NatureServe

Finding 2020-003: Preparation of the Schedule of Expenditures of Federal Awards (SEFA) Information on the Federal Programs: All Federal Awards Criteria: CFR 200.508 ?Auditee Responsibilities? indicates that the auditee must prepare appropriate financial statements, including the Schedule of Expenditures of Federal Awards (as specifically defined under CFR 200.510 ?Financial statements?). CFR 200.510 ?Financial Statements? requires recipients of Federal funds to prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the auditee's financial statements, which must include the total Federal awards expended. Additionally, in accordance with CFR 200.303, the non-Federal entity must: 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. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: During the fiscal year under audit, an analysis of Federal assistance was not performed until our audit fieldwork date. Cause: The Organization included non-assistance transactions in its SEFA, as internal policies and procedures defining SEFA preparation do not exist. Effect: The major program determination was delayed until such time when an accurate SEFA could be produced. Questioned Costs: None identified. Context: Our audit procedures consisted of an initial review of the SEFA, which resulted in multiple subsequent reviews following attempts to correct prior schedules. The condition noted is deemed to be systematic in nature. Identification as a Repeat Finding: This is not a repeat finding Recommendation: We recommend NatureServe prepare an interim SEFA (internally) on a quarterly basis. All Federal assistance (direct and pass-through) should be evaluated for inclusion in the SEFA through the review of each agreement and the identification of the Catalog of Federal Domestic Assistance (CFDA). Any questionable instruments should be reviewed with the funding agency to determine if the agreement has a CFDA classification. The completed SEFA should be reviewed and approved by a member of management in a supervisory position, and evidence of the review process should be retained in the accounting records.

Finding 2020-004: Reporting Information on the Federal Programs: CFDA 15.944: Natural Resource Stewardship; Research & Development Cluster (CFDA 10.652 Forestry Research and CFDA 12.632 Legacy Resource Management Program) Criteria: CFR 200.510 ?Financial Statements? requires recipients of Federal funds to prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the auditee's financial statements which must include the total Federal awards expended. Additionally, in accordance with CFR 200.303, the non-Federal entity must: 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. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: During the year under audit, the Organization experienced challenges in the timely submission of Federal Financial Reports required to be filed during the fiscal year ended June 30, 2020. During the past several years, there has been significant changes in the accounting department, including turnover of key financial personnel; the transition resulted in untimely submission of required reports under Federal assistance awards. Context: We noted that 8 of 12 Federal financial reports tested were not submitted timely; 8 of 10 progress reports tested were not deemed to not be submitted timely. It is our understanding that this condition was partly due to the fact that these reports were made verbally during progress meetings with funders, which were deemed acceptable by those funders. All ten progress reports did not evidence a proper review and approval process. This condition is deemed to be systematic in nature. Effect: Several Federal Financial Reports prepared during the fiscal year were not submitted timely. Several progress reports were also not submitted in a timely manner. Cause: NatureServe currently does not maintain a centralized reporting schedule that outlines grant reporting requirements and related deadlines. Additionally, a consistent review and approval process with respect to these reports does not exist. Questioned Costs: None. Identification as a Repeat Finding, if Applicable: This is a not a repeat finding. Recommendation: We recommend NatureServe create standard operating procedures that outline the process of preparing Federal Financial Reports, which are based on a reconciliation of cumulative expenditures over cumulative cash draws (directly sourced from the accounting system). Additionally, a formal reporting schedule should be developed and should outline the reporting requirements and submission deadlines. These reports, along with the reconciliations, should be evidenced with a formal review and approval process (by an individual in a supervisory capacity), and maintained in the accounting records.