Finding Text
Finding 2023-003 Expenditure of Funds Outside Contract Period
Type of Finding:
Noncompliance and Significant Deficiency in Internal Control over Compliance.
Criteria:
Federal regulations and grant guidelines require expenditures to align with the grant’s period of performance. Organizations must obtain prior authorization from the pass-through entity for any expenditures claimed against the grant before the official grant start date. Proper internal controls should include mechanisms to ensure compliance with grant periods and approval processes for any deviations.
Condition:
Testing revealed that the Organization claimed expenditures against the grant that occurred before the official grant period. Although these expenditures were made outside the period of performance, they were submitted for reimbursement without securing prior authorization from the pass-through entity.
Cause:
The Organization's internal controls for managing grant expenditures did not sufficiently address the need for pre-authorization of expenditures incurred before the grant period. Additionally, there was a lack of effective monitoring to ensure compliance with grant start dates and required approvals.
Possible or Known Effect:
Claiming expenditures prior to the grant period without prior authorization could result in improper use of grant funds. This practice may impact the organization’s ability to meet grant objectives and cause misalignment between actual expenditures and grant reporting.
Questioned Costs:
Known questioned costs total $6,286.
Repeat Finding:
This finding is a repeat from the prior year. The previous finding number was 2022-003.
Recommendation:
We recommend that the Organization enhance its internal controls to ensure compliance with grant periods by implementing a process to obtain prior authorization from the pass-through entity for any expenditures made before the official grant start date. Additionally, the Organization should strengthen monitoring mechanisms to prevent similar issues in the future.
Views of Responsible Officials:
The Organizations’ Board and Executive Team consisting of the Chief Executive Officer (CEO) and the Chief Operating Officer (COO) and key Overdose Lifeline (ODL) Staff to include the independent bookkeeper and Grant and Finance Manager recognize the need to enhance internal controls and mechanisms to ensure purchase do not occur outside grant periods.