Finding Text
Finding 2022-001: Internal Control over Compliance and Compliance with Allowable Costs/Cost Principles Information on the Federal Program: Assistance Listing Number 19.510?Reception and Placement Program, United States Department of State, Bureau for Population, Refugees and Migration. Pass-Through Entity: Lutheran Immigration and Refugee Service. Award Number: 323-21-CNWA-02. Compliance Requirements: Allowable Costs and Cost Principles. Type of Finding: Noncompliance. Criteria: CFR Section 200.303, Internal Controls, Section (a) states the Organization must establish and maintain effective internal control over federal awards that provides reasonable assurance that the Organization is managing the federal awards in compliance with federal statutes, regulations, and terms and conditions of the federal award. Management is responsible for establishing and maintaining a system of internal control that should include controls over its allowable cost/cost principle process. CFR 200.403(b) states that for costs to be allowed under federal awards, they must conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. Program requirements state that allowable costs include having only expenditures during the 90-day reception and placement period of each client. Condition: During our testing of allowable costs for expenditures incurred throughout the year, we noted exception in proper recording of dates for expenditures incurred in federal programs. Cause: Policies and procedures were not appropriately adhered to in certain instances to ensure that proper input of information was entered into the general ledger system to ensure costs allocated to the program were allowable and that an appropriate level of review and approval was completed prior to charging costs to a federal program. Effect or Potential Effect: An ineffective control system related to review of transactions being entered into the system to ensure that only allowable costs are allocated to federal programs can lead to noncompliance with federal statutes, regulations, and the provisions of grant agreements that could ultimately lead to disallowed costs for the major programs. As a result, the entity recorded an expenditure under the program that did not qualify as it was spent outside the 90-day reception and replacement period of the client for the year ended September 30, 2022, by the amount of questioned costs below. Questioned Costs: $1,190. Context: Of the $75,074 reported as a fiscal year expenditure, $1,190 represented expenditures that were not allowable due to being outside the 90-day reception and replacement period. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Organization ensure its policies and procedures ensure that the dates are being properly recorded to the general ledger to ensure allowable costs are being reimbursed and that these policies and procedures are followed on a consistent basis.