Finding Text
Criteria or Specific Requirement: Federal regulations and specific federal award pass-through agreements require the Organization to contribute matching funds to support the services to be provided with the federal award funds.
Condition: During our testing we noted that the Organization did not meet its required match for four separate grants. The Organization’s matching requirements for the grant period of these grants totaled $42,179 and the Organization contributed a total of $34,126 of matching funds during the period, resulting in an undermatch of $8,053. We also noted that in total the Organization over matched one other separate grant tested for a total of $523.
Questioned Costs: None
Context: These instances were noting during testing of matching requirements for 14 federal award pass-through agreements.
Cause: The Organization does not have a control process in place to ensure that it meets its matching requirements within the grant period.
Effect: The Organization may not meet its matching requirements under federal award agreements.
Repeat Finding: The finding is a repeat of a finding in the immediately prior year. Prior year finding number was 2023-008.
Recommendation: We recommend that the Organization implement a control process to ensure that it meets its matching requirements within the grant period.
Views of responsible officials: Management does not agree with this finding. LSC program letter 22-5 emphasizes the importance of reconciliations of timekeeping reports with labor costs, distribution report or alternative reports. CLS prioritizes this practice of reconciliation and used it during the last months of 2024 to improve internal controls and minimize potential errors. We do not believe that CLA fully and fairly considered CLS’s thorough and complete reconciliation. A “material weakness” is defined as a deficiency “such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis.” Given that reconciliation is part of our internal control process used to prevent and detect/correct any errors, it should have been fully considered and is unfairly excluded from the review. For this reason, CLS considers that this is not a material weakness as the reconciliation caught and corrected these errors. Finally, the total amount of this finding is very low and should not rise to the level of material weakness.
Auditor’s Concluding Remarks: Management’s response did not persuade the auditor to revise the finding. The aging cluster is not an LSC program and so its relevance to this finding is unclear. Federal regulations and specific federal award pass-through agreements require the Organization to contribute matching funds to support the services to be provided with the federal award funds. We were unable to see evidence that showed grants received required matching funds.