Federal Program: Workforce Investment Opportunity Act Cluster Assistance Listing 17.258 WIOA Adult Program Assistance Listing 17.259 WIOA Youth Activities Assistance Listing 17.278 WIOA Dislocated Worker Formula Grants Pass-Through Entity Identifying Number: 05-P19-Youth-81/05-P20-Youth-81 05-F20-Adult-81/05-F21-Adult-81/05-F22-Adult-81 05-F20-DLW-81/05-F21-DLW-81/05-F22-DLW-81 Federal Agency: U.S. Department of Labor Criteria or specific requirement: Subrecipient Monitoring (2 CFR 200.331 and 20CFR 683.210) and Activities Allowed or Unallowed (2 CFR 200, Subpart E) – Management is responsible for ensuring compliance with certain provisions of laws, regulations, contracts, and grant agreements. Condition: An ongoing investigation by a state agency on the WIOA program for the 2022 program year (fiscal 2023) has alleged a potential violation of operating under an expired legal contract with a subrecipient for over 10 months. Additionally, the election of the 10% de minimis indirect cost rate has not been implemented. Cause: Proper allowable costs policies and procedures were not in place according to the state agency. Effect or potential effect: The noncompliance could have a direct and material effect on the financial statements. Questioned Costs: $0 Context: The Organization operated without a legally binding agreement for WIOA Title I and One-stop Operator Services for over 10 months after the expiration of the previous contract. In addition, there was not sufficient documentation to support the allocation basis for certain expenditures charged to WIOA. Identification as a Repeat Finding, if Applicable: Yes - see prior year finding 2022-002. Recommendation: We recommend the Organization strengthen controls and processes related to the allowable costs policies and procedures. Views of Responsible Officials and Planned Corrective Actions: Management is considering its options for further appeals to the Department of Labor for review.
Federal Program: Workforce Investment Opportunity Act Cluster Assistance Listing 17.258 WIOA Adult Program Assistance Listing 17.259 WIOA Youth Activities Assistance Listing 17.278 WIOA Dislocated Worker Formula Grants Pass-Through Entity Identifying Number: 05-P19-Youth-81/05-P20-Youth-81 05-F20-Adult-81/05-F21-Adult-81/05-F22-Adult-81 05-F20-DLW-81/05-F21-DLW-81/05-F22-DLW-81 Federal Agency: U.S. Department of Labor Criteria or specific requirement: 2 CFR 200.302(b)(7) requires written procedures for determining the allowability of costs in accordance with Subpart E and the terms and conditions of federal awards. 2 CFR 200.303 requires the entity to establish and maintain effective internal control over federal awards. Under 2 CFR 200.403(c), (d), and (g), costs must be treated consistently, follow policies and procedures that apply uniformly to federal and non-federal activities, and be adequately documented. Under 2 CFR 200.405, a cost is allocable only to the extent the related goods or services benefit the federal award, and costs benefiting multiple activities must be distributed in proportions that can be approximated using reasonable methods. 2 CFR 200.430 requires salary and wage charges to be based on records that accurately reflect work performed and to be supported by a system of internal control. Under 2 CFR 200.414(f), an eligible entity may elect the 10% de minimis indirect cost rate applicable for the audit period. When applying the de minimis rate, costs must be consistently charged as either direct or indirect costs and may not be double charged or inconsistently charged as both. Condition: Management has not established a written cost allocation plan or policy as required by Uniform Guidance. Specifically, the Organization lacks documented procedures that define direct and indirect costs, describe how costs will be identified and classified, outline the methodology used to allocate indirect costs among active federal awards, and address the application of the 10% de minimis indirect cost rate. As a result, there is no formal framework to support the consistent allocation of costs to federal programs or to demonstrate compliance with federal requirements. Cause: The Organization had not established, approved, and implemented a comprehensive written cost allocation plan in accordance with Uniform Guidance requirements. As of June 30, 2023, management had not formalized policies and procedures governing the identification and classification of direct and indirect costs, the methodologies used to allocate indirect costs among federal awards, the documentation required to support cost allocations, or the application of the 10% de minimis indirect cost rate. Effect or potential effect: Because the Organization does not maintain a written cost allocation policy or plan, it lacks sufficient controls to ensure costs charged to federal awards are properly identified, allocated, and documented in accordance with Uniform Guidance. As a result, costs charged to federal programs may not be allocable to the benefiting awards, indirect costs could be inconsistently treated as direct costs, and noncompliance with Federal cost principles may not be prevented or detected in a timely manner. Questioned costs: $0 Context: The Organization operated without a written cost allocation policy as required by the Uniform Guidance. In addition, there is not sufficient documentation to support the allocation basis for indirect cost expenditures charged to WIOA. Identification as a Repeat Finding, if Applicable: No