Audit 415046

Condition and Context: Two material journal entries related to grant funding were posted during the audit. Each caused additional expenditures to be added to the Schedule of Expenditures of Federal Awards. One of the entries was the recognition of indirect costs earned but not yet recorded related to the NOAA grant. Criteria: Adjustments made throughout the year provide for accurate and timely information in which decisions can be made. Proper reconciliation of allowable grant funding allows for more timely collection of reimbursable grant income. Cause: The Organization planned to record additional grant revenue as projects were completed rather than when the expenditures were incurred. Additionally, retainage was not captured in the accounting records as a payable causing the related reimbursement receivable to also not be recorded. Effect: When activity and accounts are not accurately recorded, management and governance lack accurate and timely information upon which to make decisions. The two material entries posted during the audit increased the Organization's revenue and expenditures related to two federal grants, which ultimately altered the client's Schedule of Expenditures of Federal Awards. Recommendation: We recommend that adjustments to reconcile grants are made timely throughout the year rather than at the end of the project period. Views of Responsible Officials and Planned Corrective Action: Management now understands the importance of reconciling retainage, indirect costs allocations, and payables and will do so in a timely manner going forward.