Finding 1094916 (2023-002)

Criteria Uniform Guidance requires management to provide reasonable assurance that federal awards are expended only for allowable activities, that the cost of goods and services charged to federal awards are allowable and in accordance with the specific cost principles, and to ensure expenditures were incurred and paid prior to requesting for reimbursement. Condition The Organization lacked controls over purchasing and payments to vendors. More specifically, there was no formal process for approving invoices before payment to vendors. There is inadequate segregation of duties among those who: (1) Initiate routine transactions and (2) Review, evaluate, or approve routine transactions. There is also a lack of documentation of reviews performed and closing and reconciliation procedures. Cause The board and management of the Organization did not have adequate financial expertise to exercise effective oversight or design and implement a control environment or control activities sufficient to carry out the objectives of the Organization during the fiscal year. Effect The Organization cannot ensure that its activities and costs charged to the federal award program were allowable during the audit period conducted. Recommendation We recommend the Organization design and implement written accounting policies and procedures to formally approve invoices before payment to vendors to ensure proper segregation of duties.