Finding 623846 (2022-005)

Material Weakness
Requirement
P
Questioned Costs
-
Year
2022
Accepted
2023-08-16
Audit: 49743
Auditor: Rkl LLP

AI Summary

  • Core Issue: Management was able to override controls, leading to unauthorized contracts and expenditures.
  • Impacted Requirements: Internal accounting controls failed to prevent circumvention of procurement processes.
  • Recommended Follow-Up: Ensure compliance with procurement procedures and implement independent checks for approvals.

Finding Text

Material Weakness Management override of controls. Criteria An effective system of internal accounting control necessitates the ability to detect and prevent management override of the control environment. Condition The former general manager was able to circumvent the Authority's procurement process and enter into contacts without proper approval. Subsequent to June 30, 2022, the Authority expended $26,850 related to the project that did not go through the proper procurement procedures. Cause Due to the size of the finance group, we found some controls were not being effectively maintained to detect and prevent management override of the control environment. Effect The internal control system is more susceptible to errors and other irregularities, either intentional or unintentional, not being discovered. Recommendation Management should follow all procurement procedures as outlined in the Authority's policy documents. A final cross check of proper approvals should be done by someone that does not have access to any of the processes involved in generating the source documents. Management's Response and Corrective Action See attached response.

Categories

Internal Control / Segregation of Duties Procurement, Suspension & Debarment Material Weakness

Other Findings in this Audit

  • 47397 2022-004
    Material Weakness Repeat
  • 47398 2022-005
    Material Weakness
  • 47399 2022-006
    - Repeat
  • 47400 2022-004
    Material Weakness Repeat
  • 47401 2022-005
    Material Weakness
  • 47402 2022-006
    - Repeat
  • 47403 2022-004
    Material Weakness Repeat
  • 47404 2022-005
    Material Weakness
  • 47405 2022-006
    - Repeat
  • 47406 2022-007
    - Repeat
  • 623839 2022-004
    Material Weakness Repeat
  • 623840 2022-005
    Material Weakness
  • 623841 2022-006
    - Repeat
  • 623842 2022-004
    Material Weakness Repeat
  • 623843 2022-005
    Material Weakness
  • 623844 2022-006
    - Repeat
  • 623845 2022-004
    Material Weakness Repeat
  • 623847 2022-006
    - Repeat
  • 623848 2022-007
    - Repeat

Programs in Audit

ALN Program Name Expenditures
20.509 Formula Grants for Rural Areas and Tribal Transit Program $1.94M
93.778 Medical Assistance Program $666,568
20.505 Metropolitan Transportation Planning and State and Non-Metropolitan Planning and Research $34,832