Criteria/Specific Requirement: The Organization is responsible for establishing and maintaining an internal control system over receipts and disbursements sufficient to prevent unintentional or intentional errors, misappropriations of assets, and fraud. Condition: The Organization has a lack of segregation of duties over its receipts and disbursements as one individual is responsible for virtually all duties. Effect: Lack of effective internal control procedures could result in unintentional or intentional errors or misappropriations of assets, in which the errors or fraud could affect the financial statements and may not be detected in a timely manner by employees in the normal course of performing their assigned duties. Cause: Limited staff Auditor’s Recommendation: A good system of internal control provides for a proper segregation of the accounting functions. Proper segregation is not always possible in a small organization; however, limited segregation of duties can and should be implemented to reduce the risk of errors or fraud. Management’s Response and Plan: Management agrees with the finding.
Criteria/Specific Requirement: Employees of Stress & Trauma Treatment Center, Inc. are required to document their time and effort working on federal programs. Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) requires charges for salaries and benefits to be supported by a system of internal control which provides reasonable assurance that charges are accurate, allowable, and properly allocated. Documentation should reasonably reflect the total activity for which the employee is compensated, not exceeding 100% of compensated activities, and should encompass both federally assisted and non-federally assisted activities. It further states that budget estimates alone do not qualify as support for salary and benefit charges to a federal award. Significant changes in the corresponding work activity should be identified and entered into the accounting records in a timely manner. All necessary adjustments must be made such that the final amount charged to the federal award is accurate, allowable, and properly allocated. Condition: During our testwork, we noted three employees were missing time and effort certifications. Questioned Costs: None Context: Time and effort documentation was not correctly maintained for three of the thirty employees tested. Effect: Because time and effort documentation was not maintained for all employees, there is an increased risk that the salary and benefit costs charged to the Crime Victim Assistance program does not reflect the actual time worked on the programs. Cause: Lack of oversight over the implementation of time and effort documentation. Auditors’ Recommendation: The Stress & Trauma Treatment Center, Inc. should implement a review process over time and effort documentation to ensure that all employees charged to the grant have proper documentation. Management’s Response: Management agrees with the finding.