Finding Text
Finding 2025-003: Activities Allowed or Unallowed & Allowable Costs/Cost Principles, Cash Management & Period of Performance Clean Energy Demonstrations – ALN 81.255. Criteria: Pursuant to 2 CFR part 200 section 303, MACH2 is responsible for establishing and maintaining effective internal control over the Federal award that provides reasonable assurance that MACH2 is managing the Federal award in compliance with federal statutes, regulations, and the terms and conditions of the Federal Award. Condition: MACH2 did not consistently implement established controls for the recording of approvals over disbursements in the primary accounting records. However, separate records were maintained as a compensating control for federal transactions. There were no noted instances of noncompliance with activities allowed or unallowed, allowable costs/cost principles, cash management and period of performance. Cause: Management’s established internal control policies over the recording of financial transactions are not effectively designed to clearly assign responsibility and documentation for the approval of transactions. The approval of federal transactions are not documented within the primary accounting records. Effect: Internal controls are not properly designed. This was a repeat of finding 2024-003 in the prior year. Questioned Costs: None. Recommendation: MACH2 should review and update its internal control policies and procedures to ensure transactions are consistently processed, approvals are clearly documented, and individuals responsible for the recording of transactions are aware of their responsibilities. Management's Response: Since updating its accounting and financial management policies and procedures in late 2025, MACH2 has implemented formalized procedures governing the review, approval, processing, and recording of financial transactions. The policies define roles and responsibilities for personnel involved in the accounting function and establish expectations for documenting transaction approvals and maintaining supporting records. During the audit period, federal transactions were reviewed by MACH2's grants compliance function, and approval documentation was maintained through separate review records outside the primary accounting system. During 2026, MACH2 will take steps to ensure approval documentation for financial transactions is consistently maintained within its financial management records and systems. MACH2 will continue monitoring implementation of these procedures and documentation practices to support effective financial management and compliance with federal award requirements.