Finding 1149696 (2023-001)

Significant Deficiency
Requirement
AB
Questioned Costs
-
Year
2023
Accepted
2025-08-11

AI Summary

  • Core Issue: Payments were made without adequate documentation or proper review, risking compliance with federal requirements.
  • Impacted Requirements: Lack of adherence to 2 CFR § 200.403 and 2 CFR § 200.302 regarding documentation and internal controls.
  • Recommended Follow-Up: Implement procedures for documenting and reviewing all disbursements, especially for critical costs like temporary housing.

Finding Text

2023-001 Supporting Documentation and Approval of Disbursements Federal Program - U.S. Department of the Treasury – Coronavirus State and Local Fiscal Recovery Funds (ALN 21.027) Federal Award Number - SLFRP0136 Compliance Requirement - Allowable Costs/Cost Principles (2 CFR § 200.403 and § 200.302) Criteria - Per 2 CFR § 200.403(g), to be allowable under a federal award, costs must be adequately documented. Additionally, 2 CFR § 200.302 requires the non-Federal entity to establish and maintain effective internal controls over federal awards that provide reasonable assurance of compliance with federal statutes, regulations, and the terms and conditions of the award. Condition - During our testing of expense and disbursement transactions charged to the federal program, we identified instances where payments were made without adequate supporting documentation or evidence of appropriate review and approval. While the costs appear consistent with the purpose of the program and are considered allowable in nature, the absence of documentation limits the ability to verify the appropriateness and accuracy of the expenditures. A majority of these transactions were related to temporary housing assistance, including payments to hotels. Cause - The organization does not currently have or did not follow a formal process to ensure that all disbursements are properly documented and reviewed. Effect - Failure to maintain adequate documentation impairs the organization’s ability to demonstrate compliance with federal requirements and increases the risk of errors or inappropriate expenditures going undetected. Questioned Costs - $0. No costs are questioned at this time, as the disbursements appear consistent with program objectives. Recommendation - We recommend that the organization strengthen internal controls over the disbursement process by implementing procedures requiring all expenses to be supported by documentation such as invoices or receipts and be reviewed and approved by appropriate personnel prior to payment. This is especially important for recurring or program-critical costs such as temporary housing. Views of Responsible Officials - we agree with the finding and determined it was due to an oversight by the organization on establishing proper procedures for a new program. Verbal communications were not recorded appropriately and approvals were not signed by management.

Categories

Allowable Costs / Cost Principles Internal Control / Segregation of Duties Matching / Level of Effort / Earmarking

Other Findings in this Audit

  • 573254 2023-001
    Significant Deficiency
  • 573255 2023-002
    Significant Deficiency
  • 573256 2023-003
    Significant Deficiency
  • 1149697 2023-002
    Significant Deficiency
  • 1149698 2023-003
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
21.027 Coronavirus State and Local Fiscal Recovery Funds $399,488
21.023 Emergency Rental Assistance Program $143,915
97.024 Emergency Food and Shelter National Board Program $141,500
93.667 Social Services Block Grant $69,000
14.267 Continuum of Care Program $64,565
14.228 Community Development Block Grants/state's Program and Non-Entitlement Grants in Hawaii $27,256