Finding 2022-001: Reconciliation of Asset and Liability Accounts Federal Programs: All Programs Criteria: As stated in 2 CFR 200.303, the non-Federal entity (i.e. the Consolidated Entity) must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations and terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or in the ?Internal Control Integrated Framework? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: At the commencement of our audit fieldwork, we noted that some asset and liability accounts were not properly reconciled as of September 30, 2022. We also noted some schedules and reconciliations were not available for examination at commencement of audit fieldwork and/or were inaccurately prepared including accrued expenses, prepaid expenses, employee advances, bureaus bank reconciliations, fixed assets and deferred rent accounts, which resulted in a significant delay in the audit process. Account reconciliations are a key basic internal control for any organization. Without such reconciliations, the financial reports generated are likely to be inaccurate and unreliable. We also noted a couple of reconciliations were not substantiated by either supporting documents or details to support the balance of the account. Cause: The Consolidated Entity did not have the proper internal controls in place to ensure timely and accurate reconciliation of its asset and liability accounts. Effect or Potential Effect: Without timely and accurate reconciliation of asset and liability accounts, there exists the potential for undetected errors or misappropriation of funds, as well as internal consolidated financial statements that are incomplete, inaccurate and unreliable. Questioned Costs: None noted. Context: Asset and liability account reconciliations were not performed adequately and/or on a timely basis. Identification as a Repeat Finding: 2021-001 Recommendation: We recommend that procedures for reconciling all accounts on a monthly basis be strengthened and made a priority. A monthly closing checklist may be a useful tool to document the performance of these control procedures and to ensure that each person?s assigned responsibilities are being performed in a timely manner in the proper format.
Finding 2022-002: Salary and Benefits Reconciliation and Controls Federal Programs: All Programs Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200, paragraph 430 ?Compensation ? personal services? requires that charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed and that these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, these records must comply with established accounting policies and practices of the non-Federal entity. Condition: During our audit, we reviewed the Consolidated Entity's controls over salary, benefits and payroll activities across a multitude of varying approaches. We selected samples of payroll transactions of U.S employment contract holders; we engaged with an in-country payroll specialist in Prague to select a significant number of transactions to test compliance with local rules and regulations; we reviewed material benefits accrual balances as of fiscal year end; and we observed changes across the financial information analytically over several years. Each year we often run into challenges obtaining the necessary third party corroborating evidence to substantiate balances or identify errors in testing. For the 2022 audit we observed the following: ? Prague testing identified a number of variances in attendance sheets versus payroll provided such as (1) an instance of incorrect hours paid, (2) an instance of incorrect taxes paid, (3) an instance of mislabeled leave codes, and (4) two instances of allowances included in average hourly earnings calculations ? Our testing of Bureau employment contract holders noted variances in salaries paid against employment contracts for 3 out of 40 instances tested. ? U.S. taxpayers salaries are not reconciled against tax reporting documents (i.e. 941 reports) Cause: The Consolidated Entity may not have appropriate policies and procedures in place regarding salary and benefits reconciliation to ensure all balances are properly stated throughout the year. Effect or Potential Effect: The Consolidated Entity was unable to provide key elements in a system of internal controls exist over salary and benefits reconciliations that provides assurance that the related expenditures charged to the federal grants are accurate allowable and properly allocated. Questioned Costs: None noted. Context: These are conditions identified per review of the Consolidated Entity's controls over salary, benefits and payroll activities across a multitude of varying approaches using a statistically valid sample. Identification as a Repeat Finding: Not applicable Recommendation: The audit is (and has always been) a risk-based approach engagement. Salaries, benefits and payroll are one of the largest and most complex transaction cycles for the organization. Our samples represent an extremely small percentage of a much larger population. Our audit procedures require us to extrapolate errors found, across the larger population. The likelihood of additional errors and larger misstatements is high based on the general results of testing. We feel that, in identifying risks for the organization, RFE/RL should look to enhance controls and reconciliations around payroll and benefits at both a high and granular level.
