FINDING 2022-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): 2022 Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Condition and Context The County had not properly designed or implemented a system of internal controls that was effective in preventing, or detecting and correcting, noncompliance. Recipients are required to submit quarterly or annually Project and Expenditure (P&E) reports to the U.S. Department of the Treasury (Treasury). The reporting periods, as well as the respective due dates, are based upon type of recipient and the recipient's population, as well as the recipient's allocation amount. Information to be reported includes projects funded, expenditures, and contracts for the appropriate reporting period. The County was classified as a metropolitan county with a population below 250,000 residents that received an allocation of more than $10 million in State and Local Fiscal Recovery Funds. As such, the initial P&E report, covering the period from March 3, 2021 to December 31, 2021, was required to be submitted to the Treasury by January 31, 2022. The subsequent quarterly reports are to be submitted the last day of the month after the end of each quarter thereafter. The County submitted all four P&E reports that were required during the audit period. Although the County Auditor prepared the reports and the Board of County Commissioners reviewed and approved them, the internal controls did not prevent, or detect and correct, errors. All four P&E reports were tested. Two of the four reports were not supported by the County's records as encumbrances were incorrectly included in the County's expenditures. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, page 10, states in part: ". . . 10. Reporting. All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. . . ." 31 CFR 35.4(c) states in part: "Reporting and requests for other information. During the period of performance, recipients shall provide to the Secretary periodic reports providing detailed accounting of the uses of funds, . . ." Cause A proper system of internal controls over the P&E report was not implemented by the management of the County to ensure that complete and accurate information related to the SLFRF awards was provided to the Treasury. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the County's management of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal fundings to the County. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the County's management should develop policies and procedures to ensure that the County provides the Treasury with complete and accurate information for the P&E report. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-001 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY2022 Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 13 CITY OF CRAWFORDSVILLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The City had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties that would likely be effective in preventing, or detecting and correcting, noncompliance. Recipients are required to submit quarterly or annually Project and Expenditure (P&E) reports to the Department of Treasury (Treasury). The reporting periods, as well as the respective due dates, are based upon type of recipient and its population, as well as the recipient's allocation amount. Information to be reported includes projects funded, expenditures, and contracts for the appropriate reporting period. The City was classified as a metropolitan city with a population below 250,000 residents that received an allocation of less than $10 million in State and Local Fiscal Recovery Funds (SLFRF). As such, the initial P&E report, covering the period from March 3, 2021 to March 31, 2022, was required to be submitted to the Treasury by April 30, 2022. The subsequent annual reports are to cover one calendar year and must be submitted to the Treasury by April 30 each year. The City submitted one P&E report during the audit period; however, a single employee prepared and submitted the P&E report without a review or oversight process in place to prevent, or detect and correct, errors. In addition, the P&E report was not properly supported by the City's records. All items were reported under the Eligible Use Category of "Administrative Expenses." However, the City's expenditures during the audit period consisted of assistance to business and households, remote work recruiting, sewer infrastructure, and tourism support, none of which qualified as Administrative Expenses. Furthermore, the City reported that it was electing to take the Revenue Loss Standard Allowance, but the amount reported as Revenue Loss was $0. Criteria 2 CFR 200.303 states in part: "The Non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, page 10, states in part: ". . . 10. Reporting. All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. . . ." INDIANA STATE BOARD OF ACCOUNTS 14 CITY OF CRAWFORDSVILLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 31 CFR 35.4(c) states in part: "Reporting and requests for other information. During the period of performance, recipients shall provide to the Secretary periodic reports providing detailed accounting of the uses of funds, . . ." Cause A proper system of internal controls over the P&E report was not designed by management of the City, which would include segregation of key functions to ensure the City provided the Treasury with complete and accurate information related to the SLFRF awards. