Audit 403394

Identification of the federal program: 21.027 - Coronavirus State and Local Fiscal Recovery Funds Significant deficiency in internal controls over allowable activities and allowable costs. Criteria: Internal controls should ensure that materials charged to federal programs are authorized, properly documented, and accurately recorded. Condition: During our testing of materials charged to federal awards, we noted that pick tickets were not consistently signed prior to materials being pulled from inventory and charged to the grant. Specifically, 13 out of 40 transactions tested lacked evidence of signatures at the time materials were issued. Cause: The Cooperative did not have adequate internal control procedures in place to ensure that pick tickets were signed by the puller prior to the release of inventory. Additionally, existing procedures were not consistently followed by personnel responsible for inventory issuance. Effect: The lack of documented issuance over inventory withdrawals increases the risk that unallowable, unauthorized, or inaccurate costs could be charged to federal awards without detection. Questioned Costs: None Recommendations: We recommend that the Cooperative strengthen internal controls over inventory usage by requiring documented issuance of pick tickets prior to the release of materials. Additionally, management should implement monitoring procedures to ensure compliance with established controls and provide training to relevant personnel. Views of Responsible Officials: Management agrees with the finding and acknowledges that internal controls over inventory issuance were not consistently followed by an individual. While procedures existed requiring documentation of pick tickets, compliance with these procedures was not adequately enforced on a small amount of transactions. The Cooperative has begun strengthening its internal control processes to ensure that all inventory withdrawals are properly authorized and documented prior to release. In addition, management will implementing monitoring procedures, including periodic reviews of inventory documentation, to ensure compliance with established controls. Training will also be provided to all relevant personnel to reinforce proper procedures and the importance of adherence to internal control requirements. Management expects these corrective actions to be fully implemented by May 15, 2026.