Finding 2022-003: Compliance with U.S. Government Terrorism Requirements Federal Programs: All Programs Criteria: The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act of 2001 was enacted in order to deter and punish terrorist acts in the United States and around the world and to enhance law enforcement investigatory tools. Executive Order (EO) 13224, which was signed into law during 2001, provides a means by which to disrupt the financial support network for terrorists and related organizations by authorizing the U.S. Treasury, in consultation with other U.S. Government agencies, to designate and block the assets of foreign individuals and entities that commit, or pose a significant risk of committing, acts of terrorism. Condition: During our audit, we noted instances in which the Consolidated Entity did not perform, or did not maintain proper support to demonstrate that it performed, terrorist screening of its contractors, vendors, employees, etc. in accordance with the above-noted requirements. We also noted instances in which screenings were performed after the fact or were not updated in the current year. The failure to screen such parties increases the possibility that U.S. Government funds may inadvertently be provided to individuals or organizations deemed to be excluded by the U.S. Government. This is especially crucial based on the fact that the Consolidated Entity is funded almost entirely by grants awarded from the U.S. Government. Cause: The Consolidated Entity does not have policies and procedures in place with respect to these requirements. Effect or Potential Effect: The Consolidated Entity could inadvertently contract with and/or make payments to vendors, suppliers, employees, subcontractors and subrecipients who have been disbarred, suspended or otherwise excluded from receiving Federal funds. Questioned Costs: None noted. Context: The Consolidated Entity failed to consistently perform and/or properly document its due diligence with respect to these requirements. Identification as a Repeat Finding: 2021-002 Recommendation: Accordingly, we recommend that the Consolidated Entity develop a formal policy with respect to this requirement to ensure screening processes are conducted properly, timely and that the process is properly documented. This policy should relate to transactions in the United States and internationally (i.e., in Prague and the various bureaus). Furthermore, management should regularly communicate these policies and procedures to all employees, and it should emphasize the importance of maintaining full compliance with U.S. Government ??anti-terrorism? provisions.
Finding 2022-004: Use of Sole-Sourced Justification for Procurement Federal Programs: All Programs Criteria: Under Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Section 200.320(f) ?Methods of procurement to be followed?, procurements by noncompetitive proposals (i.e. sole-sourced justification) may be used only when one or more of the following circumstances apply: ? The item is available only from a single source; ? The public exigency or emergency for the requirement will not permit a delay resulting from competitive solicitation; ? The Federal awarding agency or pass-through entity expressly authorizes noncompetitive proposals in response to a written request from the non-Federal entity; or ? After solicitation of a number of sources, competition is determined inadequate. Condition: Our audit work over various expenses disclosed instances of consultants and vendors hired under the sole-sourced justification method of procurement. Although the expenses were properly supported, the rationale for several sole-sourced selections was not properly documented and/or not always appeared to be reasonable. Cause: The Consolidated Entity was not in full compliance with sole-sourced justification requirements, as stated above, during the year ended September 30, 2022. Effect or Potential Effect: The Consolidated Entity could enter into contractual arrangements whereby they are not receiving the best value for the organization and/or in which there exists conflicts of interest. Ultimately, transparency with respect to these transactions could be compromised if the proper procurement actions are not followed. Questioned Costs: None noted. Context: The Consolidated Entity failed to consistently document its justification with respect to solesourced according to the above-noted requirements. Identification as a Repeat Finding: 2021-003 Recommendation: We recommend that the Consolidated Entity limit its use of sole-sourced justification based on the above-noted requirements. In cases where sole-sourced is appropriate, we recommend that the actions (or lack of actions) be properly and fully documented. Subsequent to the year under audit, we noted management is working on updating it?s policies and practices related to sole-source justification and has consulted with us on several matters to ensure not only compliance, but efficiencies are maintained.
