Finding 2022-007 Lack of Internal Control Over Special Test and Provisions – Environmental Review Federal Agency: U.S. Department of Housing and Urban Development Federal Program: Indian Community Block Development Grant Assistance Listing Number: 14.682 Award Numbers: 22RPO216400 Award Year: 2022 Type of Finding: Material weaknesses in internal control over compliance and noncompliance. Criteria: Recipients of federal awards are required to comply with applicable environmental review requirements associated with the federal program and maintain sufficient documentation to demonstrate compliance with those requirements. Additionally, 2 CFR § 200.303 requires non-federal entities to establish and maintain effective internal control over the federal award that provides reasonable assurance that the entity is managing the award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition and Context: During our audit, the Council failed to provide adequate supporting documentation demonstrating that the required environmental review was completed or that the funded activities were determined to be exempt or otherwise not subject to environmental review requirements as applicable. As a result, we were unable to verify that the Tribe had complied with Special Testing requirements applicable to the federal award. Cause: The Council did not have adequate procedures in place to ensure that documentation supporting compliance with applicable environmental review requirements was retained and readily available for federally funded activities. Effect: Failure to follow compliance requirements could result in a loss of federal funding. Questioned Costs: None. Repeat Finding: No, this is not a repeat finding. Recommendation: We recommend that the Council establish and implement procedures to ensure that environmental reviews required by the federal program are completed before federally funded activities are undertaken, when applicable. The Council should also maintain documentation demonstrating completion of the environmental review, exemption or exclusion determinations, approvals, and other applicable environmental compliance requirements for the required record-retention period. Management Response: Management concurs with this finding. See Corrective Action Plan.
Finding 2022-006 Lack of Internal Control Over Special Test and Provisions – Investment and Deposit of Advance Funds Federal Agency: U.S. Department of the Interior, passed through Bureau of Indian Affairs Federal Program: Aid to Tribal Government Assistance Listing Number: 15.020 Award Numbers: A20AV00507 Award Year: 2020 Type of Finding: Material weaknesses in internal control over compliance and noncompliance. Criteria: A tribal organization receiving advance payments under the ISDEAA (Indian Self-Determination and Education Assistance Act) may invest advance payments before such funds are expended for the purposes of the grant, contract, or funding agreement, so long as such funds are (1) invested only in obligations of the United States or in obligations or securities that are guaranteed or insured by the United States, or mutual funds registered with the Securities and Exchange Commission and which only invest in obligations of the United States or securities that are guaranteed or insured by the United States; or (2) deposited only in accounts that are insured by an agency or instrumentality of the United States, or are fully collateralized to ensure protection of the advance funds, even in the event of a bank failure (25 USC 450e-3). Condition and Context: As of fiscal year-end, the Council maintained approximately $2,575,597 in a local financial institution, of that amount $1,413,986 was advanced under its Aid to Tribal Government Program. Approximately $2,397,416 of the total bank balance was not covered by FDIC insurance and was not otherwise collateralized, placing those federal funds at risk of loss. Cause: The Council did not have formal procedures to monitor bank balances against insured limits or require collateral agreements for federal funds held in excess of FDIC coverage. Effect: This practice exposes federal funds to custodial credit risk and does not comply with the federal requirements under 25 U.S.C. § 450e–3 and Uniform Guidance. If the financial institution were to fail, the Council could suffer a loss of federal program funds. Questioned Costs: None. Repeat Finding: This is a repeat finding of 2021-005 and considered a systemic issue. Recommendation: We recommend the Council implement procedures to review bank balances on a regular basis and compare them to FDIC insurance limits. The Council should arrange for a collateral agreement with its financial institution to ensure full protection of all federal funds in accordance with 25 U.S.C. § 450e–3. A written cash management policy should be developed to document these requirements. Management Response: Management concurs with this finding. See Corrective Action Plan.
Finding 2022-003 Lack of Internal Control Over Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Agency: U.S. Department of Transportation Federal Program: National Infrastructure Investment- TIGER Project Assistance Listing Number: 20.933 Award Numbers: 693JJ32040006 Award Year: 2020 Type of Finding: Material weakness in internal control over compliance and material noncompliance. Criteria: Internal control procedures should be in place to ensure the payroll accounting system is maintained to be able to accurately record payroll transactions. Payroll transactions should be supported by approved pay rates. 2 CFR 200.430 Requires charges for services and wages coded to federal awards to be based on records that accurately reflect the work performed. Internal controls over the payroll system should provide reasonable assurance that transactions are properly approved, accurate, and properly allocated. Condition and Context: Auditors reviewed a random sample of 25 transactions from the program’s payroll population. During our testing of internal controls over payroll we noted that a majority transactions tested lacked the necessary payroll documentation, approved timesheet with supervisor’s approval, approval of the rate of pay for employees. Cause: Lack of internal controls over the payroll internal control system and employee personnel file. Effect: Lack of internal controls over payroll could result in incorrect amounts being paid to employees and the improper allocation of payroll expenses charged to grants, increasing the risk of unallowable activities. Questioned Costs: Actual and likely questioned costs amounted to $570,459 in payroll expenditures related to the federal award. Repeat Finding: This is a repeat of finding 2021-002, and determined to be a systemic issue. Recommendation: The Council should strengthen internal controls over the payroll accounting system. Transactions should be reviewed and approved by supervisors for amount and coding. Timesheets should be totaled and signed by both employee and supervisor. Personnel files should be periodically reviewed to ensure that all employees have adequate payroll documentation with their current approved pay rates and deductions. Management’s Response: Management concurs with this finding. See corrective action plan.
