U.S. Department of State
Professional & Cultural Exchange Programs
Assistance Listing #19.415
Finding 2023-001 (repeat finding 2022-03)
Material Weakness, Material Noncompliance – Reporting
Criteria: The A-102 Common Rule requires that non-Federal entities receiving Federal awards establish and maintain internal control designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Adequate segregation of duties provided between performance, review, and recordkeeping of a task is a control activity which will reasonably ensure compliance with Federal laws, regulations, and program requirements.
Also, 2 CFR 200.302 requires that non-federal entities must provide for the accurate, current, and complete disclosure of financial results for each Federal award or program in accordance with the reporting requirements set forth in 2 CFR section 200.328. Due dates for reporting are also explicitly noted in the grant award documents. Federal Financial Reports require the entity to report federal expenditures, cash draws, and recipients share of program costs.
Condition: Internal control over federal financial reports could not be readily substantiated. Federal financial reports were not submitted timely and activity reported was not representative of actual federal expenditures for the period.
Questioned Costs: None noted as amounts appear to be under reported.
Context: The Flex award federal financial report was due October 31, 2023. Submission date of the Flex award federal financial report was January 17, 2024. Expense amount and cost share amount reported was not supported by underlying accounting records. The Yes award federal financial report was due October 31, 2023. Submission of the Yes award federal financial report was January 17, 2024. Expense amount and cost share amount reported was not supported by underlying accounting records.
Effect: By not submitting reports timely, the Organization is not in compliance with reporting requirements and may risk losing funding. By reporting inaccurate federal expense and cost share amounts, the Organization may not be able to readily prevent, detect, and correct potential errors in reporting. Therefore, the Organization may be incorrectly reimbursed for expenditures under the program requirements.
Cause: Current processes do not include a consistent method of preparing and submitting federal financial reports to ensure compliance with reporting requirements.
Recommendation: The Organization should improve written policies & procedures to ensure that reports are submitted timely, ensure reports contain accurate and complete financial information related to the reporting period, and to ensure compliance with reporting requirements. Management’s Response: Management considers this finding resolved as of August 2024. In September of 2023, the prior finance manager at Greenheart left the company abruptly without notice. At the time, there were no other staff who were exposed to the grants or could complete the FFR report. Subsequently, Greenheart hired Athena Admin services to manage their finance function. The FFR reports were not filed until January 17, 2024, as Athena Admin needed time to unwind what was happening within the finance department and with the grants. Additionally, the remaining team did not have access to the portal where the filing would take place and had to take administrative steps to gain access to the portal.
In 2023, as was done in prior years, there was not a multi-level approval for filing Federal Financial Reports. After the September 2023 staffing changes, the Finance Director and the Accounting Manager reviewed the FFR reports prior to filing. The Finance Director provided verbal approval to file. For all reports going forward, Greenheart will document approval of filing via email exchanges from the Accounting Manager to the Director of Finance
U.S. Department of State
Professional & Cultural Exchange Programs
Assistance Listing #19.415
Finding 2023-002
Significant Deficiency – Cash Management
Criteria: The A-102 Common Rule requires that non-Federal entities receiving Federal awards establish and maintain internal control designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Adequate segregation of duties provided between performance, review, and recordkeeping of a task is a control activity which will reasonably ensure compliance with Federal laws, regulations, and program requirements.
Condition: Internal control over reimbursement requests could not be readily substantiated.
Questioned Costs: None noted.
Context: Documentation of preparer and reviewer of reimbursement requests could not be substantiated.
Effect: By not maintaining adequate and consistent documentation of review, the Organization may not be able to readily prevent, detect, and correct potential errors in cash management requirements. Therefore, the Organization may be incorrectly reimbursed for expenditures under the program requirements.
Cause: Current processes do not include a consistent method of performing, documenting, and maintaining adequate documentation of the preparation and review of reimbursement requests.
Recommendation: The Organization should improve procedures to consistently prepare, perform, and document review of reimbursement requests.
