Koinonia Foster Homes, Inc.

Criteria: Per guidance: 2CFR 200.510(b) – Under 2 CFR §200.510(b), the Uniform Guidance mandates that auditees prepare a SEFA that accurately reflects federal award expenditures. Additionally, 2 CFR Part 200 Subpart F outlines the required components that must be included in the SEFA. Condition: During the audit, we noted that the SEFA did not include required information around identification of passthrough information which is required under Uniform Guidance. We also noted in our testing that the SEFA amount reported was overstated based on the improper identification of federal versus state funds received. The amount reported was determined to include state funds as well as federal funds. Cause: Management does not have sufficient internal controls to ensure the accuracy and completeness of the Schedule of Expenditures of Federal Awards. During performance of audit procedures, we noted that the identification of federal funds was miscalculated based on a lack of information provided by the pass-through agency. We find that several counties failed their responsibilities as a pass-through agency to provide timely federal award information to their subrecipient, Koinonia Foster Homes, Inc. We also noted that the SEFA was not reflecting the passthrough entity information which is required in which the Agency had the information available in order to do so. Effect: The use of incomplete or incorrect information on the SEFA can result in the improper identification of major programs and related compliance requirements. Management subsequently corrected the SEFA to reflect accurate expenditures of federal awards incurred in 2024. Recommendation: We recommend that the management and those charged with governance review the Uniform Guidance requirements in regards to SEFA reporting. Management cannot rely upon each respective County to proactively assist Koinonia Foster Homes, Inc. to produce an accurate SEFA. We recommend that in addition to correspondence with each County throughout the year, they obtain California state issued letters that are published on the website, that present the annual federal to state ratios of Foster Care – Title IV-E funds that can be used to identify federal funds received. We also recommend that one or more levels of review and approval of the SEFA be done by a member of management to ensure accuracy.

In 2024 we received funding from 22 different counties for foster care. These counties are required to provide documentation of the federal funds that were paid out to each agency. We received letters from 4 counties. We rely on these county agencies to provide us with accurate data. In many instances we receive conflicting information from both counties and other funding agencies. It is our opinion that it is not in our best financial interest to question the agencies that provide us with both income and this data. We will make more inquiries to seek to obtain the correct data from our funding sources in the future. We will work diligently to provide a more accurate and complete SEFA report by the end of 2025 audit period including a secondary review process. Every effort is made to obtain California state issued letters presenting annual federal to state ratios of Foster Care.

2023-004

After performance of audit procedures, additional federal funds were identified and changes were necessary to the SEFA to reconcile to the financial statements.

Management’s Planned Corrective Action: In 2023 there were multiple new programs implemented by the Agency. Every effort was made to contact county and/or state funding sources to determine the Federal awards and determine the Agencies requirements for reporting such Federal Awards. In several instances, we receive conflicting information on these Federal Awards. This resulted in us having to perform several revisions to our Schedule of Expenditures of Federal Award. We continue to gather and verify information on our funding and Federal Awards in order to track and provide an accurate Schedule of Expenditures of Federal Awards. In 2024 a budget committee was formed to help better track funding and expenditures. Koinonia recognizes and appreciates the importance of tracking the Expenditures of Federal Awards and will work diligently with our funding sources to ensure we are updating and tracking any changes that affect these funds.