Finding Text
Finding Number: 2023-002: Represents a material weakness in internal control over compliance with Maine Mathematics and Science Alliance’s major federal program.
Repeat Finding: No
Type of Finding: Material Weakness
Description: Internal Control over Financial Reporting
Major Program:
NATIONAL SCIENCE FOUNDATION
Research Development Cluster (Direct)
AL# 47.076 – Education and Human Resources
AL# 47.070 – Computer and Information Science and Engineering
Questioned Costs: None
How the questioned costs were computed: N/A
Compliance Requirements: Activities Allowed or Unallowed and Allowable Costs, Cost Principles
NSF Award Numbers Effected: 1831427 (Grant term 10/1/18 - 6/30/23), 1933491 (Grant term 1/1/20 - 6/30/24), 2009613 (Grant term 5/15/20 - 4/30/24), 1657217 (Grant term 8/15/17 - 7/31/22), 2115229 (Grant term 9/1/21 - 8/31/25) and 2201674 (Grant term 8/1/22 - 7/31/26)
Condition: During fiscal year 2023, there was turnover in the finance department.
Out of a sample of 25 nonpayroll related cash disbursement transactions there were a total of 9 where the payment was made without indication of approval for payment on the invoice or other form of supporting documentation.
Criteria: Uniform Guidance 200.302(b)(4) states each non-federal entity must provide for “effective control over, and accountability for, all funds, property, and other assets.”
Cause: In an organization with a small number of personnel in its business office and accounting department, there may be an inadequate segregation of duties. This results in certain internal control limitations, including, but not limited to, proper review and approval of cash disbursements prior to processing.
Effect: As a result of the financial reporting matters identified in the condition paragraph, including the lack of segregation of duties, the potential for misstatements or misappropriated assets exists as does a material weakness exists in the Alliance’s internal controls over financial reporting.
Context: The situation noted in the audit did not result in reportable questioned costs. The sample was not intended, and was not, a statistically valid sample.
Recommendation: We recommend that the Alliance adopt a policy whereby all payments are approved by a responsible and knowledgeable individual prior to processing to ensure that costs charged to the federal program are allowable and appropriate.
View of responsible officials: Management agrees with the finding and has committed to a corrective action plan.