2025 001 Activities Allowed or Unallowed and Allowable Costs/Cost Principles Beneficiary Payments U.S. Department of State: Bureau of Population and Refugees and Migration: U.S. Refugee Admissions Program: FY24 MRA Capacity Development Funds (ALN 19.510, award number SPRMCO23CA0361) FY2023 25 Year 3 Reception and Placement Program Affiliate MRA DA+Admin (ALN 19.510, award number SPRMCO24CA0356) FY2023 25 Year 3 Reception and Placement Program Affiliate ERMA DA+Admin (ALN 19.510, award number SPRMCO24CA0357) Statistically valid sample: No, and it was not intended to be. Repeat finding: Not a repeat finding. Finding Type: Significant Deficiency and noncompliance Criteria: 2 CFR section 200.303 requires that non federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non federal entity is managing the federal awards in compliance with federal statues, regulations, and the terms and conditions of federal awards. The specific requirements for activities allowed or unallowed are unique to each federal program and are found in the federal statutes, regulations, and the terms and conditions of the federal award pertaining to the program. 2 CFR Part 200 establishes cost principles for determining costs applicable to federal awards with nonprofit organizations. The Uniform Guidance (2 CFR 200.403) requires that costs charged to federal awards be necessary, reasonable, allocable, adequately documented, and in compliance with the terms and conditions of the federal award. Costs that do not provide a direct programmatic benefit, or where the benefit cannot be reasonably demonstrated or allocated, and are incurred outside the approved scope of the award are not allowable as direct charges. Condition and context: On February 13, 2025, IRC’s Ethics & Compliance Unit (ECU) received a whistleblower report alleging that an IRC Housing Coordinator located in an office in Northern California submitted unauthorized and fraudulent requests for funds, which were uploaded onto USIO bank debit cards, claiming they were expenses for newly resettled IRC clients, and instead using the funds for personal benefit. These USIO cards are intended to be used to cover expenses for newly arrived refugees during the initial 90 day period, including rent, food and other miscellaneous expenses. An internal investigation was initiated in February 2025 which found that the Housing Coordinator had loaded funds onto USIO bank debit cards between May 8, 2023 and February 11, 2025 which were for purposes other than refugees. The investigation concluded that there were unauthorized and fraudulent requests for funds in the amount of $215,639, plus the related indirect costs that were applied on these direct costs of $33,920, for a total of $249,559 related to federal funds expended in 2025 and charged to the grants identified in this finding. The total expenditures in this program included on the 2025 schedule of expenditures of federal awards amount to $42,671,438. This unauthorized and fraudulent requests for funds noted of $249,559 is not included in the total expenditures in this program on the 2025 schedule of expenditures of federal awards as the amounts were recoded to unrestricted funds. IRC communicated this matter to the federal agency in February 2025 when the investigation began and again in September 2025 when the investigation was completed. The expenditures were reallocated to IRC’s unrestricted funds so that the federal grants were not charged. Cause: The internal investigation completed by ECU concluded that the unauthorized and fraudulent requests for funds resulted from the Housing Coordinator’s ability to request the transactions and approve the transactions because he obtained his direct report’s general ledger log in credentials. Additionally, there were several control gaps in the Northern California office, including the following: • There was a lack of safekeeping of blank USIO Cards – this office was not following the established control to keep the blank cards in a locked safe. • USIO cards were not tracked or recorded properly – this office was not always following the established control to have the refugees sign a log book upon receipt of a USIO card. • A lack of oversight from the heads of programs and finance in this office regarding reconciliations between budgeted and actual amounts with irregular transactions being flagged (excessive housing expenses). Effect: The auditee charged certain costs directly to the program that did not meet the requirements noted above, and were therefore, not allowable. Questioned Costs: Questioned costs were $249,559, however, IRC reallocated these costs to IRC’s unrestricted funds, so that the grants were not charged. Recommendation: IRC should design and implement enhanced internal control procedures over the authorization and disbursement of funds to IRC refugee clients through USIO cards to ensure that funding provided is allowable. Additionally, IRC should provide training to employees about sharing their personal credentials to access IRC’s general ledger. Views of Responsible Officials: Management agrees with this finding, which was identified by IRC in February 2025 and raised to KPMG prior to the single audit. Corrective actions related to USIO portal access, office leadership and structure, training and policies, and spot checking have been implemented and will continue through June 2026.
