Finding Text
2023-004: Significant Deficiency: Activities Allowed or Unallowable Costs/Cost Principles
Criteria: According to federal regulations, expenditures charged to federal grants must follow
the allowable cost principles found in 2 CFR Part 200, subpart E.
Additionally, 2 CFR.200.303 requires nonfederal entities to, among other things, establish and
maintain effective internal control over the Federal award that provides reasonable assurance that
the non-Federal entity is managing the Federal award in compliance with Federal statutes,
regulations, and the terms and conditions of the Federal award.
Condition: During our testing, we noted that expenditures were allocated to the wrong budget
category line items and did not agree to the underlying accounting records.
Cause: Internal controls surrounding the review and reconciliation of supporting documentation
to expenditures charged to the grant are not properly implemented to detect and correct errors.
Effect: The costs submitted and reimbursed by the grantors did not agree to the budget
categories set forth in the grant agreement, therefore the underlying accounting records were not
consistent with what was being reported to the grantors.
Questioned Costs: None
Recommendation: We recommend that management of the Organization review internal
controls and ensure they are properly designed and implemented to ensure that expenditures are
allowable under federal regulations.
Views of Responsible Officials: Management agrees with this finding and their response is
included in the corrective action plan.