Finding Text
Finding 2024-011 – Allowable Costs (Material Weakness and Noncompliance)
Identification of the Federal Program: Community Program to Improve Minority Health, ALN 93.137, Department of Health and Human Services (Minority Health); HOME Investment Partnerships Program, ALN 14.239, Department of Housing and Urban Development (HOME).
Criteria: 2 CFR Part 200 Subpart E establishes cost principles to apply in determining costs under federal awards. Nonfederal entities are also required to establish controls over the disbursement process to ensure compliance with allowable cost requirements. According to the City's approved fiscal policies and procedures, all purchase orders, blanket purchase agreements and special purchase authorizations require review and approval by the Finance Director or Deputy Finance Director.
Condition: Minority Health - we selected a sample of 40 disbursements charged to the grant. Of the 40, 21 were not properly approved in accordance with the City’s fiscal policies and procedures. HOME - we selected a sample of seven non-payroll disbursements charged to the grant. Of those seven, two were not properly approved in accordance with the City’s fiscal policies and procedures.
Cause: Disbursements were not approved by the Finance Director or Deputy Finance Director as required by the City’s fiscal policies and procedures. The workflow rules set up in the system are not consistent with the required approval workflow.
Effect: The City did not obtain proper approvals according to the policy of established controls.
Questioned Costs: None reported.
Recommendation: We recommend the City should update the fiscal policies and procedures to incorporate and clearly define the control system of approvals.
Views of Responsible Officials: The City agrees with the finding. See Management’s View and Corrective Action Plan included at the end of the report.