Finding Text
Finding 2024-002 - Material Weakness: Allowable Costs/Cost Principles
Idenfication of federal program: Assistance Listing No. 93.493 - Congressional Directives
Criteria or specific requirement: Section 200.403(e) of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards requires that "(e) Be determined in accordance with generally accepted accounting principles (GAAP)".
GAAP does not allow reconding of the expenditure until the expense is incurred. In addition, Section 200.502(a) of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards required that "The determination of when a Federal award is expended must be based on when the activity related to the Federal award occurs".
Condition: Expenditures were included on the 2024 Schedule of Expenditures of Federal Awards, however, the expenditures were not incurred until 2025.
Cause: Drawdown on reimbursement requests were submitted to the grantor prior to the System incurring qualifying expenditures.
Effect or potential effect: This resulted in material non-compliance with the allowable costs/cost principles requirement for the grant program. The expenditures included on the 2024 Schedule of Expenditures of Federal Awards was overstated.
Questioned cost: $92,130 known. The 2024 Schedule of Expenditures of Federal Awards has been corrected for this finding.
Context: The finding is considered systemic in nature.
Recommendation: We recommend that the System personnel administering the grant program comply with the System's established process, whereby qualifying expenditures are incurred prior to requesting reimbursement from the grantor.
Views of responsible officials: The System concurs with this finding. See page 52 for corrective action plan.