Finding 2022-002 Lack of Internal Control Over Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Agency: U.S. Department of the Treasury (direct) Federal Program: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF), COVID-19 Assistance Listing Number: 21.027 Award Numbers: SLFRP2510 Award Year: 2021 Type of Finding: Material weakness in internal control over compliance and material noncompliance. Criteria: Internal control procedures should be in place to ensure the payroll accounting system is maintained to be able to accurately record payroll transactions. Payroll transactions should be supported by approved pay rates. 2 CFR 200.430 Requires charges for services and wages coded to federal awards to be based on records that accurately reflect the work performed. Internal controls over the payroll system should provide reasonable assurance that transactions are properly approved, accurate, and properly allocated. Condition and Context: Auditors reviewed a random sample of 25 transactions from the program’s payroll population. During our testing of internal controls over payroll we noted that a majority transactions tested lacked the necessary payroll documentation, approved timesheet with supervisor’s approval, approval of the rate of pay for employees. Cause: Lack of internal controls over the payroll internal control system and employee personnel file. Effect: Lack of internal controls over payroll could result in incorrect amounts being paid to employees and the improper allocation of payroll expenses charged to grants, increasing the risk of unallowable activities. Questioned Costs: Actual and likely questioned costs amounted to $322,066 in payroll expenditures related to the federal award. Repeat Finding: This is a repeat of finding 2021-002, and determined to be a systemic issue. Recommendation: The Council should strengthen internal controls over the payroll accounting system. Transactions should be reviewed and approved by supervisors for amount and coding. Timesheets should be totaled and signed by both employee and supervisor. Personnel files should be periodically reviewed to ensure that all employees have adequate payroll documentation with their current approved pay rates and deductions. Management’s Response: Management concurs with this finding. See corrective action plan.
Finding 2022-004 Lack of Internal Control over Reporting and Noncompliance with Reporting Requirements Federal Agencies: U.S. Department of the Treasury (direct), U.S. Department of Transportation, and U.S. Department of Housing and Urban Development Federal Programs: Coronavirus State and Local Fiscal Recovery Funds (SLFRF) COVID-19, National Infrastructure Investment-TIGER Project (TIGER Project), and Indian Community Block Development Grant (ICBDG), respectively Assistance Listing Numbers: 21.027, 20.933, and 14.682 respectively Award Numbers: SLFRP2510, 693JJ32040006, and 22RPO216400 Award Years: 2021 (SLFRF), 2020 (TIGER Project), and 2022 (ICDBG) respectively Type of Finding: Material weakness in internal control over compliance and material noncompliance. Criteria: Reporting requirements for each award state that they must be submitted by the deadline listed for each program. Condition and Context: During our compliance testing over reporting requirements for the programs, it was determined that management had not submitted any of the reports for the above programs timely. Cause: Lack of internal controls over reporting requirements. Effect: Failure to follow reporting requirements could result in the loss of federal funding. Questioned Costs: None noted.
Finding 2022-005 Late Reporting and Noncompliance with Reporting Requirements Federal Agencies: U.S. Department of the Treasury (direct), U.S. Department of Transportation, and U.S. Department of Housing and Urban Development Federal Programs: Coronavirus State and Local Fiscal Recovery Fund (SLFRF) COVID-19, National Infrastructure Investment-TIGER Project (TIGER Project), and Indian Community Block Development Grant (ICBDG), respectively Assistance Listing Numbers: 21.027, 20.933, and 14.682 respectively Award Numbers: SLFRP2510, 693JJ32040006, and 22RPO216400 Award Years: 2021 (SLFRF), 2020 (TIGER Project), and 2022 (ICDBG) respectively Type of Finding: Material weakness in internal control over compliance and material noncompliance. Criteria: Uniform Guidance requires that the reporting package be submitted within the earlier of 9 months after year end or 30 days after the report issuance in accordance with the provisions of 2 CFR part 200, subpart F, section 200.512. Condition and Context: The Council did not adhere to the Uniform Guidance requirement of submitting the reporting package within the earlier of 30 days after the receipt of the audit report, or the nine months after the end of the audit period. Cause: Lack of internal controls around Uniform Guidance requirements. Effect: The Council was not in compliance with reporting requirements. Questioned Costs: None. Repeat Finding: This is a repeat finding of 2021-004, and determined to be a systemic issue. Recommendation: We recommend that management comply with Uniform Guidance reporting requirement. Management Response: Management concurs with this finding. See Corrective Action Plan.