Audit 415190

Finding #2026-002 – Allowable Costs – Significant Deficiency and Other Noncompliance. Applicable federal program: U. S. Department of Agriculture, Assistance Listing # 10.932, Regional Conservation Partnership Program, Contract period: 06/14/24 – 12/31/26 Contract number: Supplemental-2983-A-1608, Contract period: 10/31/23 – 07/31/27 Contract number: Supplemental-2757-A-1212, Contract period: 08/29/23 – 03/31/26 Contract number: 917442230013. Passed through Sul Ross State University: Contract period: 04/01/23 – 03/31/26 Contract number: N/A. Criteria: Allowable costs – The Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, §200.430 requires that charges to awards for salaries and wages must be based on records that accurately reflect the work performed. These records must 1) be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable and properly allocated; 2) reasonably reflect the total activity for which the employee is compensated; 3) comply with the established accounting polies and practices of the agency; and 4) support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one activity. Condition and context: Of the $1,838,681 expended during the year ended March 31, 2026, approximately $1,729,640 related solely to the purchase of a conservation easement. The remaining expenditures of $109,041 consisted of payroll and related charges. In a sample of three payroll transactions tested, we noted in each case that reimbursement requests were based on hourly rates that exceeded the actual rates of pay of the employees performing the work, resulting in an overstatement of payroll charged to the grantors of $14,668. Cause: Management did not have controls in place to ensure billings accurately reflected only actual costs incurred in accordance with federal award requirements. Effect: Compensation costs charged to the program were based on standard billing rates rather than actual employee compensation costs, resulting in reimbursement requests that exceeded allowable program costs. Known questioned costs: $14,668. Recommendation: Develop policies and procedures to ensure that all costs charged to federal awards are based on actual costs incurred in accordance with federal award requirements. Views of responsible officials and planned corrective actions: Management agrees with the finding. See Corrective Action Plan.

Finding #2026-001 – Reporting – Significant Deficiency and Other Noncompliance. Applicable federal programs: All programs. Criteria: Schedule of Expenditures of Federal Awards – In accordance with the Uniform Guidance §200.508 and §200.510, management is required to prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the auditee’s financial statements which must include the total federal awards expended, and identify the name of the pass-through entity and identifying number assigned by the pass-through entity. Condition and context: The SEFA originally provided by TALT did not correctly identify all federal awards. Certain federal awards were reported using incorrect award amounts and identifying numbers, and awards received as a subrecipient were not appropriately identified on the SEFA. Cause: TALT did not have procedures in place to correctly identify and report all federal grants on the SEFA. Effect: Failure to adequately establish and maintain a system of internal controls over preparation of the SEFA adversely affected TALT’s ability to correctly identify and summarize federal awards for reporting in accordance with the Uniform Guidance. Recommendation: Develop policies and procedures to correctly identify and reflect all federal programs on the SEFA and formalize independent review process for the SEFA. Views of responsible officials and planned corrective actions: Management agrees with the finding. See Corrective Action Plan.