Criteria: In accordance with the Uniform Guidance, 2 CFR 200.510(b), the auditee must prepare the schedule of expenditures of federal awards (SEFA) for the period covered by the auditee’s financial statements.
Condition: The auditee did not finalize the schedule of expenditures of federal awards prior to signing the engagement letter and the start of the audit procedures for the fiscal year July 1, 2022 to June 30, 2023. Additionally, the prepared SEFA included totals representing contractor payments to Florence Crittenton (FCFS), which overstated SEFA total expenditures by $173,389.
Context: Initially, the auditee stated that a single audit was not needed for fiscal year 2022-23, and that expenditures of federal awards was below $750,000. The audit engagement letter was prepared and signed, which excluded single audit language. During the course of the audit procedures, the SEFA was prepared by the auditee with the assistance of the auditor, and it was determined that the auditee incurred $816,420 in expenditures of federal awards in fiscal year covering July 1, 2022 to June 30, 2023. Upon the discovery that a single audit was needed for the testing period, the engagement letter was revised, and single audit procedures were completed. During the course of audit procedures for the Single Audit, it was discovered that the state of Montana considered Florence Crittenton to be a non-subrecipient for the stabilization grants under the Child Care and Development Block Grant.
Effect: Non-compliance with the Uniform Guidance regarding SEFA preparation.
Questioned Costs: There were no questioned costs identified.
Cause: Florence Crittenton was not aware that federal expenditures for the fiscal year July 1, 2022 to June 30, 2023 were over $750,000 until the auditor requested documentation that federal expenditures were under $750,000.
Recommendation: We recommend the organization review all contracts before the end of the fiscal year to ensure all funds received have the appropriate contracts from state and federal awarding entities, and that the organization begin SEFA preparation immediately following the end of the fiscal year to ensure it includes all federal funds expended and is completed prior to the start of audit procedures.
Organization Response: Based on the way that the State of Montana has historically written their grant contracts, it has been difficult to decipher if the organization is a subrecipient or a contractor of the state. This was especially true for any contracts funded through Covid-19 CARES and ARPA funds. Additionally, FCFS was unclear if seed funds from the Innovation grant were considered expended or not. This confusion led to a mistake on the initial SEFA worksheet that indicated federal funds fell below $750,000. Upon further examination by all parties, it was determined that FCFS had in fact expended over $750,000 in federal funds. FCFS immediately signed an engagement letter for Douglas Wilson to complete the SEFA and has since complied with all testing requirements. To ensure this mistake does not happen again, FCFS designed a corrective action plan that will include confirming subrecipient or contractor status with all contracting agencies. This has already been completed with current contracts for FY24. FCFS has subsequently established additional measures to ensure complete review of all contracts and quarterly reporting of all grant spending, regardless of if it is a federal, state, or private grant.
U.S. Department of Public Health
and Human Services
Child Care and Development Block Grant (CCDBG)
ALN: 93.575
Criteria: In the CCDBG Innovation grant contract it states: The Contractor [Florence Crittenton] may not seek compensation from monies payable through this contract for the cost of goods and services that may be or are reimbursed, in whole or in part, from other programs and sources.
Condition: The auditee reported the same payroll costs in this grant as well as in two stabilization grants.
Context: The stabilization grants outline that Florence Crittenton will maintain records and submit quarterly expense reports detailing how funds are allocated (used and/or spent). Employee bonuses were counted as eligible costs for reimbursement in the innovation CCDBG grant totaling $3,700. Additionally, the innovation grant allows for a 5 percent indirect cost counted against direct costs for the month. Therefore, another $185 was counted as eligible based on the bonus amount. One employee’s salaries were counted as eligible costs in the innovation grant, totaling $9,529. The bonus and salary costs were also included in the quarterly expense reports for the stabilization grants.
Effect: Non-compliance with the innovation Child Care and Development Block Grant contract.
Questioned Costs: No questioned costs were identified.
Cause: Florence Crittenton reported employee bonuses and a portion of employee salaries as eligible costs for two separate contracts.
