Finding Text
Finding 2024-004: 93.591 - U.S. Department of Health and Human Services - Family Violence Prevention and Services/State Domestic Violence Coalitions Allowable Costs/Cost Principles, Material Weakness in Internal Control and Noncompliance Criteria: In accordance with 2 CFR §200.403(g), costs must be adequately documented in order to be allowable under a federal award. Additionally, per 2 CFR §200.302(b)(3), recipients must maintain records that identify the source and application of funds for federally funded activities. Furthermore, effective internal controls per 2 CFR §200.303 require that transactions be properly authorized and reviewed to ensure compliance with applicable requirements. Condition: During our testing of expenses charged to the federal award, we reviewed a sample of 10 transactions totaling $9,284. Of those, 7 transactions (representing $8,980) were found to be noncompliant due to one or both of the following: • Missing supporting documentation, such as receipts or invoices • Missing approval documentation, such as required supervisor sign-offs These issues impaired our ability to determine whether the expenses were allowed, reasonable, and allocable under the terms of the award. Due to the high rate of errors, we performed extrapolation procedures over the population of similar expenses totaling $107,782. Based on the sample error rate and our extrapolation methodology, we estimate that $36,846 of the total expenses charged to the federal award may be unallowable and are thus considered extrapolated questioned costs. Effect: As a result of insufficient supporting and approval documentation, the allowability of a significant portion of expenses charged to the federal award could not be determined. This has led to an extrapolated questioned cost of $36,846. Questioned Costs: $36,846 (extrapolated) Cause: The deficiencies noted appear to be the result of weak internal controls related to documentation and approval workflows for federal expenditures. Specifically, the Organization does not appear to have a consistent process to: • Ensure documentation is retained for all expenses • Verify and record supervisory or grant-related approvals Recommendation: We recommend the Organization take immediate steps to improve internal controls related to documentation and record retention for federal program expenditures. The Organization should ensure that all expenses charged to the federal award are supported with adequate documentation. Additionally, the Organization should also ensure approvals are properly documented regardless if the expense is paid by check or electronic payment.