Finding Text
Federal Program(s) Information Federal Agency: U.S. Department of Treasury Award Name: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Award Year: 2024 Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Type of Finding Compliance Internal Controls over Compliance – Significant Deficiency Criteria or Specific Requirement Under Uniform Guidance (2 CFR § 200.403, 200.405), costs charged to federal programs must be allowable, allocable, and properly supported. Adequate documentation, such as approved invoices and supporting records, must be maintained for all charges to federal awards. Effective internal controls should ensure that all payments are authorized, reviewed, and retained in accordance with program requirements. Condition and Context During testing of 40 transactions for the Activities Allowed/Allowable Costs (A/B) compliance area one invoice that was less than $10,000 could not be provided and one invoice was not approved prior to payment. Cause The City did not consistently enforce internal controls requiring the retention of supporting documentation and formal approval of invoices prior to processing payments charged to the grant. Effect or Potential Effect Failure to maintain supporting documentation and to ensure invoices are properly approved increases the risk of unallowable or unsupported costs being charged to the federal program, and limits the City’s ability to demonstrate compliance with program requirements. Questioned Costs None reported. Prior Year Finding No Recommendation We recommend the City strengthen internal controls by ensuring all expenditures charged to federal programs are properly documented and approved prior to payment. Management should periodically review vendor payment processes to verify compliance with documentation and approval procedures.