FAC Explorer

Finding 1162515 (2024-002)

Material Weakness Repeat Finding
Requirement
AB
Questioned Costs
-
Year
2024
Accepted
2025-11-17
Audit: 372230
Organization: 91 Place, Inc. (IN)
Auditor: PETTIT & COMPANY LLC

AI Summary

  • Core Issue: Missing or incomplete documentation for disbursements, including credit card transactions, raises concerns about the legitimacy of expenses charged to federal programs.
  • Impacted Requirements: The Uniform Guidance mandates that all costs must be necessary, reasonable, and adequately documented to be allowable under federal awards.
  • Recommended Follow-Up: Establish a formal policy for obtaining and reviewing original invoices or receipts, ensure independent approval of documentation, and provide staff training on compliance with documentation requirements.

Finding Text

Finding 2024-002 Lack of Supporting Documentation for Disbursements (Including Credit Card Transactions) Condition: During our testing of disbursements, including credit card transactions, we identified several instances where supporting invoices or receipts were missing or incomplete. In these cases, the organization was unable to provide sufficient documentation to substantiate the nature, purpose, or business justification of the expenditures charged to federal programs. Criteria: The Uniform Guidance requires that costs charged to federal awards be necessary, reasonable, allocable, and adequately documented. Specifically, §200.403(g) states that a cost is allowable only if it is adequately documented, and §200.302(b)(3) requires recipients to maintain records that identify the source and application of funds for federally funded activities.Questioned Costs: The total questioned costs cannot be determined due to lack of adequate supporting documentation.Cause: This issue occurred due to inadequate internal controls over the documentation and retention of support for disbursements. Management has not fully implemented procedures to ensure all expenditures are properly supported before being approved or charged to a federal program.Effect: Without proper supporting documentation, there is an increased risk that unallowable or unsupported costs were charged to the federal award. This condition could result in repayment of disallowed costs, noncompliance with the Uniform Guidance, and potential impact on future federal funding.Recommendation: We recommend that management: 1. Implement a formal written policy requiring original invoices or receipts to be obtained and reviewed for every disbursement, including credit card purchases, prior to payment or cost allocation to a federal award. 2. Ensure that documentation is reviewed and approved by an individual independent of the preparer or cardholder. 3. Maintain supporting documentation in accordance with the record retention requirements of 2 CFR §200.334. 4. Provide staff training on the documentation requirements for allowable costs under the Uniform Guidance.Views of Responsible Officials: We concur with this finding. The organization acknowledges that complete documentation is essential to substantiate the nature, purpose, and justification of all expenditures, particularly those funded by federal awards.

Corrective Action Plan

1. Documentation Recovery — Completed (September 2025) ○ Contacted vendors to obtain duplicate invoices and receipts for all transactions with missing documentation. 2. Current Transaction Review — Completed (October 2025) ○ Conducted a comprehensive review of all pending and recent transactions. 3. Documentation Requirements Policy — Completed (September 2025) ○ Corrected identified gaps and implemented a Pending Documentation File system to track incomplete transactions. ○ Prepared expense memoranda describing goods/services, business purpose, and program benefit for any unrecoverable items. ○ Organized all recovered documentation into auditable files for review. ○ Establishes documentation standards for all expenditures. ○ Implements enhanced requirements for federal awards in compliance with 2 CFR §200.302 and § 200.303. ○ Requires submission of receipts/invoices within five (5) business days. ○ Aligns retention and compliance standards with federal and state regulations. ○ Defines clear consequences for non-compliance. 4. Strengthened Documentation Controls — Completed (October 2025) Purchases over $500 require prior written approval. ○ All receipts must be submitted within five (5) business days of the transaction. ○ Missing documentation triggers a 48-hour follow-up hold on spending authorizations. ○ Monthly certifications confirm all transactions are fully supported. 5. Enhanced Federal Award Documentation — Completed (October 2025) ○ Implemented a federal expenditure checklist requiring itemized receipts, program benefit descriptions, budget references, and authorizing signatures. ○ The Finance Director conducts monthly reviews of all federal expenditures. 6. Staff Training — Completed (October 2025) ○ Conducted mandatory training on documentation standards, federal compliance, and allowable costs under 2 CFR Part 200. ○ Training materials added to new employee orientation with annual refreshers scheduled. 7. Ongoing Monitoring — Ongoing ○ Monthly sample audits conducted by the Finance Director to verify compliance. ○ Quarterly reporting to the COO summarizing documentation metrics. ○ Annual compliance results presented to the Board Finance/Audit Committee.

Categories

Allowable Costs / Cost Principles

Programs in Audit

ALN Program Name Expenditures
21.027 CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS $997,113