Finding 375745 (2023-003)

Finding 2023 - 003 Allowable Costs - Native Hawaiian Education – Assistance Listing 84.362A Criteria: 2 CFR 200.303(a) requires the non-Federal entity to 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: During testing of controls over credit card expenditures funded by the Native Hawaiian Education Grant, we noted out of a population of 119 transactions, the School was unable to provide sufficient documentation to substantiate 33 of the transactions. The total population tested was $47,581 and the amount of items unsubstantiated was $3,827. Context and Cause of Condition: Due to turnover at the School, there was a lack of controls that would normally require sufficient documentation for all expenses incurred by the School to properly substantiate credit card expenditures, mainly around the last two months of the School year. Questioned Costs: None Potential Effect: Without sufficient documentation to support the reasonable business purpose of expenses, there in an increased risk for error and/or fraud. These conditions could result in noncompliance and potential loss of current and future funding. Recommendation: All purchases should be properly substantiated with sufficient documentation that clearly supports the reasonable business purpose of expenses incurred. In addition, all expenses should be approved by a person of proper authority. Views of Responsible Officials: The School concurs with the finding and recommendation. See Corrective Action Plan.