Finding No. 2023-003 Federal Agency: U.S. Department of Agriculture AL Program: 10.555 National School Lunch Program (NSLP) Federal Award No.: 217NMNM3N1174, 227NMNM3N1174 and 237NMNM3N1174 Area: Allowable Costs/Cost Principles Questioned Costs: $-0- Criteria: In accordance with 2 CFR Section 200.303, non-federal entities receiving federal awards must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: Based on walkthrough procedures performed over the disbursement process of program funds, PSS lacks documented evidence of review and approval controls over check and ACH payments to ensure that payment amounts agree with approved invoice amounts. Specifically, the process did not include documented review or approval demonstrating that checks and ACH disbursements were verified against supporting invoices prior to payment. As a result, controls designed to ensure the accuracy and validity of disbursements are not adequately documented or evidenced. Cause: PSS lacks adequate documentation evidencing its monitoring and review procedures over disbursements of program funds, including review and approval controls to ensure that checks and ACH payments agree with approved invoice amounts. Effect or potential effect: PSS is in noncompliance with 2 CFR Section 200.303 related to internal control requirements. No questioned costs are identified as testing did not disclose noncompliance with allowable costs/cost principles compliance requirements. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: PSS should implement and enforce adequate documentations over its monitoring control procedures in place over disbursements of program funds. Views of Auditee and Corrective Action Plan: PSS concurs with the findings. Refer to PSS’ Corrective Action Plan for additional information.
Finding No. 2023-004 Federal Agency: U.S. Department of Agriculture AL Program: 10.555 National School Lunch Program (NSLP) Federal Award No.: 217NMNM3N1174, 227NMNM3N1174, 237NMNM3N1174 Area: Procurement and Suspension and Debarment Questioned Costs: $725,425 Criteria: In accordance with 2 CFR Section 200.317, when conducting procurement transactions under a Federal award, a State must follow the same policies and procedures it uses for procurements with non-Federal funds. PSS Procurement Rules and Regulations requires the following: 1. § 60-40-205 Competitive Sealed Bidding: • Public Notice - Adequate public notice of the invitation for bids shall be given a reasonable time prior to the date set forth for the opening of bids. Publication of notice shall be on the Public School website over a continuous period of four weeks shall be deemed to be adequate notice; and • Bid Acceptance and Bid Evaluation - Bids shall be unconditionally accepted without alteration or correction, except as authorized in the chapter. Bids shall be evaluated based on the requirements set forth in the invitation for bids, which may include criteria as necessary to reasonably permit a determination as to the acceptability of the bid for the particular purpose intended. 2. § 60-40-225 Competitive Sealed Proposals: • Condition for Use - When the Commissioner of Education determines in writing upon the advise of the legal counsel that the use of a competitive sealed bidding is either not practical or not advantageous to the Public School System, a contract may be entered into by competitive sealed proposals; • Public Notice - Adequate public notice of the request for proposals shall be given in the same manner as provided for in competitive sealed bids; and • Award - Award shall be made to the responsible offeror whose proposal is determined in writing to be most advantageous to the Public School System taking into consideration price and the evaluation factors set forth in the request for proposals. The award cannot be made less than five business days after the issuance of a notice of intent to award pursuant to subsection (g). No other factors or criteria shall be used in the evaluation and the contract file shall contain the basis on which the award is made. 3. § 60-40-560 Authority to Debar or Suspend • After reasonable notice to the person involved and reasonable opportunity for the person to be heard under the Administrative Procedure Act [1 CMC §§ 9101, et seq.], the Commissioner of Education after consultation with the Public School System legal counsel, shall have authority to debar a person for cause from consideration for award of contracts; and • The debarment shall not be for a period of more than three years. The Commissioner of Education, after consultation with Public School System legal counsel, shall have authority to suspend a person from consideration for award of contracts if there is probable cause for debarment. The suspension shall not be for a period exceeding three months. 4. In accordance with 2 CFR §180.220 and §180.300, entities that enter into a covered transaction with another person at the next lower tier for a contract amount that is expected to equal or exceed $25,000, entities must verify that the person with whom they intend to do business is not excluded or disqualified by: (a) Checking SAM.gov Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person. Condition: 1. Of twenty-one expenditures tested, aggregating $711,947 of a total population of $17,350,718 in nonpayroll expenditures subject to procurement, the following were noted: a. For one (or 5%), the selected vendor for contract number 00182076-OC was the third lowest bidder, for which documentation of the selection justification, was not provided. b. For one (or 5%), for contract number 00182076-OC only two public announcements of the invitation for bids were provided. No questioned costs are presented as the amount is questioned at Condition 1a. 2. PSS does not verify whether a person or a vendor is not excluded or disqualified pursuant to 2 CFR §180.220 and §180.300, prior to entering into a covered transaction for an amount equal to or exceeds $25,000 with award funds. Cause: 1. Inadequate documentation and inadequate systematic filing of relevant documentation supporting program costs; and 2. Lack of monitoring control procedures to ensure verification as to whether a person or a vendor is not excluded or disqualified pursuant to 2 CFR §180.220 and §180.300 are performed, prior to entering into a covered transaction. Effect or potential effect: PSS is in noncompliance with applicable procurement and suspension and debarment regulations and questioned costs of $725,425 result for Conditions 1a and 2. Identification as Repeat Finding: Finding No. 2022-012 Recommendation: 1. Establish and maintain effective systematic filing of relevant documentation to support program costs and for easier retrieval; and 2. Establish and implement effective monitoring controls over the verification of excluded or disqualified persons or vendors pursuant to 2 CFR §180.220 and §180.300, prior to PSS entering into a covered transaction. Views of Auditee and Corrective Action Plan: PSS concurs with the findings. Refer to PSS’ Corrective Action Plan for additional information.
