Finding 1240002 (2025-001)

Federal program: U.S. Department of Justice passed through the Texas Office of the Governor: Crime Victims Assistance - Assistance Listing Number (ALN) 16.575 Criteria: The Uniform Guidance requires entities to establish and maintain effective internal controls to prevent, or detect and correct, errors in the billing and reporting of Federal expenditures. The Uniform Guidance requires that all billed costs be necessary, reasonable, allocable, and adequately supported. Condition: Traffick911’s review controls failed to detect duplicate transaction entries in the general ledger, which resulted in double-booked expenses being billed to the grantor. Statement of cause: Turnover in the accounting department led to a breakdown in established internal controls. Reconciliations failed to compare monthly ledger postings against original source vouchers and management’s financial statement review failed to identify the overstated expense and liability accounts. Statement of effect: Invalid duplicate charges were requested from the grantor, constituting a material weakness in internal controls and questioned costs. Questioned costs: Known questioned costs of $86,088 were billed to ALN 16.575. This amount represents the total cumulative value of the duplicate, invalid transactions billed to the grantor identified during the audit period.Perspective information: Our testwork identified overstated health insurance expenses totaling $186,238 due to duplicate entries, of which $86,088 was billed to the grantor. This error appeared to be isolated to the health insurance billings starting in March of 2025 through year end. The entire population of health insurance expenses was reviewed as part of the audit testing. Recommendations: Implement controls to ensure invoices are not duplicated, increase financial statement review and analysis to identify and investigate unusual fluctuations from the prior period. Perform reconciliations to tie reconciliation request to the supporting documentation and original invoices. Views of responsible officials: Responsible official: Danielle Upton, Director of Finance Finding # 2025-001 Management concurs with the finding and the associated recommendations. Management acknowledges that a breakdown in the manual invoice verification workflow allowed duplicate transactions to be processed and requested for reimbursement. Upon discovering the duplicate entries, management initiated a comprehensive review of all unbilled expenditures incurred during the grant period. Sufficient eligible, previously unbilled program costs were successfully identified and substituted to fully resolve the variance for the closed grant 3245806. The remaining $45,643 of overbilled funds was deferred and will be applied to allowable billings in 2026.