Finding Text
Finding 2024-007 Pass-Through Entity: Federated States of Micronesia National Government Federal Agency: U.S. Department of the Interior Assistance Listing: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D24AF00340, D24AF00341, D23AF00263, D24AF00335 Area: Reporting Questioned Costs: $11,237 Criteria: Article VI, section 1(b)(i) of the FSM-U.S. Fiscal Procedures Agreement requires effective internal control over accurate and complete federal financial reporting. Condition: All four SF-425 reports tested differed from the underlying accounting records. Federal cash receipts for D23AF00263 differed by $99,526 and could not be recalculated from contemporaneous support. Reported disbursements exceeded accounting records by an aggregate $663,986. Of this amount, $11,237 related to a duplicate obligation that should have been reversed; $652,749 resulted from allowable cost-of-living reclassifications recorded after the reports were filed, as follows:Condition: (Continued) a) $99,526 - The federal cash receipts difference could not be recalculated or traced to the general ledger. No affected award expenditure or receipt was identified; therefore, no questioned costs are reported for this difference. b) $11,237 - Reported federal cash disbursements included obligation 386833, the original version of a corrected transaction that should have been reversed. c) $652,749 - These differences resulted from allowable cost-of-living reclassifications between the general and sector funds recorded after the SF-425s were filed. The underlying expenditures remained allowable; therefore, no questioned costs are reported. Cause: The State did not retain contemporaneous SF-425 support, did not detect the duplicate obligation, and did not timely reconcile post-filing payroll reclassifications to filed reports. Effect: The State did not comply with applicable reporting requirements. The $11,237 is questioned as an unallowable expenditure charged to the grant which was reported on the SF-425. Recommendation: The State should retain each filed SF-425, certification, summary report, transaction-level detail, and reconciliation as one contemporaneous reporting package. Require supervisory review of the reconciliation and investigate duplicate or unreversed transactions before submission. Identification as a Repeat Finding: Not applicable View of Responsible Officials: The State’s response and corrective action plan addressing this finding is included in the accompanying corrective action plan.