Finding Text
Finding 2020-008 Noncompliance with Allowable Costs/Cost Principles – Non-Payroll Expenditures Information on Federal Program: Criteria: In accordance with 2 CFR Part 200 (Uniform Guidance), federal grant expenditures must be accurately recorded and supported, and accounting records must clearly reflect gross revenues and allowable expenditures. Grant expenditures should be recorded as expenses and not netted against grant revenue. In addition, recorded expenditures must agree to supporting documentation, including vendor invoices and amounts paid. Conditions: During testing of non-payroll expenditures, the following exceptions were noted: 1) For 4 out of 6 samples tested, grant expenditures were recorded as a debit to the related grant revenue account, resulting in grant revenue being presented net of related expenses. Grant expenditures should be recorded as expenses and not offset against grant revenue. 2) For 1 out of 6 samples tested, the invoice amount and amount paid did not agree to the amount recorded in the detailed listing of expenditures resulting in a difference related to sales taxes that were not included in the recorded expenditures. 3) For 1 out of 6 samples tested, the expense was recorded to an incorrect expense account instead of to the related grant expenditure account, resulting in a reclassifying journal entry. Cause: Management did not have adequate internal controls in place to ensure that grant expenditures were consistently recorded in the proper general ledger accounts and recorded expenditures were reconciled to supporting documentation, including vendor invoices and amounts paid, prior to recording. Section III – Federal Awards Findings and Questioned Costs (Continued) A. Current Year Findings and Questioned Costs – Major Federal Award Program Audit (Continued) Finding 2020-008 Noncompliance with Allowable Costs/Cost Principles – Non-Payroll Expenditures (Continued) Effect or Potential Effect: There is an increased risk that expenditures reported for federal programs may be inaccurate or incomplete, which could impact compliance with federal reporting and allowable cost requirements. Questioned Costs: None. Recommendations: We recommend that management strengthen internal controls by: • Implementing and documenting procedures to ensure grant expenditures are recorded as expenses and not netted against grant revenue. • Strengthening review controls over non-payroll expenditures to ensure amounts recorded agree to supporting documentation, including invoices, sales tax and amounts paid. View of Responsible Officials: Management understands and agrees with the finding and acknowledges the need for improved controls over grant expenditure recording. Corrective actions include: • Implementing procedures to ensure grant expenditures are recorded as expense and not netted against revenue. • Enhancing review controls to verify recorded expenditures agree to invoices, including applicable taxes and payment amounts. • Establishing clear general ledger account mapping for grant related expenditures. • Providing additional staff training on Uniform Guidance cost principles (2 CFR Part 200).