2025-004- Activities Allowed or Unallowed; Allowable Costs/Cost Principles. Federal Agency: U.S. Department of Labor Federal Program Title: WIOA Cluster (WIOA Adult Program; WIOA Youth Activities; WIOA Dislocated Worker Formula Grants) ALN: 17.258, 17.259, 17.278 Award Identification Number: 23A55AY000015; AA-38542-22-55-A-32; AA-36332-21-55-A-32, 23A55AT000046; 23A55AW000038; 23A55AY000015 Pass-Through Agency: State of Nevada, Department of Employment, Training and Rehabilitation (DETR) Pass-Through Award Number and Period: PY23-A-01-WIOA; PY24-A-01-WIOA; PY23-Y-01-WIOA; PY24-Y-01-WIOA; PY23-DY-01-GR; PY23-DW-01-WIOA; PY24-DW-01- WIOA (All for the period 4/1/2023 – 6/30/2026) Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria or specific requirement: 2 CFR 200.430(i), Standards for Documentation of Personnel Expenses, requires that charges to federal awards for salaries and wages be based on records that accurately reflect the work performed, be supported by a system of internal control that provides reasonable assurance the charges are accurate, allowable, and properly allocated, and be incorporated into official records. 2 CFR 200.430(a) requires compensation to be reasonable and allocable, 2 CFR 200.403 requires costs to be adequately documented, and 2 CFR 200.303 requires effective internal \ control over federal awards. (WIOA Cluster — Activities Allowed / Allowable Costs, 2025 Compliance Supplement Part 4, ALNs 17.258/17.259/17.278.) Condition: As part of testing compliance with Activities Allowed or Unallowed and Allowable Costs/Cost Principles, audit procedures included reviewing payroll transactions charged to the WIOA Cluster and evaluating controls over payroll approval and labor cost allocation. Testing of payroll authorization identified that two of twenty-five employee timecards selected for testing lacked evidence of supervisory review and approval. In both instances, the timecards were approved only by the employee and no evidence of managerial review was maintained. Testing of payroll allocations further identified significant deficiencies in Nevadaworks’ labor distribution process. For eleven of twelve employees selected for detailed testing, management was unable to provide supporting documentation demonstrating how payroll costs were allocated among individual federal programs. Although payroll charges were recorded to specific grants in the accounting records, the amounts charged could not be reconciled to personnel activity records, allocation methodologies, or other supporting documentation sufficient to demonstrate that costs were properly assigned to benefiting programs. The condition was not isolated to a single employee or program and was determined to represent a breakdown in the Entity's payroll allocation and review processes affecting the WIOA Cluster as a whole. Questioned costs: $84,685 known; additional related questioned costs unknown. Context: Payroll represents pprox.. 16% of the total program expenditures and our sample represents pprox.. 10% of the payroll costs. Cause: Internal controls over payroll approval and labor distribution did not operate effectively during the fiscal year. Significant turnover within the finance and administrative functions contributed to the breakdown in established procedures. In addition, management had not implemented a formal process requiring periodic reconciliation of payroll allocations to supporting personnel activity information or documented supervisory review of allocation calculations. Effect: Nevadaworks was unable to demonstrate that payroll costs charged to the WIOA Cluster were properly authorized, supported, and allocated to benefiting federal programs. As a result, compliance with federal requirements governing allowable costs could not be verified. The lack of adequate supporting documentation resulted in known questioned costs exceeding the threshold for reporting and constitutes material noncompliance with federal program requirements. Repeat Finding: No. Recommendation: Management should implement formal payroll allocation procedures that clearly document the methodology used to allocate employee compensation among federal awards. Payroll allocations should be supported by contemporaneous records that accurately reflect work performed and should be reviewed periodically for reasonableness. In addition, all employee time records should be subject to documented supervisory review and approval prior to payroll processing. Views of responsible officials: There is no disagreement with the audit finding. Nevadaworks will strengthen payroll authorization and labor allocation procedures by requiring approved time records, documented grant allocations, supervisory review of payroll records, monthly reconciliation of payroll charges, and periodic reviews of allocation methodologies for compliance with federal requirements.
