Finding Text
Department of Homeland Security and Emergency Management North Dakota Department of Emergency Services 4760DR-ND-749691, 2025 Federal Financial Assistance Listing 97.036 Disaster Grant – Public Assistance Allowable Costs/Activities Allowed or Unallowed Material Weakness in Internal Control Over Compliance Criteria – A good system of internal accounting control contemplates an adequate system for ensuring documentation of expenditures, including material inventory transactions, is reviewed and maintained. Condition – In our testing of allowable costs and activities, we noted instances where materials inventory expenses were submitted for federal reimbursement at a cost per unit that did not agree to the replacement cost. Cause – Procedures are not in place to adequately identify improper replacement costs applied to material inventory transactions. Effect – The deficiency could result in a misstatement to the financial statements that would not be prevented or detected. Questioned Costs – None reported. Context/Sampling – A nonstatistical sample of 63 transactions out of a population greater than 250 total transactions were selected for testing, which accounted for $474,885 of $1,775,771 of federal program expenditures. Repeat Finding from Prior Years – Yes, 2024-001 Recommendation – A thorough review and reconciliation of supporting documentation for expenditures, including material inventory transactions, should be performed before amounts are claimed for reimbursement. Views of Responsible Officials – There is no disagreement with the audit finding.