Finding 1152609 (2024-001)

Finding - 2024-001 Significant deficiency in internal control over compliance with allowable costs meeting the requirements of 2 CFR Part 200. Federal Agency: U.S. Department of Commerce Program Title: Economic Adjustment Assistance Program Assistance Listing Number: 11.307 Award Number: MDM9F73QJ1Z1 Criteria Organization policy and Uniform Guidance (2 CFR 200.303) require that all nonpayroll disbursements be supported by documented approval from an authorized official prior to payment to ensure proper internal control over federal funds. Condition/Context During our testing of 21 nonpayroll disbursements, we noted that 9 disbursements lacked evidence of the required approval by an authorized official. Cause During the year, the Organization implemented a new financial system. As a result of the system change, all supporting data for nonpayroll disbursements was lost prior to the conversion and could not be recovered or reconstructed. Effect Failure to document approvals increases the risk of unauthorized or improper disbursements and noncompliance with internal control policies, which could result in questioned costs or loss of federal funding Questioned Costs None identified. Recommendation We recommend the Organization reinforce its procedures and implement controls to ensure that supporting documentation is retained and properly migrated during system changes, and that all nonpayroll disbursements are properly approved and documented in accordance with policy and federal requirements Views of Responsible Individual and Corrective Action Plan Management agrees with the finding and has provided the accompanying corrective action plan.