Finding Text
Finding 2024-001 (ACFR Finding 2024-001)
Compliance Finding - Reporting
Education Stabilization Fund
ALN: 84.425U
FAIN: S425U210027
Grantor Agency: U.S. Department of Education
Pass-Through Agency: State Department of Education
Criteria: The Uniform Guidance requires financial reports to be accurate, complete, and supported by underlying accounting records. Additionally, the granting agency also requires that expenditures reported align with accounting records to ensure proper reporting of federal funds.
Statement of Condition: The Education Stabilization Fund (ESF) final reports submitted to the oversight agency did not reconcile to the underlying accounting data maintained by the District. Specifically, discrepancies were identified between reported expenditures and the general ledger, including a $125,463 overstatement of expenditures. This amount was recorded by the District as a due to grantor in the Special Revenue Fund.
Context: During our testing of Federal Award Programs, we audited the ESF final reports to determine compliance with the reporting requirement. Our testing included reviewing and reconciling the individual grant final reports to the underlying accounting data. Auditors reviewed nine individual grant final reports noting that three of the reports did not reconcile to the underlying accounting data.
Cause and Effect: The discrepancy occurred because District staff did not perform a thorough reconciliation of expenditures prior to submission. Additionally, staff turnover contributed to the issue. Failure to reconcile the underlying accounting data increases the risk of inaccurate financial reports, which could result in noncompliance with grant requirements. This could lead to questioned costs, a loss of credibility with oversight agencies, or potential future funding restrictions.
Questioned Costs: None.
Recommendation: We recommend that the District develop and require a formal reconciliation process to ensure all financial reports align with underlying accounting records before submission, provide additional training to finance staff on reconciliation procedures and grant reporting requirements, enhance supervisory review process to identify and correct discrepancies prior to report submission, and periodically review grant reporting policies to ensure alignment with applicable regulations.
Views of Responsible Officials: District management concurs with the finding and has developed a corrective action plan in response to the recommendations above and has begun to take action to address the finding.