Finding Text
FINDING 2021‐002 – Material Weakness and Material Noncompliance – Allowable Cost Principles
Assistance Listing Number: 21.023
Federal Program Name: COVID-19 Emergency Rental Assistance Program
Award Year: 2021
Criteria: 2 CFR 200.303 indicates grant recipients should establish and maintain effective internal control that provides reasonable assurance that the entity is managing their federal awards in compliance with Federal statutes, regulations and the terms and conditions of their federal awards. To ensure accurate financial reports and compliance with all rules and regulations with respect to grant awards, the payroll process of the Center should include reviews and approvals at each level to determine and support payroll expenses, including that those expenses are allowable costs, reasonable, necessary, and within budget. Documentation should be maintained to demonstrate that all pay rates were adequately approved and authorized. Additionally, all disbursements should be supported by an invoice or other documentation to substantiate costs incurred, which includes documentation of review and approval.
Condition/Context: Our testing of internal controls over compliance and testing of compliance found the following errors:
•An employee’s advance draw of $1,550 with associated benefits of approximately $176 was inappropriately charged to the grant.
•Timecard approval was lacking in 8 instances of a sample of 21 payroll expenditures.
•There was one instance, out of 21 tested, in which a timecard lacked the employee certification.
•There were four instances, out of a sample of 60, in which support was not maintained by accounting, however they were provided at a later date upon request.
•One instance, out of a sample of 60, in which a $3,500 disbursement lacked proper documentation or other supporting evidence or approval.
Cause: The Center did not design and implement internal controls to effectively manage their federal awards.
Effect: Without properly designed and implemented controls, errors and unallowed costs could be disbursed with grant funds, which may be subject to return.
Questioned Costs: $5,226
Repeat Finding: No
Recommendation: We recommend the Center devote sufficient resources to the finance department. This includes training related to federal awards and internal controls. We also recommend management emphasize the importance of developing and following financial and personnel policies and procedures in relation to internal controls and compliance with allowable costs; and that all documentation be retained.
Views of responsible officials and planned corrective actions: Management agrees with the audit findings and is implementing the following accounting policies to ensure compliance:
•Changing the company payroll draw policy to limit the number of draws annually
•Reviewing company time sheet policies with employees
•Reviewing disbursement documentation policies to ensure all disbursements contain proper documentation.
•Instituting a policy of monthly review of documentation and approvals as part of the monthly close process
Timeline: policies have been implemented and reviewed
Contact Person(s):
Linda Lauch, Executive Director