Finding Text
Finding 2025-003: Significant Deficiency - Control and Compliance Over Allowable Costs Program: Disaster Grants - Public Assistance (Presidentially Declared Disasters) Assistance Listing Number: 97.036 Pass-Through Agency: Minnesota Department of Public Safety Criteria: In accordance with 2 CFR §200.303 and 200.403 through 200.405, the County is required to establish and maintain effective internal control over the federal award. Costs charged to a federal award must be allowable under the applicable federal cost principles, including being necessary and reasonable for the performance of the award, allocable to the award, and adequately documented with review and approval. Condition: Of the forty (40) expenditures tested, five (5) did not have sufficient evidence of review and approval or contained an error that was not identified during the review process. Cause: The County relied on in-person verification and approval for certain expenditures but did not consistently retain documentation evidencing the review performed. In addition, for one expenditure, the total invoice amount was erroneously entered as the unit price, and the review performed was not sufficiently detailed to identify and correct the error before the expenditure was claimed. Context: Four (4) of the exceptions were related to force account equipment costs for which the County did not retain documentation evidencing review and approval. One (1) exception involved an input error that caused the amount claimed as an eligible cost to exceed the amount actually incurred, resulting in questioned costs identified below. The sample was not statistically valid. Effect: Without adequate review controls and documentation evidencing the review performed, there is an increased risk that unsupported, inaccurate, or otherwise unallowable costs could be charged to the federal program and not detected timely. Such costs may be subject to disallowance and repayment to the grantor. Questioned Costs: $5,301 Recommendation: The County should strengthen its internal controls over expenditures claimed for reimbursement under the federal program. The County should require and retain documentation evidencing the review and approval of expenditures and ensure that the review includes verification of amounts claimed to underlying supporting documentation. The review should be performed at a sufficient level of detail to identify errors or irregularities before costs are claimed to the program. Views of Responsible Officials: The County will implement a documented review and approval process for expenditures included in reimbursement requests. Supporting documentation will be reviewed prior to submission to verify that amounts claimed agree to underlying records, including invoices, force account equipment records, and other applicable supporting documentation. Evidence of the review and approval will be retained with the reimbursement documentation. The County has reached out to the Minnesota Department of Public Safety to update the claimed costs as necessary for the mathematical error.