Finding Text
Condition: Violence Free Minnesota did not consistently ensure that expenses were in compliance or that controls were implemented to detect noncompliance. There were four instances where costs were not properly coded to grants. There were two instances of expenses not being approved, due to the cost supported by the bank statement with no other support. There were three instances of inconsistent monthly allocations with different cost allocation pools because costs were added to the accounting records afterwards. There was one instance of an expense being charged directly to the grant, where it normally is charged across multiple grants. There was one instance where an expense was approved but not paid, resulting in a vendor fine and double charge to the grant. Criteria: The Uniform Guidance requires that internal controls are designed and implemented in order to prevent or detect fraud and errors (per 45 CFR 75.303(a)). Internal controls help prevent compliance issues related to the grant, including using consistent cost allocation rate, using direct or another allocation method consistently with similar costs, and ensuring that costs are properly paid. Common internal controls include approving expenses, managing allocation of costs to programs, and approval of disbursement of funds. Context: Based on the explanation found in the ?condition? element, we found a total of 9 transactions out of 40 tested transactions that one or multiple issues. Cause: Weakness in implementation of internal controls over cost allocation. These findings appear to be concentrated at the beginning of the fiscal year, when management and accounting staff experienced turnover. Effect: Certain costs may have been improperly calculated. Controls did not ensure that costs were properly allocated, or approved when costs were auto-paid by the bank. Recommendation: Our recommendation is that the Organization take steps to address the finding. We recommend that the staff continue to address expense coding and allocation issues as they are detected. We also recommend documenting how to code and allocate expenses to achieve consistency. For example, if technology and accounting is always allocated using the ?FTE? rate to allocate expenses. We recommend documenting this if it is not otherwise noted on each invoice. Views of Responsible Officials: Due to significant turnover early in our fiscal year FY22, temporary and new staff members lacked understanding of proper internal controls and procedures. Violence Free management and outsourced accountants have taken the appropriate steps to ensure all costs are appropriately approved and allocated.