Abc Entity Single Audit Case

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ABC Entity – Single Audit Case
After obtaining an understanding of the accounting system and related controls over financial reporting of ABC Entity, I decided to test a sample of sixty disbursements for compliance with the allowable costs/cost principle requirements of the Compliance Supplement. In the following paragraphs, I will provide an opinion on compliance related to the sampled items with support and justification for my decisions.
The first set of items sampled for compliance included eight disbursements related to payroll for various staff members with various percentages of their time charged to the programs funded by the Federal awards. According to §200.430 Compensation – personal services, costs of compensation for personal services …show more content…
Of these thirteen disbursements, three were air travel reimbursements (two couch tickets and one first-class ticket), seven were mileage reimbursements (calculated at the IRS approved rates), and three others were hotel and meal reimbursements (one including a bottle of wine for an evening party). Pursuant to §200.474 Travel Costs and §200.423 Alcoholic Beverages, I believe that a portion of these travel disbursements may be allowable. According to §200.474, costs incurred by employees and officers for travel must be considered reasonable and otherwise allowable only to the extent that these costs do not exceed charges normally allowed by the entity in its regular operations as the result of the entity’s written travel policy. Furthermore, airfare costs are allowable if the costs do not exceed the basic least expensive unrestricted accommodations class offered by commercial airlines, result in additional costs that would offset transportation savings, require unreasonable traveling conditions, or offer accommodations not reasonably adequate for the traveler’s medical needs.
Therefore, I found all but one of the disbursements related to travel to be allowable if they have been properly documented by management and comply with the entity’s written travel policy. However, one of the hotel and meal reimbursements would be unallowable given that §200.423 …show more content…
According to §200.449 Interest, costs incurred for interest on borrowed capital, temporary use of endowment funds, or the use the entity’s own funds, are unallowable. Furthermore, pursuant to §200.434 Contributions and donations, costs of contributions and donations, including cash, from the entity to other entities, are unallowable. Therefore, I believe that these disbursements would not be allowable nor comply with the allowable costs/cost principle requirements of the Compliance
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