Finding Text
2025-003 Expenditure Approval — Temporary Assistance for Needy Families and Emergency Solutions Grants Program Federal agency: U.S. Department of Health and Human Services (TANF); U.S. Department of Housing and Urban Development (ESG). Assistance Listings: 93.558 and 14.231. Federal award numbers were not available; pass-through entity identifying numbers: TANF (Adams County); DOLA DOH ESG, DOLA DOH HSP, DOLA DOH NS2G, DOLA DOH HRP, and DOLA DOH HPAP (State of Colorado); Encampment Resolution (Adams County). Award year: July 1, 2024 through June 30, 2025. Pass-through entities: Adams County (TANF and ESG); State of Colorado, Department of Local Affairs, Division of Housing (ESG). Federal expenditures: $1,079,200 (TANF) and $984,865 (ESG). Compliance requirement: Allowable costs/cost principles. Type of finding: material weakness in internal control over compliance. Repeat finding: No. Condition: During our audit of the Temporary Assistance for Needy Families (TANF) program (Assistance Listing 93.558) and the Emergency Solutions Grants (ESG) program (Assistance Listing 14.231) for the year ended June 30, 2025, it was noted that the Organization did not consistently follow its established policies and procedures requiring management approval prior to the disbursement of program expenditures. Specifically, 26 of the 80 expenditures tested were processed without evidence of the required management approval in accordance with the Organization's documented policies and procedures. Our sample was not intended to be, and was not, a statistically valid sample. Criteria: In accordance with 2 CFR § 200.303, non-federal entities are required to establish and follow internal controls over federal programs that provide reasonable assurance of compliance with federal statutes, regulations, and the terms and conditions of federal awards. The Organization's internal policies require management approval prior to the disbursement of program-related expenditures. Cause: The Organization's documented control requires management approval of each disbursement prior to payment; however, approvals are commonly obtained verbally and there is no standard approval form retained with each disbursement package. As a result, while approvals are routinely performed in practice, documented evidence of the approval is not consistently retained in the disbursement file. Effect: The Organization is unable to demonstrate through its own records that the required management approval was obtained prior to payment for the affected disbursements. The absence of retained approval evidence in the disbursement file means that the Organization's internal control cannot be relied upon to prevent or detect unallowable, unreasonable, or unauthorized costs being charged to the federal programs, increasing the risk that material noncompliance with the allowable costs/cost principles compliance requirements could occur without timely detection. Questioned Costs: None. No questioned costs are reported because the condition relates to the retention of approval evidence rather than to unallowable or unauthorized expenditures. Management approvals were performed at the time of disbursement in accordance with the Organization's practice; however, the approvals were obtained verbally and documented evidence was not retained in the disbursement files. The expenditures tested were otherwise supported and were allowable under the applicable program requirements, and the audit did not identify any unallowable costs charged to the programs. Recommendation: We recommend the Organization (a) implement a standard approval form or signature block that is completed, signed, and dated by each required reviewer prior to issuance of payment and retained as part of the disbursement support package for every TANF and ESG disbursement; (b) update its written disbursement procedures to require that the completed approval form be retained in the disbursement file at the time of payment, in lieu of verbal approval; and (c) implement a periodic supervisory review of disbursement files to confirm that the required approval evidence is consistently retained, with results communicated to the Executive Director. Management's Response: See corrective action plan.