Finding Text
Criteria: Cost principles in 2 CFR part 200, subpart E (Cost Principles), prescribe general criteria costs follow to be considered allowable under federal awards. The criteria state costs must be necessary and reasonable for the performance of the federal award, be allocable, and be adequately documented. Condition: While all costs tested were determined to be necessary and reasonable for the performance of the federal award, federal expenditures were not allocable and adequately documented leading to a materially misstated schedule of expenditures of federal awards. Cause: Due to the lack of accounting expertise and transition in the accounting and finance roles during the year, there was a lack of accounting for federal awards leading to a materially misstated schedule of expenditures of federal awards being presented for audit. The schedule of expenditures of federal awards was corrected, but not until significantly after the close of the fiscal year. Effect: The lack of internal controls surrounding allocating costs could lead to potential funding issues in the future. Questioned Costs: None. Repeat Finding: N/A, first year for this finding. Recommendation: We recommend that management separately track and monitor federal expenditures from non-federal expenditures in their accounting system. Organization Response: Management agrees with this finding.