Finding Text
Criteria Purchases and commitments to purchase during the grant period should be for expenses for the grant period. Condition Purchases at the end of the grant period were for items not obtained or utilized by the organization until after the grant period. Context Software was ordered September 29th, 2022, the last day of the grant period. The software continuation license, support, and one year benefit of use for the organization did not commence until November 1, 2022. Cause The organization interpreted a decision to make a prepaid purchase for an asset to be used after the grant period to be acceptable use of funds. Effect The grant expenditures were overstated by $36,400. The grant was improperly billed for the purchase and reimbursed. A payable to the grantor was not recorded, and grant revenue was overstated by the improperly billed and reimbursed amount. The prepaid asset was not recognized. Auditor's Recommendations We recommend that the organization utilize grant funding for expenditures in accordance with the requirements of the grant, keeping in mind accrual-based accounting standards for expenses related to the grant period.