Finding No. 2023-005 Federal Agency: U.S. Department of Agriculture AL Program: 10.555 National School Lunch Program (NSLP) Federal Award No.: 217NMNM3N1174, 227NMNM3N1174, 237NMNM3N1174 Area: Reporting Questioned Costs: $-0- Criteria: In accordance with 7 CFR Section 210.8, to be entitled to reimbursement under this part, each school food authority shall submit to the State agency, a Claim for Reimbursement that must include data in sufficient detail to justify the reimbursement claimed and to enable the State agency to provide the Report of School Program Operations required under § 210.5(d). Such data must include, at a minimum, the number of free, reduced price, and paid lunches and after school snacks served to eligible children. The claim must be signed by a school food authority official. In addition, School food authorities shall maintain on file, each Claim for Reimbursement and all data used in the claims review process, by school. Records shall be retained as specified in § 210.23(c) of this part. School food authorities shall make this information available to the Department and the State agency upon request. In accordance with the applicable reporting requirements, an SF-425 report is required to be accompanied by supporting accounting records to verify the accuracy of the reported amounts. Condition: 1. Of five SF-425 reports that were due for submission during FY2023, the underlying accounting records supporting all five (or 100%) SF-425 reports, were not provided. 2. Of four quarterly program reports that were due for submission during FY2023, the underlying accounting records supporting all four (or 100%) quarterly program reports, were not provided. Cause: 1. PSS lacks monitoring control procedures to ensure data included in the SF-425 and quarterly program reports are supported with underlying accounting records. 2. Inadequate documentation and inadequate systematic filing of relevant documentation supporting the SF-425 and quarterly program reports. Effect or potential effect: PSS is in noncompliance with the applicable reporting compliance requirements. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: 1. PSS should implement and enforce monitoring controls over compliance with applicable reporting requirements; and 2. Establish and maintain effective systematic filing of relevant documentation to support program costs and for easier retrieval. Views of Auditee and Corrective Action Plan: PSS concurs with the findings. Refer to PSS’ Corrective Action Plan for additional information.
Finding No. 2023-006 Federal Agency: U.S. Department of Education AL Program: 84.027 Special Education Cluster - Grants to States (IDEA, Part B) Federal Award No.: H027A200106, H027A210106, H027X210106, H027A22106, H027A230106 Area: Activities Allowed/Unallowed, Allowable Costs/Cost Principles Questioned Costs: $5,130 Criteria: 1. Per CFR §200.403(a), costs must be necessary and reasonable for the performance of the Federal award. 2. In accordance with 2 CFR §200.403, costs must be adequately documented in order to be allowable under federal programs. Condition: 1. Of ten nonpayroll expenditures tested, aggregating $184,105 of a total population of $1,241,478, one (or 10%), transaction pertains to an off-island travel from Rota to Saipan to attend PSS’ education day celebration event. There was no documentation provided to justify that such an event is necessary and reasonable for the performance of the federal award, for which the corresponding directly associated travel costs are also questioned. 2. Of thirty payroll expenditures tested, aggregating $75,035 of a total population of $3,488,866, the following were noted: a. For one (or 3%), the differential pay rate for the nine hours paid to an employee was not provided, for which the corresponding directly associated payroll costs are also questioned. b. For one (or 3%), the gross pay comprised of the employee’s payroll cost and annual leave pay out; however, the approved timesheet for the hours worked was not provided, for which the corresponding directly associated costs are also questioned. Cause: 1. PSS lacks monitoring control procedures to ensure program costs are supported; and 2. Inadequate documentation and inadequate systematic filing of relevant documentation supporting program costs. Effect or potential effect: PSS is in noncompliance with the applicable allowable costs/cost principles compliance requirements and questioned costs of $5,130 result as the projected questioned costs exceed the $25,000 threshold. Identification as Repeat Finding: Finding No. 2022-003 Recommendation: 1. PSS should implement and enforce monitoring controls over compliance with applicable allowable costs/cost principles; and 2. Establish and maintain effective systematic filing of relevant documentation to support program costs and for easier retrieval. Views of Auditee and Corrective Action Plan: PSS concurs with the audit findings and the associated questioned costs. Refer to PSS’ Corrective Action Plan for additional information.
Finding No. 2023-007 Federal Agency: U.S. Department of Education AL Program: 84.027 Special Education Cluster - Grants to States (IDEA, Part B) Federal Award No.: H027A210106, H027A220106, H027A230106 Area: Equipment and Real Property Management Questioned Costs: Undeterminable Criteria: In accordance with 2 CFR 200.313(b), a state must use, manage, and dispose of equipment acquired under a federal award in accordance with state laws and regulations. In accordance with 2 CFR 200.313(d)(1), property records must include a description of the property, a serial number or another identification number, the source of funding for the property (including the FAIN), the title holder, the acquisition date, the cost of the property, the percentage of the Federal agency contribution towards the original purchase, the location, use and condition of the property, and any disposition data including the date of disposal and sale price of the property. The recipient and subrecipient are responsible for maintaining and updating property records when there is a change in the status of the property. Further, in accordance with 2 CFR 200.313 (3), a control system must be developed to ensure adequate safeguards to prevent loss, damage or theft of the property. Additionally, 2 CFR 200.313(d)(4) requires that adequate maintenance procedures must be developed to keep the property in good condition. PSS Policy Subpart C Inventory Management Policy section 60-20-815 (a)(1) states that PSS shall require a physical count of all stock supply and equipment items at least once each year. Lastly, according to PSS Policy Subpart C Inventory Management Policy section 60-20-815 (c)(5), during inventory counts, all custodians must be matched with the appropriate records of assigned fixed assets maintained at the Central Office. Condition: 1. The capital assets listing maintained by PSS is incomplete and does not include all information for equipment and real property required under 2 CFR 200.313(d)(1), such as the federal participation percentage and the condition of the asset. 2. PSS lacks standardized and consistently implemented internal controls over safeguarding and maintenance of equipment across schools and offices. For four (or 80%) of the five locations selected for testing, no maintenance procedures and safeguarding measures for equipment are documented. 3. For one (or 13%) of eight capital assets selected for testing, PSS did not provide approved count sheets signed nor submitted the assigned custodian to support that a physical count was performed in FY2023. Cause: 1. PSS policies and procedures over capital assets management have not been fully updated to align with federal requirements under 2 CFR § 200.313 (d) (1), resulting in incomplete capital asset records. 2. PSS does not have a centralized and standardized system for safeguarding and maintaining equipment across all schools and offices for each type of equipment. 3. PSS’ document retention and record-keeping practices did not operate effectively to ensure that required inventory documentation, such as approved custodian count sheets, is properly maintained, stored and easily retrievable. Effect or potential effect: PSS is in noncompliance with applicable Equipment and Real Property Management requirements. Incomplete asset records, inconsistent safeguarding and maintenance practices, and insufficient inventory documentation increase the risk of loss, misuse, theft, or deterioration of federally funded property. Questioned costs are undetermined as we are unable to quantify the extent of noncompliance. Identification as Repeat Finding: Finding No. 2022-008 Recommendation: 1. PSS should update the structure and contents of their current capital asset listing to ensure all information required by 2 CFR 200.313(d)(1) is fully captured, maintained, and kept current for all equipment and real property acquired with federal funds. 2. PSS should revise and strengthen policies and procedures related to capital asset management to ensure alignment with federal requirements, including recordkeeping, inventory, safeguarding, and maintenance. 3. PSS should establish and implement centralized or standardized safeguarding and maintenance controls which should serve as minimum required procedures for all schools and offices regardless of equipment type. 4. Lastly, PSS should strengthen physical inventory procedures by requiring annual inventories to be properly documented, reviewed, approved, and retained, including ensuring all custodians submit signed inventory count sheets in accordance with its policy. Views of Auditee and Corrective Action Plan: PSS concurs with the findings. Refer to PSS’ Corrective Action Plan for additional information.
