Finding Text
Inadequate Approval Controls Over Adjusting Journal Entries and Invoices - Federal Agency: U.S. Department of Agriculture Pass-Through Agency: MN DEED Assistance Listing Number(s):17.258, 17.278 and 17.259 (WIOA Cluster) Federal Agency: U.S. Department of Health and Human Services Pass-Through Agencies: MN DEED and various counties Assistance Listing Number: 93.558 (TANF) Compliance Requirement: Allowable Cost Criteria: The Organization’s policy requires that adjusting journal entries be reviewed by someone other than the originator. Additionally, all invoices must be approved by authorized personnel prior to payment. Condition: Testing of disbursements revealed that several adjusting journal entries were posted without the required dual review. Invoice testing also identified payments processed without documented approval. For the WIOA Cluster, 14 of 60 disbursements (totaling $28,161) lacked proper approval. For TANF, 23 of 60 disbursements (totaling $3,281) were missing required sign-offs. Cause: There is a breakdown in enforcing workflow protocols within the accounting system and a lack of consistent supervisory review. Effect: Weak approval controls increase the risk of errors, unauthorized transactions, and non-compliance with audit and grantor requirements, potentially jeopardizing funding eligibility. Questioned costs: For WIOA Cluster - $28,161 Recommendation: We recommend following documented controls to enforce approval for adjusting journal entries. We also recommend ensuring invoice processing workflows include mandatory approvals before payment. We further recommend conducting periodic audits to verify compliance with approval policies. Responsible Officials Response: Our previous accounting software did not allow for systematic enforcement of approvals. CMJTS migrated to a new accounting software (Sage Intacct) in February of 2025. With the new system, only two users (accounting staff) have access to submit journal entries. The system then forces the journal entries to be approved before they are posted to the general ledger. This approval is done by the Accounting Manager, who does not have access to post journal entries. Similarly, only the two accounting staff members can enter accounts payable bills. The system then routes all invoices to the program manager, as well as additional approvals if the transactions is over a certain threshold. This systematic dual control ensures that all journal entries and accounts payable bills have a secondary person reviewing the entry before it posts to the general ledger.