Finding Text
Criteria or specific requirement: Organizations are required to retain the supporting documentation for determining whether an expenditure is an allowable cost under a federal grant and to ensure the cost was charged to the appropriate grant. In addition, § 200.303(a) requires organizations 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.
Condition: ICEDC lacked sufficient controls to ensure all supporting documentation was kept for general expenditures, to show that expenditures paid through autopay were adequately reviewed, and to ensure a second party reviewed the Executive Director’s (ED’s) payroll charges.
Questioned costs:
Known Questioned Costs: $2,217
Likely Questioned Costs: $25,173
Context: In a statistically valid sample, CLA tested 60 general expenditures and 11 payroll expenditures. Of those tested:
• 4 general expenditure items were found to be out of compliance with allowable activity and allowable costs provisions as the expenditures lacked adequate support and approval.
• 32 general expenditure selections were for autopay transactions. These transactions were supported by the ED’s approval of the original initiation of the costs but there was a lack of documentation to show that further reviews were done to ensure the autopay was correctly entered into the payment system and continues to be properly paid and charged to the federal program.
• 3 payroll expenditures lacked indication that the costs incurred for that employee and that time were approved. This was deemed to be an issue isolated to the timesheets of the ED.
Cause: Due to lack of staffing at the executive level to perform review and document approval of expenditures to ensure they are allowable and are accurately charged to the federal program.
Effect: Without adequate controls in place to ensure costs are reasonable and intended for the program charged, ICEDC could incorrectly charge expenditures to the federal program, report fraudulent expenditures, or not request appropriate reimbursement that ICEDC is entitled to under the terms of the grant.
Repeat Finding: No.
Recommendation: CLA recommends that additional emphasis of documentary evidence of approvals be made, and such evidence is retained by ICEDC as proof of oversight of expenditure of federal funds. Additionally, we recommend adding a review and approval process for the ED’s timesheets.
Views of responsible officials: There is no disagreement with the audit finding.