Finding Text
#2023-004 – Major Federal Award Finding – Period of Performance
Nature of Finding: Compliance Finding – Period of Performance and Material Weakness in Internal Controls over Compliance
This is a repeat of prior year finding #2022-004.
Criteria/Condition: A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance. The Organization did not have controls in place to verify that costs were being charged to the award in the correct period of performance.
Questioned Costs: Approximately $19,400
Identification of How Questioned Costs Were Computed: A sample of 40 non-payroll expenditures totaling approximately $110,000 was selected from a population of approximately $175,000 of non-payroll expenditures charged to the major program during the year ending December 31, 2023.
• Of the invoices selected for testing, 4 expenditures were billed during the month of September 2023. All 4 of these expenditures were inappropriately charged to the incorrect grant period. As a result, the questioned costs include all non-payroll expenditures billed in September 2023, which was approximately $15,700.
• Of the 36 remaining invoices selected for testing, 6 other invoices were partially or entirely billed to the incorrect grant period, totaling an additional $2,582 identified error. Questioned costs are estimated by projecting this error identified in the sample tested to the population of non-payroll expenditures billed during the remaining 11 months of the year (excluding September 2023).
Cause/Context: There are not proper controls in place to review invoices and assign them to the appropriate grant period. Seven expenditures out of forty non-payroll related expenditures tested for the grant were for contracted annual services or other costs that partially or entirely related to a separate performance period but was billed in its entirety to the current fiscal year.
Effect: An overstatement of expenditures for the grant was reported in the current year. Reimbursement was sought for expenditures outside of the grant’s period of performance.
Recommendation: We recommend procedures be established for the independent review of the grant period of performance when recording transactions and preparing grant reimbursement requests. Evidence of this review should be documented and maintained.
Views of Responsible Officials and Planned Corrective Actions: MARR will retain a CPA consultant to establish formal written policy documenting significant accounting procedures including but not limited to the independent review of the grant period of performance when recording transactions and preparing grant reimbursement requests. Evidence of the review to be documented and maintained according to the procedures to be implemented.