2022-002 Internal Controls Over Receivables and Grant Billings
Condition: Grant billings and payments were not posted correctly during the fiscal year. The error was found during the audit and records had to be reconstructed and corrected. Records for some months were not available for testing.
Criteria: Grant billing and subsequent payments should be easily traced from which expenses were being billed, to the invoice and then subsequent payment. If changes are made, those changes should be well documented and adjusted throughout the accounting process. Documentation should be maintained in such a way that it can be retrieved when needed.
Cause: There were multiple changes in the accounting staff. This was compounded by the new federal funds that were being administered by a subrecipient that was not able to provide feedback when payments were made for amounts different than the amounts invoiced.
Effect/Context: Additional time was required by staff to reconstruct and reconcile a number of the grant billings and subsequent payments. There were some months that were not able to be directly tested and alternative testing had to be developed to obtain sufficient audit evidence for reporting. Significant adjustments were required for grant revenues, receivables and advances.
Questioned Costs: None
Recommendation: We recommend that management and staff receive training on nonprofit and federal award accounting to enhance their new understanding of what is required to account for and report on grant funds. Internal controls and procedures should be developed, documented and implemented to ensure that grant state and federal funds are properly recorded and when staff changes, there will not be a loss of continuity for reporting.
Response: Management has worked with a few outside accounting firms over the last year and believes they have found a competent accounting person to assist with the financial statements and processes. Management is working with the new accounting firm to document the procedures and maintaining records.
2022-003 Internal Controls Over Cost Allocations and Administrative Costs
Condition: Invoices and disbursements tested did not always indicate the allocation of costs between programs and grants. There were invoices that did not include the approval to pay and some invoices were not available to be tested.
Criteria: Invoices should indicate the approval to pay as well as the appropriate account and allocation of the cost to ensure proper recording of the expense. There are multiple types of funding and a staff person, well versed on what is allowable and not allowable to be charged to grants, should be reviewing and approving the expense and allocation prior to payment.
Cause: There are multiple grants that have different requirements. Due to changes in the accounting staff position, there were weaknesses in the processes for the controls over the disbursements and allocation to the grant funds.
Effect/Context: It was very difficult to determine if disbursements were appropriately allocated based on the cost allocation plan in place. Disbursements could be paid incorrectly or allocated incorrectly without the proper oversight.
Questioned Costs: None
Recommendation: We recommend that management and staff receive training on nonprofit and federal award accounting to enhance their new understanding of what is required to account for and report on grant funds. Internal controls and procedures should be developed, documented and implemented to ensure that grant state and federal funds are properly recorded and when staff changes, there will not be a loss of continuity for reporting.
Response: Management has worked with a few outside accounting firms over the last year and believes they have found a competent accounting person to assist with the financial statements and processes. Management is working with the new accounting firm to document the procedures and maintaining records.
2022-002 Internal Controls Over Receivables and Grant Billings
Condition: Grant billings and payments were not posted correctly during the fiscal year. The error was found during the audit and records had to be reconstructed and corrected. Records for some months were not available for testing.
Criteria: Grant billing and subsequent payments should be easily traced from which expenses were being billed, to the invoice and then subsequent payment. If changes are made, those changes should be well documented and adjusted throughout the accounting process. Documentation should be maintained in such a way that it can be retrieved when needed.
Cause: There were multiple changes in the accounting staff. This was compounded by the new federal funds that were being administered by a subrecipient that was not able to provide feedback when payments were made for amounts different than the amounts invoiced.
Effect/Context: Additional time was required by staff to reconstruct and reconcile a number of the grant billings and subsequent payments. There were some months that were not able to be directly tested and alternative testing had to be developed to obtain sufficient audit evidence for reporting. Significant adjustments were required for grant revenues, receivables and advances.
Questioned Costs: None
Recommendation: We recommend that management and staff receive training on nonprofit and federal award accounting to enhance their new understanding of what is required to account for and report on grant funds. Internal controls and procedures should be developed, documented and implemented to ensure that grant state and federal funds are properly recorded and when staff changes, there will not be a loss of continuity for reporting.
Response: Management has worked with a few outside accounting firms over the last year and believes they have found a competent accounting person to assist with the financial statements and processes. Management is working with the new accounting firm to document the procedures and maintaining records.
2022-003 Internal Controls Over Cost Allocations and Administrative Costs
Condition: Invoices and disbursements tested did not always indicate the allocation of costs between programs and grants. There were invoices that did not include the approval to pay and some invoices were not available to be tested.
Criteria: Invoices should indicate the approval to pay as well as the appropriate account and allocation of the cost to ensure proper recording of the expense. There are multiple types of funding and a staff person, well versed on what is allowable and not allowable to be charged to grants, should be reviewing and approving the expense and allocation prior to payment.
Cause: There are multiple grants that have different requirements. Due to changes in the accounting staff position, there were weaknesses in the processes for the controls over the disbursements and allocation to the grant funds.
Effect/Context: It was very difficult to determine if disbursements were appropriately allocated based on the cost allocation plan in place. Disbursements could be paid incorrectly or allocated incorrectly without the proper oversight.
Questioned Costs: None
Recommendation: We recommend that management and staff receive training on nonprofit and federal award accounting to enhance their new understanding of what is required to account for and report on grant funds. Internal controls and procedures should be developed, documented and implemented to ensure that grant state and federal funds are properly recorded and when staff changes, there will not be a loss of continuity for reporting.
Response: Management has worked with a few outside accounting firms over the last year and believes they have found a competent accounting person to assist with the financial statements and processes. Management is working with the new accounting firm to document the procedures and maintaining records.
