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Finding 2025-006 – Cash Disbursement Internal Controls (Significant Deficiency) Information on the Federal Program: Legal Services Corporation (LSC) Basic Field Grant, Disaster Project Grant, Disaster Grant Incurred Cost, and Technology Innovation Grant - FAL # 9.601037 Criteria: 45 CFR § 1630 requires recipients to establish and maintain internal controls to ensure that costs charged to LSC grants are allowable and that restricted activities are not supported with LSC funds. Effective internal controls include timely supervisory approval of nonpayroll disbursements and employee certification of time records to demonstrate allowability and proper allocation of costs. LSA policies require nonpayroll invoices to be approved prior to payment and payroll to be approved by department heads and certified by employees. Condition/Context: During testing of internal controls related to compliance with 45 CFR § 1630, the auditors noted the following exceptions - For nonpayroll disbursements, 3 of 40 transactions tested were approved after the related purchase had occurred. For payroll, 1 of 40 employees tested did not sign and certify their timesheet for the pay period selected, despite organizational policies requiring employee certification. Cause: Purchase requests were not consistently submitted and approved in advance of the purchase date, and the time sheet was not properly certified, indicating a breakdown in adherence to established policies. Effect: Although the transactions were ultimately approved and the costs were otherwise allowable and properly charged to the program, failure to obtain timely approval increases the risk that purchases may be made without appropriate prior authorization. Questioned Costs: None reported Recommendation: We recommend management reinforce disbursement procedures to ensure purchase requests are submitted and approved in accordance with the established policy requiring approval prior to the date of purchase, thereby strengthening internal controls over disbursements. Views of Responsible Officials: Management agrees with this finding. See Management’s View and Corrective Action Plan included at the end of the report.