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the City's management of what should be done to effect internal control, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. In addition, not meeting the SLFRF reporting requirements increases the likelihood that the public will not have access to transparent and accurate information regarding expenditures of federal awards. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the City design and implement a proper system of internal controls that would provide a segregation of duties for the preparation and review of federal reports to ensure appropriate reviews, approvals, and oversight are taking place. Additionally, management should develop policies and procedures to ensure that the City provides the Treasury with complete and accurate information for the P&E report. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-002 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY 2022 Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Condition and Context The County had not properly implemented a system of internal controls, which would include appropriate segregation of duties that would likely be effective in preventing, or detecting and correcting, noncompliance. Recipients are required to submit quarterly or annually Project and Expenditure (P&E) Reports to the Department of the Treasury (Treasury). The reporting periods, as well as the respective due dates, are based upon type of recipient and its population, as well as the recipient's allocation amount. Information to be reported includes projects funded, expenditures, and contracts for the appropriate reporting period. The County was classified as a metropolitan county with a population below 250,000 residents that received an allocation of more than $10 million in Coronavirus State and Local Fiscal Recovery Funds (SLFRF) funding. As such, the initial P&E Report, covering three calendar quarters from March 3, 2021 to December 31, 2021, was required to be submitted to the Treasury by January 31, 2022. The subsequent quarterly reports were to cover one calendar quarter and must be submitted to the Treasury by the last day of the month following the end of the period covered. The County submitted four quarterly P&E Reports during the audit period. The County's process for the completion and submission of the P&E Reports was that the County Attorney prepared each P&E Report based on a spreadsheet prepared by the Board of County Commissioners Executive-Administrative Assistant, and then the Chair of the Board of County Commissioners reviewed and submitted the reports. One of the four quarterly reports was not properly supported by the County's records. For the final quarterly report in 2022, the County did not include an expenditure of $1,500,000 as it was not included on the spreadsheet prepared by the Board of County Commissioners Executive-Administrative Assistant. INDIANA STATE BOARD OF ACCOUNTS 17 JOHNSON COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The lack of internal controls and noncompliance were isolated to the final quarterly report in 2022. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, page 10, states in part: ". . . 10. Reporting. All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. . . ." 31 CFR 35.4(c) states in part: "Reporting and requests for other information. During the period of performance, recipients shall provide to the Secretary periodic reports providing detailed accounting of the uses of funds." Cause A proper system of internal controls over the P&E Report was not designed by management of the County to ensure the County provided the Treasury with complete and accurate information related to the SLFRF awards. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the County's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. In addition, not meeting the SLFRF reporting requirements increases the likelihood that the public will not have access to transparent and accurate information regarding expenditures of federal awards. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 18 JOHNSON COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that management of the County design and implement a proper system of internal controls, including policies and procedures to ensure that the County provides the Treasury with complete and accurate information for the P&E Report. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
According to Section 200.303 of the Uniform Guidance, a nonfederal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Point of Freedom needs to establish and document their policies and procedures to meet the control objectives outlined in 2 CFR section 200.1. One of the objectives focuses on ensuring that transactions are accurately recorded and accounted for, enabling the accurate preparation of dependable financial statements and federal reports. Based on our testing of reports, management was not able to provide accurate supporting documentation to corroborate reports submitted to the funding agency. The Organization's initial exposure to a Single Audit, along with limited time to develop policies and procedures for compliance, has resulted in the identified deficiencies. Inadequate controls in this compliance area could lead to a significant risk of the Organization not meeting federal award reporting requirements. We selected three months' worth of monthly reports for ADAMHS and one closeout report for OHMAS. We recommend management to seek professional advice in developing and implementing policies and procedures that address compliance requirements. We recommend further to provide comprehensive training to employees on these policies and procedures, along with consistent monitoring, to ensure accuracy and timeliness in federal reporting.
