Department of Veteran Affairs FFAL #64.033, 20-SD-136-25, 10/1/2024 – 12/31/2025 VA Supportive Services for Veteran Families Program Reporting Material Weakness in Internal Control over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. 2 CFR 200.328 and 2 CFR 200.329 require the auditee to collect financial information and monitor its activities under federal awards to assure compliance with applicable federal requirements and performance expectations are being achieved and report these items in accordance with the program requirements. Condition: No review and approval processes were in place over 2 quarterly progress reports. Cause: Management did not have review procedures and processes in place over the quarterly progress reports until the quarter report ending June 30, 2025. Effect: Without review procedures and processes in place over reporting, demonstrating the program complies with laws, regulations, and other compliance requirements is difficult. Additionally, not having an oversight process over reporting could result in a reasonable possibility reports that are inaccurate or incomplete could be submitted. Questioned Costs: None reported Context/Sampling: Included under two award letters of the federal program, one annual financial report and 2 quarterly progress report were reviewed in the Organization’s fiscal year. In addition, two monthly HMIS reports were reviewed in the Organization’s fiscal year. There was a total of 16 reports filed. Repeat Finding from Prior Year: Yes, prior year finding 2024-003. Recommendation: Management implemented procedures and control processes to incorporate an independent review and approval over reporting effective for the quarterly progress report ending June 30, 2025. We recommend to continue following the implemented procedures and control processes and retain documentation to support the review was performed. Views of Responsible Officials: Management is in agreement.
Department of Veteran Affairs FFAL #64.033, 20-SD-136-25, 10/1/2024 – 12/31/2025 FFAL #64.033, 20-SD-136-26, 10/1/2025 – 9/30/2026 VA Supportive Services for Veteran Families Program Activities Allowed or Unallowed and Allowable Costs/Cost Principles Significant Deficiency in Internal Control over Compliance Criteria: The Center is required to have procedures in place to ensure that federal awards are expended only for allowable costs in accordance with Subpart E – Cost Principles of the Uniform Guidance. Allowable costs are supported by appropriate documentation and correctly charged as to account, amount, and period. 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR 200.430(g) establishes the standards for documentation of personnel expenses including charges to Federal awards for salaries and wages. Charges must be based on records that accurately reflect the work performed with the records meeting the following standards: a. Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. b. Be incorporated into the office records of the non-Federal entity. c. Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities. d. Encompass both federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity’s written policy. e. Comply with the established accounting policies and practices of the non-Federal entity. f. Support the distribution of the employee’s salary or wages among specific activities or cost objectives. g. Budget estimates alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes. Condition: In our sample of expenditures selected for testing, we noted the following items: a) Calculation errors for payroll expenses allocated to the grant based upon review of supporting timesheets, payroll documentation and management’s true-up calculations to allocate actual costs rather than budgeted costs (5 instances). b) Identification of benefits not being allocated in a similar manner as salaries and wages (1 employee impacted). c) Grant was overcharged as it relates to a travel reimbursement (1 instance). Cause: Calculation errors were made during the year due to management’s true-up payroll calculation spreadsheet not being updated appropriately for employee payrate increases and including incorrect inputs based upon supporting payroll documentation. Additionally, management was unaware of the requirement of allocating payroll benefits in a similar manner to the allocation salaries and wages. In addition, individuals with key roles over financial and compliance reporting were not involved in the Organization’s financial and compliance reporting activities for the full year. Effect: The Organization’s controls did not detect or correct the errors identified, which results in a reasonable possibility that the Organization could submit disallowed costs under the federal awards and would not be able to detect and correct noncompliance in a timely manner. Questioned Costs: No questioned costs greater than $25,000. Context: A total non-statistical sample of 60 payroll and nonpayroll transactions out of more than 250 payroll and nonpayroll transactions were selected for testing, which accounted for approximately $73,700 of approximately $1,702,000 of direct payroll and nonpayroll program expenditures. Repeat Finding from Prior Year: No Recommendation: We recommend management review the procedures and control processes involving allocating payroll related expenses and ensuring expenses allocated to the grant are supported by documentation to ensure compliance with the federal grant. Views of Responsible Officials: Management is in agreement.
Department of Veteran Affairs FFAL #64.033, 20-SD-136-25, 10/1/2024 – 12/31/2025 FFAL #64.033, 20-SD-136-26, 10/1/2025 – 9/30/2026 VA Supportive Services for Veteran Families Program Procurement, Suspension & Debarment Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR 200.318 maintains that recipients must have and use documented procurement policies and must conform with procurement standards in sections 200.317 through 200.327. Additionally, 2 CFR 200.214 requires recipients to restrict making contracts with certain parties that are debarred, suspended, or excluded from participating in Federal awards. Condition: Testing of the federal program identified the following: a. The Organization’s formally documented procurement policy is missing one required element as it relates to domestic preferences (2 CFR 200.322). b. Two lease agreements were entered into where the Organization did not follow the procurement process as detailed in the procurement policy. The lease agreements with the vendors were also missing a required contract provision in accordance with Uniform Guidance and there was no review performed by the Organization to ensure the vendors were not suspended or debarred as the lease agreements with the vendors were over $25,000. Cause: Individuals with key roles over compliance reporting were not involved in the Organization’s compliance reporting activities for the full year. Contract provisions were not evaluated compared to Uniform Guidance contract requirements. Lease agreements entered into were not evaluated in accordance with Uniform Guidance as it relates to suspension and debarment. Effect: Ineffective controls over this area of compliance could result in a reasonable possibility the Organization would be noncompliant with the compliance requirements outlined above. Additionally, the Organization may enter into a covered transaction with a vendor that is suspended or debarred. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 2 out of 4 vendors were selected for testing. Repeat Finding from Prior Year: No Recommendation: We recommend the Organization update their procurement policy to ensure it includes the required elements as it relates to domestic preference. In addition, we suggest that management implement procedures and control processes related to the review of contracts to ensure the procurement methods are being followed, documentation is being retained, and that the contracts include the required Uniform Guidance provisions. Also, management should ensure vendors are not suspended or debarred from doing business with the federal government. Views of Responsible Officials: Management agrees with the finding.