Finding Text
2022-002 Significant Deficiency in Compliance and Internal Controls over Compliance - Allowable Costs/Cost Principles
Identification of federal program: 93.044,93.045,93.053 Aging Cluster
Criteria: Title 2 U.S. Code Part 200.403(g) requires that for costs charged to a federal program to be allowable, they must be adequately documented.
Condition: Certain approved costs charged to this program by management were unable to be substantiated by through adequate payroll and purchasing documentation supporting the allocated expense.
Cause: There was a significant amount of turnover in key positions for both accounting and management with limited personnel working for during the course of the year under audit and consequently some of the supporting documentation was not sufficiently maintained.
Effect or potential effect: Documentation for some costs charged to the program via allocation of cost pools were not supported in accordance with allowable cost principles.
Questioned Costs: $8,180 Known $116,687 Likely.
Context: During sample testing for allowable costs, we identified 12 out of 22 transactions (error rate of 54.5%) where documentation of underlying support for cost was not able to be located or identified. Management charges costs to grants based on cost pools created via monthly expenditure reports exported directly from the financial system. Of 40 samples tested, 22 were allocations and no deviations were noted in sample testing of 18
direct expenditures. Expenditures tested via sampling were $315,093. Cost charged via allocations were 68% of the population sampled.
Identification of Repeat Finding: Not applicable.
Recommendations: We recommend management ensure its internal control design and procedures account for proper record retention during unusual circumstances such as a period of turnover and limited personnel.
Views of Responsible Officials: See Corrective Action Plan