Finding Text
2023-01 - Internal Control over Compliance and Compliance with Reporting (Preparation of the Schedule of Expenditures of Federal Awards) Information on the Federal Program: United States Department of Health and Human Services Assistance Listing Numbers: 93.650 Accountable Health Communities 93.391 Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises 93.558 Temporary Assistance for Needy Families 93.667 Social Services Block Grant 93.738 Racial & Ethnic Approaches to Community Health; Program Solely Funded by Public Prevention Health Funds 93.044 Special Programs for the Aging, Title III, Part B, Grants for Supportive Services and Senior Centers 93.052 National Family Caregiver Support 93.268 Immunization Cooperative Agreements United States Department of Housing and Urban Development Assistance Listing Number: 14.218 Community Development Block Grants United States Department of Homeland Security Assistance Listing Number: 97.024 Emergency Food and Shelter Criteria: The Code of Federal Regulation (CFR) Section §200.510(b) states in part: “The auditee must also 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 Basis for determining Federal awards expended.” The schedule must provide total Federal awards expended for each individual Federal program. In accordance with CFR §200.302 Financial Management, a non-federal entity’s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. The financial management system of each non-Federal agency provide for the following: Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §200.328 Financial Reporting and §200.329 Monitoring and Reporting Program Performance. Records that identify adequately the source and application of funds for federally funded activities. Effective control over, and accountability for, all funds, property, and other assets.Condition: During management’s preparation of the Schedule of Expenditures of Federal Awards (SEFA), the finance team of the Organization used a combination of cost center reports that identify Federal dollars spent throughout the year, reporting done by program management, and invoices billed to Federal agencies. The SEFA preparation and review process did not appropriately reflect total Federal Expenditures for the period covered. During our major program grant population completeness procedures, we identified expenditures of federal awards that had been excluded from the SEFA prepared by management. The SEFA, as presented in these financial statements has been adjusted to include an additional $13,012 of expenditures incurred for AL 93.391 versus what had been previously presented. Cause: Subsequent to June 30, 2023, United Way of Greater Cleveland experienced turnover in certain program management positions with the responsibility for submission and preparation of data for completion of the schedule of expenditures of federal awards (SEFA). As a result of these changes in staffing, management was unable to fully execute on its documented internal control policies regarding SEFA preparation. Accordingly, internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not operate as designed due to personnel changes in the programmatic areas, responsible for submission of costs incurred for the SEFA. Effect: The SEFA provided for the audit was inaccurate for the reasons outlined in the condition section above. Failure to accurately report expenditures and programs on the SEFA result in audit adjustments. Questioned Costs: There are no questioned costs related to the items described above. Context: The conditions outlined above are based on our testing of the United Way of Greater Cleveland’s major programs and our overall testing of the accuracy of the SEFA. The nature of this finding is detailed in the condition section above. Repeat Finding: This is a repeat finding. Recommendation: We recommend management address the staffing considerations to ensure the documented policies and procedures can be performed as prescribed, and that policies and procedures are followed on a consistent basis. This will ensure that Federal funds are reported accurately on the SEFA.Views of Responsible Officials: United Way of Greater Cleveland’s management agrees with the finding and recommendations set forth within and has developed a corrective action. The Organization’s corrective action plan is described in Management’s Corrective Action Plan included at page __ of this reporting package.