2022-002 ? Internal Control over Compliance and Compliance with Activities Allowed or Unallowed and Allowable Costs/Cost Principles Information on Federal Program(s) - Department of Education Assistance Listing Number: 84.351 Assistance Listing Name: Arts in Education National Program Grant Award Numbers: S351A220001 Award Period: October 4, 2021 to April 30, 2023 Criteria or Specific Requirement ? The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. In addition, per 2 CFR Section 200.403, ?Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. (g) Be adequately documented. (h) Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to ? 200.308(e)(3).? Condition ? During our test work of 40 payroll samples, totaling $44,233.99, selected to test the Activities Allowed or Unallowed and Allowable Costs/Cost Principles compliance requirements, we noted two instances for the same employee for which the employee received compensation at a higher rate than the employee?s approved salary letter that was maintained in the personnel file. For the two samples selected, the employee received a total of $13.45 in compensation in excess of the approved amount per personnel file. Cause ? The Center is not adhering to their internal process to ensure all approved salary information was maintained in the personnel file. Effect or Potential Effect ? Without adequate internal controls in place to ensure costs are properly verified and supported, the Center could incorrectly charge expenditures to the federal program. Questioned Costs - Known questioned costs totaled $13.45 and likely questioned costs totaled $1,876. The likely questioned costs were determined by management through examination of the total salary charged to the federal program for the employee who received compensation in excess of the approved amount per personnel file. Context ? This is a condition based on testing of the Center?s compliance. The prevalence of the finding is detailed in the condition section above. The samples were selected using a non-statistical method. Repeat Finding ? N/A Recommendation - We recommend management ensure the Center strengthen their internal process to ensure that employee salary information recorded in the payroll system are approved and supported by salary documentation in the personnel file. Views of Responsible Officials ? The Center?s management agrees with the finding and will strengthen the internal control surrounding the activities allowed or unallowed and allowable costs and will ensure the adequate documentation is in place. See the Center?s corrective action for more details.
2022-001 ? Internal Control over Compliance and Compliance with Procurement, Suspension and Debarment Information on Federal Program(s) - Department of Education Assistance Listing Number: 84.351 Assistance Listing Name: Arts in Education National Program Grant Award Numbers: S351A220001 Award Period: October 4, 2021 to April 30, 2023 Criteria or Specific Requirement ? In accordance with ?200.318(a), General Procurement Standards, the non-federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable federal law and the standards identified in General Procurement Standards. Additionally, ?200.318(i) states that the non-federal entity must maintain records sufficient to detail the history of the procurement. These records are required to include, but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. All procurement transactions must be conducted in a manner providing full and open competition consistent in accordance with ?200.319 and must be performed using the appropriate procurement method as outlined in ?200.320. In accordance with ?200.213 and ?180.300, Suspension and Debarment, non-federal entities cannot enter into awards, subawards, or contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in federal assistance programs or activities. Non-federal entities must either check for exclusions in the System for Award Management (SAM); collect a certification from the entity, or add a clause or condition to the covered transaction with the entity prior to entering into a covered transaction with a non-federal entity. In addition, in accordance with ?180.415(b), non-federal entities cannot renew or extend covered transactions (other than no-cost time extension) with any excluded person, or under which an excluded person is a principal, unless the non-federal entity obtains an exception under ?180.135. Condition ? During our procurement testing, we noted the following exceptions: ? We noted that there was no documentation in the vendor/procurement files for two samples (total samples tested 10) to support the Center?s rationale for selecting that particular vendor. The Center didn?t adhere to its procurement policy for these vendors. The two samples with insufficient documentation were in amounts of $12,500 and $14,451. The 10 samples tested totaled $225,066. ? We noted that for one procurement sample (total samples tested 10) there was no documentation in the vendor file to document that the debarment check was run before the contract was signed with the vendor. Per discussion with management, it was noted that this check was performed but the program manager did not save the documentation to maintain in the procurement files. Management performed a debarment check in November 2022 concluding that the vendor was not suspended or debarred. However, this is still considered a finding as the Center did not follow their retention policies and did not maintain documentation in the vendor files (with a time stamp). Cause ? The Center did not adhere to the Center?s documented policies and procedures for ensuring complete documentation of the history of the procurement and for ensuring proper suspension and debarment validations were performed before entering into a contract. Effect or Potential Effect - Failure to perform procurement procedures in accordance with the Center?s documented policies and Procurement Procedures as outlined in the Uniform Administrative Requirements could result in the procurement being disallowed. Failure to timely verify that a vendor is not suspended or debarred could result in transactions involving unreasonable costs or result in unintentionally entering into a contract with an entity that is barred from performing work for the federal government. Questioned Costs - None Context ? This is a condition based on testing of the Center?s compliance with specified requirements. The prevalence of these findings is detailed in the condition section above. The samples were selected using a non-statistical method. Repeat Finding ? N/A Recommendation - We recommend management ensure all required procurement documentation is maintained in conjunction with its document retention policy. And we also recommend that management ensure that suspension and debarment regulations are followed. Views of Responsible Officials ? The Center?s management agrees with the finding and will strengthen the internal control surrounding the procurement and debarment cycles and will ensure the policies are followed. See the Center?s corrective action for more details.
