Finding Text
Finding 2024-004 - U.S. Department of Education (USDE) - Higher Education Institutional
Aid (Title III Programs) (Material weaknesses and Significant deficiencies):
Information on the federal program – Strengthening Historically Black Colleges and
Universities (HBCUs), (Title III), FAL No. 84.031B, June 30, 2024; Historically Black Colleges
and Universities (HBCU) (FUTURE ACT), FAL No. 84.031E, June 30, 2024.
Criteria – Federal regulations governing Higher Education Institutional Aid, (Title III).
Condition – Non-compliance was noted as described in the context below.
Questioned Costs – See below.
Context –
1. We observed the following questioned cost of $505,004 during our testing of Title III and
Future Grant drawdowns (material weaknesses):
a. Adequate supporting source documents and general ledger data was not readily on file to
support three (3) of eleven drawdowns tested. The University subsequently supplied
adjusting journal entries to reclass expenditures previously recorded elsewhere in the
general ledger. However, the total amount of the questioned cost noted above was not
substantiated, resulting in excess federal cash on hand.
b. We noted two (2) drawdowns for payroll were drawn 20 days and nine (9) days before the
actual payroll dates.
2. Our testing of Title III cash disbursements revealed questioned cost of $55,525 as stated
below (significant deficiency):
a. Adequate supporting source documents, such as invoices, check request, and evidence
of approval were not on file or provided for one (1) of eight (8) disbursements tested.
b. One (1) check contained only one signature.
3. We noted the following during our review of budget versus actual reporting.
a. The University did not properly and accurately maintain budget vs actual schedules to
adequately validate carryover and remaining balances. The budgets for Title Ill, Future
grants appear to have been overspent; however, the reasonableness of under or over
prior year remaining balances could not accurately be determined.
4. We noted the following during our testing of time and effort reporting (significant deficiencies):
a. The University subsequently provided corrected Time and Effort Reports for nine (9) out
of 12 tested which we noted were previously missing employee signatures, signatures of
approval by supervisor or next level of authority, salary distribution percentages, and grant
funding codes.
b. Personnel Action Forms originally provided for three (3) of four (4) employees tested did
not contain salary allocations as evidence that salaries were to be allocated to the
program. The University subsequently corrected the forms.
c. The University also provided adjusting entries to reclassify salaries that were incorrectly
recorded in the general ledger; however, we were unable to trace the salary distribution
to the general ledger for two (2) of 12 tested.
Cause – Oversight by responsible employees.
Effect – Noncompliance with program guidelines.
Repeat Finding – No.
Auditor's Recommendation –
1) We recommend all drawdowns are approved by management prior to the request being made
and reviewed to assure that drawdowns and supporting expenditures are accurately and
timely recorded. Federal regulations require that funds drawn down are limited to the minimum
amounts needed to cover immediate project cost and not made to cover future or budgeted
expenditures.
2) We recommend the University require prior approval for all disbursements, including credit
card, check, wires, and electronic funds transfer, and maintain supporting source documents
in a manner that’s easily accessible when needed. Proper supporting source documents
include invoices, approved expense/check request, payment advice copy, etc.
3) We recommend the University implement procedures for budget versus actual reporting to
include allowable carryover budgets to accurately reflect remaining balances and to assure
that the University is operating within the constraints of the grant budgets.
4) We recommend that the University maintain adequate supporting source documentation as
evidence that time and effort reporting is accurately completed, reviewed and approved prior
to seeking reimbursement for payroll expenses from the grantor. Federal regulations require
that grant recipients provide reasonable assurance that charges are accurate, allowable, and
properly allocated and that salary and wages charged to federal awards are based on actual
rather than budget estimates.
Views of Responsible Officials –
The Vice President for Fiscal Affairs has implemented standard operating procedures to
ensure the following: drawdown review and approval, centralize location for all grant
related documents, award letters, invoices, etc. with accessibility for both Business Office
and Sponsored Programs, and grant reconciliation completion date. The SOP will be
included in the update Business Office Procedure document that will completed this fiscal
year.
The items identified in the 23-24 audit for grant were also contributed to the down-time of
the ERP as well as having a new team in Sponsored Programs and Business Office
reviewing and restoring the accounting records while trying to ensure accuracy and
integrity in the recording of transactions.
The institution disagrees with in-adequate approval of documents. The ERP is designed to
not process purchase orders without appropriate approvals. All requisitions are approved
by the area Vice President with any transactions $10,000 and over requires the signature
of the President.