Finding 33603 (2022-001)

Significant Deficiency Repeat Finding

Requirement

Questioned Costs

Year

2022

Accepted

2023-07-05

Audit: 24109

Organization: New York Association on Independent Living, Inc. (NY)

Auditor: Cusack & Company CPAS LLC

AI Summary

Core Issue: Grant expenses were incorrectly classified as administrative costs without budget approval.
Impacted Requirements: Proper matching of revenues and expenses to the correct period was not achieved.
Recommended Follow-Up: Management should create procedures for fair cost allocation and establish a review process.

Finding Text

Criteria: The allocation of direct and indirect costs of grants should be reasonable and fair. Condition: The allocation of grant expenses, for which budget approval is pending, were improperly included as administrative expenses and no accrual of grant revenue was recorded. Cause: Allocation system was flawed. Effect: The matching of revenues and expenses to the proper period was not accounted for properly. Recommendation: We recommend that management develop and implement procedures to allocate direct and indirect costs fairly, and to provide a review process for the same.

Corrective Action Plan

We have revised our expense allocation system so that grant expenses, for which budget approval is pending, are now allocated to a separate cost center by grant and that the appropriate revenue accrual is made and reversed when the actual billing is made. Additionally, we will require that all expenses be allocated, so that our report of allocated revenue and expenses will be equal the trial balance, and a procedure will be implemented to verify that reconciliation monthly.

Other Findings in this Audit

610045 2022-001

Significant Deficiency Repeat

Programs in Audit

ALN	Program Name	Expenditures
93.791	Money Follows the Person Rebalancing Demonstration	$6.26M
93.261	National Diabetes Prevention Program: Preventing Type 2 Diabetes Among People at High Risk	$211,718