COVENANT HOUSE MISSOURI

Criteria Management is required to prepare the Schedule of Expenditures of Federal Awards (“SEFA”). If the SEFA includes errors or omissions, it will surely result in inefficiencies, additional audit effort by auditors if major programs must be re-selected, the potential for audit restatement, and/or additional audit costs. Condition Not all federal expenditures were included on the client prepared Schedule of Expenditures of Federal Awards. There were differences noted in reconciling expenditures from the original SEFA to the government contract revenue (which is the basis for expenditures), and it was discovered that certain adjustments for grants receivable, unearned revenues and grant revenue had not been made in order to properly report total federal expenditures. These errors were corrected through adjustments proposed as part of the financial statement audit. Questioned Costs None Context One of the grants, containing funding from the federal program assistance listing number 14.231- Emergency Solutions Grant Program incorrectly omitted $301,226 of federal expenditures on the SEFA provided by management. Cause Funding received from one award was incorrectly reported as part of the contribution revenue and omitted from the client prepared SEFA. Effect This delayed the completion of the compliance audit. Recommendations We recommend that the Organization become familiar with the SEFA reporting elements required by the Uniform Guidance and develops and implements a review process to ensure a complete and accurate SEFA is prepared. These processes and controls should include reconciling the SEFA to the current year general ledger expenditures, grant reporting submitted/approved and reviewing other grant related information to ensure accuracy. Additionally, management should consider requiring key Grants Management personnel take advanced Uniform Guidance training and annual updates, as made available.

CHMO Finance and Quality & Compliance departments will continue to work to create procedures and controls that ensure that all SEFA reporting elements required by the Uniform Guidance are adhered to. Standard Operating Procedures (“SOPs”) are currently being created for monthly and quarterly reconciliation between grant reporting and the general ledger to inform the SEFA preparation. Once the SOPs have been developed, they will be reviewed with the Finance Committee of the Board of Directors. Additionally, special consideration will be given to federal expenditures that are recorded separately from general operating expenses in the general ledger such as was the case for the CFDA 14.231 funds utilized for capital improvements in the FY23. Leadership Review: Each quarter, a qualified member of the leadership team will review the SEFA reporting components and a summary of all Government Grant Revenue to confirm we are in compliance with this corrective action. At least once annually, we will ask for a compliance review by our audit firm.