Audit 374870

Material Weakness - Record Retention and Succession Planning for Federal Awards Program/Agency: AL No. 16.575 Victims of Crime Targeted Victim Services, US Department of Justice Federal Award Year: Fiscal year 2024. Compliance Requirement: Not Applicable. Questioned Costs: $0. Criteria: Proper internal controls and compliance with federal regulations require the maintenance of accurate and complete records to support federal award transactions, including having written policies and procedures in place. Additionally, effective succession planning is necessary to ensure continuity of operations and knowledge transfer. Condition: During our audit, we noted that the Agency had to spend substantial time locating supporting documentation for federal transactions due to the departure of key staff members responsible for managing federal awards. Additionally, the Agency did not have adequate written policies related to management of federal awards. Cause: The Agency lacked adequate policies and procedures for federal awards, including record retention, succession planning and allowable costs. Additionally, the existing federal policies and procedures have not been updated since 2019 for staff managing federal awards. When key personnel left, critical information and documentation were not readily available or properly transferred to new staff to ensure a smooth transition. Effect: This deficiency resulted in: 1) Significant time and resources spent locating necessary documentation; 2) Increased risk of non-compliance with federal award requirements; 3) Potential for errors or misstatements in financial reporting related to federal awards; 4) Delays in the audit process. Recommendation: We recommend that the Agency: 1) Implement a comprehensive record retention policy specific to federal award management; 2) Develop and maintain detailed internal control policies and procedures manuals for federal award processes; 3) Establish a formal succession planning process for key positions, including cross training of staff; 4) Consider implementing a document management system to centralize and secure critical records. Auditee Response: Management concurs with the finding and is committed to improving its record retention practices and succession planning for federal award management and has taken steps under its new leadership team to address these issues. Corrective Action Plan: See corrective action plan on page 28 detailing the steps management has taken to resolve this finding.