Finding 1218927 (2025-002)

Finding No.: 2025-002 Federal Agency: U.S. Department of Commerce AL No. and Title: 11.307 Economic Adjustment Assistance Federal Award No.: 07 79 07557 Area: Reporting Criteria: The recipient shall prepare the Federal Financial Report (FFR) or SF-425 and report key line items based on the following FFR instructions: FFR No. Reporting Item Instructions 7 Basis of Accounting (Cash/Accrual) Specify whether a cash or accrual basis was used for recording transactions related to the award(s) and for preparing this FFR. Accrual basis of accounting refers to the accounting method in which expenses are recorded when incurred. For cash basis accounting, expenses are recorded when they are paid. 10a Cash Receipts Enter the cumulative amount of actual cash received from the Federal agency as of the reporting period end date. 10b Cash Disbursements Enter the cumulative amount of Federal fund disbursements (such as cash or checks) as of the reporting period end date. Disbursements are the sum of actual cash disbursements for direct charges for goods and services, the amount of indirect expenses charged to the award, and the amount of cash advances and payments made to subrecipients and contractors. For multiple grants, report each grant separately on the FFR Attachment. The sum of the cumulative cash disbursements on the FFR Attachment must equal the amount entered on Line 10b, FFR. 10e Federal Share of Expenditures Enter the amount of Federal fund expenditures. For reports prepared on a cash basis, expenditures are the sum of cash disbursements for direct charges for property and services; the amount of indirect expense charged; and the amount of cash advance payments and payments made to subrecipients. For reports prepared on an accrual basis, expenditures are the sum of cash disbursements for direct charges for property and services; the amount of indirect expense incurred; and the net increase or decrease in the amounts owed by the recipient for (1) goods and other property received; (2) services performed by employees, contractors, subrecipients, and other payees; and (3) programs for which no current services or performance are required. Do not include program income expended in accordance with the deduction alternative, rebates, refunds, or other credits. (Program income expended in accordance with the deduction alternative should be reported separately on Line 100.) 10j Recipient Share of Expenditures Enter the recipient share of actual cash disbursements or outlays (less any rebates, refunds, or other credits) including payments to subrecipients and contractors. This amount may include the value of allowable third party in-kind contributions and recipient share of program income used to finance the non-Federal share of the project or program. Note: On the final report this line should be equal to or greater than the amount of Line10i. Finding No.: 2025-002, continued Federal Agency: U.S. Department of Commerce AL No. and Title: 11.307 Economic Adjustment Assistance Federal Award No.: 07 79 07557 Area: Reporting Condition: The University prepared the two semi-annual FFRs required to be submitted during the fiscal year ended September 30, 2025 using cash basis of accounting. However, the University inadvertently selected accrual basis of accounting when it filled out the FFRs. Below are the key line items in the semi-annual reports that differ from amounts per underlying accounting records and are not in accordance with the FFR instructions: Item No. Reporting Period Ended Line Item Per SF-425 Per Accounting Records (Cash Basis of Accounting) Over(under)Reported 1 09/30/2024 Cash receipts $2,396,870 $1,259,328 $1,137,542 Cash disbursements $2,771,842 $1,634,300 $1,137,542 2 03/31/2025 Cash disbursements $4,251,682 $4,828,060 $(576,378) Federal share of expenditures $4,251,682 $4,828,060 $(576,378) Recipient share of expenditures $2,959,350 $3,360,533 $(401,183) Cause: In reporting cash receipts and disbursements, the University reported both local and federal share amounts when only the federal share was required to be presented, as prescribed by FFR requirements, when reporting financial activity. In reporting expenditures, the University did not use appropriate transaction dates reflected in the underlying accounting records that align with the cash basis of accounting. Effect or potential effect: The University did not report accurately some of the key line items of the FFR. Finding No.: 2025-002, continued Federal Agency: U.S. Department of Commerce AL No. and Title: 11.307 Economic Adjustment Assistance Federal Award No.: 07 79 07557 Area: Reporting Questioned costs: $0 Context: We tested seven financial reports and four performance reports submitted by the University during fiscal year ended September 30, 2025. Of 56 key line items tested, 2 (4%) key line items from the FFR for the reporting period September 30, 2024 differ from amounts per underlying accounting records and not in accordance with the FFR instructions. However, the errors were corrected by the University in the subsequent FFR. Of 56 key line items tested, 3 (or 5%) key line items from the FFR for the reporting period March 31, 2025 differ from amounts per underlying accounting records and are not in accordance with the FFR instructions. Identification as a repeat finding, if applicable: Not applicable. This is not a repeat finding. Recommendation: The University should revisit its internal controls and procedures in place over the preparation of the FFR in accordance with the underlying accounting records and FFR instructions. The University should prepare the FFR consistent with the elected accounting policy when preparing the form. Views of responsible officials: The University agrees with the finding. See Corrective Action Plan. Conclusion: The views of responsible officials do not indicate disagreement with our finding.