Audit 406502

Finding 2025-004: Significant Deficiency – Special Tests and Provisions Program: Indian School Equalization Assistance Listing Number: 15.042 Federal Agency: U.S. Department of the Interior Federal Award Identification Number: N/A Federal Award Year: June 30, 2025 Repeat of Prior Year Finding 2024-005 Criteria: 25 CFR section 63.17 requires that Indian Tribes and tribal organizations perform adjudication to determine suitability for employment and efficiency of service. The adjudication process protects the interests of the employer and the rights of applicants and employees. Adjudication requires uniform evaluation to ensure fair and consistent judgment. Condition: While documentation exists that a background investigation was completed, no documentation was maintained that the results of the background investigation were compared to the employment application or that a suitability determination was conducted by an appropriate adjudicating official who herself/himself was the subject of a favorable background investigation. Questioned Costs: None noted. Context: No documentation was available that the results of the background investigation were compared to the employment application or that a suitability determination was conducted by an appropriate adjudicating official who herself/himself was the subject of a favorable background investigation for 4 of the 40 employees selected for testing. The sample was not considered statistically valid. Effect: When comparison of background investigations and suitability determinations are not performed, employees may be hired who do not meet laws and regulations to work in a school environment or employees may be hired who are not suitable to perform the positions they were hired for. Cause: Documentation that the background investigations were compared to the employment application and that a suitability determination was conducted by an appropriate adjudicating official was not maintained. Recommendation: It is recommended that the Club updates its Employment Suitability Investigations policy to accurately reflect the process for performing background investigations and employment suitability. Within that policy, the Club should ensure that a process is put in place to ensure documentation of the background investigations and employment suitability assessment is maintained in employee files. Management’s Response: The Club and Cherokee Central Schools (CCS) agree with this finding and CCS notes that its Employment Suitability Investigations policy was updated and formally adopted on July 22, 2019. The audit included a sample of employee files from prior years, before the policy was implemented and before consistent personnel changes were made. Since the policy's adoption, appropriate procedures have been put in place to ensure background investigations and employment suitability assessments are conducted and properly documented. CCS will continue to monitor compliance with the policy and ensure that documentation is consistently maintained in employee personnel files moving forward. Current updates to be enacted immediately include documentation that the Superintendent has reviewed the files.

Finding 2025-005: Significant Deficiency – Cash Management Program: Clean School Bus Program; Climate Pollution Reduction Grants Assistance Listing Number: 66.045; 66.046 Federal Agency: U.S. Environmental Protection Agency Federal Award Identification Number: 03D07424; 03D30125 Federal Award Year: June 30, 2025 Criteria: The Uniform Guidance requires that recipients and subrecipients minimize the time elapsing between the transfer of federal funds and the disbursement of those funds. Advance payments must be limited to the minimum amounts needed and timed as close as administratively feasible to actual, immediate cash requirements for program costs. Recipients must also maintain written procedures to minimize the time between drawdown and disbursement. Condition: The Club drew down federal funds in advance of actual cash needs. For two cash draws tested for each program, the federal funds were not disbursed to vendors within 5 business days of the funds being drawn down. Questioned Costs: None noted. Context: Two federal draws occurred during the fiscal year for each program. The sample is not considered statistically valid. Effect: Federal funds were drawn in advance of immediate cash needs, resulting in excess federal cash on hand and noncompliance with cash management regulations. This increases the risk that federal funds could be used inefficiently, interest liabilities could be incurred on excess cash balances and federal funding may not be managed in accordance with grant requirements. Cause: The full grant funding was drawn down in advance of related expenditures due to funding uncertainty under the guidance of the Environmental Protection Agency (EPA). Later in the fiscal year, the unspent portion of the funds were returned to the EPA when the funding certainty returned. In addition, one draw down was deposited into a different Club bank account than the account was expected so the Club was not aware that it had received the funding. Recommendation: It is recommended that the Club strengthen controls over federal cash draws to ensure draws are based on actual and immediate cash needs. Management should maintain supporting documentation showing how each draw amount was calculated and should draw down funds as close as administratively feasible to the disbursement of those funds. Management’s Response: The Club is working with the EBCI Grant’s office to increase communication and coordinate the drawdowns so funds are received and processed for payment within the given grant timelines.

Finding 2025-006: Significant Deficiency – Procurement Program: Clean School Bus Program; Climate Pollution Reduction Grants Assistance Listing Number: 66.045; 66.046 Federal Agency: U.S. Environmental Protection Agency Federal Award Identification Number: 03D07424; 03D30125 Federal Award Year: June 30, 2025 Criteria: The Uniform Guidance requires that the documentation be maintained for the history of procurement, including the rationale for the method of procurement, selection of contract type, basis for contractor selection and the basis for the contract price. Condition: Documentation that supported the evidence of quotes/bids, cost or price analysis, vendor selection rationale, required approvals and verification that the vendors selected were not suspended or debarred was not able to be located. Questioned Costs: None noted. Context: For Assistance Listing Number 66.045, the project funded by this grant program consisted of payments to a single vendor. For Assistance Listing Number 66.046, the project funded by this grant program consisted of payments to two vendors. The sample is not considered statistically valid. Effect: The Club is not able to document its compliance with procurement and suspension and debarment requirements. Cause: During the grant writing process, the Eastern Band of Cherokee Indians Natural Resources office reached out to potential vendors to obtain quotes for the projects, but the documentation of the procurement process was not able to be located. Recommendation: It is recommended that the Club maintain documentation throughout the procurement process and store that documentation in a place where it can be easily located and accessed. Management’s Response: The Club will coordinate with the EBCI Grant office to ensure all future grants follow the Club and Tribal procurement processes.

Finding 2025-007: Significant Deficiency – Special Tests and Provisions Program: Climate Pollution Reduction Grants Assistance Listing Number: 66.046 Federal Agency: U.S. Environmental Protection Agency Federal Award Identification Number: 03D30125 Federal Award Year: June 30, 2025 Criteria: The Uniform Guidance requires that entities obtain certified payroll records for each week in which work was performed under a contract funded by an award that contains Wage Rate Requirements and review those records for compliance with the applicable wage rate requirements. Condition: The Club notified the contractor of the wage rate requirements but did not obtain or review certified payroll records for each week in which work was performed under the contract. Questioned Costs: None noted. Context: Two contracts under the grant were subject to wage rate requirements. The sample is not considered statistically valid. Effect: The Club did not perform adequate monitoring of contractors to ensure compliance with applicable wage rate requirements, which increases the risk of noncompliance with grant requirements. Cause: Club personnel were advised by the Environmental Protection Agency (EPA) that certified payroll records would only need to be made available if the grant was under EPA audit, so certified payroll records were not obtained and reviewed each week in which work was performed under the contract. Recommendation: It is recommended that the Club implement policies and procedures to ensure that weekly certified payrolls are obtained from contractors subject to wage rate requirements and those payroll records are reviewed for compliance with the applicable wage rate requirements. Management’s Response: The Club Finance Director will work with the current contractor and set up a schedule for payroll review based on their payroll schedule.