2024-001 Compensation for Personal Services
CCDF Cluster – Assistance Listing No. 93.575 – COVID-19 Funding
Award Number: CTGG1 QAAA 2024*3969 A1 – Award Period: October 1, 2023 through June 30, 2024
Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters
Condition: During our testing of time and effort records we noted that although timesheets were kept for staff working on other Federal awards, they were not kept for staff who charged salaries and wages to the Federal award under this cluster. Instead, budgeted allocations were used.
Criteria: According to 2 CFR Part 200.430(g)(1), Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must:
(i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated;
(ii) Be incorporated into the official records of recipient or subrecipient;
(iii) Reasonably reflect the total activity for which the employee is compensated by the recipient or subrecipient, not exceeding 100 percent of compensated activities (for IHEs, this is the IBS);
(iv) Encompass federally-assisted and all other activities compensated by the recipient or subrecipient on an integrated basis but may include the use of subsidiary records as defined in the recipient’s or subrecipient's written policy;
(v) Comply with the established accounting policies and procedures of the recipient or subrecipient (See paragraph (i)(1)(ii) of this section for treatment of incidental work for IHEs.); and
(vi) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity.
(vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity.
(viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that:
(A) The system for establishing the estimates produces reasonable approximations of the activity actually performed;
(B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and
(C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.
Questioned Costs: Not determinable.
Cause: The award funder (pass-through entity) categorized the Organization as a contractor at the start of the award period, however, they notified the Organization of a change in determination to subrecipient on May 6, 2024 (7 months into the 9-month grant cycle). Thus, the terms and conditions related to subrecipients were not communicated until the contract amendment was executed effective May 12, 2024. For this reason, the Organization did not require staff working on non-Federal awards (including contracts where IIK is determined to be a contractor rather than subrecipient) to keep timesheets identifying time spent working on different funding sources/cost objectives. They used budgeted allocations to charge salaries and wages to the award tested without documentation of reconciliation after-the-fact to actual time worked on different funding sources/cost objectives.
Effect: Costs for salaries and wages were not fully supported by documentation in accordance with 2 CFR Part 200.430. Allowable costs could potentially be overpaid or underpaid or disallowed and required to be paid back to the Federal awarding agency (and/or pass-through entity).
Recommendation: The Organization should strengthen policies and procedures to support a system of internal control which provides a reasonable assurance that the charges to Federal awards for salaries and wages are accurate, allowable, and properly allocated. This might include:
1. Updating current policy to require staff working on non-Federal awards to also keep timesheets to track and charge actual time spent working on different funding sources/cost objectives, or
2. Establishing a process to periodically review after-the-fact interim charges made to Federal awards based on budget estimates, make timely adjustments, and document their reconciliation.
Views of Responsible Officials and Planned Corrective Actions: Invest in Kids management acknowledges that there have been deficiencies in processes, which were immediately corrected beginning with the May 30th payroll forward. We have restructured timesheets to be reflective of time spent working on different funding sources/cost objectives. Additionally, all staff attended the organization’s annual financial management and internal controls training in October 2024, that included updated policies and a focus on time and effort. Policy reviews have also been completed by management.
2024-002 Allowable Costs, Subrecipient Reimbursement
Coronavirus State & Local Fiscal Recovery Funds – Assistance Listing No. 21.027 – COVID-19 Funding
Award Number: 24 QAAA 186913 – Award Period: July 1, 2023 through June 30, 2024
Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters
Condition: The Organization did not have records to adequately support costs reimbursed to a subrecipient for the month of August 2023.
Criteria: According to 2 CFR 200.302(b)(3), The financial management system of each non-Federal entity must provide for the following:
(3) Records that identify adequately the source and application of funds for federally-funded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation.
Additionally, 2 CFR 200.303(a) states the non-Federal entity must:
(a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Questioned Costs: The total amount reimbursed to the subrecipient for the month of August 2023 of $49,772.27.
Cause: The Organization did not obtain source documentation from the sampled subrecipient supporting amounts reimbursed for the month of August 2023.
Effect: Costs that are not allowable per the terms and conditions of the grant and/or Uniform Guidance, or improper costs passed through to subrecipients could be charged to the grant. Unallowable or improper costs could be required to be paid back to the Federal awarding agency (and/or pass-through entity).
Recommendation: The Organization should strengthen policies and procedures to support a system of internal control regarding review and approval of subrecipient reimbursement requests to ensure costs are backed by source documentation supporting accuracy and allowability prior to payment.
Views of Responsible Officials and Planned Corrective Actions: Invest in Kids made multiple requests for source documentation from the subrecipient. However, due to management turnover, the subrecipient lacked personnel with the knowledge to retrieve the requested information. Acknowledging this challenge, Invest in Kids updated its policies and procedures in October 2024. Additionally, all staff participated in the organization's annual financial management and internal controls training that same month. To note, upon completion of this audit, the subrecipient is no longer involved in Invest in Kids programming.
