Finding Text
Internal Control over Compliance and Compliance with Activities Allowed or Unallowed and Allowable Costs and Cost Principles
Identification of the Federal Program:
United States Agency for International Development (USAID)
Assistance Listing Number: 98.001
Assistance Listing Name: USAID Foreign Assistance for Programs Overseas
Pass-through Award Information:
Pass-through
Entity Pass-through Award Number
Award Period
IPE Global Limited IPE-DOM-2022 January 25, 2022 through August 31, 2023
Criteria or Specific Requirement: In accordance with §200.302 Financial Management, a non-federal entity's financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions;
and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statutes, regulations, and the terms and conditions of the federal award. The financial management system of each non-federal entity must provide for the following:
(1) Identification, in its accounts, of all federal awards received and expended and the federal programs under which they were received.
(2) Accurate, current, and complete disclosure of the financial results of each federal award or program in accordance with the reporting requirements set forth in §200.327 Financial Reporting and §200.328 Monitoring and Reporting Program Performance.
(3) Records that identify adequately the source and application of funds for federally-funded activities.
(4) Effective control over, and accountability for, all funds, property, and other assets.
Additionally, §200.303 Internal Controls states that a non-federal entity must (a) establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award.
Condition: ChildFund has documented expenditure policies and procedures. ChildFund’s policies are designed to ensure grant expenses are reviewed and approved timely to ensure proper accounting. However, as identified below, the review and approval process did not operate as designed. However, in seven out of our 40 samples tested, BDO identified instances in which the expenditures were reported within the incorrect financial reporting period. These errors all occurred at the same office location. These expenditures did occur in the award period.
Cause: ChildFund has documented expenditure policies and procedures. However, as identified above, the review and approval process for the samples identified above did not operate as designed.
Effect: The lack of adherence to established internal control policies and procedures can lead to noncompliance with federal statutes, regulations, and the provisions of award agreements which could ultimately lead to disallowed costs for the major program.
Questioned Costs: As all of the costs noted were within the award period of performance, there are no questioned costs to report.
Context: This is a condition identified per review of ChildFund’s compliance with allocability and allowability provisions of the Uniform Guidance. The prevalence of this finding is detailed in the condition section above. Samples were selected using a non-statistical method.
Repeat Finding: This is not a repeat finding from the previous year.
Recommendation: BDO recommends ChildFund adhere to its documented policies and procedures regarding approval and recording of expenditures.
Views of Responsible Officials: Management agrees with the finding. Please see Appendix B for Management’s Corrective Action Plan.