2023-001 Improve Controls and Documentation Over Payroll Process Federal Agency: U.S. Department of Agriculture Cluster/Program: Child Nutrition Cluster Award Name: National School Lunch Program AL Number(s): 10.553/10.555/10.559/10.582 Award Year: 2023 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Agency: U.S. Department of Education Award Name: Title I Grants to Local Educational Agencies AL Number(s): 84.010 Award Year: 2021, 2022, 2023 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Agency: U.S. Department of Education Cluster/Program: Special Education Cluster Award Name: Special Education Grants to States and Preschool Grants AL Number(s): 84.027/84.173 Award Year: 2021, 2022, 2023 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Agency: U.S. Department of Education Award Name: COVID-19 – Education Stabilization Fund AL Number(s): 84.425 Award Year: 2021, 2022, 2023 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Type of Finding Compliance Internal Control over Compliance – Material Weakness Criteria or Specific Requirement The Code of Federal Regulations Section 200.403(g) states that for costs to be allowable under Federal awards, they must be adequately documented and there must be sufficient documentation. Condition and Context In fiscal year 2023, our sample testing disclosed that amounts paid to employees could not be recalculated and documentation to ensure amounts paid were complete and accurate was not available. Cause Weaknesses in the design and implementation of internal controls. Effect or Potential Effect We were unable to conclude on the allowability, validity, or completeness of payroll charged to the grants, and as a result there is a risk that amounts charged to federal awards may not be allowable in accordance with applicable cost principles. Questioned Costs Due to the condition noted, we were unable to determine if the costs charged to the applicable grants are allowable. AL Number(s) Name of Federal Program or Cluster Questioned Costs 10.553/10.555/10.559/10.582 Child Nutrition Cluster $3,423,470 84.010 Title I Grants to Local Educational Agencies $4,687,955 84.027/84.173 Special Education Cluster $4,946,791 84.425 COVID-19 – Education Stabilization Fund $7,567,860 Recommendation The City should redesign and enhance the internal controls surrounding how payroll is processed to provide assurance that processing is complete, accurate and valid and that suitable, appropriate documentation is maintained. Views of Responsible Official and Planned Corrective Action Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.
2023-002 Improve Controls and Documentation Over Allowability of Costs Federal Agency: U.S. Department of Agriculture Cluster/Program: Child Nutrition Cluster Award Name: National School Lunch Program AL Number(s): 10.553/10.555/10.559/10.582 Award Year: 2023 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Agency: U.S. Department of the Treasury Award Name: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds AL Number(s): 21.027 Award Year: 2022, 2023 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Agency: U.S. Department of Education Award Name: Title I Grants to Local Educational Agencies AL Number(s): 84.010 Award Year: 2021, 2022, 2023 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Agency: U.S. Department of Education Cluster/Program: Special Education Cluster Award Name: Special Education Grants to States and Preschool Grants AL Number(s): 84.027/84.173 Award Year: 2021, 2022, 2023 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Type of Finding Compliance Internal Control over Compliance – Significant Deficiency Criteria or Specific Requirement Grantees must provide reasonable assurance that federal awards are expended only for allowable activities and that the costs of goods and services charged to federal awards are allowable and in accordance with the applicable cost principles. Management of the City is also responsible for establishing and maintaining effective internal control over compliance with federal requirements that have a direct and material effect on a federal program. The Code of Federal Regulations Section 200.403(g) states that for costs to be allowable under Federal awards, they must be adequately documented and there must be sufficient documentation. Condition and Context A sample of invoices was tested in order to determine if costs were allowable and adequately approved. As a result of our testing, it was determined that invoices were not approved for two transactions in the Child Nutrition Cluster, four transactions in the Coronavirus State and Local Fiscal Recovery Fund, two transactions in the Title I program, and one transaction in the Special Education Cluster. Cause Weaknesses in the design and implementation of internal controls. Effect or Potential Effect Due to the weaknesses in internal controls noted above, there is a risk that amounts charged to federal awards may not be allowable or in accordance with applicable cost principles. Questioned Costs Due to the condition noted, we were unable to determine if the costs charged to the applicable grants are allowable. AL Number(s) Name of Federal Program or Cluster Questioned Costs 10.553/10.555/10.559/10.582 Child Nutrition Cluster $300 21.027 COVID-19 – Coronavirus State and Local Fiscal Recovery Fund $247,537 84.010 Title I Grants to Local Educational Agencies $3,770 84.027/84.173 Special Education Cluster $4,267 Recommendation The City should address the weaknesses in internal controls noted above in order to provide reasonable assurance that federal award transactions are allowable and in accordance with the applicable cost principles. SECTION III - FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS (CONTINUED) Views of Responsible Official and Planned Corrective Action Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.
