Finding Text
ACCOUNTING FOR GRANTS - MATERIAL WEAKNESS
Federal Program
COVID-19 Education Stabilization Fund (ALN 84.425 C, F, & M) and Student Financial Assistance Cluster (ALN 84.007, 84.033, 84.063, and 84.268)
Criteria
The College receives grants from a variety of funding sources throughout the year. At year end, grants should be reconciled for any expenses that have been incurred where reimbursement has yet to be received to properly reflect revenues and expenses.
Condition/Context
The grants accounts receivable account was not reconciled at year end to properly reflect grant activity. It was noted that grant funds drawn down from the G5 system in April, May, and June 2023 were not recorded in the general ledger. When the College made a journal entry to correct the missing deposits, a clearing account was used not the grants accounts receivable account where the entry should have been posted.
Cause
The College did not have a written year end closing process for grants or cash accounts. The lack of written procedures, the turnover within the grant accounting staff, and lack of proper oversight from management did not allow grants to be properly accounted for.
Effect
Material entries were needed to correctly account for drawdowns made before year end and amount owed after year end. Certain grants were also difficult to manage within the period of availability due to either the inadequacy of accounting for expenses or the lack of timely invoices for drawdowns performed to cover expenses that were already incurred.
Questioned Costs
None.
Repeat Finding
No.
Recommendation
Proper accounting for grants is an integral function for the College. The timely and accurate reporting of expenses and the related cash receipts allows for proper grant management of available funds to be expended in the period of availability. The College should review the responsibilities of the staff within the accounting department to ensure that an individual is dedicated to maintaining accurate grant reconciliations and in contact with the various grant managers. The College also should ensure proper oversight is in place to oversee the grant reporting process.
Management Response
See corrective action plan included in this report package.