Audit 321792

Significant Deficiency in Internal Control and Compliance over Major Programs Funding Agency: Department of Defense ALN: 12.002 Criteria Internal controls and other compliance knowledge should provide adequate subrecipient monitoring under Federal awards. Per 2 CFR 200.332(d), pass-through entities should "monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved." This would include reviewing financial and performance reports required by the pass-through entity. Pass-through entities must also include certain language in their agreement with the subrecipient, including "that the subrecipient permit the pass-through entity and auditors to have access to the subrecipient's records and financial statements as necessary for the pass-through entity to meet the requirements of this part;" (2 CFR 200.332(a)(5)), and "Appropriate terms and conditions concerning closeout of the subaward" ((2 CFR 200.332(a)(6)). Condition The Organization provided funds to subrecipients under its direct award from the U.S. Department of Defense. Payments to subrecipients are made on a reimbursement basis, typically on a monthly basis. Context Our audit found the Organization did not include all required elements in the subaward agreements. Additionally, the Organization's internal controls over subrecipient monitoring were inadequate. We found that monitoring activities were inconsistent, and that the Organization was not retaining support of their review of program expenses being claimed by the subrecipient. Our review of the subaward noted that the subrecipients were required to provide invoices for all allowable reimbursable costs. Upon our review of the subrecipient reimbursement, we found that the subrecipients were not including all financial documentation to support their allowable cost reimbursement. The Organization was sporadically reviewing supporting financial documentation to ensure that the expenditures were allowable under the Federal award. The Organization's Apex program manager would meet monthly with subrecipients to discuss the award progress and goals but was sporadically reviewing financial records or reports prior to reimbursing the subrecipient. During our subrecipient monitoring testing, we found that two of the subaward agreements did not include language that would require the subrecipient to permit the pass-through entities and auditors to have access to the subrecipient's records and financial statements, and that there was no language discussing the closeout of the award. We also found that there was an insufficient level of monitoring being done for subrecipient reimbursements. Effect Unallowable activities or cost principles could be charged to the Department of Defense. Cause The error was caused by the Organization's negligence to review the subrecipient's financial records prior to making the reimbursement. Repeat Finding No. Auditor's Recommendation JSP recommends that the Organization includes all required elements in the subrecipient contracts. We also recommend that the Organization reviews subrecipient's financial records and documentation for program expenses, prior to reimbursing the subrecipient with federal funds.

Significant Deficiency in Internal Control and Compliance over Major Programs Funding Agency: Department of Defense ALN: 12.002 Criteria Internal controls and other compliance knowledge should provide adequate subrecipient monitoring under Federal awards. Per 2 CFR 200.332(d), pass-through entities should "monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved." This would include reviewing financial and performance reports required by the pass-through entity. Pass-through entities must also include certain language in their agreement with the subrecipient, including "that the subrecipient permit the pass-through entity and auditors to have access to the subrecipient's records and financial statements as necessary for the pass-through entity to meet the requirements of this part;" (2 CFR 200.332(a)(5)), and "Appropriate terms and conditions concerning closeout of the subaward" ((2 CFR 200.332(a)(6)). Condition The Organization provided funds to subrecipients under its direct award from the U.S. Department of Defense. Payments to subrecipients are made on a reimbursement basis, typically on a monthly basis. Context Our audit found the Organization did not include all required elements in the subaward agreements. Additionally, the Organization's internal controls over subrecipient monitoring were inadequate. We found that monitoring activities were inconsistent, and that the Organization was not retaining support of their review of program expenses being claimed by the subrecipient. Our review of the subaward noted that the subrecipients were required to provide invoices for all allowable reimbursable costs. Upon our review of the subrecipient reimbursement, we found that the subrecipients were not including all financial documentation to support their allowable cost reimbursement. The Organization was sporadically reviewing supporting financial documentation to ensure that the expenditures were allowable under the Federal award. The Organization's Apex program manager would meet monthly with subrecipients to discuss the award progress and goals but was sporadically reviewing financial records or reports prior to reimbursing the subrecipient. During our subrecipient monitoring testing, we found that two of the subaward agreements did not include language that would require the subrecipient to permit the pass-through entities and auditors to have access to the subrecipient's records and financial statements, and that there was no language discussing the closeout of the award. We also found that there was an insufficient level of monitoring being done for subrecipient reimbursements. Effect Unallowable activities or cost principles could be charged to the Department of Defense. Cause The error was caused by the Organization's negligence to review the subrecipient's financial records prior to making the reimbursement. Repeat Finding No. Auditor's Recommendation JSP recommends that the Organization includes all required elements in the subrecipient contracts. We also recommend that the Organization reviews subrecipient's financial records and documentation for program expenses, prior to reimbursing the subrecipient with federal funds.

