Finding 1217616 (2025-002)

2025-002 – Significant Deficiency – Internal Control over Compliance Program: WIOA Cluster (ALN 17.258; ALN 17.259; ALN 17.278) Criteria: Per 2 CFR 200.303, recipients must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control- Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: During our testing of compliance with requirements applicable to major federal programs, we noted that the entity did not have formal, consistently applied review and approval controls over key compliance areas. Specifically, evidence of supervisory review and approval was not consistently documented for compliance-related transactions. As a result, review procedures appear to be informal, inconsistent, or reliant on individual practices rather than standardized, documented controls. Cause: This condition appears to be the result of a lack of internal controls designed to ensure compliance with Uniform Guidance. Effect: The absence of formal and consistently documented review and approval procedures increases the risk that noncompliance with federal program requirements could occur and not be prevented or detected on a timely basis. Recommendation: We recommend that the Organization formalize policies and procedures by developing and documenting standardized procedures for review and approval of key compliance activities across all major federal programs, implement documented review controls, and enhance monitoring and oversight. View of Responsible Officials: Management agrees with the recommendation and has developed a much more stringent review and approval process.