Management Response: Management acknowledges Finding 2025-004 and agrees that weaknesses in the review and approval of expenses represent a material weakness in internal control over compliance. The reimbursement of personal credit card expenses and the charging of those transactions to federal awar...
Management Response: Management acknowledges Finding 2025-004 and agrees that weaknesses in the review and approval of expenses represent a material weakness in internal control over compliance. The reimbursement of personal credit card expenses and the charging of those transactions to federal awards resulted in unallowable costs and demonstrated a breakdown in the review process for employee reimbursements and supporting documentation. Although the known questioned costs total only $46, the broader risk is that additional unallowable, unsupported, or improperly coded expenses could be charged to federal awards if review controls are not strengthened. Management determined that the root causes included insufficiently detailed procedures for reviewing employee reimbursement requests, inconsistent verification of business purpose and allowability before reimbursement, and inadequate supervisory review of expense documentation before costs were posted to federal awards. Existing controls were not precise enough to identify personal or otherwise unallowable charges embedded within reimbursement activity, particularly when descriptions were incomplete or reviewers did not independently confirm that the expense was necessary, reasonable, properly documented, and allowable under Uniform Guidance. To address this material weakness, management is implementing a corrective action plan focused on strengthening pre-payment and pre-posting review of employee reimbursements and other expense transactions charged to federal awards. The plan includes four key actions: revising reimbursement and accounts payable procedures to require detailed support for every request; requiring documented secondary review by supervisory or finance personnel independent of the submitter; implementing exception-based review procedures for higher-risk transactions; and performing periodic post-payment monitoring to confirm that review procedures are operating effectively and that unallowable costs are promptly identified and corrected. Under the revised process, no employee reimbursement or expense charged to a federal award will be approved unless the request includes sufficient supporting documentation to allow the reviewer to determine that the cost is necessary, reasonable, allocable as applicable, consistently treated, and adequately documented in accordance with Uniform Guidance cost principles. Reviewers will be required to confirm the business purpose of the transaction, assess whether the type of cost is allowable under the terms of the award and applicable federal regulations, and verify that no personal items, duplicate charges, sales tax errors, or unsupported amounts are included. If documentation is incomplete or a charge appears questionable, the transaction will be held pending clarification, recoded to a non-federal source, or denied reimbursement as appropriate. Any unallowable expense identified after reimbursement will be promptly removed from the applicable federal award and reported through management’s corrective follow-up procedures. Management will also reinforce accountability through targeted training and oversight. Employees who prepare, review, approve, or process reimbursements and expense reports affecting federal awards will receive training on allowable cost principles, documentation expectations, and the importance of careful review under 2 CFR Part 200, including the requirement that costs be adequately documented and necessary and reasonable for the performance of the federal award. In addition, Finance will generate periodic exception reports highlighting reimbursement activity charged to federal awards, personal credit card reimbursements, and other transactions meeting defined risk criteria. These reports will be reviewed by management to identify trends, address control failures, and implement additional corrective measures when needed. Management believes these corrective actions directly address the auditors’ recommendations and strengthen controls over the review and approval of expenses charged to federal awards without repeating the corrective actions already established for pre-award costs, allocation methodology, or broader financial close procedures. Responsibility for implementation will rest primarily with the Finance Director, in coordination with accounts payable, grants, and program leadership. Management expects enhanced documentation standards, independent review requirements, exception-based oversight, and monitoring activities to reduce the risk of personal or otherwise unallowable expenses being reimbursed and charged to federal awards in future periods. Corrective Action Plan Summary Corrective Action Responsible Staff/Role Target Completion Date Evidence of Completion Revise and adopt written expense reimbursement and accounts payable review procedures requiring itemized receipts, documented business purpose, funding source identification, and explicit confirmation that requested costs are not personal in nature. Finance Director; Accounts Payable Supervisor June 30, 2026 Approved procedures; updated reimbursement forms; staff distribution records. Implement a standardized reimbursement review checklist requiring reviewer validation of allowability, Accounts Payable Supervisor; July 15, 2026 Completed checklist template; sample reviewed reimbursement business purpose, receipt support, coding accuracy, and identification of any personal or unsupported charges before reimbursement or posting to a federal award. Finance Director packages; approval signoff documentation. Require independent supervisory review and approval for all employee reimbursements and any expense transaction charged in whole or in part to a federal award, including personal credit card reimbursement requests. Finance Director Effective immediately Supervisor approval records; signed reimbursement packages; workflow evidence showing independent review. Provide targeted training for employees, supervisors, accounts payable, and grants personnel on allowable cost principles, documentation standards, and reviewer responsibilities for expenses affecting federal awards. Compliance Officer; Finance Director August 31, 2026 Training materials; attendance logs; completed acknowledgements or knowledge checks. Create periodic exception reports for reimbursement activity charged to federal awards, missing receipt transactions, unusual merchants, and other higher-risk expense patterns, and require documented management review of the results. Accounting Manager; Finance Director September 30, 2026 Exception report format; monthly or quarterly review logs; documented follow-up on exceptions. Perform quarterly post-payment monitoring of a sample of reimbursed expenses charged to federal awards to verify compliance with documentation, Compliance Officer; Finance Director Quarterly, beginning September 30, 2026 Quarterly monitoring reports; exception logs; evidence of recoding, recovery, or corrective follow-up. approval, and allowability requirements and to ensure prompt correction of any identified exceptions.