Finding 959187 (2023-001)

Schedule of Expenditures of Federal Awards (SEFA) Not Accurately Reported Condition: Federal expenditures were over reported on the SEFA due to state expenditures being classified as federal expenditures, specifically related to its funding agreement with the Commonwealth of Kentucky Contract PON2 736-2200002279. Criteria: The SEFA should only include federal expenditures as required by the Uniform Guidance. Cause: The Organization has a funding agreement with the Commonwealth of Kentucky (Contract PON2 736-2200002279), under this funding agreement, the Organization was expected to receive 85% from federal sources and 15% from state sources. As such, the Organization allocated the total expenditures incurred under the contract in accordance with the funding agreement. Effect: The SEFA over reported federal expenditures by $801,496. Recommendation: We recommend management review their policies and procedures over SEFA preparation to ensure sufficient internal controls are implemented. In circumstances where there is any uncertainty regarding the source of the funds (for example, funding agreements with multiple sources), the Organization should reach out to the related agency and confirm the sources of the funding to verify the amounts reported on the SEFA are accurately presented. Views of Responsible Officials: As part of its processes and procedures to prepare the SEFA, management will reach out to the funding source (mentioned above) to verify the source of the funds to ensure the accuracy of reported federal expenditures. Additionally, for the specific funding agreement (mentioned above), management will reach out to the related funding source to communicate the discrepancy (the funding agreement’s source of funds is not consistent funds received).