Finding 1117052 (2022-004)

2022-004 Improve Controls Over Cash Management and Application of Indirect Cost Rate Federal Program Information Federal Agency: U.S Department of the Interior Award Name: Natural Resource Stewardship; Cooperative Research and Training Programs – Resources of the National Park System Assistance Listing Number(s): 15.944, 15.945 Award Year: 2022 Compliance Requirement: Cash Management, Allowable Costs/Cost Principles Type of Finding Internal Control Over Compliance – Significant Deficiency Criteria or Specific Requirement Management of the Organization is responsible for establishing and maintaining effective internal control over compliance with federal requirements that have a direct and material effect on a federal program. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a Federal program on a timely basis. Management of the Organization is also responsible for applying the indirect cost rate appropriately. Condition and Context There is no documented review of requests for reimbursement by an individual that is not involved with preparing the requests. One individual is both preparing and reviewing requests for reimbursement with no additional documented oversight. As a result, there is also no review over the application of the indirect cost rate prior to requests for reimbursement. Cause The Organization did not have adequate controls in place to ensure approval over reimbursement requests prior to submission to the federal agency, including application of the indirect cost rate. Effect or Potential Effect Due to the weakness in internal controls noted above, there is a risk that amounts requested to be reimbursed under federal awards could not be allowable or in accordance with applicable cost principles, including application of the indirect cost rate. No questioned costs are reported as this is an internal control over compliance finding. Recommendation The Organization should address the weaknesses in internal controls noted above by requiring two individuals to be involved in requesting reimbursements, and that the review and oversight of reimbursement requests and application of the indirect cost rate be documented. Views of Responsible Official Management agrees with the finding. Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.