Audit 297486

Federal Agency: Department of Transportation Federal Program: 20.106 Airport Improvement Program Identification Number: 3-24-0017-049-2021 Requirement: Reporting Type of Finding: Significant deficiency in internal control over major program Criteria: Federal revenue, federal expenditures and the recipient share are to be reported for the period Form SF-425 is being filed. Condition: Forms SF-425, Federal Financial Report (FFR), were completed using amounts from a varying reporting period and excluded expenditures that were incurred during the reporting period. Cause: There was no management oversight of the preparation of Form SF-425. Effect: The Department of Transportation will not have accurate information to assess the status of each project. Context: FFR for Grant 49 was filed with period-end date September 30, 2021 noting zero expenditures when actual expenditures were $5,500. Repeat Finding: This finding was reported for the years ended June 30, 2021 and 2020 as 2021-002 and 2020-004, respectively, as a material weakness and noncompliance. The issue was not as severe for the year ended June 30, 2022. Recommendation: The finance department should provide accounting records to the airport that are for the reporting period the Form SF-425 is being prepared. This will provide the Department of Transportation with an accurate accounting of where the project stands. Views of Responsible Official(s) and Planned Corrective Actions: See corrective action plan.

Federal Agency: Department of Health and Human Services Federal Program: 93.224 Health Center Program Identification Numbers: H80CS29007 H8DCS36329 H8ECS38904 H8FCS41132-01-00 Requirement: Reporting Type of Finding: Material weakness in internal control over major program; Noncompliance Criteria: Supporting documentation should match the amounts reported on all reports required to be filed for federal programs. Condition: Supporting documentation for key line items on the Uniform Data System (UDS) report and Federal Financial Report (FFR) did not match the reported amounts. Cause: Review and approval of grant reporting did not take place at the level needed to support accurate federal reporting. Also, the Health Center experienced a high volume of employee turnover. Effect: Misinformation presented to the federal government may lead to federal inquiries of those charged with governance. Context: The supporting documentation for the reports selected for testing (five FFRs and one UDS report) did not tie into the amounts reported on the FFRs and UDS. Also, the information could not be recreated by current staff at the Health Center. Amounts in the general ledger did not support the financial data for the varying reporting periods utilized in preparation of the reports. Recommendation: The Health Center should maintain any and all support utilized in the preparation of federal reports. We also recommend that Health Center staff receive proper training on the patient data software so that they are able to run reports that are necessary for the UDS reports. Documentation of the methods utilized to extract activity from the general ledger for financial reporting should also be maintained. Views of Responsible Official(s) and Planned Corrective Actions: See corrective action plan.

Federal Agency: Department of Health and Human Services Federal Program: 93.224 Health Center Program Identification Numbers: H80CS29007 H8DCS36329 H8ECS38904 H8FCS41132-01-00 Requirement: Special Tests and Provisions Type of Finding: Significant deficiency in internal control over major program; Noncompliance Criteria: Patient charges are adjusted based on income and family size by applying the Health Center’s sliding fee discount schedule. Condition: Sliding fee discounts are not applied appropriately for all patients. Cause: There is no management oversight in this area. Also, employees have not been properly trained and are not consistently utilizing the Allscripts software that maintains patient data. Effect: The Health Center is not compliant with federal regulations which could result in the federal government imposing additional requirements or withholding, disallowing or suspending grant funds. Context: Out of the 60 patients selected for testing, 12 were charged less than they should have been, 5 patients were charged more than they should have been and 4 patients were unable to be tested due to a lack of documentation. Repeat Finding: This finding was reported for the year ended June 30, 2021 as 2021-006. Recommendation: All elements required for the sliding fee discount should be properly maintained in Allscripts, including documentation of zero household income. Employees should be properly trained on the software, and a user manual should be created related to patient intake so patient records are consistent and documented appropriately. The sliding fee discount noted in Allscripts should correspond to the co-pay amount listed on patient billings. Health Center staff in charge of billing should review the patient data to ensure the correct adjustment was made and patients were charged the correct co-pay amount. Any discrepancies should be brought to the attention of Health Center management before bills are processed. Views of Responsible Official(s) and Planned Corrective Actions: See corrective action plan.

Federal Agency: Department of Health and Human Services Federal Program: 93.224 Health Center Program Identification Numbers: H80CS29007 H8DCS36329 H8ECS38904 H8FCS41132-01-00 Requirement: Reporting Type of Finding: Significant deficiency in internal control over major program Criteria: Annual and final FFRs should be submitted 90 days after the report period quarter-end date. Condition: Annual FFRs filed for reporting periods within the year ended June 30, 2022 were not submitted timely. Cause: Proper monitoring of grant report submissions was not performed. Effect: Failure to comply with reporting requirements can result in deferral or restrictions of future funding decisions by the funding agency. Context: Of the four annual FFRs tested, three reports were submitted between 16 and 19 business days late. Repeat Finding: This finding was reported for the year ended June 30, 2021 as 2021-005. Recommendation: The Health Center and Finance Department should maintain a schedule of required reporting with corresponding due dates. A designated employee should be assigned to monitor the report submissions with the goal that reports should be submitted timely, in compliance with the grant agreements. Views of Responsible Official(s) and Planned Corrective Actions: See corrective action plan.