Management’s Response: Management considers this finding resolved as of August 2024. In 2023, as was done in prior years, there was not a multi-level approval for submitting drawdown requests. Greenheart has now changed this process to have the Accounting Manager send a request to drawdown to the Director of Finance and Grants director. The Director of Finance ultimately approves the drawdown, and the email exchange is saved for documentation.
U.S. Department of State
Professional & Cultural Exchange Programs
Assistance Listing #19.415
Finding 2023-003
Material Weakness, Material Noncompliance – Allowable Costs/Activities
Criteria: The A-102 Common Rule requires that non-Federal entities receiving Federal awards establish and maintain internal control designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Adequate segregation of duties provided between performance, review, and recordkeeping of a task is a control activity which will reasonably ensure compliance with Federal laws, regulations, and program requirements. 2 CFR 200.302 requires that non-federal entities must maintain records that identify adequately the source and application of funds for federally funded activities and be supported by source documentation.
Condition: Internal control could not be readily substantiated for the allocation percentages applied to personnel expenses. Source documentation could not be readily substantiated for personnel expenses charged to the program and time actually worked.
Questioned Costs: Personnel expenses charged to the FLEX and YES awards were approximately $464,332 and $318,813 respectively, for a total of approximately $783,145.
Context: Review of personnel expenses and the allocation percentages applied could not be readily substantiated.
Effect: By not maintaining adequate and consistent documentation of review and source documentation, the Organization may not be able to readily prevent, detect, and correct potential errors in allowable costs/activities. Therefore, the Organization may be incorrectly reimbursed for expenditures under the program requirements.
Cause: Current processes do not include maintaining adequate review and source documentation to support personnel.
Recommendation: The Organization should improve policies & procedures to ensure that personnel expenses are adequately supported by source documentation and documentation is readily available.
Management’s Response: Management considers this resolved as of August 2024. Greenheart is in the process of establishing a timecard system for all staff who work on grants and have their time allocated to a grant. Investing in hour tracking within the payroll system will ensure that personnel allocations are accurate and approved by management. In the meantime, in early 2024, the Grants Director worked directly with payroll and department leaders to review and update the list of personnel who are working on the grant. This was a documented process.
U.S. Department of State
Professional & Cultural Exchange Programs
Assistance Listing #19.415
Finding 2023-004
Material Weakness, Material Non-compliance – Matching
Criteria: 2 CFR 200.306 requires cost sharing to be verifiable from a non-federal entity's records.
Condition: Cost sharing amounts were not readily verifiable.
Questioned Costs: Approximately $69,000 in adjustments were made in 2023 to recapture cost share amounts that occurred in a previous period(s).
Context: Adjustments were made to capture cost share expenses for both current and prior periods, which were not previously tracked, which led to expense accounts in the current year with a credit balance, indicating cost share amounts could not be readily substantiated by underlying source documentation.
Effect: By not maintaining adequate and consistent documentation for cost share amounts, the Organization may not be able to readily prevent, detect, and correct potential errors in matching. The Organization must maintain written records to support all allowable costs which are claimed as being its contribution. Such records are subject to audit. In the event the Organization does not provide the minimum amount of cost sharing as stipulated in the Organization’s approved budget, the Department of State’s contribution may be reduced in kind.
Cause: Current processes do not include maintaining adequate documentation to track and record cost share amounts.
Recommendation: The Organization should improve policies & procedures to document how cost share amounts are tracked in the accounting system to ensure amounts are verifiable.
Management’s Response: Management considers this resolved as of August 2024. For 2023 and prior, there were no cost sharing amounts booked to the General Ledger. When applicable, cost share was calculated prior to a drawdown by reducing a drawdown request by any necessary cost share commitment. For 2023, Greenheart made several one-time adjustments to move costs to a new cost share account in the general ledger. This way, Greenheart can track total cost share.
As previously stated, Greenheart did not previously allocate cost sharing items to a cost sharing account in the General Ledger. In 2024, a new template was created for grant expense submissions which identifies Cost Share coding from the time that a payment request is made. The grants team is responsible for completing this file and identifying how much of any expense incurred should be considered cost share. This approach allows for supporting documentation to be available for all cost share items and eliminates the need for adjusting journal entries to break out cost share.
