Finding Text
ALN 21.027 Finding #2024‐005 Insufficient Accounting to Track Federal Grant Expenditures Repeat Finding: No Condition: The Organization did not maintain accounting records that sufficiently tracked expenditures relating to the federal program. Instead, federal program expenditures were co‐mingled with all other organizational expenditures. As a result, the Organization was unable to readily identify the federal share of costs or demonstrate that the costs charged were allowable under the terms of the award. Criteria: Per 2 CFR 200.302, non‐federal entities must maintain financial management systems that provide for: · Accurate, current, and complete disclosure of financial results of each federal award; · Records that identify adequately the source and application of federal funds; and · Effective control and accountability for all funds, property, and other assets. These requirements include maintaining accounting records that segregate federal program expenditures from non‐federal activity to ensure compliance with applicable statutes, regulations, and terms of the award. Cause: The Organization did not implement accounting controls and procedures to establish separate accounts or cost centers for federal program expenditures. Effect: Because federal program expenditures were not separately tracked, there is an increased risk of: · Unallowable or unsupported costs being charged to the program, · Inaccurate reporting on the Schedule of Expenditures of Federal Awards (SEFA), and · Noncompliance with Uniform Guidance financial management standards. Questioned Costs: None noted. Perspective Information: The condition affected one of the Coronavirus State and Fiscal Recovery – ARPA grants, ALN 21.027, which accounted for $153,653 of federal expenditures for 2024. Recommendation: We recommend that the Organization implement an accounting system that separately tracks federal program expenditures, either through distinct general ledger accounts, cost centers, or project codes. The system should allow management to readily identify federal expenditures, prepare accurate SEFA reporting, and demonstrate compliance with federal requirements. Reporting Views of Responsible Officials: The Organization agrees with the finding. The Organization is in process of implementing a project‐based ledger and procedures to ensure federal expenditures are properly coded so they are readily identifiable.