Finding Text
2022-003 Internal Controls Over Cost Allocations and Administrative Costs
Condition: Invoices and disbursements tested did not always indicate the allocation of costs between programs and grants. There were invoices that did not include the approval to pay and some invoices were not available to be tested.
Criteria: Invoices should indicate the approval to pay as well as the appropriate account and allocation of the cost to ensure proper recording of the expense. There are multiple types of funding and a staff person, well versed on what is allowable and not allowable to be charged to grants, should be reviewing and approving the expense and allocation prior to payment.
Cause: There are multiple grants that have different requirements. Due to changes in the accounting staff position, there were weaknesses in the processes for the controls over the disbursements and allocation to the grant funds.
Effect/Context: It was very difficult to determine if disbursements were appropriately allocated based on the cost allocation plan in place. Disbursements could be paid incorrectly or allocated incorrectly without the proper oversight.
Questioned Costs: None
Recommendation: We recommend that management and staff receive training on nonprofit and federal award accounting to enhance their new understanding of what is required to account for and report on grant funds. Internal controls and procedures should be developed, documented and implemented to ensure that grant state and federal funds are properly recorded and when staff changes, there will not be a loss of continuity for reporting.
Response: Management has worked with a few outside accounting firms over the last year and believes they have found a competent accounting person to assist with the financial statements and processes. Management is working with the new accounting firm to document the procedures and maintaining records.