Audit 405605

Section III--Federal Award and State Project Findings and Questioned Costs Major Federal Award Programs and State Projects Audit: 2025-001 – Timely Reconciliations of Aged Accounts Payable Federal Agency: U.S. Department of Education Assistance Listing: 93.558, 93.658, 93.659 Program Name: Student Financial Assistance Cluster Type of Finding: Significant deficiency in internal control over compliance Questioned Costs: None Criteria: Under 2 CFR 200.303 1, nonfederal entities are required to establish, document, and maintain effective internal control over federal awards to provide reasonable assurance that transactions are properly recorded, reported, and managed in compliance with applicable federal statutes, regulations, and the terms and conditions of the federal award. Effective internal control includes timely reconciliation of subsidiary records to the general ledger, supervisory review of unusual or aged items, and retention of documentation evidencing preparation and review. Condition: During our testing of internal control over compliance related to federal awards, we noted the Authority did not consistently perform and document timely reconciliations of the aged accounts payable subsidiary ledger to the general ledger for expenditures charged to federal programs. As a result of this control lapse, the Authority ultimately wrote off approximately $34,695.50 of aged accounts payable that had not been timely identified and resolved through the reconciliation process. Cause: The condition appears to have resulted from inadequate monthly reconciliation procedures, lack of timely review and follow-up for aged items outstanding more than 90 days, and insufficient documentation and retention of evidence supporting the preparation and review of reconciliations. Effect: As a result, the Authority’s controls did not operate effectively to timely detect and correct errors, omissions, or unsupported items in expenditures charged to federal programs. This increased the risk of misstatement and noncompliance related to federal award activity. However, based on the audit procedures performed, we did not identify material noncompliance or any questioned costs related to this matter. Recommendation: We recommend that management implement and document monthly reconciliations of the aged accounts payable subsidiary ledger to the general ledger for all federal program expenditures. We further recommend that management require timely supervisory review of aged items exceeding 90 days, document the resolution of such items, and retain evidence of the preparation, review, and follow-up performed.