Finding 1142115 (2024-001)

Significant deficiency in internal controls over compliance related to allowable costs. Federal Agency: Department of Health and Human Services Program Titles: Refugee and Entrant Assistance State/Replacement Designee Administered Programs Assistance Listing Number: 93.566 Award Number: 2134-30265 Award Period: October 1, 2021 - September 30, 2025 Criteria 2 U.S. Code of Federal Regulations (CFR) 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards provides for specific items of cost which are considered to be unallowable. Additionally, costs must be accounted for in accordance with generally accepted accounting principles (GAAP) and be given consistent treatment. SOWA’s internal controls over allowable costs failed to remove these items from allowable costs. Condition/Context During the testing of allowable costs, there were two instances where subscription costs were not accounted for in accordance with GAAP. Subscription costs should be expensed over the performance period versus when paid. Questioned Costs $989 Cause SOWA’s operation of internal controls was not sufficient to ensure that subscription costs charged to federal awards were in accordance with GAAP. Effect Based on the exception noted in the operation of internal controls, unallowable costs could be charged to the Federal Award. Repeat Finding This is not a repeat finding. Recommendation We recommend that SOWA ensures current internal controls are communicated to staff charging expenses to federal awards and consider the need for further strengthening internal controls over allowable costs. Views of Responsible Official of Auditee Management concurs with the finding and has provided accompanying corrective action plan.