U.S. Department of State
Professional & Cultural Exchange Programs
Assistance Listing #19.415
Finding 2023-001 (repeat finding 2022-03)
Material Weakness, Material Noncompliance – Reporting
Criteria: The A-102 Common Rule requires that non-Federal entities receiving Federal awards establish and maintain internal control designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Adequate segregation of duties provided between performance, review, and recordkeeping of a task is a control activity which will reasonably ensure compliance with Federal laws, regulations, and program requirements.
Also, 2 CFR 200.302 requires that non-federal entities must provide for the accurate, current, and complete disclosure of financial results for each Federal award or program in accordance with the reporting requirements set forth in 2 CFR section 200.328. Due dates for reporting are also explicitly noted in the grant award documents. Federal Financial Reports require the entity to report federal expenditures, cash draws, and recipients share of program costs.
Condition: Internal control over federal financial reports could not be readily substantiated. Federal financial reports were not submitted timely and activity reported was not representative of actual federal expenditures for the period.
Questioned Costs: None noted as amounts appear to be under reported.
Context: The Flex award federal financial report was due October 31, 2023. Submission date of the Flex award federal financial report was January 17, 2024. Expense amount and cost share amount reported was not supported by underlying accounting records. The Yes award federal financial report was due October 31, 2023. Submission of the Yes award federal financial report was January 17, 2024. Expense amount and cost share amount reported was not supported by underlying accounting records.
Effect: By not submitting reports timely, the Organization is not in compliance with reporting requirements and may risk losing funding. By reporting inaccurate federal expense and cost share amounts, the Organization may not be able to readily prevent, detect, and correct potential errors in reporting. Therefore, the Organization may be incorrectly reimbursed for expenditures under the program requirements.
Cause: Current processes do not include a consistent method of preparing and submitting federal financial reports to ensure compliance with reporting requirements.
Recommendation: The Organization should improve written policies & procedures to ensure that reports are submitted timely, ensure reports contain accurate and complete financial information related to the reporting period, and to ensure compliance with reporting requirements. Management’s Response: Management considers this finding resolved as of August 2024. In September of 2023, the prior finance manager at Greenheart left the company abruptly without notice. At the time, there were no other staff who were exposed to the grants or could complete the FFR report. Subsequently, Greenheart hired Athena Admin services to manage their finance function. The FFR reports were not filed until January 17, 2024, as Athena Admin needed time to unwind what was happening within the finance department and with the grants. Additionally, the remaining team did not have access to the portal where the filing would take place and had to take administrative steps to gain access to the portal.
In 2023, as was done in prior years, there was not a multi-level approval for filing Federal Financial Reports. After the September 2023 staffing changes, the Finance Director and the Accounting Manager reviewed the FFR reports prior to filing. The Finance Director provided verbal approval to file. For all reports going forward, Greenheart will document approval of filing via email exchanges from the Accounting Manager to the Director of Finance
U.S. Department of State
Professional & Cultural Exchange Programs
Assistance Listing #19.415
Finding 2023-002
Significant Deficiency – Cash Management
Criteria: The A-102 Common Rule requires that non-Federal entities receiving Federal awards establish and maintain internal control designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Adequate segregation of duties provided between performance, review, and recordkeeping of a task is a control activity which will reasonably ensure compliance with Federal laws, regulations, and program requirements.
Condition: Internal control over reimbursement requests could not be readily substantiated.
Questioned Costs: None noted.
Context: Documentation of preparer and reviewer of reimbursement requests could not be substantiated.
Effect: By not maintaining adequate and consistent documentation of review, the Organization may not be able to readily prevent, detect, and correct potential errors in cash management requirements. Therefore, the Organization may be incorrectly reimbursed for expenditures under the program requirements.
Cause: Current processes do not include a consistent method of performing, documenting, and maintaining adequate documentation of the preparation and review of reimbursement requests.
Recommendation: The Organization should improve procedures to consistently prepare, perform, and document review of reimbursement requests.
