Finding Text
Community Development Block Grant – AL# 14.218, Controls over
Reporting
Condition: ASP included an amount for reimbursement to the City of Johnson City, TN that had
not been paid and was not paid promptly, resulting in ASP receiving funds in advance from the
City, which is in violation of the grant agreement ASP has with the City.
Criteria: The grant agreement with the City states that in no event shall the City provide advance
funding to their sub-recipient.
Cause: ASP failed to pay an invoice that was submitted for reimbursement prior to the receipt of
the reimbursement from the City. ASP’s controls over the process of reconciling reimbursement
requests and payables from their general ledger to the request were not sufficient to prevent this
issue from occurring, resulting in the error.
Effect: ASP violated their agreement with the City and received funds in advance.
Context: An invoice recorded in their purchasing tracking software was not subsequently recorded
in their financial software allowing for request for reimbursement to happen for an invoice that
was not promptly paid. Controls were not sufficient to prevent this from occurring.
Questioned Costs: N/A
Recommendation: ASP should pay all invoices submitted for reimbursement prior to receipt of
the reimbursement from the City in order to stay in compliance with their agreement with the
City. ASP should also reconcile between the purchase tracking software and the general ledger to
ensure that all purchases are promptly recorded in accounts payable to be paid promptly. ASP
should ensure that controls are implemented to help prevent reoccurrence of this issue in the
future.
Repeat Finding: No.
Management’s Response: ASP has policies and procedures in place to ensure all reimbursable
expenditures are allowable, paid and clear the bank before submitting for reimbursement.
However, on one occasion, ASP inadvertently submitted an allowable and paid expenditure of
$32.78 that had not cleared the bank. ASP has since repaid this amount and the replacement
check has been cashed by the vendor. In the future, ASP will ensure that all expenditures are
allowable, paid, and clear the bank before submitting the reimbursement.