Audit 406271

Section III - Federal Award Findings and Questioned Costs Finding 2025-001 Significant deficiency in internal controls over compliance related to allowable costs. Federal Agency: Department of Health and Human Services Program Titles: Refugee and Entrant Assistance State/Replacement Designee Administered Programs Assistance Listing Number: 93.566 Award Number: 2134-30265 Award Period: October 1, 2021 - September 30, 2025 Criteria 2 U.S. Code of Federal Regulations (CFR) 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards provides for specific items of cost which are considered to be unallowable. Additionally, costs must be necessary and reasonable. SOWA’s internal controls over allowable costs failed to remove these items from allowable costs. Condition/Context During the testing of allowable costs, there were two instances where costs that were not necessary or reasonable were directly allocated to the grant. Questioned Costs $118 - Known Questioned Costs were computed based on the accumulation of the portion of transactions tested that were deemed not necessary and reasonable and were confirmed noncompliant. Cause SOWA’s operation of internal controls was not sufficient to ensure that unnecessary/reasonable costs charged to federal awards were not charged to the grant. Effect Based on the exception noted in the operation of internal controls, unallowable costs could be charged to the Federal Award. Repeat Finding This is not a repeat finding. Recommendation We recommend that SOWA ensures current internal controls are communicated to staff charging expenses to federal awards and consider the need for further strengthening internal controls over allowable costs. Views of Responsible Official of Auditee Management concurs with the finding and has provided accompanying corrective action plan.