Finding Text
#2022-009 - Major Federal Award Finding - Reporting
Nature of Finding: Compliance Finding - Reporting and Material Weakness in Internal Controls Over Compliance
Criteria/Condition: Federal regulations 2 CFR 200.328 - 200.329 provide that required reporting under the federal program must be completed timely and accurately. The federal award agreement includes specific report filing due dates. Segregation of duties is also a key element of internal controls, including controls over compliance, and involves processes whereby the activities of one employee are reviewed or checked by the activities of another individual, and avoids one employee having the ability to perform
a transaction or process from beginning to end. We noted during testing that no review procedures are in place surrounding these reports.
Cause/Context: Controls were not in place to ensure accurate reporting. Only one individual was involved in the reporting process. Of the two reports tested, one Federal Status Report included an expenditure reported in an inaccurate budget category. Payroll tax costs were divided between the Fringe Benefits/Payroll tax budget line and the Other Expenses line, with a total of $1,554 reported in the incorrect budget category. Additionally, the client failed to identify that submission of a single audit was an applicable reporting requirement for the December 31, 2022 year, resulting in a late single audit filing.
Effect: The lack of controls resulted in inaccurate, late, and failed reporting compliance.
Recommendation: We recommend that a full-range of controls related to reporting, including federal program reporting be implemented. The Organization should devote the resources necessary to ensure that reports are timely and accurately prepared, reviewed, and approved prior to filing. All controls, including review and approval should be documented and that documentation be maintained.
Views of Responsible Officials and Planned Corrective Actions: MARR will retain a CPA consultant to implement a full-range of controls relating to reporting, including federal program reporting. MARR will take such steps as necessary to ensure that reports are timely and accurately prepared, reviewed, and approved prior to filing. All controls, including review and approval will be documented in such documentation to be maintained.