Finding Text
Finding 2025-001 United States Department of Agriculture - Forest Service Federal Assistance Listing No. 10.727 Inflation Reduction Act (IRA) Significant Deficiency in Internal Controls and Noncompliance over Activities Allowed or Unallowed and Allowable Costs/Cost Principles (Nonpayroll) Repeat Finding: No Condition: During our testing and review of the non-payroll transactions, BTT did not provide evidence that charges for 10 out of 40 transactions on the grant were approved by supervisory personnel. Criteria: In accordance with 2 CFR 200.514: (c) Internal controls, (1) The compliance supplement provides guidance on internal controls over federal programs based upon the guidance in Standards for Internal Control in the Federal Government issued by the Comptroller General of the United States and the Internal Control - Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). COSO requires entities to establish and maintain effective internal controls to achieve operational, reporting and compliance objectives. In accordance with 2 CFR 200.430: Test direct costs charged to federal awards with the following criteria: a. Costs were approved by the federal awarding agency, if required. (See 2 CFR 200.407 for items of cost that require prior written approval and Exhibit 1, Selected Items of Cost, in this part of the Supplement.) b. Costs were necessary and reasonable for the performance of the federal award and allocable under the principles of 2 CFR 200, Subpart E. c. Costs conformed to any limitations or exclusions set forth in 2 CFR 200, Subpart E, or in the federal award as to types or amount of cost items. d. Costs were consistent with policies and procedures that apply uniformly to both federally financed and other activities of the NPO. e. Costs were accorded with consistent treatment. Costs were not assigned to a federal award as a direct cost if any other cost incurred for the same purpose in like circumstances was allocated to a federal award as an indirect cost. f. Costs were not included as a cost of any other federally financed program in either the current or a prior period. g. Costs were not used to meet the costsharing or matching requirements of another federal program, except where authorized by federal statute. h. Costs were adequately documented. Cause: BTT did not have proper controls in place to ensure that federal activities charged were reviewed by appropriate approver and that all approvers are listed in the approval policy. Effect: Failure to document supervisory approval of grant charges increases the risk of unallowable or unsupported costs being charged to the grant, potentially leading to noncompliance and jeopardizing current or future funding. Questioned Costs: Unknown. Recommendation: We recommend that BTT establish and update written procedures related to federally funded expenses to ensure the charges are approved and allowable for the grant. Auditee Response and Corrective Action Plan: Refer to management’s corrective action plan. Auditor’s Conclusion: Finding remains as stated.