Finding Text
#2023-003 FINDING: Compliance Controls
Federal Program Affected: DOL H-1B, Assistance Listing #17.286.
Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Cash Management, Eligibility, Earmarking, Reporting.
Questioned Costs: None.
Condition and Cause: During compliance testing, we noted there was an overall lack of segregation of duties and weaknesses in internal controls related to compliance.
Criteria and Effect: The following internal control deficiencies resulted in misstatements to the financial statements and several classification errors were not prevented or detected by your Organization’s internal control system.
1.
There is no formal approval of bank charges related to the DOL program. The Executive Director receives invoices and remits payment with no subsequent formal review.
2.
We noted 23 federal expenditures out of 60 selected for testing did not have executive director coding or approval to indicate the expenditure was allowable.
3.
The Executive Director prepares and submits the Payment Management System grant reimbursement requests with no additional review prior to submission.
4.
The Executive Director prepares, uploads, and certifies the grant financial reports. One of six grant reports tested was filed one day late.
5.
Federal grant expenditures were not charged consistently to general ledger accounts. The lack of consistency makes tracking expenditures difficult for federal grant budget categories and for financial statement natural classification. Adjustments were made to reclassify inconsistencies identified during the audit.
6.
We noted expenditures for fiscal year 2022 were recorded in fiscal year 2023. We also noted fiscal year 2023 expenditures were not properly accrued at year-end. Adjustments were recorded to correct year-end cutoff of grant expenditures and grant revenue.
7.
Proper supporting documentation for eligibility requirements was not maintained during the year.
Repeat Finding from Prior Year: No.
Recommendation: We recommend the Organization continue to develop additional oversight and segregation of duties related to internal controls over compliance. The Organization had a review with the Department of Labor for the DOL H-1B grant during 2023 resulting in findings for segregation of duties and eligibility, which were improved or corrected subsequent to the fiscal year-end.
Response/Corrective Action Plan: See Organization’s Corrective Action Plan