Recommendation: We recommend the organization improve on tracking which federal program funds pay for costs of the organization, in order to prevent duplicate reporting from occurring in the future.
Organization Response: FCFS disagrees with the inclusion of this finding. In both the Condition and the Effect of this finding, the Stabilization block grant is referenced as support for the finding. However, per the auditor’s expertise, this grant should not be listed as federal funds and should not be used as supporting documentation for a finding on the SEFA. In addition, the Stabilization block grant required agencies to report all programmatic expenditures funded even though only a fraction of those expenditures were reimbursed. The Innovation grant that is noted in the Context of finding 2023-002, covers 25% of the CEC director’s salary, leaving 75% of her wage to be paid for by other means. Even if the Stabilization funds were included on the SEFA (which would not be the case due to FCFS being a contractor to the state on the grant), Stabilization funds could still cover up to 75% of the director’s salary and not be considered double reporting. The Stabilization grant was part of ARPA funding by the state to help organizations regain their footing post Covid. The regulations on expenditure were extremely vague and ill-defined, and reporting requirements were almost nonexistent until much later in the granting period. Only after two payments had been received did the reporting requirements come out. Reporting required FCFS to report all expenditures in the program during the previous grant periods.
Criteria: In accordance with the Uniform Guidance, 2 CFR 200.510(b), the auditee must prepare the schedule of expenditures of federal awards (SEFA) for the period covered by the auditee’s financial statements.
Condition: The auditee did not finalize the schedule of expenditures of federal awards prior to signing the engagement letter and the start of the audit procedures for the fiscal year July 1, 2022 to June 30, 2023. Additionally, the prepared SEFA included totals representing contractor payments to Florence Crittenton (FCFS), which overstated SEFA total expenditures by $173,389.
Context: Initially, the auditee stated that a single audit was not needed for fiscal year 2022-23, and that expenditures of federal awards was below $750,000. The audit engagement letter was prepared and signed, which excluded single audit language. During the course of the audit procedures, the SEFA was prepared by the auditee with the assistance of the auditor, and it was determined that the auditee incurred $816,420 in expenditures of federal awards in fiscal year covering July 1, 2022 to June 30, 2023. Upon the discovery that a single audit was needed for the testing period, the engagement letter was revised, and single audit procedures were completed. During the course of audit procedures for the Single Audit, it was discovered that the state of Montana considered Florence Crittenton to be a non-subrecipient for the stabilization grants under the Child Care and Development Block Grant.
Effect: Non-compliance with the Uniform Guidance regarding SEFA preparation.
Questioned Costs: There were no questioned costs identified.
Cause: Florence Crittenton was not aware that federal expenditures for the fiscal year July 1, 2022 to June 30, 2023 were over $750,000 until the auditor requested documentation that federal expenditures were under $750,000.
Recommendation: We recommend the organization review all contracts before the end of the fiscal year to ensure all funds received have the appropriate contracts from state and federal awarding entities, and that the organization begin SEFA preparation immediately following the end of the fiscal year to ensure it includes all federal funds expended and is completed prior to the start of audit procedures.
Organization Response: Based on the way that the State of Montana has historically written their grant contracts, it has been difficult to decipher if the organization is a subrecipient or a contractor of the state. This was especially true for any contracts funded through Covid-19 CARES and ARPA funds. Additionally, FCFS was unclear if seed funds from the Innovation grant were considered expended or not. This confusion led to a mistake on the initial SEFA worksheet that indicated federal funds fell below $750,000. Upon further examination by all parties, it was determined that FCFS had in fact expended over $750,000 in federal funds. FCFS immediately signed an engagement letter for Douglas Wilson to complete the SEFA and has since complied with all testing requirements. To ensure this mistake does not happen again, FCFS designed a corrective action plan that will include confirming subrecipient or contractor status with all contracting agencies. This has already been completed with current contracts for FY24. FCFS has subsequently established additional measures to ensure complete review of all contracts and quarterly reporting of all grant spending, regardless of if it is a federal, state, or private grant.
