Finding Text
2023-002 Internal Control Over Financial Reporting - Internal Control Evidence Criteria or Specific Requirement: Internal controls should be in place that provide reasonable assurance that transactions are reviewed and approved. This is critically important for grant funding to assure that expenditures incurred are allowable grant costs. Condition: During the audit, transactions tested for cash disbursements and journal entries lacked evidence of review and approval by others. Three of ten payroll transactions selected for testing did not have evidence of timesheet approval. Additionally, no documentation was available to substantiate reviews of other processes such as payroll registers and bank reconciliations. Although management represents these items were reviewed, the documentation we observed did not have evidence of review. Effect: A material weakness in internal control over financial reporting exists due to the lack of documentation of internal control processes. Cause: NIBC transitioned their accounting function from an outsourced model to utilizing inhouse staffing which resulted in the loss off approval documentation maintained by the outsourced accountant. In-house staffing did not implement process that provided for evidence of review. Auditor's Recommendation: We recommend NIBC implement procedures to ensure documentation of approvals is retained. Questioned Costs: None View of Responsible Officials: Management agrees with the findings and has written a corrective action plan. Federal Program Information: Funding agency: Department of the Treasury, passed through the Battle Creek Community Foundation Title: Emergency Rental Assistance Program AL number: 21.023