Finding Text
FINDING 2022-005: CRIME VICTIM ASSISTANCE (16.575) ? CASH MANAGEMENT ? REIMBURSEMENT REQUESTS AND SUPPORTING DOCUMENTATION FINDING TYPE: Federal Awards ? Material Weakness/Noncompliance CRITERIA: 2 CFR section 200.305(b)(3) states that a non-Federal entity must incur costs prior to the date of the reimbursement request when the reimbursement method is used. Supporting documentation must be maintained. CONDITION: The auditor noted, while testing a sample of reimbursement requests for Crime Victim Assistance for compliance and adherence to internal controls, that several reimbursement requests in excess of materiality were requested in advance of any expenses being incurred. The auditor noted, in particular, several large final drawdowns for a grant with a period ending on 9/30/21. The amounts requested were based off budgeted and estimated amounts. It was difficult for the auditor to determine that eligible costs were incurred before the close of the grant period. CAUSE: Turnover at the accounting position and override of controls lead to accidental and non-compliant reimbursement requests. EFFECT: Safenet, Inc. was not in compliance with cash management compliance requirements and internal controls were not functioning in a manner that would ensure proper reimbursement requests. Excess funds could have potentially been drawn and not expended. QUESTIONED COST: Undetermined RECOMMENDATION: Management should ensure internal controls are designed in a manner that ensures reimbursement requests are based off expenses that have been incurred prior to the date of the reimbursement request. Requests should be reviewed by someone other than the preparer and should agree to supporting documentation. VIEWS OF RESPONSIBLE OFFICIALS: Management agrees with the finding.