Finding Text
2022-001 {ALN 45.129 Promotion of the Humanities Federal/State Partnership}
Condition: During our review of the Schedule of Expenditures of Federal Awards (SEFA)
and related financial statements, we noted that a significant portion of total subawards issued
during the fiscal year were funded by federal programs. However, the corresponding Federal
Financial Report (FFR) did not reflect any unliquidated obligations, despite the presence of a
substantial subawards payable balance in the audited financial statements.
Criteria: In accordance with 2 CFR §200.343 and Uniform Guidance requirements, recipients
of federal funds must accurately report unliquidated obligations on the FFR to ensure
complete and transparent financial reporting.
Cause: The discrepancy resulted from a change in the organization’s bookkeeping practices
and reporting methodology. Specifically, the organization transitioned from a cash basis to
an accrual basis for preparing the FFR, which was not fully aligned with the timing and
recognition of subaward obligations.
Effect: This discrepancy may result in inaccurate reporting to federal agencies, which could
lead to misunderstandings about the organization’s financial position and compliance with
federal requirements.
Recommendation: We recommend that the organization establish and implement
procedures to ensure that subawards payable are properly reviewed and reconciled with the
FFR prior to submission in line with the accrual method for reporting the FFR. This should
include identifying and reporting any unliquidated obligations related to federal subawards.
Views of Responsible Officials: The organization concurs with the finding and has since
resubmitted the Federal Financial Report (FFR) to the federal agency to accurately reflect
unliquidated obligations. Procedures are being developed to ensure future FFRs are
reconciled with subawards payable balances prior to submission.