Finding Text
2022-003 ? Internal Controls over Cash Draws (Previously reported as 2021-003) Material Weakness Federal Program COVID-19 Employment Recovery National Dislocated Worker Grant ? Assistance Listing Number 17.277 Criteria An effective system of internal controls over compliance is required to ensure that grants are being administered properly. This includes a system to ensure that invoices for each program are being reimbursed by the correct granting agency and for the correct grant. Condition During the fiscal year 2021 audit, we noted instances where invoices that were reimbursed by a program were subsequently moved to another fund due to a correction of an error. When this occurs, the expense is moved to the other fund, and cash is reimbursed to the initial fund, however, the funds that were drawn down in error are not being remitted back to the granting agency. Rather, the excess funds are held and applied to subsequent invoices that are to be reimbursed by that program, reducing the reimbursements by the amounts of excess cash held. Given that the fiscal year 2021 audit was not issued until late-September 2022, corrective actions were not implemented until after fiscal year end. Cause These instances were likely due to the nature of the very short turnaround time between paying the invoices and requesting cash reimbursements, as well as experiencing turnover in key personnel during the year. Effect SDWP could request reimbursements for potentially unallowable expenses for the program leading to potentially having to repay the granting agency for funds requested in error. Questioned Costs Cannot be determined. Recommendation We recommend SDWP implement a system to identify when these instances have occurred and track funds that are required to be remitted back to the granting agency. Management?s Response See Corrective Action Plan.