Statement of Condition During testing of expenditures and reimbursements related to the federal program, NEW received reimbursements based upon participant milestones achieved. The milestone payments were calculated based on an approved program budget, as established in the subaward agreement. Audit procedures identified that approved program budget on which milestone payments were based was significantly in excess of actual costs, causing total reimbursements received under the program to exceed actual allowable costs incurred by NEW for the period under audit. NEW did not obtain written approval or documentation from the pass-through entity indicating that funds received in excess of actual allowable costs could be retained. Furthermore, the pass-through entity indicated specific procedures surrounding the use of program profits, whereby profit earned over the contract term must either be reinvested into the program in accordance with a pre-approved plan, or returned to the funder. No such plan was submitted by NEW or approved by the pass-through entity. The contract term ended after the year under audit, in September 2025. Total excess reimbursements over the contract term are therefore unknown as of the report date. Criteria or Specific Requirement Federal awards and subawards funded under Uniform Guidance are subject to the requirement that costs charged to the award be allowable, reasonable, allocable, and adequately documented. The subaward agreement further provides that payment shall be based on line-item budget reimbursement and permits the pass-through entity to recover improperly incurred costs, overpayments, and funds not expended in accordance with the approved budget at the end of the contract term. Questioned Costs Undetermined. Effect NEW may have retained federal funding in excess of the amount allowable under the terms and conditions of the award. As a result, federal expenditures reported for the program and amounts reimbursed under the award may be overstated. NEW may also be subject to repayment of funds to the pass-through entity. Cause Management relied on milestone-based payment provisions contained within the program scope of work and did not perform a reconciliation of cumulative reimbursements received to actual allowable program costs incurred. As a result, excess reimbursements were not identified, reported, or returned to the pass-through entity on a timely basis. Recommendation We recommend that management: • Reconcile cumulative federal reimbursements received to actual allowable and allocable program expenditures over the contract term. • Return any amounts determined to constitute unallowable excess reimbursement. • Implement procedures requiring periodic reconciliation of reimbursement claims to actual allowable expenditures. Views of Responsible Officials and Corrective Action Plan Management agrees with the finding and will implement procedures to reconcile reimbursement amounts to actual expenditures and program activity.
Statement of Condition NEW did not submit the required expenditure reports to the pass-through entity during the contract period. As a result, the pass-through entity did not receive the cumulative payment and expenditure information for purposes of monitoring contract expenditures and reconciling payments to actual costs incurred. Criteria or Specific Requirement Pursuant to the terms of NEW’s subaward agreement with the pass-through entity, NEW is required to monitor expenditures and submit expenditure reports to the pass-through entity. This expenditure data is used, as necessary, to adjust payments during the contract term and contract closeout process to ensure payments to NEW do not exceed the allowable profit margin. Questioned Costs Undetermined. Effect Failure to submit required expenditure reports resulted in noncompliance with the reporting requirements of the federal award over the contract term. In addition, the absence of timely expenditure reporting limited the pass-through entity's ability to monitor expenditures and determine whether cumulative contract payments over the contract term remained within established contractual limitations, including allowable profit margin provisions. Cause Management did not establish and maintain effective internal controls to ensure that required financial reports were prepared, reviewed, and submitted to the pass-through entity in accordance with contract requirements. Recommendation We recommend that management establish formal policies and procedures to identify all required reports associated with federal awards, assign responsibility for report preparation and submission, maintain documentation evidencing timely submission, and implement supervisory review procedures to ensure compliance with reporting requirements. Views of Responsible Officials and Corrective Action Plan Management agrees with the findings and will implement procedures to identify, prepare, review, and submit all required reports associated with federal awards.
Statement of Condition The Uniform Guidance report for the year ended June 30, 2025, will be submitted with NEW’s Federal Audit Clearinghouse filing during October 2026, which is after its due date. Criteria or Specific Requirement The Federal Audit Clearinghouse filing, inclusive of NEW’s Uniform Guidance report, is due thirty days after the receipt of the auditors’ report or nine months after the end of the fiscal year (March 31, 2026) – whichever comes first. Questioned Costs Not applicable. Effect Failure to timely submit the reporting package results in noncompliance with Uniform Guidance requirements and may limit federal agencies' ability to monitor NEW’s use of federal funds. In addition, untimely filings may subject NEW to increased oversight by awarding agencies and pass-through entities. Cause NEW did not have adequate procedures in place to monitor Single Audit reporting deadlines and ensure that all information necessary to complete the audit and reporting package was prepared on a timely basis. Recommendation NEW should closely monitor compliance with reporting requirements and consider commencing its financial statement and Uniform Guidance audits earlier. Views of Responsible Officials and Corrective Action Plan Management agrees with the finding and will implement procedures to monitor Single Audit reporting deadlines and ensure future filings are completed timely.