Criteria: In accordance with the Uniform Guidance, 2 CFR 200.510(b), the auditee must prepare the schedule of expenditures of federal awards (SEFA) for the period covered by the auditee’s financial statements.
Condition: The auditee did not finalize the schedule of expenditures of federal awards prior to signing the engagement letter and the start of the audit procedures for the fiscal year July 1, 2022 to June 30, 2023. Additionally, the prepared SEFA included totals representing contractor payments to Florence Crittenton (FCFS), which overstated SEFA total expenditures by $173,389.
Context: Initially, the auditee stated that a single audit was not needed for fiscal year 2022-23, and that expenditures of federal awards was below $750,000. The audit engagement letter was prepared and signed, which excluded single audit language. During the course of the audit procedures, the SEFA was prepared by the auditee with the assistance of the auditor, and it was determined that the auditee incurred $816,420 in expenditures of federal awards in fiscal year covering July 1, 2022 to June 30, 2023. Upon the discovery that a single audit was needed for the testing period, the engagement letter was revised, and single audit procedures were completed. During the course of audit procedures for the Single Audit, it was discovered that the state of Montana considered Florence Crittenton to be a non-subrecipient for the stabilization grants under the Child Care and Development Block Grant.
Effect: Non-compliance with the Uniform Guidance regarding SEFA preparation.
Questioned Costs: There were no questioned costs identified.
Cause: Florence Crittenton was not aware that federal expenditures for the fiscal year July 1, 2022 to June 30, 2023 were over $750,000 until the auditor requested documentation that federal expenditures were under $750,000.
Recommendation: We recommend the organization review all contracts before the end of the fiscal year to ensure all funds received have the appropriate contracts from state and federal awarding entities, and that the organization begin SEFA preparation immediately following the end of the fiscal year to ensure it includes all federal funds expended and is completed prior to the start of audit procedures.
Organization Response: Based on the way that the State of Montana has historically written their grant contracts, it has been difficult to decipher if the organization is a subrecipient or a contractor of the state. This was especially true for any contracts funded through Covid-19 CARES and ARPA funds. Additionally, FCFS was unclear if seed funds from the Innovation grant were considered expended or not. This confusion led to a mistake on the initial SEFA worksheet that indicated federal funds fell below $750,000. Upon further examination by all parties, it was determined that FCFS had in fact expended over $750,000 in federal funds. FCFS immediately signed an engagement letter for Douglas Wilson to complete the SEFA and has since complied with all testing requirements. To ensure this mistake does not happen again, FCFS designed a corrective action plan that will include confirming subrecipient or contractor status with all contracting agencies. This has already been completed with current contracts for FY24. FCFS has subsequently established additional measures to ensure complete review of all contracts and quarterly reporting of all grant spending, regardless of if it is a federal, state, or private grant.
U.S. Department of Public Health
and Human Services
Child Care and Development Block Grant (CCDBG)
ALN: 93.575
Criteria: In the CCDBG Innovation grant contract it states: The Contractor [Florence Crittenton] may not seek compensation from monies payable through this contract for the cost of goods and services that may be or are reimbursed, in whole or in part, from other programs and sources.
Condition: The auditee reported the same payroll costs in this grant as well as in two stabilization grants.
Context: The stabilization grants outline that Florence Crittenton will maintain records and submit quarterly expense reports detailing how funds are allocated (used and/or spent). Employee bonuses were counted as eligible costs for reimbursement in the innovation CCDBG grant totaling $3,700. Additionally, the innovation grant allows for a 5 percent indirect cost counted against direct costs for the month. Therefore, another $185 was counted as eligible based on the bonus amount. One employee’s salaries were counted as eligible costs in the innovation grant, totaling $9,529. The bonus and salary costs were also included in the quarterly expense reports for the stabilization grants.
Effect: Non-compliance with the innovation Child Care and Development Block Grant contract.
Questioned Costs: No questioned costs were identified.
Cause: Florence Crittenton reported employee bonuses and a portion of employee salaries as eligible costs for two separate contracts.
