FAC Explorer

Finding 528447 (2024-001)

Significant Deficiency
Requirement
B
Questioned Costs
$1
Year
2024
Accepted
2025-03-17
Audit: 346462
Organization: World Relief Corporation of National Association of Evangelicals (MD)
Auditor: Tait Weller & Baker LLP

AI Summary

  • Issue: Rent expense for 2025 was paid in advance and charged to the federal award instead of being capitalized and amortized.
  • Requirements Impacted: This violates GAAP and 2 CFR 200.403, which dictate how costs should be recognized.
  • Recommended Follow-Up: Review and adjust the accounting treatment for rent expenses to ensure compliance with GAAP and federal regulations.

Finding Text

Condition: Rent expense for the 2025 fiscal year in one branch office was paid in advance, in order to receive a discount, and charged to the federal award rather than capitalized and amortized over the period of benefit. Criteria: Costs must be determined in accordance with generally accepted accounting principles (GAAP). Context: World Relief follows GAAP in financial reporting. Cause: As rent is routinely charged each month it is paid, management overlooked capitalizing the payment and amortizing it over the periods benefited. Effect: As this cost was a prepayment for future period benefit, it was not determined in accordance with generally accepted accounting principles as required under 2 CFR 200.403, Factors affecting allowability of costs.

Corrective Action Plan

Action Taken: We have taken several steps to prevent this sort of error in the future:We immediately reviewed this error with the office in question and made sure they understood the correct process of capitalizing prepaid expenses and expensing each month  This is a transaction that was made in error, guidance for handling prepaid expenses already exists. We reviewed this existing guidance around the correct way to handle prepaid expenses with relevant finance staff.  At the end of each fiscal year offices will be required to complete a full check with finance signoff for prepaid expenses and agree that everything that is prepaid has been communicated to finance.  There is an existing process for grant closeout that provides additional review of expenses that would detect this sort of expense and ensure it is recorded correctly, however, in this instance it was a multi-year grant and so the grant was not closed out and fiscal year end.  As this is a multi-year grant, we corrected this error in FY25 and returned the funds to the grantor for the expense that had not yet been incurred.

Categories

Questioned Costs Allowable Costs / Cost Principles Reporting

Other Findings in this Audit

  • 1104889 2024-001
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
19.510 U.s. Refugee Admissions Program $28.62M
93.567 Refugee and Entrant Assistance State/replacement Designee Administered Programs $9.75M
98.001 Usaid Foreign Assistance for Programs Overseas $776,850
93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (elc) $187,175
97.010 Citizenship Education and Training $168,624
93.576 Refugee and Entrant Assistance State/replacement Designee Administered Programs $144,714
21.027 Coronavirus State and Local Fiscal Recovery Funds $136,943
10.561 State Administrative Matching Grants for the Supplemental Nutrition Assistance Program $82,701
84.002 Adult Education - Basic Grants to States $43,951
93.558 Temporary Assistance for Needy Families $37,832
97.008 Non-Profit Security Program $31,086
93.048 Special Programs for the Aging, Title Iv, and Title Ii, Discretionary Projects $31,010
93.575 Refugee and Entrant Assistance State/replacement Designee Administered Programs $23,297
93.569 Refugee and Entrant Assistance State/replacement Designee Administered Programs $20,353
21.019 Coronavirus Relief Fund $15,941
10.557 Wic Special Supplemental Nutrition Program for Women, Infants, and Children $8,684
94.006 Americorps State and National 94.006 $5,365
17.259 Wioa Youth Activities $-1
97.024 Emergency Food and Shelter National Board Program $-367
93.566 Refugee and Entrant Assistance State/replacement Designee Administered Programs $-10,369