Finding Text
2025-001 Agency: U.S. Department of Treasury Repeat Finding: 2024-001 Assistance Listing Number: 21.027 Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Condition: The Organization did not have adequate and effective controls over compliance in place as it relates to activities allowed or unallowed and allowable costs. We noted instances where payroll and nonpayroll related expenditures did not have documentation of review. Criteria: Uniform Guidance requires Detroit Police Athletic League, Inc. (DPAL) to establish and maintain effective internal control over federal awards to provide reasonable assurance DPAL is managing the federal awards in compliance with federal statutes, regulations and the terms and conditions of the award. Questioned Costs: The amount of questioned costs cannot be determined. Context: DPAL is required by the Uniform Guidance to have effective internal control relating to activities allowed or unallowed and allowable costs. Effect: Without verifiable evidence of controls in place, the possibility exists that a control was not established or maintained during the period which could lead to noncompliance not being identified by management. Cause: Although management has indicated that reviews were taking place, management did not have sufficient and verifiable documented evidence of the reviews that occurred during the year for payroll and nonpayroll transactions. Repeat Finding: This condition was also noted in the 2023 and 2024 audit cycles; see item 2024-001 on the accompanying Summary Schedule of Prior Audit Findings. Recommendation: We recommend management review current internal controls and implement a process where the preparer and reviewer retain verifiable evidence of the review. Management's Response: Management agrees with the finding and acknowledges that this is a repeat finding from the prior year. In response to the prior-year finding, management communicated the need for appropriate review of payroll and nonpayroll expenditures; however, documentation evidencing the performance of these reviews was not consistently retained during the current year. Management will implement additional procedures to ensure that evidence of preparer and reviewer approval is documented and retained for expenditures charged to federal awards going forward.