Finding Text
Finding Number: 2024-002 Significant Deficiency – Internal Controls over Compliance and
Compliance of: Activities Allowed or Unallowed and Allowable Costs/Cost Principles, Matching,
and Program Income
Federal Award: Aging Cluster, No. 93.045, Special Programs for the Aging, Title III, Part C
Federal Agency: Department of Health and Human Services
Pass-Through Entity: Monterey County Area Agency on Aging
Criteria or Specific Requirement: 2 CFR section 200.302, Financial Management, states that the
recipient’s financial management system must provide for the following: Maintaining records that
sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards.
These records must contain information necessary to identify Federal awards, authorizations,
financial obligations, as well as expenditures and income. All records must be supported by source
documentation. There must be written procedures for determining the allowability of costs in
accordance with subpart E and the terms and conditions of the Federal award.
2 CFR section 200.303, Internal Controls, states grant recipient must: establish, document, and
maintain effective internal control over the Federal award that provides reasonable assurance that
the recipient or subrecipient is managing the Federal award in compliance with Federal statutes,
regulations, and the terms and conditions of the Federal award.
Cause: The organization does not have an effective reconciliation and review process required to
track compliance requirements that adhere to Uniform Guidance and the grant terms. Match
expenditures could not be reconciled to the Service Invoice Summaries. In addition, the
methodology used to allocate program income, matching, and non-payroll expenditures was not
consistently applied.
Effect or Potential Effect: Potential for unallowable activities and unallowable costs, not meeting
matching requirements per grant terms, and potential for program income to be understated or
overstated.
Questioned Costs: Related questioned costs are unknown.
Context: During the year under audit, the issues represent a systemic problem.
Recommendation: We recommend the Organization implement policies and procedures to ensure
proper reconciliation and review of Service Invoice Summaries are effective and specific to grant
View of Responsible Officials: In response to finding number 2024-002, there is no disagreement
with the audit finding. Management is in the process of drafting new policies and procedures to
ensure that the amount, source, and expenditure of Federal funds for all Federal awards is
identified; and will track and verify expenditures and income. In addition, Management is
developing a process and procedures to verify compliance with Federal statues, regulations, and
the terms and conditions of each Federal award. Management will complete the Corrective Action
Plan by February 28, 2025 and these procedures will be in full effect for the fiscal year 2025.