Federal Agency: Department of Health and Human Services Federal Program: 93.224 Health Center Program Identification Number: H80CS29007 Requirement: Activities Allowed or Unallowed Type of Finding: Significant deficiency in internal control over major program Criteria: Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one federal award; a federal award and non-federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases or an unallowable activity and a direct or indirect cost activity. Condition: An employee was charged to the federal program without the allocation of pay being supported. Cause: Timesheets are not broken down by program, so payroll expenses are not allocated based off actual time spent on the grant program. Effect: Failure to allocate employee pay in accordance with federal requirements could result in a loss of funding. Context: For four out of eight pay periods tested, an employee’s pay was allocated 50% to the Health Center Program. Support could not be provided showing that this allocation was appropriate. Recommendation: The Health Center should maintain support and rationale for all allocations of payroll costs for employees charged to federal awards. Additionally, employees should earmark their timesheets with the number of hours worked on each program. Views of Responsible Official(s) and Planned Corrective Actions: See corrective action plan.

Federal Agency: Department of Health and Human Services Federal Program: 93.137 Community Programs to Improve Minority Health Grant Program Identification Number: 1 CPIMP211296-01-00 Requirement: Subrecipient Monitoring Type of Finding: Material weakness in internal control over major program; Noncompliance Criteria: A pass-through entity’s subrecipient monitoring policies and procedures should provide information about the entity’s process to identify subawards, evaluate risk of noncompliance and perform monitoring procedures based upon identified risks. Condition: Program management does not have knowledge of the process used to select subrecipients. Monitoring procedures performed were not documented and reports submitted by the subrecipients were not reviewed. Cause: The program has had significant employee turnover and there was a lack of documentation of these policies and procedures. Effect: Selecting subrecipients without a formal evaluation process and performing minimal monitoring procedures increases the risk of noncompliance for the City and could lead to a loss of funding if the subrecipients are deemed noncompliant. Context: The City selected two subrecipients to pass federal funding onto. There was no knowledge or documentation as to how the subrecipients were chosen or how the subaward agreements were developed. The City did hold progress meetings with subrecipients, but there were no minutes taken or any documentation maintained related to these meetings. Financial reports submitted by the subrecipients to program management were not reviewed to ensure grant funds were utilized for allowable activities and costs. Recommendation: Program management should develop standardized procedures for selecting and granting subawards. These procedures should be formalized and maintained for future reference. Brief minutes of progress meetings should be taken to show that monitoring is taking place. All reporting by the subrecipient should be reviewed by management of the program. Views of Responsible Official(s) and Planned Corrective Actions: See corrective action plan.

Federal Agency: Department of Health and Human Services Federal Program: 93.137 Community Programs to Improve Minority Health Grant Program Identification Number: 1 CPIMP211296-01-00 Requirement: Subrecipient Monitoring Type of Finding: Material weakness in internal control over major program; Noncompliance Criteria: Subaward agreements should include terms and conditions of the subaward, making the subrecipient aware of the award information required by Uniform Guidance Section 200.331(a) sufficient for the pass-through entity to comply with federal statutes, regulations and the terms and conditions of the award. Condition: Subaward agreements do not make Uniform Guidance requirements and regulations clear. They also do not contain language that supports subrecipient classification. Cause: Program management does not possess adequate knowledge of subrecipient monitoring requirements. Effect: Failure to explicitly state federally-imposed requirements and regulations may result in noncompliance by the subrecipient and lead to federal inquiries of those charged with governance. Context: Subrecipient agreements are titled “Memorandums of Understanding” instead of subaward agreements. The agreement with the one subrecipient does not state a dollar amount that is being passed-through over the course of the agreement. The terms and conditions do not explicitly mention the Uniform Guidance. The agreement makes references to both subcontractors and subrecipients, and never explicitly identifies the subrecipient as such. The other subrecipient agreement refers to the City of Frederick, Maryland as “the Sponsor”, not a pass-through entity and does not explicitly name the subrecipient as such. The agreement does not mention the Uniform Guidance. Recommendation: Program management should revise subaward agreements to specifically note the requirements and regulations of the Uniform Guidance, as noted in Section 200.331(a). Views of Responsible Official(s) and Planned Corrective Actions: See corrective action plan.

