Audit 404450

ACH Cash Disbursements – Federal Assistance Listing Number 10.766 – U.S. Department of Agriculture – Community Facilities Loans and Grants Criteria: During our review of cash disbursement activity, we noted that ACH transactions were processed without evidence of required management approvals. Supporting documentation did not include signatures or electronic approval notations confirming that the transactions had been reviewed and authorized prior to release. Condition: Strong internal control frameworks require that all disbursements, including ACH transactions, receive documented approval from an authorized individual prior to processing. Cause: Management has not implemented a process that ensures consistent documentation of approvals for ACH payments. Effect: Without documented approval for ACH transactions there is an increased risk of unauthorized or inappropriate payments being made. The Organization may be unable to demonstrate compliance with internal controls. Errors or fraudulent transactions may go undetected due to lack of review. Recommendation: We recommend that management implement a formal approval process for all ACH disbursements, requiring documented authorization before payments are released. Ensure the accounting/finance system has built‑in approval workflows, or alternatively, attach PDF or electronic approval evidence to each ACH batch. Retain approval documentation in accordance with record retention policies and audit requirements. Management’s Response: Management has established processes and procedures for documenting approvals for ACH transactions.