Management’s Response: Management considers this finding resolved as of August 2024. In 2023, as was done in prior years, there was not a multi-level approval for submitting drawdown requests. Greenheart has now changed this process to have the Accounting Manager send a request to drawdown to the Director of Finance and Grants director. The Director of Finance ultimately approves the drawdown, and the email exchange is saved for documentation.
U.S. Department of State
Professional & Cultural Exchange Programs
Assistance Listing #19.415
Finding 2023-003
Material Weakness, Material Noncompliance – Allowable Costs/Activities
Criteria: The A-102 Common Rule requires that non-Federal entities receiving Federal awards establish and maintain internal control designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Adequate segregation of duties provided between performance, review, and recordkeeping of a task is a control activity which will reasonably ensure compliance with Federal laws, regulations, and program requirements. 2 CFR 200.302 requires that non-federal entities must maintain records that identify adequately the source and application of funds for federally funded activities and be supported by source documentation.
Condition: Internal control could not be readily substantiated for the allocation percentages applied to personnel expenses. Source documentation could not be readily substantiated for personnel expenses charged to the program and time actually worked.
Questioned Costs: Personnel expenses charged to the FLEX and YES awards were approximately $464,332 and $318,813 respectively, for a total of approximately $783,145.
Context: Review of personnel expenses and the allocation percentages applied could not be readily substantiated.
Effect: By not maintaining adequate and consistent documentation of review and source documentation, the Organization may not be able to readily prevent, detect, and correct potential errors in allowable costs/activities. Therefore, the Organization may be incorrectly reimbursed for expenditures under the program requirements.
Cause: Current processes do not include maintaining adequate review and source documentation to support personnel.
Recommendation: The Organization should improve policies & procedures to ensure that personnel expenses are adequately supported by source documentation and documentation is readily available.
Management’s Response: Management considers this resolved as of August 2024. Greenheart is in the process of establishing a timecard system for all staff who work on grants and have their time allocated to a grant. Investing in hour tracking within the payroll system will ensure that personnel allocations are accurate and approved by management. In the meantime, in early 2024, the Grants Director worked directly with payroll and department leaders to review and update the list of personnel who are working on the grant. This was a documented process.
U.S. Department of State
Professional & Cultural Exchange Programs
Assistance Listing #19.415
Finding 2023-004
Material Weakness, Material Non-compliance – Matching
Criteria: 2 CFR 200.306 requires cost sharing to be verifiable from a non-federal entity's records.
Condition: Cost sharing amounts were not readily verifiable.
Questioned Costs: Approximately $69,000 in adjustments were made in 2023 to recapture cost share amounts that occurred in a previous period(s).
Context: Adjustments were made to capture cost share expenses for both current and prior periods, which were not previously tracked, which led to expense accounts in the current year with a credit balance, indicating cost share amounts could not be readily substantiated by underlying source documentation.
Effect: By not maintaining adequate and consistent documentation for cost share amounts, the Organization may not be able to readily prevent, detect, and correct potential errors in matching. The Organization must maintain written records to support all allowable costs which are claimed as being its contribution. Such records are subject to audit. In the event the Organization does not provide the minimum amount of cost sharing as stipulated in the Organization’s approved budget, the Department of State’s contribution may be reduced in kind.
Cause: Current processes do not include maintaining adequate documentation to track and record cost share amounts.
Recommendation: The Organization should improve policies & procedures to document how cost share amounts are tracked in the accounting system to ensure amounts are verifiable.
Management’s Response: Management considers this resolved as of August 2024. For 2023 and prior, there were no cost sharing amounts booked to the General Ledger. When applicable, cost share was calculated prior to a drawdown by reducing a drawdown request by any necessary cost share commitment. For 2023, Greenheart made several one-time adjustments to move costs to a new cost share account in the general ledger. This way, Greenheart can track total cost share.
As previously stated, Greenheart did not previously allocate cost sharing items to a cost sharing account in the General Ledger. In 2024, a new template was created for grant expense submissions which identifies Cost Share coding from the time that a payment request is made. The grants team is responsible for completing this file and identifying how much of any expense incurred should be considered cost share. This approach allows for supporting documentation to be available for all cost share items and eliminates the need for adjusting journal entries to break out cost share.
