Finding 1148613 (2024-001)

Condition and Context: Samples of 40 non-payroll expenditures totaling $1,390,383 under ALN 17.270 and $631,033 under ALN 17.280 were selected for audit from populations of 1,461 expenditures totaling $4,177,292 under ALN 17.270 and 254 expenditures totaling $730,790 under ALN 17.280. The results of the testing were as follows: • Evidence that the expenditure was approved for payment by a person knowledgeable about program requirements could not be located for 21 of the 40 items selected for testing under ALN 17,270, totaling $813,327, and for 21 of the 40 items selected for testing under ALN 17.280, totaling $337,965. • Documentation to support the expenditure could not be located for 15 of the 40 items selected for testing under ALN 17.270, totaling $630,863, and for nine of the 40 items selected for testing under ALN 17.280, totaling $183,068. For many of the expenditures cited in the above two points, neither evidence of payment approval nor documentation to support the expenditure could be located. In total, 23 of the 40 items selected for testing under ALN 17.270, and 21 of the 40 items selected for testing under ALN 17,280, had neither evidence of payment approval nor documentation to support the expenditure that could be located. Criteria: 2 CFR 200 requires that auditees maintain adequate internal controls over compliance, including approval of program expenditures by person knowledgeable about program requirements and maintenance of adequate documentation to support costs incurred. Effect: The costs incurred may not have been allowed under the federal award program. Cause: The Financial Reporting Department of Opportunities Industrialization Centers of America, Inc. (“OICA”) was undergoing significant transition during the audited period. As a result, certain personnel lacked sufficient knowledge about the requirements of federal award programs, and the records to support the selected expenditures were not retained properly to ensure documentation of costs. Questioned Costs: Known questioned costs were $879,797 under ALN 17.270 and $337,965 under ALN 17.280. Recommendation: OICA’s management should reinforce with personnel responsible for recording program charges the need for expenditures to be approved for payment by a person knowledgeable about program requirements and that this approval be documented and retained. OICA’s management should also remind all employees with responsibilities for federal award programs of the requirements to retain documentation supporting compliance. Management’s Response: OICA concurs with the recommendation. In addition, documentation will be archived in OICA’s central SharePoint repository.