2022-002 ? Internal Control over Compliance and Compliance with Activities Allowed or Unallowed and Allowable Costs/Cost Principles Information on Federal Program(s) - Department of Education Assistance Listing Number: 84.351 Assistance Listing Name: Arts in Education National Program Grant Award Numbers: S351A220001 Award Period: October 4, 2021 to April 30, 2023 Criteria or Specific Requirement ? The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. In addition, per 2 CFR Section 200.403, ?Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. (g) Be adequately documented. (h) Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to ? 200.308(e)(3).? Condition ? During our test work of 40 payroll samples, totaling $44,233.99, selected to test the Activities Allowed or Unallowed and Allowable Costs/Cost Principles compliance requirements, we noted two instances for the same employee for which the employee received compensation at a higher rate than the employee?s approved salary letter that was maintained in the personnel file. For the two samples selected, the employee received a total of $13.45 in compensation in excess of the approved amount per personnel file. Cause ? The Center is not adhering to their internal process to ensure all approved salary information was maintained in the personnel file. Effect or Potential Effect ? Without adequate internal controls in place to ensure costs are properly verified and supported, the Center could incorrectly charge expenditures to the federal program. Questioned Costs - Known questioned costs totaled $13.45 and likely questioned costs totaled $1,876. The likely questioned costs were determined by management through examination of the total salary charged to the federal program for the employee who received compensation in excess of the approved amount per personnel file. Context ? This is a condition based on testing of the Center?s compliance. The prevalence of the finding is detailed in the condition section above. The samples were selected using a non-statistical method. Repeat Finding ? N/A Recommendation - We recommend management ensure the Center strengthen their internal process to ensure that employee salary information recorded in the payroll system are approved and supported by salary documentation in the personnel file. Views of Responsible Officials ? The Center?s management agrees with the finding and will strengthen the internal control surrounding the activities allowed or unallowed and allowable costs and will ensure the adequate documentation is in place. See the Center?s corrective action for more details.
2022-001 ? Internal Control over Compliance and Compliance with Procurement, Suspension and Debarment Information on Federal Program(s) - Department of Education Assistance Listing Number: 84.351 Assistance Listing Name: Arts in Education National Program Grant Award Numbers: S351A220001 Award Period: October 4, 2021 to April 30, 2023 Criteria or Specific Requirement ? In accordance with ?200.318(a), General Procurement Standards, the non-federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable federal law and the standards identified in General Procurement Standards. Additionally, ?200.318(i) states that the non-federal entity must maintain records sufficient to detail the history of the procurement. These records are required to include, but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. All procurement transactions must be conducted in a manner providing full and open competition consistent in accordance with ?200.319 and must be performed using the appropriate procurement method as outlined in ?200.320. In accordance with ?200.213 and ?180.300, Suspension and Debarment, non-federal entities cannot enter into awards, subawards, or contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in federal assistance programs or activities. Non-federal entities must either check for exclusions in the System for Award Management (SAM); collect a certification from the entity, or add a clause or condition to the covered transaction with the entity prior to entering into a covered transaction with a non-federal entity. In addition, in accordance with ?180.415(b), non-federal entities cannot renew or extend covered transactions (other than no-cost time extension) with any excluded person, or under which an excluded person is a principal, unless the non-federal entity obtains an exception under ?180.135. Condition ? During our procurement testing, we noted the following exceptions: ? We noted that there was no documentation in the vendor/procurement files for two samples (total samples tested 10) to support the Center?s rationale for selecting that particular vendor. The Center didn?t adhere to its procurement policy for these vendors. The two samples with insufficient documentation were in amounts of $12,500 and $14,451. The 10 samples tested totaled $225,066. ? We noted that for one procurement sample (total samples tested 10) there was no documentation in the vendor file to document that the debarment check was run before the contract was signed with the vendor. Per discussion with management, it was noted that this check was performed but the program manager did not save the documentation to maintain in the procurement files. Management performed a debarment check in November 2022 concluding that the vendor was not suspended or debarred. However, this is still considered a finding as the Center did not follow their retention policies and did not maintain documentation in the vendor files (with a time stamp). Cause ? The Center did not adhere to the Center?s documented policies and procedures for ensuring complete documentation of the history of the procurement and for ensuring proper suspension and debarment validations were performed before entering into a contract. Effect or Potential Effect - Failure to perform procurement procedures in accordance with the Center?s documented policies and Procurement Procedures as outlined in the Uniform Administrative Requirements could result in the procurement being disallowed. Failure to timely verify that a vendor is not suspended or debarred could result in transactions involving unreasonable costs or result in unintentionally entering into a contract with an entity that is barred from performing work for the federal government. Questioned Costs - None Context ? This is a condition based on testing of the Center?s compliance with specified requirements. The prevalence of these findings is detailed in the condition section above. The samples were selected using a non-statistical method. Repeat Finding ? N/A Recommendation - We recommend management ensure all required procurement documentation is maintained in conjunction with its document retention policy. And we also recommend that management ensure that suspension and debarment regulations are followed. Views of Responsible Officials ? The Center?s management agrees with the finding and will strengthen the internal control surrounding the procurement and debarment cycles and will ensure the policies are followed. See the Center?s corrective action for more details.