2023-003 Maintain Employee’s Time and Effort Records Federal Agency: U.S. Department of Housing and Urban Development Cluster/Program: CDBG – Entitlement Grants Cluster Award Name: Community Development Block Grants/Entitlement Grants AL Number(s): 14.218 Award Year: 2023 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Agency: U.S. Department of Education Cluster/Program: Special Education Cluster Award Name: Special Education Grants to States and Preschool Grants AL Number(s): 84.027/84.173 Award Year: 2021, 2022, 2023 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Type of Finding Compliance Internal Control over Compliance – Material Weakness Criteria or Specific Requirement Grantees must provide reasonable assurance that federal awards are expended only for allowable activities and that the costs of goods and services charged to federal awards are allowable and in accordance with the applicable cost principles. Management of the City is also responsible for establishing and maintaining effective internal control over compliance with federal requirements that have a direct and material effect on a federal program. The Code of Federal Regulations Section 200.403(g) states that for costs to be allowable under Federal awards, they must be adequately documented and there must be sufficient documentation. Condition and Context A sample of payroll disbursements were tested in order to determine if adequate time and effort certifications were maintained. As a result of our testing, it was determined that time and effort certifications were not maintained for all six employees tested in the Community Development Block Grants/Entitlement Grants program, and six employees tested in the Special Education Cluster. Cause Weaknesses in the design and implementation of internal controls. Effect or Potential Effect Due to the weaknesses in internal controls noted above, there is a risk that amounts charged to federal awards may not be allowable or in accordance with applicable cost principles. Questioned Costs Due to the condition noted, we were unable to determine if the costs charged to the applicable grants are allowable. AL Number(s) Name of Federal Program or Cluster Questioned Costs 14.218 Community Development Block Grants/Entitlement Grants $1,112,830 84.027/84.173 Special Education Cluster $5,439 Recommendation The City should address the weaknesses in internal controls noted above in order to provide reasonable assurance that federal award transactions are allowable and in accordance with the applicable cost principles. Views of Responsible Official and Planned Corrective Action Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.
