Finding Text
Finding 2023-001; Lack of Written Policies and Procedures
Condition: The Organization does not have written policies and procedures in place for the administration and management of federal awards, as required by the Uniform Guidance (2 CFR Part 200). Specifically, the organization lacks documented procedures for financial management, internal controls, allowable costs, procurement, and other key operational areas.
Criteria: According to 2 CFR § 200.302(b)(7), non-federal entities must have written procedures to implement the requirements of § 200.305 (Payment) and must maintain written procedures for determining the allowability of costs in accordance with Subpart E—Cost Principles of this part and the terms and conditions of the federal award. Additionally, 2 CFR § 200.303 requires non-federal entities to establish and maintain effective internal controls, including written policies and procedures, to ensure compliance with federal statutes, regulations, and the terms and conditions of the federal awards.
Cause: The absence of written policies and procedures appears to be due to a lack of awareness of the specific requirements under the Uniform Guidance, coupled with insufficient resources allocated to the development of these necessary internal controls.
Effect: Without written policies and procedures, the Organization is at risk of non-compliance with federal regulations, which could lead to unallowable costs being charged to federal awards, inefficient or improper use of federal funds, and potential disallowance of costs during audits. This deficiency could also reduce the Organization's ability to ensure consistency and accountability in the management of federal funds.
Recommendation: The Organization should develop and implement comprehensive written policies and procedures in accordance with the requirements of the Uniform Guidance. These should include, but not be limited to, the following areas:
1. Financial management, including procedures for payments and cash management.
2. Internal controls to ensure compliance with federal requirements.
3. Determination of allowable costs in accordance with federal regulations and the terms and conditions of the award.
4. Procurement standards and conflict of interest policies.
5. Time and effort reporting and compensation.
The Organization should also ensure that staff are adequately trained in these policies and procedures to enhance compliance and operational efficiency.
Views of Responsible Officials of Auditee: In response to the finding, management and will take action to develop and implement the necessary written policies and procedures by December 31, 2024. Comprehensive training will be provided to all relevant staff to ensure compliance with federal requirements.