Finding No. 2023-008 Federal Agency: U.S. Department of Education AL Program: COVID-19 84.027 Special Education Cluster - Grants to States (IDEA, Part B) Federal Award No.: H027A220106, H027A230106, H027X210106 Area: Matching, Level of Effort, and Earmarking Questioned Costs: $345,823 Criteria: In accordance with IDEA §612(a)(18) as part of the IDEA Part B Application, states may meet the maintenance of State financial support (MFS), on either a total or per capita basis. Additionally, 34 CFR §300.163(a) says a State must not reduce the amount of State financial support for special education and related services for children with disabilities or otherwise made available because of the excess costs of educating those children, below the amount of support for the preceding fiscal year. Condition: 1. Based on the comparison of State expenditures recorded under Business Unit (BU) 111133 against the amount indicated on the Part B Application for MFS, we noted that PSS failed to maintain the required level of State financial support for special education and related services in FY2023. In addition, PSS included open encumbrances as part of its calculation for maintenance of effort. However, PSS was unable to substantiate these encumbrances or provide adequate documentation to support the inclusion of these encumbrances. As a result, questioned costs were determined based on the actual expenditures incurred in FY2023. 2. Per our walkthrough procedures over internal control, evidence of review and approval by the Director of Finance over the local expenditures recorded under business unit 111133 was not provided. Cause: PSS failed to adhere to the maintenance of effort requirements under IDEA §612(a)(18), 34 CFR §300.163 and applicable grant award requirements. Additionally, PSS lacks proper monitoring, review and approval controls over State expenditures recorded under business unit 111133 to ensure compliance with maintenance of effort requirements. Effect or potential effect: PSS is in noncompliance with applicable maintenance of effort regulations and questioned costs of $345,823 result. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: 1. PSS should ensure compliance with maintenance of effort requirements in accordance with applicable federal regulations and grant award terms. 2. PSS should establish and implement policies and procedures for monitoring, reviewing and reconciling State expenditures to accurately compare prior year and current year levels of State financial support for special education and related services. Views of Auditee and Corrective Action Plan: PSS concurs with the finding. Refer to PSS’ Corrective Action Plan for additional information.
Finding No. 2023-009 Federal Agency: U.S. Department of Education AL Program: COVID-19 84.027 Special Education Cluster - Grants to States (IDEA, Part B) Award Number: H027A210106, H027A220106, H027A230106, H027X210106 Area: Procurement and Suspension and Debarment Questioned Costs: $102,862 Criteria: In accordance with 2 CFR Section 200.317, when conducting procurement transactions under a Federal award, a State must follow the same policies and procedures it uses for procurements with non-Federal funds. PSS Procurement Rules and Regulations states the following: 1. § 60-40-210 Small Purchases • Purchases not exceeding $500 may be made without securing bids or price quotations if the Chief of Procurement and Supply considers the price reasonable. Such determination shall be made in writing and shall indicate: 1) the reason why price quotations were not sought; 2) the utility of the purchase; and 3) an explanation of why the price is reasonable under the circumstances. • Bidding is not required but is encouraged for procurement under $10,000. Price quotations from at least three vendors must be obtained and the selection based on competitive price and quality for procurement valued at under $10,000. Any price quotations obtained must be written, documented, and submitted to the Chief for approval. However, if it is an emergency and three price quotations are not practicable, the purchase shall function as an emergency procurement and follow § 60-40-220. 2. § 60-40-230 Competitive Selection Procedures for Professional Services: • Procurement Method – The services of accountants shall be procured as provided in this section except when authorized as a small purchase, emergency procurement, sole-source procurement or non-employment services contracts such as special education related services. • Policy – It is the policy to publicly announce all requirements for professional services and negotiate contracts on the basis of demonstrated competence and qualifications at a fair and reasonable price. The Chief Procurement Officer shall maintain files of current statements of qualifications of professional firms. Persons engaged in providing professional services may submit statements of qualifications and expressions of interests providing such types of services. Persons may amend these statements at any time by filing a new statement. • Public Announcement and Form of Request for Proposals – Adequate notice of the need for such services shall be given by the official with expenditure authority through a request for proposals. The request for proposals shall describe the services required, list the type of information and data required of each offeror and state the relative importance of particular qualifications. • Award – Award shall be made to the offeror determined in writing by the official with expenditure authority to be the best qualified based on the evaluation factors set forth in the request for proposals, and negotiation of compensation determined to be fair and reasonable. If compensation cannot be agreed upon with the best qualified offeror then negotiations will be formally terminated with the selected offeror. If proposals were submitted by one or more other offerors determined to be qualified, negotiations may be conducted with such other offeror or offerors, in the order of their respective qualification ranking, and the contract may be awarded to the offeror then ranked as best qualified if the amount of compensation is determined to be fair and reasonable. 3. § 60-40-560 Authority to Debar or Suspend • After reasonable notice to the person involved and reasonable opportunity for the person to be heard under the Administrative Procedure Act [1 CMC §§ 9101, et seq.], the Commissioner of Education after consultation with the Public School System legal counsel, shall have authority to debar a person for cause from consideration for award of contracts; and • The debarment shall not be for a period of more than three years. The Commissioner of Education, after consultation with Public School System legal counsel, shall have authority to suspend a person from consideration for award of contracts if there is probable cause for debarment. The suspension shall not be for a period exceeding three months. 4. In accordance with 2 CFR §180.220 and §180.300, entities that enter into a covered transaction with another person at the next lower tier for a contract amount that is expected to equal or exceed $25,000, entities must verify that the person with whom they intend to do business is not excluded or disqualified by: a. Checking SAM.gov Exclusions; or b. Collecting a certification from that person; or c. Adding a clause or condition to the covered transaction with that person. Condition: Of twelve expenditures tested, aggregating $114,356 of a total population of $1,156,858 in nonpayroll expenditures subject to procurement, the following were noted: 1. For two (or 17%), transactions were procured under the $10,000 small purchases threshold; however, only one quotation was obtained. 2. For two (or 17%), contracts were procured through a competitive sealed proposal for professional services; however, the evaluation for and proposal submitted by the offeror was not provided for contract 00180716-OC. For contract 00190611-OC, the request for proposals outlining scope of work and proposal submitted by the offeror was not provided. 