Audit 407538

Criteria: The Authority should adopt and maintain formal written policies and procedures governing the approval, allowability, documentation, monitoring, and reporting of federal fund expenditures to support consistent compliance with applicable federal grant requirements. Condition: The Authority has not adopted formal written policies and procedures governing the approval, allowability, documentation, monitoring, and reporting of federal fund expenditures. Cause: Formal written policies and procedures for federal fund expenditures have not been developed, approved, and implemented. Recommendation: We recommend that the Authority develop, approve, and implement comprehensive written policies for federal fund spending that address cost allowability, procurement, approvals, documentation retention, subrecipient or vendor oversight, reimbursement requests, and periodic management review. In addition, the Authority should train relevant personnel on these policies and perform ongoing monitoring to confirm that federal expenditures are reviewed and documented in accordance with applicable grant requirements. Effect: In the absence of these controls, management and staff may apply federal grant requirements inconsistently, increasing the risk that costs charged to federal awards are unallowable, unsupported, untimely, or otherwise noncompliant. This deficiency rises to the level of a material weakness because it reflects a failure in the design of internal control over compliance that could reasonably result in a material noncompliance finding or material questioned costs not being prevented, or detected and corrected, on a timely basis. Without established policies, the Authority also lacks a reliable framework to ensure responsibilities are assigned, review procedures are performed, and changes in federal requirements are implemented consistently across programs. Views of Responsible Official and Planned Corrective Action: See corrective action plan included in this report package.