Finding 39133 (2022-002)

FINDING 2022-002 Condition: The Organization filed some of its SF-425 Federal Financial Reports with inaccurate expenditure amounts. The amounts did not agree with the Organization?s grant expense tracking system. The auditor discovered the inaccurate reports when testing the grant revenue for significant federal awards as part of the financial audit. The inaccurate reports were associated with at least two of eight federal awards spent during 2022 but were not associated with the major program that was tested. The inaccurate reports typically showed expenditures in an amount equal to the total award pro-rated equally on a quarterly basis over the award period, instead of actual expenditures. In some cases, this resulted in the SF-425 reporting more expenditures than actually incurred. Some of the dates were also inaccurate or did not get updated properly. Criteria: The Uniform Guidance (2 CFR section 200.328) addresses requirements regarding financial reporting. The Organization?s federal award contracts typically require the SF-425 report to be filed quarterly and that the report be true, complete, and accurate. Cause: The Organization inadvertently had some typographical errors in the report. There was also confusion regarding how to accurately complete the report. Effect: The Organization filed inaccurate SF-425 Federal Financial Reports for some of its federal awards. This did not directly affect the major program that was tested during the audit but is considered a significant deficiency in internal control over compliance, particularly compliance related to reporting, for federal awards. It is also considered to be noncompliance with federal award programs that were not tested as major programs. No adjustment to the financial statements was required. Recommendation: The Organization should reevaluate its procedures and controls regarding federal financial reporting, particularly the accuracy of the reporting, to ensure proper compliance. Views of Responsible Officials and Planned Corrective Actions: The Organization agrees with the finding and plans to carry out the noted recommendation.