Finding Text
U.S. Department of State
Professional & Cultural Exchange Programs
Assistance Listing #19.415
Finding 2023-001 (repeat finding 2022-03)
Material Weakness, Material Noncompliance – Reporting
Criteria: The A-102 Common Rule requires that non-Federal entities receiving Federal awards establish and maintain internal control designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Adequate segregation of duties provided between performance, review, and recordkeeping of a task is a control activity which will reasonably ensure compliance with Federal laws, regulations, and program requirements.
Also, 2 CFR 200.302 requires that non-federal entities must provide for the accurate, current, and complete disclosure of financial results for each Federal award or program in accordance with the reporting requirements set forth in 2 CFR section 200.328. Due dates for reporting are also explicitly noted in the grant award documents. Federal Financial Reports require the entity to report federal expenditures, cash draws, and recipients share of program costs.
Condition: Internal control over federal financial reports could not be readily substantiated. Federal financial reports were not submitted timely and activity reported was not representative of actual federal expenditures for the period.
Questioned Costs: None noted as amounts appear to be under reported.
Context: The Flex award federal financial report was due October 31, 2023. Submission date of the Flex award federal financial report was January 17, 2024. Expense amount and cost share amount reported was not supported by underlying accounting records. The Yes award federal financial report was due October 31, 2023. Submission of the Yes award federal financial report was January 17, 2024. Expense amount and cost share amount reported was not supported by underlying accounting records.
Effect: By not submitting reports timely, the Organization is not in compliance with reporting requirements and may risk losing funding. By reporting inaccurate federal expense and cost share amounts, the Organization may not be able to readily prevent, detect, and correct potential errors in reporting. Therefore, the Organization may be incorrectly reimbursed for expenditures under the program requirements.
Cause: Current processes do not include a consistent method of preparing and submitting federal financial reports to ensure compliance with reporting requirements.
Recommendation: The Organization should improve written policies & procedures to ensure that reports are submitted timely, ensure reports contain accurate and complete financial information related to the reporting period, and to ensure compliance with reporting requirements. Management’s Response: Management considers this finding resolved as of August 2024. In September of 2023, the prior finance manager at Greenheart left the company abruptly without notice. At the time, there were no other staff who were exposed to the grants or could complete the FFR report. Subsequently, Greenheart hired Athena Admin services to manage their finance function. The FFR reports were not filed until January 17, 2024, as Athena Admin needed time to unwind what was happening within the finance department and with the grants. Additionally, the remaining team did not have access to the portal where the filing would take place and had to take administrative steps to gain access to the portal.
In 2023, as was done in prior years, there was not a multi-level approval for filing Federal Financial Reports. After the September 2023 staffing changes, the Finance Director and the Accounting Manager reviewed the FFR reports prior to filing. The Finance Director provided verbal approval to file. For all reports going forward, Greenheart will document approval of filing via email exchanges from the Accounting Manager to the Director of Finance