Audit of MCC’s Fiscal Years 2017 and 2016 Financial Statements

Audit Report
Report Number
M-000-18-002-C

We contracted with the independent certified public accounting firm CliftonLarsonAllen LLP to conduct an audit of MCC’s financial statements for fiscal years 2017 and 2016. The audit firm concluded these financial statements were presented fairly, in all material respects, in accordance with U.S. generally accepted accounting principles. The audit firm found no instances of noncompliance with certain provisions of laws, regulations, contracts, and grant agreements.

The auditors reported two significant deficiencies in internal control related to grant accrual estimates and validation (modified repeat finding) and to Millennium Challenge Accounts’ financial reporting and compliance (new finding). To address the significant deficiencies identified in the report, the audit firm made, and OIG agreed with, eight recommendations. MCC’s management agreed with all eight.

Recommendations

Recommendation 1

Evaluate whether its grant accrual methodology assumptions and calculations are effective. This evaluation should include an assessment of root causes for variances in estimated and actual accruals and take into consideration, experiences from at least the last 5 years.

Questioned Cost:
$0
Recommendation 2

Update the “Expense Accruals Financial Management Division Procedure Manual” to:

  • Require supporting documentation, including rationale for deviating from MCC’s accrual policy and procedures. This documentation should also include MCC’s management approval for any deviations.
  • Indicate in the guidance how reinstated unused spending authority and applicable subsequent disbursements are to be addressed in the grant accrual calculation.
Questioned Cost:
$0
Recommendation 3

Correct the accrual data for quarters three and four to reflect the actual spending authority and disbursements.

Questioned Cost:
$0
Recommendation 4

Update the "Compact Grant Accrual Validation Data Call Desktop Manual" to include timeframes for validating Millennium Challenge Accounts' grant accrual estimates and MCC's follow-up on significant differences so errors are promptly identified and addressed.

Questioned Cost:
$0
Recommendation 5

Provide Millennium Challenge Accounts with additional written instructions and training on evaluating the reasonableness of MCC's grant accrual estimates, and require each Millennium Challenge Account to submit documentation showing why it agrees with MCC's estimate.

Questioned Cost:
$0
Recommendation 6

Implement procedures for tracking and monitoring Millennium Challenge Accounts’ compliance with grant management policies and procedures, including Millennium Challenge Accounts' grant oversight, procurement eligibility verification, and grant award processes.

Questioned Cost:
$0
Recommendation 7

Enforce the requirement for the Millennium Challenge Accounts to submit quarterly financial reports and financial information by the due dates.

Questioned Cost:
$0
Recommendation 8

Establish procedures to ensure that Millennium Challenge Accounts' are providing accurate, complete, supportable, and valid financial information for data calls for contract retentions.

Questioned Cost:
$0