Finding Text
2024-01 Grant and Contract Balances
Criteria: The Council should have accurate grant-related balances with supporting documentation
that substantiates their valuation.
Condition: During our audit we found that the asset and liability balances related to grants and
contracts were not being regularly reconciled to supporting documentation. In order to gain
assurance as to the accuracy of these balances we were required to complete a detailed analysis of
every one of the funds of the Council. We discovered numerous misstatements of grant related
balances, three of which were over $200,000 and therefore material to the financial statements. We
found that month end journal entries were entered and not reversed, reversed in incorrect amounts,
and even posted backwards. We also found multiple instances where year end accruals and deferrals
were not made.
Cause: These misstatements were caused by human error and the lack of a properly designed review
process to catch such errors. There was no effective review of month end journal entries and reversals
to ensure they were entered and reversed correctly. Additionally, there was not a regular process to
reconcile grant and contract balances to the accounting software.
Effect: The Healthy Start North Central Florida Medicaid Waiver Fund’s revenues were understated
by approximately $237,000 and expenses overstated by approximately $162,000. These material
misstatements were corrected with audit adjustments netting approximately $399,000. This fund
experienced the greatest impact of these errors, but numerous other funds experienced posting
errors of smaller magnitude. These errors caused our firm to spend substantially more time than
projected to complete the audit, delaying the audit’s completion.
Recommendation: We recommend the following actions
1. A strategic assessment of the finance department’s staff including an evaluation of
competencies, accounting structures, and whether adjustments in staffing may be
necessary to restore confidence in financial reporting.
2. Implementation of a regular process to reconcile grant and contract balances to the
accounting software.
3. Document year end grant expenses which were not billed in the fiscal year but will be billed
and reimbursed in the next period and therefore require a revenue accrual.
4. Create a process to review reimbursement grant funds that show income or loss and
complete adjustments to write off non-reimbursable expenses and defer unspent funds
accordingly.
5. Changing the month end accrual process to something less error prone. The current method
of posting monthly entries and reversals clutters up the accounting records with 24
unnecessary transactions in each accrual account, making it difficult to analyze.