Finding Text
2025-001: Activities Allowed or Unallowed and Allowable Costs/Cost Principles - Material Weakness in Internal Control and Material Noncompliance Repeat of Prior Audit Finding 2024-001 Federal Program: Trans-National Crime Federal Agency: U.S. Department of State - Bureau of International Narcotics and Law Enforcement Affairs Federal Assistance Listing Number: 19.705 Federal Award Year: December 31, 2025 Criteria: 2 CFR Section 200.303(a) of the Uniform Guidance requires all non-Federal entities to establish, document, and maintain effective internal control over the Federal awards that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards. In addition, 2 CFR Sections 200.405 and 200.403(g) require federal awards be expended only for allowable activities and be adequately documented, respectively. Condition/Context: The Corporation was unable to provide a signed contract or reconciliation to evidence allowability of the expenditures or documentation of review and approval for the following: • For 3 out of 40 selections, no evidence of approval of signed contracts could be provided (control and compliance). • For 1 out of 40 selections, no evidence of approval of time sheet could be provided (control and compliance). • For 11 out of 40 selections, no evidence of approval of payroll payments could be provided (control). This was not a statistically valid sample. Questioned Costs: Questioned costs were approximately $12,016. Cause: The Corporation did not retain/could not retrieve the signed contracts due to poor document retention. Effect: The Corporation has not complied with the specific requirements for activities allowed or unallowed and allowable costs/cost principles as described in the Uniform Guidance. Unallowable costs may have been charged to the federal program. Recommendation: We recommend that the Corporation review its process and implement procedures that would allow management to properly maintain all required documentation related to its federal expenditures.