Finding 2022-001: Reconciliation of Asset and Liability Accounts Federal Programs: All Programs Criteria: As stated in 2 CFR 200.303, the non-Federal entity (i.e. the Consolidated Entity) must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations and terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or in the ?Internal Control Integrated Framework? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: At the commencement of our audit fieldwork, we noted that some asset and liability accounts were not properly reconciled as of September 30, 2022. We also noted some schedules and reconciliations were not available for examination at commencement of audit fieldwork and/or were inaccurately prepared including accrued expenses, prepaid expenses, employee advances, bureaus bank reconciliations, fixed assets and deferred rent accounts, which resulted in a significant delay in the audit process. Account reconciliations are a key basic internal control for any organization. Without such reconciliations, the financial reports generated are likely to be inaccurate and unreliable. We also noted a couple of reconciliations were not substantiated by either supporting documents or details to support the balance of the account. Cause: The Consolidated Entity did not have the proper internal controls in place to ensure timely and accurate reconciliation of its asset and liability accounts. Effect or Potential Effect: Without timely and accurate reconciliation of asset and liability accounts, there exists the potential for undetected errors or misappropriation of funds, as well as internal consolidated financial statements that are incomplete, inaccurate and unreliable. Questioned Costs: None noted. Context: Asset and liability account reconciliations were not performed adequately and/or on a timely basis. Identification as a Repeat Finding: 2021-001 Recommendation: We recommend that procedures for reconciling all accounts on a monthly basis be strengthened and made a priority. A monthly closing checklist may be a useful tool to document the performance of these control procedures and to ensure that each person?s assigned responsibilities are being performed in a timely manner in the proper format.
Finding 2022-002: Salary and Benefits Reconciliation and Controls Federal Programs: All Programs Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200, paragraph 430 ?Compensation ? personal services? requires that charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed and that these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, these records must comply with established accounting policies and practices of the non-Federal entity. Condition: During our audit, we reviewed the Consolidated Entity's controls over salary, benefits and payroll activities across a multitude of varying approaches. We selected samples of payroll transactions of U.S employment contract holders; we engaged with an in-country payroll specialist in Prague to select a significant number of transactions to test compliance with local rules and regulations; we reviewed material benefits accrual balances as of fiscal year end; and we observed changes across the financial information analytically over several years. Each year we often run into challenges obtaining the necessary third party corroborating evidence to substantiate balances or identify errors in testing. For the 2022 audit we observed the following: ? Prague testing identified a number of variances in attendance sheets versus payroll provided such as (1) an instance of incorrect hours paid, (2) an instance of incorrect taxes paid, (3) an instance of mislabeled leave codes, and (4) two instances of allowances included in average hourly earnings calculations ? Our testing of Bureau employment contract holders noted variances in salaries paid against employment contracts for 3 out of 40 instances tested. ? U.S. taxpayers salaries are not reconciled against tax reporting documents (i.e. 941 reports) Cause: The Consolidated Entity may not have appropriate policies and procedures in place regarding salary and benefits reconciliation to ensure all balances are properly stated throughout the year. Effect or Potential Effect: The Consolidated Entity was unable to provide key elements in a system of internal controls exist over salary and benefits reconciliations that provides assurance that the related expenditures charged to the federal grants are accurate allowable and properly allocated. Questioned Costs: None noted. Context: These are conditions identified per review of the Consolidated Entity's controls over salary, benefits and payroll activities across a multitude of varying approaches using a statistically valid sample. Identification as a Repeat Finding: Not applicable Recommendation: The audit is (and has always been) a risk-based approach engagement. Salaries, benefits and payroll are one of the largest and most complex transaction cycles for the organization. Our samples represent an extremely small percentage of a much larger population. Our audit procedures require us to extrapolate errors found, across the larger population. The likelihood of additional errors and larger misstatements is high based on the general results of testing. We feel that, in identifying risks for the organization, RFE/RL should look to enhance controls and reconciliations around payroll and benefits at both a high and granular level.