3. PSS does not verify whether a person or a vendor is not excluded or disqualified pursuant to 2 CFR §180.220 and §180.300, prior to entering into a covered transaction for an amount equal to or exceeds $25,000 with award funds. No questioned costs are presented as the amount is questioned at Condition 2. Cause: 1. Inadequate documentation and inadequate systematic filing of relevant documentation supporting program costs. 2. Lack of monitoring control procedures to ensure verification as to whether a person or a vendor is not excluded or disqualified pursuant to 2 CFR §180.220 and §180.300 are performed, prior to entering into a covered transaction. Effect or potential effect: PSS is in noncompliance with applicable procurement and suspension and debarment compliance requirements and questioned costs of $102,862 result for Conditions 1 and 2. Identification as Repeat Finding: Finding No. 2022-013 Recommendation: 1. Establish and maintain effective systematic filing of relevant documentation to support program costs and for easier retrieval. 2. Establish and implement effective monitoring controls to ensure that all procurement regulations are complied with, including over the verification of excluded or disqualified persons or vendors pursuant to 2 CFR §180.220 and §180.300, prior to the PSS entering into a covered transaction. Views of Auditee and Corrective Action Plan: PSS concurs with the finding. Refer to PSS’ Corrective Action Plan for additional information.
Finding No. 2023-010 Federal Agency: U.S. Department of Education AL Program: 84.403 Consolidated Grants to the Outlying Areas Federal Award No.: S403A210001, S403A220001, S403A230001 Area: Allowable Costs/Cost Principles Questioned Costs: $-0- Criteria: In accordance with 2 CFR Section 200.303, non-federal entities receiving federal awards must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: Based on walkthrough procedures performed over the disbursement of program funds, PSS lacks documented evidence of review and approval controls over check and ACH payments to ensure that payment amounts agree with approved invoice amounts. Specifically, the process did not include documented review or approval demonstrating that checks and ACH disbursements were verified against supporting invoices prior to payment. As a result, controls designed to ensure accuracy and validity of disbursements are not adequately documented or evidenced. Cause: PSS lacks adequate documentation evidencing its monitoring and review procedures over disbursements of program funds, including review and approval controls to ensure that checks and ACH payments agree with approved invoice amounts. Effect or potential effect: PSS is in noncompliance with 2 CFR Section 200.303 related to internal control requirements. No questioned costs are identified as testing did not disclose noncompliance with allowable costs/cost principles compliance requirements. Identification as Repeat Finding: Finding No. 2022-004 Recommendation: PSS should implement, document and consistently enforce appropriate review and approval controls over disbursements of program funds Views of Auditee and Corrective Action Plan: PSS concurs with the finding. Refer to PSS’ Corrective Action Plan for additional information.
Finding No. 2023-011 Federal Agency: U.S. Department of Education AL Program: 84.403 Consolidated Grants to the Outlying Areas Federal Award No.: S403A220001 Area: Equipment and Real Property Management Questioned Costs: Undeterminable Criteria: In accordance with 2 CFR 200.313(b), a state must use, manage, and dispose of equipment acquired under a federal award in accordance with state laws and regulations. In accordance with 2 CFR 200.313(d)(1), property records must include a description of the property, a serial number or another identification number, the source of funding for the property (including the FAIN), the title holder, the acquisition date, the cost of the property, the percentage of the Federal agency contribution towards the original purchase, the location, use and condition of the property, and any disposition data including the date of disposal and sale price of the property. The recipient and subrecipient are responsible for maintaining and updating property records when there is a change in the status of the property. Further, in accordance with 2 CFR 200.313 (3), a control system must be developed to ensure adequate safeguards to prevent loss, damage or theft of the property. Additionally, 2 CFR 200.313(d)(4) requires that adequate maintenance procedures must be developed to keep the property in good condition. The PSS Policy Subpart C Inventory Management Policy section 60-20-815 (a)(1) states that PSS shall require a physical count of all stock supply and equipment items at least once each year. Lastly, according to PSS Policy Subpart C Inventory Management Policy section 60-20-815 (c)(5), during inventory counts, all custodians must be matched with the appropriate records of assigned fixed assets maintained at the Central Office. Condition 1. The capital assets listing maintained by PSS is incomplete and does not include all information for equipment and real property required under 2 CFR 200.313(d)(1), such as the federal participation percentage and the condition of the asset. 2. PSS lacks standardized and consistently implemented internal controls over safeguarding and maintenance of equipment across schools and offices. For all seventeen (or 100%) locations selected for testing, no maintenance procedures and safeguarding measures for equipment are documented. 3. For one (or 10%) of ten capital assets selected for testing, PSS did not provide approved count sheets signed and submitted by the assigned custodian to support that a physical counts was performed in FY2023. Cause: 1. PSS policies and procedures over capital assets management have not been fully updated to align with federal requirements under 2 CFR § 200.313 (d) (1), resulting in incomplete capital asset records. 2. PSS does not have a centralized and standardized system for safeguarding and maintaining equipment across all schools and offices for each type of equipment. 3. PSS’ document retention and record-keeping practices did not operate effectively to ensure that required inventory documentation, such as approved custodian count sheets, is properly maintained, stored and are easily retrievable. Effect or potential effect: PSS is in noncompliance with applicable Equipment and Real Property Management requirements. Incomplete asset records, inconsistent safeguarding and maintenance practices, and insufficient inventory documentation increase the risk of loss, misuse, theft, or deterioration of federally funded property. Questioned costs are undetermined as we are unable to quantify the extent of noncompliance. Identification as Repeat Finding: 2022-009 Recommendation: 1. PSS should update the structure and contents of their current capital asset listing to ensure all information required by 2 CFR 200.313(d)(1) is fully captured, maintained, and kept current for all equipment and real property acquired with federal funds. 2. PSS should revise and strengthen policies and procedures related to capital asset management to ensure alignment with federal requirements, including recordkeeping, inventory, safeguarding, and maintenance. 3. PSS should establish and implement centralized or standardized safeguarding and maintenance controls which should serve as minimum required procedures for all schools and offices regardless of equipment type. 4. Lastly, PSS should strengthen physical inventory procedures by requiring annual inventories to be properly documented, reviewed, approved, and retained, including ensuring all custodians submit signed inventory count sheets in accordance with its policy. Views of Auditee and Corrective Action Plan: PSS concurs with the finding and recommendations. Refer to PSS’ Corrective Action Plan for additional information.
