Finding Text
2024-002 Allowable Costs, Subrecipient Reimbursement
Coronavirus State & Local Fiscal Recovery Funds – Assistance Listing No. 21.027 – COVID-19 Funding
Award Number: 24 QAAA 186913 – Award Period: July 1, 2023 through June 30, 2024
Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters
Condition: The Organization did not have records to adequately support costs reimbursed to a subrecipient for the month of August 2023.
Criteria: According to 2 CFR 200.302(b)(3), The financial management system of each non-Federal entity must provide for the following:
(3) Records that identify adequately the source and application of funds for federally-funded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation.
Additionally, 2 CFR 200.303(a) states the non-Federal entity must:
(a) 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 guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Questioned Costs: The total amount reimbursed to the subrecipient for the month of August 2023 of $49,772.27.
Cause: The Organization did not obtain source documentation from the sampled subrecipient supporting amounts reimbursed for the month of August 2023.
Effect: Costs that are not allowable per the terms and conditions of the grant and/or Uniform Guidance, or improper costs passed through to subrecipients could be charged to the grant. Unallowable or improper costs could be required to be paid back to the Federal awarding agency (and/or pass-through entity).
Recommendation: The Organization should strengthen policies and procedures to support a system of internal control regarding review and approval of subrecipient reimbursement requests to ensure costs are backed by source documentation supporting accuracy and allowability prior to payment.
Views of Responsible Officials and Planned Corrective Actions: Invest in Kids made multiple requests for source documentation from the subrecipient. However, due to management turnover, the subrecipient lacked personnel with the knowledge to retrieve the requested information. Acknowledging this challenge, Invest in Kids updated its policies and procedures in October 2024. Additionally, all staff participated in the organization's annual financial management and internal controls training that same month. To note, upon completion of this audit, the subrecipient is no longer involved in Invest in Kids programming.