Finding 960401 (2022-002)

Finding 2022-02 – Reporting Program: COVID-19 Disaster Grants – Public Assistance (Presidentially Declared Disasters) Federal Agency: U.S. Department of Homeland Security Assistance Listing Number: 97.036 Criteria: Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Subpart F – Audit Requirements §200.510 requires the auditee to prepare a schedule of expenditures of Federal awards for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with §200.502. The Uniform Guidance requires the auditor to determine whether the auditee’s schedule of expenditures of federal awards is fairly stated, in all material respects, in relation to the audited entity’s financial statements as a whole. In addition, the Uniform Guidance places the responsibility for identifying major programs on the auditor and the schedule of expenditures of federal awards serves as the primary basis for the auditor’s major program determination. Therefore, appropriate major program determination by the auditor is dependent on the accuracy and completeness of the information in the schedule of expenditures of federal awards. Condition: In preparation of the schedule of expenditures for federal awards (SEFA) management did not record the COVID-19 Disaster Grants – Public Assistance (Presidentially Declared Disasters) expenditures on the SEFA which resulted in the SEFA being understated by $14,249,269. We deemed this to be a material weakness in internal controls. Cause: BILH did not have an adequately designed internal control to identify the error in federal awards expended as such, the amount of the errors could have been greater and not detected by BILH’s control environment. Possible Asserted Effect: Potential misstatement to the schedule of expenditures of federal awards. Questioned Costs: None noted Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Identification of Whether the Audit Finding was a Repeat Finding: This is not a repeat finding. Recommendation: We recommend that BILH implement a more thorough and detailed process for preparing and reviewing the SEFA to identify adjustments that could result in a misstatement of the SEFA. This should include a formalized and detailed review of the SEFA and a reconciliation to the general ledger and financial statements by someone other than the preparer. Views of Responsible Officials: Management will enhance its review process by requiring a formal second sign-off of the SEFA with supporting documents.