Finding Text
Information on Federal Programs U.S. Department of Homeland Security ALN No. 97.036, Disaster Grants ? Public Assistance (Presidentially Declared Disasters); Award Number: 033-UECF5-00; Award Year: January 1, 2020 to July 1, 2022; Pass-Through Entity: State of Washington Military Department Emergency Medicine Division; Award Number: D20-368 Specific Requirements/Criteria Per CFR Part 200.403, costs must be necessary and reasonable for the performance of the Federal award and be adequately documented. Condition During our testing of the internal controls and compliance over the Activities Allowed and Unallowed process, we noted controls that were designed to ensure that expenses related to the COVID-19 pandemic were actually incurred were ineffective in certain circumstances. To test the compliance of this process, we tested a total of 41 expense transactions to ensure the expense was incurred and attributable to coronavirus as per the terms and conditions of the grant agreement. Of the 41 expense transactions tested, 32 were related to the procurement of materials. We noted that for 1 of the 32 materials transactions tested, the reimbursement claimed was greater than the eligible coronavirus related expense. This difference was caused by the amount claimed for reimbursement for part of the transaction being based on an estimate of the materials to be received, but the amount of materials received was lower. The amount of costs associated with materials not received was included in the reimbursement request. The FEMA reimbursements associated with procurement of materials was $3,251,718 for the year ending June 30, 2022. Out of the 32 material transactions tested, the 1 transaction that was not supported by eligible costs was $37,665, resulting in likely questioned costs of $146,146. The sample was not intended to be, and was not, a statistically valid sample. Cause The above finding was caused by the control not being designed with sufficient precision to ensure a detail level of review was conducted to identify whether or not the materials claimed for reimbursement were based on actual incurred eligible coronavirus expenses. Effect The schedule of expenditures of federal awards is inappropriately stated as of June 30, 2022 because ineligible costs were charged to the program. Questioned Costs $37,665 Repeat Finding from Prior Year Yes ? Finding 2021-002 Recommendation We recommend that the Association implement procedures and policies to ensure that the amounts being claimed for reimbursement are based on actual expenditures incurred. Views of Responsible Officials and Planned Corrective Action Management agrees with the finding and recommendation. Internal controls will be strengthened in future periods to ensure that costs are incurred (receipt of goods/services) and payments are made prior to submitting a request for reimbursement. Ledger details for reimbursement requests will be filtered to exclude items not yet received or paid. The accounting team will review and pull supporting invoice and payment records to be reviewed by the Director of Finance prior to submission to ensure all expenditures have been paid prior to submitting a request for reimbursement.