Finding 2022-003: Compliance with U.S. Government Terrorism Requirements Federal Programs: All Programs Criteria: The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act of 2001 was enacted in order to deter and punish terrorist acts in the United States and around the world and to enhance law enforcement investigatory tools. Executive Order (EO) 13224, which was signed into law during 2001, provides a means by which to disrupt the financial support network for terrorists and related organizations by authorizing the U.S. Treasury, in consultation with other U.S. Government agencies, to designate and block the assets of foreign individuals and entities that commit, or pose a significant risk of committing, acts of terrorism. Condition: During our audit, we noted instances in which the Consolidated Entity did not perform, or did not maintain proper support to demonstrate that it performed, terrorist screening of its contractors, vendors, employees, etc. in accordance with the above-noted requirements. We also noted instances in which screenings were performed after the fact or were not updated in the current year. The failure to screen such parties increases the possibility that U.S. Government funds may inadvertently be provided to individuals or organizations deemed to be excluded by the U.S. Government. This is especially crucial based on the fact that the Consolidated Entity is funded almost entirely by grants awarded from the U.S. Government. Cause: The Consolidated Entity does not have policies and procedures in place with respect to these requirements. Effect or Potential Effect: The Consolidated Entity could inadvertently contract with and/or make payments to vendors, suppliers, employees, subcontractors and subrecipients who have been disbarred, suspended or otherwise excluded from receiving Federal funds. Questioned Costs: None noted. Context: The Consolidated Entity failed to consistently perform and/or properly document its due diligence with respect to these requirements. Identification as a Repeat Finding: 2021-002 Recommendation: Accordingly, we recommend that the Consolidated Entity develop a formal policy with respect to this requirement to ensure screening processes are conducted properly, timely and that the process is properly documented. This policy should relate to transactions in the United States and internationally (i.e., in Prague and the various bureaus). Furthermore, management should regularly communicate these policies and procedures to all employees, and it should emphasize the importance of maintaining full compliance with U.S. Government ??anti-terrorism? provisions.
Finding 2022-004: Use of Sole-Sourced Justification for Procurement Federal Programs: All Programs Criteria: Under Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Section 200.320(f) ?Methods of procurement to be followed?, procurements by noncompetitive proposals (i.e. sole-sourced justification) may be used only when one or more of the following circumstances apply: ? The item is available only from a single source; ? The public exigency or emergency for the requirement will not permit a delay resulting from competitive solicitation; ? The Federal awarding agency or pass-through entity expressly authorizes noncompetitive proposals in response to a written request from the non-Federal entity; or ? After solicitation of a number of sources, competition is determined inadequate. Condition: Our audit work over various expenses disclosed instances of consultants and vendors hired under the sole-sourced justification method of procurement. Although the expenses were properly supported, the rationale for several sole-sourced selections was not properly documented and/or not always appeared to be reasonable. Cause: The Consolidated Entity was not in full compliance with sole-sourced justification requirements, as stated above, during the year ended September 30, 2022. Effect or Potential Effect: The Consolidated Entity could enter into contractual arrangements whereby they are not receiving the best value for the organization and/or in which there exists conflicts of interest. Ultimately, transparency with respect to these transactions could be compromised if the proper procurement actions are not followed. Questioned Costs: None noted. Context: The Consolidated Entity failed to consistently document its justification with respect to solesourced according to the above-noted requirements. Identification as a Repeat Finding: 2021-003 Recommendation: We recommend that the Consolidated Entity limit its use of sole-sourced justification based on the above-noted requirements. In cases where sole-sourced is appropriate, we recommend that the actions (or lack of actions) be properly and fully documented. Subsequent to the year under audit, we noted management is working on updating it?s policies and practices related to sole-source justification and has consulted with us on several matters to ensure not only compliance, but efficiencies are maintained.
