Finding Text
AL# 93.568 Criteria ? An appropriate system of internal controls allows for the review and approval of all expense items including those recorded through journal entries. Condition ? For the year ended June 30, 2022, we requested support for the review and approval of expense items, invoiced or journal entries, that were reimbursed under the grant. Cause ? Internal controls were not appropriately designed to incorporate a review of journal entries within the general ledger. Effect or Potential Effect ? There is the potential that a journal entry will be calculated incorrectly or based on unallowable costs and will be coded to the grant and reimbursed resulting in unallowed or questioned costs being reimbursed under the grant. Questioned Costs ? None noted. Context ? Of the 40 individual expense items we selected for testing, we noted six that were journal entries and not independently reviewed for accuracy or allowability. Repeat Finding ? This is not a repeat finding. Recommendation ? The entity should incorporate a step where any journal entries recorded in the general ledger are reviewed by someone other than the preparer. This individual should be knowledgeable on the entity?s fiscal policies and grant compliance requirements.