Audit of MCC’s Fiscal Years 2020 and 2019 Financial Statements

Audit Report
Report Number
0-MCC-21-002-C
We contracted with the independent certified public accounting firm of CliftonLarsonAllen LLP (CLA) to conduct an audit of MCC’s financial statements for fiscal years 2020 and 2019. CLA issued an unmodified opinion for both years. The audit objectives were to: (1) express an opinion on whether MCC’s financial statements as of September 30, 2020 and 2019, were presented fairly, in all material respects; (2) evaluate MCC’s internal control over financial reporting; and (3) determine whether MCC complied with applicable laws and regulations. CLA concluded that MCC’s financial statements are presented fairly, in all material respects, in accordance with U.S. generally accepted accounting principles. In addition, the audit firm did not identify any instances of noncompliance with applicable laws and regulations. CLA did not identify any material weaknesses but did report one significant deficiency in MCC internal control over financial reporting as a modified repeat finding from the prior year. We are making nine new recommendations to MCC to address the deficiency identified in the report.

Recommendations

Recommendation 1

MCC's Chief Financial Officer Revise MCC's "Grant Accrual Estimation: Millennium Challenge Account Guidance" to state that when a MCA identifies an advance, the MCA will exclude the advance amount from the grant accrual amount to ensure that the advance is not included in the grant accrual estimate reported to MCC.

Questioned Cost:
$0
Funds For Better Use:
$0
Recommendation 2

MCC's Chief Financial Officer Request the MCAs to establish a documented control mechanism to verify that the grant accrual estimates reported to MCC agrees with the support document used by the MCAs to complete the grant accrual estimates data call template.

Questioned Cost:
$0
Funds For Better Use:
$0
Recommendation 3

MCC's Chief Financial Officer Provide additional training to the MCAs to ensure the MCAs have a clear understanding of the grant accrual estimation and validation requirements.

Questioned Cost:
$0
Funds For Better Use:
$0
Recommendation 4

MCC's Chief Financial Officer Require the MCAs to document improved budgeting process to ensure future payment needs are properly considered at the detail compact program/activity level as part of its quarterly budgeting process.

Questioned Cost:
$0
Funds For Better Use:
$0
Recommendation 5

MCC's Chief Financial Officer Require the MCA Director of Administration and Finance and relevant Program Directors to (1) determine the root cause for delayed payments and report that information to MCC, and (2) timely provide all relevant and applicable payment support and approval documentation (including but not limited to purchase order, contract, acceptance note, delivery note, delivery confirmation receipt, etc.) to the MCA Fiscal Agent for required payment verification procedures and timely process the invoice for payment.

Questioned Cost:
$0
Funds For Better Use:
$0
Recommendation 6

MCC's Chief Financial Officer Provide an additional reminder to the MCAs regarding the payment requirements in the Fiscal Accountability Plan and instruct them to monitor their compliance.

Questioned Cost:
$0
Funds For Better Use:
$0
Recommendation 7

MCC's Chief Financial Officer Revise the "Accountable Entities Guidelines for Contracted Financial Audits" to address the timing of the audit review process to ensure that independent public accountant firms are able to meet the 90-day delivery deadline for issuing the audit report.

Questioned Cost:
$0
Funds For Better Use:
$0
Recommendation 8

MCC's Chief Financial Officer Revise the "Accountable Entities Guidelines for Contracted Financial Audits" to establish a requirement after the initial compact or threshold audit to determine if the 90-day audit report deadline is still appropriate for the next audit given the circumstances (i.e., prior audit delays). If not, then issue an Implementation Letter to establish the new audit report deadline.

Questioned Cost:
$0
Funds For Better Use:
$0
Recommendation 9

MCC's Chief Financial Officer Revise the "Audit, Risk, and Control (ARC) Branch Process for Screening Potential Independent Public Accountant Firms" to clarify when ARC will begin and complete the screening process for a new compact or threshold program.

Questioned Cost:
$0
Funds For Better Use:
$0