Finding Text
Department of Housing and Urban Development Continuum of Care, Federal Financial Assistance Listing 14.267, Affects all grant awards included under Federal Financial Assistance Listing 14.267 on the Schedule Activities Allowed or Unallowed/Allowable Cost Principles, Matching and Earmarking, Period of Performance Significant Deficiency in Internal Control Over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Internal control procedures should ensure expenses and other records tracking allowable costs, allowable activities, period of performance, indirect expenses, matching and earmarking are approved and the approval is documented in a timely manner. Condition: Catholic Charities has documented review procedures that conform to applicable federal standards regarding activities allowed or unallowed, allowable cost principles, matching, earmarking, and period of performance. However, the procedures were not followed for 34 of 60 selections for expense items, seven of 12 employees tested for payroll expenditures did not have documented approval on the allocation rate applied, as well as two of three months selected for testing for matching, earmarking, and indirect expenses. Additionally, for four of 12 employees errors in the payroll calculations were identified that were not corrected or identified by Catholic Charities and for one employee there was no evidence of approval on the hours paid for two pay periods during the year. Cause: Catholic Charities’ internal controls did not operate as designed, which resulted in transactions not being reviewed timely or the review process not being formally documented and maintained. Effect: Inadequate internal controls over compliance could result in noncompliance with the federal program. Questioned Costs: None reported.Context/Sampling: Activities Allowed or Unallowed/Allowable Cost Principles and Period of Performance: Expenses: A nonstatistical sample of 60 transactions out of 2,324 total transactions were selected for testing, which accounted for $23,406 of $681,188 federal program expenditures. Payroll expenses: A nonstatistical sample of 12 employees out of 61 were selected for testing, which accounted for $196,230 of $473,784 federal program expenditures. Indirect expenses: A nonstatistical sample of three months out of 12 were selected for testing. Matching and Earmarking: A nonstatistical sample of three months out of 12 were selected for testing. Repeat Finding from Prior Year(s): No Recommendation: We recommend Catholic Charities enhance internal control procedures to ensure the control process is properly supported and the documentation is retained. Views of Responsible Officials: Management agrees with the finding.