Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control
over the federal award that provides assurance that the entity is managing the federal award in compliance with
federal statutes, regulations, and conditions of the federal award. The non-Federal entity’s documented
procurement procedures must conform to the procurement standards identified in 2 CFR 200.318 through
200.317 which also requires documentation to be retained to detail the history of procurements.
Condition: The organization has not adopted a procurement policy containing required provisions in accordance
with 2 CFR 200.318. For each of the 5 vendors selected for testing there was no documentation retained to
support the rationale for the method of procurement. Additionally, the Organization did not consider whether
the vendor was suspended or debarred from doing business with the federal government prior to entering the
covered transaction for each of the 5 vendors selected for testing.
Cause: The Organization has not adopted a procurement policy resulting in the lack of established internal
controls over the procurement process.
Effect: Without a written procurement policy in accordance with the Uniform Guidance, demonstrating that the
program complies with laws, regulations, and other compliance requirements is difficult.
Questioned Costs: None reported based on assessment of comparative pricing readily available.
Context/Sampling: A nonstatistical sample of 5 vendors out of 15 vendors were selected for testing.
Repeat Finding from Prior Year: No.
Recommendation: We recommend management review 2 CFR 200.318 through 200.327 and adopt a
procurement policy containing all required provisions including provisions to check for suspension and
debarment.
Views of Responsible Officials: Management is in agreement.
Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control
over the federal award that provides assurance that the entity is managing the federal award in compliance with
federal statutes, regulations, and conditions of the federal award. 2 CFR 200.328 and 2 CFR 200.329 require the
auditee to collect financial information and monitor its activities under federal awards to assure compliance
with applicable federal requirements and performance expectations are being achieved and report these items
in accordance with the program requirements.
Condition: Of three reports tested, two instances in which support was not retained to substantiate federal
share of expenditures reported in a quarterly report and the final report. Management subsequently worked to
reconcile reports out of the Organization’s accounting software to support federal expenditures reported within
the reports that materially agree. Additionally, individual who prepared the report is the same individual
approving the report prior to submission to the federal agency.
Cause: Support was not retained to substantiate amounts reported within a semi-annual report and final report.
Additionally, management hasn’t implemented controls ensuring the individual preparing the report is separate
from the individual who reviews and approves the report prior to submission to the federal agency.
Effect: Without retaining documentation to support the amounts reported, demonstrating that the program
complies with laws, regulations, and other compliance requirements is difficult. Additionally, not having a formal
oversight process over reporting results in a reasonable possibility that reports that are inaccurate or incomplete
could be submitted.
Questioned Costs: None reported.
Context/Sampling: Two out of four semi-annual financial reports were reviewed along with one annual financial
report. There was a total of five financial reports filed.
Repeat Finding from Prior Year: No.
Criteria: The Organization is required to have procedures in place to ensure that federal awards are expended
only for allowable costs in accordance with Subpart E – Cost Principles of the Uniform Guidance. Allowable costs
are supported by appropriate documentation and correctly charged as to account, amount, and period. 2 CFR
200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal
award that provides assurance that the entity is managing the federal award in compliance with federal
statutes, regulations, and the terms and conditions of the federal award. 2 CFR 200.430(i) establishes the
standards for documentation of personnel expenses including charges to Federal awards for salaries and wages.
Charges must be based on records that accurately reflect the work performed with the records meeting the
following standards:
a) Be supported by a system of internal control which provides reasonable assurance that the charges are
accurate, allowable, and properly allocated.
b) Be incorporated into the official records of the non-Federal entity.
c) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity,
not exceeding 100% of compensated activities.
d) Encompass both federally assisted, and all other activities compensated by the non-Federal entity on an
integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity’s
written policy.
e) Comply with the established accounting policies and practices of the non-Federal entity.
f) Support the distribution of the employee’s salary or wages among specific activities or cost objectives.
g) Budget estimates alone do not qualify as support for charges to Federal awards, but may be used for
interim accounting purposes.
Condition: Through testing over payroll expenditures management could not provide support to substantiate the
rate of pay paid to one employee was approved by the President or Board of Directors. Additionally, six
instances identified in which the employee’s wages that were billed to the federal award were billed at a higher
hourly rate than the employee’s hourly rate with the Organization.
Cause: There was a lapse in oversight of the internal control process ensuring management retained support of
President or Board of Directors approval of employee’s salary.
Effect: The Organization’s controls did not detect or correct the errors identified, which results in a reasonable
possibility that the Organization could submit disallowed costs under the federal awards.
Questioned Costs: No questioned costs over $25,000.
Context/Sampling: A nonstatistical sample of 29 payroll transactions out of approximately 144 total payroll
transactions, accounting for approximately $36,400 of $140,200 total payroll costs charged to federal program.
Repeat Finding from Prior Year: No.
Recommendation: We recommend management to review payroll policies and procedures over retaining
approvals over employee’s salary.
Views of Responsible Officials: Management is in agreement.
Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control
over the federal award that provides assurance that the entity is managing the federal award in compliance with
federal statutes, regulations, and conditions of the federal award. The non-Federal entity’s documented
procurement procedures must conform to the procurement standards identified in 2 CFR 200.318 through
200.317 which also requires documentation to be retained to detail the history of procurements.
Condition: The organization has not adopted a procurement policy containing required provisions in accordance
with 2 CFR 200.318. For each of the 5 vendors selected for testing there was no documentation retained to
support the rationale for the method of procurement. Additionally, the Organization did not consider whether
the vendor was suspended or debarred from doing business with the federal government prior to entering the
covered transaction for each of the 5 vendors selected for testing.
Cause: The Organization has not adopted a procurement policy resulting in the lack of established internal
controls over the procurement process.
Effect: Without a written procurement policy in accordance with the Uniform Guidance, demonstrating that the
program complies with laws, regulations, and other compliance requirements is difficult.
Questioned Costs: None reported based on assessment of comparative pricing readily available.
Context/Sampling: A nonstatistical sample of 5 vendors out of 15 vendors were selected for testing.
Repeat Finding from Prior Year: No.
Recommendation: We recommend management review 2 CFR 200.318 through 200.327 and adopt a
procurement policy containing all required provisions including provisions to check for suspension and
debarment.
Views of Responsible Officials: Management is in agreement.
Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control
over the federal award that provides assurance that the entity is managing the federal award in compliance with
federal statutes, regulations, and conditions of the federal award. 2 CFR 200.328 and 2 CFR 200.329 require the
auditee to collect financial information and monitor its activities under federal awards to assure compliance
with applicable federal requirements and performance expectations are being achieved and report these items
in accordance with the program requirements.
Condition: Of three reports tested, two instances in which support was not retained to substantiate federal
share of expenditures reported in a quarterly report and the final report. Management subsequently worked to
reconcile reports out of the Organization’s accounting software to support federal expenditures reported within
the reports that materially agree. Additionally, individual who prepared the report is the same individual
approving the report prior to submission to the federal agency.
Cause: Support was not retained to substantiate amounts reported within a semi-annual report and final report.
Additionally, management hasn’t implemented controls ensuring the individual preparing the report is separate
from the individual who reviews and approves the report prior to submission to the federal agency.
Effect: Without retaining documentation to support the amounts reported, demonstrating that the program
complies with laws, regulations, and other compliance requirements is difficult. Additionally, not having a formal
oversight process over reporting results in a reasonable possibility that reports that are inaccurate or incomplete
could be submitted.
Questioned Costs: None reported.
Context/Sampling: Two out of four semi-annual financial reports were reviewed along with one annual financial
report. There was a total of five financial reports filed.
Repeat Finding from Prior Year: No.
Criteria: The Organization is required to have procedures in place to ensure that federal awards are expended
only for allowable costs in accordance with Subpart E – Cost Principles of the Uniform Guidance. Allowable costs
are supported by appropriate documentation and correctly charged as to account, amount, and period. 2 CFR
200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal
award that provides assurance that the entity is managing the federal award in compliance with federal
statutes, regulations, and the terms and conditions of the federal award. 2 CFR 200.430(i) establishes the
standards for documentation of personnel expenses including charges to Federal awards for salaries and wages.
Charges must be based on records that accurately reflect the work performed with the records meeting the
following standards:
a) Be supported by a system of internal control which provides reasonable assurance that the charges are
accurate, allowable, and properly allocated.
b) Be incorporated into the official records of the non-Federal entity.
c) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity,
not exceeding 100% of compensated activities.
d) Encompass both federally assisted, and all other activities compensated by the non-Federal entity on an
integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity’s
written policy.
e) Comply with the established accounting policies and practices of the non-Federal entity.
f) Support the distribution of the employee’s salary or wages among specific activities or cost objectives.
g) Budget estimates alone do not qualify as support for charges to Federal awards, but may be used for
interim accounting purposes.
Condition: Through testing over payroll expenditures management could not provide support to substantiate the
rate of pay paid to one employee was approved by the President or Board of Directors. Additionally, six
instances identified in which the employee’s wages that were billed to the federal award were billed at a higher
hourly rate than the employee’s hourly rate with the Organization.
Cause: There was a lapse in oversight of the internal control process ensuring management retained support of
President or Board of Directors approval of employee’s salary.
Effect: The Organization’s controls did not detect or correct the errors identified, which results in a reasonable
possibility that the Organization could submit disallowed costs under the federal awards.
Questioned Costs: No questioned costs over $25,000.
Context/Sampling: A nonstatistical sample of 29 payroll transactions out of approximately 144 total payroll
transactions, accounting for approximately $36,400 of $140,200 total payroll costs charged to federal program.
Repeat Finding from Prior Year: No.
Recommendation: We recommend management to review payroll policies and procedures over retaining
approvals over employee’s salary.
Views of Responsible Officials: Management is in agreement.