Finding Text
Finding 2022-001: Invalid Journal Entries (Compliance)
Condition and Criteria: During the current year audit, we discovered deficiencies in internal controls over journal entries posted to the Organization's records. We identified numerous entries, primarily related to payroll, that the Organization reviewed and confirmed were invalid as they did not have appropriate supporting documentation. This required the Organization to reverse all the identified entries and re-reconcile several months of records. $76,720 of costs related to federal expenditures charged to the major program. These entries were invalid and therefore the activities and costs related to the expenses were unallowed.
Cause: The Organization had an inexperienced fiscal officer during part of 2022. The officer posted invalid entries while trying to reconcile the cash accounts due to their lack of understanding related to the accounting system. These entries were then included in reimbursement requests for the federal program.
Effect and Questioned Costs: The effect of these deficiencies in internal controls was known questioned costs of $75,540 charged to the major program. This resulted in over payment of federal funds to the Organization in the amount of $75,540. The potential effect of these deficiencies is the misstatement of federal expenditures reported on the Schedule of Expenditures of Federal Awards and the noncompliance with Allowable Activities and Allowable Costs requirements per the Compliance Supplement.
Recommendation: We recommend the Organization perform a thorough year-end review which should include comparing current balances to the prior year, reviewing details of account balances, as necessary, and reviewing journal vouchers posted during the year for reasonableness, prior to submitting reimbursement requests for federal programs.