Significant Deficiency in Internal Control and Compliance over Major Programs Funding Agency: Department of Treasury ALN: 21.027 Criteria Internal controls and other compliance knowledge should prevent the incorrect coding of employee hours worked. Per 2 CFR 200.430(i)(1), "charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed." Condition Internal controls and adherence to compliance were not followed with regards to an appropriate level of approval of management that is charged to the Coronavirus State and Local Recovery Funds program. Questioned costs Total questioned cost of $7,475 based on six payroll transactions tested that were not approved at the appropriate level but were charged to the Coronavirus State and Loval Recovery Fund grant (ALN 21.027). Context During our payroll testing, of the six executive director timesheets tested, none of them indicated a secondary control offsetting the program manager. Effect The Coronavirus State and Local Recovery Funds program and other federal programs could be incorrectly charged. Cause The error was caused by not applying an adequate number of controls necessary for the executive director's timesheet. Repeat Finding Yes Auditor's Recommendation JSP recommends that the program manager and a member of the finance committee knowledge about 2 CFR 200.430(i)(1) review the executive director costs charged to the Coronavirus State and Local Recovery Funds program.

Significant Deficiency in Internal Control and Compliance over Major Programs Funding Agency: Department of Defense ALN: 12.002 Criteria Internal controls and other compliance knowledge should provide adequate subrecipient monitoring under Federal awards. Per 2 CFR 200.332(d), pass-through entities should "monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved." This would include reviewing financial and performance reports required by the pass-through entity. Pass-through entities must also include certain language in their agreement with the subrecipient, including "that the subrecipient permit the pass-through entity and auditors to have access to the subrecipient's records and financial statements as necessary for the pass-through entity to meet the requirements of this part;" (2 CFR 200.332(a)(5)), and "Appropriate terms and conditions concerning closeout of the subaward" ((2 CFR 200.332(a)(6)). Condition The Organization provided funds to subrecipients under its direct award from the U.S. Department of Defense. Payments to subrecipients are made on a reimbursement basis, typically on a monthly basis. Context Our audit found the Organization did not include all required elements in the subaward agreements. Additionally, the Organization's internal controls over subrecipient monitoring were inadequate. We found that monitoring activities were inconsistent, and that the Organization was not retaining support of their review of program expenses being claimed by the subrecipient. Our review of the subaward noted that the subrecipients were required to provide invoices for all allowable reimbursable costs. Upon our review of the subrecipient reimbursement, we found that the subrecipients were not including all financial documentation to support their allowable cost reimbursement. The Organization was sporadically reviewing supporting financial documentation to ensure that the expenditures were allowable under the Federal award. The Organization's Apex program manager would meet monthly with subrecipients to discuss the award progress and goals but was sporadically reviewing financial records or reports prior to reimbursing the subrecipient. During our subrecipient monitoring testing, we found that two of the subaward agreements did not include language that would require the subrecipient to permit the pass-through entities and auditors to have access to the subrecipient's records and financial statements, and that there was no language discussing the closeout of the award. We also found that there was an insufficient level of monitoring being done for subrecipient reimbursements. Effect Unallowable activities or cost principles could be charged to the Department of Defense. Cause The error was caused by the Organization's negligence to review the subrecipient's financial records prior to making the reimbursement. Repeat Finding No. Auditor's Recommendation JSP recommends that the Organization includes all required elements in the subrecipient contracts. We also recommend that the Organization reviews subrecipient's financial records and documentation for program expenses, prior to reimbursing the subrecipient with federal funds.

