Finding 380911 (2023-006)

Criteria: Expenditures of federal awards must be for allowable costs as outlined in the respective grant agreements and must follow Subpart E, Cost Principles in Title 2 U.S. CFR Part 200, Uniform Guidance. Expenditures claimed for reimbursement during the year should be recorded on the same basis of accounting as the basic financial statements. Condition: Expenditures requested for reimbursement include unallowed amounts based on the budgets in the grant agreements, amounts outside of the grant period and costs unallowed by the Uniform Guidance. Cause: The Organization maintains their books and records on the cash basis of accounting throughout the fiscal year and doesn’t account for accruals until year end. Amounts are being requested that are not a part of the approved budget. Effect or Potential Effect: Claiming unallowable costs can result in having to return the funding or termination of funding. Known Questioned Costs: $18,170 Context: Of expenses tested, the Organization claimed $5,000 of liability insurance for reimbursement which is not a part of the approved budget. Additionally, the Organization requested $12,000 of mortgage payments as rent expense under the grant. There were also $1,170 of expenses that related to months outside the budget period and were not corrected through accrual entries at year end. Amounts reported as known questioned costs correlate to the errors found during the testing of the Schedule of Expenditures of Federal Awards and are reported in total. Reimbursement was requested and received for worker’s compensation and liability insurance which was part of the 2024 fiscal year. Recommendation: The Organization should begin keeping their accounting records on the accrual basis of accounting throughout the fiscal year. This will ensure that costs claimed for reimbursement will only include expenditures applicable to the reporting period. Also, the Organization should review the grant budgets to ensure they are capturing only allowable costs under each grant program and propose budget modifications to the grantor as deemed necessary. Views of Responsible Official(s) and Planned Corrective Actions: See corrective action plan.