Finding Text
Criteria:
2 CFR § 200.303(a) requires a non-federal entity to establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the award.
Condition:
The District posts all costs to its QuickBooks-based general ledger. QuickBooks provides separate financial information for the District’s individual federal awards and other activities. The District also posts all costs to a spreadsheet used to aggregate costs for billing purposes (the “Billing Worksheets”). These Billing Worksheets form the basis of the financial reports to the U.S. Forest Service.
We noted a material discrepancy between the QuickBooks reports and the Billing Worksheets. The District does not have a procedure to reconcile the Billing Worksheets to QuickBooks. We inquired about the discrepancy, but the District was unable to fully explain the difference.
The need for a reconciliation procedure between QuickBooks and the Billing Worksheets was most evident in payroll. Of a population of 37 payroll items, we test 9 individual postings of either wages or fringe benefits. We began testing the sample by recomputing the payroll items and comparing them to the Billing Worksheets with only one very small exception. We then traced these billing items to the SF 270’s with no exceptions. However, when we attempted to trace the proven payroll costs, which were billed to the Forest Service (based on the Billing Worksheets), to QuickBooks (used to draft the Schedule of Expenditures of Federal Awards) and could not match most numbers.
Further, in our non-payroll disbursements testing, we located one small item that appeared to have been paid twice. We noted that a reconciliation procedure between QuickBooks and the Billing Worksheets would likely have located this double billing.
Cause: Had the District used QuickBooks as a base for the billing to the USFS or, alternately, reconciled the Billing Worksheets used to prepare SF 270s to the bank-reconciled, QuickBooks general ledger, the errors identified above likely would not have occurred.
Effect: Costs could be billed to the federal award, which are not allowable because they were not expended.
Repeat Finding: No.
Questioned Costs: No costs are questioned.
Recommendation: We recommend that the District impose a procedure to require that the Billing Worksheets be reconciled to the QuickBooks general ledger on a monthly basis.
Views of Responsible Officials: Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report.