Finding Text
Finding Type – Material noncompliance and material weakness in internal control over compliance.
Repeat Finding – No.
Federal Program(s) – U.S. Department of Education: Education Stabilization Fund (ALN 84.425); Passed through MDE; All project numbers.
Compliance Requirement – Allowable Costs/Cost Principles ‐ Disbursements.
Criteria – The Uniform Guidance requires the Academy to establish internal controls over disbursements related to the compliance requirements applicable to allowable costs/cost provisions. The Academy's policies require an independent review and approval of expenditures by Academy official(s).
Condition – The Academy could not provide supporting documentation for costs charged to the programs for (2) out of (37) disbursements selected for testing.
Cause / Effect – The condition appears to be the result of the Academy not adhering to established internal control policies and procedures. As a result, the Academy is at an increased risk of unallowable costs being charged to federal programs without being detected by its internal controls.
Questioned Costs – Known questioned costs ‐ $31,731; Likely questioned costs ‐ $59,377; Total questioned costs $91,108.
Recommendation – The Academy should follow its internal control policies and procedures that require an independent review and approval of expenditures by Academy official(s).
Auditee Response – The Academy along with its new management company are reviewing, revising, and developing internal controls as necessary in order to comply with compliance requirements relevant to federal programs.