Finding Text
Condition:
The Organization does not maintain a mapping schedule or other means to efficiently determine that expenses charged to the federal grant represent expenses incurred and paid as reflected in the general ledger.
Criteria:
Controls are not in place to ensure all expenses charged to the grant have been incurred and paid as reflected in the general ledger.
Cause:
The details of federal expenses are maintained outside of the general ledger and there is no efficient means to reconcile to the general ledger.
Effect:
Amounts reported as eligible grant expenses may be incorrect.
Questioned Costs:
N/A
Recommendation:
We recommend that the Organization consider incorporating a chart of accounts specifically used for federal grant expenditures. Alternatively, additional detail could be included in its grant spreadsheet to clearly indicate which expense account was charged in order to agree these amounts to the general ledger. This will allow the entity to ensure the accuracy of its grant reporting in a more efficient manner.
Views of Responsible Officials and Planned Corrective Action:
Management stated that they disagree with the audit finding. Management notes that all expenses are documented in spreadsheets, invoice form, and available for review. However, management indicates that it will begin reclassifying federal grant expenditures in the accounting software. Auditor notes that this is consistent with the auditor’s finding that the entity lacks a means to efficiently determine that expenses charged to the grant are included in the general ledger, and the auditor’s recommendation to consider incorporating a chart of accounts specifically used for federal grant expenditures.