U.S. Department of State
Professional & Cultural Exchange Programs
Assistance Listing #19.415
Finding 2023-001 (repeat finding 2022-03)
Material Weakness, Material Noncompliance – Reporting
Criteria: The A-102 Common Rule requires that non-Federal entities receiving Federal awards establish and maintain internal control designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Adequate segregation of duties provided between performance, review, and recordkeeping of a task is a control activity which will reasonably ensure compliance with Federal laws, regulations, and program requirements.
Also, 2 CFR 200.302 requires that non-federal entities must provide for the accurate, current, and complete disclosure of financial results for each Federal award or program in accordance with the reporting requirements set forth in 2 CFR section 200.328. Due dates for reporting are also explicitly noted in the grant award documents. Federal Financial Reports require the entity to report federal expenditures, cash draws, and recipients share of program costs.
Condition: Internal control over federal financial reports could not be readily substantiated. Federal financial reports were not submitted timely and activity reported was not representative of actual federal expenditures for the period.
Questioned Costs: None noted as amounts appear to be under reported.
Context: The Flex award federal financial report was due October 31, 2023. Submission date of the Flex award federal financial report was January 17, 2024. Expense amount and cost share amount reported was not supported by underlying accounting records. The Yes award federal financial report was due October 31, 2023. Submission of the Yes award federal financial report was January 17, 2024. Expense amount and cost share amount reported was not supported by underlying accounting records.
Effect: By not submitting reports timely, the Organization is not in compliance with reporting requirements and may risk losing funding. By reporting inaccurate federal expense and cost share amounts, the Organization may not be able to readily prevent, detect, and correct potential errors in reporting. Therefore, the Organization may be incorrectly reimbursed for expenditures under the program requirements.
Cause: Current processes do not include a consistent method of preparing and submitting federal financial reports to ensure compliance with reporting requirements.
Recommendation: The Organization should improve written policies & procedures to ensure that reports are submitted timely, ensure reports contain accurate and complete financial information related to the reporting period, and to ensure compliance with reporting requirements. Management’s Response: Management considers this finding resolved as of August 2024. In September of 2023, the prior finance manager at Greenheart left the company abruptly without notice. At the time, there were no other staff who were exposed to the grants or could complete the FFR report. Subsequently, Greenheart hired Athena Admin services to manage their finance function. The FFR reports were not filed until January 17, 2024, as Athena Admin needed time to unwind what was happening within the finance department and with the grants. Additionally, the remaining team did not have access to the portal where the filing would take place and had to take administrative steps to gain access to the portal.
In 2023, as was done in prior years, there was not a multi-level approval for filing Federal Financial Reports. After the September 2023 staffing changes, the Finance Director and the Accounting Manager reviewed the FFR reports prior to filing. The Finance Director provided verbal approval to file. For all reports going forward, Greenheart will document approval of filing via email exchanges from the Accounting Manager to the Director of Finance
U.S. Department of State
Professional & Cultural Exchange Programs
Assistance Listing #19.415
Finding 2023-002
Significant Deficiency – Cash Management
Criteria: The A-102 Common Rule requires that non-Federal entities receiving Federal awards establish and maintain internal control designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Adequate segregation of duties provided between performance, review, and recordkeeping of a task is a control activity which will reasonably ensure compliance with Federal laws, regulations, and program requirements.
Condition: Internal control over reimbursement requests could not be readily substantiated.
Questioned Costs: None noted.
Context: Documentation of preparer and reviewer of reimbursement requests could not be substantiated.
Effect: By not maintaining adequate and consistent documentation of review, the Organization may not be able to readily prevent, detect, and correct potential errors in cash management requirements. Therefore, the Organization may be incorrectly reimbursed for expenditures under the program requirements.
Cause: Current processes do not include a consistent method of performing, documenting, and maintaining adequate documentation of the preparation and review of reimbursement requests.
Recommendation: The Organization should improve procedures to consistently prepare, perform, and document review of reimbursement requests.
