Finding Text
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal
control over the Federal award that provides reasonable assurance the non-Federal entity is managing the
Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal
award.
2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of
funds from the U.S. Treasury and disbursement of funds by the recipient.
Condition: The University drew down funds related to an expenditure that had previously been drawn
down.
Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which
reimbursement was requested and received. We noted one expenditure for $80,996 was previously
reimbursed through a prior reimbursement request.
Cause: Despite the University’s established policies and procedures for cash management, an error
occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction
process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant
for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the
Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP
review process, as their review does not encompass journal entries posted directly to the general ledger.
Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement
request.
Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an
expenditure that was previously drawn down and noncompliance with the cash management requirement.
Questioned Costs: $80,996
Identification of a repeat finding: N/A
Recommendations: We recommend the University modify or revise its review process to ensure that the
reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal
entry postings.
Views of responsible officials: The University has policies and procedures to ensure the review of
expenditures charged to federal grants prior to draw downs. However, the University failed to identify a
mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw
down request had been made. Specifically, the University charged prepaid amortization to a grant fund,
although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated
expense posting, one for the actual payment, and a second for the expense amortization. The University
discovered the mistake after the duplicated expense had been drawn down. To correct this error, the
University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is
not overdrawn.
Management reviewed the conditions which contributed to this error and is establishing the following
controls to address this error:
1. The University will incorporate an additional review step for any journal entries posted to
federal grants. The Office of Sponsored Projects and Business Office management will sign
off on any journal entries which are posted to federal grants prior to the posting taking place.
2. The Business Office will reinforce existing procedures to all accounting staff responsible for
prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant
funds.
3. The Office of Sponsored Projects will adjust its review process and train staff to ensure
thorough review of all activities impacting grants, including journal entries made by the
Business Office, before authorizing drawdowns.