Finding Text
Type of Finding: Material weakness in internal controls over compliance.
Criteria: 45 CFR Section §75.303 states the non-Federal entity must evaluate and monitor the entity’s compliance with statutes, regulations, and the terms and conditions of Federal awards.
Condition and Context: The organization did not have policies and procedures in place to provide reasonable assurance it is managing the Federal award in compliance with the applicable statutes, regulations, and terms and conditions.
Questioned Costs: $102,145
Cause: The Association did not have a process in place to identify and communicate spending in excess of the approved budget and costs that would be subject to prior written approval requirements.
Effect: Direct costs were charged to the grant award that may not have been allowable. There is the possibility that such costs would have to be refunded to the awarding agency if such determination is made. Additionally, significant costs were incurred throughout the year for other costs, such as staff bonuses and food purchases, that led to program incurring more costs than funding available.
Recommendation: We recommend management implement procedures to ensure that financial information is appropriately communicated to management and those in charge of governance and identify expected purchases that may require prior written approval from the federal awarding agency.
Responsible Official’s Response: The fiscal policies and procedures will be revised to include clear guidelines for effective communication with the governing body, ensuring that anticipated purchases requiring prior written approval from federal awarding agencies are properly identified and addressed.