Federal Agency: Department of Health and Human Services Federal Program: 93.137 Community Programs to Improve Minority Health Grant Program Identification Number: 1 CPIMP211296-01-00 Requirement: Subrecipient Monitoring Type of Finding: Material weakness in internal control over major program; Noncompliance Criteria: A pass-through entity must verify that subrecipients expected to be audited as required by 2 CFR Part 200, Subpart F, met this requirement. This verification ensures that the subrecipients take timely and appropriate action on deficiencies identified through single audits. Condition: Program management did not perform this verification. Cause: Program management does not possess adequate knowledge of subrecipient monitoring requirements. Effect: Failure to verify the single audit status of subrecipients may lead to unresolved subrecipient noncompliance and lead to federal inquiries of those charged with governance. Context: Program management stated that the subrecipients did not undergo single audits. The Federal Audit Clearinghouse website noted that both subrecipients had filed single audits for the subaward period which included program 93.137. Recommendation: Program management should obtain the single audits performed for the subrecipients and review for program deficiencies. Views of Responsible Official(s) and Planned Corrective Actions: See corrective action plan.

Federal Agency: Department of Health and Human Services Federal Program: 93.137 Community Programs to Improve Minority Health Grant Program Identification Number: 1 CPIMP211296-01-00 Requirement: Reporting Type of Finding: Material weakness in internal control over major program; Noncompliance Criteria: Supporting documentation must be maintained for all reports required to be filed for federal programs. Amounts reported on financial reports should be supported by the accounting records that support the audited financial statements and the schedule of expenditures of federal awards. Condition: Supporting documentation for key line items on the quarterly progress reports and monthly reports required to be filed in the first six months of the project was not maintained. Amounts reported as cash receipts did not match the underlying support and cash disbursements included accrued amounts. Cause: Review and approval of grant reporting did not take place at the level needed to support accurate federal reporting. Also, the minority health program experienced a high volume of employee turnover. Effect: Misinformation presented to the federal government may lead to federal inquiries of those charged with governance. Context: The reports selected for testing (two quarterly financial and performance progress reports and three monthly special reports) did not have documentation maintained that supported the program data stated in the reports. As noted in the directions for the quarterly FFR, cash receipts and cash disbursements are only actual cash received. The amounts reported by the City included expenditures which were in accounts payable and Brown Plus could not trace the cash receipts to the general ledger detail. Recommendation: Program management should maintain any and all support utilized in the preparation of federal reports. Documentation of the methods utilized to extract activity from the general ledger for financial reporting should also be maintained. Minority health staff preparing reports should carefully review reporting instructions to ensure the correct amounts are reported. Views of Responsible Official(s) and Planned Corrective Actions: See corrective action plan.

Federal Agency: Department of Health and Human Services Federal Program: 93.137 Community Programs to Improve Minority Health Grant Program Identification Number: 1 CPIMP211296-01-00 Requirement: Reporting Type of Finding: Significant deficiency in internal control over major program Criteria: Quarterly FFRs must be submitted to the award agency 30 days after the report period quarter-end date. Condition: Quarterly FFRs filed for reporting periods within the year ended June 30, 2022 were not submitted timely. Cause: Proper monitoring of grant report submissions was not performed. Effect: Failure to comply with reporting requirements can result in deferral or restrictions of future funding decisions by the funding agency. Context: The two quarterly FFRs tested were submitted between one and six business days late. Recommendation: Program management and the Finance Department should maintain a schedule of required reporting with corresponding due dates. A designated employee should be assigned to monitor the report submissions with the goal that reports should be submitted timely, in compliance with the grant agreements. Views of Responsible Official(s) and Planned Corrective Actions: See corrective action plan.

Federal Agency: Department of Health and Human Services Federal Program: 93.137 Community Programs to Improve Minority Health Grant Program Identification Number: 1 CPIMP211296-01-00 Requirement: Reporting Type of Finding: Material weakness in internal control over major program; Noncompliance Criteria: Any obligation to a subrecipient over $25,000 is required to be reported under the Federal Funding Accountability and Transparency Act (FFATA) requirements. Condition: First tier subawards were not entered into the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS) portal during the audit period. One subrecipient agreement does not include a subaward amount. Cause: Management does not have procedures in place to ensure subrecipients meeting the reporting requirement are entered into the FSRS portal. Effect: First tier subrecipients are not reported in the FSRS portal, causing noncompliance with the FFATA. Misinformation presented to the federal government may lead to federal inquiries of those charged with governance. Context: There were two subrecipient agreements that met the requirements of a first tier subaward during the audit period. These subawards were not reported in the FSRS portal during the year under audit. A summarization of transactions tested, as well as questioned costs, are below. Recommendation: Program management should make the first-tier subaward determination when funds are awarded to recipients and promptly enter qualifying subawards into the FSRS portal. We recommend that one individual is responsible for entering the subaward into the portal and another individual is responsible for checking the portal before the deadline (one month after the subaward is made). Adding this additional review of the portal would ensure that qualifying subawards are appropriately reported. Subaward agreements should include the amount of funding. Views of Responsible Official(s) and Planned Corrective Actions: See corrective action plan.

