Common Single Audit Findings and Remediation Series: Reporting

Reporting is seemingly a straight-forward compliance requirement to understand. Financial, performance or special reports must be submitted by non-federal entities accurately and timely. While this may appear simple, findings relating to the reporting compliance requirement are common and similar to the number of findings noted in the procurement and subrecipient monitoring compliance requirements (as discussed in previous articles).

While procurement and subrecipient monitoring compliance requirements are extensive and may be overwhelming, reporting errors are generally not attributable to the level of difficulty; rather, the findings are primarily attributable to a lack of internal controls or a lack of supporting data for amounts reported.

Avoid these common missteps and learn how to prevent or remedy them.

Types of Reports

The first step in reporting for any award is to identify the required reports and their required content and deadlines. There are typically three types of reports: financial, performance and special.

Financial reports require recipients to use standard financial reporting forms developed by OMB or the grantor to report revenue and expenditure data on either a cash or an accrual basis.

Performance reports require recipients to report very specific programmatic information on metrics, such as the average meal cost for beneficiaries or the number of households served per $1,000,000 spent.

Special reports, like performance reports, essentially catch any other specific programmatic data that interests the federal agency or grantor but may not fit into the category of a financial or performance report. A common example of a special report is the subrecipient or subcontractor reporting requirements under the Federal Funding Accountability and Transparency Act (FFATA) reporting, in which prime recipients report certain financial and non-financial data in relation to subawards or subcontracts.

Financial Reports

Financial reports should always be supported by the underlying accounting system (general ledger). These reports focus on revenues and expenses, which should come directly from the accounting records. Errors often occur when the underlying information is not reconciled to the accounting system or when the reconciliation is not documented and available for review. Having someone review the report and reconciliation for errors or omissions is key to providing accurate reporting and preventing findings.

There may be changes to the account structure, journal entries, or other items that need to be in the reconciliation. An effective internal control process should be established to ensure the accuracy of the report. An example would be someone independent of the preparer of the report thoroughly reviewing the reconciliation between the general ledger and the financial report prior to submission. This review process should be clearly documented. In addition, the review process should also ensure that the reviewed information (i.e. the approved draft report) agrees with the final submitted report. All supporting documentation used to produce the report should be retained.

Performance and Special Reports

Both performance and special reports are generally driven on non-financial data. There may be some financial data (i.e. total grant award, annual spending, etc.), but generally, it is the non-financial data that is reported. Non-financial data may not lend itself to a reconciliation between the report and an information system, making it difficult to ensure accuracy. One challenge with this type of data also tends to be that it’s obtained from a “live environment,” meaning the non-financial data is often changing in real time. As a result, recreating supporting information for the report at a later date may be impossible. To avoid findings relating to reporting, it is essential to retain the report used or document where and how data was summarized and accumulated.

If there are any intervening computations or estimates that need to be performed, it is essential to document what they are and how they are calculated. For example, if a special report requires caseload statistics for the prior quarter, current quarter and estimated next quarter, document how the data was obtained and the assumptions and details of how the projection is determined.

Segregation of duties is imperative to avoid findings with performance and special reports, just like it is with financial reports. A secondary review of the data for reasonableness and accuracy may catch questions such as:

• Does this information in the report agree with the underlying support?
• Is the source of this information appropriate?
• Why did the estimate significantly change?
• The cost/meal is higher than last year; does the underlying data support this change?

On the Horizon

With the recent change and updates to Uniform Guidance in fall 2020, there was a heavy emphasis placed on performance objectives and measures. Federal agencies now have the directive to develop performance metrics with grantees reporting on those metrics. Reporting will continue to become more prominent, and data gathering and data accuracy will be an increasing emphasis.

If the reports are not accurate, then the users can’t rely on them and decision-makers may come to incorrect conclusions. Properly developed internal controls, specifically reviewed by someone independent of the preparer, are key to catching inaccurate reporting.