Finding Text
2023-002 INTERNAL CONTROLS OVER ALLOWABLE COST PRINCIPLES
Criteria: Federal grant agreements and contracts require entities to have an approval process in place for expenditure of federal awards to ensure that activities are allowed under federal agreements.
Condition: For 1 of the 25 transactions tested we found that the Organization had not followed their policy of obtaining authorization from the appropriate level of management.
Cause: The Organization does have controls in place to ensure that this compliance is checked on a daily basis, but the control was deficient on various occasions and appears to be an oversight.
Effects: The Organization could allow expenditures that are not allowable in the lines of the federal agreement that could produce the Organization being noncompliant with laws and regulations with the agreement and be subject to penalties or withdraw of federal funding status.
Recommendation: We recommend that management implements a comprehensive plan to ensure that all transactions receive proper approval after a thorough review of each transaction.