Federal Agency: Department of Health and Human Services Federal Program: 93.568 Low-Income Home Energy Assistance Identification Number: FIA/OHEP/22-001 Requirement: Cash Management Type of Finding: Significant deficiency in internal control over major program Criteria: Interest earned in excess of $500 on federal cash draws should be remitted annually to the Department of Health and Human Services, Payment Management System (Uniform Guidance Section 200.305(9)). Condition: The amount of interest on federal cash draws could not be determined. Cause: Management does not have any support for the interest earned specific to federal cash draws for this program. Effect: If interest in excess of $500 was earned, the City would owe the Department of Health and Human Services. Context: During inquiries with program management and the finance department, it was noted that the City does not believe they have earned interest in excess of $500. The City had total draw downs for the program of $2,053,514 which are subject to earning interest. The City was ultimately not able to provide any evidence to support the fact that the draw downs did not earn less than $500 and, as such, their claim could not be corroborated. Recommendation: The City should track interest earned on each applicable federal program to ensure they are in compliance with federal regulations. Views of Responsible Official(s) and Planned Corrective Actions: See corrective action plan.

Federal Agency: Department of Health and Human Services Federal Program: 93.568 Low-Income Home Energy Assistance Identification Number: FIA/OHEP/22-001 Requirement: Reporting Type of Finding: Significant deficiency in internal control over major program Criteria: Financial reports should be submitted to the awarding agency by the 15th of the subsequent month. Condition: Financial reports filed for reporting periods within the year ended June 30, 2022 were not submitted timely. Cause: Review and approval of grant reporting did not take place at the level needed to support accurate federal reporting. Also, the Low-Income Home Energy Assistance program experienced a high volume of employee turnover. Effect: Failure to comply with reporting requirements can result in deferral or restrictions of future funding decisions by the funding agency. Context: Of the four financial reports tested, three reports were submitted between 41 and 84 business days late. Recommendation: Low-Income Home Energy Assistance program management and the finance department should maintain a schedule of required reporting with corresponding due dates. A designated employee should be assigned to monitor the report submissions with the goal that reports should be submitted timely, in compliance with the grant agreements. Views of Responsible Official(s) and Planned Corrective Actions: See corrective action plan.

Federal Agency: Small Business Administration Federal Program: 59.075 Shuttered Venue Operators Grant Program Identification Number: SBAHQ21SV012046.2 Requirement: Allowable Costs and Cost Principles Type of Finding: Material weakness in internal control over major program; Noncompliance Criteria: Costs claimed under a federal award program cannot be claimed under another federal program in any reporting period. Condition: Program expenditures included costs that were claimed under another federal program in the prior fiscal year. Cause: Management has not implemented adequate controls over the allowability of expenditures. Effect: Inclusion of costs already claimed under another federal program may lead to federal inquiries of those charged with governance and could cause the federal agency to request a refund for those costs. Known Questioned Costs: Our identified error of expenses claimed under another federal program was $55,867. Context: $55,867 of costs claimed under the federal program were also claimed under the Coronavirus Relief Fund during the year ended June 30, 2021. Recommendation: Before using federal grant funds to pay for expenditures, the Program management should ensure that these costs were not claimed under a separate grant. Views of Responsible Official(s) and Planned Corrective Actions: See corrective action plan.

Federal Agency: U.S. Small Business Administration Federal Program: 59.075 Shuttered Venue Operators Grant Program Identification Number: SBAHQ21SV012046.2 Requirement: Period of Performance Type of Finding: Significant deficiency in internal control over major program Criteria: The period to incur costs was 3/1/2020 and 6/30/2022. The U.S. Small Business Administration’s Shuttered Venue Operators Grant webinar on Auditing and the Compliance Supplement notes that a cost is incurred when the obligation for payment has been made. Condition: Program expenditures included costs that were incurred outside the period of performance. Cause: Management does not have an adequate understanding of federal program requirements. Effect: Inclusion of costs outside the period of performance may lead to federal inquiries of those charged with governance and could cause the federal agency to request a refund for those costs. Context: Four transactions tested included advertising and janitorial services which were performed in February 2020. The obligation for payment was made when the services were performed. Recommendation: Program management should review program definitions and attend federal agency webinars to ensure complete and accurate understanding of program standards. Views of Responsible Official(s) and Planned Corrective Actions: See corrective action plan.

Federal Agency: U.S. Small Business Administration Federal Program: 59.075 Shuttered Venue Operators Grant Program Identification Number: SBAHQ21SV012046.2 Requirement: Activities Allowed or Unallowed Type of Finding: Significant deficiency in internal control over major program Criteria: Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one federal award; a federal award and non-federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using difference allocation bases or an unallowable activity and a direct or indirect cost activity. Condition: Support for payroll costs claimed under the program was not maintained for all pay periods. Cause: Management did not maintain the electronic support for each pay period. Effect: Failure to maintain support for costs claimed may result in inquiries by the federal entity to those charged with governance. Context: During the height of the COVID-19 pandemic, the Box Office Manager would email the Executive Theater Manager the employees’ weekly hours worked in lieu of a physical timesheet. Out of five pay periods tested, one pay period did not have email correspondence to support the employees’ time. Recommendation: Email correspondence used in the approval process of any costs should be maintained in the same manner as physical invoices or timesheets. Views of Responsible Official(s) and Planned Corrective Actions: See corrective action plan.

