Finding Text
Finding 2023-006: Federal Financial Reporting (Significant Deficiency)
Information on the Federal Program: ALN 19.663 Global Telecommunications and Emerging
Technology Training
Criteria: The U.S. Department of State requires that USTTI submit a quarterly Federal Financial
Report (FFR), SF-425, in accordance with the quarterly schedule indicated in its grant agreement,
within 30 days following the end of each calendar quarter.
Condition: USTTI filed its FFR's for the fiscal year by the required due dates if there was activity.
However, we noted that the expenditures reported in the quarterly FFR's were not consistent with the
actual expenditures reported in the general ledger due to indirect costs which were incorrectly reported
as direct expenses on the FFR's. We also noted that USTTI incorrectly reported on the accrual basis of
accounting rather than on the cash basis of accounting on the quarterly FFR's.
Cause: Management did not have effective internal controls in place to ensure that the FFR's were
accurately filed and submitted.
Effect: Without established controls over reporting and reimbursement requests, there is a reasonable
possibility that USTTI would not detect noncompliance in the normal course of performing duties and
be able to correct them in a timely manner.
Questioned Costs: None.
Context: Our audit procedures consisted of reviewing the FFR's that were filed and comparing them to
the amounts reported in the general ledger. We consider our sample to be representative of the
population. The condition appears to be systemic in nature.
Identification as a Repeat Finding: Yes. See Finding 2022-05.Recommendation: We recommend USTTI prepare the FFR's based on actual expenditures for each
quarter. Since it is likely indirect rate adjustments may occur after quarter-end, USTTI should make
efforts to ensure these transactions are reflected in the general ledger before preparation of the FFR's,
while still meeting the FFR submission deadlines.