Significant Deficiency in Internal Control and Compliance over Major Programs Funding Agency: Department of Defense ALN: 12.002 Criteria Internal controls and other compliance knowledge should provide adequate subrecipient monitoring under Federal awards. Per 2 CFR 200.332(d), pass-through entities should "monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved." This would include reviewing financial and performance reports required by the pass-through entity. Pass-through entities must also include certain language in their agreement with the subrecipient, including "that the subrecipient permit the pass-through entity and auditors to have access to the subrecipient's records and financial statements as necessary for the pass-through entity to meet the requirements of this part;" (2 CFR 200.332(a)(5)), and "Appropriate terms and conditions concerning closeout of the subaward" ((2 CFR 200.332(a)(6)). Condition The Organization provided funds to subrecipients under its direct award from the U.S. Department of Defense. Payments to subrecipients are made on a reimbursement basis, typically on a monthly basis. Context Our audit found the Organization did not include all required elements in the subaward agreements. Additionally, the Organization's internal controls over subrecipient monitoring were inadequate. We found that monitoring activities were inconsistent, and that the Organization was not retaining support of their review of program expenses being claimed by the subrecipient. Our review of the subaward noted that the subrecipients were required to provide invoices for all allowable reimbursable costs. Upon our review of the subrecipient reimbursement, we found that the subrecipients were not including all financial documentation to support their allowable cost reimbursement. The Organization was sporadically reviewing supporting financial documentation to ensure that the expenditures were allowable under the Federal award. The Organization's Apex program manager would meet monthly with subrecipients to discuss the award progress and goals but was sporadically reviewing financial records or reports prior to reimbursing the subrecipient. During our subrecipient monitoring testing, we found that two of the subaward agreements did not include language that would require the subrecipient to permit the pass-through entities and auditors to have access to the subrecipient's records and financial statements, and that there was no language discussing the closeout of the award. We also found that there was an insufficient level of monitoring being done for subrecipient reimbursements. Effect Unallowable activities or cost principles could be charged to the Department of Defense. Cause The error was caused by the Organization's negligence to review the subrecipient's financial records prior to making the reimbursement. Repeat Finding No. Auditor's Recommendation JSP recommends that the Organization includes all required elements in the subrecipient contracts. We also recommend that the Organization reviews subrecipient's financial records and documentation for program expenses, prior to reimbursing the subrecipient with federal funds.

Significant Deficiency in Internal Control and Compliance over Major Programs Funding Agency: Department of Treasury ALN: 21.027 Criteria Internal controls and other compliance knowledge should prevent the incorrect coding of employee hours worked. Per 2 CFR 200.430(i)(1), "charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed." Condition Internal controls and adherence to compliance were not followed with regards to an appropriate level of approval of management that is charged to the Coronavirus State and Local Recovery Funds program. Questioned costs Total questioned cost of $7,475 based on six payroll transactions tested that were not approved at the appropriate level but were charged to the Coronavirus State and Loval Recovery Fund grant (ALN 21.027). Context During our payroll testing, of the six executive director timesheets tested, none of them indicated a secondary control offsetting the program manager. Effect The Coronavirus State and Local Recovery Funds program and other federal programs could be incorrectly charged. Cause The error was caused by not applying an adequate number of controls necessary for the executive director's timesheet. Repeat Finding Yes Auditor's Recommendation JSP recommends that the program manager and a member of the finance committee knowledge about 2 CFR 200.430(i)(1) review the executive director costs charged to the Coronavirus State and Local Recovery Funds program.