Federal Agency: Department of Transportation Federal Program: 20.106 Airport Improvement Program Identification Number: 3-24-0017-049-2021 Requirement: Reporting Type of Finding: Significant deficiency in internal control over major program Criteria: Federal revenue, federal expenditures and the recipient share are to be reported for the period Form SF-425 is being filed. Condition: Forms SF-425, Federal Financial Report (FFR), were completed using amounts from a varying reporting period and excluded expenditures that were incurred during the reporting period. Cause: There was no management oversight of the preparation of Form SF-425. Effect: The Department of Transportation will not have accurate information to assess the status of each project. Context: FFR for Grant 49 was filed with period-end date September 30, 2021 noting zero expenditures when actual expenditures were $5,500. Repeat Finding: This finding was reported for the years ended June 30, 2021 and 2020 as 2021-002 and 2020-004, respectively, as a material weakness and noncompliance. The issue was not as severe for the year ended June 30, 2022. Recommendation: The finance department should provide accounting records to the airport that are for the reporting period the Form SF-425 is being prepared. This will provide the Department of Transportation with an accurate accounting of where the project stands. Views of Responsible Official(s) and Planned Corrective Actions: See corrective action plan.

Federal Agency: Department of Health and Human Services Federal Program: 93.224 Health Center Program Identification Numbers: H80CS29007 H8DCS36329 H8ECS38904 H8FCS41132-01-00 Requirement: Reporting Type of Finding: Material weakness in internal control over major program; Noncompliance Criteria: Supporting documentation should match the amounts reported on all reports required to be filed for federal programs. Condition: Supporting documentation for key line items on the Uniform Data System (UDS) report and Federal Financial Report (FFR) did not match the reported amounts. Cause: Review and approval of grant reporting did not take place at the level needed to support accurate federal reporting. Also, the Health Center experienced a high volume of employee turnover. Effect: Misinformation presented to the federal government may lead to federal inquiries of those charged with governance. Context: The supporting documentation for the reports selected for testing (five FFRs and one UDS report) did not tie into the amounts reported on the FFRs and UDS. Also, the information could not be recreated by current staff at the Health Center. Amounts in the general ledger did not support the financial data for the varying reporting periods utilized in preparation of the reports. Recommendation: The Health Center should maintain any and all support utilized in the preparation of federal reports. We also recommend that Health Center staff receive proper training on the patient data software so that they are able to run reports that are necessary for the UDS reports. Documentation of the methods utilized to extract activity from the general ledger for financial reporting should also be maintained. Views of Responsible Official(s) and Planned Corrective Actions: See corrective action plan.

Federal Agency: Department of Health and Human Services Federal Program: 93.224 Health Center Program Identification Numbers: H80CS29007 H8DCS36329 H8ECS38904 H8FCS41132-01-00 Requirement: Special Tests and Provisions Type of Finding: Significant deficiency in internal control over major program; Noncompliance Criteria: Patient charges are adjusted based on income and family size by applying the Health Center’s sliding fee discount schedule. Condition: Sliding fee discounts are not applied appropriately for all patients. Cause: There is no management oversight in this area. Also, employees have not been properly trained and are not consistently utilizing the Allscripts software that maintains patient data. Effect: The Health Center is not compliant with federal regulations which could result in the federal government imposing additional requirements or withholding, disallowing or suspending grant funds. Context: Out of the 60 patients selected for testing, 12 were charged less than they should have been, 5 patients were charged more than they should have been and 4 patients were unable to be tested due to a lack of documentation. Repeat Finding: This finding was reported for the year ended June 30, 2021 as 2021-006. Recommendation: All elements required for the sliding fee discount should be properly maintained in Allscripts, including documentation of zero household income. Employees should be properly trained on the software, and a user manual should be created related to patient intake so patient records are consistent and documented appropriately. The sliding fee discount noted in Allscripts should correspond to the co-pay amount listed on patient billings. Health Center staff in charge of billing should review the patient data to ensure the correct adjustment was made and patients were charged the correct co-pay amount. Any discrepancies should be brought to the attention of Health Center management before bills are processed. Views of Responsible Official(s) and Planned Corrective Actions: See corrective action plan.

Federal Agency: Department of Health and Human Services Federal Program: 93.224 Health Center Program Identification Numbers: H80CS29007 H8DCS36329 H8ECS38904 H8FCS41132-01-00 Requirement: Reporting Type of Finding: Significant deficiency in internal control over major program Criteria: Annual and final FFRs should be submitted 90 days after the report period quarter-end date. Condition: Annual FFRs filed for reporting periods within the year ended June 30, 2022 were not submitted timely. Cause: Proper monitoring of grant report submissions was not performed. Effect: Failure to comply with reporting requirements can result in deferral or restrictions of future funding decisions by the funding agency. Context: Of the four annual FFRs tested, three reports were submitted between 16 and 19 business days late. Repeat Finding: This finding was reported for the year ended June 30, 2021 as 2021-005. Recommendation: The Health Center and Finance Department should maintain a schedule of required reporting with corresponding due dates. A designated employee should be assigned to monitor the report submissions with the goal that reports should be submitted timely, in compliance with the grant agreements. Views of Responsible Official(s) and Planned Corrective Actions: See corrective action plan.