Finding 2022-001: Reconciliation of Asset and Liability Accounts Federal Programs: All Programs Criteria: As stated in 2 CFR 200.303, the non-Federal entity (i.e. the Consolidated Entity) must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations and terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or in the ?Internal Control Integrated Framework? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: At the commencement of our audit fieldwork, we noted that some asset and liability accounts were not properly reconciled as of September 30, 2022. We also noted some schedules and reconciliations were not available for examination at commencement of audit fieldwork and/or were inaccurately prepared including accrued expenses, prepaid expenses, employee advances, bureaus bank reconciliations, fixed assets and deferred rent accounts, which resulted in a significant delay in the audit process. Account reconciliations are a key basic internal control for any organization. Without such reconciliations, the financial reports generated are likely to be inaccurate and unreliable. We also noted a couple of reconciliations were not substantiated by either supporting documents or details to support the balance of the account. Cause: The Consolidated Entity did not have the proper internal controls in place to ensure timely and accurate reconciliation of its asset and liability accounts. Effect or Potential Effect: Without timely and accurate reconciliation of asset and liability accounts, there exists the potential for undetected errors or misappropriation of funds, as well as internal consolidated financial statements that are incomplete, inaccurate and unreliable. Questioned Costs: None noted. Context: Asset and liability account reconciliations were not performed adequately and/or on a timely basis. Identification as a Repeat Finding: 2021-001 Recommendation: We recommend that procedures for reconciling all accounts on a monthly basis be strengthened and made a priority. A monthly closing checklist may be a useful tool to document the performance of these control procedures and to ensure that each person?s assigned responsibilities are being performed in a timely manner in the proper format.
Finding 2022-002: Salary and Benefits Reconciliation and Controls Federal Programs: All Programs Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200, paragraph 430 ?Compensation ? personal services? requires that charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed and that these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, these records must comply with established accounting policies and practices of the non-Federal entity. Condition: During our audit, we reviewed the Consolidated Entity's controls over salary, benefits and payroll activities across a multitude of varying approaches. We selected samples of payroll transactions of U.S employment contract holders; we engaged with an in-country payroll specialist in Prague to select a significant number of transactions to test compliance with local rules and regulations; we reviewed material benefits accrual balances as of fiscal year end; and we observed changes across the financial information analytically over several years. Each year we often run into challenges obtaining the necessary third party corroborating evidence to substantiate balances or identify errors in testing. For the 2022 audit we observed the following: ? Prague testing identified a number of variances in attendance sheets versus payroll provided such as (1) an instance of incorrect hours paid, (2) an instance of incorrect taxes paid, (3) an instance of mislabeled leave codes, and (4) two instances of allowances included in average hourly earnings calculations ? Our testing of Bureau employment contract holders noted variances in salaries paid against employment contracts for 3 out of 40 instances tested. ? U.S. taxpayers salaries are not reconciled against tax reporting documents (i.e. 941 reports) Cause: The Consolidated Entity may not have appropriate policies and procedures in place regarding salary and benefits reconciliation to ensure all balances are properly stated throughout the year. Effect or Potential Effect: The Consolidated Entity was unable to provide key elements in a system of internal controls exist over salary and benefits reconciliations that provides assurance that the related expenditures charged to the federal grants are accurate allowable and properly allocated. Questioned Costs: None noted. Context: These are conditions identified per review of the Consolidated Entity's controls over salary, benefits and payroll activities across a multitude of varying approaches using a statistically valid sample. Identification as a Repeat Finding: Not applicable Recommendation: The audit is (and has always been) a risk-based approach engagement. Salaries, benefits and payroll are one of the largest and most complex transaction cycles for the organization. Our samples represent an extremely small percentage of a much larger population. Our audit procedures require us to extrapolate errors found, across the larger population. The likelihood of additional errors and larger misstatements is high based on the general results of testing. We feel that, in identifying risks for the organization, RFE/RL should look to enhance controls and reconciliations around payroll and benefits at both a high and granular level.