Finding No. 2023-012 Federal Agency: U.S. Department of Education AL Program: 84.403 Consolidated Grants to the Outlying Areas Federal Award No.: S403A220001 Area: Procurement and Suspension and Debarment Questioned Costs: $1,019,874 Criteria: In accordance with 2 CFR Section 200.317, when conducting procurement transactions under a Federal award, a State must follow the same policies and procedures it uses for procurements with non-Federal funds. PSS Procurement Rules and Regulations states the following: 1. § 60-40-205 Competitive Sealed Bidding: • Public Notice - Adequate public notice of the invitation for bids shall be given a reasonable time prior to the date set forth for the opening of bids. Publication of notice shall be on the Public School website over a continuous period of four weeks shall be deemed to be adequate notice; and • Bid Acceptance and Bid Evaluation - Bids shall be unconditionally accepted without alteration or correction, except as authorized in the chapter. Bids shall be evaluated based on the requirements set forth in the invitation for bids, which may include criteria as necessary to reasonably permit a determination as to the acceptability of the bid for the particular purpose intended. 2. § 60-40-560 Authority to Debar or Suspend • After reasonable notice to the person involved and reasonable opportunity for the person to be heard under the Administrative Procedure Act [1 CMC §§ 9101, et seq.], the Commissioner of Education after consultation with the Public School System legal counsel, shall have authority to debar a person for cause from consideration for award of contracts; and • The debarment shall not be for a period of more than three years. The Commissioner of Education, after consultation with Public School System legal counsel, shall have authority to suspend a person from consideration for award of contracts if there is probable cause for debarment. The suspension shall not be for a period exceeding three months. 3. In accordance with 2 CFR §180.220 and §180.300, entities that enter into a covered transaction with another person at the next lower tier for a contract amount that is expected to equal or exceed $25,000, entities must verify that the person with whom they intend to do business is not excluded or disqualified by: a. Checking SAM.gov Exclusions; or b. Collecting a certification from that person; or c. Adding a clause or condition to the covered transaction with that person. Condition: 1. Of twenty-five expenditures tested, aggregating $846,783 of a total population of $8,192,986 in nonpayroll expenditures subject to procurement, the following were noted: a. For five (or 20%), bid evaluation forms for the unsuccessful bidders for the following contracts procured through invitation for bid, were not provided. For contract number 00181592-OC, none of the bid evaluation forms were provided, including the bid opening summary sheet. b. For two (or 8%), public announcements of the invitation for bids were not provided. No questioned costs are presented as the amounts are questioned at Condition 1a. 2. PSS does not verify whether a person or a vendor is not excluded or disqualified pursuant to 2 CFR §180.220 and §180.300, prior to entering into a covered transaction for an amount equal to or exceeds $25,000 with award funds. Cause: 1. Inadequate documentation and inadequate systematic filing of relevant documentation supporting program costs; and 2. Lack of monitoring control procedures to ensure verification as to whether a person or a vendor is not excluded or disqualified pursuant to 2 CFR §180.220 and §180.300 are performed, prior to entering into a covered transaction. Effect or potential effect: PSS is in noncompliance with applicable procurement and suspension and debarment regulations and questioned costs of $1,019,874 result for Conditions 1a and 3. Identification as Repeat Finding: Finding No. 2022-014 Recommendation: 1. Establish and maintain effective systematic filing of relevant documentation to support program costs and for easier retrieval; and 2. Establish and implement effective monitoring controls over the verification of excluded or disqualified persons or vendors pursuant to 2 CFR §180.220 and §180.300, prior to PSS entering into a covered transaction. Views of Auditee and Corrective Action Plan: PSS concurs with the finding. Refer to PSS’ Corrective Action Plan for additional information.
Finding No. 2023-013 Federal Agency: U.S. Department of Education AL Program: COVID-19 84.425A/84.425X Education Stabilization Fund Federal Award No.: S425A200001, S425A210001, S425X210001 Area: Allowable Costs/Cost Principles Questioned Costs: $-0- Criteria: In accordance with 2 CFR Section 200.303, non-federal entities receiving federal awards must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: Based on walkthrough procedures performed over the disbursement process of program funds, PSS lacks documented evidence of review and approval controls over check and ACH payments to ensure that payment amounts agree with approved invoice amounts. Specifically, the process did not include documented review or approval demonstrating that checks and ACH disbursements were verified against supporting invoices prior to payment. As a result, controls designed to ensure the accuracy and validity of disbursements are not adequately documented or evidenced. Cause: PSS lacks adequate documentation evidencing its monitoring and review procedures over disbursements of program funds, including review and approval controls to ensure that checks and ACH payments agree with approved invoice amounts. Effect or potential effect: PSS is in noncompliance with 2 CFR Section 200.303 related to internal control requirements. No questioned costs are identified as testing did not disclose noncompliance with allowable costs/cost principles compliance requirements. Identification as Repeat Finding: Finding No. 2022-005 Recommendation: PSS should implement compensating, redundant, or adjacent control activities, including documented supervisory reviews and approval checklists, to ensure compliance with federal requirements. Views of Auditee and Corrective Action Plan: PSS concurs with the finding. Refer to PSS’ Corrective Action Plan for additional information.
