Finding Text
Criteria:
In accordance with §200.303, Internal Controls, the non-federal entity must 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 our internal controls over compliance testing, we noted instances where the same individual was approving timecards and reimbursement packets without an additional layer of review prior to submitting for reimbursement. Additionally we noted instances where there was no documentation of review of the reimbursement packets prior to being submitted for reimbursement. We tested 40 transactions noting 6 control exceptions relating to activities allowed or unallowed; 34 control exceptions relating to allowable costs/cost principles and 29 control exceptions relating to period of performance.
Cause:
The Organization lacked resources to properly implement controls in certain instances to ensure that proper segregation of duties were maintained and an appropriate level of review and approval was completed prior to charging costs to a federal program.
Effect:
An ineffective control system related to internal controls over compliance can lead to noncompliance with laws and regulations and loss of funding for the related program.
Questioned Costs:
None
Context:
This is a condition based on testing of the Organization’s internal controls over compliance with specified requirements using a non-statistical method. The prevalence of these findings is detailed in the conditions section above.
Repeat Finding:
This is not a repeat finding.
Recommendation:
We recommend management develop policies and procedures to ensure proper segregation of duties when aggregating costs to be submitted for reimbursement. The Organization should have different individuals approve timecards and reimbursement packets. There should be an additional layer of review of the reimbursement packet prior to being submitted, and documentation of such review should be maintained.
Views of Responsible Officials and Planned Corrective Actions:
Community Housing Solutions concurs with the finding and the recommendation. The Organization’s corrective action plan is described in Managements Corrective Action Plan included at page 12 of this reporting package.