Finding 2022-003: Compliance with U.S. Government Terrorism Requirements Federal Programs: All Programs Criteria: The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act of 2001 was enacted in order to deter and punish terrorist acts in the United States and around the world and to enhance law enforcement investigatory tools. Executive Order (EO) 13224, which was signed into law during 2001, provides a means by which to disrupt the financial support network for terrorists and related organizations by authorizing the U.S. Treasury, in consultation with other U.S. Government agencies, to designate and block the assets of foreign individuals and entities that commit, or pose a significant risk of committing, acts of terrorism. Condition: During our audit, we noted instances in which the Consolidated Entity did not perform, or did not maintain proper support to demonstrate that it performed, terrorist screening of its contractors, vendors, employees, etc. in accordance with the above-noted requirements. We also noted instances in which screenings were performed after the fact or were not updated in the current year. The failure to screen such parties increases the possibility that U.S. Government funds may inadvertently be provided to individuals or organizations deemed to be excluded by the U.S. Government. This is especially crucial based on the fact that the Consolidated Entity is funded almost entirely by grants awarded from the U.S. Government. Cause: The Consolidated Entity does not have policies and procedures in place with respect to these requirements. Effect or Potential Effect: The Consolidated Entity could inadvertently contract with and/or make payments to vendors, suppliers, employees, subcontractors and subrecipients who have been disbarred, suspended or otherwise excluded from receiving Federal funds. Questioned Costs: None noted. Context: The Consolidated Entity failed to consistently perform and/or properly document its due diligence with respect to these requirements. Identification as a Repeat Finding: 2021-002 Recommendation: Accordingly, we recommend that the Consolidated Entity develop a formal policy with respect to this requirement to ensure screening processes are conducted properly, timely and that the process is properly documented. This policy should relate to transactions in the United States and internationally (i.e., in Prague and the various bureaus). Furthermore, management should regularly communicate these policies and procedures to all employees, and it should emphasize the importance of maintaining full compliance with U.S. Government ??anti-terrorism? provisions.
Finding 2022-004: Use of Sole-Sourced Justification for Procurement Federal Programs: All Programs Criteria: Under Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Section 200.320(f) ?Methods of procurement to be followed?, procurements by noncompetitive proposals (i.e. sole-sourced justification) may be used only when one or more of the following circumstances apply: ? The item is available only from a single source; ? The public exigency or emergency for the requirement will not permit a delay resulting from competitive solicitation; ? The Federal awarding agency or pass-through entity expressly authorizes noncompetitive proposals in response to a written request from the non-Federal entity; or ? After solicitation of a number of sources, competition is determined inadequate. Condition: Our audit work over various expenses disclosed instances of consultants and vendors hired under the sole-sourced justification method of procurement. Although the expenses were properly supported, the rationale for several sole-sourced selections was not properly documented and/or not always appeared to be reasonable. Cause: The Consolidated Entity was not in full compliance with sole-sourced justification requirements, as stated above, during the year ended September 30, 2022. Effect or Potential Effect: The Consolidated Entity could enter into contractual arrangements whereby they are not receiving the best value for the organization and/or in which there exists conflicts of interest. Ultimately, transparency with respect to these transactions could be compromised if the proper procurement actions are not followed. Questioned Costs: None noted. Context: The Consolidated Entity failed to consistently document its justification with respect to solesourced according to the above-noted requirements. Identification as a Repeat Finding: 2021-003 Recommendation: We recommend that the Consolidated Entity limit its use of sole-sourced justification based on the above-noted requirements. In cases where sole-sourced is appropriate, we recommend that the actions (or lack of actions) be properly and fully documented. Subsequent to the year under audit, we noted management is working on updating it?s policies and practices related to sole-source justification and has consulted with us on several matters to ensure not only compliance, but efficiencies are maintained.
