Finding 530126 (2024-001)

Material Weakness

Requirement

Questioned Costs

Year

2024

Accepted

2025-03-25

Audit: 348223

Organization: Collegiate Edu-Nation (TX)

Auditor: Sutton Frost Cary LLP

AI Summary

Core Issue: There is a material weakness in internal controls due to lack of documented approval for grant expenses.
Impacted Requirements: Internal control procedures require all expenses to be reviewed and approved before charging to the grant.
Recommended Follow-Up: Management should implement a process to ensure all grant expenses receive formal approval prior to reimbursement requests.

Finding Text

Finding 2024-001: Allowable costs and activities – material weakness in internal controls over compliance and compliance finding. Criteria: The Organization’s internal control procedures over compliance specify that all expenses be reviewed and approved prior to charging to the grant. Condition: During allowable costs and activities testing for the grant, 28 out of 40 expenses tested did not have documented approval. Cause: Prior to the implementation of Ramp, the Organization’s internal policy did not require separate documented approval for budgeted expenses before they were charged to the grant. Since all expenses tested were part of the TWC Robotics grant and aligned with the approved grant budget, purchases were processed without additional approval documentation. This practice resulted in a lack of formal approval records for these transactions, leading to the identified finding. Effect: The Organization’s approval of grant expenses were not fully documented in accordance with the internal control over compliance procedures. Questioned Costs: None Recommendation: Management should ensure amounts charged to the grant are formally approved before the request for reimbursement is submitted. Management’s Response: See corrective action plan.

Corrective Action Plan

Finding 2024-001: Allowable costs and activities – material weakness in internal controls over compliance and compliance finding. Management Response Finding: Lack of Documented Approval for Purchases. Corrective Action Taken: Effective July 1, 2024, CEN implemented Ramp, an expense management platform that ensures all purchases are documented and approved before processing. Ramp provides an automated and auditable approval workflow, ensuring compliance with federal grant requirements. Steps Implemented: • Centralized Purchasing System: All purchases are now made within Ramp using a Ramp credit card, ensuring complete oversight and control over spending. • Automated Approval Workflow: Each purchase requires approval within Ramp, and approvals are documented digitally, creating an auditable trail. • Receipt Verification: Every purchase must include a receipt, which the approver reviews before granting final approval. • Grant Compliance Review: Any charges that do not meet grant requirements are not charged to the grant and are instead assigned to an appropriate non-grant funding source. • Training & Compliance: All relevant staff members have been trained on Ramp’s approval and compliance procedures to ensure adherence to purchasing protocols. Responsible Party: Kendall Guynes, CFO Completion Date: July 1, 2024 (Fully Implemented)

Other Findings in this Audit

530127 2024-002

Significant Deficiency
1106568 2024-001

Material Weakness
1106569 2024-002

Significant Deficiency

Programs in Audit

ALN	Program Name	Expenditures
94.006	Americorps State and National 94.006	$628,936
93.558	Temporary Assistance for Needy Families	$133,283