Finding Text
Statement of Condition:The organization incorrectly reported federal cash-cash disbursements, cash on hand, total federal funds authorized and federal share of expenditures twice in their submitted FY 2022 Federal Financial Report SF-425 during the required time frame. A third version prepared with correct information has not been submitted, and therefore, did not meet the required time frame. The third version of SF-425 indicated an overstatement of allowable expenses of $50,750. Criteria: SF-425 Federal Financial Report Instructions, Page 2 defines Federal Cash-cash disbursements as the amount of federal fund disbursements for actual cash disbursements for direct charges for goods and services and the amount of indirect expenses. Cash on hand is the amount of cash receipts less cash disbursements and represents the immediate cash needs. Total Federal share of expenditures for reports prepared on an accrual basis should include the sum of cash disbursements for direct charges, the amount of indirect expense incurred, and the net increase or decrease in the amounts owed by the recipient for goods and other property received; service performed by employees and other payees; and programs for which no current services or performance are required. Effect of Condition: The organization did not meet the timely submission requirement and cannot be considered a low-risk auditee in the next single audit reporting period. In addition, they understated the amount of cash disbursements. Further, failure to submit a timely and accurate SF-425 prevents the VA from conducting proper oversight of the grantee’s award. Incorrect SF-425 submissions have a direct impact on the ability of the agency to recoup funds, perform follow-up activities, and develop corrective action plans, if required. Cause of Condition: Management acknowledged a general lack of understanding of the SF-425 and what constituted allowable expenses and cash disbursements. Recommendation: As previously recommended by the Office of Business Oversight (OBO), the organization should develop standard operating procedures, and related oversight activities ensuring accurate SF-425 information reporting. Further, it should provide training to staff on the updated policies. Finally, it should submit the revised SF-425 with the correct allowable expense reported for the program. Views of Responsible Officials: The organization agrees with the finding. Please refer to corrective action plan on page 46.