Finding Text
2022-001 Federal Agency: U.S. Department of Agriculture Federal Program Title: Supplemental Nutrition Assistance Program CFDA Number: 10.561 Award Period: December 1, 2019 through September 30, 2023 Type of Finding: ? Material Weakness in Internal Control over Financial Reporting and Compliance Criteria or specific requirement: The Code of Federal Regulations 2 CFR 200.413(a) requires that direct costs be identified specifically with a particular final cost objective, such as a federal award, or other internally or externally funded activity, or be directly assigned to such activities relatively easily with a high degree of accuracy. Condition: During our testing, we noted reimbursement requests were prepared using grant budgets rather than direct costs incurred. Management was unable to determine direct costs related to general and payroll disbursements. As a result, proper revenue recognition could not be determined for financial reporting purposes. Questioned Costs: None Cause: Internal controls have not been implemented to specifically track direct costs incurred under specific grant agreements. Effect: The Organization cannot determine direct costs incurred under the grant with a high degree of accuracy. Reimbursement requests do not accurately reflect direct costs incurred by the Organization. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the Organization develop procedures to track expenditures of federal awards using the class system within their ERP. All invoices for general disbursements paid with federal awards should be reviewed and approved by a grants manager prior to payment and coded to the general ledger by the accounting department. In addition, we recommend implementing procedures to ensure that payroll expenses charged to the grant are based on actual time and effort. Timesheets should be prepared by staff performing grant functions, reviewed and approved by a grants manager, and coded to the general ledger by the accounting department. Views of responsible officials: Management agrees with the finding.