Finding 375833 (2021-003)

Material Weakness

Requirement

Questioned Costs

Year

2021

Accepted

2024-03-13

Audit: 294918

Organization: California Asian Pacific Chamber of Commerce (CA)

Auditor: Richardson & Company LLP

AI Summary

Core Issue: The Chamber billed the Department of Commerce for grant expenses that were not properly supported by accounting records, leading to potential overbilling.
Impacted Requirements: The Chamber failed to perform necessary reconciliations between grant expenses and revenues, violating 2 CFR 200.400 regarding proper documentation and cost allocation.
Recommended Follow-Up: Implement a system to ensure all grant-related expenses are accurately recorded and reconciled with billed amounts to prevent future discrepancies.

Finding Text

Finding 2021-003: Material Weakness and Questioned Cost – Grant Claim Support Federal grantor: Department of Commerce Condition: The Chamber’s expenditure detail for the grant funded projects do not support the amounts billed to the Department of Commerce. The amounts billed were more than the general ledger detail supported. Criteria: A reconciliation of grant project expenses to the grant revenue billed should be performed. The supporting documentation of any reconciling items should be maintained with the grant bills. Also, 2 CFR 200.400 states that accounting practices of the entity be consistent with cost principals required under the CFR and support the accumulation of costs and provide adequate documentation to support costs charged to the Federal award. Cause: The Chamber billed costs to the grant that were not allocated in the accounting system to that grant and a reconciliation was not performed comparing the grant billings to the expense detail. Effect: The expenses billed to the grant may not be correct. Our reconciliation of these expenses disclosed an overbilling to the grant of approximately $2,500. Recommendation: The Chamber needs to ensure that expenses to be reimbursed by federal grant funds are recorded in the class code in the accounting system for that grant so that federal grant revenue in the accounting system match the expenses allocated to that grant. The Chamber needs to include in their year-end reconciliations a comparison of grant revenue and expense and ensure they match or can be reconciled. Management’s Response: Management’s response to the finding is discussed in the Corrective Action Plan.

Corrective Action Plan

Description of Finding: Expenditure detail does not support the amounts billed Statement of Concurrence or Nonconcurrence: The California Asian Pacific Chamber of Commerce (CalAsian) agrees with the finding. Corrective Action: CalAsian acknowledges the serious nature of this finding and the potential for damage to relationships with the grantors and Federal entities. The Interim Controller and Director of Finance are working to secure an ERP system which will allow for better cost collection, reporting and reviews of the grant-related expenses for accuracy, reliability, and reconciliation. Subcontractor invoices will be required to provide specific information related to the grant, scope of work and any other pertinent details for proper charging in the accounting system. Detailed paper timesheets will be provided in the interim for all employees to ensure compliance with the requirements and provide proper support for all grant costs. Monthly reviews by the Project Directors/Managers plus Accounting will be performed to identify any potential cost charging issues and corrective action(s) required. Name of Contact Person: Ryan Fong, Director of Finance, 916-446-7883, rfong@calasiancc.org Pat Fong Kushida, President & CEO, 916-446-7883, patfongkushida@calasiancc.org Projected Completion Date: March 2024 for detailed paper timesheets, December 2024 for ERP system

Other Findings in this Audit

375831 2021-001

Material Weakness
375832 2021-002

Material Weakness
375834 2021-004

Significant Deficiency
952273 2021-001

Material Weakness
952274 2021-002

Material Weakness
952275 2021-003

Material Weakness
952276 2021-004

Significant Deficiency

Programs in Audit

ALN	Program Name	Expenditures
11.802	Minority Business Resource Development	$352,881
20.910	Assistance to Small and Disadvantaged Businesses	$133,758
11.805	Mbda Business Center	$107,993