Finding 2022-001: Reconciliation of Asset and Liability Accounts Federal Programs: All Programs Criteria: As stated in 2 CFR 200.303, the non-Federal entity (i.e. the Consolidated Entity) must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations and terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or in the ?Internal Control Integrated Framework? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: At the commencement of our audit fieldwork, we noted that some asset and liability accounts were not properly reconciled as of September 30, 2022. We also noted some schedules and reconciliations were not available for examination at commencement of audit fieldwork and/or were inaccurately prepared including accrued expenses, prepaid expenses, employee advances, bureaus bank reconciliations, fixed assets and deferred rent accounts, which resulted in a significant delay in the audit process. Account reconciliations are a key basic internal control for any organization. Without such reconciliations, the financial reports generated are likely to be inaccurate and unreliable. We also noted a couple of reconciliations were not substantiated by either supporting documents or details to support the balance of the account. Cause: The Consolidated Entity did not have the proper internal controls in place to ensure timely and accurate reconciliation of its asset and liability accounts. Effect or Potential Effect: Without timely and accurate reconciliation of asset and liability accounts, there exists the potential for undetected errors or misappropriation of funds, as well as internal consolidated financial statements that are incomplete, inaccurate and unreliable. Questioned Costs: None noted. Context: Asset and liability account reconciliations were not performed adequately and/or on a timely basis. Identification as a Repeat Finding: 2021-001 Recommendation: We recommend that procedures for reconciling all accounts on a monthly basis be strengthened and made a priority. A monthly closing checklist may be a useful tool to document the performance of these control procedures and to ensure that each person?s assigned responsibilities are being performed in a timely manner in the proper format.
Finding 2022-002: Salary and Benefits Reconciliation and Controls Federal Programs: All Programs Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200, paragraph 430 ?Compensation ? personal services? requires that charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed and that these records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, these records must comply with established accounting policies and practices of the non-Federal entity. Condition: During our audit, we reviewed the Consolidated Entity's controls over salary, benefits and payroll activities across a multitude of varying approaches. We selected samples of payroll transactions of U.S employment contract holders; we engaged with an in-country payroll specialist in Prague to select a significant number of transactions to test compliance with local rules and regulations; we reviewed material benefits accrual balances as of fiscal year end; and we observed changes across the financial information analytically over several years. Each year we often run into challenges obtaining the necessary third party corroborating evidence to substantiate balances or identify errors in testing. For the 2022 audit we observed the following: ? Prague testing identified a number of variances in attendance sheets versus payroll provided such as (1) an instance of incorrect hours paid, (2) an instance of incorrect taxes paid, (3) an instance of mislabeled leave codes, and (4) two instances of allowances included in average hourly earnings calculations ? Our testing of Bureau employment contract holders noted variances in salaries paid against employment contracts for 3 out of 40 instances tested. ? U.S. taxpayers salaries are not reconciled against tax reporting documents (i.e. 941 reports) Cause: The Consolidated Entity may not have appropriate policies and procedures in place regarding salary and benefits reconciliation to ensure all balances are properly stated throughout the year. Effect or Potential Effect: The Consolidated Entity was unable to provide key elements in a system of internal controls exist over salary and benefits reconciliations that provides assurance that the related expenditures charged to the federal grants are accurate allowable and properly allocated. Questioned Costs: None noted. Context: These are conditions identified per review of the Consolidated Entity's controls over salary, benefits and payroll activities across a multitude of varying approaches using a statistically valid sample. Identification as a Repeat Finding: Not applicable Recommendation: The audit is (and has always been) a risk-based approach engagement. Salaries, benefits and payroll are one of the largest and most complex transaction cycles for the organization. Our samples represent an extremely small percentage of a much larger population. Our audit procedures require us to extrapolate errors found, across the larger population. The likelihood of additional errors and larger misstatements is high based on the general results of testing. We feel that, in identifying risks for the organization, RFE/RL should look to enhance controls and reconciliations around payroll and benefits at both a high and granular level.
