Audit 414988

Finding 2023-002 Lack of Internal Control Over Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Agency: U.S. Department of the Interior (direct) Federal Program: Aid to Tribal Government Assistance Listing Number: 15.020 Award Numbers: A20AV00507 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 $64,421 in payroll expenditures related to ALN 15.020. Repeat Finding: This is a repeat of finding 2022-002, 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 2023-003 Lack of Internal Control Over Activities Allowed or Unallowed and Allowable Costs/Cost Principles Federal Agency: U.S. Department of Transportation (direct) Federal Program: National Infrastructure Investments Assistance Listing Number: 20.933 Award Numbers: 693JJ32040006 and 693JJ32340013 Award Year: 2020 and 2023 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 $444,242 in payroll expenditures related to the federal award. Repeat Finding: This is a repeat of finding 2022-003, 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 2023-004 Lack of Internal Control over Reporting and Noncompliance with Reporting Requirements Federal Agencies: U.S. Department of the Interior (direct), U.S. Department of Transportation (direct) Federal Programs: Aid To Tribal Government, and National Infrastructure Investment Project, respectively Assistance Listing Numbers: 15.020 and 20.933, respectively Award Numbers: 693JJ32040006 and 693JJ32340013 (ALN 20.933), A20AV00507 (ALN 15.020) Award Years: 2020 and 2023 (National Infrastructure Investment Project) 2020 (Aid to Tribal Government) 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. Repeat Finding: This is a repeat finding of 2022-004, and determined to be a systematic issue. Recommendation: We recommend that management complies with all reporting requirements of the above programs. Management’s Response: Management concurs with this finding. See corrective action plan.

Finding 2023-005 Late Reporting and Noncompliance with Reporting Requirements Federal Agencies: U.S. Department of the Interior (direct), and U.S. Department of Transportation (direct) Federal Programs: Aid To Tribal Government, and National Infrastructure Investment, respectively Assistance Listing Numbers: 15.020 and 20.933, respectively Award Numbers: 693JJ32040006 and 693JJ32340013 (ALN 20.933), A20AV00507 (ALN 15.020) Award Years: 2020 and 2023 (National Infrastructure Investment Project) 2020 (Aid to Tribal Government) 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 2022-005 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.