Finding number: 2023-001
AL number: 10.561
AL title: Supplemental Nutrition Assistance Program
Award term: October 29, 2021 through September 30, 2024
Name of federal
agency:
U.S. Department of Agriculture
Name of pass-through
entity:
Colorado Department of Human Services
Repeat finding: Yes - 2022-001
Criteria: The Code of Federal Regulations 2 CFR 200.4 13(a) requires that direct costs be
identified specifically with a particular final cost objective, such as a federal
award, or other internally or externally funded activity, or be directly assigned to
such activities relatively easily with a high degree of accuracy.
Condition: During our testing, we noted reimbursement requests were prepared using grant
budgets rather than direct costs incurred. Management was unable to determine
direct costs related to general and payroll disbursements. As a result, proper
revenue recognition could not be determined for financial reporting purposes.
Cause: Internal controls have not been implemented to specifically track direct costs
incurred under specific grant agreements.
Possible effect: The Organization cannot determine direct costs incurred under the grant with a
high degree of accuracy. Reimbursement requests do not accurately reflect direct
costs incurred by the Organization.
Questioned cost: $1,433,992.
Recommendation: We recommend the Organization develop procedures to track expenditures of
federal awards using the class system within thin their ERP. All invoices for
general disbursements paid with federal awards should be reviewed and approved
by a grants manager prior to payment and coded to the general ledger by the
accounting department. In addition, we recommend implementing procedures to
ensure that payroll expenses charged to the grant are based on actual time and
effort. Timesheets should be prepared by staff performing grant functions,
reviewed and approved by a grants manager, and coded to the general ledger by
the accounting department.
Views of responsible
officials:
Effective October 1, 2023, management implemented extensive accounting and
documentation controls to ensure full accounting and reporting compliance on
direct costs incurred for all federal grants and expenditures. These controls are
reviewed and monitored for compliance by management on a periodic basis
during the year.
Anticipated completion date: December 31, 2023.
AL number: 10.561
AL title: Supplemental Nutrition Assistance Program
Award term: October 29, 2021 through September 30, 2024
Name of federal
agency:
U.S. Department of Agriculture
Name of pass-through
entity:
Colorado Department of Human Services
Repeat finding: Yes - 2022-002 & 2022-003
Criteria: The Code of Federal Regulations 2 CFR 200.3 l 8(a) states, "the non-
Federal entity must have and use document procurement procedures,
consistent with State, local, and tribal laws and regulations and the
standards of this section, for the acquisition of property or services
required under a Federal award or subaward."
In addition, per the Code of Federal Regulations 2 CFR 200.214, non-
Federal entities are subject to the non-procurement debarment and
suspension regulations. The regulations restrict awards, subawards, and
contracts with certain- parties that are debarred, suspended, or otherwise
excluded from or ineligible for participation in Federal assistance
programs or activities.
Condition: During our testing, we noted the Organization had not adopted a procurement
policy and no procurement procedures were performed in selecting contractors.
Cause: Procurement policies and procedures were not adopted by the Organization.
Possible effect: The Organization may not have received a competitive bid for services, and may
have engaged a suspended or debarred contractor.
Questioned cost: None
Recommendation: We recommend the Organization implement necessary internal controls to ensure
a competitive bid process is performed and all vendors are reviewed for
suspension and debarment, prior to entering into contracts utilizing federal
awards. These internal controls should also include a conflict-of- interest clause
with all vendors within contract language.
Views of responsible
officials:
Management recruited a procurement officer in December 2024 to design and
implement best practice procurement processes effective the first quarter 2025.
Procurement policies will ensure full compliance with Federal and State
requirements. Procurement policies will incorporate clearly defined procedures
around all contractors ensuring appropriate selection processes and contractual
terms.
Anticipated completion date: March 31, 2025.
Finding number: 2023-001
AL number: 10.561
AL title: Supplemental Nutrition Assistance Program
Award term: October 29, 2021 through September 30, 2024
Name of federal
agency:
U.S. Department of Agriculture
Name of pass-through
entity:
Colorado Department of Human Services
Repeat finding: Yes - 2022-001
Criteria: The Code of Federal Regulations 2 CFR 200.4 13(a) requires that direct costs be
identified specifically with a particular final cost objective, such as a federal
award, or other internally or externally funded activity, or be directly assigned to
such activities relatively easily with a high degree of accuracy.
Condition: During our testing, we noted reimbursement requests were prepared using grant
budgets rather than direct costs incurred. Management was unable to determine
direct costs related to general and payroll disbursements. As a result, proper
revenue recognition could not be determined for financial reporting purposes.
Cause: Internal controls have not been implemented to specifically track direct costs
incurred under specific grant agreements.
Possible effect: The Organization cannot determine direct costs incurred under the grant with a
high degree of accuracy. Reimbursement requests do not accurately reflect direct
costs incurred by the Organization.
Questioned cost: $1,433,992.
Recommendation: We recommend the Organization develop procedures to track expenditures of
federal awards using the class system within thin their ERP. All invoices for
general disbursements paid with federal awards should be reviewed and approved
by a grants manager prior to payment and coded to the general ledger by the
accounting department. In addition, we recommend implementing procedures to
ensure that payroll expenses charged to the grant are based on actual time and
effort. Timesheets should be prepared by staff performing grant functions,
reviewed and approved by a grants manager, and coded to the general ledger by
the accounting department.
Views of responsible
officials:
Effective October 1, 2023, management implemented extensive accounting and
documentation controls to ensure full accounting and reporting compliance on
direct costs incurred for all federal grants and expenditures. These controls are
reviewed and monitored for compliance by management on a periodic basis
during the year.
Anticipated completion date: December 31, 2023.
AL number: 10.561
AL title: Supplemental Nutrition Assistance Program
Award term: October 29, 2021 through September 30, 2024
Name of federal
agency:
U.S. Department of Agriculture
Name of pass-through
entity:
Colorado Department of Human Services
Repeat finding: Yes - 2022-002 & 2022-003
Criteria: The Code of Federal Regulations 2 CFR 200.3 l 8(a) states, "the non-
Federal entity must have and use document procurement procedures,
consistent with State, local, and tribal laws and regulations and the
standards of this section, for the acquisition of property or services
required under a Federal award or subaward."
In addition, per the Code of Federal Regulations 2 CFR 200.214, non-
Federal entities are subject to the non-procurement debarment and
suspension regulations. The regulations restrict awards, subawards, and
contracts with certain- parties that are debarred, suspended, or otherwise
excluded from or ineligible for participation in Federal assistance
programs or activities.
Condition: During our testing, we noted the Organization had not adopted a procurement
policy and no procurement procedures were performed in selecting contractors.
Cause: Procurement policies and procedures were not adopted by the Organization.
Possible effect: The Organization may not have received a competitive bid for services, and may
have engaged a suspended or debarred contractor.
Questioned cost: None
Recommendation: We recommend the Organization implement necessary internal controls to ensure
a competitive bid process is performed and all vendors are reviewed for
suspension and debarment, prior to entering into contracts utilizing federal
awards. These internal controls should also include a conflict-of- interest clause
with all vendors within contract language.
Views of responsible
officials:
Management recruited a procurement officer in December 2024 to design and
implement best practice procurement processes effective the first quarter 2025.
Procurement policies will ensure full compliance with Federal and State
requirements. Procurement policies will incorporate clearly defined procedures
around all contractors ensuring appropriate selection processes and contractual
terms.
Anticipated completion date: March 31, 2025.