Finding Text
U.S. Department of State
Professional & Cultural Exchange Programs
Assistance Listing #19.415
Finding 2023-004
Material Weakness, Material Non-compliance – Matching
Criteria: 2 CFR 200.306 requires cost sharing to be verifiable from a non-federal entity's records.
Condition: Cost sharing amounts were not readily verifiable.
Questioned Costs: Approximately $69,000 in adjustments were made in 2023 to recapture cost share amounts that occurred in a previous period(s).
Context: Adjustments were made to capture cost share expenses for both current and prior periods, which were not previously tracked, which led to expense accounts in the current year with a credit balance, indicating cost share amounts could not be readily substantiated by underlying source documentation.
Effect: By not maintaining adequate and consistent documentation for cost share amounts, the Organization may not be able to readily prevent, detect, and correct potential errors in matching. The Organization must maintain written records to support all allowable costs which are claimed as being its contribution. Such records are subject to audit. In the event the Organization does not provide the minimum amount of cost sharing as stipulated in the Organization’s approved budget, the Department of State’s contribution may be reduced in kind.
Cause: Current processes do not include maintaining adequate documentation to track and record cost share amounts.
Recommendation: The Organization should improve policies & procedures to document how cost share amounts are tracked in the accounting system to ensure amounts are verifiable.
Management’s Response: Management considers this resolved as of August 2024. For 2023 and prior, there were no cost sharing amounts booked to the General Ledger. When applicable, cost share was calculated prior to a drawdown by reducing a drawdown request by any necessary cost share commitment. For 2023, Greenheart made several one-time adjustments to move costs to a new cost share account in the general ledger. This way, Greenheart can track total cost share.
As previously stated, Greenheart did not previously allocate cost sharing items to a cost sharing account in the General Ledger. In 2024, a new template was created for grant expense submissions which identifies Cost Share coding from the time that a payment request is made. The grants team is responsible for completing this file and identifying how much of any expense incurred should be considered cost share. This approach allows for supporting documentation to be available for all cost share items and eliminates the need for adjusting journal entries to break out cost share.