Finding Text
Criteria – Federal regulations (2 CFR 200.302 and 2 CFR 200.303) require recipients of federal awards to maintain effective internal controls over federal programs and financial transactions to provide reasonable assurance that expenditures are properly authorized, allowable, and in compliance with applicable program requirements. Sound internal control practices include independent review and approval of invoices prior to payment and recording. Condition – During testing of expenditures charged to the federal program, it was noted that invoices were processed and recorded by the accounting staff without documented evidence of review and approval by an individual independent of the recording function. The Organization did not maintain documentation demonstrating supervisory approval of invoices prior to payment. Context and Cause – The Organization has not implemented a formal policy requiring documented review and approval of invoices by personnel independent of the accounting function responsible for recording transactions. Effect of Condition – Without documented independent approval, there is an increased risk that unallowable, unsupported, inaccurate, or unauthorized expenditures could be charged to the federal program without timely detection. Questioned Cost – None. Recommendation – Management should establish and implement procedures requiring all invoices to be reviewed and approved by an authorized individual independent of the employee responsible for recording the transaction. Evidence of approval should be documented and retained with the supporting invoice documentation. Views of Responsible Officials and Planned Corrective Actions – Management agrees with the finding and will implement procedures requiring documented supervisory review and approval of invoices prior to payment and recording. Documentation of approvals will be retained with the payment records to strengthen internal controls over federal expenditures.