Finding Text
Reporting: Inaccurate Financial Reporting.
Federal Program Information: Substance Abuse and Mental Health Services Projects of
Regional and National Significance (Federal Assistance Listing - 93.243)
Condition and Criteria: The Center is required to maintain internal controls over expenditures
in order to ensure that only federal expenditures are reported to the oversight agency. During
audit procedures, we noted two instances where the cumulative expenditures reported on Form
SF-425 did not agree to cumulative expenditures per the accounting records.
Prior Year Audit Finding: N/A.
Cause and Effect: The Center received a refund for subcontractor expenses that was
inadvertently recorded as other grant revenue rather than reducing the related expenditures,
resulting in over reporting of expenditures. Additionally, it was noted the Center submits draw
down requests prior to the end of the grant period for expenses incurred at that point in time.
This increases the opportunity for actual expenditures to differ from draw down amounts.
These two factors contribute to increased risk of actual federal expenditures not being
accurately reported to the oversight agency.
Context: Annual SF-425 reports were tested for the three HHS awards. The test found the
incorrect expenditures were reported to the agency for two awards, one which expenditures
were underreported and another which expenditures were overreported. This represents a
systemic problem.
Questioned Costs: None.
Recommendation: We recommend the Center implement procedures to generate program
reports from the accounting records at the time of the report preparation and document any
reconciling items to ensure federal expenditures reported to the oversight agency are complete
and accurate. These reports should be maintained as supporting documentation for the report
submission to substantiate the specific amounts of funds drawn down on a specific date. Any
subsequent adjustments to cash or expenditures can be taken into consideration in subsequent
draw down requests and reflected in a modified SF-425 report submission. We also
recommend the Center implement procedures to submit draw down requests for grant funds
after the month has closed. This will ensure all federal expenditures are captured in the annual
reporting.
Management’s Response:
Management understands the importance of maintaining complete and accurate records of
expenditures submitted to the oversight agency. As part of our response indicated at 2023-002,
we will continue to ensure submitted expenditures agree to the accounting records prior to
submission, and retain contemporaneous support for any reconciling items, such that any
differences between expenses reported to a federal agency and expenses recorded in the
accounting records subsequent to report submission can be quickly and easily resolved upon
request.