Audit 371446

Criteria: According to 2 CFR § 200.77 and § 200.343 of the Uniform Guidance, federal awards must be obligated and expended only during the authorized period of performance as stated in the award documents. Expenditures incurred outside of this time frame are considered unallowable and subject to repayment. Condition: During a performance review conducted by the U.S. Department of Housing and Urban Development (HUD), the Institution was found to have expended $247,000 in federal funds outside the period of performance established for the Emergency Shelter Grant Program under the CARES Act. These expenditures were not in accordance with federal requirements and were deemed unallowable by HUD. Effect: The Institution incurred unallowable costs totaling $247,000. As a result, HUD has required that the Institution return these funds. Noncompliance with period-of-performance requirements can also increase the risk of future disallowances and may impact eligibility for future federal funding. Cause: The noncompliance resulted from the lack of effective internal controls to monitor the period of performance, limited communication between departments, and insufficient knowledge of federal grant requirements within the accounting department. There was a lack of formal review of the funding agreement terms before processing reimbursements or direct charges, which led to the oversight. Recommendations: We recommend that the Institution implement the following corrective actions: 1. Implement a Period Monitoring System: Establish a formal process for tracking the period of performance for each grant, with automatic alerts or calendar reminders for start and end dates. 2. Grant Agreement Review Procedures: Require a formal review of grant agreements and performance periods prior to incurring or approving expenses to ensure compliance. 3. Training for Finance and Program Staff: Provide training on Uniform Guidance cost principles and federal compliance requirements to staff involved in program administration and finance. 4. Periodic Reconciliation: Conduct periodic reconciliations of expenses charged to federal grants to ensure they are within the allowed timeframe and scope. 5. Communicate with Auditors: Work closely with the external auditors to ensure that any potential delays in the audit process are identified early and mitigated to meet the submission deadline. Questioned cost: $247,000 Sampling was statistically valid: Yes

Criteria: According to 2 CFR § 200.512 (Report Submission) of the Uniform Guidance, non-federal entities that expend $750,000 or more in federal awards during the fiscal year are required to submit the audit report, including the financial statements and the Schedule of Expenditures of Federal Awards (SEFA), to the FAC no later than nine months after the end of the fiscal year or 30 days after receipt of the auditor’s report, whichever is earlier. Condition: The Institution did not submit its Single Audit report for the fiscal year ended June 30, 2023 to the Federal Audit Clearinghouse (FAC) within the required timeframe. The report was due within nine months after the end of the fiscal year, as per federal regulations. As of the report date, has not been submitted. Best practices, as highlighted by the Government Finance Officers Association (GFOA) and the Council on Financial Assistance Reform (COFAR), recommend that entities establish internal processes to ensure compliance with federal reporting deadlines, such as implementing a calendar of key reporting dates and assigning specific responsibilities to team members to monitor and manage audit reporting submissions. Effect: Failure to submit the Single Audit report timely could result in non-compliance with federal regulations, jeopardizing the Institution’s eligibility to receive future federal awards or funding. Additionally, late submissions may lead to increased scrutiny from oversight agencies and affect the entity’s reputation with grantors and other stakeholders. Cause: The late submission appears to have resulted from a combination of factors, including: • Delays in completing the financial close and audit process due to significant deficiencies in the financial closing and reporting disclosed in finding 2023-II-1 and resource constraints, turnover in accounting personnel, or unexpected audit complexities. • A lack of internal processes and controls to monitor and ensure timely submission of the Single Audit report to the FAC. Recommendations: We recommend that the Institution implement the following actions to ensure timely submission of the Single Audit report in the future: 1. Establish a Compliance Calendar: Create a detailed compliance calendar that includes key deadlines for the Single Audit submission, as well as internal milestones leading up to the submission date. This calendar should be regularly reviewed and updated. 2. Assign Responsibility: Designate a specific individual or team within the organization to monitor the audit process and ensure that the submission to the FAC occurs within the required timeframe. 3. Implement Review Procedures: Institute formal review and sign-off procedures for audit deliverables, with specific checkpoints to ensure that the audit report is finalized well before the submission deadline. 4. Communicate with Auditors: Work closely with the external auditors to ensure that any potential delays in the audit process are identified early and mitigated to meet the submission deadline. Questioned cost: None Sampling was statistically valid: N/A