2024-001 Compensation for Personal Services
CCDF Cluster – Assistance Listing No. 93.575 – COVID-19 Funding
Award Number: CTGG1 QAAA 2024*3969 A1 – Award Period: October 1, 2023 through June 30, 2024
Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters
Condition: During our testing of time and effort records we noted that although timesheets were kept for staff working on other Federal awards, they were not kept for staff who charged salaries and wages to the Federal award under this cluster. Instead, budgeted allocations were used.
Criteria: According to 2 CFR Part 200.430(g)(1), Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must:
(i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated;
(ii) Be incorporated into the official records of recipient or subrecipient;
(iii) Reasonably reflect the total activity for which the employee is compensated by the recipient or subrecipient, not exceeding 100 percent of compensated activities (for IHEs, this is the IBS);
(iv) Encompass federally-assisted and all other activities compensated by the recipient or subrecipient on an integrated basis but may include the use of subsidiary records as defined in the recipient’s or subrecipient's written policy;
(v) Comply with the established accounting policies and procedures of the recipient or subrecipient (See paragraph (i)(1)(ii) of this section for treatment of incidental work for IHEs.); and
(vi) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity.
(vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity.
(viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that:
(A) The system for establishing the estimates produces reasonable approximations of the activity actually performed;
(B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and
(C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.
Questioned Costs: Not determinable.
Cause: The award funder (pass-through entity) categorized the Organization as a contractor at the start of the award period, however, they notified the Organization of a change in determination to subrecipient on May 6, 2024 (7 months into the 9-month grant cycle). Thus, the terms and conditions related to subrecipients were not communicated until the contract amendment was executed effective May 12, 2024. For this reason, the Organization did not require staff working on non-Federal awards (including contracts where IIK is determined to be a contractor rather than subrecipient) to keep timesheets identifying time spent working on different funding sources/cost objectives. They used budgeted allocations to charge salaries and wages to the award tested without documentation of reconciliation after-the-fact to actual time worked on different funding sources/cost objectives.
Effect: Costs for salaries and wages were not fully supported by documentation in accordance with 2 CFR Part 200.430. Allowable costs could potentially be overpaid or underpaid or disallowed and required to be paid back to the Federal awarding agency (and/or pass-through entity).
Recommendation: The Organization should strengthen policies and procedures to support a system of internal control which provides a reasonable assurance that the charges to Federal awards for salaries and wages are accurate, allowable, and properly allocated. This might include:
1. Updating current policy to require staff working on non-Federal awards to also keep timesheets to track and charge actual time spent working on different funding sources/cost objectives, or
2. Establishing a process to periodically review after-the-fact interim charges made to Federal awards based on budget estimates, make timely adjustments, and document their reconciliation.
Views of Responsible Officials and Planned Corrective Actions: Invest in Kids management acknowledges that there have been deficiencies in processes, which were immediately corrected beginning with the May 30th payroll forward. We have restructured timesheets to be reflective of time spent working on different funding sources/cost objectives. Additionally, all staff attended the organization’s annual financial management and internal controls training in October 2024, that included updated policies and a focus on time and effort. Policy reviews have also been completed by management.
2024-002 Allowable Costs, Subrecipient Reimbursement
Coronavirus State & Local Fiscal Recovery Funds – Assistance Listing No. 21.027 – COVID-19 Funding
Award Number: 24 QAAA 186913 – Award Period: July 1, 2023 through June 30, 2024
Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters
Condition: The Organization did not have records to adequately support costs reimbursed to a subrecipient for the month of August 2023.
Criteria: According to 2 CFR 200.302(b)(3), The financial management system of each non-Federal entity must provide for the following:
(3) Records that identify adequately the source and application of funds for federally-funded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation.
Additionally, 2 CFR 200.303(a) states the non-Federal entity must:
(a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Questioned Costs: The total amount reimbursed to the subrecipient for the month of August 2023 of $49,772.27.
Cause: The Organization did not obtain source documentation from the sampled subrecipient supporting amounts reimbursed for the month of August 2023.
Effect: Costs that are not allowable per the terms and conditions of the grant and/or Uniform Guidance, or improper costs passed through to subrecipients could be charged to the grant. Unallowable or improper costs could be required to be paid back to the Federal awarding agency (and/or pass-through entity).
Recommendation: The Organization should strengthen policies and procedures to support a system of internal control regarding review and approval of subrecipient reimbursement requests to ensure costs are backed by source documentation supporting accuracy and allowability prior to payment.
Views of Responsible Officials and Planned Corrective Actions: Invest in Kids made multiple requests for source documentation from the subrecipient. However, due to management turnover, the subrecipient lacked personnel with the knowledge to retrieve the requested information. Acknowledging this challenge, Invest in Kids updated its policies and procedures in October 2024. Additionally, all staff participated in the organization's annual financial management and internal controls training that same month. To note, upon completion of this audit, the subrecipient is no longer involved in Invest in Kids programming.