Finding Text
2023-001: Activities Allowed or Unallowed & Allowable Costs/Cost Principles - Material Weakness in Internal Control and Material Noncompliance
Repeat of Prior Audit Finding 2022-001
Federal Program: Trans-National Crime
Federal Agency: U.S. Department of State - Bureau of International Narcotics and Law Enforcement Affairs
Federal Assistance Listing Number: 19.705
Federal Award Year: December 31, 2023
Criteria: 2 CFR section 200.303(a) of the Uniform Guidance requires all non-Federal entities to establish and maintain effective 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. In addition, 2 CFR sections 200.405 and 200.403(g) require federal awards be expended only for allowable activities and be adequately documented, respectively.
Condition/Context: The Corporation was unable to provide a signed contract, payment information, invoice or reconciliation to evidence allowability of the expenditures or documentation of review and approval for the following:
• For 3 out of 80 selections, no evidence of approval of the invoice or approval of signed contract could be provided (control).
• For 27 out of 80 selections, no evidence of signed contract or payment support could be provided (compliance).
This was not a statistically valid sample.
Questioned Costs: Questioned costs were approximately $24,563.
Cause: The Corporation did not retain/could not retrieve the signed contract or any related support for the disbursements due to poor document retention and staffing turnover and did not follow its internal control procedures by including formal, written review of disbursement payments.
Effect: The Corporation has not complied with the specific requirements for activities allowed or unallowed and allowable costs/cost principles as described in the Uniform Guidance. Unallowable costs may have been charged to the federal program.
Recommendation: We recommend that the Corporation review its process and implement procedures that would allow management to properly maintain all required documentation on its federal expenditures.
Views of Responsible Officials: Over the past year, the Corporation has made significant improvements, reducing the occurrence of these findings compared to 2022. To continue to improve on and address this, the Corporation implemented a new HR solution, Rippling, in 2024, which will ensure all future agreements and rate changes are properly tracked and documented. This system will enhance the Corporation's document retention process and ensure compliance with federal regulations moving forward.