Finding Text
CONDITION: During our testing of federal expenditures, we selected a sample of 25 transactions. For eight of these transactions, totaling $1,767, the PALM could not provide the original or reconstructed vendor receipts. The payments were supported only by credit card statements, which did not include a detailed description of the goods or services purchased. CRITERIA: The PALM is required by federal grant guidelines, specifically 2 CFR 200.302, to maintain records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. CAUSE: The primary cause is a breakdown in the PALM’s internal controls over procurement and record-keeping. The lack of a consistent process to ensure all staff members who make purchases submit timely and complete receipts has created a weakness that could lead to unallowable costs being charged to the federal award. EFFECT: The lack of supporting documentation prevents the auditor from determining if the costs were necessary, reasonable, and for the exclusive purpose of the federal award. This also increases the risk of fraud, waste, and abuse. The grantee is at risk of having these costs disallowed and potentially required to repay the federal agency for the undocumented expenditures. RECOMMENDATION: We recommend that management implement a more robust internal control system to ensure all federal expenditures are supported by proper documentation. This includes: •Mandating that all employees submit itemized receipts for purchases made on federal awards. •Creating a "Missing Receipt" form that requires a detailed explanation and supervisory approval when an original receipt cannot be located. •Providing mandatory training for staff on proper procurement and documentation procedures. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE ACTION: The PALM believes the expenses referred to were indeed for allowable costs for the federal program. They will start to maintain all proper source documentation regardless of dollar amount. QUESTIONED COSTS: A total of $1,767 is being questioned for eight transactions lacking adequate documentation.