Finding 2022-003: Compliance with U.S. Government Terrorism Requirements Federal Programs: All Programs Criteria: The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act of 2001 was enacted in order to deter and punish terrorist acts in the United States and around the world and to enhance law enforcement investigatory tools. Executive Order (EO) 13224, which was signed into law during 2001, provides a means by which to disrupt the financial support network for terrorists and related organizations by authorizing the U.S. Treasury, in consultation with other U.S. Government agencies, to designate and block the assets of foreign individuals and entities that commit, or pose a significant risk of committing, acts of terrorism. Condition: During our audit, we noted instances in which the Consolidated Entity did not perform, or did not maintain proper support to demonstrate that it performed, terrorist screening of its contractors, vendors, employees, etc. in accordance with the above-noted requirements. We also noted instances in which screenings were performed after the fact or were not updated in the current year. The failure to screen such parties increases the possibility that U.S. Government funds may inadvertently be provided to individuals or organizations deemed to be excluded by the U.S. Government. This is especially crucial based on the fact that the Consolidated Entity is funded almost entirely by grants awarded from the U.S. Government. Cause: The Consolidated Entity does not have policies and procedures in place with respect to these requirements. Effect or Potential Effect: The Consolidated Entity could inadvertently contract with and/or make payments to vendors, suppliers, employees, subcontractors and subrecipients who have been disbarred, suspended or otherwise excluded from receiving Federal funds. Questioned Costs: None noted. Context: The Consolidated Entity failed to consistently perform and/or properly document its due diligence with respect to these requirements. Identification as a Repeat Finding: 2021-002 Recommendation: Accordingly, we recommend that the Consolidated Entity develop a formal policy with respect to this requirement to ensure screening processes are conducted properly, timely and that the process is properly documented. This policy should relate to transactions in the United States and internationally (i.e., in Prague and the various bureaus). Furthermore, management should regularly communicate these policies and procedures to all employees, and it should emphasize the importance of maintaining full compliance with U.S. Government ??anti-terrorism? provisions.
Finding 2022-004: Use of Sole-Sourced Justification for Procurement Federal Programs: All Programs Criteria: Under Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) Section 200.320(f) ?Methods of procurement to be followed?, procurements by noncompetitive proposals (i.e. sole-sourced justification) may be used only when one or more of the following circumstances apply: ? The item is available only from a single source; ? The public exigency or emergency for the requirement will not permit a delay resulting from competitive solicitation; ? The Federal awarding agency or pass-through entity expressly authorizes noncompetitive proposals in response to a written request from the non-Federal entity; or ? After solicitation of a number of sources, competition is determined inadequate. Condition: Our audit work over various expenses disclosed instances of consultants and vendors hired under the sole-sourced justification method of procurement. Although the expenses were properly supported, the rationale for several sole-sourced selections was not properly documented and/or not always appeared to be reasonable. Cause: The Consolidated Entity was not in full compliance with sole-sourced justification requirements, as stated above, during the year ended September 30, 2022. Effect or Potential Effect: The Consolidated Entity could enter into contractual arrangements whereby they are not receiving the best value for the organization and/or in which there exists conflicts of interest. Ultimately, transparency with respect to these transactions could be compromised if the proper procurement actions are not followed. Questioned Costs: None noted. Context: The Consolidated Entity failed to consistently document its justification with respect to solesourced according to the above-noted requirements. Identification as a Repeat Finding: 2021-003 Recommendation: We recommend that the Consolidated Entity limit its use of sole-sourced justification based on the above-noted requirements. In cases where sole-sourced is appropriate, we recommend that the actions (or lack of actions) be properly and fully documented. Subsequent to the year under audit, we noted management is working on updating it?s policies and practices related to sole-source justification and has consulted with us on several matters to ensure not only compliance, but efficiencies are maintained.