FAC Explorer

Finding 38974 (2022-002)

Significant Deficiency
Requirement
B
Questioned Costs
$1
Year
2022
Accepted
2023-09-28
Audit: 37998
Organization: Northeast Indiana Innovation Center, Inc. and Affiliates (IN)
Auditor: Capincrouse LLP

AI Summary

  • Core Issue: The Organization charged the grant for expenses that were not actually paid, leading to a lack of clear documentation linking expenses to reimbursements.
  • Impacted Requirements: This violates federal regulations CFR 200.302 and 200.403 regarding proper tracking and allocation of grant funds.
  • Recommended Follow-Up: Implement a general ledger project designation for better tracking of grant funds and ensure program beneficiaries are paid or funds returned to the SBA.

Finding Text

Unallowable Costs Significant Deficiency U.S. SMALL BUSINESS ASSOCIATION (SBA) ALN #: 59.077 Federal Award Identification #: COVID-19 Community Navigator Pilot Program (SBAHQ22CNP0036) Condition: The Organization charged and was reimbursed for grant expenses that were not paid. There also is not a clear trail from source document to expenditures charged to the federal grant. Criteria: CFR 200.302, 200.403 Questioned Costs: $17,984 Context: Out of $253,139 of non-payroll expenses charged to the grant and reimbursed, $17,984 was not yet paid to program beneficiaries. Cause: Financial management system is not adequate to track grant funds and expenses from source document to grant reimbursement. Effect: Potential for over charging the grant for expenses not allocable to the program or charging the same expense to multiple funding sources. Identification as repeat finding, if applicable: Not Applicable Recommendation: We recommend that the Organization track grant funds through a general ledger project designation to provide an audit trail from source document to grant revenue and allowable grant expenditures. We also recommend that the program beneficiaries be paid or the funds reimbursed be returned to the SBA. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding. See corrective action plan.

Corrective Action Plan

Unallowable Costs Planned Corrective Action: This finding occurred due to the fact that hours entered on a form-stack form by several contractors on our Community Navigator Program with the SBA were charged to the SBA before invoices were received from the contractor for those hours. This led to payment being received prior to the contractor being paid. Although this was officially approved by the SBA prior to submitting the quarterly bill for our services under the contract, we recognize that this is not how it should be done according to government and accounting rules. Thus, we will undertake the following corrective action to ensure that this does not occur again. 1. We will ensure that invoices for these identified charges are received from the contractors and the contractors are paid the full amount owed. 2. We will ensure that reimbursable expenses are not charged on government contracts and grants until they are actually paid or spent. This does not include expenses that are allowed by contract to be billed in advance. 3. Both the lead accounting person and the Compliance Officer will review and authorize all charges for allowability on all programs prior to submission of a request for payment. 4. A periodic review of the process and process adherence will be conducted by the finance committee of the Board of Directors. Person Responsible for Corrective Action Plan: Jamie Thomas, Compliance Officer Anticipated Date of Completion: October 15, 2023

Categories

Questioned Costs Allowable Costs / Cost Principles

Other Findings in this Audit

  • 615416 2022-002
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
59.077 Covid-19 Community Navigator Pilot Program $476,804
59.008 Covid-19 Disaster Assistance Loans $350,000
59.043 Women's Business Ownership Assistance: Activating Talent, Opportunity and Potential in Rural Women-Owned Businesses $170,069
59.043 Women's Business Ownership Assistance Renewal $125,367
11.020 Cluster Grants $98,938
19.040 Public Diplomacy Programs $34,093