Management’s Response: Management considers this finding resolved as of August 2024. In 2023, as was done in prior years, there was not a multi-level approval for submitting drawdown requests. Greenheart has now changed this process to have the Accounting Manager send a request to drawdown to the Director of Finance and Grants director. The Director of Finance ultimately approves the drawdown, and the email exchange is saved for documentation.
U.S. Department of State
Professional & Cultural Exchange Programs
Assistance Listing #19.415
Finding 2023-003
Material Weakness, Material Noncompliance – Allowable Costs/Activities
Criteria: The A-102 Common Rule requires that non-Federal entities receiving Federal awards establish and maintain internal control designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Adequate segregation of duties provided between performance, review, and recordkeeping of a task is a control activity which will reasonably ensure compliance with Federal laws, regulations, and program requirements. 2 CFR 200.302 requires that non-federal entities must maintain records that identify adequately the source and application of funds for federally funded activities and be supported by source documentation.
Condition: Internal control could not be readily substantiated for the allocation percentages applied to personnel expenses. Source documentation could not be readily substantiated for personnel expenses charged to the program and time actually worked.
Questioned Costs: Personnel expenses charged to the FLEX and YES awards were approximately $464,332 and $318,813 respectively, for a total of approximately $783,145.
Context: Review of personnel expenses and the allocation percentages applied could not be readily substantiated.
Effect: By not maintaining adequate and consistent documentation of review and source documentation, the Organization may not be able to readily prevent, detect, and correct potential errors in allowable costs/activities. Therefore, the Organization may be incorrectly reimbursed for expenditures under the program requirements.
Cause: Current processes do not include maintaining adequate review and source documentation to support personnel.
Recommendation: The Organization should improve policies & procedures to ensure that personnel expenses are adequately supported by source documentation and documentation is readily available.
Management’s Response: Management considers this resolved as of August 2024. Greenheart is in the process of establishing a timecard system for all staff who work on grants and have their time allocated to a grant. Investing in hour tracking within the payroll system will ensure that personnel allocations are accurate and approved by management. In the meantime, in early 2024, the Grants Director worked directly with payroll and department leaders to review and update the list of personnel who are working on the grant. This was a documented process.
U.S. Department of State
Professional & Cultural Exchange Programs
Assistance Listing #19.415
Finding 2023-004
Material Weakness, Material Non-compliance – Matching
Criteria: 2 CFR 200.306 requires cost sharing to be verifiable from a non-federal entity's records.
Condition: Cost sharing amounts were not readily verifiable.
Questioned Costs: Approximately $69,000 in adjustments were made in 2023 to recapture cost share amounts that occurred in a previous period(s).
Context: Adjustments were made to capture cost share expenses for both current and prior periods, which were not previously tracked, which led to expense accounts in the current year with a credit balance, indicating cost share amounts could not be readily substantiated by underlying source documentation.
Effect: By not maintaining adequate and consistent documentation for cost share amounts, the Organization may not be able to readily prevent, detect, and correct potential errors in matching. The Organization must maintain written records to support all allowable costs which are claimed as being its contribution. Such records are subject to audit. In the event the Organization does not provide the minimum amount of cost sharing as stipulated in the Organization’s approved budget, the Department of State’s contribution may be reduced in kind.
Cause: Current processes do not include maintaining adequate documentation to track and record cost share amounts.
Recommendation: The Organization should improve policies & procedures to document how cost share amounts are tracked in the accounting system to ensure amounts are verifiable.
Management’s Response: Management considers this resolved as of August 2024. For 2023 and prior, there were no cost sharing amounts booked to the General Ledger. When applicable, cost share was calculated prior to a drawdown by reducing a drawdown request by any necessary cost share commitment. For 2023, Greenheart made several one-time adjustments to move costs to a new cost share account in the general ledger. This way, Greenheart can track total cost share.
As previously stated, Greenheart did not previously allocate cost sharing items to a cost sharing account in the General Ledger. In 2024, a new template was created for grant expense submissions which identifies Cost Share coding from the time that a payment request is made. The grants team is responsible for completing this file and identifying how much of any expense incurred should be considered cost share. This approach allows for supporting documentation to be available for all cost share items and eliminates the need for adjusting journal entries to break out cost share.
