Finding 1092098 (2024-004)

Significant Deficiency
Requirement
P
Questioned Costs
-
Year
2024
Accepted
2024-12-18
Audit: 333446
Organization: Northland Foundation (MN)
Auditor: Rsm US LLP

AI Summary

  • Core Issue: The Schedule of Expenditures of Federal Awards was overstated by $529,900 due to misclassification of the Foundation as a subrecipient instead of a beneficiary.
  • Impacted Requirements: This finding violates 2 CFR 200.510(b), which mandates accurate reporting of federal expenditures in financial statements.
  • Recommended Follow-up: The Foundation should enhance internal controls to ensure timely review of grant amendments and verify subrecipient classifications with passthrough entities.

Finding Text

Finding 2024-004 U.S. Department of Treasury Federal Award Year Ending June 30, 2024 COVID-19: Coronavirus State and Local Fiscal Recovery Funds Lack of internal controls over the preparation of the Schedule of Expenditures of Federal Awards Criteria: In accordance with 2 CFR 200.510(b), the auditee must prepare a Schedule of Expenditures of Federal awards for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. Condition: The Schedule of Expenditures for Federal Awards for the year ended June 30, 2024, was initially overstated by $529,900 due to an improper subrecipient verses beneficiary determination for a grant. Cause: While this original grant agreement specified that the Foundation was a subrecipient, the Foundation did not timely review a 2024 grant amendment or obtain further correspondence from the granter that updated the initial subrecipient determination to now identify the Foundation as a beneficiary, resulting in the removal of $529,900 from the Schedule of Expenditures for Federal Awards. Effect or potential effect: Improper reporting of federal expenditures results in errors on the Schedule of Expenditures for Federal Awards and can lead to inaccurate major program determination. In this instance, the error did result in an update to the major program determination. Questioned costs: None. Context: During the audit, we reviewed a July 2024 grant amendment from the grantor that removed a number of the original grant requirements and reclassified the Foundation as a “grantee.” Upon further inquiry with the grantor, it was discovered that the Foundation is no longer considered a subrecipient. Thus, the Foundation is a beneficiary, which resulted in the removal of incurred costs of $529,900 from the Schedule of Expenditures of Federal Awards. Recommendation: To ensure accuracy of the Schedule of Expenditures of Federal Awards, the Foundation should improve the processes and controls around timely identification of potential federal awards, which includes enhancing the review of any grant amendments and timely contacting passthrough entities to verify potential updates to the subrecipient verses beneficiary determination. Views of responsible officials of the auditee: The Foundation agrees with the above finding, and its response is included in the corrective action plan.

Categories

Reporting

Other Findings in this Audit

  • 515656 2024-004
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
21.033 Covid 19 - Community Development Financial Institutions Fund Equitable Recovery Program (cdfi Erp) $300,000
94.017 Americorps Seniors Senior Demonstration Program (fgp) 94.017 $247,563
93.575 Child Care and Development Block Grant $125,200
59.037 Small Business Development Centers $31,953
21.020 Community Development Financial Institutions Program $28,564
21.024 Covid 19 - Community Development Financial Institutions Rapid Response Program (cdfi Rrp) $23,014
93.434 Every Student Succeeds Act/preschool Development Grants $21,358