Finding Text
#2025-003 - Lack of Authorization for Expenses Criteria: Uniform Guidance 2 CFR 200.403 requires costs to be necessary, reasonable, and adequately documented to be allowable under Federal awards. Additionally, the Organization’s internal policies mandate written prior approval before incurring federal expenditures. Cause: Program staff bypassed standard procurement workflows to expedite payments. Additionally, the finance department processed the grant reimbursement requests without verifying that the supporting packages contained the required signatures. Condition: We identified federal grant expenditures that were charged to the program without documented evidence of prior review, approval, or formal authorization by the designated individual. We tested a sample of 20 non-payroll disbursements charged to the federal program. Of these, 2 transactions lacked documented approval. The total population of non-payroll disbursements for this award was $487,816. Effect: The Organization is out of compliance with federal documentation standards. Failure to approve costs pre-disbursement can result in unallowable expenses being charged to the federal award, leading to potential claw backs of funds by the granting agency. Recommendation: Management should reinforce existing policies and require documentation for all approvals. Management’s Response: The Organization is implementing a new approval process.