Finding Text
U.S. Department of Justice
Crime Victim Assistance – Assistance #16.575
#2023-009 – Major Federal Award Finding – Cash Management
Nature of Finding: Compliance Finding Cash Management and Significant Deficiency in Internal Controls over Compliance
Criteria/Condition: 2 CFR 200.305 requires that non-federal entities must minimize the time elapsing between the transfer of federal funds to the non-federal entity and the subsequent disbursement of the funds by the non-federal entity for program costs. The Organization did not have proper controls in place to verify that specific vendor invoices were paid within a reasonable amount of time of requesting reimbursement for the expenditures.
Questioned Costs: $2,381
Identification of How Questioned Costs Were Computed: The issues of noncompliance related to cash management was limited to one vendor that was not paid within a reasonable amount of time of being reimbursed for the costs. This was determined to be an isolated incident. Questioned costs include the two invoices that were charged to the grant for this vendor during the year ended September 30, 2023 and were not paid to the vendor within a reasonable amount of time of being reimbursed for the expenditures.
Cause/Context: Controls were not in place to ensure expenditures were paid to the vendor prior to requesting reimbursements. This circumstance was determined to be an isolated incident due to the unique nature of the vendor invoices. The Organization was withholding payment to the vendor until it determined that both invoices were proper.
Effect: The lack of controls could result in requests for reimbursement being submitted for unpaid expenditures.
Recommendation: We recommend the Organization establish procedures and incorporate controls to review that expenditures are paid prior to submitting requests for reimbursement.
Views of Responsible Officials and Planned Corrective Actions:
The Organization will implement the following changes in its accounting procedures:
Each month, an aged open accounts payable report will be produced as part of the month end closing. Invoices that are past due will be paid in the following batch of payments (which are typically run weekly). If it is determined that the invoice is not being paid for a valid reason, it will be removed from accounts payable at that time.
#2023-010 – Major Federal Award Finding – Period of Performance
Nature of Finding: Compliance Finding Period of Performance and Material Weakness in Internal Controls over Compliance
Criteria/Condition: A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance. The Organization did not have controls in place to verify that costs were being charged to the award in the correct period of performance.
Questioned Costs: $20,790
Identification of How Questioned Costs Were Computed: A sample of 40 non-payroll expenditures totaling approximately $48,000 was selected from a population of approximately $552,000 of non-payroll expenditures. An amount of $1,817 combined from two invoices that were charged to the Crime Victim Assistance program was related to the year ending September 30, 2024 and was inappropriately charged to the grant during 2023. Questioned costs are estimated by projecting the error identified in the sample tested to the population of non-payroll expenditures of the Crime Victim Assistance program.
Cause/Context: There are not proper controls in place to review invoices and assign them to the appropriate grant period. Two expenditures out of forty non-payroll related expenditures tested for the Crime Victim Assistance grant was for a contracted annual service that covered multiple performance periods but was billed in its entirety to the current fiscal year.
Effect: An overstatement of expenditures for the Crime Victim Assistance grant was reported in the current year.
Recommendation: We recommend procedures are established to review for proper grant period when recording transactions and creating monthly reimbursement requests.
Views of Responsible Officials and Planned Corrective Actions:
The Organization will implement the following changes in its accounting procedures.
1. The Staff Accountant will review the period each expenditure is related to and record the invoice to the appropriate period when entering it into accounts payable. The month and year will be noted on the invoice.
2. The CFO will review the month and year noted by the Staff Accountant prior to entry into accounts payable.