Finding 516656 (2022-003)

Material Weakness

Requirement

Questioned Costs

Year

2022

Accepted

2024-12-23

Audit: 334631

Organization: California Asian Pacific Chamber of Commerce (CA)

Auditor: Richardson & Company LLP

AI Summary

Core Issue: The Chamber billed the Department of Commerce for grant expenses that were not properly supported by the accounting records, leading to potential inaccuracies.
Impacted Requirements: The Chamber failed to perform necessary reconciliations and maintain documentation as required by 2 CFR 200.400, which mandates consistency in accounting practices.
Recommended Follow-Up: Implement a system to ensure all grant expenses are accurately recorded and reconciled with billed amounts, including regular year-end comparisons of grant revenue and expenses.

Finding Text

Finding 2022-003: Material Weakness and Questioned Cost – Grant Claim Support Federal grantor: Department of Commerce Condition: The Chamber’s expenditure detail for the grant funded projects do not support the amounts billed to the Department of Commerce. The amounts billed were more than the general ledger detail supported. Criteria: A reconciliation of grant project expenses to the grant revenue billed should be performed. The supporting documentation of any reconciling items should be maintained with the grant bills. Also, 2 CFR 200.400 states that accounting practices of the entity be consistent with cost principals required under the CFR and support the accumulation of costs and provide adequate documentation to support costs charged to the Federal award. Cause: The Chamber billed costs to the grant that were not allocated in the accounting system to that grant and a reconciliation was not performed comparing the grant billings to the expense detail. Effect: The expenses billed to the grant may not be correct. Our reconciliation of these expenses disclosed an overbilling to the grant of approximately $2,500 in 2021. Recommendation: The Chamber needs to ensure that expenses to be reimbursed by federal grant funds are recorded in the class code in the accounting system for that grant so that federal grant revenue in the accounting system match the expenses allocated to that grant. The Chamber needs to include in their year-end reconciliations a comparison of grant revenue and expense and ensure they match or can be reconciled. Views of Responsible Officials and Planned Corrective Actions: The Chamber agrees with this finding and is in the process of implementing a system for improved grant tracking.

Corrective Action Plan

Description of Finding: Expenditure detail does not support the amounts billed Statement of Concurrence or Nonconcurrence: The California Asian Pacific Chamber of Commerce (CalAsian) agrees with the finding. Corrective Action: CalAsian acknowledges the serious nature of this finding and the potential for damage to relationships with the grantors and Federal entities. The Interim Controller and Director of Finance are working to secure an ERP system which will allow for better cost collection, reporting and reviews of the grant-related expenses for accuracy, reliability, and reconciliation. We also understand these findings are repetitive from the 2021 audit; however, due to catch-up of the prior year audits, we were unable to address these issues prior to completion of the 2022 audit. This delay was caused by a change in auditors as our previous auditor did not have the capacity to retain us as clients due to staff shortages related to COVID. A subcontractor has been retained to assist with providing information for the 2023 audit to bring the audits current. The auditors tested 84% of the total 2021 total direct grant expenditures and this issue was isolated to one payroll entry for $2,500.00, which is a result of a one-time, non-recurring clerical error. No issues were noted in the 2022 audit work related to this finding. We are currently analyzing and ensuring revenue and expenses for grants in 2023 and 2024 have proper recognition and billing of accurate and complete costs. This issue will be further mitigated with the implementation of the new accounting system on 1/1/2025. The ERP system includes electronic timesheets for daily charging to specific grants, as well as more visibility into the proper separation of direct, indirect, and unallowable costs per the CFR. Timesheet training has been performed and timesheet completion is required for all employees beginning on 1/1/2025. This will provide support for hours worked/billed, as well as document the certification and approvals that all time entered is accurate and in compliance with contract requirements. and provide proper support for all grant and indirect labor costs. An indirect cost pool allocation structure is being designed and implemented to properly allocate the allowable indirect costs to each work effort. This proposed structure and rates will be submitted for approval in 2025. Monthly reviews by the Project Directors/Managers plus Accounting will be performed to identify any potential cost charging issues and corrective action(s) required. Name of Contact Person: Ryan Fong, Director of Finance, 916-446-7883, rfong@calasiancc.org Pat Fong Kushida, President & CEO, 916-446-7883, patfongkushida@calasiancc.org Projected Completion Date: January 2025

Other Findings in this Audit

516654 2022-001

Material Weakness
516655 2022-002

Material Weakness
516657 2022-004

Significant Deficiency
1093096 2022-001

Material Weakness
1093097 2022-002

Material Weakness
1093098 2022-003

Material Weakness
1093099 2022-004

Significant Deficiency

Programs in Audit

ALN	Program Name	Expenditures
11.802	Minority Business Resource Development	$457,771
20.910	Assistance to Small and Disadvantaged Businesses	$62,344