Orlando Sheriff Can't Dodge Federal Grant Auditors
Audit report cites lack of staff time tracking and other basic errors and calls for a return of a quarter of two grants totalling about one million dollars.
Orlando sheriff Kevin Beary has been under press scrutiny for over a year regarding his role in a nonprofit organization he started. National Domestic Preparedness Coalition Inc (no Form 990—it is probably a 501(c)(4) or 501(c)(6)) developed software to assess exposure of buildings to terrorist attack. The latest reports give us a peek into two audit reports, one from the county (story here and audit report PDF 193Kb) and one from the Department of Homeland Security auditors (story here and audit report PDF 557kb).
The largest dollar disallowance in the DHS audit came from a failure to document staff time spent working on the grant. In deadpan auditor fashion, the report notes that NDPCI records showed that most of the staff spending on the grant had taken place before December 2004, even though the grant lasted until September 2005. Employee time sheets did not indicate that they were working on the grant. When NDPCI produced a spreadsheet listing when staff was working on the grant, the auditors found two instances where staff were actually on vacation. Auditors were told that sherrif's office staff worked on the grant on off-hours, but the auditors noted most e-mails they were given to demonstrate the work effort were from regular work hours.
There was the matter of allocation of administrative costs, which government regulations require must be shared proportionately by all activities in an organization. The audit found that that all administrative costs were charged to the grant, and of course disallowed all but the government's proportionate share.
Moving on, the auditors found that the full cost ofthe software licenses were charged to the grant, even though NDPCI received a 28% credit on the purchase (due to an arrangement where NDPCI had given another firm the right to distribute to software). NDPCI claimed the 28% was a royalty, but the auditors countered that royalties can be excluded only if the government had paid for the development of the software. This grant was for implementation, not software development.
All in all, a good object lesson about some of the basics of US government grant accounting rules.
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