Finding 12266 (2022-005)

Material Weakness
Requirement
BC
Questioned Costs
$1
Year
2022
Accepted
2023-02-13
Audit: 16547
Organization: Epilepsy Foundation of America (MD)

AI Summary

  • Core Issue: Ineffective controls over cash management led to unallowable expenses being drawn down, resulting in noncompliance.
  • Impacted Requirements: The Uniform Guidance mandates internal controls to ensure only allowable costs are drawn down for federal funds.
  • Recommended Follow-Up: Implement detailed procedures for reviewing cash drawdowns and ensure all expenditures have proper documentation before submission.

Finding Text

Finding 2022-005: Material Weakness over Cash Management and Allowable Costs - Review of Cash Drawdowns Information on the Federal Program: Department of Human and Health - Center for Disease Control: Improving Epilepsy Programs, Services and Outcomes Through Partnerships, CFDA 93.850 Criteria: The Uniform Guidance requires organizations to establish internal controls to detect potential noncompliance. The Uniform Guidance also requires organizations who receive funds on a cost reimbursement basis to only draw down funds for allowable expenditures under the grant. Condition: Management has an established control in place, in that the VP of Finance reviews the calculation of expenditures not drawn down prior to the submission of the drawdown request. However, the control was ineffective to prevent and detect an erroneous expense journal entry, considered an unallowable expense and is an instance of noncompliance, from being included in the drawdown. Cause: Due to a lack of policies and procedures regarding retention of review documentation and lack of awareness of the requirement. Effect: Non-compliance with adequate review over cash management and allowable costs. Questioned Costs: $72,514 in known questioned costs were identified, as determined by management as a part of an inspection performed. Context: For one cash drawdown chosen for testing of two (50%), there were expenses that had no supporting documentation and were unallowable under the grant. Repeat Finding: No. Recommendation: We recommend that management establish procedures review cash drawdowns in detail prior to submission and that all expenditures recorded to the grant have appropriate supporting documentation.

Corrective Action Plan

Finding 2022-005: Material Weakness over Cash Management and Allowable Costs - Review of Cash Drawdowns Information on the Federal Program: Department of Human and Health - Center for Disease Control: Improving Epilepsy Programs, Services and Outcomes Through Partnerships. Finding: The Uniform Guidance requires organizations to establish internal controls to detect potential noncompliance. The Uniform Guidance also requires organizations who receive funds on a cost reimbursement basis to only draw down funds for allowable expenditures under the grant. Management has an established control in place, in that the VP of Finance reviews the calculation of expenditures not drawn down prior to the submission of the drawdown request. However, the control was ineffective to prevent and detect an erroneous expense journal entry, considered an unallowable expense and is an instance of noncompliance, from being included in the drawdown. Planned Corrective Action: A corrective action was taken and the Foundation returned the funds drawn down to the Department of Treasury. The Foundation has implemented an additional confirmation process where reimbursable expenses will be reviewed along with the draw down prior to draw down. This additional step will ensure that erroneous coding does not result in a funds draw down. Name and Person Responsible: Caro Marie Brown (Senior Director of Finance), June Nolan (Accounts Payable Accountant), and Lindey Camerata (Controller). Anticipated Completion Date: February 2023.

Categories

Questioned Costs Cash Management Allowable Costs / Cost Principles

Other Findings in this Audit

  • 12263 2022-002
    Material Weakness
  • 12264 2022-003
    -
  • 12265 2022-004
    Material Weakness
  • 588705 2022-002
    Material Weakness
  • 588706 2022-003
    -
  • 588707 2022-004
    Material Weakness
  • 588708 2022-005
    Material Weakness

Programs in Audit

ALN Program Name Expenditures
93.850 Improving Epilepsy Programs, Services, and Outcomes Through National Partnerships $3.80M