Finding 2024-002
material weakness
- Program
- RURAL RENTAL HOUSING LOANS (10.415); Rural Rental Housing Assistance (10.427)
- Compliance requirement
- Allowable costs/cost principles
- FAC record
- FY2024 audit on fac.gov
Finding text from the filing
Finding 2024-002: Internal Control System
Rural Rental Housing Loan Program #10.415 and Rural Rental Housing Assistance Program #10.427
Material Weakness – Allowable Costs/Cost Principles
X
Criteria: According to the Single Audit Requirements, 2 CFR Part 200.303, the Organization must establish and maintain effective internal controls over the federal award programs they administer. These controls should provide reasonable assurance that the Organization is managing the federal awards in compliance with federal statutes, regulations and the terms and conditions of the awards.
Condition: During our audit we noted the Project Manager was the only person signing the majority of the checks during the year and there was no indication on the supporting invoices that the invoice was being reviewed by another person.
In addition, during our review of the Board minutes we noted there was no documentation to support that expenses were being reviewed and approved by the Board.
Cause: The Project did not assess the risk of the lack of the approval process of expenses and the potential effects it could have on unallowable costs.
Effect or Potential Effect: The lack of the expense approval process could lead to unallowable costs.
Recommendation: The Project needs to review its internal control policy over significant processes and implement controls to adequately segregate duties. Specifically, the Project should implement a dual signature process to ensure checks are properly authorized.
In addition, as part of the Board meetings the Board of Directors should review a listing of expenses and this review and approval should be documented in the minutes.
View of the Responsible Officials of the Auditee: The auditee's management agrees with the finding.