Subrecipient Monitoring Federal Agency: U.S. Department of Labor Federal Program Title: WIOA Cluster (WIOA Adult Program; WIOA Youth Activities; WIOA Dislocated Worker Formula Grants) ALN: 17.258, 17.259, 17.278 Award Identification Number: 23A55AY000015; AA-38542-22-55-A-32; AA-36332-21-55-A-32, 23A55AT000046; 23A55AW000038; 23A55AY000015 Pass-Through Agency: State of Nevada, Department of Employment, Training and Rehabilitation (DETR) Pass-Through Award Number and Period: PY23-A-01-WIOA; PY24-A-01-WIOA; PY23-Y-01-WIOA; PY24-Y- 01-WIOA; PY23-DY-01-GR; PY23-DW-01-WIOA; PY24-DW-01- WIOA (All for the period 4/1/2023 – 6/30/2026) Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria or specific requirement: As a pass-through entity, Nevadaworks is required by 2 CFR 200.332 (Requirements for pass-through entities) to monitor the activities of each subrecipient as necessary to ensure the subaward is used for authorized purposes, in compliance with federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved (2 CFR 200.332(d)). WIOA oversight requirements at 20 CFR 683.410 and 683.420 reinforce monitoring of subrecipients and 2 CFR 200.303 requires effective internal control over federal awards. Condition: Audit procedures included selecting 5 of 8 subrecipients that received WIOA funding during fiscal year 2025 and testing management’s monitoring activities. Management was unable to provide evidence that monitoring procedures had been performed for three of the five subrecipients tested. Specifically, no monitoring reports, desk reviews, site visit documentation, risk assessments, corrective action follow-up, or other monitoring evidence was maintained for these subrecipients during the fiscal year. Subsequent inquiries with management identified that no monitoring procedures were performed for the three remaining subrecipients not selected. Although management monitored two subrecipients that remained active throughout the year, no procedures were performed over six subrecipients whose agreements terminated earlier in the fiscal year. As a result, management could not demonstrate that federal funds provided to those organizations were subject to oversight sufficient to ensure compliance with applicable federal requirements. Questioned costs: None. Context: The population consisted of eight subrecipients receiving WIOA funding during fiscal year 2025. Approximately $3.7 million in federal funding was passed through to subrecipients during the fiscal year. Monitoring deficiencies affected six of eight subrecipients, representing a substantial portion of Nevadaworks’ pass-through activity. Cause: Management's subrecipient monitoring process did not include procedures addressing subrecipients whose agreements terminated during the fiscal year. Because several contracts closed early in the year, management did not perform monitoring activities before closeout. In addition, there was no formal monitoring schedule or risk assessment process to ensure monitoring requirements were satisfied regardless of the duration of the award. Effect: Without documented monitoring activities, management lacked adequate assurance that federal funds were expended for authorized purposes, that program performance objectives were achieved, and that subrecipients complied with applicable laws, regulations, and grant requirements. The absence of monitoring procedures constitutes material noncompliance with pass-through entity responsibilities under Uniform Guidance. Repeat Finding: No. Recommendation: Management should establish and implement a formal risk-based subrecipient monitoring program consistent with 2 CFR 200.332. Monitoring activities should include documented risk assessments, periodic reviews of financial and performance information, monitoring procedures for terminated awards, and documented follow-up of identified issues. Monitoring requirements should apply to all subrecipients, including those with short-term agreements or agreements closed during the fiscal year. Views of responsible officials: There is no disagreement with the audit finding. Nevadaworks will implement a formal subrecipient monitoring process that includes documented policies, monitoring procedures applicable to all subrecipients, and monitoring activities incorporated into subaward closeout procedures.
