Finding Text
Finding No. 2023-004: Internal Control over Period of Performance – Significant Deficiency in Internal Control over Compliance
U.S. Agency for International Development, USAID Foreign Assistant for Programs Overseas, Assistance Listing Number 98.001.
Criteria
As per the Code of Federal Regulations (CFR) § 200.303 Internal controls, 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). This includes ensuring that expenses are incurred during the period of performance stated in the federal award.
Context
During our testing over the period of performance, we noted 3 payroll charges that were recorded to the grant after the period of performance on the grant award had ended. The Organization was able to replace the $1,824 in payroll charges with eligible consultant charges incurred during the period to support the recognition of this total.
Cause
This was due to a breakdown in internal control over the review and approval of charges incurred by the appropriate personnel for amounts charged against the federal award.
Effect
Charging expenditures incurred outside of the award period can result in refusal of these reimbursements by the federal grantor as well as the possibility of loss of grant funding for future periods.
Questioned Costs
None
Recommendation
We recommend that the Organization review and enhance its current internal control procedures over its financial close process specifically related to the period of performance around federal awards to ensure that there are procedures in place to ensure that the expenditures claimed fall within the appropriate period of the federal award and are recognized in the correct period in accordance with generally accepted accounting principles on a timely basis.
Views of Responsible Officials and Planned Corrective Actions
See Corrective Action Plan