Criteria: Uniform Guidance, Section 200,510(b) requires the auditee prepare a complete and accurate SEFA.

Condition: There is no documented policy or procedure in place to track research grants to ensure proper reporting of the research and development (R&D) cluster on the schedule of expenditures of federal awards (SEFA). There is also no documented policy or procedure in place regarding the reconciliation of the SEFA to underlying activity to ensure the completeness and accuracy of the schedule.

Context: During our testing of the SEFA, we noted management does not internally track R&D grants to ensure proper clustering of R&D activity on the SEFA. We also noted reconciliation variances when comparing federal grant expenditures to federal grant revenues for cost reimbursement grants for the year under.

Effect: Financial reporting of federal expenditures could be inaccurate or incomplete.

Cause: The above condition appears to be the result of a lack of controls surrounding the grants management process.

Recommendation: We recommend management maintain all grant award documents and appropriately flag research grants to proper R&D cluster reporting. We also recommend management implementation of the SEFA to ensure financial and non-financial information is accurate and complete and reconcile federal grant expenditures to federal grant revenues on the general ledger at least annually at June 30 to ensure proper cut-off of grant activity.

Views of responsible officials and planned corrective action: Management agrees with finding. Internal controls surrounding the grants management process and SEFA preparation will be reviewed and strengthened to ensure accurate and timely reporting of grant activity.

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