Federal Agency: Department of Health and Human Services Federal Program: 93.224 Health Center Program Identification Number: H80CS29007 Requirement: Activities Allowed or Unallowed Type of Finding: Significant deficiency in internal control over major program Criteria: Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one federal award; a federal award and non-federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases or an unallowable activity and a direct or indirect cost activity. Condition: An employee was charged to the federal program without the allocation of pay being supported. Cause: Timesheets are not broken down by program, so payroll expenses are not allocated based off actual time spent on the grant program. Effect: Failure to allocate employee pay in accordance with federal requirements could result in a loss of funding. Context: For four out of eight pay periods tested, an employee’s pay was allocated 50% to the Health Center Program. Support could not be provided showing that this allocation was appropriate. Recommendation: The Health Center should maintain support and rationale for all allocations of payroll costs for employees charged to federal awards. Additionally, employees should earmark their timesheets with the number of hours worked on each program. Views of Responsible Official(s) and Planned Corrective Actions: See corrective action plan.

Federal Agency: Department of Health and Human Services Federal Program: 93.137 Community Programs to Improve Minority Health Grant Program Identification Number: 1 CPIMP211296-01-00 Requirement: Subrecipient Monitoring Type of Finding: Material weakness in internal control over major program; Noncompliance Criteria: A pass-through entity’s subrecipient monitoring policies and procedures should provide information about the entity’s process to identify subawards, evaluate risk of noncompliance and perform monitoring procedures based upon identified risks. Condition: Program management does not have knowledge of the process used to select subrecipients. Monitoring procedures performed were not documented and reports submitted by the subrecipients were not reviewed. Cause: The program has had significant employee turnover and there was a lack of documentation of these policies and procedures. Effect: Selecting subrecipients without a formal evaluation process and performing minimal monitoring procedures increases the risk of noncompliance for the City and could lead to a loss of funding if the subrecipients are deemed noncompliant. Context: The City selected two subrecipients to pass federal funding onto. There was no knowledge or documentation as to how the subrecipients were chosen or how the subaward agreements were developed. The City did hold progress meetings with subrecipients, but there were no minutes taken or any documentation maintained related to these meetings. Financial reports submitted by the subrecipients to program management were not reviewed to ensure grant funds were utilized for allowable activities and costs. Recommendation: Program management should develop standardized procedures for selecting and granting subawards. These procedures should be formalized and maintained for future reference. Brief minutes of progress meetings should be taken to show that monitoring is taking place. All reporting by the subrecipient should be reviewed by management of the program. Views of Responsible Official(s) and Planned Corrective Actions: See corrective action plan.

Federal Agency: Department of Health and Human Services Federal Program: 93.137 Community Programs to Improve Minority Health Grant Program Identification Number: 1 CPIMP211296-01-00 Requirement: Subrecipient Monitoring Type of Finding: Material weakness in internal control over major program; Noncompliance Criteria: Subaward agreements should include terms and conditions of the subaward, making the subrecipient aware of the award information required by Uniform Guidance Section 200.331(a) sufficient for the pass-through entity to comply with federal statutes, regulations and the terms and conditions of the award. Condition: Subaward agreements do not make Uniform Guidance requirements and regulations clear. They also do not contain language that supports subrecipient classification. Cause: Program management does not possess adequate knowledge of subrecipient monitoring requirements. Effect: Failure to explicitly state federally-imposed requirements and regulations may result in noncompliance by the subrecipient and lead to federal inquiries of those charged with governance. Context: Subrecipient agreements are titled “Memorandums of Understanding” instead of subaward agreements. The agreement with the one subrecipient does not state a dollar amount that is being passed-through over the course of the agreement. The terms and conditions do not explicitly mention the Uniform Guidance. The agreement makes references to both subcontractors and subrecipients, and never explicitly identifies the subrecipient as such. The other subrecipient agreement refers to the City of Frederick, Maryland as “the Sponsor”, not a pass-through entity and does not explicitly name the subrecipient as such. The agreement does not mention the Uniform Guidance. Recommendation: Program management should revise subaward agreements to specifically note the requirements and regulations of the Uniform Guidance, as noted in Section 200.331(a). Views of Responsible Official(s) and Planned Corrective Actions: See corrective action plan.

