Assistance Listing Number, Federal Agency, and Program Name - 21.027 - U.S. Department of the Treasury - COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Federal Award Identification Number and Year - N/A Pass through Entity - Cook County Health Finding Type - Significant deficiency Repeat Finding - No Criteria - 2 CFR 200.510(b) requires the auditee to prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the financial statements that includes total federal awards expended. The SEFA must be complete and accurately reflect all federal expenditures. Condition - The Organization’s SEFA for the year ended June 30, 2024 was not complete. Specifically, certain federal expenditures were omitted from the SEFA. Questioned Costs - None If Questioned Costs are Not Determinable, Description of Why Known Questioned Costs Were Undetermined or Otherwise Could Not be Reported - No questioned costs were identified, as the issue relates to the completeness of SEFA reporting rather than the allowability, allocability, or reasonableness of the underlying expenditures. Identification of How Questioned Costs Were Computed - N/A Context - During our procedures, we noted that $668,038 of expenditures related to the Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) program was not included on the fiscal year 2024 SEFA, even though these expenditures were incurred in fiscal year 2024 and should have been reported. Management identified this omission during the preparation of the fiscal year 2025 SEFA. While additional procedures were performed to assess completeness, no other omitted federal expenditures were identified. Cause and Effect - Although the Organization has a formal SEFA preparation and review process, the control did not operate effectively to identify all sources of federal funding. Specifically, CSLFRF funding was not identified by management as federal assistance and, therefore, was not included in the population subject to SEFA reporting and review in fiscal year 2024. The fiscal year 2024 SEFA was understated by $668,038. Although the omission did not impact the determination of major programs for fiscal year 2024, an incomplete SEFA increases the risk that federal expenditures are not fully identified and could result in inaccurate reporting and potential noncompliance with the Uniform Guidance requirements. The fiscal year 2025 SEFA properly excludes these expenditures. Recommendation - We recommend that management strengthen procedures over SEFA completeness by enhancing the process used to identify federal funding sources. This may include: • Implementing a centralized and regularly updated listing of all funding sources that clearly identifies federal awards, including pass through funding • Establishing procedures to evaluate new or amended agreements for federal characteristics at the time of award • Enhancing the SEFA review process (e.g., CFO review) to include a formal reconciliation of federal expenditures to the general ledger and grant listings, with specific consideration of funding sources that may not be clearly labeled as federal These enhancements will help ensure all federal expenditures are identified and accurately reflected in the SEFA. Views of Responsible Officials and Corrective Action Plan - Management agrees it is important to have a SEFA preparation process that allows the identification of all sources of federal funding. In addition to current procedures, management will confirm with grantors directly when grant award agreements are silent on whether awards are sourced from federal funding and document the confirmations from grantors.
Assistance Listing Number, Federal Agency, and Program Name - 21.027 - U.S. Department of the Treasury - COVID-19 - Coronavirus State and Local Fiscal Recovery Funds 93.959 - U.S. Department of Health and Human Services - Block Grants for Prevention and Treatment of Substance Abuse Federal Award Identification Number and Year - 21.027 - All programs reported 93.959 - Grant numbers 43CDZ03232, 43CDC03016, 43CDC03736, 43CDZ03787, and 43CDC03731 Pass through Entity - 21.027 - Cook County Health and Kane County, Illinois 93.959 - Direct Awards Finding Type - Significant deficiency Repeat Finding - No Criteria - Under 2 CFR 200.430(i), charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: • Be supported by a system of internal control that provides reasonable assurance charges are accurate, allowable, and properly allocated • Be supported by documentation that reflects the total activity for which the employee is compensated Condition - The Organization allocates personnel costs to federal programs based on wage forms that reflect estimated time expected to be worked across programs. Supervisors perform biweekly reviews of employee time charged within the Paylocity system and compare allocations to supporting information, such as program schedules and caseloads. However, we noted that: • There is no formal documentation retained evidencing the supervisor’s review of supporting records (e.g., caseloads and schedules) to substantiate that recorded time aligns with actual work performed. • The only evidence of review is system approval within Paylocity, which indicates the timecard was approved but does not demonstrate the nature, extent, or basis of the review performed. Questioned Costs - N/A If Questioned Costs are Not Determinable, Description of Why Known Questioned Costs Were Undetermined or Otherwise Could Not be Reported - N/A Identification of How Questioned Costs Were Computed - N/A Context - The Organization allocates payroll costs to federal awards based on wage forms reflecting how employees are expected to work across programs. Supervisors review employee time biweekly and consider information, such as caseloads, counselor/doctor notes, and other operational records, to assess whether recorded allocations remain reasonable. If an employee’s actual time differs from the allocation reflected in Paylocity, the allocation is expected to be reviewed and corrected within the payroll system via an updated wage form. Cause and Effect - The Organization relies on system approval within Paylocity and informal supervisory processes rather than a formal, documented review process to support payroll allocations charged to federal awards. Without documented evidence of supervisory review, the Organization cannot clearly demonstrate that payroll costs charged to federal awards are supported and accurately reflect actual work performed. Due to the lack of formal documentation to demonstrate that payroll allocations charged to the grant were reasonable, additional audit procedures were necessary. Recommendation - We recommend the Organization strengthen its internal controls over personnel cost allocations by implementing a more formal and well documented review process. At a minimum, supervisors should document their review of payroll allocations, including the supporting information considered (e.g., caseloads and counselor/doctor notes) and the basis for concluding that recorded time reasonably reflects work performed. To further enhance compliance and documentation, the Organization may consider the following approaches: • Track time by grant at the employee level: Require employees to record actual time worked by funding source (e.g., by grant or cost objective) within the payroll system, reducing reliance on estimated allocations. • Implement personnel activity reports (PARs): Utilize periodic certifications (e.g., each pay period) in which employees attest that recorded time reflects actual work performed across funding sources, with supervisory review and approval documented. • Enhance existing processes: If continuing to use estimated allocations, require consistent documentation of supervisory review, including evidence of comparison to supporting records and evaluation of any variances. Documenting and retaining evidence of these reviews will strengthen the Organization’s ability to demonstrate that personnel costs are accurate, allowable, and properly allocated in accordance with the Uniform Guidance and will reduce audit burden in future periods. Views of Responsible Officials and Planned Corrective Actions - Management agrees and will implement a control that requires direct supervisors to document their reviews of supporting records (e.g., caseloads and schedules) of direct reports to substantiate that recorded time aligns with actual work performed as a part of the supervisors' biweekly timesheet reviews. Family Guidance Centers, Inc. will retain this documentation in accordance with its document retention policy.