Finding Text
Inadequate Documentation of Expense Approvals
21.027 Coronavirus State and Local Fiscal Recovery Funds
(Significant Deficiency in Internal Control Over Compliance)
(Section A – Activities Allowed and Unallowed, Section B – Allowable Costs, Section H –
Period of Performance)
Condition: We noted several instances in which there was no documentation verifying
management’s review and approval of credit card expenditures charged to the grant indicating
that the transactions had been reviewed to comply with Activities Allowed or Unallowed,
Allowable Costs, and Period of Performance in accordance with the grant terms.
Criteria: Title 2 of the Code of Federal Regulations, Section 200.303(a) states that the non-
Federal entity must, “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. These internal controls should be in compliance with guidance in “Standards for
Internal Control in the Federal Government” issued by the Comptroller General of the United
States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO).”
Cause: The Organization has controls in place around credit card purchases, which includes
a request and approval process embedded within the system, Bill Spend and Expense (Divvy),
where only Directors can approve funds. However, an audit trail evidencing the appropriate
personnel’s review was unable to be pulled from the system.
Effect: Ineffective review of expenditures charged to the grant could potentially result in
noncompliance if the expenditure is for an unallowable activity, unallowable cost, or incurred
outside the period of performance.
Context: A sample of fifteen (15) general disbursement expenditures were selected for testing.
Management was unable to provide documentation verifying the appropriate personnel’s
review and approval of fourteen (14) of the selected expenditures.
Recommendation: We recommend that controls be implemented to properly document
management’s review and approval of expenditures. This can be done in a number of ways,
including, but not limited to: email of approval, physical signature or initial and date on invoice
or receipt, payment request form which includes transaction details and approvals.
Management’s Response: See accompanying management’s corrective action plan.