Finding Text
Internal Control Over Federal Awards – Allowability of Costs and Allowable Activities
Finding Type: Significant deficiency, internal controls over federal award.
Programs: Formula Grants for Rural Areas and Tribal Transit Program (Assistance Listing #20.509)
Criteria: Costs must meet certain general criteria to be allowable under federal awards. One criterion is that the costs be adequately documented.
Condition/Finding: Several of the payroll expenses that were selected for testing did not have employee timecards with evidence that they were reviewed and authorized for payment by their immediate supervisor.
Cause: The Transit’s internal control policies were not followed and therefore caused payroll expenses to not have documented review and authorization.
Effect: As a result of this condition, the Transit does not have adequate documentation demonstrating that an individual with appropriate knowledge of the transaction has reviewed that the transaction is allowable, free of error, and necessary and reasonable for the performance of the federal award.
Questioned Costs: No costs have been questioned as a result of this finding.
Recommendation: We recommend that the Transit ensure documented proof of review and authorization by management of all expenses.