Finding Text
2024-006– Lack of Independent Review and Approval of Journal Entries in Federal Grant Programs
Finding Type. Immaterial Noncompliance. Significant Deficiency in Internal Control over Compliance (Allowable Activities).
Program. COVID-19 - Coronavirus State and Local Fiscal Recovery Funds; U.S. Department of Treasury; Assistance Listing Number 21.027, All Award Numbers
Criteria. According to 2 CFR 200.303(a), non-Federal entities 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.
Condition. The Organization does not have a formal review process in place for journal entries related to its federal grant programs. Journal entries are posted without independent review or approval, increasing the risk of errors or misstatements in the financial records.
Cause. The lack of a review process is due to insufficient staffing and inadequate segregation of duties within the accounting department.
Effect. Without a review process, there is an increased risk of inaccurate financial reporting and potential non-compliance with federal regulations. This could lead to questioned costs, audit findings, and potential loss of federal funding.
Questioned Costs. No costs are required to be questioned as a result of this finding, in as much as no unallowable expenditures were noted.
Recommendation. The Organization should implement a formal review and approval process for all journal entries related to federal grant programs.
View of Responsible Officials. Management agrees with this finding and has prepared a Corrective Action Plan.