Finding Text
FINDING 2022‐006 MATERIAL WEAKNESS IN INTERNAL CONTROL OVER COMPLIANCE ‐ RETAINING PROPER APPROVALS OF GRANT EXPENDITURES riteria: Title 2 Code of Federal Regulations Section 200.514 requires the auditor to obtain an
understanding and assess the effectiveness of internal controls over federal awards.
Condition: For 21 of 40 non-payroll activities tested that were charged to the grant, approval of the charge was not documented.
Cause: Internal controls over the grant, specifically related to allowable activities and period of performance, were not operating effectively. Due to turnover in the business manager position, supporting documentation noting approval by someone with knowledge of the grant award was missing.
Effect: Expenses could have been charged to the VOCA grant for unallowable activities or outside of the period of performance. This may have resulted in the need for the Organization to return funds, or could jeopardize future funding from this grantor. uestioned Costs: All costs tested were ultimately determined to be in compliance with the grant
award; therefore, there are no questioned costs.
Context: Approval of grant expenditures is a key internal control relative to federal awards.
Repeat Finding: This is a repeat finding.
Recommendation: We recommend that all invoices (regardless of whether they are charged to a grant) be reviewed and approved by someone with understanding of the Organization’s funding sources. Each invoice should be coded to the specific grant and/or general ledger account to which it will be applied. Approvals and coding should be obtained in writing on every invoice. For payroll charges, all payroll registers should be reviewed and approved to ensure proper allocation of payroll charges to grants. Views of Responsible Officials and Planned Corrective Action: As of October 2022, EPEC updated our grant expense approval process. As with all purchases and payroll, grant expenditures will be approved by a Director (Director team consists of: Executive Director, Director of Finance, Director of Outreach, and Director of Shelter), and when paid, will be assessed for accuracy again by EPEC’s contracted CPA. Approvals will be documented on each paper bill or electronically via email or DocuSign, when appropriate.