EASTER SEALS SOUTH FLORIDA, INC.Non-Profit

Internal Control over Compliance and Compliance with Reporting - Preparation of the Schedule of Expenditures of Federal Awards (SEFA) Criteria: The Uniform Guidance in 2 CFR Section 200.510 (b) states in part: ?The auditee must also 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 as determined in accordance with CFR Section ?200.502 Basis for determining Federal awards expended.? In accordance with ?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 entity must provide for the following: 1) Identification, in its accounts, of all federal awards received and expended and the federal programs under which they were received. 2) Accurate, current, and complete disclosure of the financial results of each federal award or program in accordance with the reporting requirements set forth in ?200.327 Financial Reporting and ?200.328 Monitoring and Reporting Program Performance. 3) Records that identify adequately the source and application of funds for federally-funded activities. 4) Effective control over, and accountability for, all funds, property, and other assets. Condition: The following conditions were identified during the testing of the SEFA: 1) The SEFA originally prepared by management included one award that should not have been included and therefore was required to be removed from the SEFA to ensure accurate reporting of federal expenditures. The modification to the SEFA were appropriately corrected and did not impact major program determination. 2) The SEFA did not segregate certain expenditures related to COVID funding from the other funding provided by an agency. The modification to the SEFA were appropriately corrected and did not impact major program determination. 3) The SEFA included payroll expenditures for which the allocation detail could not be completely generated from the general ledger system upon request. Management ultimately compiled the proper documentation through original source data to support the allocations and expenditures, however, the SEFA should be supported by general ledger detail that can be used to trace the expenditures including related overhead allocations, consistent with internal policies. The payroll costs charged to the programs were validated by employee time sheets and other original source records. Questioned Costs: There are no questioned costs related to the items described above. Context: The conditions outlined above are based on our testing of Easter Seals of South Florida, Inc.?s major programs and projects and our overall testing of the accuracy of the SEFA. The nature of these findings is detailed in the condition section above. Cause: The internal controls established for the review and approval of the SEFA at year end to ensure its completeness and accuracy did not operate as designed due to personnel changes in the accounting and finance department responsible 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 resulted in adjustments to the SEFA. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that management review its policies and procedures to ensure that Federal expenditures are correctly reported on the SEFA by ensuring program personnel review general ledger data to be used for reporting on a routine basis throughout the year. Management should ensure policies and procedures are formally documented so they can be performed as prescribed, especially in the event of turnover of key process owners. We also recommend cross training of personnel to fill roles when turnover occurs in order to limit the impact on internal controls. Views of Responsible Officials: Easter Seals experienced turnover of key staff near the end of the fiscal year under audit. In addition, the Organization received an influx of new funding related to COVID relief which had never previously been received. Due to those reasons, there were modifications to the SEFA after the audit commenced. The modifications were made on a timely basis and were not material to any major program determination or testing. In order to address the deficiency, management will continue to closely review and monitor all contracts to ensure all federal expenditures are properly classified on the SEFA. Management will also ensure more than one finance team member is trained on the preparation of the SEFA. Detailed procedures related to the SEFA will be updated and documented in the accounting policies and procedures.