Finding 503666 (2021-001)

Significant Deficiency Repeat Finding

Requirement

Questioned Costs

Year

2021

Accepted

2024-10-24

Audit: 325873

Organization: Public Defender Association (WA)

Auditor: Clark Nuber P S

AI Summary

Core Issue: There is a significant deficiency in internal controls over compliance for allowable costs due to inadequate documentation.
Impacted Requirements: Compliance with Title 2 U.S. Code of Federal Regulations requires all costs charged to Federal awards to be properly documented.
Recommended Follow-Up: PDA should update its accounting policies to ensure all costs, regardless of amount, have the necessary documentation to meet federal requirements.

Finding Text

Significant deficiency in internal control over compliance for allowable costs related to adequate documentation. Federal Agency: United States Department of Treasury Program Titles: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.019 & 21.027 Pass-Through Entity: King County Award Numbers: 6200091 Award Periods: January 1, 2021 through December 31, 2024 Criteria Internal control requirements contained in Title 2 U.S. Code of Federal Regulations Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards, Subpart E ‐ Cost Principles, Section 200.400, policy guide, require that a non‐Federal entity ensure that cost be adequately documented to be allowable under Federal awards. The accounting practices of the non-Federal entity must be consistent with cost principles per the policy guide and support the accumulation of costs as required by the principles and must provide for adequate documentation to support costs charged to the Federal award. Condition/Context In our initial sample of transactions for allowability, the PDA said they did not require support for the 24 transactions we had selected under $75 as a policy. They were subsequently able to locate support for all but 8 of these transactions totaling $105. Cause PDA’s accounting policies and practices over allowable costs seemed not properly implemented to ensure compliance with the Uniform Guidance requirements. Effect Some of the transactions were missing adequate documented support. Questioned Costs None. Repeat Finding Yes. Recommendation We recommend that PDA revisits and updates its accounting policies and practices to align with the provisions outlined in the policy guide of the Code of Federal Regulations. Although the current policy may have been established with materiality considerations in mind, it is important to note that all charges to Federal awards necessitate proper documentation, irrespective of the amount involved.

Corrective Action Plan

Significant deficiency in internal control over compliance for allowable costs related to adequate documentation. Management Response: We acknowledge the finding and provide the following corrective action plan. Corrective Action Plan: • This is primarily related to the absence of receipts for expense items under $75. There are three items contributing to this finding: 1) Receipts that were not able to be located related to employees who had left the organization and did not provide receipts prior to departure - $96.12 of sample list. 2) Receipts that were simply not able to be found - $18.86 from sample list. 3) In general, PDA relies on our credit card platform for the repository of credit card receipts. The forum used during 2021 was “Elan”. Elan only retains receipts up to a maximum of 12 months from the date of spending. Due to the timing of the audit, in most cases 7-12 months had passed when the receipts were requested, and we were not able to extract from that system and therefore relied on employees’ records (see #1-2 above). • PDA’s policy is to retain and upload receipts for all spending, no minimum. • In May of 2022, PDA moved to a new credit card platform (“Center”), which retains receipts into perpetuity. Anticipated completion date: Quarter 1, 2024 Name(s) of the contact person(s) responsible for corrective action: Co-Executive Directors, Finance team

Other Findings in this Audit

503667 2021-001

Significant Deficiency Repeat
503668 2021-001

Significant Deficiency Repeat
503669 2021-002

Material Weakness
503670 2021-002

Material Weakness
1080108 2021-001

Significant Deficiency Repeat
1080109 2021-001

Significant Deficiency Repeat
1080110 2021-001

Significant Deficiency Repeat
1080111 2021-002

Material Weakness
1080112 2021-002

Material Weakness

Programs in Audit

ALN	Program Name	Expenditures
21.027	Coronavirus State and Local Fiscal Recovery Funds	$4.68M
21.019	Coronavirus Relief Fund	$1.13M