Finding 481028 (2022-001)

Significant Deficiency
Requirement
C
Questioned Costs
-
Year
2022
Accepted
2024-08-13
Audit: 317146
Auditor: Hoskins & CO PC

AI Summary

  • Core Issue: The College inaccurately recorded grant revenue, leading to an overstatement of total revenue by $578,963.
  • Impacted Requirements: Revenues must be recorded in the period they are earned; improper reconciliation caused duplication of expenses and revenue.
  • Recommended Follow-Up: The College should enhance its policies and controls for account reconciliations and reviews to prevent future errors.

Finding Text

Identification and recording of revenues and expenses Criteria Revenues should be recorded in the period in which they are earned. Condition The College did not properly record earned grant revenue and related deferred revenue liabilities. Cause Improper reconciliation and review of revenue and related deferred liabilities allowed expenses that had previously been included in the schedule of expenditures and earned revenue to be duplicated. Effect Total revenue overstated by $578,963. This was the combination of Title IIIB revenue overstated by $797,154 and related deferred revenue liability understated by the same and FUTURE revenue understatement by $218,191 and related accrued asset by the same. Recommendation We recommend the College review and improve its policies, procedures, and controls related to the account reconciliations and review.

Corrective Action Plan

The College does not dispute this finding. The finding pertains to the College’s efforts to renovate its historic library to make it more accessible and user-friendly. To fund the project's initial phase, the renovations required the aggregation and carry-over of Title IIIB funds over multiple fiscal year periods. Before the commencement of construction, the Title IIIB program officer was informed of the College’s intent to dedicate the aggregated funds to the project. There was no indication from the Department of Education that such use would be an inappropriate practice. Because no blueprints or other construction documents were available for the mid-1950s era building, the College, and the construction professionals it utilized, anticipated that the project would experience unknown conditions and unanticipated material and equipment supply delays during the construction period that would increase the cost of the project. Some unknown conditions included a significant floor height discrepancy between building sections and extensive rock formations in the excavation area. The recording and reconciliation errors noted by the auditor above reflect the College’s attempt to ensure that it had sufficient cash on hand during the project to meet both anticipated and unanticipated expenses. Additionally, a second phase of the library modernization project involving HVAC, window system, and flooring upgrades was planned even before the beginning of the initial phase of construction. While few of the second-phase improvements were ultimately included in the initial stage, the College has proceeded with the remaining second-phase enhancements, including replacing existing windows and flooring. These items will be expensed in the next quarter (October-December 2022). The College now recognizes that the approach described above is unallowable, and will confine its future drawdowns of federal funds to actual, not speculative, expenditures. The Board will implement the above procedure immediately.

Categories

Reporting

Other Findings in this Audit

  • 481029 2022-002
    Significant Deficiency
  • 1057470 2022-001
    Significant Deficiency
  • 1057471 2022-002
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
84.425 Education Stabilization Fund $4.38M
84.031 Higher Education_institutional Aid $1.83M
84.268 Federal Direct Student Loans $277,272
84.063 Federal Pell Grant Program $162,685
84.007 Federal Supplemental Educational Opportunity Grants $8,808