Recommendation: We recommend the organization improve on tracking which federal program funds pay for costs of the organization, in order to prevent duplicate reporting from occurring in the future.
Organization Response: FCFS disagrees with the inclusion of this finding. In both the Condition and the Effect of this finding, the Stabilization block grant is referenced as support for the finding. However, per the auditor’s expertise, this grant should not be listed as federal funds and should not be used as supporting documentation for a finding on the SEFA. In addition, the Stabilization block grant required agencies to report all programmatic expenditures funded even though only a fraction of those expenditures were reimbursed. The Innovation grant that is noted in the Context of finding 2023-002, covers 25% of the CEC director’s salary, leaving 75% of her wage to be paid for by other means. Even if the Stabilization funds were included on the SEFA (which would not be the case due to FCFS being a contractor to the state on the grant), Stabilization funds could still cover up to 75% of the director’s salary and not be considered double reporting. The Stabilization grant was part of ARPA funding by the state to help organizations regain their footing post Covid. The regulations on expenditure were extremely vague and ill-defined, and reporting requirements were almost nonexistent until much later in the granting period. Only after two payments had been received did the reporting requirements come out. Reporting required FCFS to report all expenditures in the program during the previous grant periods.
Criteria: In accordance with the Uniform Guidance, 2 CFR 200.510(b), the auditee must prepare the schedule of expenditures of federal awards (SEFA) for the period covered by the auditee’s financial statements.
Condition: The auditee did not finalize the schedule of expenditures of federal awards prior to signing the engagement letter and the start of the audit procedures for the fiscal year July 1, 2022 to June 30, 2023. Additionally, the prepared SEFA included totals representing contractor payments to Florence Crittenton (FCFS), which overstated SEFA total expenditures by $173,389.
Context: Initially, the auditee stated that a single audit was not needed for fiscal year 2022-23, and that expenditures of federal awards was below $750,000. The audit engagement letter was prepared and signed, which excluded single audit language. During the course of the audit procedures, the SEFA was prepared by the auditee with the assistance of the auditor, and it was determined that the auditee incurred $816,420 in expenditures of federal awards in fiscal year covering July 1, 2022 to June 30, 2023. Upon the discovery that a single audit was needed for the testing period, the engagement letter was revised, and single audit procedures were completed. During the course of audit procedures for the Single Audit, it was discovered that the state of Montana considered Florence Crittenton to be a non-subrecipient for the stabilization grants under the Child Care and Development Block Grant.
Effect: Non-compliance with the Uniform Guidance regarding SEFA preparation.
Questioned Costs: There were no questioned costs identified.
Cause: Florence Crittenton was not aware that federal expenditures for the fiscal year July 1, 2022 to June 30, 2023 were over $750,000 until the auditor requested documentation that federal expenditures were under $750,000.
Recommendation: We recommend the organization review all contracts before the end of the fiscal year to ensure all funds received have the appropriate contracts from state and federal awarding entities, and that the organization begin SEFA preparation immediately following the end of the fiscal year to ensure it includes all federal funds expended and is completed prior to the start of audit procedures.
Organization Response: Based on the way that the State of Montana has historically written their grant contracts, it has been difficult to decipher if the organization is a subrecipient or a contractor of the state. This was especially true for any contracts funded through Covid-19 CARES and ARPA funds. Additionally, FCFS was unclear if seed funds from the Innovation grant were considered expended or not. This confusion led to a mistake on the initial SEFA worksheet that indicated federal funds fell below $750,000. Upon further examination by all parties, it was determined that FCFS had in fact expended over $750,000 in federal funds. FCFS immediately signed an engagement letter for Douglas Wilson to complete the SEFA and has since complied with all testing requirements. To ensure this mistake does not happen again, FCFS designed a corrective action plan that will include confirming subrecipient or contractor status with all contracting agencies. This has already been completed with current contracts for FY24. FCFS has subsequently established additional measures to ensure complete review of all contracts and quarterly reporting of all grant spending, regardless of if it is a federal, state, or private grant.