Finding Text
SECTION 3 – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
II Findings Relating to the Financial Statement Audit as Required to be Reported in Accordance with Generally Accepted Government Auditing Standards
A. Material Weakness in Internal Control over Major Program
Findings related to major federal awards required to be reported in accordance with Section 2 CDR-20.516(b):
Finding 2022-001 Internal Control over Cash Receipts and Disbursements
ALN 16.575 Crime Victim Assistance
Condition:
During audit procedures we select a random sample of cash disbursements by check number. We selected 25 transactions. We test the following: 1) does the invoice exist for the payment 2) does the check issued agree to the invoice 3) was the payment authorized by management and 4) does the amount and payee of the check agree to the general ledger. We were not able to perform the test due to missing checks, the general ledger information not agreeing to the information on the check, and missing authorization to pay.
Expenditures to on-line company for over $52,000 have no secondary review of the purchases made by secondary personnel.
Cause: The Organization has not adopted an internal control policy over cash disbursements as required for Federal contracts.
Criteria:
Uniform Guidance Part 6 – Internal Control
The 2 CFR section 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards.
Government Auditing Standards Chapter 5 Internal Control
Requirement: System of Quality Control
5.04 An audit organization should document its quality control policies and procedures and communicate those policies and procedures to its personnel. The audit organization should document compliance with its quality control policies and procedures and maintain such documentation for a period of time sufficient to enable those performing monitoring.
Effect: Organizations receiving federal and state are required to develop, document and monitor internal controls as term of the grant agreements. The Organization has signed a legal document they will do so.
Recommendation: The Organization should adopt internal control procedures which comply at a minimum with the procedures above. The purpose of internal control is to detect and prevent fraud. Without these controls, this is not possible. Internal controls function to minimize risks and protect assets, ensure accuracy of records, promote operational efficiency, and encourage adherence to policies, rules, regulations, and laws. Further, auditable internal controls are required by government grants and contracts
Management’s response:
Partners in Prevention Education will adopt internal control procedures matching requirements from 2 CFR section 200.303 and other government standards of non-profit financial control. This will be adopted by the Executive Director and Board by December 31, 2023.