Audit 371856

2024-001 – Cash Management Federal Agency: U.S. Department of Education Federal Program: Arts in Education Federal Assistance Listing Number: 84.351A Pass-through Entity: Not applicable. Award Identification Number: S351A210115 Year: 2023 and 2024 Criteria: 2 CFR 200.305 requires recipients and subrecipients to minimize the time elapsing between receipt of federal funds and disbursement, ensuring advance payments are limited to the minimum needed and timed to actual, immediate cash requirements for program or project costs. Additionally, 2 CFR 200.303 requires non-Federal entities to maintain effective internal controls over Federal awards to ensure compliance with Federal laws, regulations, and award terms. Condition: During our audit, we noted instances whereby the basis for the funds drawn down from the G6 system were unsupported. Context: This issue appears to be recurring, as several drawdowns over multiple months exceeded actual expenses and were not identified through the Organization’s internal controls. During the audit period, 100% of drawdowns were tested, with cumulative drawdowns exceeding actual expenses by $260,490 out of $1,118,922 total drawdowns at year-end. Cause: Internal controls were not in place to ensure an accurate basis for drawdowns. Effect: The failure to maintain supporting documentation for draw requests could result in drawing funds in excess of actual expenses incurred. Questioned Costs: Known questioned costs are $260,490, calculated as the excess of cumulative federal drawdowns over allowable program expenses as of June 30, 2024. Repeat Finding: Yes Recommendation: We recommend that the Organization implement procedures to ensure that federal drawdowns are based on allowable program expenditures and are supported by general ledger reports of expenses incurred on the Federal program. Staff responsible for drawdowns should receive training on federal cash management requirements. Views of Responsible Officials: See Corrective Action Plan.

2024-002 – Procurement and Suspension and Debarment Federal Agency: U.S. Department of Education Federal Program: Arts in Education Federal Assistance Listing Number: 84.351A Pass-through Entity: Not applicable. Award Identification Number: S351A210115 Year: 2023 and 2024 Criteria: 2 CFR §200.320(b) requires that for purchases exceeding the micro-purchase threshold, price or rate quotations must be obtained from an adequate number of qualified sources. If a noncompetitive (single-source) procurement is used, the entity must document the justification in accordance with 2 CFR §200.320(c). Condition: During testing, we identified three vendors with transactions exceeding the micro purchase threshold. For one vendor, the Organization obtained competitive price quotations in accordance with procurement requirements. For the remaining two vendors, the Organization did not retain documentation supporting compliance procurement decisions in accordance with the Organization's. Context: Documentation for two of the three transactions did not align with the competitive procurement requirements. Given that two-thirds of the population were affected, this indicates an area where compliance practices could be strengthened. Cause: Although the Organization has a formal procurement policy outlining requirements for competitive quotes and single-source justifications in accordance with 2 CFR §200.320, these procedures were not consistently followed for the transactions tested. Effect: Failure to obtain competitive quotes or document single-source justifications increases the risk of noncompliance with federal procurement requirements and may result in unallowable costs being charged to the federal program. Questioned Costs: Known questioned costs total $167,348, representing the federal share of the transactions where procurement requirements were not met. Repeat Finding: Yes Recommendation: We recommend the Organization ensure that its procurement policy is fully implemented. Staff should be trained and held accountable for obtaining competitive price or rate quotations for all purchases exceeding the micro-purchase threshold, or for documenting appropriate single-source justifications when applicable. Views of Responsible Officials: See Corrective Action Plan.

2024-003 – Procurement and Suspension and Debarment Federal Agency: U.S. Department of Education Federal Program: Arts in Education Federal Assistance Listing Number: 84.351A Pass-through Entity: Not applicable. Award Identification Number: S351A210115 Year: 2023 and 2024 Criteria: 2 CFR §180.300 and 2 CFR §200.213 require non-federal entities to verify that contractors and subrecipients are not suspended or debarred from participation in federal programs. This verification must be accomplished by checking the System for Award Management (SAM), collecting a certification from the contractor, or adding a clause or condition to the covered transaction. Condition: During our testing, we noted the Organization did not maintain documentation to support that internal controls were performed to ensure vendors were not suspended or debarred prior to entering into the contract. Context: The population of covered transactions consisted of four vendors, all of which were tested. While the Organization did not contract with any suspended or debarred vendors, there was no documentation of internal controls or procedures in place to verify vendor suspension or debarment status prior to entering into the covered transactions. Cause: The Organization was unable to locate documentation to support the performance of procedures to ensure vendors were not suspended or debarred. Effect: Without documented internal controls, there is an increased risk that the Organization could inadvertently enter into covered transactions with suspended or debarred vendors, resulting in noncompliance with federal requirements. Questioned Costs: None Repeat Finding: Yes Recommendation: We recommend the Organization establish and document internal controls and procedures to verify and retain evidence that vendors are not suspended or debarred prior to entering into covered transactions, in accordance with federal requirements. Views of Responsible Officials: See Corrective Action Plan.