Finding Text
Criteria:
2 CFR 200.303 requires 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. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
2 CFR 200.403 requires that costs “be necessary and reasonable for the performance of the Federal award.” Costs should not consist of improper payments, including payments that were not eligible under the award document.
Condition:
The Town received a reimbursement for a cost from an award for “blighted property” that was not an eligible expense under the grant agreement.
Cause:
The Town’s controls related to allowable costs for individual grant agreements were not operating effectively.
Effect or Potential Effect:
Unallowable expenditures may have been paid with federal funds.
Questioned Costs:
$19,569
Context:
Total federal expenditures for the Community Development Block Grants-State's Program and Non-Entitlement Grants in Hawaii were $1,450,668 for the fiscal year ended June 30, 2024.
Identification of a Repeat Finding:
This is not a repeat finding from the prior year.
Recommendation:
Officials should ensure that the control of personnel adequately reviewing award requirements before submitting for reimbursement of a particular cost is operating effectively. Furthermore, officials should consider a secondary review of reimbursement requests.
Views of Responsible Officials:
Management concurs with the finding and has developed a plan to correct the issue.