Finding Text
Criteria: To be allowable under federal awards, costs must be necessary and
reasonable for the performance and administration of the federal award. Costs must
meet the following criteria: 1) necessary and reasonable; 2) consistent with policies and
procedures; 3) accorded consistent treatment; and 4) are adequately documented.
Condition: Expenditures were not consistent with the above criteria. We noted the
following:
1) One out twenty-seven transactions tested where an employee’s pay rate was not
approved and three out of twenty-seven transactions tested where there was no
timesheet approval.
2) One out of twenty-seven transactions tested where management could not
provide original supporting documentation.
Questioned Costs: None.
Context: Four out of twenty-seven transactions tested were not in compliance with
federal requirements.
Cause and Effect: Internal control procedures are not in place to ensure all transactions
are properly approved and supporting documentation is being maintained.
Auditors’ Recommendations: Established policies and procedures should be enforced to
ensure compliance with federal requirements and the Organizations policies and
procedures. All transactions should be appropriately approved and adequately
supported by accurate source documentation to demonstrate compliance with federal
requirements.
Management’s Response: Management acknowledges the audit finding and has
evaluated current procedures and have confirmed controls are in place to ensure
compliance, accuracy, and accountability in both areas. To prevent unauthorized
changes, to strengthen time management controls and ensure proper oversight,
management will ensure controls related to the approval process are enforced