Finding Text
Finding Number: 2021-SA2 Material Weakness – Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Period of Performance, Program Income, Reporting, Special Tests – Compliance and Control Finding -Internal Control over Compliance
Federal Award: No. 64.024 VA Homeless Providers Grant and Per Diem Program
Federal Agency: U.S. Veterans Administration
Pass-Through Entity: Not applicable
Criteria or Specific Requirement: 2 CFR section 200.303a states the non-Federal must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statues, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Condition: The Organization did not maintain effective internal controls over compliance over direct and material compliance areas, except for Eligibility. Internal controls over compliance of eligibility were appropriately designed and implemented and operated effectively.
Cause: Factors beyond the control of current management, including poorly designed policies and procedures and lack of understanding of Federal award requirements and training, as key members of the accounting department left the Organization before appropriately transferring knowledge and records related to the Federal awards.
Internal controls over compliance of eligibility were found to be appropriately designed and implemented and operated effectively during the June 30, 2021 fiscal year.
Effect or Potential Effect: Potential for noncompliance of direct and material audit requirements.
Questioned Costs: Related questioned costs are unknown.
Context: During the year under audit, the issues represent a systemic problem, beyond the control of current management.
Recommendation: Organization should implement appropriate internal controls over compliance for all direct and material compliance areas, other than eligibility.
View of Responsible Officials: In response to finding number 2021-SA2, management agrees with the finding and will design, implement, and maintain internal controls over all direct and material compliance areas (other than eligibility). Additionally, management will ensure that the Organization’s internal controls comply with the Comptroller General of the United States’s “Standards for Internal Control in the Federal Government” or COSO’s “Internal Control Integrated Framework”.