Finding Text
Cash Disbursement Approval Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Continuum of Care Assistance Listing Number: 14.267 Federal Award Identification Number and Year: 2024-2025 and 2025-2026 Award Period: October 1, 2024 – September 30, 2025 and October 1, 2025 – September 30, 2026 Type of Finding: • Material Weakness in Internal Control Over Compliance and Other Matter Criteria or specific requirement: The organization's financial policies require that expenditures receive appropriate documented approval prior to payment and that duties related to authorization, custody of assets, and recordkeeping be appropriately segregated whenever practical. These controls help ensure expenditures are valid, authorized, and made in accordance with organizational policies. Condition: During testing of disbursement transactions, we noted instances in which disbursements were processed without evidence that the organization's established approval procedures were followed. In addition, the Chief Financial Officer (CFO) maintained sole access to the organization's Amazon purchasing account, including the ability to initiate purchases and process related disbursements without independent review or approval. Questioned Costs: $1,673 (known) $5,072 (likely) Context: The Organization processed disbursements related to federal programs during the audit period. The identified control deficiencies affected the Organization's controls over the authorization and monitoring of expenditures charged to federal awards. Cause: Established disbursement approval procedures were not consistently followed, and access to the Amazon purchasing platform was not structured to provide adequate oversight or segregation of duties. Effect: The absence of required approvals and the lack of segregation of duties increase the risk of unauthorized purchases, improper expenditures, and errors or irregularities not being detected in a timely manner. Repeat Finding: No Recommendation: We recommend the organization strengthen controls over purchasing and disbursement activities by requiring documented approval of all disbursements prior to payment, establishing independent review and approval of purchases made through the Amazon account, limiting sole control of purchasing accounts by assigning secondary administrative access or implementing periodic management or board review of purchasing activity, monitoring compliance with disbursement approval policies through periodic review of transactions and supporting documentation. Views of Responsible officials and planned corrective actions: Management agrees with the finding and will enhance controls over purchasing and disbursement activities. Procedures will be implemented to ensure all expenditures receive documented approval and that Amazon account activity is subject to independent review. Management will also evaluate opportunities to improve segregation of duties and oversight of purchasing transactions.