Finding 977287 (2023-001)

2023-001 Segregation of Duties Title and Assistance Listing Number of the Federal Program: ALN 94.006 AmeriCorps State and National and ALN 94.006 COVID 19 - AmeriCorps State and National Year Finding Originated: 2022 Compliance Requirement: 2 CFR 200.303 Internal Controls Name of Federal Agency: Corporation for National and Community Service Pass-through Agency: State of Louisiana/Volunteer Louisiana Questioned Costs: None. Condition: During our audit, we obtained an understanding and tested LDSC’s internal control for purposes of planning and performing our audit procedures. In obtaining our understanding and testing LDSC’s internal controls, we determined there were inadequate segregation of duties involving certain aspects of the financial reporting cycle. Criteria: As noted in 2 CFR 200.303 “The non-Federal entity 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 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).” Cause: Due to the size of LDSC’s administrative staff, certain duties are performed by the same individual, as follows:  Initiate and approve vendor invoices for payment,  Write checks or initiating electronic disbursements,  Review and approve payroll, including the approver’s payroll  Initiate and approve reimbursements to themselves as the agency head,  Access to check stock, check signing authority, and approval authorization. The following responsibilities over cash receipts are performed by the same individual:  Receive and open mail,  Prepare bank deposits and deposit monies received,  Invoices customers for services provided (host sites). Effect: There is not adequate segregation of duties. Recommendation: To the extent possible, we recommend that board members or the contract accountant become further involved in the financial reporting process; such examples include, but are not limited to:  Approve monthly financial statements,  Bank statements and reconciliations,  Reimbursements (travel, expense, etc.) made to agency head,  Credit card activity initiated by the agency head,  The board of directors should adopt an annual budget and monitor on a periodic basis. We further recommend that management incorporate these recommendations to their financial policies and procedures handbook. This will ensure that financial policies are conducted consistently and in accordance with the expectations set by management and board governance. Additionally, such policies and procedures provide structure within LDSC in the event of employee turnover or absenteeism. Views of Responsible Officials: See views of responsible officials on page 29.