Finding Text
Finding # 2023-001:
Type: Material weakness over preparation of schedule of expenditures of federal awards (SEFA).
Assistance Listing:
10.937 Partnerships for Climate-Smart Commodities
Criteria/Requirement
The Organization should have procedures in place to properly identify and account for federal awards that are subject to Uniform Guidance.
Condition/Context:
The Organization did not correctly identify federal expenditures that should or should not be reported on the SEFA and significant adjustments were required.
Cause:
Payroll expenses by funding source were tracked outside of the accounting system’s payroll module. Reports that were generated from the accounting system to be used in the SEFA preparation were not complete since payroll costs were improperly excluded. In addition, certain federal agreements that are exempt from the Uniform Guidance were included in the SEFA.
Effect:
Major programs for the Single Audit may not be correctly identified and audited.
Questioned Costs:
None.
Recommendation:
The Organization should implement additional procedures and controls to accurately capture all activity under federal awards in preparing the SEFA. Federal cost reimbursement revenue should be compared to amounts reported on the SEFA to ensure completeness and accuracy.
Management’s Response:
The Organization agrees with the auditor’s recommendation. At the time of this audit’s publishing, the Organization has implemented the payroll module in the accounting system so that expenses are tracked in one system.