Finding 560524 (2024-002)

Finding 2024-002 – Allowable Costs Federal Agency: U.S. Department of Treasury Federal Program Name: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Assistance Listing No.: No. 21.027 Federal Award Number: ASST_NON_SLFRP0137_2001 Grant Award Period: 9/1/2022 – 8/31/2024 Pass Through Entity: Los Angeles County - Department of Public Health Repeat Finding: No Statistically Valid Sample: The sample was not intended to be, and was not, a statistically valid sample Criteria 2 CFR 200.303 requires the recipient of federal funds 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. Condition/Context For 1 of the 28 invoices reviewed, which includes 25 subrecipient invoices and 3 vendor invoices, representing $76,549 of the $439,088 of underlying invoices reviewed, we noted that there was insufficient documentation to demonstrate management completed the invoice review process as the review and approval of this invoice was not documented. The Foundation had an agreement with its contractor to pay for services performed according to an agreed payment schedule. While the Foundation reviewed payments made to the contractors, it did not review the underlying invoice detailing the work performed for the payment. Cause Although the Foundation has a process in place to review invoices for allowability of the underlying costs, management inadvertently failed to formally document their review of one of the invoices we selected for testing. Effect or Potential Effect By not maintain formal evidence that a review of an invoice, there is a risk that costs could be charged to the grant that are ultimately deemed unallowable. Questioned Costs None noted. Auditors’ Recommendation We recommend that the Foundation strengthen its documentation requirements over the review and approval of invoices for costs claimed for federal reimbursement. Views of Responsible Officials The Foundation acknowledges the finding and will implement corrective measures by updating its invoice review procedures to formally record review dates and approvals in compliance with 2 CFR 200.303. Additionally, we will reinforce staff training and supervisory reviews to ensure that all invoice documentation meets federal standards, and we will conduct periodic internal reviews and audits to verify adherence to these enhanced procedures. These actions will mitigate the risk of unallowable cost charges and ensure ongoing compliance with federal procurement standards.