Finding Text
2023-002 Finding – Federal Award
Type:
Cash Management (Invoices) – Material Weakness in Internal Control over Compliance. (Repeat 2022-003)
Identification of Federal Program:
Research and Development Cluster:
AL Number: 81.086 Conservation Research and Development Program
Criteria / Requirement:
2 CFR section 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards.
Condition / Context:
It was noted during the audit that there were insufficient internal controls over invoices submitted for cost reimbursement related to federal grants as invoices were created and approved by one individual. While the internal controls were insufficient, our sample of invoices did not contain errors or undocumented amounts.
Cause:
Procedures were not in place to ensure that Forth is maintaining adequate internal controls over compliance in regards to cash management requirements. Key duties and functions are not segregated among organization personnel and internal control policies and procedures are inadequate to properly define the roles and responsibilities of accounting personnel performing key functions.
Effect:
Failure to maintain sufficient internal controls over invoices submitted for cost reimbursement related to federal grants may result in the wrongful use of federal funds and/or non‐compliance with the provisions of applicable requirements. Questioned Costs:
None.
Recommendation:
The Organization should establish written policies and procedures regarding invoicing for cost-reimbursement related to federal grants which include proper segregation of duties.
Management’s response:
We agree with the auditor’s comments, and the following actions have been or will be taken to improve the situation. We hired a Grants Accountant in 2024 to take over the responsibility of preparing invoices for cost-reimbursement. This allows for the additional control of the Senior Finance Manager reviewing the invoices. This review is now being documented in writing. Additionally, there are procedures in place to ensure if the Senior Finance Manager prepares the invoice, the Director of Finance & Operations reviews and documents approval of the invoice. We will establish written policies and procedures to document this process by October 31, 2024.