Finding 1116888 (2024-005)

Material Weakness
Requirement
C
Questioned Costs
$1
Year
2024
Accepted
2025-03-28
Audit: 350256
Organization: Hawaii Pacific University (HI)
Auditor: Kmh LLP

AI Summary

  • Core Issue: The University mistakenly drew down funds twice for the same expenditure, violating cash management requirements.
  • Impacted Requirements: Non-compliance with 2 CFR 200.303(a) and 2 CFR 200.305 due to inadequate review processes.
  • Recommended Follow-Up: Revise review procedures to include journal entries and enhance training for staff involved in grant management.

Finding Text

Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.

Categories

Questioned Costs Cash Management

Other Findings in this Audit

  • 540445 2024-004
    Material Weakness Repeat
  • 540446 2024-005
    Material Weakness
  • 540447 2024-004
    Material Weakness Repeat
  • 540448 2024-005
    Material Weakness
  • 540449 2024-004
    Material Weakness Repeat
  • 540450 2024-005
    Material Weakness
  • 540451 2024-004
    Material Weakness Repeat
  • 540452 2024-005
    Material Weakness
  • 540453 2024-004
    Material Weakness Repeat
  • 540454 2024-005
    Material Weakness
  • 540455 2024-004
    Material Weakness Repeat
  • 540456 2024-005
    Material Weakness
  • 540457 2024-004
    Material Weakness Repeat
  • 540458 2024-005
    Material Weakness
  • 540459 2024-004
    Material Weakness Repeat
  • 540460 2024-005
    Material Weakness
  • 540461 2024-004
    Material Weakness Repeat
  • 540462 2024-005
    Material Weakness
  • 540463 2024-004
    Material Weakness Repeat
  • 540464 2024-005
    Material Weakness
  • 540465 2024-002
    Material Weakness
  • 540466 2024-003
    Material Weakness
  • 540467 2024-006
    Significant Deficiency
  • 540468 2024-004
    Material Weakness Repeat
  • 540469 2024-005
    Material Weakness
  • 540470 2024-004
    Material Weakness Repeat
  • 540471 2024-005
    Material Weakness
  • 540472 2024-002
    Material Weakness
  • 540473 2024-003
    Material Weakness
  • 540474 2024-006
    Significant Deficiency
  • 540475 2024-002
    Material Weakness
  • 540476 2024-003
    Material Weakness
  • 540477 2024-006
    Significant Deficiency
  • 540478 2024-002
    Material Weakness
  • 540479 2024-003
    Material Weakness
  • 540480 2024-006
    Significant Deficiency
  • 540481 2024-002
    Material Weakness
  • 540482 2024-003
    Material Weakness
  • 540483 2024-006
    Significant Deficiency
  • 540484 2024-002
    Material Weakness
  • 540485 2024-003
    Material Weakness
  • 540486 2024-006
    Significant Deficiency
  • 540487 2024-002
    Material Weakness
  • 540488 2024-003
    Material Weakness
  • 540489 2024-006
    Significant Deficiency
  • 540490 2024-004
    Material Weakness Repeat
  • 540491 2024-005
    Material Weakness
  • 540492 2024-004
    Material Weakness Repeat
  • 540493 2024-005
    Material Weakness
  • 540494 2024-004
    Material Weakness Repeat
  • 540495 2024-005
    Material Weakness
  • 540496 2024-004
    Material Weakness Repeat
  • 540497 2024-005
    Material Weakness
  • 540498 2024-002
    Material Weakness
  • 540499 2024-003
    Material Weakness
  • 540500 2024-006
    Significant Deficiency
  • 540501 2024-004
    Material Weakness Repeat
  • 540502 2024-005
    Material Weakness
  • 540503 2024-004
    Material Weakness Repeat
  • 540504 2024-005
    Material Weakness
  • 540505 2024-004
    Material Weakness Repeat
  • 540506 2024-005
    Material Weakness
  • 540507 2024-004
    Material Weakness Repeat
  • 540508 2024-005
    Material Weakness
  • 1116887 2024-004
    Material Weakness Repeat
  • 1116889 2024-004
    Material Weakness Repeat
  • 1116890 2024-005
    Material Weakness
  • 1116891 2024-004
    Material Weakness Repeat
  • 1116892 2024-005
    Material Weakness
  • 1116893 2024-004
    Material Weakness Repeat
  • 1116894 2024-005
    Material Weakness
  • 1116895 2024-004
    Material Weakness Repeat
  • 1116896 2024-005
    Material Weakness
  • 1116897 2024-004
    Material Weakness Repeat
  • 1116898 2024-005
    Material Weakness
  • 1116899 2024-004
    Material Weakness Repeat
