Finding No.: 2022-018 AL Program: 15.875 - Economic, Social, and Political Development of the Territories Area: Reporting Questioned Costs: $-0- Contact Person(s): Nerissa B. Karakaya, CIP COTR Corrective Action Plan: CIP agrees with this finding. A documentation checklist exists; however, it was no...
Finding No.: 2022-018 AL Program: 15.875 - Economic, Social, and Political Development of the Territories Area: Reporting Questioned Costs: $-0- Contact Person(s): Nerissa B. Karakaya, CIP COTR Corrective Action Plan: CIP agrees with this finding. A documentation checklist exists; however, it was not consistently fully extended to program administration records. Monitoring controls focused primarily on project completion, resulting in less attention to verifying that supporting documentation for administrative expenses was fully compiled and properly reconciled. In addition, segregation-of-duties constraints were evident, as the same staff oversaw both the preparation of reports and the maintenance of program administration records, which limited independent verification and delayed the retrieval of required documentation. The following steps will be implemented to address this finding. 1. Implement Formal Monitoring Procedures • Develop and document a standardized review checklist to verify that all data in financial and operational reports is supported by source documentation and reconciled to the accounting records. • Require periodic management sign-off (e.g., monthly or quarterly) to confirm that reconciliations are performed and retained. 2. Strengthen Segregation of Duties • Reassign key tasks so that data preparation, reconciliation, and approval are performed by separate individuals or units whenever possible. • Where staffing constraints prevent full segregation, implement compensating controls (e.g., independent supervisory review, dual sign-off). 3. Training and Capacity Building • Provide targeted training to finance and program staff on proper documentation, reconciliation procedures, and the importance of segregation of duties. 4. Periodic Internal Reviews • Establish periodic internal audits or spot checks by an independent unit (e.g., internal audit or compliance team) to verify adherence to the new monitoring controls and segregation requirements. 5. Timeline for Implementation • Within 30 days: Draft and approve written monitoring and reconciliation procedures. • Within 60 days: Reassign tasks to strengthen segregation of duties or document compensating controls. • Within 90 days: Conduct staff training and begin periodic internal reviews. 6. Monitoring & Reporting • Quarterly management reports to track completion of reconciliations and internal review results. • Annual evaluation of control design and effectiveness by internal audit or an independent reviewer. These actions will ensure reported data is consistently supported by accurate underlying accounting records and controls are suitably designed and effective, reducing the risk of misstatement or undetected errors due to inadequate segregation of duties. Proposed Completion Date: December 31, 2025