Finding Text
Finding 2022-005: Federal Financial Reporting
Criteria: The U.S. Department of Labor requires that the Organization submit a quarterly Federal
Financial Report (FFR), SF-425, in accordance with the quarterly schedule indicated in its grant
agreement, within 30 days following the end of each calendar quarter.
Condition: USTTI filed its FFRs for the fiscal year by the required due dates if there was activity. We
noted that the expenditures reported in the quarterly FFRs were not consistent with the actual
expenditures reported in the general ledger due to indirect costs incorrectly reported as direct
expenses on the FFRs. We also noted that USTTI incorrectly reported an accrual basis of accounting
rather than cash basis on the quarterly FFRs.
Cause: Management did not have effective internal controls in place to ensure that the FFRs were
accurately filed and submitted.
Effect: Without established controls over reporting and reimbursement requests, there is a reasonable
possibility that USTTI would not detect noncompliance in the normal course of performing duties and
correct them in a timely manner.
Questioned Costs: None.
Context: Our audit procedures consisted of testwork performed over cash receipts and draw down
requests from the Federal Government. We consider our sample to be representative of the
population. The condition appears to be systemic in nature.
Identification as a Repeat Finding: Not applicable.
Recommendation: We recommend USTTI prepare its FFRs based on actual expenditures for each
quarter. Since it is likely indirect rate adjustments may occur after quarter-end, for instance, USTTI
should make efforts to ensure these transactions are reflected in the general ledger before preparation
of the FFRs, while still meeting the FFR submission deadlines.