Finding Text
Federal Agency: U.S. Department of Veterans Affairs
Federal Program Name: Supportive Services for Veteran Families
Assistance Listing Number: 64.033
Federal Award Identification Number and Year: 12-NC-050
Award Period: September 30, 2022 through September 30, 2024
- Type of Finding: Material Weakness in Internal Control over Compliance and Other Matters
Criteria or specific requirement: Per 2 CFR 200.302(b)(3), non-Federal entities must maintain records that adequately identify the source and application of funds for federally-funded activities. Additionally, 2 CFR 200.403(g) requires that costs must be adequately documented to be allowable under Federal awards.
Condition: During testing of allowable costs, we identified cash disbursements that lacked adequate supporting documentation. Specifically, these disbursements were made without proof of payment and corresponding invoice support.
Questioned costs: $16,576
Context: As part of our audit procedures, we selected a sample of cash disbursements to ensure compliance with federal regulations. The sample included transactions from various periods within the award year. During the review, it was noted that disbursements totaling $15,754 did not have the required supporting documentation, such as proof of payment and corresponding invoices. This finding indicates potential systemic issues within the accounts payable process that could affect the overall compliance with federal awards.
Cause: The lack of supporting documentation appears to be due to weaknesses in the internal controls over the accounts payable process. The Corporation did not have a process in place to ensure that expenditures charged to the grant were supported by proof of payment and corresponding invoice support.
Effect: There is a risk that unallowable costs were charged to the grant, which could lead to noncompliance with federal requirements and potential disallowance of costs.
Recommendation: We recommend that the Corporation strengthen its internal controls over cash disbursements. This should include retention of payments supported by valid invoices and proof of payment documentation as well as periodic internal audits to ensure compliance with the documentation requirements.
Views of responsible officials: Management agrees with the above finding. All purchase-related supporting documentation will be transitioned to paper files to eliminate confusion created by the electronic record-keeping system, and to ensure that all staff requiring access to such documentation can immediately and easily retrieve them. Records will be maintained in the Finance Department office
for seven years.