2025 002 Reporting Federal Funding Accountability and Transparency Act U.S. Department of State: Bureau of Population and Refugees and Migration: Overseas Refugee Assistance Program for Middle East and North Africa: Provision of lifesaving protection & health response for Syrian refugees and vulnerable Lebanese (ALN 19.519, award number SPRMCO24CA0321) Overseas Refugee Assistance Program for South Asia: Comprehensive, Integrated Multi Sector Response for Rohingya Refugees and Host Communities in Cox’s Bazar (Y2) (ALN 19.523, award number SPRMCO24CA0239) U.S. Agency for International Development: USAID Foreign Assistance for Programs Oversees: Improved (Re)integration Services Activity (ALN 98.001, award number 72052224CA00004) Lifesaving Integrated Humanitarian Services in Underserved Areas of Sudan (ALN 98.001, award number 720BHA22GR00218) Statistically valid sample: No, and it was not intended to be. Repeat finding: Yes (2024 001). Finding Type: Significant deficiency and noncompliance Criteria: Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109 282), as amended by Section 6202 of Public Law 110 252, (Transparency Act) that are codified in 2 CFR Parts 25 and 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first tier subawards of $30,000 or more to System for Award Management (SAM.gov). Aspects of the Transparency Act that relate to subaward reporting (1) under grants and cooperative agreements were implemented in OMB in 2 CFR Part 170 and (2) under contracts, by the regulatory agencies responsible for the Federal Acquisition Regulation (FAR at 5 FR 39414 et seq., July 8, 2010). The requirements pertain to recipients (i.e., direct recipients) of grants or cooperative agreements who make first tier subawards and contractors (i.e., prime contractors) that award first tier subcontracts. Title 45 U.S. Code of Federal Regulations Part 75 (45 CFR 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards for HHS Awards, section 75.2 defines Subaward as an award provided by a pass through entity to a subrecipient for the subrecipient to carry out part of a federal award received by the pass through entity. It does not include payments to a contractor or payments to an individual that is a beneficiary of a federal program. A subaward may be provided through any form of legal agreement, including an agreement that the pass through entity considers a contract. Further, 45 CFR 75.2 defines Subrecipient as a non federal entity that receives a subaward from a passthrough entity to carry out part of a federal award; but does not include an individual that is a beneficiary of such award. A subrecipient may also be a recipient of other federal awards directly from a federal awarding agency. Additionally, per 2 CFR 200.303, non federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. The following subaward data elements to be reported include the following: • Subawardee Name • Subawardee Unique Entity Identifier • Amount of Subaward • Subaward Obligation/Action Date • Date of Report Submission • Subaward Number • Subaward Project Description • Subawardee Names and Compensation of Highly Compensated Officers, if applicable The information is required to be reported in SAM.gov no later than the last day of the month following the month in which the subaward/subaward amendment obligation was made. Condition and context: For ALN 19.519, there were 3 new or amended subawardee agreements entered into during fiscal year 2025 that required FFATA reporting. We selected 2 of these agreements for test work and noted that while all the key data elements were accurately submitted, the information for both agreements was not submitted timely. Both of the agreements were entered into on September 30, 2024 and had a submission due date of October 31, 2024. SAM.gov notes the submission date for both agreements to be August 21, 2025. During our testwork over this program, we noted IRC did not establish control procedures to submit FFATA reports for all subawards on a