Finding Text
Improper Period Recognition of SEFA Expenses Finding Type. Immaterial Noncompliance/Significant Deficiency in Internal Control over Compliance (Allowable Costs/Cost Principles). Program. Coronavirus State and Local Fiscal Recovery Funds; U.S. Department of Treasury; Assistance Listing Number 21.027; Award Number SLFRP0127: IIA Grant passed through Michigan Center for Adult College Success. Criteria. Under the accrual basis of accounting, an expense is reported in the period in which it is incurred, regardless of when it is paid, as specified in 42 CFR 413.24(b)(2). Condition. During our testing of compliance and related controls, we identified instances where expenses covering service periods extending beyond the fiscal year under audit were recorded in full rather than prorated for the portion incurred during the fiscal year. This resulted in an initial overstatement of expenses reported on the Schedule of Expenditures of Federal Awards (SEFA). Cause. The College recorded expenses based on payment date rather than the period incurred. Effect. Initial SEFA amounts were not accurately stated in accordance with accrual accounting requirements. Questioned Costs. No questioned costs were identified as a result of this finding, inasmuch as our testing did not reveal any unallowed costs. Recommendation. We recommend the College implement procedures to ensure expenses are recorded in the proper period in accordance with GAAP and Uniform Guidance requirements. View of Responsible Officials. Management agrees with this finding and has prepared a Corrective Action Plan.