Finding 2024-005: Improve Procurement Procedures Federal Program(s) Information Federal Agency: Department of Education Cluster/Program: Special Education Cluster Award Name: Special Education Grants to States and Special Education Preschool Grants Assistance Listing Number: 84.027/84.173 Award Year: 2024 Compliance Requirement: Procurement Type of Finding - Compliance Internal Control over Compliance – Material Weakness Criteria or Specific Requirement Per 2 CFR 200.318–200.327, non-federal entities must use their own documented procurement procedures which reflect applicable state, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards set forth in the Uniform Guidance. In some cases, state procurement laws under MGL Chapter 30B are more restrictive than the Uniform Guidance. In the event state procurement laws are less restrictive, non-federal entities must follow the more restrictive requirement under the Uniform Guidance. Condition and Context During our testing of three procurement transactions under the Special Education Cluster, the Town was unable to provide documentation supporting whether procurement policies and procedures were followed for each transaction. Specifically, the Town believed that the contracts were exempt from procurement under MGL Chapter 30B for contracts utilizing special education funding, which is less restrictive than Uniform Guidance requirements in this particular circumstance. As a result, the Town did not comply with the federal procurement standards applicable to these transactions. Cause The Town’s internal controls over procurement did not ensure that federal requirements under Uniform Guidance were followed when state and federal rules differed. The Town applied state-level exemptions rather than adhering to more restrictive federal standards. Effect or Potential Effect The absence of procurement documentation and use of state exemptions rather than federal requirements increase the risk of non-compliance and may result in unallowable costs. Questioned costs are reported as follows over all expenditures with vendors in excess of the micro-purchase threshold of $10,000: AL Number(s): Name of Federal Program or Cluster Questioned Costs 84.027/84.173 Special Education Cluster $759,116 Recommendation We recommend that the Town strengthen its internal controls over procurement to ensure compliance with Uniform Guidance requirements, regardless of state law exemptions. The Town should ensure adequate documentation is retained for all federally funded procurements, and that procurement staff are trained on the distinction between federal and state procurement requirements. Views of Responsible Official See corrective action plan included herein.
Finding 2024-006: Improve Documentation and Controls over Allowable Costs Federal Program(s) Information Federal Agency: Department of Education Cluster/Program: Special Education Cluster Award Name: Special Education Grants to States and Special Education Preschool Grants Assistance Listing Number: 84.027/84.173 Award Year: 2024 Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Type of Finding - Compliance Internal Control over Compliance – Material Weakness Criteria or Specific Requirement Per Uniform Guidance (2 CFR § 200.430), charges to federal grants for salaries and wages must be based on records that accurately reflect the work performed. Time and effort documentation—such as personnel activity reports, after-the-fact certifications, or properly maintained timesheets for hourly employees—must support that the amount charged to the grant is allocable and appropriate. Condition and Context Of the 40 payroll selections tested for the Special Education Cluster, 28 lacked required time and effort documentation to support the time worked on the grant. In addition, for 21 hourly employees, timesheets were not maintained, preventing verification that only hours spent on grant functions were charged to the grants. Cause The Town did not have effective controls in place to ensure required time and effort documentation and timesheets were completed and retained for all employees whose salaries or wages were charged, in whole or in part, to federal grant programs. Effect or Potential Effect Lack of proper time and effort support and failure to maintain timesheets for hourly employees increases the risk of unallowable or unsupported costs being charged to the grants, resulting in material noncompliance and the potential for disallowed costs. Questioned costs are reported as follows: AL Number(s): Name of Federal Program or Cluster Questioned Costs 84.027/84.173 Special Education Cluster $1,251,490 Recommendation The Town should implement and enforce procedures to ensure all employees whose salaries or wages are charged to federal grants maintain and retain appropriate time and effort documentation, including timesheets for hourly staff and semi-annual certifications for salaried staff, in compliance with Uniform Guidance. Views of Responsible Official See corrective action plan included herein.
