Finding Text
Assistance listing number(s): 17.258, 17.259, and 17.278
Federal Program Name or Cluster: WIOA Cluster
Name of Federal Agency: United States Department of Labor
Name of Pass-Through Entity: Minnesota DEED
Compliance Requirement/Internal Control over Compliance: Reporting
Criteria
Organizations are required to maintain effective internal controls over financial reporting to ensure that financial statements and other reports are accurate, complete, and submitted in compliance with applicable regulations. An independent review process is a key internal control to detect and correct errors prior to submission.
Condition/Context
We noted that financial reports submitted during the year were not subject to an independent review process before submission.
Cause
The Organization has not implemented a formal policy or procedure requiring an independent review of financial reports prior to submission.
Effect
Failure to perform an independent review increases the risk of material misstatements in financial reports, noncompliance with reporting requirements, and reduced stakeholder confidence in the reliability of the Organization’s financial information.
Questioned Costs
No questioned costs were identified.
Recommendation
We recommend that management implement a formal policy requiring all financial reports to undergo an independent review prior to submission. This process should include a documented review checklist and sign-off by a qualified individual who is independent of the report preparation process.
Management’s Response
Management agrees with the finding and will implement procedures to ensure independent reviews of financial reports are conducted before submission. The Organization will designate a responsible reviewer and implement a review checklist immediately.