Finding 1217265 (2025-001)

Finding 2025-001: Significant Deficiency in Internal Control Over Financial Statements – Inadequate Review of Expenditures Criteria: The Organization should have controls that provide documented evidence of review and approval of expenses at the invoice or transaction level prior to payment. Condition: During disbursement testing, approvals were often evidenced only by the President’s signature on checks. Practices for documenting preapproval of expenditures were not uniform. Cause: The Organization has not fully implemented a formal, documented expense approval process that requires and evidences review and authorization at the invoice or transaction level. Effect: Inconsistent documentation of approvals increases the risk that disbursements may be processed without appropriate review, may not comply with grant requirements or organizational policies, or may be recorded in the wrong period or account. This represents a significant deficiency in internal control over financial reporting, although no unallowable or improper costs were identified in our testing. Recommendation: Implement a formal expense approval policy requiring documented approval at the invoice or transaction level (for example, signatures/initials on invoices or documented electronic approvals in QuickBooks Online). Establish an approval matrix that defines approval thresholds and identifies other authorized approvers to reduce reliance on the President and promote consistency. Views of responsible officials: See attached corrective action plan.