Finding Text
2024-002 Internal Controls over Compliance and Compliance with Activities Allowed or Unallowed and Allowable Costs/Cost Principles Requirements (Significant Deficiency)
Information on the Federal Program:
U.S. Agency for International Development
Assistance Listing Number: 98.001
Assistance Listing Name: USAID Foreign Assistance for Programs Overseas
Grant Award Number(s):
Direct Award Number Award Period
720BHA22GR00225 May 13, 2022 through May 10, 2024
720BHA22GR00127 April 15, 2022 through April 14, 2024
Criteria or Specific Requirement: Auditee requirements contained in Title 2 U.S. Code of Federal Regulations (2 CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D ‐ Post Federal Award Requirements, Section 200.303 ‐ Internal Controls, requires the auditee to 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. These internal controls should be in compliance with a framework such as the “Internal Control Integrated Framework”, issued by the COSO.
In accordance with 2 CFR §200. 308, 200.309, and 200.403(h), a non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity. A period of performance may contain one or more budget periods.
Condition: During our testing of the activities allowed or unallowed and allowable costs/cost principles compliance requirements, we identified one disbursement sample out of a total of twenty-five disbursement samples tested wherein management charged the federal program on June 2024 when the transaction happened on December 2022. In particular, the inventory distribution in the amount of $4,258.53 that took place in December 2022 should have been recorded as an expense in fiscal year 2023 rather than in fiscal year 2024. In addition, during our testing of period of performance compliance requirements, we also noted another inventory distribution in the amount of $235.89 that took place on August 2023 but it was only recorded on June 2024. The expenditures are allowable and within the period of performance, however, the controls over timely reconciliation and recording the inventory distributions did not occur in the appropriate reporting period.
Questioned Costs: There are no known or likely questioned costs.
Context: This is a condition based on testing of CRS’s compliance with specified requirements. The prevalence of the finding is detailed in the condition section above. The samples were selected using a non-statistical method.
Cause: Delays in performing the reconciliation and timely recording of inventory distributions in certain CRS country offices were caused by personnel’s unfamiliarity with the use of the new Supply Chain Management system, a system used in inventory management.
Effect: Failure to timely reconcile and record transactions in the correct accounting period results in incorrect SEFA reporting to the U.S. government.
Repeat Finding: No.
Recommendation: We recommend that management ensure timely reconciliation of inventory distributions in order to record the transactions in the correct accounting period. In addition, management should conduct appropriate training to CRS country office personnel with the proper use of the Supply Chain Management system to ensure timely reconciliation and recording of inventory distributions.
Views of Responsible Officials: CRS management agrees with the finding and recommendations and will enhance the inventory reconciliation processes.