Audit 352443

Criteria: Internal controls over subrecipient monitoring should be in place to ensure cost reimbursement requests only include allowable costs. Statement of condition: WL did not require subrecipient organizations to submit evidence of costs incurred and submitted for reimbursement. As a result, WL did not review or approve all costs incurred by subrecipient organizations prior to submitting the costs for reimbursement from the Wisconsin Department of Children and Families. Cause: The Wisconsin Department of Children and Families did not require supporting documentation to be submitted as part of the reimbursement request. WL did not require supporting evidence for costs from subrecipient organizations since they were not required for the reimbursement request. Effect: Since not all subrecipient expenses were obtained and reviewed timely, the organization’s system of internal control over compliance may not timely detect and correct disallowed costs being charged to the program. Questioned costs: There were no questioned costs. Views of responsible officials: WL agrees with the finding and has implemented the recommendations to improve its systems to evaluate and monitor internal controls over subrecipient monitoring. Context: Since not all subrecipient expenses were obtained and reviewed timely, the organization’s system of internal control over compliance may not timely detect and correct disallowed costs being charged to the program. Recommendation: We recommend obtaining evidence to support the costs submitted by the subrecipient. We also recommend policies and procedures over subrecipient costs to be updated to clearly document who is responsible for reviewing, what is to be reviewed, and how and where to document the review. The policies and procedures should also document who is responsible for maintaining records of the subrecipient costs and where those records are to be retained.

Criteria: Internal controls over subrecipient monitoring should be in place to ensure cost reimbursement requests only include allowable costs. Statement of condition: WL did not require subrecipient organizations to submit evidence of costs incurred and submitted for reimbursement. As a result, WL did not review or approve all costs incurred by subrecipient organizations prior to submitting the costs for reimbursement from the Wisconsin Department of Children and Families. Cause: The Wisconsin Department of Children and Families did not require supporting documentation to be submitted as part of the reimbursement request. WL did not require supporting evidence for costs from subrecipient organizations since they were not required for the reimbursement request. Effect: Since not all subrecipient expenses were obtained and reviewed timely, the organization’s system of internal control over compliance may not timely detect and correct disallowed costs being charged to the program. Questioned costs: There were no questioned costs. Views of responsible officials: WL agrees with the finding and has implemented the recommendations to improve its systems to evaluate and monitor internal controls over subrecipient monitoring. Context: Since not all subrecipient expenses were obtained and reviewed timely, the organization’s system of internal control over compliance may not timely detect and correct disallowed costs being charged to the program. Recommendation: We recommend obtaining evidence to support the costs submitted by the subrecipient. We also recommend policies and procedures over subrecipient costs to be updated to clearly document who is responsible for reviewing, what is to be reviewed, and how and where to document the review. The policies and procedures should also document who is responsible for maintaining records of the subrecipient costs and where those records are to be retained.