FAC Explorer

Audit 3018

FY End
2023-06-30
Total Expended
$1.91M
Findings
2
Programs
1
Organization: Pencil Foundation (TN)
Year: 2023 Accepted: 2023-11-13
Auditor: Kraftcpas PLLC

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
1742 2023-001 Material Weakness - M
578184 2023-001 Material Weakness - M

Programs

ALN Program Spent Major Findings
84.425 Education Stabilization Fund $1.91M Yes 1

Contacts

Name Title Type
WA86JK8377N5 Angie Adams Auditee
6152423167 Kenneth Youngstead Auditor
No contacts on file

Notes to SEFA

Title: BASIS OF PRESENTATION Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. De Minimis Rate Used: N Rate Explanation: PENCIL has elected not to use the 10-percent de minims indirect cost rate as allowed under the Uniform Guidance, however, no indirect costs have been charged to PENCIL’s grants. The accompanying Schedules of Expenditures of Federal Awards (the “Schedule”) includes the federal grant activity of PENCIL and is presented on the accrual basis of accounting. The information in the Schedule of Expenditures of Federal Awards is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (“Uniform Guidance”) and the Audit Manual issued by the Comptroller of the Treasury of the State of Tennessee. Because the Schedule presents only a selected portion of the operations of PENCIL, it is not intended to and does not present the financial position, changes in net assets, or cash flows of PENCIL.
Title: SUBRECIPIENTS Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. De Minimis Rate Used: N Rate Explanation: PENCIL has elected not to use the 10-percent de minims indirect cost rate as allowed under the Uniform Guidance, however, no indirect costs have been charged to PENCIL’s grants. PENCIL passed through $1,062,467 of federal awards to subrecipients.

Finding Details

Finding 2023-001
Federal Program Information Funding Agency: U.S. Department of Education Federal ALN: 84.425B COVID-19 Coronavirus Education Stabilization Fund, Discretionary Grants: Rethink K-12 Education Models Grants Pass Through Agency: State of Tennessee, Department of Education Criteria As required by the Uniform Guidance, non-federal entities are required to monitor the use of funds provided to subrecipients. Condition PENCIL did not have a written agreement with the subrecipient setting forth the terms of the arrangement and required use of funds, nor did PENCIL produce evidence of subrecipient monitoring of the appropriate use of funds by the subrecipient. Cause PENCIL had not received federal funding previously and was not aware of the subrecipient monitoring requirements of the Uniform Guidance. Effect Funds provided to subrecipients may have been used inappropriately or not in furtherance of the program objectives. Auditor's Recommendations PENCIL should execute a written agreement with the subrecipient that outlines the responsibilities under the grant agreement that are passed through. PENCIL should also establish monitoring policies to ensure that the subrecipient is using the funds in accordance with the agreement. PENCIL should then conduct the required procedures to monitor the use of funds, check status of programs and obtain regular updates sufficient to satisfy themselves regarding the appropriate use of funds in accordance with the requirements of the federal award and any related contracts. Management Response Management agrees with the auditor’s recommendation. PENCIL should communicate the compliance requirements for staff involved in the distribution of funds to subrecipients. The staff should conduct the required procedures to monitor the use of funds, check status of programs and obtain regular updates sufficient to satisfy themselves regarding the appropriate use of funds in accordance with the requirements of the federal award and any related contracts.
Finding 2023-001
Federal Program Information Funding Agency: U.S. Department of Education Federal ALN: 84.425B COVID-19 Coronavirus Education Stabilization Fund, Discretionary Grants: Rethink K-12 Education Models Grants Pass Through Agency: State of Tennessee, Department of Education Criteria As required by the Uniform Guidance, non-federal entities are required to monitor the use of funds provided to subrecipients. Condition PENCIL did not have a written agreement with the subrecipient setting forth the terms of the arrangement and required use of funds, nor did PENCIL produce evidence of subrecipient monitoring of the appropriate use of funds by the subrecipient. Cause PENCIL had not received federal funding previously and was not aware of the subrecipient monitoring requirements of the Uniform Guidance. Effect Funds provided to subrecipients may have been used inappropriately or not in furtherance of the program objectives. Auditor's Recommendations PENCIL should execute a written agreement with the subrecipient that outlines the responsibilities under the grant agreement that are passed through. PENCIL should also establish monitoring policies to ensure that the subrecipient is using the funds in accordance with the agreement. PENCIL should then conduct the required procedures to monitor the use of funds, check status of programs and obtain regular updates sufficient to satisfy themselves regarding the appropriate use of funds in accordance with the requirements of the federal award and any related contracts. Management Response Management agrees with the auditor’s recommendation. PENCIL should communicate the compliance requirements for staff involved in the distribution of funds to subrecipients. The staff should conduct the required procedures to monitor the use of funds, check status of programs and obtain regular updates sufficient to satisfy themselves regarding the appropriate use of funds in accordance with the requirements of the federal award and any related contracts.