Finding Text
According to Section 200.303 of the Uniform Guidance, a nonfederal 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. Point of Freedom receiving Federal Awards must follow 2 CFR Part 200 subpart E, which outlines cost principles in the Uniform Guidance. Adequate documentation is crucial for costs to be allowable under Federal Awards, ensuring compliance, transparency, and accountability in fund utilization. We noted the following matters during testing: 1) Nineteen (19) contractor expenditures have no internal control evidence of timesheet reviewed and approved for the hours charged to the federal program. 2) Seven (7) disbursements have inadequate documentation. There is no formal monitoring over the contractors’ charged hours to the federal program and established policies over maintaining an adequate documentation. This suggests control deficiency over compliance. Incomplete documentation creates a challenge in promptly verifying the accuracy, thereby posing a risk of improper disbursements of federal funds. Of the 693 disbursements, we examined 68 of which seven (7) were identified with incomplete documentation, nineteen (19) contractor invoices without supporting timesheets. In accordance with 2 CFR 200.516(a)(3), auditors are required to report known questioned costs when likely questioned costs are greater than $25,000. Although the sample uncovered 26 transactions with incomplete documentation, resulting in $11,307 in questioned costs, extending the tests to the entire population projects questioned costs exceeding $25,000, specifically $27,462. We recommend that management should develop internal control procedures to address the compliance requirements of federal programs, especially over retaining adequate documentation of transactions.