Finding Text
Criteria
Title 2, Code of Federal Regulations (CFR), Subtitle A, Chapter II, Part 200, Subpart D, Cost Principles for Non-Profit Organizations, Section 200.303 states “The 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 or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). (b) Comply with Federal statues, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity’s compliance with statues, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. (e) Take reasonable measures to safeguard protected personally identifiable information and other information the Federal awarding agency or pass-through entity designates as sensitive or the non-Federal entity considers sensitive consistent with applicable Federal, state, local, and tribal laws regarding privacy and obligations of confidentiality.”
Additionally, the Subrecipient Agreement, with the County of Santa Barbara, notes NBCC “shall obtain written approval from COUNTY for the use of any funds provided under this Agreement for the reimbursement of any costs incurred for travel outside the County of Santa Barbara.”
Condition
Two of the 25 expenditures selected for testing, associated with the above award, were related to travel outside of the County of Santa Barbara. We subsequently reviewed the detail of expenditures charged to this award, noting multiple other transactions. Additionally, we noted the client did not have prior approval to allocate funds to this award.
Cause
NBCC’s internal controls are not properly designed and enforced to be in line with Federal guidelines, or take into account specific requirements of Federal awards.
Repeat Finding
No.
Effect
NBCC’s lack of internal controls may allow improper expenditures to be charged to Federal awards. This may impact future funding from Federal awards.
Recommendation
We recommend NBCC establish and maintain effective internal control over Federal Awards in order to provide reasonable assurance that NBCC is managing the Awards in compliance with Federal statues and regulations, as well as the terms and conditions set forth in the specific Federal Award or subrecipient agreement.