Finding Text
2022-008 Grant Expenditures (Material Weakness) Criteria: Title 2 CFR Part 200 §200.400. Accounting practices must support the accumulation costs including maintaining adequate documentation to support costs charged to the Federal award. Title 2 CFR Part 200 §200.302 requires that the financial management system must maintain records that sufficiently identify the amount, source, and expenditure of Federal funds. Condition: Actual grant expenses were not accumulated in the Organization’s accounting system by individual grant and indirect costs were not appropriately applied. As discussed at 2022-006, the Organization prepared grant submissions based on estimates of monthly average expenses to be incurred over the life of the grant as opposed to expenses actually incurred. This led to noncompliance of the grant provisions for reimbursement. Cause: The Organization’s accounting system is not properly designed to accumulate expenses by grant. Policies and procedures were not adequately designed for the appropriate level of oversight to ensure that grant submissions complied with grant agreements. Effect: Submissions for grants reimbursement exceeded actual expenses incurred. In addition, because of the failure to assign expenses to individual grants, there is an increased risk that expenditures could be inappropriately charged to government programs. Questioned Costs: Not determinable at the major program level. Perspective: Pervasive, this was not an isolated incident. Repeat Finding: Yes Recommendation: The Organization’s accounting system should be modified to accommodate expense tracking by individual grant and policies and procedures should be implemented to require direct expenses be assigned to specific grants. A method should be established to allocate indirect costs in accordance with federal regulations. Policies and procedures are also needed to provide appropriate oversight of all grant accounting including reporting. Views of Responsible Officials: Management acknowledges the control weaknesses related to the accumulation of grant expenses and accurate completion of grant reimbursement requests. The Organization has undertaken a review of its policies and procedures, including consultation of an outside accounting firm to implement policies and procedures to properly account for grant expenses and accurately prepared requests for reimbursement.