CITY OF MIDWEST CITYLocal Government

CRITERIA: The schedule of expenditures of federal awards (SEFA) should include all federal expenditures of federal awards during the fiscal year under audit. CONDITION: The City's schedule of expenditures of federal awards for the fiscal year ended June 30, 2021 improperly excluded approximately $164,000 of expenditures incurred during the year related to the Disaster Grants - Public Assistance (Presidentially Declared Disasters) program. CAUSE: Expenditures for the federal program are reported for reimbursement through project worksheets that correspond to specific components of the response to and recovery from the disaster as defined by the Federal Emergency Management Agency (FEMA). Grants management personnel prepare the project worksheets and accounting personnel prepare the SEFA. There were not sufficient controls in place to ensure that all federal expenditures incurred during the year were communicated from grants management personnel to accounting personnel for inclusion in the SEFA. EFFECT: Expenditures from only one of the four project worksheets containing expenditures incurred under the federal program during the year were included in the SEFA. RECOMMENDATION: We recommend that the City establish controls to ensure sufficient review of the SEFA is performed by all individuals necessary to determine that all federal expenditures incurred during the year are correctly reflected in the SEFA. CITY MANAGEMENT RESPONSE: Concur, the FY-2021 reimbursable costs addressed were not processed/reimbursed until FY-2022. Our Finance staff was not aware of such costs at the time of preparing the Schedule of Expenditures of Federal Awards (SEFA). Also the Finance Department had a staff change during the SEFA preparation. In the future, with new staff in place, the Finance Department will have regular discussions with the Grants Department staff to ensure the proper recording of transactions.

CRITERIA: Uniform Guidance, Section 200.510 (b) (2) requires subrecipients to indicate if federal funding received was provided by a subrecipient on the Schedule of Expenditures of Federal Awards (SEFA) by including the name of the pass-through entity and identifying number assigned by the pass-through entity. CONDITION: The City's SEFA for the fiscal year ended June 30, 2021 as originally issued did not include the pass-through entity information for the Federal programs listed above. CAUSE: Lack of timely communication between the City's Finance and Grants departments. EFFECT: the City's SEFA was not prepared in accordance with the requirements of the Uniform Guidance. RECOMMENDATION: We recommend that the City establish controls to ensure sufficient review of the SEFA is performed by all individuals necessary to determine that the characteristics of each Federal award, including whether it is a direct program or a pass-through program, is properly documented. CITY MANAGEMENT RESPONSE: The City did not identify the pass-through grantor information for FAL #'s 21.027, 21.019 and 97.036. The draft SEFA prepared by the City did properly identify the pass-through grantor information for FAL #'s 16.738 and 14.239, but the pass-through information was inadvertently omitted from the final report. In the future, the City's finance and grants departments will compare all grant agreements to the SEFA to ensure that pass-through grantor information has been properly identified.