Reporting Federal Agency: U.S. Department of Labor Federal Program Title: WIOA Cluster (WIOA Adult Program; WIOA Youth Activities; WIOA Dislocated Worker Formula Grants) ALN: 17.258, 17.259, 17.278 Award Identification Number: 23A55AY000015; AA-38542-22-55-A-32; AA-36332-21-55-A-32, 23A55AT000046; 23A55AW000038; 23A55AY000015 Pass-Through Agency: State of Nevada, Department of Employment, Training and Rehabilitation (DETR) Pass-Through Award Number and Period: PY23-A-01-WIOA; PY24-A-01-WIOA; PY23-Y-01-WIOA; PY24-Y- 01-WIOA; PY23-DY-01-GR; PY23-DW-01-WIOA; PY24-DW-01- WIOA (All for the period 4/1/2023 – 6/30/2026) Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria or specific requirement: Pursuant to 2 CFR 200.328, federal financial reports must be accurate, complete, and submitted timely. The Department of Labor requires ETA financial reports to be submitted quarterly with cumulative expenditure information from grant inception through the reporting period. Effective controls over grant reporting are required under 2 CFR 200.303. Condition: Audit procedures included reviewing all quarterly financial reports submitted under the WIOA Cluster during fiscal year 2025. Testing identified that the fourth-quarter fiscal year 2025 financial report submitted to the grantor was an exact duplicate of the third-quarter report. As a result, fourth-quarter expenditures, obligations, and other financial activity were not reported. Management was unable to provide evidence that the report had been independently reviewed prior to submission, and no corrected report had been subsequently filed with the grantor agency. Further inquiry determined that the reporting process lacked procedures requiring reconciliation of reported amounts to accounting records before submission. The condition indicates that reporting controls failed to identify a significant reporting error prior to submission to the awarding agency. Questioned costs: Unknown. Context: The audit reviewed the entire population of four quarterly reports required during fiscal year 2025. One of the four reports reviewed was materially inaccurate and incomplete, representing a reporting error affecting an entire quarter of grant activity. Cause: Management did not maintain effective review controls over grant reporting. Staff turnover and changes in reporting responsibilities contributed to the failure; however, the underlying cause was the absence of a formal reconciliation and review process designed to verify report accuracy prior to submission. Effect: Required federal financial reporting was inaccurate and incomplete. The awarding agency did not receive accurate cumulative financial information necessary to monitor grant performance, funding utilization, and compliance with federal requirements. The condition constitutes material noncompliance with federal reporting requirements. Repeat Finding: No. Recommendation: Management should implement a formal reporting review process requiring reconciliation of all quarterly reports to underlying accounting records prior to submission. Reports should be independently reviewed and approved by a qualified individual and evidence of the review should be retained. Management should also submit any required corrected reports to the granting agency. Views of responsible officials: There is no disagreement with the audit finding. Nevadaworks will strengthen its federal reporting process by implementing a reporting calendar, requiring reconciliation of reports to accounting records before submission, and establishing documented independent review and approval procedures. Any necessary corrected reports will be submitted to the awarding agency.
Matching, Level of Effort, and Earmarking Federal Agency: U.S. Department of Labor Federal Program Title: WIOA Cluster (WIOA Adult Program; WIOA Youth Activities; WIOA Dislocated Worker Formula Grants) ALN: 17.258, 17.259, 17.278 Award Identification Number: 23A55AY000015; AA-38542-22-55-A-32; AA-36332-21-55-A-32, 23A55AT000046; 23A55AW000038; 23A55AY000015 Pass-Through Agency: State of Nevada, Department of Employment, Training and Rehabilitation (DETR) Pass-Through Award Number and Period: PY23-A-01-WIOA; PY24-A-01-WIOA; PY23-Y-01-WIOA; PY24-Y- 01-WIOA; PY23-DY-01-GR; PY23-DW-01-WIOA; PY24-DW-01- WIOA (All for the period 4/1/2023 – 6/30/2026) Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria or specific requirement: For local areas, WIOA earmarking requirements include: not less than 20% of local Youth Activity funds (excluding local administration) must be used for paid and unpaid work experiences (29 USC 3164(c)(4)). Reports used to monitor earmarking must be accurate (2 CFR 200.303). Condition: Management monitors compliance with WIOA earmarking requirements through information reported in quarterly financial and expenditure reports. As described in Finding 2025-006, the fourth-quarter fiscal year 2025 financial report submitted to the granting agency was inaccurate and did not include actual fourth-quarter activity. Because the expenditure reports used to monitor earmarking compliance were incomplete and inaccurate, management was unable to demonstrate compliance with applicable local-area earmarking requirements for fiscal year 2025. In particular, management could not provide reliable support demonstrating that expenditures subject to WIOA earmarking provisions were properly accumulated and monitored throughout the fiscal year for all awards listed above. Questioned costs: Unknown. Context: Our sample represents the entire population. Cause: Controls over expenditure reporting and compliance monitoring did not operate effectively. Deficiencies in quarterly reporting, combined with inadequate reconciliation procedures and staff turnover, resulted in management's inability to maintain accurate information necessary to monitor earmarking compliance throughout the fiscal year. Effect: Nevadaworks could not demonstrate compliance with applicable local-area earmarking requirements. Because the expenditure information necessary to evaluate compliance was incomplete and unreliable, compliance with federal earmarking requirements could not be verified. This represents material noncompliance with WIOA compliance requirements. Repeat Finding: No. Recommendation: Management should establish procedures requiring periodic reconciliation of expenditure reports to the general ledger and independent review of earmarking calculations throughout the year. Compliance with earmarking requirements should be documented and monitored quarterly to ensure potential compliance issues are identified and addressed timely. Views of responsible officials: Nevadaworks will implement a quarterly review process to monitor compliance with applicable WIOA earmarking requirements using reconciled expenditure data and documented compliance reviews prepared in conjunction with quarterly reporting.