Finding Text
Criteria: The Uniform Guidance requires nonfederal entities that receive federal funding to
identify in its general ledger accounts the specific expenses that are paid for by each federal
assistance program. To help ensure that grants receivable, deferred revenue and the expenses
reported on the Schedule of Expenditures of Federal Awards are accurate, all expenses charged to
federal and state contracts should be specifically identified in the general ledger system, through
the use of funds or QuickBooks classes, and these specific identified expenses should be reconciled
to the amounts reported to the grantor and reimbursed and further reconciled to the full award to
ensure any grants receivable will ultimately be reimbursed from the grantor.
Condition: The Organization tracks its federal and state contract expenses through a
combination of classes within QuickBooks and spreadsheets outside of the accounting system but
does not fully allocate costs specifically identified to a contract to a separate class or other
distinguishing account code specific to each contract. As a result, significant effort was required
by the organization during the audit process to reconcile specific expenses with the reimbursement
requests and errors were made in the originally provided Schedule of Expenditures of Federal
Awards. The originally provided Schedule of Expenditures of Federal Awards indicated $1,530,003 for
the Coronavirus State and Local Fiscal Recovery Funds program, passed through Maricopa County,
Arizona, assistance listing number
21.027 and $288,532 for the Continuum of Care Program, Assistance Listing Number 14.267 whereas the
amounts reported to the grantor, the total expenses, and the corresponding drawdowns
for fiscal year 2023, and what therefore should be included on the Schedule of Expenditures of
Federal Awards, totaled $1,996,449 and
$552,598 for these programs, respectively. In addition, a total of
$73,978 was recorded as a grant receivable, but not reimbursed by the grantor or requested for
reimbursement for the HUD Continuum of Care program that was in excess of the total federal award
and therefore should not have been recorded as a grant receivable.
Cause and Effect: The organization does not fully utilize its accounting system to track federal
and state contract expenses on an ongoing basis throughout the fiscal year. In addition, reports
submitted to the grantor are not periodically reconciled to a complete list of allowable expenses
incurred and to the total award and required match. If a specific account code structure is
utilized to track specific program expenses, then reimbursement and other reports should be
reconciled directly to the underlying general ledger accounts. Without tracking these expenses
within the general ledger by program, errors in reporting to the grantor could be made and amounts
reported as grants receivable and deferred revenue, and amounts reported on the Schedule of
Expenditures of Federal Awards may not be accurate.
Auditors’
Recommendations: The Organization should establish separate classes within QuickBooks for
each federal and state contract and each request for reimbursement should be reconciled to the
total of all expenses within this class. Further, an overall reconciliation should be performed
where the total award amounts are compared to total
reimbursements requested and to any required match.