Finding Text
2022-003 Internal Control over Compliance and Compliance with Activities Allowed or Unallowed and Allowable Costs and Cost Principles Information on the Federal Program(s): United States Department of State Assistance Listing Number: 19.345 Assistance Listing Name: International Programs to Support Democracy, Human Rights and Labor Award Number: Direct Award Number Award Period SLMAQM20GR2250 September 8, 202 through June 30, 2023 United States Department of State Assistance Listing Number: 19.415 Assistance Listing Name: Professional and Cultural Exchange Programs ? Citizen Exchanges Pass-through Award: Pass-through Entity Pass through Award Number Award Period The Aspen Institute SI_SOL4_SubR-2021 April 1, 2021 through June 30, 2023 Criteria or Specific Requirement: In accordance with ?200.302 Financial Management, a non-federal entity's financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statutes, regulations, and the terms and conditions of the federal award. The financial management system of each non-federal entity must provide for the following: (1) Identification, in its accounts, of all federal awards received and expended and the federal programs under which they were received. (2) Accurate, current, and complete disclosure of the financial results of each federal award or program in accordance with the reporting requirements set forth in ?200.327 Financial Reporting and ?200.328 Monitoring and Reporting Program Performance. (3) Records that identify adequately the source and application of funds for federally-funded activities. (4) Effective control over, and accountability for, all funds, property, and other assets. Additionally, ?200.303 Internal Controls states that a non-federal entity must (a) establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award.Condition: The Organization has documented expenditure policies and procedures. However, as identified below, the review and approval process did not operate as designed. The Organization?s policies are designed to ensure expenses are reviewed and approved timely to ensure proper recording in the books and records. The following errors were identified during our testing of payroll and non-payroll expenditures: ? For AL# 19.345 we tested 40 non-payroll samples and identified one error. The expense was allocated between two projects based on preliminary estimates. The preliminary budgeted expense allocation was not corrected based on the actual allocation from the underlying documentation, representing $45 in questioned costs. ? For AL# 19.415 we tested 40 non-payroll samples and identified one error. The expense was related to depreciation which requires the Organization to maintain adequate property records and take a physical inventory at least once every two years to ensure that the assets exist and are usable, used, and needed. The documentation provided to support the charge to the award was not sufficient to meet the requirements above resulting in $3,046 in questioned costs. Questioned Costs: The items above represents questioned costs totaling $3,091. Context: This is a condition identified per review of the Organization?s compliance with allocability and allowability provisions of the Uniform Guidance. The prevalence of these findings is detailed in the condition section above. Samples were selected using a non-statistical method. Cause: The Organization has documented expenditure policies and procedures regarding the timely processing and approval of expenditures. However, as identified above, the review and approval process did not operate as designed resulting in errors noted. Effect: The lack of adherence to the established internal control policies and procedures can lead to noncompliance with federal statutes, regulations, and the provisions of grant agreements which could ultimately lead to disallowed costs for the major programs. Repeat Finding: This finding is not a repeat finding from the prior year. Recommendation: BDO recommends that the Organization adhere to its documented policies and procedures regarding authorization final invoices and recording of expenditures and not using preliminary budgeted expense allocations.