Finding 1086229 (2023-004)

Internal Control Impact: Material weakness Criteria: 2 CFR Part 200 Subpart F requires auditors to perform procedures to obtain an understanding of internal control over Federal programs sufficient to plan the audit to support a low assessed level of control risk of noncompliance for major programs. Internal control should be implemented to the degree possible to assign to different individuals the responsibility for approving, executing and recording transactions. The basic premise is that no one individual should have access to both physical assets and the related accounting records or to all phases of a transaction. Condition: The Organization was unable to provide documentation to substantiate supervisor review and approval of employee’s timesheets for 2 out of 7 payroll costs allocated to the Federal grant which were selected for testing from January through December, 2023. In addition, the Organization was unable to provide documentation to substantiate review and approval prior to payment of non-payroll expenditures for 4 out of 23 expenditures allocated to the Federal grant which were selected for testing from January through December 2023. Cause: The failure to provide documentation was due to the Organization not having adequate procedures in place to ensure review and approval of timesheets for supervisory-level employees and to review and approve non-payroll expenditures allocated to the grant. Effect: Because of the failure to provide documentation of internal controls being implemented and operating effectively, we were unable to substantiate that internal control structure elements reduce to a relatively low level the risk that errors or irregularities in amounts that would be material in relation to the Statement of Expenditures of Federal Awards being audited may occur and not be detected within a timely period by management in the normal course of performing assigned functions. Recommendation: The Organization should establish procedures to ensure that timesheets for all employees charging time to Federal grant programs are reviewed and approved and to ensure that all non-payroll expenditures charged to Federal grant programs are reviewed and approved. Views of Responsible Officials: Management of the Organization concurs with the finding. Please refer to the Corrective Action Plan.