Finding 1081943 (2024-003)

Material Weakness
Requirement
AB
Questioned Costs
-
Year
2024
Accepted
2024-11-13

AI Summary

  • Core Issue: Weak controls in the Unaccompanied Children Program led to budget overruns and improper disbursements due to reliance on manual processes.
  • Impacted Requirements: Compliance with Federal program guidelines is compromised, risking inappropriate fund usage and inaccurate reporting.
  • Recommended Follow-Up: Implement stronger monitoring controls, reduce manual processes, and enhance communication between program and financial teams to ensure compliance and accuracy.

Finding Text

Condition: In our testing of the Unaccompanied Children Program, we noted several compliance matters as noted in findings 2024-001 and 2024-002 that stem in part from either a failure of or a lack of controls to prevent, or detect and correct, matters for Federal awards. Many of the errors seem to stem from the entity’s use of manual spreadsheets to complete many allocations, communication issues between program managers and financial personnel, and errors that were not noted and corrected in a timely manner. As a result of a lack of strong controls, the budget was exceeded, disbursements were made in excess of per child allowable amounts, unallowed items were reimbursed, and amendments were not requested promptly for budget overages. Criteria: Strong controls over Federal programs are necessary to ensure that fund are used appropriately, managed appropriately internally and accurate reporting is maintained that can be made available to all interested parties within the entity and to the grantor as required. Grantee entities are to be responsible stewards of funds and should have strong monitoring and controls in place to ensure that is met. Cause: Errors in understanding allowable amounts per child, errors in understanding allowable items, lack of controls and processes to monitor gift cards, over-reliance on many manual processes and spreadsheets, and lack of communication appears to be creating some disconnect and issues that is allowing this breakdown in monitoring and reporting to occur. Effect: As a result of the control concerns, we do believe that a larger error or several smaller issues that total a larger error could occur and not be timely noted and/or corrected by the entity. Recommendation: We recommend enCircle work on controls that put in place monitoring over program usage of funds by independent individuals to verify per child amounts, gift cards, and other similar items are being appropriately monitored. We also recommend that enCircle investigate whether their current accounting system can help with the allocation of personnel and invoices across programs so there is less reliance on manual processes and journal entries. Additionally, we recommend that stronger monitoring and review processes be put in place for all programs to ensure budgetary and reporting compliance. Views of Responsible Officials and Planned Corrective Action: enCircle believes the responses to findings 2024-001 and 2024-002 will remediate the concerns of this finding. Furthermore, enCircle will continue to work to decrease the number of allocations it actively uses when direct coding is more appropriate. enCircle will also work to integrate payroll allocations into its payroll provider directly, so that these allocations are updated automatically by HR when position roles change.

Categories

Subrecipient Monitoring Allowable Costs / Cost Principles Reporting

Other Findings in this Audit

Programs in Audit

ALN Program Name Expenditures
93.676 Unaccompanied Children Program $2.06M