Finding Text
Inadequate Approval Controls Over Adjusting Journal Entries and Invoices (Repeat of Finding 2024-006) Federal Agency: U.S. Department of Agriculture Pass-Through Agency: MN DEED Assistance Listing Number(s):17.258, 17.278 and 17.259 (WIOA Cluster) Federal Agency: U.S. Department of Health and Human Services Pass-Through Agencies: MN DEED and various counties Assistance Listing Number: 93.558 (TANF) Compliance Requirement: Allowable Cost Criteria: The Organization’s policy requires that adjusting journal entries be reviewed by someone other than the originator. Additionally, all invoices must be approved by authorized personnel prior to payment. Condition: Testing of disbursements revealed that several adjusting journal entries were posted without the required dual review. Invoice testing also identified payments processed without documented approval. For the WIOA Cluster, 4 of 60 disbursements (totaling $9,456) lacked proper approval, but were otherwise allowable costs. For TANF, 7 of 60 disbursements tested (totaling $1,760) lacked proper approval, but were otherwise allowable costs. Cause: There is a breakdown in enforcing workflow protocols within the accounting system and a lack of consistent supervisory review. Effect: Weak approval controls increase the risk of errors, unauthorized transactions, and non-compliance with audit and grantor requirements, potentially jeopardizing funding eligibility. Questioned Costs: None Recommendation: We recommend following documented controls to enforce proper approval for adjusting journal entries. We also recommend ensuring invoice processing workflows include mandatory approvals before payment. We further recommend conducting periodic internal reviews to verify compliance with approval policies. Responsible Officials Response: CMJTS migrated to a new accounting software in February of 2025. This software has systematic approval workflows built in to ensure approvals are done on journal entries before they are posted and invoices before they can be paid.