Finding Text
Criteria:
The Organization’s policy states that the Executive Director or Board (over a threshold) will approve all invoices for payment. Additionally, the Executive Director is to sign off on submission of the payroll information to the service provider. This review is not only to verify that these are costs of the Organization, but that these are properly allocated to the appropriate grants and that these costs are allowable under the grant agreements and applicable federal and/or state allowable costs standards.
Condition:
22 invoices tested did not have documented approvals. 18 payroll transactions tested did not have documented approvals on the submission of the payroll.
Effect:
There is a risk that amounts could be charged to grants that are either not an expense of that grant or are not allowable under either the grant agreement or state and/or federal allowable costs standards.
Cause:
The Organization did not follow their stated policies for cost review and approval.
Recommendation
We recommend that the Organization have an individual with a strong knowledge of generally accepted accounting principles and state and federal cost principles review invoices before payment and payroll before submission to ensure proper charging of such costs to the Organization’s programs.
Management’s Corrective Actions:
The Organization is in agreement with the finding. The Organization indicated that they have put certain procedures in place as detailed in the Corrective Action Plan located in Appendix A.