Finding Text
Criteria: As required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), the auditee is responsible for the preparation of a complete and accurate schedule of Expenditures of Federal Awards for the period covered by the auditee's financial statements, which must include total federal awards expended. The total federal awards expended should include both expense transactions associated with awards including grants and the receipt or use of program income. Condition: The lack of internal accounting control prevented management from identifying information necessary to prepare the Schedule of Expenditure of Federal Awards in a complete and accurate statement. Cause: Management has not implemented procedures to identify the nature of receipts recorded on a cash basis from grantor and contract entities to determine the component federal source of funding. The lack of such procedures in turn did not allow for proper identification of the expenditure of federal assistance to be reported in the schedule of expenditures of federal awards. Effect: Significant additional audit procedures were required to identify the nature of receipts recorded and determining if such receipts were supported by an accounting of expenditures attributed to federally assisted allowable activities and costs. Questioned cost: None identified Recommendation: We recommend that management implement controls to ensure that federal assistance received as direct or indirect support are identified as attributed to the financial reporting period. Further, management must implement procedures to ensure that federal award expenditures are identified relative to expenses incurred during the financial reporting period in the determination of allowable costs charged to federally assisted programs. Unexpended funds should be reflected as deferred revenue and excluded from revenue. Ensuring that management staff responsible for financial statement preparation collaborate to produce accurate accounting records and financial reports. Ensuring the prescribed controls and resources to prepare and review the financial statements and schedules result in accurate reporting in a timely manner.