Finding Text
Criteria:Current Uniform Guidance (and financial reporting) highlights the importance and requirements for grantees to maintain a system of internal controls surrounding the administration of federal grants which ensure all compliance requirements and the financial reporting related thereto are achieved for each federal program. Condition:The District’s general ledger for fiscal year 2023 did not reconcile with subsequent reporting for the fiscal year 2023 activity reported to the Commonwealth of Massachusetts. Moreover, the Final Reporting associated with the program has not been filed. As a result of our audit procedures, we noted the District understated fiscal year 2023 expenditures reported as expended in the grant by approximately $263,000. We also noted an additional $208,000 of subsequent year expenditures (FY2024) not posted to the grant within the ledger. Cause: The District’s general ledger and underlying grants and associated reporting were not reconciled. Potential Effect: The District’s reporting associated with the program is late. Additionally, the lack of reconciliation and monitoring of the grants with the general ledger allow for material misstatements within the District’s general ledger (financial statements and schedule of expenditures of federal awards) to occur. Misstatements could have an effect upon the decisions made by the users of the financial information. Based upon our procedures and discussion with current personnel, adjusting entries were proposed to correct the identified misclassified. Repeat Finding: This is a new finding in the current year. Auditor’s Recommendation: While the aforementioned program did not have a supplanting restriction, in our opinion, the District should post all financial activity as intended as part of the overall monitoring and grants administration. At minimum, routine reconciliation with grant administration personnel should be performed with the underlying accounting records to ensure adjusting/reclassifying entries (if needed) are posted timely, ensuring the accuracy of the general ledger and financial reports filed with pass-through entities. In our professional opinion, the District should evaluate established grants management policies and procedures and refined as deemed appropriate. Evaluation of established procedures should be incorporated as part of a routine risk assessment program.