Finding Text
U.S. Department of Homeland Security Pass-through Entity: North Carolina Department of Public Safety, Division of Emergency Management Program Name: Disaster Grants – Public Assistance Federal Assistance Listing Number 97.036 Significant Deficiency, Nonmaterial Noncompliance – Allowable Costs/Costs Principles Finding 2022-007 Criteria: Per Section 200.303 of the Uniform Grant Guidance, a non-federal entity 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 statutes, regulations, and the terms and conditions of the federal award, sufficient to ensure that only costs incurred for allowable activities that adhere to all appropriate cost principles are charged to federal grants. Condition: There was one out of 10 transactions tested where clear and consistent documentation of a control over allowable costs and activities was not present. Effect: Without consistent documentation and adherence to departmental policy for approving allowable costs, there is an increased risk that unallowable expenditures may be charged to the program, potentially resulting in noncompliance with federal requirements and questioned costs. Questioned Costs: None. Cause: The departmental policy to approve expenditure documents as an allowable cost for the program was not followed. Recommendation: The Town should consistently follow departmental policy by ensuring all expenditure documents for the program are properly reviewed and approved as allowable costs before being approved for payment and maintain clear documentation of controls over program activities to support compliance with federal requirements. Management Response: Management agrees with the findings and is implementing corrective procedures, which are further discussed in the corrective action plan.