Finding Text
Finding 2021-009 – Internal Control Over Approvals – Allowable Costs (Material Weakness)
Federal Program 14.231 Emergency Solutions Grant
Condition: The Agency lacked a formal, consistent process for obtaining and documenting approvals for expenditures
related to federal awards. Several instances were identified where federal funds were used without proper pre-approval,
or approvals were not consistently documented.
Criteria: Recipients of federal awards must establish and maintain effective internal controls, including proper
authorization and documentation of expenditures. Specifically, prior approval for costs related to federal awards must be
obtained from the relevant parties, and expenditure documentation must be retained to demonstrate compliance with
federal regulations.
Cause: The Agency did not implement a structured approval process for federal awards expenditures, resulting in ad-hoc
approvals or the lack of documented evidence of such approvals.
Effect: Without proper internal controls over approvals, there is an increased risk of noncompliance with federal
regulations, potential misuse of federal funds, and inaccurate financial reporting. This could result in disallowed costs or
findings during future audits.
Recommendation: We recommend the Agency implement a formal approval process for all expenditures related to
federal awards, ensuring that appropriate pre-approvals are obtained, documented, and retained for all applicable costs.
Consider training staff on the Uniform Guidance requirements and establish regular reviews of the approval process to
ensure compliance.
Management’s Response: See Corrective Action Plan.