Finding Text
Lack of approval for Expenditures (For Financial Statement activity and the Crime Victim Assistance – ALN 16.575 program)
Criteria: Criteria: Section 200.303 of the Cost Principles of the Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) requires a non-Federal entity to establish and maintain effective internal control over the Federal award that provides a 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. These internal controls should be in compliance with the specified guidance that requires proper segregation of duties by dividing key responsibilities among different people to reduce the risk of error or fraud. This should include separating the responsibilities for authorizing transactions, processing and recording them, reviewing the transactions, and handling any related assets. No one individual should control all key aspects of a transaction or event. In addition, this guidance also requires transactions and internal controls to be clearly documented, and the records should be properly maintained and readily available for examination.
Condition: The Organization did not have an effective internal control system in place in regard to approving invoices and maintaining documentation. Nine of 40 disbursements tested did not have supporting documentation for the approval by Executive Director.
Cause: The Organization did not implement an internal control process over approval of disbursements.
Effect: The lack of internal controls could lead to a misstatement of financial and program reports and resulted in noncompliance.
Recommendation: The organization should appropriate levels of management all review and approve all invoices and maintain the documentation of approval for each invoice.
Management Response: See corrective action plan on pages 29-31.