Finding Text
Criteria: The Organization is required to establish and maintain effective internal controls over financial
documentation to ensure compliance with federal regulations, as outlined in 2 CFR 200.303 and 2 CFR
200.334 of the Uniform Guidance. These controls are crucial for the accurate management and
reporting of federal funds. Statement of Condition: During our audit, it was identified that the Organization could not locate invoices
or check stubs for five out of sixty items tested for non-payroll expenses within a major federal program.
Cause: The existing internal control processes related to the organization and retrieval of financial
documentation appear to be insufficient, a situation that was exacerbated by staffing shortages during
the period under audit. Addressing these challenges through enhanced processes and adequate
staffing could improve the Organization's ability to provide timely and complete documentation.
Effect or Potential Effect: The inability to produce essential financial documentation may lead to
compliance challenges with federal funding requirements. Additionally, this increases the risk of
questioned costs, which could have financial implications for the Organization if not rectified.
Recommendation: It is recommended that the Organization implement enhanced procedures for the
systematic maintenance and retrieval of all financial records related to expenditures. This should
include staff training on these protocols to ensure compliance and improve overall internal controls.
Management’s Response: Management agrees with this finding. Please refer to the Corrective Action
Plan for further details.