Finding Text
2024-006 Significant Deficiency in Internal Control and Compliance over Major Programs Funding Agency: Department of Health and Human Services ALN: 93.600 Criteria Per 2 CFR 200.303(a), recipients must “establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” Condition During our testing of cash disbursements, we identified three outstanding check payments for program expenses that had not been cleared by the bank. We identified the checks as outstanding on the bank reconciliation. Vendors were contacted during fieldwork and confirmed that KCR did not have an open balance, and that the vendors did not have custody of the checks. Questioned Costs $7,856 Cause KCR’s internal controls over cash disbursement were not adequately designed to identify and respond to outstanding checks, especially for payments related to federal program expenses. Effect KCR’s failure to identify and respond to outstanding checks resulted in noncompliance with 2 CFR 200.403(a). Unnecessary and unreasonable costs were charged to the Federal award. Repeat Finding No. Recommendation We recommend KCR strengthen its internal controls over cash disbursements to better identify and respond to outstanding checks. Bank reconciliations, with an outstanding check register, should be regularly reviewed by those charged with governance. Views of Responsible Officials Management concurs with the finding and recommendation. Please see the attached corrective action plan.