Federal Agency: Department of Health and Human Services Federal Program: 93.137 Community Programs to Improve Minority Health Grant Program Identification Number: 1 CPIMP211296-01-00 Requirement: Subrecipient Monitoring Type of Finding: Material weakness in internal control over major program; Noncompliance Criteria: A pass-through entity must verify that subrecipients expected to be audited as required by 2 CFR Part 200, Subpart F, met this requirement. This verification ensures that the subrecipients take timely and appropriate action on deficiencies identified through single audits. Condition: Program management did not perform this verification. Cause: Program management does not possess adequate knowledge of subrecipient monitoring requirements. Effect: Failure to verify the single audit status of subrecipients may lead to unresolved subrecipient noncompliance and lead to federal inquiries of those charged with governance. Context: Program management stated that the subrecipients did not undergo single audits. The Federal Audit Clearinghouse website noted that both subrecipients had filed single audits for the subaward period which included program 93.137. Recommendation: Program management should obtain the single audits performed for the subrecipients and review for program deficiencies. Views of Responsible Official(s) and Planned Corrective Actions: See corrective action plan.

Federal Agency: Department of Health and Human Services Federal Program: 93.137 Community Programs to Improve Minority Health Grant Program Identification Number: 1 CPIMP211296-01-00 Requirement: Reporting Type of Finding: Material weakness in internal control over major program; Noncompliance Criteria: Supporting documentation must be maintained for all reports required to be filed for federal programs. Amounts reported on financial reports should be supported by the accounting records that support the audited financial statements and the schedule of expenditures of federal awards. Condition: Supporting documentation for key line items on the quarterly progress reports and monthly reports required to be filed in the first six months of the project was not maintained. Amounts reported as cash receipts did not match the underlying support and cash disbursements included accrued amounts. Cause: Review and approval of grant reporting did not take place at the level needed to support accurate federal reporting. Also, the minority health program experienced a high volume of employee turnover. Effect: Misinformation presented to the federal government may lead to federal inquiries of those charged with governance. Context: The reports selected for testing (two quarterly financial and performance progress reports and three monthly special reports) did not have documentation maintained that supported the program data stated in the reports. As noted in the directions for the quarterly FFR, cash receipts and cash disbursements are only actual cash received. The amounts reported by the City included expenditures which were in accounts payable and Brown Plus could not trace the cash receipts to the general ledger detail. Recommendation: Program management should maintain any and all support utilized in the preparation of federal reports. Documentation of the methods utilized to extract activity from the general ledger for financial reporting should also be maintained. Minority health staff preparing reports should carefully review reporting instructions to ensure the correct amounts are reported. Views of Responsible Official(s) and Planned Corrective Actions: See corrective action plan.

Federal Agency: Department of Health and Human Services Federal Program: 93.137 Community Programs to Improve Minority Health Grant Program Identification Number: 1 CPIMP211296-01-00 Requirement: Reporting Type of Finding: Significant deficiency in internal control over major program Criteria: Quarterly FFRs must be submitted to the award agency 30 days after the report period quarter-end date. Condition: Quarterly FFRs filed for reporting periods within the year ended June 30, 2022 were not submitted timely. Cause: Proper monitoring of grant report submissions was not performed. Effect: Failure to comply with reporting requirements can result in deferral or restrictions of future funding decisions by the funding agency. Context: The two quarterly FFRs tested were submitted between one and six business days late. Recommendation: Program management and the Finance Department should maintain a schedule of required reporting with corresponding due dates. A designated employee should be assigned to monitor the report submissions with the goal that reports should be submitted timely, in compliance with the grant agreements. Views of Responsible Official(s) and Planned Corrective Actions: See corrective action plan.

Federal Agency: Department of Health and Human Services Federal Program: 93.137 Community Programs to Improve Minority Health Grant Program Identification Number: 1 CPIMP211296-01-00 Requirement: Reporting Type of Finding: Material weakness in internal control over major program; Noncompliance Criteria: Any obligation to a subrecipient over $25,000 is required to be reported under the Federal Funding Accountability and Transparency Act (FFATA) requirements. Condition: First tier subawards were not entered into the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS) portal during the audit period. One subrecipient agreement does not include a subaward amount. Cause: Management does not have procedures in place to ensure subrecipients meeting the reporting requirement are entered into the FSRS portal. Effect: First tier subrecipients are not reported in the FSRS portal, causing noncompliance with the FFATA. Misinformation presented to the federal government may lead to federal inquiries of those charged with governance. Context: There were two subrecipient agreements that met the requirements of a first tier subaward during the audit period. These subawards were not reported in the FSRS portal during the year under audit. A summarization of transactions tested, as well as questioned costs, are below. Recommendation: Program management should make the first-tier subaward determination when funds are awarded to recipients and promptly enter qualifying subawards into the FSRS portal. We recommend that one individual is responsible for entering the subaward into the portal and another individual is responsible for checking the portal before the deadline (one month after the subaward is made). Adding this additional review of the portal would ensure that qualifying subawards are appropriately reported. Subaward agreements should include the amount of funding. Views of Responsible Official(s) and Planned Corrective Actions: See corrective action plan.