Finding No. 2023-014 Federal Agency: U.S. Department of Education AL Program: COVID-19 84.425A/84.425X Education Stabilization Fund Federal Award No.: S425A210001 and S425X210001 Area: Equipment and Real Property Management Questioned Costs: Undeterminable Criteria: In accordance with 2 CFR 200.313(b), a state must use, manage, and dispose of equipment acquired under a federal award in accordance with state laws and regulations. In accordance with 2 CFR 200.313(d)(1), property records must include a description of the property, a serial number or another identification number, the source of funding for the property (including the FAIN), the title holder, the acquisition date, the cost of the property, the percentage of the Federal agency contribution towards the original purchase, the location, use and condition of the property, and any disposition data including the date of disposal and sale price of the property. The recipient and subrecipient are responsible for maintaining and updating property records when there is a change in the status of the property. Further, in accordance with 2 CFR 200.313 (3), a control system must be developed to ensure adequate safeguards to prevent loss, damage or theft of the property. Lastly, 2 CFR 200.313(d)(4) requires that adequate maintenance procedures must be developed to keep the property in good condition. Condition: 1. The capital assets listing maintained by PSS is incomplete and does not include all information for equipment and real property required under 2 CFR 200.313(d)(1), such as the federal participation percentage and the condition of the asset. No questioned costs are presented as we are not able to quantify the extent of noncompliance. 2. PSS lacks standardized and consistently implemented internal controls over safeguarding and maintenance of equipment across schools and offices. For twenty-six (or 96%) of the twenty-seven locations selected for testing, no maintenance procedures and safeguarding measures for equipment were documented. Cause: 1. PSS policies and procedures over capital assets management have not been fully updated to align with federal requirements under 2 CFR § 200.313 (d) (1), resulting in incomplete capital asset records. 2. PSS does not have a centralized and standardized system for safeguarding and maintaining equipment across all schools and offices for each type of equipment. Effect or potential effect: PSS is in noncompliance with applicable Equipment and Real Property Management requirements. Incomplete asset records and inconsistent safeguarding and maintenance practices increase the risk of loss, misuse, theft, or deterioration of federally funded property. Questioned costs are undetermined as we are unable to quantify the extent of noncompliance. Identification as Repeat Finding: Finding No. 2022-010 Recommendation: 1. PSS should update the structure and contents of their current capital asset listing to ensure all information required by 2 CFR 200.313(d)(1) is fully captured, maintained, and kept current for all equipment and real property acquired with federal funds. 2. PSS should revise and strengthen policies and procedures related to capital asset management to ensure alignment with federal requirements, including recordkeeping, inventory, safeguarding, and maintenance. 3. PSS should establish and implement centralized or standardized safeguarding and maintenance controls which should serve as minimum required procedures for all schools and offices regardless of equipment type. Views of Auditee and Corrective Action Plan: PSS concurs with the finding. Refer to PSS’ Corrective Action Plan for additional information.
Finding No. 2023-015 Federal Agency: U.S. Department of Education AL Program: COVID-19 84.425A/84.425X Education Stabilization Fund Federal Award No.: S425A210001 and S425X210001 Area: Matching, Level of Effort, Earmarking Questioned Costs: Undeterminable Criteria: In accordance with 2 CFR Section 200.303, non-federal entities receiving federal awards must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. In accordance with the terms and conditions in the Grant Agreement, the State Educational Agencies (SEA) will use (a) not less than twenty percent of its ARP-OA SEA allocation to carry out, directly or through subgrants or contracts, activities to address the academic impact of lost instructional time by supporting the implementation of evidence-based interventions; (b) a portion of their ARP-OA SEA allocation to carry out, directly or through subgrants to Local Educational Agencies (LEAs) or through contracts, the implementation of evidence-based summer enrichment programs; (c) and a portion of their ARP-OA SEA allocation to carry out, directly or through subgrants to LEAs or through contracts, the implementation of evidence-based comprehensive afterschool programs. Condition: PSS did not maintain or provide adequate supporting documentation to demonstrate compliance with the ARP-OA earmarking requirements. Specifically, PSS did not provide budgetary documentation evidencing that the required portions of ARP-OA funds were allocated and expended for allowable evidence-based interventions, summer enrichment programs and comprehensive afterschool programs. Questioned costs are undetermined as we are unable to quantify the extent of noncompliance. Cause: PSS does not have an effective internal control over financial documentation related to earmarked ARP-OA funds. PSS lacks established procedures to ensure that budget allocations and supporting record related to earmarking requirements are properly prepared, retained and readily available for audit and compliance reporting purposes. Effect or potential effect: PSS is in noncompliance with the earmarking requirements for the ARP-OA program. Questioned costs are undeterminable as we are unable to quantify the extent of noncompliance. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: PSS should strengthen internal controls over ARP‑OA earmarking compliance by establishing and implementing formal procedures to ensure that: 1. Required earmarking allocations are clearly identified in budgets; and 2. Supporting documentation is retained, organized, and readily available for audit and compliance review purposes. Views of Auditee and Corrective Action Plan: PSS does not agree with the finding. PSS has allocated and expended more than 20% on evidence-based interventions to address learning loss. Specifically, projects listed under the ARP expense report are mapped directly to learning loss categories (e.g. expenses for summer school, extended learning opportunities, high dosage tutors, etc.). Refer to PSS’ Corrective Action Plan for additional information. Auditor Response: The supporting documentation provided, including the ARPA-OA budget that was resubmitted, did not clearly identify the required earmarking allocations and related expenditures for evidence-based interventions, summer enrichment programs and comprehensive afterschool programs. Recalculation or verification of compliance with the earmarking requirements of the ARP-OA program could not be performed. The finding remains.
