FAC Explorer

Finding 43886 (2022-001)

Significant Deficiency
Requirement
B
Questioned Costs
-
Year
2022
Accepted
2023-03-30
Audit: 45959
Organization: Nbcc (CA)
Auditor: McGowan Guntermann

AI Summary

  • Core Issue: The Organization lacks effective internal controls over Federal awards, leading to significant deficiencies in compliance.
  • Impacted Requirements: Non-compliance with CFR 200.303, including inadequate documentation for expenditures and missing employee I-9 forms.
  • Recommended Follow-Up: Implement stronger internal controls to ensure proper documentation and compliance with Federal regulations and award terms.

Finding Text

Finding 2022-01 ? Lack of Internal Controls (Significant Deficiency) Criteria Title 2, Code of Federal Regulations (CFR), Subtitle A, Chapter II, Part 200, Subpart D, Cost Principles for Non-Profit Organizations, Section 200.303 states ?The non-Federal entity must: (a) 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. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). (b) Comply with Federal statues, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity?s compliance with statues, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. (e) Take reasonable measures to safeguard protected personally identifiable information and other information the Federal awarding agency or pass-through entity designates as sensitive or the non-Federal entity considers sensitive consistent with applicable Federal, state, local, and tribal laws regarding privacy and obligations of confidentiality.? Condition During our testing of the Organization?s expenditures, we noted the following deficiencies in internal controls: 1. 3 of the 45 transactions selected for testing lacked sufficient and appropriate documentation to support the expenditure had been reviewed and approved. The 3 invoices were for office supplies. 2. 3 of the 13 employees selected for testing lacked a completed I-9 on file. Cause of Condition The Organization?s internal controls are not properly designed and enforced to be in line with Federal guidelines, particularly, CFR 200.303. Effect of Conditions The Organization used Federal Awards for expenditures without proper supporting documentation and without obtaining and maintaining adequate approvals. Recommendation We recommend the Organization establish and maintain effective internal control over Federal Awards in order to provide reasonable assurance that the Organization is managing the Awards in compliance with Federal statutes and regulations, as well as the terms and conditions set forth in the specific Federal Award.

Corrective Action Plan

Management Response and Planned Corrective Action 1. While the current Internal Controls Manual allows for certain expenditures to be made with verbal and/or written approval from the Executive Director, the control does not state a dollar amount or specific circumstance for verbal approval and therefore the control has been clarified as follows: All funds to be expended must be approved by the Executive Director, either verbally or in writing, prior to the expenditure. Program staff may then request that the FA, OM or Administrative Associate purchase the needed expense either by debit card or credit card or produce a check for the ED?s signature. All requests for purchase must follow the same backup paperwork procedures outlined in the AP Procedures section. For all routine essential office supply individual item purchases $250 and under, the OM or FA has approval to make these purchases without ED verbal or written approval prior to the expenditure. All expenditures for individual items above $250 must be verbally approved by the ED prior to purchase and documented via email which then should be attached to the purchase documentation. Purchases $1,500 and above should follow the procurement policy outlined below in Control No. 21. In addition, the procurement control has been clarified with updated language as follows: For goods and services $1,499 and under, Executive Director approval is required as per the purchase policy above referenced in Control No. 17. 2. NBCC maintains an onboarding process and checklist which includes the completion of the I-9 for each employee. This process is strictly followed. The three employees identified during the testing that lacked a completed I-9 on file were for one employee who was hired during the initial period of the COVID lockdown when all processes were significantly impacted by the initial COVID quarantine, and the remaining two were onboarded by a staff member serving temporarily in the human resources position after the exiting human resources staff member did not return from a medical leave of absence. All current staff have completed I-9?s on file and there is every expectation that this control will continue to be enforced. As an additional guarantee of having a completed I-9 in place, NBCC has asked our external accounting firm, Vista Financial, to create an additional control where a new employee is not onboarded into Quickbooks for payroll without the completed I-9.

Categories

Subrecipient Monitoring Allowable Costs / Cost Principles Significant Deficiency Matching / Level of Effort / Earmarking Internal Control / Segregation of Duties

Other Findings in this Audit

  • 620328 2022-001
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
64.033 Va Supportive Services for Veteran Families Program $851,372
14.231 Emergency Solutions Grant Program $158,386
14.267 Continuum of Care Program $136,293
14.871 Section 8 Housing Choice Vouchers $52,882
14.219 Community Development Block Grant $43,225
14.239 Home Investment Partnerships Program $22,692
93.243 Substance Abuse and Mental Health Services_projects of Regional and National Significance $21,397
14.218 Community Development Block Grants/entitlement Grants $11,526