Finding Text
Criteria
Title 2, Code of Federal Regulations (CFR), Subtitle A, Chapter II, Part 200, Subpart D, Cost Principles for
Non-Profit Organizations, Section 200.303 states “The non-Federal entity must: (a) Establish and maintain
effective internal control over the Federal award that provides reasonable assurance that the non-Federal
entity is managing the Federal award in compliance with Federal Statutes, regulations, and the terms and
conditions of the Federal award. These internal controls should be in compliance with guidance in
“Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United
States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). (b) Comply with Federal statues, regulations, and the
terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity’s compliance
with statues, regulations and the terms and conditions of Federal awards. (d) Take prompt action when
instances of noncompliance are identified including noncompliance identified in audit findings. (e) Take
reasonable measures to safeguard protected personally identifiable information and other information the
Federal awarding agency or pass-through entity designates as sensitive or the non-Federal entity considers
sensitive consistent with applicable Federal, state, local, and tribal laws regarding privacy and obligations of
confidentiality.”
Condition
During our testing of the Organization’s expenditures, we noted the following deficiencies in internal
controls:
1. 4 of the 50 transactions selected for testing did not include evidence of approval.
2. 3 of the 50 transactions selected for testing were reimbursed to employees at incorrect rates.
3. 2 of the 27 payroll transactions selected for testing were paychecks to employees at the incorrect
rate.
4. 4 of the 4 payroll periods Payroll testing, noted in each of the 4 pay periods selected for testing
the hours allocated per time sheets did not tie to the GL
Cause of Condition
The Organization’s internal controls are not properly designed to be in line with Federal guidelines,
particularly, CFR 200.303.
Repeat Finding
Yes.
Effect of Conditions
The Organization used Federal Awards for expenditures without proper supporting documentation and
without obtaining and maintaining adequate approvals.
Recommendation
We recommend the Organization establish and maintain effective internal control over Federal Awards in
order to provide reasonable assurance that the Organization is managing the Awards in compliance with
Federal statutes and regulations, as well as the terms and conditions set forth in the specific Federal Award.