Finding No. 2023-016 Federal Agency: U.S. Department of Education AL Program: COVID-19 84.425A/84.425X Education Stabilization Fund Federal Award No.: S425A210001 and S425X210001 Area: Special Tests and Provisions - Wage Rate Requirement Questioned Costs: Undeterminable In accordance with 2 CFR Section 200.303, non-federal entities receiving federal awards must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Under 29 CFR 5.5(a), contracts exceeding $2,000 for construction, alteration, or repair of public buildings or public works financed in whole or in part with federal funds must include the required Davis-Bacon labor standards clauses, including the incorporation by reference of all applicable rulings and interpretations (29 CFR parts 1, 3, and 5). Additionally, pursuant to 29 CFR 5.5(a)(3)(ii)(A), contractors or subcontractors must submit weekly, for each week in which any Davis Bacon Act (DBA)- or Related Acts-covered work is performed, certified payrolls to the appropriate Federal agency, if the agency is a party to the contract, but if the agency is not such a party, the contractor will submit the certified payrolls to the applicant, sponsor, owner, or other entity, as the case may be, that maintains such records, for transmission to the agency. Condition: 1. For eight (or 100%) of eight construction contracts selected for testing, the required clauses, as identified in 29 CFR 5.5(a)(1) and 29 CFR 5.5(a)(8), were not inserted or referenced in the contract or purchase order. No questioned costs are presented as we are unable to quantify the extend of the noncompliance. 2. For eight (or 100%) of eight construction expenditures selected for testing, PSS did not provide the certified payrolls from contractors or subcontractors for work subject to Davis-Bacon Act requirements. No questioned costs are presented as we are unable to quantify the noncompliance. Cause: PSS did not establish and effectively implement internal control procedures to address or prevent noncompliance of the applicable wage rate requirements. Effect or potential effect: PSS is in noncompliance with applicable wage rate requirements. Questioned costs are undetermined as we are unable to quantify the extent of noncompliance. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: PSS should establish and implement effective internal controls to ensure compliance with federal wage rate requirements. At a minimum, PSS should: 1. Ensure all applicable contracts and purchase orders include or reference the required Davis‑Bacon labor standards clauses; 2. Require contractors and subcontractors to submit certified payrolls for all Davis‑Bacon–covered work; and 3. Implement procedures to review, approve, and retain certified payrolls and supporting documentation. Views of Auditee and Corrective Action Plan: PSS concurs with the findings. Refer to PSS’ Corrective Action Plan for additional information.
Finding No. 2023-017 Federal Agency: U.S. Department of Education AL Program: COVID-19 84.425A/84.425X Education Stabilization Fund Federal Award No.: S425A210001 and S425X210001 Area: Special Tests and Provisions - Private School Participation Questioned Costs: Undeterminable Criteria: In accordance with 2 CFR Section 200.303, non-federal entities receiving federal awards must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. In accordance with 34 CFR 299.7(a)(1), in order to have a timely and meaningful consultation, an agency, consortium, or entity must: (i) Consult with appropriate private school officials during the design and development of the agency, consortium, or entity's program for eligible private school children and their teachers and other educational personnel; and (ii) Consult before the agency, consortium, or entity makes any decision that affects the opportunities of eligible private school children and their teachers and other educational personnel to participate in the applicable program. Additionally, in accordance with 34 CFR 299.7(2), such consultation must continue throughout the implementation and assessment of equitable services. Lastly, based on 34 CFR 299.9 (a)(1), expenditures of funds made by an agency, consortium, or entity under a program listed in 34 CFR 299.6 (b) for services for eligible private school children and their teachers and other educational personnel must be equal on a per-pupil basis to the amount of funds expended for participating public school children and their teachers and other educational personnel, taking into account the number and educational needs of those children and their teachers and other educational personnel. Condition: 1. PSS did not provide adequate documentation to verify that there were timely and meaningful consultations with appropriate private school officials during the design and development of federally funded programs and prior to making decisions involving private school participation regarding the size and scope of the equitable services that will be provided to eligible private school children and their teachers, and other educational personnel, the amount of funds available for those services, and how that amount is determined. 2. The amount allocated to eligible private schools is not equal to the amount of funds expended for participating public schools in FY2023 on a per-pupil basis. Since no adequate documentation was provided for the calculation of the amount of funds for eligible private schools as cited at Condition 1, no questioned costs are presented as we are unable to quantify the extent of the noncompliance. Cause: 1. PSS does not perform timely consultations and follow-ups with the eligible private school officials in accordance with provisions of 34 CFR 299.7. 2. PSS does not have controls established to properly monitor the need for consultations, follow-up or corrective actions to ensure that the plans established are being met. 3. PSS does not have procedures in place to properly calculate and monitor that the per pupil amount for both private and public schools are equal. Effect or potential effect: PSS is in noncompliance with the applicable special test and provision requirements of the participation of private school children. No questioned costs are presented as we are unable to quantify the extent of noncompliance. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: 1. PSS should adhere to the provisions of 34 CFR 299.7 and ensure that timely consultations with the eligible private schools are conducted. Additionally, PSS should establish controls and procedures to ensure that the results of the consultations are properly monitored and implemented. 2. PSS should establish monitoring procedures to ensure that costs budgeted or allocated to private and public schools will remain equal on a per pupil basis. Views of Auditee and Corrective Action Plan: PSS does not agree with the finding. PSS asserts that timely and meaningful consultations were conducted with private school officials prior to making decisions regarding the size, scope, and funding of equitable services for FY2023. Calculations for the equitable share under the Education Stabilization Funds were performed in accordance with federal regulations, ensuring that per-pupil allocations for eligible private school students and teachers were equitable relative to public school expenditures. PSS maintains that consultation timelines, meeting records, and allocation formulas were maintained. While PSS is continuously refining its administrative workflows, the existing documentation and controls were sufficient to satisfy the requirements of 34 CFR § 299.7. Refer to PSS’ Corrective Action Plan for additional information. Auditor Response: The supporting documentation provided, including the minutes of meetings with private schools, did not demonstrate the required timely and meaningful consultation with appropriate private school personnel during the design and development of federally funded programs and prior to making decisions involving private school participation regarding the size and scope. The finding remains.
