Finding Text
2025-002 Internal Controls over Expenditures Charged to Federal Award for U.S. DHHS 93.432 ACL Centers for Independent Living #2401MEICL-00 (Significant Deficiency in Internal Controls over Compliance and Noncompliance) Criteria: Management is responsible for the design and implementation of internal controls over expenditures charged to federal award programs. Condition and Context: Through audit procedures testing internal controls over cash disbursements charged to major federal award programs, one expense lacked readily available support beyond a credit card statement. Eventually, receipts for all but one of the purchases were retained, but it required reaching out to the purchaser to obtain and retain some of those receipts. Cause: The missing receipts appeared to have resulted from insufficient controls over the collection and retention of supporting documentation prior to posting the monthly meals journal entry by relying on the credit card statement. Effect: The absence of adequate supporting documentation increases the risk of noncompliance with Federal cost principles and could result in disallowed costs. Question Costs: Known questioned costs related to our testing totaled $161. Recommendation: We recommend that management strengthen internal controls over documentation for meals and expenses by ensuring that all receipts are properly retained and reviewed prior to recording the monthly journal entry. Views of Responsible Officials and Planned Corrective Actions: Management concurs with this finding. Maintaining complete and accurate receipt documentation is essential for ensuring proper expense coding, supporting auditability, and maintaining compliance with organizational policies and funding requirements. Upon identification of this exception, management initiated corrective actions to reinforce our internal controls over receipt retention and documentation. Accounting staff have been re-trained on our receipt tracking procedures, with an emphasis on the requirement that receipts must be obtained and retained for all meal expenses. We will continue to monitor compliance with these updated procedures to ensure their effectiveness.