Finding 966096 (2023-001)

Criteria Title 2, Code of Federal Regulations (CFR), Subtitle A, Chapter II, Part 200, Subpart D, Cost Principles for Non-Profit Organizations, Section 200.303 states “The non-Federal entity must: (a) 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 Statutes, 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). (b) Comply with Federal statues, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity’s compliance with statues, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. (e) Take reasonable measures to safeguard protected personally identifiable information and other information the Federal awarding agency or pass-through entity designates as sensitive or the non-Federal entity considers sensitive consistent with applicable Federal, state, local, and tribal laws regarding privacy and obligations of confidentiality.” Condition During our testing of the Organization’s payroll expenditures, we noted that for 16 of our 45 selections the employee’s time card had not been approved by the employee’s supervisor prior to submission for payroll processing, and recording in the GL. Cause of Condition The Organization’s internal controls are not properly designed and enforced to be in line with Federal guidelines, particularly, CFR 200.303. Effect of Conditions The Organization used Federal Awards for expenditures without proper supporting documentation and without obtaining and maintaining adequate approvals. Recommendation We recommend the Organization establish and maintain effective internal control over Federal Awards in order to provide reasonable assurance that the Organization is managing the Awards in compliance with Federal statutes and regulations, as well as the terms and conditions set forth in the specific Federal Award.