Audit 371973

Condition - The District did not accrue a June 2023 invoice totaling $1,620,380.99 for a ventilation project at the Spaulding Union High School funded through a Federal Education Stabilization Fund grant at June 30, 2023. An audit adjustment was proposed to correct this misstatement. Criteria - Uniform Guidance §200.502 states that “the determination of when a Federal award is expended must be based on when the activity related to the Federal award occurs.” For financial statement reporting in the fund financial statements as prescribed by the GASB “expenditures should be recognized in the accounting period in which the fund liability is incurred, if measurable.” Cause - This invoice was paid by the District on July 20, 2023 and was not recorded in the general ledger as a June 2023 expenditure but was instead recorded as a July 2023 expenditure. Effect - The Districts Grants Fund expenditures were understated by $1,620,380.99. The Schedule of Expenditures of Federal Awards presented for audit was also understated by $1,620,380.99. Lastly, capital assets in the government-wide governmental activities were understated by this same amount. Recommendation - We recommend a careful review of costs paid in the first quarter of a fiscal year or just prior to scheduled audit work. We would recommend that such a review include the review of significant amounts paid and verification that those costs are recorded in the proper fiscal year. The condition in this finding discussed previously was first identified by the auditor while performing a standard search for unrecorded liabilities by obtaining the subsequent year check register and reviewing invoice(s) supporting significant amounts paid and verifying that those costs were included in the proper period.