Finding Text
2022-002--Allowable Costs/Cost Principles--Significant Deficiency Federal Agency: U.S. Department of Health and Human Services Federal Program: ALN 93.591 ? Family Violence Prevention and Services Act Program/State Domestic Violence Coalitions Grant Numbers: 2101NYSDVC,2201NYSDVC,2201NYSTC6,C028876 Grant Period: Year ended September 30, 2022 Condition: The Coalition did not maintain documentation to support the contemporaneous approval of invoices. Criteria: Internal controls should be in place to ensure the maintenance of detailed contemporaneous documentation that supports the assertion that invoices are properly approved prior to them being recorded as and expense and charged to a grant. Cause: The Coalition moved to a remote working environment due to COVID in early 2020 and continues to work remotely, which makes a formal review and approval process more difficult. Management reports that all invoices are provided to the Executive Director and Finance Director for approval and the Coalition utilizes frequent communications to discuss and approve invoices. However, based on the documentation provided it was not possible to determine that each invoice was approved prior to recording the costs as an expense and charging the related costs to a grant. Context: We selected a random sample of 40 general cash disbursements to test internal controls. The sample was considered to be statistically significant. The condition was noted in all of the sampled items. Effect: The current conditions create the opportunity for misstatements or unallowable costs to be recorded, whether due to fraud or error, and potentially not be prevented, detected, or corrected, in a timely manner. Questioned Costs: None Repeat Finding: Yes Recommendation: The Coalition should implement policies and procedures necessary to maintain detailed documentation of the contemporaneous approval of all invoices. That documentation should be in a static form that cannot be changed retroactively and should include information documenting who made the approval and when the approval was made. Views of Responsible Officials and Corrective Actions: Although there were several compensating controls in place prior to the 2021 audit regarding the Executive Director?s review of detailed expenditure and bank reconciliation reports, the Coalition took further steps to strengthen internal controls when findings from the 2021 audit were communicated to management in January 2023. Management immediately provided a response to these findings on January 6, 2023, and implemented revised processes and corrective actions. As of January 2023, an Expenditure Approval Form which is prepared by the Finance Director is sent to the Executive Director for review and approval for all payments prior to them being processed and posted in QuickBooks. Certain small expenses are currently paid monthly by ACH/autopay ? the Executive Director approves in writing all of the payments currently set up with this payment approach and approves in writing any new vendors to be set up on autopay and also reviews such expenditures as part of detailed expenditure and bank reconciliation reports provided to the Executive Director.