Finding Text
Criteria: Financial reports should be prepared on the same basis of accounting as the basic financial statements.
Condition: Financial reports submitted under the grant with the Commissioners of Carroll County were prepared on the cash basis of accounting.
Cause: The Organization maintains their books and records on the cash basis of accounting throughout the fiscal year and doesn’t account for accruals until year end.
Effect or Potential Effect: Reporting unallowable costs can result in having to return the funding or termination of funding.
Context: The financial reports tested were prepared using the cash basis numbers for the quarter, not taking into account any accruals because it was believed all grant-related reporting was done on the cash basis of accounting.
Recommendation: The Organization should begin keeping their accounting records on the accrual basis of accounting throughout the fiscal year. This will ensure the correct financials are being reported for federal programs.
Views of Responsible Official(s) and Planned Corrective Actions: See corrective action plan.