Finding 2023-04 Failure to Create and Implement Effective Internal Controls over Federal Compliance
Condition: The Organization failed to develop, implement, and monitor an appropriate system of internal controls that ensure compliance in relevant compliance categories. Audit procedures required th...
Finding 2023-04 Failure to Create and Implement Effective Internal Controls over Federal Compliance
Condition: The Organization failed to develop, implement, and monitor an appropriate system of internal controls that ensure compliance in relevant compliance categories. Audit procedures required the assessment of internal controls over Allowable Activities, Allowable Costs, Period of Performance, Procurement, Suspension, and Debarment. In all compliance requirement categories assessed, it was determined that the Organization had no system of internal controls in place to properly offset the risks involved. It is likely that all other compliance requirement categories not assessed during the audit also have material weaknesses. Ultimately, this failure to implement an effective system of internal controls has led to the Organization having multiple instances of noncompliance and material questioned costs.
Corrective Actions Taken or Planned:
- A licensed CPA firm will provide monthly compliance reports covering critical federal compliance categories. These reports will serve as an ongoing tool to identify risks, track compliance, and document corrective measures where needed.
- Develop and implement a system of internal controls to address federal compliance requirements. This framework will include the following components:
+ Written Policies and Procedures: Establish clear, written policies and procedures for all key compliance categories, ensuring alignment with federal regulations.
+ Approval and Documentation Process: Require VOICES' executive team to review, approve, and document all activities, expenditures, and procurement processes related to federal funding.
+ Segregation of Duties: Assign roles and responsibilities to staff to ensure adequate segregation of duties for reviewing and approving federal transactions.
- Implement procedures to verify all vendors against the Suspension and Debarment list prior to procurement, ensuring compliance with federal guidelines. Maintain detailed procurement records that include procurement method, vendor selection justification, and award documentation.
- Provide mandatory compliance training for all relevant staff to increase understanding of federal requirements and internal control processes. The training will cover key areas such as allowable costs, period of performance, procurement rules, and documentation standards.