Audit 389856

Finding 2025‐004 Inaccurate Reporting of Expenditures on Monthly Project Financial Reports (VOCA #16.575) Criteria: Non-federal entities must establish and maintain effective internal controls over federal awards, including controls that ensure accurate, complete and timely reporting. Under the VOCA grant agreements, the organization must submit monthly financial reports that accurately reflect expenditures charged to the VOCA grant. Condition: During testing, we noted that all 12 monthly project reports submitted to VOCA were revised by the grantor to properly report expenditures to be charged to the grant. Throughout the 12 months, revisions totaling $54,190.79 were made to these reports. Cause: Turnover in the accounting position, combined with changes in the way VOCA paid the organization (advance payments vs reimbursement). Reductions in some monthly payments appear to have been made as a result of unexpended VOCA receipts from the prior year. Effect: Inaccurate reporting could jeopardize future funding or delay reimbursement. Questioned Costs: No questioned costs. The grantor corrected reports prior to reimbursing the organization and therefore, there were no unsupported or unallowable costs. Context: This finding is considered systemic, as all 12 monthly reports required revisions to be made by the grantor. However, the revisions were not the result of unallowable costs being charged to the grant. Repeat Finding: Not a repeat finding, as the organization did not require a single audit in the prior year. Views of Responsible Officials and Planned Corrective Action: During the period under review, the organization experienced turnover in the accounting position, which impacted continuity in grant reporting processes. In addition, VOCA grant funding administered through JCS (the grantor) transitioned from an advance payment method to a reimbursement-based payment structure. This change significantly affected the timing and presentation of expenditures reported on monthly financial reports. Management would like to clarify that the revisions made to all 12 reports were not the result of unallowable or unsupported costs. As noted in the audit, there were no questioned costs. The grantor adjusted the reports primarily due to the shift in payment methodology and reconciliation of prior-year unexpended funds. In several instances, JCS modified invoice amounts after submission to align with its updated reimbursement process and internal grant tracking. These post-submission adjustments were administrative in nature and not attributable to improper expenditure classification or misuse of grant funds by the organization. We recognize, however, that stronger internal review controls could have reduced the need for grantor-initiated revisions. To address this matter and strengthen compliance EPEC, has instituted a double check procedure on invoices. Recommendation: We recommend that management implement a formal supervisory review process of VOCA expenditures to ensure that monthly reports are accurate prior to submission for reimbursement. We further recommend training be provided to staff in charge of submitting VOCA reimbursements to ensure accurate classification and reconciliation of expenditures.