U.S. Department of State
Professional & Cultural Exchange Programs
Assistance Listing #19.415
Finding 2023-001 (repeat finding 2022-03)
Material Weakness, Material Noncompliance – Reporting
Criteria: The A-102 Common Rule requires that non-Federal entities receiving Federal awards establish and maintain internal control designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Adequate segregation of duties provided between performance, review, and recordkeeping of a task is a control activity which will reasonably ensure compliance with Federal laws, regulations, and program requirements.
Also, 2 CFR 200.302 requires that non-federal entities must provide for the accurate, current, and complete disclosure of financial results for each Federal award or program in accordance with the reporting requirements set forth in 2 CFR section 200.328. Due dates for reporting are also explicitly noted in the grant award documents. Federal Financial Reports require the entity to report federal expenditures, cash draws, and recipients share of program costs.
Condition: Internal control over federal financial reports could not be readily substantiated. Federal financial reports were not submitted timely and activity reported was not representative of actual federal expenditures for the period.
Questioned Costs: None noted as amounts appear to be under reported.
Context: The Flex award federal financial report was due October 31, 2023. Submission date of the Flex award federal financial report was January 17, 2024. Expense amount and cost share amount reported was not supported by underlying accounting records. The Yes award federal financial report was due October 31, 2023. Submission of the Yes award federal financial report was January 17, 2024. Expense amount and cost share amount reported was not supported by underlying accounting records.
Effect: By not submitting reports timely, the Organization is not in compliance with reporting requirements and may risk losing funding. By reporting inaccurate federal expense and cost share amounts, the Organization may not be able to readily prevent, detect, and correct potential errors in reporting. Therefore, the Organization may be incorrectly reimbursed for expenditures under the program requirements.
Cause: Current processes do not include a consistent method of preparing and submitting federal financial reports to ensure compliance with reporting requirements.
Recommendation: The Organization should improve written policies & procedures to ensure that reports are submitted timely, ensure reports contain accurate and complete financial information related to the reporting period, and to ensure compliance with reporting requirements. Management’s Response: Management considers this finding resolved as of August 2024. In September of 2023, the prior finance manager at Greenheart left the company abruptly without notice. At the time, there were no other staff who were exposed to the grants or could complete the FFR report. Subsequently, Greenheart hired Athena Admin services to manage their finance function. The FFR reports were not filed until January 17, 2024, as Athena Admin needed time to unwind what was happening within the finance department and with the grants. Additionally, the remaining team did not have access to the portal where the filing would take place and had to take administrative steps to gain access to the portal.
In 2023, as was done in prior years, there was not a multi-level approval for filing Federal Financial Reports. After the September 2023 staffing changes, the Finance Director and the Accounting Manager reviewed the FFR reports prior to filing. The Finance Director provided verbal approval to file. For all reports going forward, Greenheart will document approval of filing via email exchanges from the Accounting Manager to the Director of Finance
U.S. Department of State
Professional & Cultural Exchange Programs
Assistance Listing #19.415
Finding 2023-002
Significant Deficiency – Cash Management
Criteria: The A-102 Common Rule requires that non-Federal entities receiving Federal awards establish and maintain internal control designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Adequate segregation of duties provided between performance, review, and recordkeeping of a task is a control activity which will reasonably ensure compliance with Federal laws, regulations, and program requirements.
Condition: Internal control over reimbursement requests could not be readily substantiated.
Questioned Costs: None noted.
Context: Documentation of preparer and reviewer of reimbursement requests could not be substantiated.
Effect: By not maintaining adequate and consistent documentation of review, the Organization may not be able to readily prevent, detect, and correct potential errors in cash management requirements. Therefore, the Organization may be incorrectly reimbursed for expenditures under the program requirements.
Cause: Current processes do not include a consistent method of performing, documenting, and maintaining adequate documentation of the preparation and review of reimbursement requests.
Recommendation: The Organization should improve procedures to consistently prepare, perform, and document review of reimbursement requests.
