Finding Text
Finding Number: 2022-SA2 Material Weakness – Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance, Program Income, Reporting, Special Tests – Compliance and Control Finding - Internal Control over Compliance Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program Federal Agency: U.S. Veterans Administration Pass-Through Entity: Not applicable Repeat Finding: Yes – 2021-SA2 Criteria or Specific Requirement: 2 CFR section 200.303a states the non-Federal must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statues, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with 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: The Organization did not maintain effective internal controls over compliance over direct and material compliance areas. Cause: Factors beyond the control of current management, including poorly designed policies and procedures and lack of understanding of Federal award requirements and training, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards. Effect or Potential Effect: Potential for noncompliance of direct and material audit requirements. Questioned Costs: Related questioned costs are unknown. Context: These issues stem from policies and procedures established by former key accounting personnel, predate current management’s oversight, and were therefore outside their direct control. Recommendation: Organization should implement appropriate internal controls over compliance for all direct and material compliance areas. View of Responsible Officials: In response to Finding No. 2022-SA2, management agrees with the finding. Corrective actions were implemented in subsequent fiscal years. CFDA numbers for new federal awards are identified, along with the applicable compliance requirements in accordance with the OMB Compliance Supplement (Matrix of Federal Compliance Requirements). Policies and procedures have been established for each applicable compliance requirement and are communicated to employees responsible for monitoring and ensuring compliance.