Finding Text
Finding 2022-001 Criteria or Specific Requirement: Management is responsible for establishing policies and procedures for creating an appropriate financial management system to track federal grants in accordance with 2 CFR 200.508, including the preparation and presentation of the schedule of expenditures of federal awards. Condition: Grant revenue in the prior year was not accrued to present reimbursement grants in accordance with generally accepted accounting principles. Cause: Management records grant revenue at the time of the drawdown request without regard to the period the expenditures were incurred. Effect or Potential Effect: Grant revenue was presented in the incorrect period causing a misstatement in the schedule of expenditures of federal awards. Recommendation: We recommend the Organization implement a process to perform a financial close, including accruing expected grant revenue based on expenditures incurred during the reporting period. We also recommend the Organization implement a process to ensure the schedule of federal expenditures of federal awards is presented fairly. Views of responsible officials: Management agrees with the finding and will implement a process to review its financial closing procedures.