timely basis. We noted the following exceptions:7 Transactions Tested: 2 Subaward not reported: 0 Report not timely: 2 Subaward amount incorrect: 0 Subaward incorrect key elements: 0 Dollar amount of tested transactions: $403,678 Subaward not reported: $0 Report not timely: $403,678 Subaward amount incorrect: $0 Subaward incorrect key elements: $0 For ALN 19.523, there were 4 new or amended subawardee agreements entered into during fiscal year 2025 that required FFATA reporting. We selected 2 of these agreements for test work and noted that while all the key data elements were accurately submitted, the information for both agreements was not submitted timely. Both of the agreements were entered into on September 1, 2024 and had a submission due date of October 31, 2024. SAM.gov notes the submission dates to be December 4, 2025 and December 8, 2025. During our testwork over this program, we noted IRC did not establish control procedures to submit FFATA reports for all subawards on a timely basis. We noted the following exceptions: Transactions Tested: 2 Subaward not reported: 0 Report not timely: 2 Subaward amount incorrect: 0 Subaward incorrect key elements: 0 Dollar amount of tested transactions: $759,550 Subaward not reported: $0 Report not timely: $759,550 Subaward amount incorrect: $0 Subaward incorrect key elements: $0 For ALN 98.001, there were 23 new or amended subawardee agreements entered into during fiscal year 2025 that required FFATA reporting. We selected 5 for test work and noted that while all the key data elements were accurately submitted, the information for 4 of these agreements was not submitted timely. Two of these agreements were entered into on November 1, 2024, one was entered into on November 22, 2024 and the last was entered into on December 1, 2024. The submission due dates for these agreements were December 31, 2024 and January 31, 2025. SAM.gov notes the submission dates for three of these agreements to be December 18, 2025, and for the one agreement entered into on November 22, 2024, the submission date was noted to be January 7, 2025. During our testwork over this program, we noted IRC did not establish control procedures to submit FFATA reports for all subawards on a timely basis. We noted the following exceptions: Transactions Tested: 5 Subaward not reported: 0 Report not timely: 4 Subaward amount incorrect: 0 Subaward incorrect key elements: 0 Dollar amount of tested transactions: $302,280 Subaward not reported: $0 Report not timely: $291,135 Subaward amount incorrect: $0 Subaward incorrect key elements: $0 Cause: Following the federal system migration, the USG FFATA reporting platform within SAM.GOV no longer displayed or made readily retrievable the submission date associated with individual FFATA. Effect: Delayed reporting can lead to reduced transparency, hindering public access to information about how federal funds are being used. Questioned Costs: None. Recommendation: IRC should continue to communicate to all field office personnel responsible for FFATA submissions the importance of timely reporting and maintaining appropriate documentation to evidence timely reporting. We recommend adding another level of review from headquarters to ensure reporting is taking place once a subawardee agreement is finalized and documenting that review in writing. Additionally, we recommend that IRC take screen shots during the submission process and maintain these with the subawardee agreements. This will evidence the submission in SAM.gov, specifically evidencing the submission date. Views of Responsible Officials: While Management maintains it acted in good faith to ensure all FFATA submissions are provided timely, the new FFATA reporting platform issues made it difficult for IRC to substantiate the dates of submission. IRC did contact FSD.gov to confirm what form of evidence would be considered sufficient in the absence of visible system date stamps. FSD.gov was unable to provide specific confirmation and instead directed IRC to published guidance https://www.fsd.gov/gsafsd_sp/en/under the federal funding accountability and transparency act how acknowledging existing “implementation challenges”. This guidance shifts the focus of compliance validation from system generated timestamps to whether the recipient acted in good faith to comply with reporting obligations. Relying on this, IRC’s internal control framework did not include a secondary documentation mechanism to independently evidence submission dates in the event that system functionality limited visibility. However, IRC remains committed to full FFATA compliance and will incorporate additional steps to strengthen the compliance documentation trail.