Finding Text
Finding 2023-004: Federal Financial Reporting Requirements (Significant Deficiency)
Federal Program: Assistance Listing Number 14.267
Criterion or Specific Requirements: Code of Federal Regulations (CFR) Section 200.303(b)
requires non-Federal entities to establish and maintain effective internal control over Federal awards
that provide reasonable assurance that the non-Federal entity is managing Federal awards in
compliance with Federal statutes, regulations, and terms and conditions of the Federal award. CFR
Section 200.502(a) states that the determination of when a Federal award is expended should be
based on when the activity related to the Federal award occurs. CFR Section 200.510 states that the
auditee must 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 CFR Section 200.502.
Condition: The schedule of expenditures of Federal awards (SEFA) for the year ended June 30,
2023, was not supported by general ledger detail at the start of our audit in October 2023.
Management had not originally allocated costs in the general ledger such that it supported the
amounts on the SEFA. The allocation of costs in the general ledger was completed in January 2024.
Questioned Costs: None
Cause: IW originally prepared the SEFA without fully allocating all Federal award related costs in the
general ledger.
Effect or Potential Effect: The exclusion of certain allocated costs from the general ledger created
variances when the SEFA was reconciled to the general ledger at the start of the audit in October
2023. Without remedy, this situation could have caused an inaccurate selection of audit samples for
single audit testing.
Recommendation: IW should implement a process for preparing the SEFA that includes fully
allocating costs in the general ledger so as to support all amounts reported in the SEFA.