Audit 366353

Internal Control Over Compliance Material Weakness in Internal Control Over Compliance Criteria – The Uniform Guidance states that the non-federal entity must: (1) 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 the 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 the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). (§200.303). Condition – We identified insufficient internal controls, including lack of internal controls relating to (1) supervisory review and approval of invoices and payroll, (2) review and authorization of drawdowns prior to submission, (3) preparation and review of cash flow statements/forecasts to determine the immediate cash needs of the federal program, and (4) review and approval of reports for completeness and accuracy. Cause – Effective internal controls over federal awards have not been implemented due to limited individuals as a result of the small size of the entity. Effect – Deficiencies in internal control could result in noncompliance with the terms and conditions of the federal program. Recommendations – Civic Arts should develop and document review processes to ensure (1) supervisory review and approval of invoices and payroll, (2) review and authorization of drawdowns prior to submission, (3) preparation and review of cash flow statements/forecasts to determine the immediate cash needs of the federal program, and (4) review and approval of reports for completeness and accuracy.