Audit 366660

2024-001: Activities Allowed or Unallowed & Allowable Costs/Cost Principles - Material Weakness in Internal Control and Material Noncompliance Repeat of Prior Audit Finding 2023-001 Federal Program: Trans-National Crime Federal Agency: U.S. Department of State - Bureau of International Narcotics and Law Enforcement Affairs Federal Assistance Listing Number: 19.705 Federal Award Year: December 31, 2024 Criteria: 2 CFR section 200.303(a) of the Uniform Guidance requires all non-Federal entities to establish and maintain effective internal control over the Federal awards that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards. In addition, 2 CFR sections 200.405 and 200.403(g) require federal awards be expended only for allowable activities and be adequately documented, respectively. Condition/Context: The Corporation was unable to provide a signed contract or reconciliation to evidence allowability of the expenditures or documentation of review and approval for the following: • For 5 out of 40 selections, no evidence of approval of signed contract could be provided (control). • For 6 out of 40 selections, no evidence of signed contract or reconciliation support could be provided (compliance). This was not a statistically valid sample. Questioned Costs: Questioned costs were approximately $19,428. Cause: The Corporation did not retain/could not retrieve the signed contract or due to poor document retention. Effect: The Corporation has not complied with the specific requirements for activities allowed or unallowed and allowable costs/cost principles as described in the Uniform Guidance. Unallowable costs may have been charged to the federal program. Recommendation: We recommend that the Corporation review its process and implement procedures that would allow management to properly maintain all required documentation on its federal expenditures. Views of Responsible Officials: The Corporation has sustained and built upon the improvements achieved in 2023, maintaining a reduced occurrence of the findings noted in prior audits. The HR solution, Rippling, implemented in 2024, continues to be an integral part of ensuring that all agreements and rate changes are accurately tracked and fully documented. This system has strengthened the Corporation’s document retention practices and supported ongoing compliance with federal regulations. The rollout of Rippling’s timesheet module was completed for all of the Corporation’s South American entities, Central America, UK, France, Gabon and Senegal. The Corporation continued roll out into 2025 and completed that for all remaining entities including Thailand, Malaysia, UAE, Saudia Arabia, Central and South Africa.