Finding 2024-003: Improve Internal Controls Over Procurement Federal Program(s) Information Federal Agency: Department of the Treasury Award Name: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Award Year: 2024 Compliance Requirement: Procurement Type of Finding - Compliance Internal Control over Compliance – Significant Deficiency Criteria or Specific Requirement Per 2 CFR 200.318–200.327, non-federal entities must use their own documented procurement procedures which reflect applicable state, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards set forth in the Uniform Guidance. In some cases, state procurement laws under MGL Chapter 30B are more restrictive than the Uniform Guidance. In the event state procurement laws are less restrictive, non-federal entities must follow the more restrictive requirement under the Uniform Guidance. Condition and Context During our testing of six procurement transactions under the Coronavirus State and Local Fiscal Recovery Funds program, the Town was unable to provide documentation supporting whether procurement policies and procedures were followed for one transaction. Specifically, the Town believed that the contract was exempt from procurement under MGL Chapter 30B for contracts with architects, engineers, and related professionals, which is less restrictive than Uniform Guidance requirements in this particular circumstance. As a result, the Town did not comply with the federal procurement standards applicable to this transaction. Cause The Town’s internal controls over procurement did not ensure that federal requirements under Uniform Guidance were followed when state and federal rules differed. The Town applied state-level exemptions rather than adhering to more restrictive federal standards. Effect or Potential Effect The absence of procurement documentation and use of state exemptions rather than federal requirements increase the risk of non-compliance and may result in unallowable costs. Questioned costs are reported as follows: AL Number(s): Name of Federal Program or Cluster Questioned Costs 21.027 COVID-19 – Coronavirus State and Local Fiscal Recovery Funds $241,400 Recommendation We recommend that the Town strengthen its internal controls over procurement to ensure compliance with Uniform Guidance requirements, regardless of state law exemptions. The Town should ensure adequate documentation is retained for all federally funded procurements, and that procurement staff are trained on the distinction between federal and state procurement requirements. Views of Responsible Official See corrective action plan included herein.
Finding 2024-004: Improve Internal Controls Over Reporting Federal Program(s) Information Federal Agency: Department of the Treasury Award Name: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Award Year: 2024 Compliance Requirement: Reporting Type of Finding - Compliance Internal Control over Compliance – Material Weakness Criteria or Specific Requirement Under the American Rescue Plan Act (ARPA) State and Local Fiscal Recovery Funds (SLFRF), the Town is required to submit accurate and complete quarterly performance and evaluation reports in accordance with program requirements. Amounts reported, including current period and cumulative expenditures, must be supported by the entity’s general ledger and any variances be explained. When electing to calculate revenue loss rather than applying the standard $10 million allowance, the recipient must maintain adequate support for the calculation and ensure the amounts reported are accurate and supported. Recipients are also required to maintain effective internal controls, including documented review of reports prior to submission. Condition and Context During our audit, we sampled two quarterly performance and evaluation reports submitted for the ARPA program and identified discrepancies in both current period and cumulative expenditures reported as compared to the amounts recorded in the general ledger detail. Further, there was no evidence of a documented, independent review of the reports prior to their submission to the agency. Additionally, the Town elected to calculate revenue loss using the Treasury’s revenue loss formula rather than taking the standard one-time $10 million allowance. The underlying documentation provided to support the Town’s revenue loss calculation did not agree to the amounts reported on the quarterly performance and evaluation reports. The discrepancies resulted from issues in the original report query used to build the calculation and from the Town not maintaining reports used to build the calculation. Cause The Town did not maintain effective internal controls over the reporting process to ensure reported expenditures and revenue loss amounts are accurate and supported by underlying accounting records. There were no formal procedures in place for independent review of the reports prior to submission and supporting records for the revenue loss calculation were not properly maintained. Effect or Potential Effect Inaccurate reporting and lack of sufficient documentation could lead to misstatements in federally required reports and increase the risk of administrative noncompliance. No questioned costs are reported as the Town did not overclaim lost revenue amounts and the requirement is administrative in nature. Recommendation The Town should establish and implement formal procedures to ensure quarterly reports submitted to the federal agency are reconciled to the general ledger, subject to a documented independent review, and supported by retained source documentation. In addition, we recommend the Town maintain all underlying records used in the calculation of revenue loss for audit and reporting purposes and adjust performance and evaluation reports on a prospective basis to reflect appropriate amounts. Views of Responsible Official See corrective action plan included herein.