Finding Text
Type of Finding: (B) Significant Deficiency in Internal Control Over Financial Reporting Condition During our audit, we noted that New Space has not established comprehensive, formalized written policies and procedures governing key financial and compliance areas. While certain processes appear to be performed in practice, they are not documented in a consistent or formal manner, nor do they explicitly incorporate requirements outlined in the Uniform Guidance. Criteria In accordance with the Uniform Guidance (2 CFR Part 200), non-federal entities are required to establish and maintain effective internal control over federal awards that provides reasonable assurance that the entity is managing awards in compliance with federal statutes, regulations, and the terms and conditions of the federal award. This includes the development and implementation of formal, written policies and procedures that incorporate applicable requirements of the Uniform Guidance. Effect Without formalized policies and procedures that incorporate Uniform Guidance requirements, there is an increased risk of inconsistent practices, noncompliance with federal regulations, and errors in financial reporting or grant administration. Additionally, the absence of documented controls may hinder continuity in operations and training of personnel. Cause Policies and procedures were not formally designed, approved, and maintained; responsibility for maintaining compliance documentation was not assigned and monitored. Recommendation We recommend that management develop, document, and implement comprehensive written policies and procedures over financial management and federal award compliance. These policies should be aligned with the requirements of the Uniform Guidance and address, at a minimum: • Allowable costs and cost principles • Procurement standards • Cash management • Subrecipient monitoring (if applicable) • Reporting and record retention • Internal controls over compliance • Management should also ensure these policies are communicated to relevant personnel and reviewed periodically for updates and compliance with current regulations. Views of Responsible Officials and Planned Corrective Action New Space will maintain written financial and grants management policies to support consistent operations and compliance with Uniform Guidance (2 CFR Part 200). These policies will cover key areas including allowable costs, procurement, cash management, subrecipient monitoring, reporting, record retention, and internal controls. The Financial Analyst will be responsible for maintaining and updating these policies, with oversight from the Executive Director, and policies will be reviewed at least annually and updated as needed. Policy Owner: Financial Analyst; Implementation Date: March 31, 2024