Finding 969211 (2023-001)

Condition:We noted that some Federal expenditures for certain listed programs did not agree to the underlying financial records. The underlying financial records are prepared in accordance to requirements in 2 CFR 200.502 and thus the expenditures per program should agree with the underlying financial records. Certain accruals of expenses were made in the financial records that were not reflected on the SEFA. Criteria:The Code of Federal Regulations requires that auditees prepare the Schedule of Expenditures of Federal Awards (SEFA) (2 CFR 200.510(b)) and display all Federal expenditures per Federal program (2 CFR 200.510(b)(3)) in accordance with the expenditure guidelines at 2 CFR 200.502. Expenditures should be based, generally, on when the activity occurred. In general, this means that the SEFA will agree to the underlying financial records. Cause:This was due to a misunderstanding of how the accruals should relate to the SEFA. Effect:The SEFA was overstated for the current year before correction. Context:This issue does not appear pervasive. While the misstatement was material, the accruals were unusual and not a pervasive mistake. Recommendation:We recommend fully agreeing the SEFA to the underlying financial statements. The reconciliation process was completed with the exception of these accruals. We recommend including the accruals in most cases since Federal expenditures are generally calculated in accordance with GAAP accrual accounting. Deviations from GAAP can be found at 2 CFR 200.502. Views of Responsible Officials:Management agrees with the finding.