Overview
During our audit, we found that MGCC had a $54,324 unreconciled variance of COVID-19 SBRGP funds. This variance consists of funding that MGCC had not disbursed as grants or returned to the state, and MGCC could not explain this variance.
If MGCC does not reconcile all of its funding, then there is a higher-than-acceptable risk that MGCC cannot identify any potential misappropriation of funds.
Authoritative Guidance
MGCC’s Grant Receipts & Control Procedure states that it should, “match grant receipts with amounts in grant request letter, amounts, and grant programs [and] . . . update grant receipts schedule.”
Reasons for Issue
MGCC officials told us that there were a number of reasons for variances. Specifically, MGCC attributed these variances in tracking all grant receipts and disbursements to the following:
- initial invoices represented contract amounts as opposed to actual group amounts;
- some original award amounts were revised;
- returned funds were reallocated to other groups; and
- limitations of its accounting system.
Recommendations
- MGCC should reconcile all grant funds.
- MGCC should determine whether it needs a new accounting system that has the ability to track all grant receipts and disbursements.
Auditee’s Response
MGCC agrees that it should reconcile all grant funds after a program has concluded, and in fact did perform such a reconciliation for the COVID-19 SBRGP. That reconciliation was performed using MGCC’s official accounting ledgers on a cash basis, rather than the [grant application system] that was on an award basis, which MGCC used to accept and process applications. The final and official close-out for the COVID-19 SBRGP reconciled program funds received with program funds disbursed without any deviation.
The auditor’s attempted reconciliation using [the grant application system] found a deviation because the grant amounts logged in [the grant application system] were initial estimates, and subject to change after discussion with EOHED. As noted, MGCC’s final and official close-out for the COVID-19 SBRGP reconciled program funds received with program funds disbursed without any deviation.
Auditor’s Reply
The total amount awarded to all grant recipients should agree to the total amounts disbursed under the COVID-19 SBRGP. Our review found a variance of $54,324 for which MGCC could not provide any detailed information on what accounted for the discrepancy in the list of grant recipients. Assuming MGCC reconciled these accounts, as indicated in its response, it should be the case that MGCC can explain this variance with an itemized accounting, since this information was not made available to our audit team during the audit, nor was it included in MGCC’s grant application system. Additionally, MGCC could not provide us a grant recipient list from its accounting system that detailed how much each grantee received as part of the COVID-19 SBRGP. As MGCC states in its response, the list generated from its grant application system included award estimates that were subject to change after review by EOED. MGCC should have updated its grant application system to reflect any changes that EOED told MGCC to make to document the amount and reason for the change. (See Finding 1 for a similar issue identified in MGCC’s undocumented changes made in consultation with EOED.)
We reiterate our recommendations that MGCC should clearly reconcile all grant funds and determine which accounting system is accurately tracking all grant receipts and disbursements, for reconciliation purposes. Our office looks forward to our post-audit review alongside MGCC, where we hope to further review this reconciliation. Based on its response, MGCC is taking steps to address our concerns.
| Date published: | August 28, 2024 |
|---|