Finding Text
Significant Deficiency in Internal Control over Compliance Federal Agency: U.S. Department of Justice Federal Program: Crime Victim Assistance Assistance Listing Number: 16.575 Direct Award Number: Not applicable Pass-Through Entity: California Governor's Office of Emergency Services (CalOES) Grant Identifying Numbers: XD-23-02-1199, AT-23-04-1199, XL-23-03-1199 Compliance Requirements: Cash Management and Reporting Criteria: Pursuant to 2 CFR §200.303, the Organization is required to establish and maintain effective internal control over the federal award that provides reasonable assurance that the Organization is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Under 2 CFR §200.328 (financial reporting) and §200.329 (performance reporting) recipients are responsible for monitoring activities under federal awards and must submit required performance and financial reports at the intervals required by the federal award, which may be no more frequent than quarterly and no less frequent than annually. Condition and Context: The pass-through entity changed requirements in January 2025 to require only one signature/certification when they moved to electronic submission of monthly cost reimbursement claims and financial reports from paper submission that required two reviewer signatures. This caused the organization to not have proof of review by way of second signature on file for the submitted financial claims and financial reports although procedurally there was evidence of internal review within the accounting department. Cause: Management did not design and implement documented internal controls requiring supervisory review and approval of cash management activities and federal financial reporting. Effect: The lack of documented internal controls increased the risk that errors, omissions, or noncompliance related cash management and reporting could occur and not be detected in a timely manner. Questioned Costs: Not applicable. Repeat Finding: No Recommendation: We recommend management design and implement documented review and approval controls over the applicable compliance requirements. This should include regular monitoring to ensure controls are consistently applied, and periodic internal audits to assess the effectiveness of compliance systems.Views of Responsible Officials: In January 2025, CalOES moved to an electronic submission of the monthly cost reimbursement claims form and financial reports which only allowed one signature/certification on the form. Prior to 2025, the manual submission required two signatures. Under the new electronic system, the Organization did not have proof of a supervisor review on the electronic form or internally. Since the internal policy and Federal requirements ask for supervisory approval, the Organization will amend internal processes to document supervisory approval beginning in January 2027.