Federal Agency: Department of Health and Human Services Federal Program: 93.568 Low-Income Home Energy Assistance Identification Number: FIA/OHEP/22-001 Requirement: Cash Management Type of Finding: Significant deficiency in internal control over major program Criteria: Interest earned in excess of $500 on federal cash draws should be remitted annually to the Department of Health and Human Services, Payment Management System (Uniform Guidance Section 200.305(9)). Condition: The amount of interest on federal cash draws could not be determined. Cause: Management does not have any support for the interest earned specific to federal cash draws for this program. Effect: If interest in excess of $500 was earned, the City would owe the Department of Health and Human Services. Context: During inquiries with program management and the finance department, it was noted that the City does not believe they have earned interest in excess of $500. The City had total draw downs for the program of $2,053,514 which are subject to earning interest. The City was ultimately not able to provide any evidence to support the fact that the draw downs did not earn less than $500 and, as such, their claim could not be corroborated. Recommendation: The City should track interest earned on each applicable federal program to ensure they are in compliance with federal regulations. Views of Responsible Official(s) and Planned Corrective Actions: See corrective action plan.

Federal Agency: Department of Health and Human Services Federal Program: 93.568 Low-Income Home Energy Assistance Identification Number: FIA/OHEP/22-001 Requirement: Reporting Type of Finding: Significant deficiency in internal control over major program Criteria: Financial reports should be submitted to the awarding agency by the 15th of the subsequent month. Condition: Financial reports filed for reporting periods within the year ended June 30, 2022 were not submitted timely. Cause: Review and approval of grant reporting did not take place at the level needed to support accurate federal reporting. Also, the Low-Income Home Energy Assistance program experienced a high volume of employee turnover. Effect: Failure to comply with reporting requirements can result in deferral or restrictions of future funding decisions by the funding agency. Context: Of the four financial reports tested, three reports were submitted between 41 and 84 business days late. Recommendation: Low-Income Home Energy Assistance program management and the finance department should maintain a schedule of required reporting with corresponding due dates. A designated employee should be assigned to monitor the report submissions with the goal that reports should be submitted timely, in compliance with the grant agreements. Views of Responsible Official(s) and Planned Corrective Actions: See corrective action plan.

Federal Agency: Small Business Administration Federal Program: 59.075 Shuttered Venue Operators Grant Program Identification Number: SBAHQ21SV012046.2 Requirement: Allowable Costs and Cost Principles Type of Finding: Material weakness in internal control over major program; Noncompliance Criteria: Costs claimed under a federal award program cannot be claimed under another federal program in any reporting period. Condition: Program expenditures included costs that were claimed under another federal program in the prior fiscal year. Cause: Management has not implemented adequate controls over the allowability of expenditures. Effect: Inclusion of costs already claimed under another federal program may lead to federal inquiries of those charged with governance and could cause the federal agency to request a refund for those costs. Known Questioned Costs: Our identified error of expenses claimed under another federal program was $55,867. Context: $55,867 of costs claimed under the federal program were also claimed under the Coronavirus Relief Fund during the year ended June 30, 2021. Recommendation: Before using federal grant funds to pay for expenditures, the Program management should ensure that these costs were not claimed under a separate grant. Views of Responsible Official(s) and Planned Corrective Actions: See corrective action plan.

Federal Agency: U.S. Small Business Administration Federal Program: 59.075 Shuttered Venue Operators Grant Program Identification Number: SBAHQ21SV012046.2 Requirement: Period of Performance Type of Finding: Significant deficiency in internal control over major program Criteria: The period to incur costs was 3/1/2020 and 6/30/2022. The U.S. Small Business Administration’s Shuttered Venue Operators Grant webinar on Auditing and the Compliance Supplement notes that a cost is incurred when the obligation for payment has been made. Condition: Program expenditures included costs that were incurred outside the period of performance. Cause: Management does not have an adequate understanding of federal program requirements. Effect: Inclusion of costs outside the period of performance may lead to federal inquiries of those charged with governance and could cause the federal agency to request a refund for those costs. Context: Four transactions tested included advertising and janitorial services which were performed in February 2020. The obligation for payment was made when the services were performed. Recommendation: Program management should review program definitions and attend federal agency webinars to ensure complete and accurate understanding of program standards. Views of Responsible Official(s) and Planned Corrective Actions: See corrective action plan.

Federal Agency: U.S. Small Business Administration Federal Program: 59.075 Shuttered Venue Operators Grant Program Identification Number: SBAHQ21SV012046.2 Requirement: Activities Allowed or Unallowed Type of Finding: Significant deficiency in internal control over major program Criteria: Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one federal award; a federal award and non-federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using difference allocation bases or an unallowable activity and a direct or indirect cost activity. Condition: Support for payroll costs claimed under the program was not maintained for all pay periods. Cause: Management did not maintain the electronic support for each pay period. Effect: Failure to maintain support for costs claimed may result in inquiries by the federal entity to those charged with governance. Context: During the height of the COVID-19 pandemic, the Box Office Manager would email the Executive Theater Manager the employees’ weekly hours worked in lieu of a physical timesheet. Out of five pay periods tested, one pay period did not have email correspondence to support the employees’ time. Recommendation: Email correspondence used in the approval process of any costs should be maintained in the same manner as physical invoices or timesheets. Views of Responsible Official(s) and Planned Corrective Actions: See corrective action plan.