Finding Text
Criteria: The District should have established internal control policies and procedures surrounding the administration of federal grants which address each federal award's compliance requirement on an annual basis.
Condition: During the current year audit, we noted original budge lines to the grant were not amended from the original submission to correspond with actual costs incurred. Accordingly, final costs reported to the pass-through entity were reported in the original budget categories, rather than classifications within the accounting records. Additionally, there was a $4,300 variance between the general ledger and the final report. Based upon our expenditures tested (approximately $300,00), no unallowed costs were noted. The District had not been subject to the Single Audit threshold of expenditures of $750,000 or more on an annual basis prior to fiscal year 2021, primarily as a result of COVID-19 pandemic related funding. The District had established general procedures surrounding administration of grant awards in accordance with district processes and pass-through agency procedures; however, the District had not yet established more formalized policies and procedures which more specifically address the compliance requirements within the Uniform Guidance and provide for an overall centralized monitoring of grants and compliance. This had been reported as a finding in the prior year (2021-001).
Potential Effect: Costs may be disallowed. Furthermore, noncompliance with specific compliance requirements applicable to a federal award could occur.
Cause: The District's managers did not amend the applicable grants budget with the pass-through entity with actual costs incurred and postings within the underlying accounting records. An overall formalized grants management policy manual and monitoring thereof had not been implemented during fiscal year 2022.
Questioned costs: None reported in the current year.
Repeat Finding: As noted above, the finding is a partial repeat finding from the prior year.
Auditor's recommendation: We continue to recommend the District establish more formalized policies and procedures surrounding the administration of federal grants and award programs, which specifically address compliance requirements of all grants received and a centralized monitoring thereof. Established policies and procedures should provide for routine monitoring and evaluation of adopted internal control policies and procedures to ensure requirements are met. Moreover, we recommend additional review and approval of journal entries posted within the accounting system through grants managers and officials reclassifying from original postings and approvals. We have been informed by management that a grants manual has been implemented during fiscal year 2023.