Audit 317362

Finding 2023-001 – Unallowable Expenditures Federal Programs: U.S. Department of Education • ALN 84.425U - COVID-19 - Education Stabilization Fund (ESF) Criteria: Section 18003(d) of the CARES Act, section 313(3) of the CRRSA Act and section 2001 (e) of the ARP act provide guidance on allowable uses of ESF funds. Condition: During the audit of allowable costs related to the ESF program, it was noted that management improperly assessed the allowability of three expenditures that occurred during 2023. These expenditures were deemed to be unallowable due to the fact that the billed services were not actually delivered to the Organization. Context: During our testing of allowable costs related to the ESF program, we selected a sample of 60 expenditures in which three expenditures were noted to be unallowable per the grant guidance. We further evaluated the remaining population, along with the results of an investigation performed by an external consultant at management’s request, which identified the total of unallowable expenditures incurred between July 1, 2022 and June 30, 2023 to be $210,000. Effect: The improper assessment of unallowable expenditures lead to an improper recording and claiming of federal funding. Cause: The above condition appears to be a result of a lack of internal controls surrounding the assessment of vendors and ensuring that services identified on invoices were being provided and received. Questioned Cost: $210,000 - ALN 84.425U Repeat Finding: Yes Recommendation: We recommend that management modify their internal control procedures surrounding the process of selecting and adding new vendors, as well as the processing of invoices for payment. Steps should be in place to verify that the services included on invoices were actually received by the Organization. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.

Finding 2023-001 – Unallowable Expenditures Federal Programs: U.S. Department of Education • ALN 84.425U - COVID-19 - Education Stabilization Fund (ESF) Criteria: Section 18003(d) of the CARES Act, section 313(3) of the CRRSA Act and section 2001 (e) of the ARP act provide guidance on allowable uses of ESF funds. Condition: During the audit of allowable costs related to the ESF program, it was noted that management improperly assessed the allowability of three expenditures that occurred during 2023. These expenditures were deemed to be unallowable due to the fact that the billed services were not actually delivered to the Organization. Context: During our testing of allowable costs related to the ESF program, we selected a sample of 60 expenditures in which three expenditures were noted to be unallowable per the grant guidance. We further evaluated the remaining population, along with the results of an investigation performed by an external consultant at management’s request, which identified the total of unallowable expenditures incurred between July 1, 2022 and June 30, 2023 to be $210,000. Effect: The improper assessment of unallowable expenditures lead to an improper recording and claiming of federal funding. Cause: The above condition appears to be a result of a lack of internal controls surrounding the assessment of vendors and ensuring that services identified on invoices were being provided and received. Questioned Cost: $210,000 - ALN 84.425U Repeat Finding: Yes Recommendation: We recommend that management modify their internal control procedures surrounding the process of selecting and adding new vendors, as well as the processing of invoices for payment. Steps should be in place to verify that the services included on invoices were actually received by the Organization. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.