Finding 2024-004 - U.S. Department of Education (USDE) - Higher Education Institutional Aid
(Title III Programs) (Material weaknesses and Significant deficiencies):
A. We observed the following questioned cost of $505,004 during our testing of Title III and
Future Grant drawdowns (material weaknesse...
Finding 2024-004 - U.S. Department of Education (USDE) - Higher Education Institutional Aid
(Title III Programs) (Material weaknesses and Significant deficiencies):
A. We observed the following questioned cost of $505,004 during our testing of Title III and
Future Grant drawdowns (material weaknesses):
a) Adequate supporting source documents and general ledger data was not readily on file
to support three (3) of eleven drawdowns tested. The University subsequently supplied
adjusting journal entries to reclass expenditures previously recorded elsewhere in the
general ledger. However, the total amount of the questioned cost noted above was not
substantiated, resulting in excess federal cash on hand.
b) We noted two (2) drawdowns for payroll were drawn 20 days and nine (9) days before
the actual payroll dates.
B. Our testing of Title III cash disbursements revealed questioned cost of $55,525 as stated
below (significant deficiency):
a) Adequate supporting source documents, such as invoices, check request, and evidence of
approval were not on file or provided for one (1) of eight (8) disbursements tested.
b) One (1) check contained only one signature.
C. We noted the following during our review of budget versus actual reporting.
a) The University did not properly and accurately maintain budget vs actual schedules to
adequately validate carryover and remaining balances. The budgets for Title Ill, Future
grants appear to have been overspent; however, the reasonableness of under or over
prior year remaining balances could not accurately be determined. D. We noted the following during our testing of time and effort reporting (significant
deficiencies):
a) The University subsequently provided corrected Time and Effort Reports for nine (9) out
of 12 tested which we noted were previously missing employee signatures, signatures of
approval by supervisor or next level of authority, salary distribution percentages, and
grant funding codes.
b) Personnel Action Forms originally provided for three (3) of four (4) employees tested did
not contain salary allocations as evidence that salaries were to be allocated to the
program. The University subsequently corrected the forms.
c) The University also provided adjusting entries to reclassify salaries that were incorrectly
recorded in the general ledger; however, we were unable to trace the salary distribution
to the general ledger for two (2) of 12 tested.
Auditor's Recommendation –
1) We recommend all drawdowns are approved by management prior to the request being made
and reviewed to assure that drawdowns and supporting expenditures are accurately and timely
recorded. Federal regulations require that funds drawn down are limited to the minimum amounts
needed to cover immediate project cost and not made to cover future or budgeted expenditures.
2) We recommend the University require prior approval for all disbursements, including credit card,
check, wires, and electronic funds transfer, and maintain supporting source documents in a
manner that’s easily accessible when needed. Proper supporting source documents include
invoices, approved expense/check request, payment advice copy, etc.
3) We recommend the University implement procedures for budget versus actual reporting to include
allowable carryover budgets to accurately reflect remaining balances and to assure that the
University is operating within the constraints of the grant budgets.
4) We recommend that the University maintain adequate supporting source documentation as
evidence that time and effort reporting is accurately completed, reviewed and approved prior to
seeking reimbursement for payroll expenses from the grantor. Federal regulations require that
grant recipients provide reasonable assurance that charges are accurate, allowable, and properly
allocated and that salary and wages charged to federal awards are based on actual rather than
budget estimates. Corrective Action –
The Vice President for Fiscal Affairs has implemented standard operating procedures to ensure
the following: drawdown review and approval, centralize location for all grant related
documents, award letters, invoices, etc. with accessibility for both Business Office and
Sponsored Programs, and grant reconciliation completion date. The SOP will be included in the
update Business Office Procedure document that will completed this fiscal year.
The items identified in the 23-24 audit for grant were also contributed to the down-time of the
ERP as well as having a new team in Sponsored Programs and Business Office reviewing and
restoring the accounting records while trying to ensure accuracy and integrity in the recording
of transactions.
The institution disagrees with in-adequate approval of documents. The ERP is designed to not
process purchase orders without appropriate approvals. All requisitions are approved by the
area Vice President with any transactions $10,000 and over requires the signature of the
President.