Finding Text
Department of Housing and Urban Development
Federal Assistance Listing #14.128
Section 242 – Mortgage Insurance ‐ Hospitals
Special Tests and Provisions
Significant Deficiency in Internal Control Over Compliance
Criteria: 2 CFR 200.303(a) states that the auditee must establish and maintain effective internal control over federal awards that provides reasonable assurance that the Organization is managing the federal awards in compliance with federal statutes, regulations and terms and conditions of the federal award.
Condition: There was no documentation of review and approval of certain invoices or Purchase Orders.
Cause: The Organization did not have an adequate internal control policy in place to ensure review and approval of cash disbursements was properly documented.
Effect: The lack of adequate policies governing cash disbursement increases the risk that employees participating in the federal award administration may not be able to detect and correct noncompliance in a timely manner.
Questioned Costs: None reported.
Context: A nonstatistical sample of 60 expenditures were selected for testing. Of these 60 expenditures ($213,780), three ($14,477) did not show evidence of proper review and approval prior to payment.
Repeat Finding from Prior Years: No
Recommendation: We recommend the Organization enhance internal control policies to ensure all cash disbursements are reviewed and approval is documented prior to payment to ensure that all payments are necessary and correct.
Views of Responsible Officials: Management agrees with the finding.