Finding 598682 (2022-005)

2022-005 Internal Control over Compliance and Compliance with Activities Allowed or Unallowed and Allowable Costs and Cost Principles Identification of the Federal Program: United States Agency for International Development Assistance Listing Number: 98.001 Assistance Listing Name: USAID Foreign Assistance for Programs Overseas Direct Award Number Award Period AID-617-A-15-00010 November 15, 2015 through September 30, 2023 Criteria or Specific Requirement: In accordance with ?200.302 Financial Management, a non-federal entity's financial management systems, including records documenting compliance with federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statutes, regulations, and the terms and conditions of the federal award. The financial management system of each non-federal entity must provide for the following: (1) Identification, in its accounts, of all federal awards received and expended and the federal programs under which they were received. (2) Accurate, current, and complete disclosure of the financial results of each federal award or program in accordance with the reporting requirements set forth in ?200.327 Financial Reporting and ?200.328 Monitoring and Reporting Program Performance. (3) Records that identify adequately the source and application of funds for federally-funded activities. (4) Effective control over, and accountability for, all funds, property, and other assets. Additionally, ?200.303 Internal Controls states that a non-federal entity must (a) 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: The Foundation?s policies are designed to ensure expenses are accurate, current and reported within the financial results timely for grant reporting. For one non-payroll expenditure sample of 40 non-payroll expenditure samples tested, the expenditure was not recorded timely resulting in the expenditure being recorded in the incorrect audit period on the SEFA. In this instance, the expenditure was incurred during the grant?s overall period of performance. The expenditure for AID-617-A-15-00010 totaled $513. Cause: Foundation management has procedures in place to review expenditures to ensure timely review and reporting; however, those procedures performed by management were not performed to a level of detail to ensure the error identified was reported timely on the SEFA. Effect: The lack of adherence to the established internal control policies and procedures can lead to noncompliance with federal statutes, regulations, and the provisions of grant agreements which could ultimately lead to disallowed costs for the major federal program. Questioned Costs: None Context: This is a condition identified per review of the Foundation?s compliance with allocability and allowability provisions of the Uniform Guidance. The prevalence of this finding is detailed in the condition section above. Samples were selected using a non-statistical method. Recommendation: BDO recommends that the Foundation adhere to its documented policies and procedures regarding authorization and timely approval and reporting of expenditures to ensure compliance with ?200.302 Financial Management. Views of Responsible Officials: Foundation?s management agrees with the finding and recommendations set forth within and has developed a corrective action plan to address the instances of noncompliance identified and lapses in prescribed internal controls.