Audit 301625

Revenue Recognition For Cost-Reimbursement Grants-Criteria Cost must be incurred and adequately documented to recognize revenue under federal costreimbursement grants. Condition During the year ended June 30 2023 the School erroneously recognized revenue and a receivable of $250,047 under a federal cost-reimbursement grant related to the prior year. Costs related to this grant were incurred during the year ended June 30 2022 but were not identified as federal expenditures in the accounting software until reimbursement requests were subsequently made. Cause The condition can be attributable to the absence of expenditures being identified in the accounting software in a timely manner under federal cost-reimbursement grants. The finance department has also experienced turnover. Effect To ensure that the financial statements are fairly stated, an audit adjusting entry was made to grants and contracts receivable and a corresponding entry to federal grants revenue in the statements of financial position at June 30 2022, and in the statement of activities for the year then ended. In addition, the schedule of expenditures of federal awards, accompanying the audited financial statements, was understated for the year ended June 30 2022. This resulted in reissuance of the June 30 2022 audited financial statements and amendment to the Data Collection Form and reporting package to the Federal Audit Clearinghouse. Recommendation Expenditures should be identified against a specific federal grant on a timely basis through the accounting software. We recommend that the School assess the adequacy of resources in the finance department in relation to its periodic and year-end reporting responsibilities. The School may consider an increased level of financial analysis of revenue recognition and grant management practices, as well as providing additional support to the finance department in the area of financial reporting.

Revenue Recognition For Cost-Reimbursement Grants-Criteria Cost must be incurred and adequately documented to recognize revenue under federal costreimbursement grants. Condition During the year ended June 30 2023 the School erroneously recognized revenue and a receivable of $250,047 under a federal cost-reimbursement grant related to the prior year. Costs related to this grant were incurred during the year ended June 30 2022 but were not identified as federal expenditures in the accounting software until reimbursement requests were subsequently made. Cause The condition can be attributable to the absence of expenditures being identified in the accounting software in a timely manner under federal cost-reimbursement grants. The finance department has also experienced turnover. Effect To ensure that the financial statements are fairly stated, an audit adjusting entry was made to grants and contracts receivable and a corresponding entry to federal grants revenue in the statements of financial position at June 30 2022, and in the statement of activities for the year then ended. In addition, the schedule of expenditures of federal awards, accompanying the audited financial statements, was understated for the year ended June 30 2022. This resulted in reissuance of the June 30 2022 audited financial statements and amendment to the Data Collection Form and reporting package to the Federal Audit Clearinghouse. Recommendation Expenditures should be identified against a specific federal grant on a timely basis through the accounting software. We recommend that the School assess the adequacy of resources in the finance department in relation to its periodic and year-end reporting responsibilities. The School may consider an increased level of financial analysis of revenue recognition and grant management practices, as well as providing additional support to the finance department in the area of financial reporting.