Management’s Response: Management considers this finding resolved as of August 2024. In 2023, as was done in prior years, there was not a multi-level approval for submitting drawdown requests. Greenheart has now changed this process to have the Accounting Manager send a request to drawdown to the Director of Finance and Grants director. The Director of Finance ultimately approves the drawdown, and the email exchange is saved for documentation.
U.S. Department of State
Professional & Cultural Exchange Programs
Assistance Listing #19.415
Finding 2023-003
Material Weakness, Material Noncompliance – Allowable Costs/Activities
Criteria: The A-102 Common Rule requires that non-Federal entities receiving Federal awards establish and maintain internal control designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Adequate segregation of duties provided between performance, review, and recordkeeping of a task is a control activity which will reasonably ensure compliance with Federal laws, regulations, and program requirements. 2 CFR 200.302 requires that non-federal entities must maintain records that identify adequately the source and application of funds for federally funded activities and be supported by source documentation.
Condition: Internal control could not be readily substantiated for the allocation percentages applied to personnel expenses. Source documentation could not be readily substantiated for personnel expenses charged to the program and time actually worked.
Questioned Costs: Personnel expenses charged to the FLEX and YES awards were approximately $464,332 and $318,813 respectively, for a total of approximately $783,145.
Context: Review of personnel expenses and the allocation percentages applied could not be readily substantiated.
Effect: By not maintaining adequate and consistent documentation of review and source documentation, the Organization may not be able to readily prevent, detect, and correct potential errors in allowable costs/activities. Therefore, the Organization may be incorrectly reimbursed for expenditures under the program requirements.
Cause: Current processes do not include maintaining adequate review and source documentation to support personnel.
Recommendation: The Organization should improve policies & procedures to ensure that personnel expenses are adequately supported by source documentation and documentation is readily available.
Management’s Response: Management considers this resolved as of August 2024. Greenheart is in the process of establishing a timecard system for all staff who work on grants and have their time allocated to a grant. Investing in hour tracking within the payroll system will ensure that personnel allocations are accurate and approved by management. In the meantime, in early 2024, the Grants Director worked directly with payroll and department leaders to review and update the list of personnel who are working on the grant. This was a documented process.
U.S. Department of State
Professional & Cultural Exchange Programs
Assistance Listing #19.415
Finding 2023-004
Material Weakness, Material Non-compliance – Matching
Criteria: 2 CFR 200.306 requires cost sharing to be verifiable from a non-federal entity's records.
Condition: Cost sharing amounts were not readily verifiable.
Questioned Costs: Approximately $69,000 in adjustments were made in 2023 to recapture cost share amounts that occurred in a previous period(s).
Context: Adjustments were made to capture cost share expenses for both current and prior periods, which were not previously tracked, which led to expense accounts in the current year with a credit balance, indicating cost share amounts could not be readily substantiated by underlying source documentation.
Effect: By not maintaining adequate and consistent documentation for cost share amounts, the Organization may not be able to readily prevent, detect, and correct potential errors in matching. The Organization must maintain written records to support all allowable costs which are claimed as being its contribution. Such records are subject to audit. In the event the Organization does not provide the minimum amount of cost sharing as stipulated in the Organization’s approved budget, the Department of State’s contribution may be reduced in kind.
Cause: Current processes do not include maintaining adequate documentation to track and record cost share amounts.
Recommendation: The Organization should improve policies & procedures to document how cost share amounts are tracked in the accounting system to ensure amounts are verifiable.
Management’s Response: Management considers this resolved as of August 2024. For 2023 and prior, there were no cost sharing amounts booked to the General Ledger. When applicable, cost share was calculated prior to a drawdown by reducing a drawdown request by any necessary cost share commitment. For 2023, Greenheart made several one-time adjustments to move costs to a new cost share account in the general ledger. This way, Greenheart can track total cost share.
As previously stated, Greenheart did not previously allocate cost sharing items to a cost sharing account in the General Ledger. In 2024, a new template was created for grant expense submissions which identifies Cost Share coding from the time that a payment request is made. The grants team is responsible for completing this file and identifying how much of any expense incurred should be considered cost share. This approach allows for supporting documentation to be available for all cost share items and eliminates the need for adjusting journal entries to break out cost share.