Truckee River Watershed CouncilNon-Profit

FINDING 2020-001: CONTROLS OVER THE COST ALLOCATION TO GRANT CONTRACTS Program: U.S Environmental Protection Agency; Nonpoint Source Implementation Grants Assistance Listing Numbers: 66.460 Compliance Requirement: Allowable Costs Criteria: The system to control the allocation of costs should provide assurance that all the potential costs have been allocated to the applicable grants, that the same costs have not been charged to two or more grants, and whether errors have been made, intentional or otherwise (best practice). Condition: The organization?s system for allocating costs turns a double-entry bookkeeping system (QuickBooks) into a single-entry bookkeeping system (Excel) prior to the entry of cost numbers onto grantor reimbursement claims. Single-entry bookkeeping systems can be unreliable for financial reporting purposes. Cause: The design of the organization?s cost allocation process is not ideal. Effect: Management and the board can have little assurance that all the potential costs have been allocated to the applicable grants, that the same costs have not been charged to two or more grants, or whether errors have been made, intentional or otherwise. Recommendation: Excel spreadsheets should be used to summarize cost data prior to entry into the organization?s general ledger system, not the other way around. This process could be done concurrently with the preparation of government reimbursements reports.