Finding Text
Agency: U.S. Department of Justice, passed through Michigan Department of Health and Human Services
Federal Assistance Listing Number: 16.575, Crime Victim Assistance
Criteria: The Organization is required to maintain effective internal controls over compliance to be able to submit monthly financial status reports within thirty (30) days of the close of the calendar month to the Michigan Department of Health Services that must reflect the total actual program expenditures for the month.
Statement of Condition: Internal controls were not operating effectively as submissions selected for testing did not agree to the underlying general ledger for the corresponding period. Multiple reports were not submitted within the contract's stated time frame.
Questioned Costs: The amount of questioned costs could not be determined.
Context: Out of the six (6) monthly financial status reports that were tested as part of our audit, one (1) had expenditures submitted to the grantor in excess of those recorded per the underlying general ledger detail for the corresponding period. Out of the six (6) monthly financial status reports tested as part of our audit, two (2) were submitted greater than thirty (30) days following the close of the calendar month.
Effect: Internal controls were not working effectively and the Organization was not in compliance with the reporting requirements of the contracts.
Cause: The Organization's internal controls were not working effectively and the internal financial reporting and general ledger were not updated in a timely fashion to support accurate reporting of interim or year-end financial information in a timely matter and the corresponding submission to funders.
Recommendation: We recommend management review their processes and internal controls over monthly reporting requirements and internal financial reporting to ensure timely, accurate reports can be submitted to grantors to maintain compliance with grant requirements.
Management's Response: Management has established written policies and procedures to ensure: (a) Federal Financial Reports (e.g., SF-425) and state reports are submitted by due dates per grant terms; (b) reports are prepared using reconciled financial data, reviewed/approved by the Finance Manager; and (c) supporting documentation is archived for 7 years.