Finding 1072832 (2023-001)

Section II – Financial Statement FindingsFinding 2023-001 Significant Deficiency in Internal Controls and Compliance with major program AIL Number: 93.658 Description: Approval of Credit Card Expenditures Criteria: Title 2, CFR, Part 200, Subpart D – Post Federal Award Requirements, section 200.303, Internal controls. states, in part, that “The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award…” Title 2, CFR, Part 200, Subpart E - Cost Principles, Basic Considerations, section 200.403, Factors affecting allowability of costs. states, in part, that “Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (g) Be adequately documented.” Condition: In our testing we were unable to verify that credit card transactions were tied out to source documents and approval to ensure allowable costs under Uniform Guidance. Cause: Management is not following their policies to reconciling credit card charges to underlying source documents and document approval prior to payments made. Effect: By not reviewing and approving credit card transactions there is a heightened risk of unallowable costs and fraudulent charges. Recommendation: We recommend that management improve internal controls around credit card expenditures by reviewing credit card transactions and underlying receipts and approving prior to payment. Management’s Response: Management’s response to the finding is discussed in the attached Corrective Action Plan. Section III – Federal Award Findings and Questioned Costs Finding 2023-001 Significant deficiency in internal control over compliance with major program AIL Number: 93.658 Program Name: Foster Care Title IV-E Federal Agency: Department of Health and Human Services Pass-through Agency: California Department of Social Services Questioned Costs: None Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs, Cost Principles See Finding 2023-01 in Section II above.