Finding No. 2023-018 Federal Agency: U.S. Department of Education AL Program: 93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance Federal Award No.: 1H79SM083644-01, 5H79SM083644-02, 5H79SM083644-03, 5H79SM083644-04 6H79SM086344-01M001,6H79SM086344-01M002, 6H79SM086344-01M003 Area: Allowable Costs/Cost Principles Questioned Costs: $-0- Criteria: In accordance with 2 CFR Section 200.303, non-federal entities receiving federal awards must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: Based on walkthrough procedures performed over the disbursement process of program funds, PSS lacks documented evidence of review and approval controls over check and ACH payments to ensure that payment amounts agree with approved invoice amounts. Specifically, the process did not include documented review or approval demonstrating that checks and ACH disbursements were verified against supporting invoices prior to payment. As a result, controls designed to ensure the accuracy and validity of disbursements are not adequately documented or evidenced. Cause: PSS lacks adequate documentation evidencing its monitoring and review procedures over disbursements of program funds, including review and approval controls to ensure that checks and ACH payments agree with approved invoice amounts. Effect or potential effect: PSS is in noncompliance with 2 CFR Section 200.303 related to internal control requirements. No questioned costs are identified as testing did not disclose noncompliance with allowable costs/cost principles compliance requirements. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: PSS should implement, document and consistently enforce appropriate review and approval controls over disbursements of program funds. Views of Auditee and Corrective Action Plan: PSS concurs with the finding. Refer to PSS’ Corrective Action Plan for additional information.
Finding No. 2023-019 Federal Agency: U.S. Department of Education AL Program: 93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance Award No.: 6H79SM083644 Area: Procurement and Suspension and Debarment Questioned Costs: $307,881 Criteria: In accordance with 2 CFR Section 200.317, when conducting procurement transactions under a Federal award, a State must follow the same policies and procedures it uses for procurements with non-Federal funds. PSS Procurement Rules and Regulations states the following: 1. § 60-40-205 Competitive Sealed Bidding: • Public Notice - Adequate public notice of the invitation for bids shall be given a reasonable time prior to the date set forth for the opening of bids. Publication of notice shall be on the Public School website over a continuous period of four weeks shall be deemed to be adequate notice; and • Bid Acceptance and Bid Evaluation - Bids shall be unconditionally accepted without alteration or correction, except as authorized in the chapter. Bids shall be evaluated based on the requirements set forth in the invitation for bids, which may include criteria as necessary to reasonably permit a determination as to the acceptability of the bid for the particular purpose intended. 2. 60-40-225 Competitive Sealed Proposals: • Condition for Use - When the Commissioner of Education determines in writing upon the advise of the legal counsel that the use of a competitive sealed bidding is either not practical or not advantageous to the Public School System, a contract may be entered into by competitive sealed proposals; 3. § 60-40-560 Authority to Debar or Suspend • After reasonable notice to the person involved and reasonable opportunity for the person to be heard under the Administrative Procedure Act [1 CMC §§ 9101, et seq.], the Commissioner of Education after consultation with the Public School System legal counsel, shall have authority to debar a person for cause from consideration for award of contracts; and 4. In accordance with 2 CFR §180.220 and §180.300, entities that enter into a covered transaction with another person at the next lower tier for a contract amount that is expected to equal or exceed $25,000, entities must verify that the person with whom they intend to do business is not excluded or disqualified by: a. Checking SAM.gov Exclusions; or b. Collecting a certification from that person; or c. Adding a clause or condition to the covered transaction with that person. Condition: 1. Of twelve procurement transactions tested, aggregating $217,154 of a total population of $546,111 of nonpayroll expenditures subject to procurement, the following were noted: a. For one (or 8%), PSS did not provide bid or proposal evaluations for all responsive bidders. b. For one (or 8%), CNMI PSS did not provide evidence of the Chief Procurement Officer’s determination in writing for a shorter period of bidding time for the related contract. c. For one (or 8%), PSS did not provide written summaries of the bid opening and proposals submitted. No questioned costs are presented as they were cited at Condition 1a. d. For one (or 8%), PSS did not provide documentation evidencing the public announcement of the Request for Proposal. No questioned costs are presented as they were cited at Condition 1a. e. For one (or 8%), the contract was procured through a competitive sealed proposal; however, the written determination by the Commissioner of Education upon the advice of legal counsel that a competitive sealed bidding is either not practical or not advantageous, was not provided. No questioned costs are presented as the amount is questioned at Condition 1a. 2. PSS does not verify whether a person or a vendor is excluded or disqualified pursuant to the requirements of 2 CFR 180.300 prior to entering into the following covered transactions that exceeded the $25,000 threshold. Cause: PSS did not consistently comply with its Procurement Regulations and applicable federal requirements due to inadequate internal controls and enforcement mechanisms. Further, PSS’s existing Suspension and Debarment procedures require action only upon approval of the Commissioner of Education, which is not aligned with the verification requirements of 2 CFR §180.300. The absence of standardized procedures, accountability measures, and routine compliance monitoring contributed to these deficiencies. Effect or potential effect: PSS is in noncompliance with applicable procurement regulations and questioned costs of $307,881 result. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: 1. Enforce uniform procurement procedures that require complete documentation of all competitive sealed bidding steps, including public notices, bid openings, bid evaluations, and contract awards. 2. Establish and implement written policies and procedures to verify the suspension and debarment status of all vendors involved in covered transactions prior to contract award, in accordance with 2 CFR §180.300. 3. Require staff training and supervisory review to ensure procurement requirements are consistently followed and adequately documented. 4. Implement ongoing monitoring and internal review processes to ensure continued compliance and to prevent recurrence of similar deficiencies. Views of Auditee and Corrective Action Plan: PSS concurs with the findings and recommendations. Refer to PSS’ Corrective Action Plan for additional information.
Finding No. 2023-020 Federal Agency: U.S. Department of Education AL Program: 93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance Award No.: 6H79SM086344-01M001 and 6H79SM086344-01M002 Area: Special Tests and Provisions - Key Level Management Questioned Costs: Undeterminable Criteria: In accordance with 2 CFR 200.303(a), the recipient and subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Further, in accordance with the grant agreement, PSS key level management are required to provide level of effort as follows: Condition For all six (or 100%) key level management personnel required to provide level of effort, PSS did not provide adequate evidence to substantiate that the required level of effort to the program were complied with. Cause: PSS did not provide documentation evidencing the level of effort of key level management personnel. Effect or potential effect: PSS is in noncompliance with applicable key level management requirements. No questioned costs result as we are unable to determine the extent of noncompliance. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: PSS should maintain documentation for its compliance with the key level management requirement, such as Notice of Personnel Action (NOPA) forms, certification of time worked under federal programs and payroll registers, among others. Views of Auditee and Corrective Action Plan: PSS concurs with the findings. Refer to PSS’ Corrective Action Plan for additional information.