Statement of Condition The Uniform Guidance requires that federal awards bear only their fair share of costs and that recipients maintain effective internal controls to ensure compliance with federal statutes, regulations, and award terms. Criteria or Specific Requirement During testing of Assistance Listing Number 11.307, we noted that NEW claimed reimbursement under two federal contracts for the same activity. As a result, payments were received from both awards for the same outcome. Questioned Costs A duplicate reimbursement under Assistance Listing Number 17.285 in the amount of $27,500 was identified, in addition to the reimbursement received under Assistance Listing Number 11.307. Effect NEW received duplicate federal reimbursement for the same performance outcome, resulting in questioned costs and noncompliance with federal award requirements. Cause Controls over tracking student milestones and reviewing billings across federal awards were not adequately designed or operating effectively to prevent, detect, or correct duplicate claims. Recommendation NEW should implement controls to identify students participating in multiple federally funded programs and perform a review of milestone billings across awards before submission to ensure the same outcome is not used to support reimbursement under more than one federal award unless expressly permitted by the award terms. Views of Responsible Officials and Corrective Action Plan Management agrees with the finding. NEW contacted the state pass-through agency and the federal agency to report the duplicate payment from Assistance Listing Number 17.285. Management will implement controls over tracking student milestones and reviewing billing across federal awards to ensure duplicate billings do not occur in the future.
Statement of Condition NEW did not prepare a complete and accurate Schedule of Expenditures of Federal Awards (“SEFA”). The SEFA was substantially prepared by the auditors based upon information obtained during the audit. NEW lacked the internal expertise and procedures necessary to prepare the SEFA. The auditors were required to identify federal awards, determine Assistance Listing Numbers, compile federal expenditures, and prepare the SEFA. Criteria or Specific Requirement 2 CFR § 200.510(b) requires the auditee to prepare a SEFA for the period covered by the auditee's financial statements which accurately presents federal expenditures by federal program and Assistance Listing Number. Questioned Costs Not applicable. Effect Errors or omissions in the SEFA may result in inaccurate reporting of federal expenditures and could affect the determination of major programs and the scope of the Single Audit. Cause Management did not maintain sufficient internal controls over the accumulation, review, and reporting of federal award expenditures necessary to prepare an accurate SEFA. Recommendation Management should establish and document procedures for preparing and reviewing the SEFA, including: • Maintaining a complete listing of all federal awards. • Reconciling SEFA expenditures to the general ledger. • Verifying Assistance Listing Numbers and pass-through information. • Performing an independent management review prior to submission to the auditors. Views of Responsible Officials and Corrective Action Plan Management agrees with the finding and will implement procedures to ensure the SEFA is prepared and reviewed internally prior to the commencement of future audits.
Statement of Condition During our testing of shared program and administrative expenses, we noted that NEW allocated costs to federal awards using budgeted percentages established at the beginning of the fiscal year. The budgeted allocation percentages were not subsequently reconciled to actual expenditures or actual program activity. As a result, amounts charged to federal awards were based on estimates rather than actual costs incurred for the benefit of each award. Criteria or Specific Requirement Under 2 CFR Part 200, costs charged to federal awards must be adequately documented, reasonable, allocable, and based on the relative benefits received by each program. Allocation methodologies should be supported by actual costs and updated periodically to reflect actual activity. Estimated allocations used for interim charging should be reconciled to actual costs in a timely manner. Questioned Costs Undetermined. Effect Costs charged to federal awards may not accurately reflect the actual benefit received by each program. Consequently, federal awards may have been overcharged or undercharged, resulting in potential questioned costs and noncompliance with federal cost principles. Cause Management did not have procedures in place to periodically compare budgeted allocations to actual costs and activity and to adjust charges to federal awards accordingly. Recommendation We recommend that management establish procedures to allocate costs based on actual expenditures and activity measures. Where estimates are used for interim reporting purposes, management should perform periodic reconciliations to actual costs and make any necessary adjustments to ensure federal programs are charged only for their allocable share of costs. For example, salary and related costs should be allocated based on contemporaneous time records kept by employees who are allocated to more than one program and/or federal grant source, while occupancy related costs should be allocated based on square footage utilized. Views of Responsible Officials and Corrective Action Plan Management agrees with the finding and will implement procedures to periodically reconcile allocation methodologies to actual expenditures and program activity.