Finding Text
Federal Program: Coronavirus State and Local Fiscal Recovery Funds (ALN 21.027) Criteria: In accordance with 2 CFR §200.303, non-Federal entities are required to establish and maintain effective internal controls over Federal awards that provides reasonable assurance the entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: The Organization did not maintain adequately documented internal controls over compliance for the Federal program. Written policies and procedures were not maintained for several compliance areas, including procurement, cash management, allowable costs, and cost allocation methodologies. In addition, significant turnover among personnel responsible for program administration contributed to inconsistent documentation of compliance-related procedures and responsibilities. Cause: The deficiency resulted from significant personnel turnover, limited formalization of compliance processes, and insufficient documentation of internal controls and compliance procedures. Effect: The lack of documented policies and formalized compliance procedures increases the risk that noncompliance with Federal requirements could occur and not be detected in a timely manner. Recommendation: We recommend the Organization develop and implement comprehensive written policies and procedures addressing applicable Uniform Guidance requirements, including procurement, cash management, allowable costs, and cost allocation. Management should also establish documented compliance monitoring procedures and provide training to personnel responsible for administering Federal awards. We noted that subsequent to year-end, the Organization developed and implemented several written policies and procedures addressing many of these compliance areas. Questioned Costs: None. Context: Audit testing did not identify any instances of noncompliance with Federal program requirements. In addition, dual-purpose testing identified certain informal controls that were operating during the period under audit. Accordingly, this matter is reported as a significant deficiency in internal control over compliance and does not result in material noncompliance with Federal program requirements. Views of Responsible Officials: Management agrees with the finding and has formalized and documented compliance policies and procedures and provided additional training to personnel responsible for Federal program administration.