Finding Text
Finding No.: 2021-006
Pass-Through Entity: Republic of the Marshall Islands
Federal Agency: U.S. Department of the Interior
AL Program: 15.875 Economic, Social and Political Development of the Territories
Federal Award No.: Compact of Free Association Program, As Amended
Area: Allowable Costs/Cost Principles
Questioned Costs: $4,597
Criteria: Federal program expenditures should be necessary and reasonable for the performance of the Federal award in accordance with allowable costs/cost principles requirements and be adequately documented.
Conditions:
1. For three (or 9%) of thirty-two items, aggregating $29,888 of $1,479,778 in total payroll expenditures, deficiencies were noted, as follows:
For item #s 1 and 2, there were no approved timesheets on file to substantiate the actual number of hours worked.
For item # 3, we noted discrepancy in the number of credits paid which is based on employment contract against the number of equivalent credits assigned to instructors per Semester Section Offering or Instructor's Schedule.
2. For one (or 13%) of eight items, aggregating $49,248 of $320,550 in non-payroll expenditures, the item amounting to $1,250 (21-PO-2096) pertains to a per diem payment that was not supported by adequate documentation to ascertain whether the travel transpired.
3. One duplicated expenditure amounting to $2,119 (21-PO-1098) was charged to the program.
Cause: The College lacks adequate internal controls over compliance with applicable federal regulations relating to allowable costs/cost principles, specifically, obtaining and retaining sufficient documentation to support all transactions.
Effect: The College is in noncompliance with applicable allowable costs/cost principles requirements. Accordingly, questioned costs of $4,597 result because the projected questioned costs exceed the $25,000 threshold.
Recommendation: College management should improve internal control policies and strengthen controls requiring obtaining and retaining sufficient documentation to support all transactions.
Views of Auditee and Corrective Action Plan: The College partially agrees with the finding and provides details in its Corrective Action Plan.