Finding 33631 (2022-001)

Significant Deficiency
Requirement
B
Questioned Costs
-
Year
2022
Accepted
2023-06-23
Audit: 36325
Organization: Alternatives for Girls (MI)

AI Summary

  • Core Issue: Three credit card purchases totaling $342 lacked supporting receipts, and one $15 purchase was misclassified.
  • Impacted Requirements: Documentation retention and accurate cost classification under federal awards were not met, leading to $357 in questionable costs.
  • Recommended Follow-Up: Improve processes for handling credit card purchases, including better documentation and classification practices.

Finding Text

Condition and Context: When testing the allowable costs for the Affordable Care Act Personal Responsibility Education Program for the year ended September 30, 2022, we selected a sample of 40 disbursements. Three of these 40 disbursements were credit card purchases totaling $342 for which supporting receipts could not be located, and another one of these 40 disbursements was a credit card purchase for $15 relating to another program that was misclassified as an allowable cost for the Affordable Care Act Personal Responsibility Education Program. / Criteria: All related documentation used as a basis for claiming costs under federal awards must be retained for audit in accordance with the record retention requirements contained in 2 CFR 200.333. Direct costs should be identified specifically with a particular final cost objective, such as a federal award, or with other internally or externally funded activity, or should be directly assigned to such activities relatively easily with a high degree of accuracy. / Effect: Total federal expenditures of $357 were identified as questionable costs. This may also indicate other credit card expenditures that may have been charged to federal awards that were not supported or that may have been misclassified to that federal award. / Cause: According to the management of Alternatives For Girls ("AFG"), the employee who made the credit card purchases submitted the actual receipts in hard copy to AFG's finance staff in place at the time. However, AFG's finance department had significant turnover during the year ended September 30, 2022, and the current finance department team could not locate the receipts. / Questioned Costs: Known and likely questioned costs are less than $10,000. / Recommendation: We recommend that management strengthen its processes for processing, reviewing, approving, and classifying credit card purchases, as well as maintaining documentation to support such transactions.

Corrective Action Plan

Single Audit Corrective Action Plan FY 2022 / Finding: / AFG acknowledges that an internal control deficiency existed within the credit card process and procedures, during Fiscal Year 2022. The process required staff to forward credit card documentation to the finance department, via email, in person, or using an accounts payable mailbox. The finance staff would then collect and maintain all receipts and other supporting documents pending the monthly credit card review and reconciliation. After receiving the approved credit card statements from cardholders, the finance staff would undertake the task of matching the receipts and other support documentation to the appropriate staff person?s credit card. / In the current period, Fiscal Year 2023, the finance team has developed and implemented controls to ensure program expenditures on agency credit cards and supporting documents are: / 1. Reviewed and approved by a supervisor, to ensure that expenditures are allowable costs within the program and grant guidelines. / 2. Supported by the appropriate and required documentation. / 3. Submitted timely both internally to the finance department, as well as externally to funding sources. / 4. Stored and maintained for future refence, by the finance department and the program staff responsible for credit card purchase. / 5. Reviewed for financial recording accuracy by the finance department's grants manager and controller. / In January 2023, AFG management, including the finance team, revised and streamlined the credit card process by eliminating multiple modes of submission for credit card required documentation, reducing the occurrence of misplaced documents. The new process also includes the development and implementation of an electronic shared filing system. The credit card expenditures and supporting documents are maintained in the electronic files by the cardholders' names and are also uploaded to the accounting software. / Additionally, effective March 31, 2023, AFG revised the agency's Credit Card Policy and Procedures to include fixed deadlines for the submission of credit card required documentation. The revision also outlined more specifically the required process for submitting credit card documents. As stated, in the revised procedures, monthly credit card packages must be submitted to the finance department on or before the established deadline, via email. The Credit Card Packages include the approved Staff Credit Card Statement, legible copies of credit card receipts, and any other required documentation that supports the purchase. / Additional enhancements to the credit card process include reviews for accuracy by the grant manager and controller of credit card reconciliations and financial postings. The credit card packages are uploaded and maintained on AFG's accounting software, and the finance department's shared files. Credit Card Packages are only submitted to and accepted by the finance department via email. The AFG staff member who is responsible for the credit card purchase must maintain the hard copy of the purchase receipt and any other support documents received directly. / AFG's management appreciates the efforts of the George Johnson & Company auditing staff, as well as this opportunity to strengthen the internal control structure and procedures. We are confident that the revised credit card procedures will significantly reduce the occurrences of misclassifications of program expenditures and misplacement of required support documentation.

Categories

Procurement, Suspension & Debarment Allowable Costs / Cost Principles

Other Findings in this Audit

  • 33632 2022-001
    Significant Deficiency
  • 610073 2022-001
    Significant Deficiency
  • 610074 2022-001
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
93.550 Transitional Living for Homeless Youth $490,555
14.231 Emergency Solutions Grant Program $453,972
16.575 Crime Victim Assistance $305,429
93.623 Basic Center Grant $300,383
93.092 Affordable Care Act (aca) Personal Responsibility Education Program $207,605
16.320 Services for Trafficking Victims $205,849
14.267 Continuum of Care Program $205,660
14.218 Community Development Block Grants/entitlement Grants $163,200
93.557 Education and Prevention Grants to Reduce Sexual Abuse of Runaway, Homeless and Street Youth $150,000
16.588 Violence Against Women Formula Grants $124,703
93.671 Family Violence Prevention and Services/domestic Violence Shelter and Supportive Services $105,218
93.558 Temporary Assistance for Needy Families $104,410
93.940 Hiv Prevention Activities_health Department Based $73,594