Finding Text
2025-001 Federal Awards Internal Control Federal Agency: U.S. Department of Commerce Program Name: Economic Adjustment Assistance Revolving Loan Fund ALN: 11.307 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria: 2 CFR 200.303 requires recipients to establish and maintain effective internal controls over Federal awards that provide reasonable assurance the entity is managing the award in compliance with Federal statutes, regulations, and terms and conditions of the award. EDA grant agreements require periodic financial and performance reports to be complete, accurate, supported, and submitted timely. Condition: During testing of reporting requirements for the Economic Adjustment Assistance program, we noted that reports submitted to the federal agency were not adequately reviewed prior to submission. Specifically, information included in the report did not agree to the underlying accounting records and supporting documentation, resulting in errors in amounts reported to the federal awarding agency. Questioned Costs: None. Context: As part of our evaluation of internal controls over compliance and compliance with Uniform Guidance, we assessed whether the Commission had documented policies and procedures governing the administration of Federal awards. Cause: The entity lacked documented review procedures to ensure reports were reconciled to the general ledger and supporting schedules before submission. Management relied on a single individual to prepare and submit reports without an independent review. Effect: Federal reports may contain inaccurate information, increasing the risk that federal agencies make decisions based on erroneous data and resulting in noncompliance with federal reporting requirements. Recommendation: We recommend management establish formal review controls over federal reporting. Reports should be reconciled to the accounting records and supporting documentation prior to submission, and evidence of supervisory review should be retained. Repeat Finding: No. View of Responsible Officials: Acknowledged.