Finding 516969 (2023-002)

2023-002: Lack of Segregation of Duties & Organizational Monitoring – Internal Control – Material Weakness - U.S. Department of State – Assistance Listing # 19.800 - Weapons Removal and Abatement Program - Criteria: Standard accounting practice for the design of good internal controls requires that no one employee should have access to both physical assets and the related accounting records or to all phases of a transaction. Condition: The condition reported as Item 2023-001 above also applies to the Organization’s internal control over compliance with the requirements of federal programs. The Organization’s small size and limited staff does not allow for it to have the checks and balances over the reporting and cash management functions that would be present in an ideal set of internal controls. Questioned Costs: None noted. Whether Sampling was Statistically Valid: Sampling was not used. Repeat Finding from Prior Year: This is a repeat finding of a prior year. Cause: Due to the limited staff within the Organization, certain internal controls and other critical systems could lack the necessary safeguards and appropriate compensating controls. Effect: This condition could result in errors being made in the accounting records and federal grant reporting and going undetected due to the lack of “cross-checking.” Further one individual could have the opportunity to perpetrate fraud (by either intentional misstatements of the grant reports, or misappropriation of the Organization’s assets) and conceal it without the proper oversight. Recommendation: We recommend that all accounting areas be evaluated to assure adequate controls are in place and operating as expected. We believe certain oversight or monitoring procedures should be put in place to enhance the systems of internal control. Our recommendation is for the Board to review all accounting and program duties and consider realigning certain incompatible duties to improve internal controls. Views of Responsible Officials: Management agrees with the recommendation and has added an additional board member with a financial background who is working towards developing policies and procedures to implement another layer of oversight and improve documentation of reports submitted for the federal award programs. Management will continue to work to implement the other necessary components of the recommendation.