  • 1116900 2024-005
    Material Weakness
  • 1116901 2024-004
    Material Weakness Repeat
  • 1116902 2024-005
    Material Weakness
  • 1116903 2024-004
    Material Weakness Repeat
  • 1116904 2024-005
    Material Weakness
  • 1116905 2024-004
    Material Weakness Repeat
  • 1116906 2024-005
    Material Weakness
  • 1116907 2024-002
    Material Weakness
  • 1116908 2024-003
    Material Weakness
  • 1116909 2024-006
    Significant Deficiency
  • 1116910 2024-004
    Material Weakness Repeat
  • 1116911 2024-005
    Material Weakness
  • 1116912 2024-004
    Material Weakness Repeat
  • 1116913 2024-005
    Material Weakness
  • 1116914 2024-002
    Material Weakness
  • 1116915 2024-003
    Material Weakness
  • 1116916 2024-006
    Significant Deficiency
  • 1116917 2024-002
    Material Weakness
  • 1116918 2024-003
    Material Weakness
  • 1116919 2024-006
    Significant Deficiency
  • 1116920 2024-002
    Material Weakness
  • 1116921 2024-003
    Material Weakness
  • 1116922 2024-006
    Significant Deficiency
  • 1116923 2024-002
    Material Weakness
  • 1116924 2024-003
    Material Weakness
  • 1116925 2024-006
    Significant Deficiency
  • 1116926 2024-002
    Material Weakness
  • 1116927 2024-003
    Material Weakness
  • 1116928 2024-006
    Significant Deficiency
  • 1116929 2024-002
    Material Weakness
  • 1116930 2024-003
    Material Weakness
  • 1116931 2024-006
    Significant Deficiency
  • 1116932 2024-004
    Material Weakness Repeat
  • 1116933 2024-005
    Material Weakness
  • 1116934 2024-004
    Material Weakness Repeat
  • 1116935 2024-005
    Material Weakness
  • 1116936 2024-004
    Material Weakness Repeat
  • 1116937 2024-005
    Material Weakness
  • 1116938 2024-004
    Material Weakness Repeat
  • 1116939 2024-005
    Material Weakness
  • 1116940 2024-002
    Material Weakness
  • 1116941 2024-003
    Material Weakness
  • 1116942 2024-006
    Significant Deficiency
  • 1116943 2024-004
    Material Weakness Repeat
  • 1116944 2024-005
    Material Weakness
  • 1116945 2024-004
    Material Weakness Repeat
  • 1116946 2024-005
    Material Weakness
  • 1116947 2024-004
    Material Weakness Repeat
  • 1116948 2024-005
    Material Weakness
  • 1116949 2024-004
    Material Weakness Repeat
  • 1116950 2024-005
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
84.268 Federal Direct Student Loans $38.81M
84.063 Federal Pell Grant Program $4.15M
84.031 Higher Education Institutional Aid $866,229
10.237 From Learning to Leading: Cultivating the Next Generation of Diverse Food and Agriculture Professionals $508,876
93.364 Nursing Student Loans $465,512
84.038 Federal Perkins Loan Program_federal Capital Contributions $448,254
84.033 Federal Work-Study Program $314,802
11.417 Sea Grant Support $285,652
84.007 Federal Supplemental Educational Opportunity Grants $228,999
11.609 Measurement and Engineering Research and Standards $220,979
20.205 Highway Planning and Construction $196,719
47.050 Geosciences $156,022
93.264 Nurse Faculty Loan Program (nflp) $126,593
11.427 Fisheries Development and Utilization Research and Development Grants and Cooperative Agreements Program $125,630
93.847 Diabetes, Digestive, and Kidney Diseases Extramural Research $115,877
93.279 Drug Use and Addiction Research Programs $97,809
93.859 Biomedical Research and Research Training $78,312
93.310 Trans-Nih Research Support $61,801
12.431 Basic Scientific Research $60,679
47.083 Integrative Activities $59,173
11.999 Marine Debris Program $57,025
84.325 Special Education - Personnel Development to Improve Services and Results for Children with Disabilities $50,966
47.076 Stem Education (formerly Education and Human Resources) $41,967
93.853 Extramural Research Programs in the Neurosciences and Neurological Disorders $34,534
93.110 Maternal and Child Health Federal Consolidated Programs $22,800
11.454 Unallied Management Projects $22,378
10.200 Grants for Agricultural Research, Special Research Grants $17,470
11.620 Science, Technology, Business And/or Education Outreach $14,310
84.379 Teacher Education Assistance for College and Higher Education Grants (teach Grants) $7,544