Finding Text
Criteria: The Services and Transitional Housing for Trafficking Victims program requires that financial management procedures are followed for all federal awards in accordance with 2 CFR §200.302. Maintaining records that sufficiently identify the amount, source, and expenditure offederal funds for Federal awards. These records must contain information necessary to identifyfederal awards, authorizations, financial obligations, unobligated balances, as well as assets,expenditures, income, and interest. All records must be supported by source documentation. Condition: During the audit, it was noted that cash drawdowns, reimbursements, invoicing, and matching requirement reporting were performed without reconciliations to the general ledger consistently and lacked formal review and approval. Errors were identified in total expenses per the general ledger that did not agree to submitted reimbursement requests, and expenditure reporting could not be reconciled to the general ledger due to differences in reporting periods and incomplete supporting documentation. These observations demonstrate a lack of adequate internal controls over the recording, review, and approval of federal award transactions. Cause: The condition resulted from the accounting practices of the previously retained outsourced accounting firm in which internal controls over drawdowns, reimbursements, invoicing, SEFA reporting, and matching contributions were not formally established or enforced. Specifically, review, approval, and reconciliation procedures were not consistently followed, leading to errors and incomplete details. Additionally, management did not properly oversee the services to ensure these processes were properly being followed. Questioned Cost: $-0- Effect:Thelack offormalreview,approval,andreconciliation controls increasestheriskofinaccurate reportingoffederalexpenditures and matchingcontributions.The conditionrepresents a reportable deficiency thatcould resultin errors,misstatements,or noncompliancewith federalrequirements. Recommendation:Werecommendmanagementmaintain and enforceformalreviews, approvals,andreconciliation proceduresforalldrawdowns,reimbursements,invoicing,federalfinancialreporting,andmatchingcontributions.Managementshould ensure thatalltransactionsare consistently reconciledto thegeneralledger,adequately documented,and approvedpriortosubmission.Continuedmonitoring,periodic internalaudits,and stafftrainingshould beimplementedtopreventrecurrenceofdeficiencies. Classification:Compliancefindingandsignificantdeficiency in internalcontrols