Finding 2022-001 Internal Control Over Debarment Type of Finding: Significant Deficiency in Internal Control over Compliance Condition and Context: An effective internal control system was not in place at the Organization to ensure compliance with requirements related to reviewing the debarment and suspension status of subrecipients before issuing subawards of federal funds. Criteria: Management is responsible for establishing internal controls to prevent making subawards to any party which is debarred, suspended, otherwise excluded from, or ineligible for participation in Federal assistance programs by any Federal department or agency. Cause: The Organization had not established an effective system of internal controls that would have ensured compliance with the grant agreement and the requirement to review federal debarment or suspended status for all subrecipients. Effect: The failure to establish an internal control system could enable noncompliance to go undetected. Noncompliance with the grant agreement leading to subawards made to debarred entities could have resulted in the loss of federal funds to the Organization. Questioned Costs: There were no questioned costs identified. Recommendation: We recommended that the Organization's management establish and implement a system of internal controls and maintain adequate supporting documentation to ensure all subrecipients are reviewed for federal debarment and suspension status before granting subawards. Views of Responsible Officials: During the year ended December 31, 2022, management began reviewing the debarment and suspension of sub recipients prior to the disbursement of funds expected to be reimbursed by federal funds. The Organization will also institute a new policy requiring all future contracts with sub recipients to include a certification from the sub recipient organization stating the sub recipient organization and its senior members of management have not been notified of suspension or debarment from receiving federal funds.
Finding 2022-002 Timeliness of Subrecipient Payments Type of Finding: Compliance finding in procuring payments to subrecipients Condition and Context: During our audit, it was determined that the auditee failed to adhere to the 30-day payment requirement for a specific subrecipient. We reviewed the payment request documentation and verified that it was complete and accurate. However, the auditee did not process the payment within the stipulated timeframe. Criteria: According to the rules and conditions of the program funding, the Organization must pay each subrecipient for allowable costs within 30 days after receiving the subrecipient?s complete payment request. Cause: Our assessment suggests that the delayed payment resulted from inadequate internal controls and processes related to payment processing and monitoring. The auditee lacked a systematic approach to promptly review, approve, and process subrecipient payment requests, leading to the violation of the 30-day requirement. Effect: The auditee's failure to make timely payments to the subrecipient negatively affects the subrecipient's cash flow, potentially hampering their ability to carry out their activities as planned and jeopardizing the success of the funded project. Additionally, the noncompliance with the 30-day payment requirement violates the terms and conditions of the federal award and the Uniform Guidance. This deficiency could impact the auditee's eligibility for future federal funding. Questioned Costs: Known questioned costs of $12,452 were identified. Recommendation: Based on our findings, we recommend that the auditee should establish a written policy outlining the procedures for processing subrecipient payment requests within the required 30-day timeframe. This policy should include clear roles and responsibilities, approval processes, and escalation procedures for exceptional circumstances. Views of Responsible Officials: During the year ended December 31, 2022, management began reconciling federal grants monthly, ensuring revenues and expenses for the month and year to date net to zero. In conjunction with this process, management reviews accounts payable schedules on a monthly basis for outstanding sub-recipient invoices due and invoices due are paid prior to the 30-day payment requirement.
Finding 2022-001 Internal Control Over Debarment Type of Finding: Significant Deficiency in Internal Control over Compliance Condition and Context: An effective internal control system was not in place at the Organization to ensure compliance with requirements related to reviewing the debarment and suspension status of subrecipients before issuing subawards of federal funds. Criteria: Management is responsible for establishing internal controls to prevent making subawards to any party which is debarred, suspended, otherwise excluded from, or ineligible for participation in Federal assistance programs by any Federal department or agency. Cause: The Organization had not established an effective system of internal controls that would have ensured compliance with the grant agreement and the requirement to review federal debarment or suspended status for all subrecipients. Effect: The failure to establish an internal control system could enable noncompliance to go undetected. Noncompliance with the grant agreement leading to subawards made to debarred entities could have resulted in the loss of federal funds to the Organization. Questioned Costs: There were no questioned costs identified. Recommendation: We recommended that the Organization's management establish and implement a system of internal controls and maintain adequate supporting documentation to ensure all subrecipients are reviewed for federal debarment and suspension status before granting subawards. Views of Responsible Officials: During the year ended December 31, 2022, management began reviewing the debarment and suspension of sub recipients prior to the disbursement of funds expected to be reimbursed by federal funds. The Organization will also institute a new policy requiring all future contracts with sub recipients to include a certification from the sub recipient organization stating the sub recipient organization and its senior members of management have not been notified of suspension or debarment from receiving federal funds.
Finding 2022-002 Timeliness of Subrecipient Payments Type of Finding: Compliance finding in procuring payments to subrecipients Condition and Context: During our audit, it was determined that the auditee failed to adhere to the 30-day payment requirement for a specific subrecipient. We reviewed the payment request documentation and verified that it was complete and accurate. However, the auditee did not process the payment within the stipulated timeframe. Criteria: According to the rules and conditions of the program funding, the Organization must pay each subrecipient for allowable costs within 30 days after receiving the subrecipient?s complete payment request. Cause: Our assessment suggests that the delayed payment resulted from inadequate internal controls and processes related to payment processing and monitoring. The auditee lacked a systematic approach to promptly review, approve, and process subrecipient payment requests, leading to the violation of the 30-day requirement. Effect: The auditee's failure to make timely payments to the subrecipient negatively affects the subrecipient's cash flow, potentially hampering their ability to carry out their activities as planned and jeopardizing the success of the funded project. Additionally, the noncompliance with the 30-day payment requirement violates the terms and conditions of the federal award and the Uniform Guidance. This deficiency could impact the auditee's eligibility for future federal funding. Questioned Costs: Known questioned costs of $12,452 were identified. Recommendation: Based on our findings, we recommend that the auditee should establish a written policy outlining the procedures for processing subrecipient payment requests within the required 30-day timeframe. This policy should include clear roles and responsibilities, approval processes, and escalation procedures for exceptional circumstances. Views of Responsible Officials: During the year ended December 31, 2022, management began reconciling federal grants monthly, ensuring revenues and expenses for the month and year to date net to zero. In conjunction with this process, management reviews accounts payable schedules on a monthly basis for outstanding sub-recipient invoices due and invoices due are paid prior to the 30-day payment requirement.