Finding Text
Criteria or specific requirement: According to §200.303 Internal controls of 2 CFR Part 200, the non-Federal entity must 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 and context: During our testing we noted two instances where the Organization was unable to provide documentation that the request for payment was approved prior to the drawdown date. In both instances we also noted that a portion of the funds drawn down had yet to have costs incurred to support drawing down those funds.
Effect: The auditor noted instances of noncompliance. Noncompliance results in federal funds being drawn down prior to the costs being incurred by the Organization.
Questioned costs: None identified.
Cause: The Organization does not have internal controls in place to ensure compliance with Federal regulations or the terms and conditions of the Federal award.
Recommendation: We recommend that the Organization create effective internal controls and procedures over the cash management process and drawdowns of federal funds that allows for compliance with all applicable Federal laws, regulations, and compliance requirements of various Federal grants.
Views of responsible officials: The Organization will review grant requirements and make sure that drawdown terms are followed and that a review will take place over any drawdowns prior to requesting the funds.