Finding Text
2024-006 - Deficiencies in Disbursement Procedures and Documentation Retention Finding Type: Material noncompliance Federal Program: 10.760 Water and Waste Disposal Systems for Rural Communities Compliance Requirement: Allowable Costs/Cost Principles Condition/Finding: During testing of disbursements charged to federal programs, we noted that supporting documentation was in some cases incomplete, missing, or insufficient to verify allowability and compliance with federal requirements. In addition, approval of certain disbursements was not clearly documented or retained in a manner consistent with federal requirements. Criteria: In accordance with 2 CFR §200.303, non-federal entities must establish internal controls that provide reasonable assurance of compliance with federal statutes, regulations, and the terms and conditions of federal awards. Per 2 CFR §200.403(g), costs must be adequately documented to be allowable under federal awards. Further, 2 CFR §200.334 requires the retention of records sufficient to support federal expenditures for a period prescribed by the regulation. Cause: The Village has not established or consistently followed formal procedures for the review, approval, and retention of documentation for federal disbursements. Documentation practices vary and are not systematically reviewed for completeness. Effect: The absence of proper documentation or evidence of approval impairs the Village’s ability to demonstrate compliance with federal cost principles. This represents noncompliance with federal documentation and cost allowability requirements that is material in relation to the applicable compliance requirements. Recommendation: We recommend the Village implement formal procedures to ensure that all federal disbursements are properly documented and approved prior to payment, and that supporting records are retained in accordance with Uniform Guidance requirements. Periodic internal review of documentation completeness should also be incorporated as part of the control process. View of Responsible Officials: Management’s response and planned corrective action can be found in the accompanying Corrective Action Plan.