Finding Text
Enhance internal controls and implementation of enhanced monitoring of grants and overall grants administration Criteria:Established internal controls surrounding financial reporting should emphasize should ensure the importance of processing and monitoring financial activity in a timely manner. This should include, but not be limited to, posting activity to the proper accounts as activity is incurred (through requisition and purchase order processes) and routine monitoring of account balances (including reconciliation with approved grant budgets and related documentation.). Condition and Context: During our current year audit, we noted instances of journal entries being posted to reclassify expenditures from the District’s operational budget to certain grants at year end. In our professional opinion, while adjustments may be required in certain instances, generally, established internal control policies and procedures should ensure that all activity (including grant transactions) is appropriately charged as incurred. This allows for timely and accurate financial reporting. Additionally, grant administrators should work closely with accounting and business office personnel to monitor activity and ensure that it is posted to the proper accounts/grants in a timely manner. Cause and effect:The District has been working to implement corrective action; however, the District has yet to fully implement comprehensive internal control policies and procedures, inclusive of grants administration and monitoring. Improper monitoring of grants in a timely manner has the potential to result in noncompliance; this in turn could have an impact on the District’s financial statements. Perspective Information: There was a similar finding reported in the prior year audit related to enhancement of grants management. Due to the timing of the prior year audit (June 26, 2024), the finding could not be fully addressed by the District for the fiscal year ending June 30, 2024. Questioned Costs: None. Auditor’s Recommendation: We continue to recommend the District review the design and implementation of internal controls surrounding grants management, compliance and reporting. Procedures should ensure all activity within the District’s general ledger is monitored in a timely manner. We recommend additional approval (separate from posting) of the reclassification of activity (non-standard journal entries) and appropriate detail prior to posting within the accounting records. Additionally, such journal entries be posted by one individual (District), via appropriate supervisory we recommend all District established policies and procedures be reviewed on an annual basis to ensure all financial reporting and compliance objectives are achieved. It is important to note that improper monitoring of grants has the potential to result in noncompliance, which in turn could have an impact on the District’s financial statements. We continue to recommend an additional centralized monitoring program be established to ensure the District’s compliance with all federal programs.