Finding Text
Finding 2022-001 ? Materially Misstated Financial Statements and Schedule of Expenditure of Federal Awards, Assistance Listing 10.601, Market Access Program and Assistance Listing 10.309, Specialty Crop Research Initiative Criteria: Part 200. Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards Subpart F. Audit Requirements subgroup 47. Auditees Section 200.510, Financial statements: The auditee must prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with ? 200.502 Basis for determining Federal awards expended. Condition: Audit adjustments of over $134,000 were required to correct the Schedule of Expenditure of Federal Awards (SEFA) and eight audit adjustments were required to correct financial statement account balances due the lack of proper accrual accounting. Cause of Condition: Accrual accounting was not performed and there was a lack of oversight by management over the preparation of the schedule of expenditures of federal awards to ensure proper reporting. Potential Effect: As a result of the condition above, the financial reports and the SEFA required significant adjustments at year end. These conditions may provide opportunities for errors or fraud to occur and cause material misstatements of the financial statements. Questioned Costs: None Context: There was a lack of oversight and lack of grant accounting knowledge to ensure complete and accurate financial statements and SEFA preparation. Recommendation: Recommend procedures be put into place to ensure the financial statements and the schedule of expenditures of federal awards are being prepared and presented in accordance with Generally Accepted Accounting Principles. We further recommend the accountant receive training in the purpose and use of accrual accounting and its application in the QuickBooks accounting system. Due to the material adjustments required to 2021 and 2022 expenditures, we recommend re-submission of both years? Federal Financial Reports to accurately reflect adjusted expenditures and matching requirements.