Audit of the Millennium Challenge Corporation's Financial Statements, Internal Controls, and Compliance for the Fiscal Years Ending September 30, 2014 and 2013
Perform a comprehensive review and determine whether the Shared Service Provider's (SSP) financial management system is meeting its financial management and reporting needs. As part of this review, management should continue to evaluate whether: a. a separate grants management system that focuses on program and financial administrations that interfaces with the core financial system is needed, or b. to establish alternatives to recording numerous data lines in the Oracle AP and PO modules which is manual intensive and prone to errors.
Investigate and collect the underlying causes for the system errors and limitations that prevent or delay the recording, processing, and summarizing of accounting transactions. Key issues that remain unresolved should be escalated immediately rather than back-log the problem. MCC should ensure that e1rnrs and open tickets are resolved appropriately and timely by the SSP and that routine MCA accounting activities recorded in Oracle within the specified timeline. Moreover, manual adjusting journal entries should be used for limited transactions like unusual one-time entries or correcting entries.
In collaboration with the SSP, formalize in writing the system's issues and standardize the resolution processes and policy/procedures.
Further review SSP data entries relating to MCA payment processing and related
adjustments (i.e. obligation/disbursement adjustments). Perform reconciliation of AP and PO on a monthly basis and proactively resolve all differences in a timely manner.
Update its Expense Accruals Financial management Division Procedure Manual to:
A. Provide clear guidance regarding the accrual process as it relates to compacts that are in their final year as to how the accrual will be determined;
B. Address how contract retentions will be accounted for and included in the grant accrual estimate; and C. Provide a logical and supportable look-back analysis and validation process to assess the reasonableness of the grant accrual on a quarterly basis. The look back analysis should provide MCC with sufficient and appropriate information to explain unusual variances between actual and estimates, or support updating the current grant accrual methodology. Such periodic assessment of the adequacy of the grant accrual methodology should be documented and supported by data analysis. The accrued liability amount is subject to the risks that actual subsequent disbursement amount may be significantly different from management's estimate. When this occurs, management should further anal
Ensure that policies and procedures developed are current and are fully implemented by MCC staff during the grant accrual process to avoid potential calculation errors in the future.