Finding Text
Criteria: Under Uniform Guidance and the terms and conditions of the federal award, the auditee must maintain records sufficient to detail the financial and programmatic activities of the award, including support for required monthly reports. Statement of Condition: During testing of compliance over reporting, the Company was unable to provide monthly reporting supporting documentation for 1 out of 2 months tested. The documents were unavailable due to the expiration of the entity’s document retention period and employee turnover, which resulted in the loss of institutional knowledge about the controls performed during the award period. As a result, we were not able to verify the accuracy, completeness, or review of the reported information for that month. Cause of Condition: The entity did not maintain documentation of internal control activities beyond the minimum required retention period and did not have processes in place to preserve institutional knowledge during employee turnover. As a result, supporting records necessary for compliance over reporting of federal awards were no longer available. Effect of Condition: As a result of the missing support, the Company is not in compliance with federal documentation requirements and award terms, we were unable to confirm the accuracy and completeness of the reported information for 1 out of 2 months selected for testing, and there is an increased risk that errors or misstatements in program reporting may go undetected. Questioned Costs: None. Recommendation: We recommend that management (1) strengthen internal controls over monthly reporting to ensure all supporting documentation is consistently retained, (2) centralize the retention of monthly reporting support in accordance with federal recordkeeping requirements, (3) provide staff training on reporting requirements and documentation expectations under the award, and (4) implement periodic internal reviews to verify that documentation is complete before reports are submitted. Identification of Repeat Finding: This is a new finding. Views of Responsible Officials: Management understands and accepts the recommendation as outlined in the Corrective Action Plan.