2025-006 - Documentation and Internal Controls over Disbursements (repeat finding) Auditor Description of Condition and Effect: Evidence of an independent review was not documented on our disbursements selected for testing. As a result of the condition, the Academy is exposed to an increased risk of misappropriation, misstated financial statements, or noncompliance. The Academy is at increased risk of unallowable costs being charged to federal programs without being detected by its internal controls. Auditor Recommendation: We recommend that the Academy strengthen its accounts payable process by implementing a formal approval procedure to ensure all invoices are reviewed and authorized by personnel with direct knowledge of the underlying transaction prior to payment. This process should include the following elements: Designated Approvers: Identify specific individuals or roles responsible for reviewing and approving invoices for each department or type of transaction. Documented Approval: Require that each invoice include documented evidence of approval (e.g., signatures or electronic approval) before it is processed for payment. Segregation of Duties: Ensure that the approver is independent of those initiating or processing payments to maintain proper internal controls. Periodic Review: Conduct periodic reviews of accounts payable records to verify compliance with approval procedures and identify any unauthorized payments. Corrective Action: 1. Designate Official Approvers: We will identify specific staff members or roles who have direct knowledge of certain transactions to be the only ones authorized to approve those invoices. 2. Require Proof of Approval: We will implement a strict rule that no invoice is processed for payment unless it has clear, documented evidence of approval, such as a physical signature or a verified electronic sign-off. 3. Maintain Independence in Payments: We will ensure the person approving an invoice is not the individual processing the actual payment. 4. Perform Regular Spot Checks: I will conduct periodic reviews of our accounts payable records to make sure our approval procedures are being followed and to catch any unauthorized payments early. 5. Focus on Federal Compliance: We will meet monthly to monitor disbursements charged to federal programs to ensure all costs are allowable and properly documented, reducing our risk of noncompliance. Responsible Person: LaKisha Loudermill, Superintendent Anticipated Completion Date: June 30, 2026