Finding Text
2022-009 Cash Disbursements (Material Weakness) Criteria: CFR 200 §200.403. Allowable costs under Federal awards must be necessary and reasonable for the performance of the Federal award and be allocable thereto. CFR 200 §200.302. Effective control and accountability must be maintained, all assets must be safeguarded and used solely for authorized purposes. Condition: In June 2022, the former Executive Director authorized bonuses for himself and two other senior management members without the knowledge of the board of directors and accounting staff. In December 2022, holiday bonuses were paid without documentation to ensure the expenditure was reasonable and necessary. In addition, approval was not documented on invoices selected for testing. Cause: As discussed at Finding 2022-003, the Organization’s policies and procedures were not adequately designed for the proper segregation of accounting and banking functions. As discussed at Finding 2022-004, the Organization’s policy requiring two signatures on all checks over $1,000 was not followed and no policy existed to ensure all invoices are approved and evidence of approval retained. Effect: Disbursements were made that were not in compliance with applicable regulations and grant agreement. Allowing these functions to be performed without separating incompatible duties and requiring appropriate documentation and review increases the risk that errors or misappropriation could occur. Questioned Costs: Unauthorized bonuses $39,342. Perspective: The unauthorized bonuses are a known amount (not projected). As noted at 2022-004, none of the transactions selected for testing contained evidence of approval. Repeat Finding: Yes Recommendation: We recommend policies and procedures over the segregation of duties between the accounting and banking functions be strengthened. In addition, policies and procedures should be implemented to ensure support for expenditures is retained and includes evidence of approval. Additional oversight should be provided by those charged with governance. Views of Responsible Officials: Management acknowledges the control weaknesses as described above as there was not a proper segregation of duties in place. The Organization has undertaken a review of its policies and procedures, including consultation of an outside accounting firm to ensure proper control procedures are in place including appropriate segregation of duties.