Finding Text
CRITERIA: In accordance with Uniform Guidance (2 CFR 200.303), recipients of federal awards are required to establish and maintain effective internal controls. These internal controls over major federal programs are essential to ensure that federal funds are managed properly, used efficiently, and administered in compliance with all applicable laws, regulations, and award provisions. CONDITION: During our audit, we noted that while the Organization has established procurement policies and procedures, it does not have comprehensive written accounting policies and procedures. Additionally, the Organization is not currently utilizing accounting software to track and manage federal award activity. CAUSE: The Organization operates with limited personnel, making it challenging to appropriately segregate financial duties. The absence of detailed policies and procedures further increases the likelihood of inconsistent practices, operational inefficiencies, and errors. EFFECT: These conditions weaken the Organization’s overall internal control environment, increasing the risk that errors, misstatements, or irregularities may occur and remain undetected. RECOMMENDATION: We recommend that the Organization enhance its internal control environment by developing and implementing formal accounting policies and procedures. This should include strengthening processes related to federal award management and improving segregation of duties where feasible. Implementing appropriate accounting software would also support more efficient and accurate financial reporting. MANAGEMENT’S RESPONSE: See management’s corrective action plan on page 17.