Finding Text
Criteria – An entity is responsible for establishing and maintaining effective internal controls over compliance with requirements of laws, regulations, contracts and grant agreements applicable to federal award programs. In addition, cost principles require that charges to federal award programs be supported by appropriate documentation including approved vouchers, vendor invoices or other documentation. Condition – The Town of Hopkinton has internal control policies and procedures in place to ensure compliance with activities allowed or unallowed, allowable costs/cost principles, and period of performance requirements. The Town’s internal controls over compliance with these requirements is the approval of the Town Manager and Finance Director on a payment voucher, which must be accompanied by a vendor invoice or other appropriate documentation to support the expenditure. During our test of internal controls over compliance with these requirements, we noted the following based on a sample of forty transactions: • Five payment vouchers were not properly approved by both the Town Manager and Finance Director. • Two transactions for reimbursements to the Town for Town employee salaries and benefits did not have appropriate documentation. Cause – The Town did not follow established internal control policies and procedures for payment voucher approval and did not have adequate documentation to support the salaries and benefits charged to federal awards. Effect – The Town has no documentation on file for these transactions to demonstrate compliance with internal control policies and procedures related to activities allowed or unallowed, allowable costs/cost principles, and period of performance requirements for these transactions. Questioned Costs – None Recommendation – We recommend that the Town ensure a properly approved payment voucher is prepared for all federal award program expenditures to ensure proper documentation of the internal control policies and procedures related to activities allowed or unallowed, allowable costs/cost principles, and period of performance compliance requirements. We also recommend that salaries and benefits charged to federal awards be supported by detailed time records approved by the Town Manager and Finance Director.