Finding Text
Finding Number:2024-006 Instance of Non-Compliance:Allowability of Costs Assistance Listing # 66.466 Questioned Cost $0 Repeat Finding: No Condition: During testing of disbursements, including both federal grant expenditures and nonfederal funded transactions, it was noted that a majority of the sampled items lacked documented evidence of review and approval. While approvals may have occurred, there was no retained written or system-based documentation to substantiate that such reviews were performed in accordance with the organization’s established approval requirements. Criteria: In accordance with 2 CFR Part 200, specifically § 200.303 (Internal Controls), nonfederal entities are required to establish and maintain effective internal controls over federal awards, including proper authorization and documentation of transactions. Additionally, the Organization’s accounting policies require that all disbursements and employee reimbursements be reviewed and approved by appropriate personnel, with supporting documentation maintained within designated systems such as QuickBooks Online (QBO) and Gusto. Cause: The deficiency appears to result from inconsistent adherence to established policies and procedures, as well as insufficient monitoring and enforcement controls to ensure that approvals are properly documented and retained within the accounting system. Effect: The lack of documented approvals increases the risk of unauthorized, inappropriate, or unsupported expenditures. This control weakness may result in noncompliance with federal regulations and internal policies and could lead to questioned costs or additional audit findings. Recommendation: Management should strengthen internal controls by reinforcing compliance with existing approval and documentation requirements. Specifically, all disbursements and reimbursements should include verifiable evidence of review and approval (e.g., documented electronic approvals within QBO or Gusto, or appropriately signed supporting documentation) prior to payment processing. Additionally, management should implement periodic monitoring procedures to ensure compliance and provide training to relevant personnel on documentation and approval standards. Views of Responsible Officials: Management acknowledges the finding and agrees that documentation of disbursement approvals needs to be strengthened. While approvals were generally occurring, they were not consistently documented or retained in accordance with established policies. To address this, the organization has implemented a requirement for documented email approvals from appropriate managers prior to processing payments. In addition, the organization is evaluating and implementing an electronic system to capture and retain approvals for accounts payable and credit card transactions. Management will also reinforce compliance through periodic monitoring and staff training to ensure adherence to approval and documentation requirements. Responsible Official: Abel Olivo, Executive Director, in coordination with the organization’s outsourced accounting firm Anticipated Completion Date: May 31, 2026