2023-004 Update Federal Equipment/Real Property Listings Federal Agency: U.S. Department of Education Award Name: COVID-19 – Education Stabilization Fund AL Number(s): 84.425 Award Year: 2021, 2022, 2023 Compliance Requirement: Equipment/Real Property Management Type of Finding Compliance Internal Control over Compliance – Material Weakness Criteria or Specific Requirement Title to equipment acquired by a non-federal entity with federal awards vests with the non-federal entity. Equipment means tangible nonexpendable property, including exempt prop¬erty, charged directly to the award having a useful life of more than one year and an acquisition cost of $5,000 or more per unit. However, consistent with a non-federal entity’s policy, lower limits may be established. Subrecipients of states who are local governments or Indian tribes shall use state laws and procedures for equipment acquired under a subgrant from a state. Local governments and Indian tribes shall follow the A-102 Common Rule for equipment acquired under federal awards received directly from a federal awarding agency. The A-102 Common Rule and OMB Circular A-110 require that equipment be used in the program for which it was acquired or, when appropriate, other federal programs. Equipment records shall be maintained, a physical inventory of equipment shall be taken at least once every 2 years and reconciled to the equipment records, an appropriate control system shall be used to safeguard equipment, and equipment shall be adequately maintained. When equipment with a current per unit fair market value of $5,000 or more is no longer needed for a federal pro¬gram, it may be retained or sold with the federal agency having a right to a proportionate (percent of federal participation in the cost of the original project) amount of the current fair market value. Proper sales procedures shall be used that provide for competition to the extent practicable and result in the highest possible return. Management is also responsible for establishing and maintaining effective internal controls over compliance with federal requirements that have a direct and material effect on a federal program. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. Condition and Context Property records for equipment/real property purchased with federal funds have not been maintained. Cause Weaknesses in the design and implementation of internal controls. Effect or Potential Effect Due to the weaknesses in internal control noted above, the City is not in compliance with federal guidelines. No questioned costs are reported as it is not quantifiable. Recommendation The City should address the weaknesses in internal controls noted above in order to provide reasonable assurance that equipment/real property purchased with federal awards is properly managed and accounted for in compliance with federal guidelines. Views of Responsible Official and Planned Corrective Action Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.
2023-005 Improve Procurement Procedures Federal Agency: U.S. Department of Education Cluster/Program: Special Education Cluster Award Name: Special Education Grants to States and Preschool Grants AL Number(s): 84.027/84.173 Award Year: 2021 and 2022 Compliance Requirement: Procurement Suspension & Debarment Type of Finding Compliance Internal Control over Compliance - Significant Deficiency Criteria or Specific Requirement OMB’s Uniform Administrative Requirement, Cost Principles, and Audit Requirements for Federal Awards (UG) requires that grant recipients follow procurement procedures for the acquisition of property or services under a federal award. Management is also responsible for establishing and maintaining effective internal controls over compliance with federal requirements that have a direct and material effect on a federal program. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. Condition and Context Services paid for by the Special Education Grants to States and Preschool Grants did not follow UG procurement procedures. Cause Weaknesses in the design and implementation of internal controls. Effect or Potential Effect Due to the weaknesses in internal control noted above, there is a risk that procurements may be awarded to vendors in a manner that is not consistent with federal procurement requirements. Known questioned costs are reported as follows: AL Number(s) Name of Federal Program or Cluster Questioned Costs 84.027/84.173 Special Education Cluster $74,562 Recommendation The City should address the weaknesses in internal controls noted above in order to ensure that federal procurements are conducted in accordance with federal and state requirements. Views of Responsible Official and Planned Corrective Action Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.
2023-006 Improve Internal Controls Over Reporting Federal Agency: U.S. Department of the Treasury Award Name: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds AL Number(s): 21.027 Award Year: 2022 Compliance Requirement: Reporting Type of Finding Compliance Internal Control over Compliance - Significant Deficiency Criteria or Specific Requirement OMB’s Uniform Administrative Requirement, Cost Principles, and Audit Requirements for Federal Awards (UG) requires that grant recipients design internal controls to ensure that reports submitted to the State/Federal government are complete and accurate. Management is also responsible for establishing and maintaining effective internal controls over compliance with federal requirements that have a direct and material effect on a federal program. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. Condition and Context Key line items, specifically current period expenditures and total cumulative expenditures, included on the project and expenditure report submitted for quarters 3 (July – September) and 4 (October – December) did not agree to the general ledger. In addition, there was no documented evidence of review of these reports prior to submission. Cause Weaknesses in the design and implementation of internal controls. Effect or Potential Effect Due to the weaknesses in internal control noted above, key line items on reports submitted may not be complete or accurate. No questioned costs are reported as it is not quantifiable. Recommendation The City should design and implement an internal control procedure to ensure that reports submitted are complete and accurate. Views of Responsible Official and Planned Corrective Action Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.