Audit 365381

Finding 2024-001 – Activities Allowed or Unallowed – Significant Deficiency in Internal Controls Over Compliance and Noncompliance Federal program information: Funding agency: Department of Energy Title: Performance Partnership Grants ALN Number: 66.605 Award year and number: 2022-2026 Criteria: Salaries and wages and fringe benefits charged to awards must be supported by reports reflecting the distribution of activity for each employee whose compensation is charged to the award. Condition/Context: For 13 payroll transactions tested for allowability, we noted that the rate charged to the grant differed from the rate the employee was paid. Cause/Effect: The amount charged to the grant is based on the pay rate included on the employees’ time sheet. The rate had not been appropriately updated on the time sheet which resulted in an incorrect amount being charged to the grant. Repeat Finding – This is not a repeat finding. Auditor’s Recommendations: The Tribe should compare the rate on the time sheets to the rate the employee was paid for each payroll period. Management’s Response: All grant awards were reconciled to reconcile salaries, wages, and fringe benefits to the correct rate. Adjustments were made to multi-year awards or updated Federal Financial Reports were prepared where appropriate. In October 2024, the Tribe implemented a new payroll system, Paycom, that allows employees to code activity directly to an award. The payroll system allocates salary/wages and benefits based on the employee’s current approved rate directly to the grant fund. Paycom will integrate with the Award Management module in the Tribe’s new ERP system, Mission Gov, beginning July 2025, for direct posting.

Finding 2024-002 – Reporting – Significant Deficiency in Internal Controls Over Compliance and Noncompliance Federal program information: Funding agency: Department of Energy Title: Performance Partnership Grants ALN Number: 66.605 Award year and number: 2022-2026 Criteria: In accordance with 2 CFR 200.327 and 2 CFR 200.328 (Uniform Guidance), recipients of federal funds must file complete, accurate, and timely financial reports using the prescribed standard reporting forms (e.g., SF-425). These reports must be supported by the recipient’s underlying accounting records and signed by authorized personnel. Condition/Context: The Tribe was unable to provide documentation demonstrating that the required Federal Financial Report (FFR) for the year ended September 30, 2024, was submitted. As a result, we could not determine whether the FFR was filed in a timely manner or whether it included the proper authorization signature. Cause/Effect: The apparent lack of formal procedures or controls for retaining evidence of FFR submissions contributed to the unavailability of supporting documentation. The absence of evidence of submission and authorization could result in noncompliance with federal reporting requirements. If the report was not submitted timely or was not signed by authorized personnel, the Tribe may be subject to adverse consequences, including potential questioning of costs, additional oversight, or delays in future funding. Repeat Finding – This is not a repeat finding. Auditor’s Recommendations: The Tribe should implement and maintain a standardized process, which includes clearly documented procedures, for retaining evidence of financial report submissions. This process should ensure that each FFR is filed promptly, reviewed by appropriate officials, and accompanied by documentation showing the submission date, authorized signature, and confirmation of receipt from the federal agency, if available. Management’s Response: The Tribe has drafted a comprehensive Financial Management Policies and Procedures Manual, which includes a section specific to grants management and procurement, that will provide guidance for month end close, asset management and preparation of the Schedule of Expenditures of Federal Awards, Reporting, etc. The Financial Management Policies and Procedures Manual will be presented to the Tribal Council for review and adoption by December 2025. Additionally, the Tribe has a third-party CPA firm to conduct mandatory Uniform Guidance training and regular grant compliance and accounting training for all program and accounting staff working with grant awards.

Finding 2024-001 – Activities Allowed or Unallowed – Significant Deficiency in Internal Controls Over Compliance and Noncompliance Federal program information: Funding agency: Department of Energy Title: Performance Partnership Grants ALN Number: 66.605 Award year and number: 2022-2026 Criteria: Salaries and wages and fringe benefits charged to awards must be supported by reports reflecting the distribution of activity for each employee whose compensation is charged to the award. Condition/Context: For 13 payroll transactions tested for allowability, we noted that the rate charged to the grant differed from the rate the employee was paid. Cause/Effect: The amount charged to the grant is based on the pay rate included on the employees’ time sheet. The rate had not been appropriately updated on the time sheet which resulted in an incorrect amount being charged to the grant. Repeat Finding – This is not a repeat finding. Auditor’s Recommendations: The Tribe should compare the rate on the time sheets to the rate the employee was paid for each payroll period. Management’s Response: All grant awards were reconciled to reconcile salaries, wages, and fringe benefits to the correct rate. Adjustments were made to multi-year awards or updated Federal Financial Reports were prepared where appropriate. In October 2024, the Tribe implemented a new payroll system, Paycom, that allows employees to code activity directly to an award. The payroll system allocates salary/wages and benefits based on the employee’s current approved rate directly to the grant fund. Paycom will integrate with the Award Management module in the Tribe’s new ERP system, Mission Gov, beginning July 2025, for direct posting.

Finding 2024-002 – Reporting – Significant Deficiency in Internal Controls Over Compliance and Noncompliance Federal program information: Funding agency: Department of Energy Title: Performance Partnership Grants ALN Number: 66.605 Award year and number: 2022-2026 Criteria: In accordance with 2 CFR 200.327 and 2 CFR 200.328 (Uniform Guidance), recipients of federal funds must file complete, accurate, and timely financial reports using the prescribed standard reporting forms (e.g., SF-425). These reports must be supported by the recipient’s underlying accounting records and signed by authorized personnel. Condition/Context: The Tribe was unable to provide documentation demonstrating that the required Federal Financial Report (FFR) for the year ended September 30, 2024, was submitted. As a result, we could not determine whether the FFR was filed in a timely manner or whether it included the proper authorization signature. Cause/Effect: The apparent lack of formal procedures or controls for retaining evidence of FFR submissions contributed to the unavailability of supporting documentation. The absence of evidence of submission and authorization could result in noncompliance with federal reporting requirements. If the report was not submitted timely or was not signed by authorized personnel, the Tribe may be subject to adverse consequences, including potential questioning of costs, additional oversight, or delays in future funding. Repeat Finding – This is not a repeat finding. Auditor’s Recommendations: The Tribe should implement and maintain a standardized process, which includes clearly documented procedures, for retaining evidence of financial report submissions. This process should ensure that each FFR is filed promptly, reviewed by appropriate officials, and accompanied by documentation showing the submission date, authorized signature, and confirmation of receipt from the federal agency, if available. Management’s Response: The Tribe has drafted a comprehensive Financial Management Policies and Procedures Manual, which includes a section specific to grants management and procurement, that will provide guidance for month end close, asset management and preparation of the Schedule of Expenditures of Federal Awards, Reporting, etc. The Financial Management Policies and Procedures Manual will be presented to the Tribal Council for review and adoption by December 2025. Additionally, the Tribe has a third-party CPA firm to conduct mandatory Uniform Guidance training and regular grant compliance and accounting training for all program and accounting staff working with grant awards.