Finding 967913 (2023-002)

Finding Reference: 2023-002 – Other Federal Program Information Federal Agencies: Department of Homeland Security Awards: Assistance Listing Number 97.036 – COVID-19 – Disaster Grants – Public Assistances (Presidentially Declared Disasters) Award Periods: February 4, 2020 – Ongoing Description: Reporting of Schedule of Expenditures of Federal Awards Type of Finding: Material Weakness in Internal Control Over Compliance Criteria In accordance with Title 2 U.S. Code of Federal Regulations, Part 200.303, Internal controls, “Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” Condition On the preliminary Schedule of Expenditures of Federal Awards (the Schedule) for the year ended June 30, 2023, the Corporation did not include all expenditures related to Assistance Listing Number 97.036 – COVID-19 – Disaster Grants – Public Assistances (Presidentially Declared Disasters). Cause The Schedule for the year ended June 30, 2023 included a number of COVID 19 programs. These programs did not follow the historical grant process and therefore, various individuals in the Corporation were involved and responsible for monitoring the terms and conditions of the federal awards and reporting of the federal expenditures. Management continued to enhance procedures related to preparation and assessment of the Schedule. However, Assistance Listing Number 97.036 – COVID-19 – Disaster Grants – Public Assistances (Presidentially Declared Disasters) did not include all incurred and obligated expenditures for the year ended June 30, 2023. Effect or potential effect This condition resulted in a net understatement of expenditures in the amount of $2,911,434 for the program on the preliminary Schedule due to incomplete reporting and verification of the completeness and accuracy of the expenditures. Questioned costs None. Identification of a repeat finding No. Context The Corporation reports expenditures on the Schedule using the accrual basis of accounting. As part of our review of the Schedule, we identified that expenditures were erroneously excluded from the preliminary Schedule based on the dates the expenditures were incurred and obligated. Recommendation The Corporation’s policy and procedures should be designed to ensure expenditures are reported on the Schedule based on the date on which the expenditures are incurred as required by the Uniform Guidance. View of responsible officials There is no disagreement with the audit finding.