2022-002 Internal Controls Over Receivables and Grant Billings
Condition: Grant billings and payments were not posted correctly during the fiscal year. The error was found during the audit and records had to be reconstructed and corrected. Records for some months were not available for testing.
Criteria: Grant billing and subsequent payments should be easily traced from which expenses were being billed, to the invoice and then subsequent payment. If changes are made, those changes should be well documented and adjusted throughout the accounting process. Documentation should be maintained in such a way that it can be retrieved when needed.
Cause: There were multiple changes in the accounting staff. This was compounded by the new federal funds that were being administered by a subrecipient that was not able to provide feedback when payments were made for amounts different than the amounts invoiced.
Effect/Context: Additional time was required by staff to reconstruct and reconcile a number of the grant billings and subsequent payments. There were some months that were not able to be directly tested and alternative testing had to be developed to obtain sufficient audit evidence for reporting. Significant adjustments were required for grant revenues, receivables and advances.
Questioned Costs: None
Recommendation: We recommend that management and staff receive training on nonprofit and federal award accounting to enhance their new understanding of what is required to account for and report on grant funds. Internal controls and procedures should be developed, documented and implemented to ensure that grant state and federal funds are properly recorded and when staff changes, there will not be a loss of continuity for reporting.
Response: Management has worked with a few outside accounting firms over the last year and believes they have found a competent accounting person to assist with the financial statements and processes. Management is working with the new accounting firm to document the procedures and maintaining records.
2022-003 Internal Controls Over Cost Allocations and Administrative Costs
Condition: Invoices and disbursements tested did not always indicate the allocation of costs between programs and grants. There were invoices that did not include the approval to pay and some invoices were not available to be tested.
Criteria: Invoices should indicate the approval to pay as well as the appropriate account and allocation of the cost to ensure proper recording of the expense. There are multiple types of funding and a staff person, well versed on what is allowable and not allowable to be charged to grants, should be reviewing and approving the expense and allocation prior to payment.
Cause: There are multiple grants that have different requirements. Due to changes in the accounting staff position, there were weaknesses in the processes for the controls over the disbursements and allocation to the grant funds.
Effect/Context: It was very difficult to determine if disbursements were appropriately allocated based on the cost allocation plan in place. Disbursements could be paid incorrectly or allocated incorrectly without the proper oversight.
Questioned Costs: None
Recommendation: We recommend that management and staff receive training on nonprofit and federal award accounting to enhance their new understanding of what is required to account for and report on grant funds. Internal controls and procedures should be developed, documented and implemented to ensure that grant state and federal funds are properly recorded and when staff changes, there will not be a loss of continuity for reporting.
Response: Management has worked with a few outside accounting firms over the last year and believes they have found a competent accounting person to assist with the financial statements and processes. Management is working with the new accounting firm to document the procedures and maintaining records.
2022-002 Internal Controls Over Receivables and Grant Billings
Condition: Grant billings and payments were not posted correctly during the fiscal year. The error was found during the audit and records had to be reconstructed and corrected. Records for some months were not available for testing.
Criteria: Grant billing and subsequent payments should be easily traced from which expenses were being billed, to the invoice and then subsequent payment. If changes are made, those changes should be well documented and adjusted throughout the accounting process. Documentation should be maintained in such a way that it can be retrieved when needed.
Cause: There were multiple changes in the accounting staff. This was compounded by the new federal funds that were being administered by a subrecipient that was not able to provide feedback when payments were made for amounts different than the amounts invoiced.
Effect/Context: Additional time was required by staff to reconstruct and reconcile a number of the grant billings and subsequent payments. There were some months that were not able to be directly tested and alternative testing had to be developed to obtain sufficient audit evidence for reporting. Significant adjustments were required for grant revenues, receivables and advances.
Questioned Costs: None
Recommendation: We recommend that management and staff receive training on nonprofit and federal award accounting to enhance their new understanding of what is required to account for and report on grant funds. Internal controls and procedures should be developed, documented and implemented to ensure that grant state and federal funds are properly recorded and when staff changes, there will not be a loss of continuity for reporting.
Response: Management has worked with a few outside accounting firms over the last year and believes they have found a competent accounting person to assist with the financial statements and processes. Management is working with the new accounting firm to document the procedures and maintaining records.
2022-003 Internal Controls Over Cost Allocations and Administrative Costs
Condition: Invoices and disbursements tested did not always indicate the allocation of costs between programs and grants. There were invoices that did not include the approval to pay and some invoices were not available to be tested.
Criteria: Invoices should indicate the approval to pay as well as the appropriate account and allocation of the cost to ensure proper recording of the expense. There are multiple types of funding and a staff person, well versed on what is allowable and not allowable to be charged to grants, should be reviewing and approving the expense and allocation prior to payment.
Cause: There are multiple grants that have different requirements. Due to changes in the accounting staff position, there were weaknesses in the processes for the controls over the disbursements and allocation to the grant funds.
Effect/Context: It was very difficult to determine if disbursements were appropriately allocated based on the cost allocation plan in place. Disbursements could be paid incorrectly or allocated incorrectly without the proper oversight.
Questioned Costs: None
Recommendation: We recommend that management and staff receive training on nonprofit and federal award accounting to enhance their new understanding of what is required to account for and report on grant funds. Internal controls and procedures should be developed, documented and implemented to ensure that grant state and federal funds are properly recorded and when staff changes, there will not be a loss of continuity for reporting.
Response: Management has worked with a few outside accounting firms over the last year and believes they have found a competent accounting person to assist with the financial statements and processes. Management is working with the new accounting firm to document the procedures and maintaining records.