FINDING 2022-003 Subject: COVID-19: Coronavirus State and Local Fiscal Recovery Funds - Reporting Federal Agency: Department of the Treasury Federal Program: COVID-19: Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): Account ID 20-1892-0-1-806 Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Condition and Context Recipients are required to submit quarterly or annually Project and Expenditure (P&E) reports to the U.S. Department of the Treasury (Treasury). The reporting periods, as well as the respective due dates, are based upon type of recipient and its population, as well as the recipient's allocation amount. Information to be reported includes projects funded, expenditures, and contracts for the appropriate reporting period. The County was classified as a metropolitan county with a population below 250,000 residents that received an allocation of more than $10 million in Coronavirus State and Local Fiscal Recovery Funds (CSLFRF). Therefore, quarterly P&E Reports were due by January 31, 2022, and the last day of the month after the end of each quarter thereafter. The County submitted four quarterly P&E reports during the audit period. The County's process for the completion and submission of the P&E reports was that the County Grant Administrator prepared the P&E reports, and the County Auditor reviewed them prior to submission. Two of the four quarterly reports submitted during the audit period were selected for testing. The County utilized the current period obligations field to document total obligations less current period expenditures. For the reports tested, the current period obligations per the County's interpretation of the current period obligations field were not supported by the County's records. The following errors were noted: Quarter 2 P&E Report (April 1, 2022 - June 30, 2022) The current period obligations for the Revenue Replacement project were overstated by $399,097. Quarter 3 P&E Report (July 1, 2022 - September 30, 2022) The current period obligations for the Prairie Creek Water Run Water Line project were overstated by $67,773. The current period obligations for the Parks Department - Latrine project were overstated by $25,758. The current period obligations for the Foraker/Southwest project were overstated by $230,338. The lack of effective internal controls and noncompliance were systemic issues during the audit period. INDIANA STATE BOARD OF ACCOUNTS 20 ELKHART COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Coronavirus State and Local Fiscal Recovery Funds Project and Expenditure Report User Guide, Appendix B - Bulk File Upload Overview, i) Project Baseline Template, states in part: "The downloadable templates provide all information required to create the upload files. The following table highlights the data elements required to complete the Project Baseline Template. . . ." Defined Term Definition Required/Optional/ Conditional List Values Data Type Max Length Current Period Obligations Total dollar value of obligations for this current reporting period Required N/A Currency N/A Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, Page 10, states in part: ". . . 10. Reporting. All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. . . ." 31 CFR 35.4(c) states in part: "Reporting and requests for other information. During the period of performance, recipients shall provide to the Secretary periodic reports providing detailed accounting of the uses of funds . . ." Cause A proper system of internal controls was not designed or implemented by management of the County to ensure that policies and procedures were in place related to Reporting. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the County's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. INDIANA STATE BOARD OF ACCOUNTS 21 ELKHART COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, noncompliance. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. In addition, not meeting the CSLFRF reporting requirements increases the likelihood that the public will not have access to transparent and accurate information regarding expenditures of federal awards. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County establish a proper system of internal controls and develop policies and procedures over the preparation and review of federal reports to ensure appropriate reviews, approvals, and oversight are taking place. Additionally, management should develop policies and procedures to ensure that the County provides the Treasury with complete and accurate information for the P&E report. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report. Auditor's Response The County was able to provide documentation of communications with the Treasury detailing questions and issues with the reporting portal. Included within the communications between the County and the Treasury was the County's interpretation of the current obligations field and the Treasury's acceptance of this interpretation. However, as specified in the Condition and Context, the current obligations field did not follow this methodology. Furthermore, the County did not provide documentation or communication explaining the specific differences between the data in the P&E report and what the calculated amount should have been. We reaffirm our finding and will review the status of the finding during our next audit.
FINDING 2022-001 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Numbers and Years (or Other Identifying Numbers): IN0429, SWIF221472 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 13CITY OF SCOTTSBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Procurement - Policy Non-federal entities must follow procurement standards set out in the Code of Federal Regulations (CFR) in addition to its own documented procurement procedures which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements idented in 2 CFR Part 200. The City did not have its own documented procurement procedures or policies that reflected applicable state laws and regulations or federal statutes for procuring goods and services paid with federal funds. Procurement Small Purchases Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. Two vendors were identified with total purchases that fell within the small purchase threshold. Price or rate quotes were not obtained, nor was full and open competition provided for either vendor. Additionally, there was no documentation available to support the rationale to limit competition. Simplified Acquisition Threshold When the value of the procurement for property or services exceeds the simplified acquisition threshold (SAT), or a lower threshold established by a non-federal entity, formal procurement methods are required. The SAT is typically set at $250,000; however, Indiana Code 5-22-8 has a more restrictive threshold, and, therefore, the SAT is set at $150,000. Formal procurement methods require adherence to documented procedures and formal methods such as sealed bids or proposals. Under the formal proposal method, the non-federal entity may use competitive proposal procedures for qualifications-based procurement of architectural/engineering (A/E) professional services whereby offeror's qualifications are evaluated, and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation. The method, where prices are not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms that are a potential source to perform the proposed effort. INDIANA STATE BOARD OF ACCOUNTS 14CITY OF SCOTTSBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Five vendors were identified with total purchases that fell within the SAT. One of the five vendors tested, which was for A/E professional services, did not have contract files, including sealed bids or proposals, to document the history of procurement, selection of contract type, or the basis for the contract. Additionally, there was no documentation available to support the rationale to limit competition nor was a cost or price analysis performed in connection with procurement. Conflict of Interest Policy Although conflicts of interest were addressed in the City's Employee Policy and Procedure Manual (manual), the manual did not include standards of conduct covering conflicts of interest nor govern the actions of its employees engaged in selection, award, and administration of contracts supported by federal awards. Suspension and Debarment Prior to entering into subawards and covered transactions with the State and Local Fiscal Recovery Funds (SLFRF) award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a non-procurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. The City did not have any policies or procedures in place related to the SLFRF suspension and debarment requirements. A population of four covered transactions, totaling $1,507,088, that equaled or exceeded $25,000 paid from the SLFRF funds were identified. All four covered transactions were selected for testing. For each of the four transactions, the City did not verify the vendors' suspension or debarment status prior to payment due to the City not having any policies or procedures in place to verify that contractors were neither suspended nor debarred, or otherwise excluded or disqualified, from participating in federal assistance programs or activities. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 15CITY OF SCOTTSBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in ?? 200.317 through 200.327. . . . (c) (1) The non-Federal entity must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will 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. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and ?? 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in ? 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases ? (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with ? 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the nonFederal entity determines to be appropriate: INDIANA STATE BOARD OF ACCOUNTS 16CITY OF SCOTTSBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; (D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and (E) Any or all bids may be rejected if there is a sound documented reason. (2) Proposals. A procurement method in which either a fixed price or costreimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. They are awarded in accordance with the following requirements: (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number of qualified offerors. Any response to publicized requests for proposals must be considered to the maximum extent practical; (ii) The non-Federal entity must have a written method for conducting technical evaluations of the proposals received and making selections; INDIANA STATE BOARD OF ACCOUNTS 17CITY OF SCOTTSBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (iii) Contracts must be awarded to the responsible offeror whose proposal is most advantageous to the non-Federal entity, with price and other factors considered; and (iv) The non-Federal entity may use competitive proposal procedures for qualifications-based procurement of architectural/engineering (A/E) professional services whereby offeror's qualifications are evaluated and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms that are a potential source to perform the proposed effort. . . ." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Cause A proper system of internal controls over procurement and suspension and debarment was not implemented by the management of the City to ensure that goods and services were properly procured and that vendors to whom payment equaled or exceeded $25,000 were not suspended or debarred. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the City's management statements of what should be done to effect internal controls and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, property and services were not properly procured and vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs There were no questioned cost identified. Recommendations We recommended that management of the City establish a proper system of internal controls and develop procedures to ensure that property and services are properly procured and that contractors are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. INDIANA STATE BOARD OF ACCOUNTS 18CITY OF SCOTTSBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the view of the responsible officials, refer to the Corrective Action plan that is part of this report.
FINDING 2022-001 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Numbers and Years (or Other Identifying Numbers): IN0429, SWIF221472 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 13CITY OF SCOTTSBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Procurement - Policy Non-federal entities must follow procurement standards set out in the Code of Federal Regulations (CFR) in addition to its own documented procurement procedures which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements idented in 2 CFR Part 200. The City did not have its own documented procurement procedures or policies that reflected applicable state laws and regulations or federal statutes for procuring goods and services paid with federal funds. Procurement Small Purchases Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. Two vendors were identified with total purchases that fell within the small purchase threshold. Price or rate quotes were not obtained, nor was full and open competition provided for either vendor. Additionally, there was no documentation available to support the rationale to limit competition. Simplified Acquisition Threshold When the value of the procurement for property or services exceeds the simplified acquisition threshold (SAT), or a lower threshold established by a non-federal entity, formal procurement methods are required. The SAT is typically set at $250,000; however, Indiana Code 5-22-8 has a more restrictive threshold, and, therefore, the SAT is set at $150,000. Formal procurement methods require adherence to documented procedures and formal methods such as sealed bids or proposals. Under the formal proposal method, the non-federal entity may use competitive proposal procedures for qualifications-based procurement of architectural/engineering (A/E) professional services whereby offeror's qualifications are evaluated, and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation. The method, where prices are not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms that are a potential source to perform the proposed effort. INDIANA STATE BOARD OF ACCOUNTS 14CITY OF SCOTTSBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Five vendors were identified with total purchases that fell within the SAT. One of the five vendors tested, which was for A/E professional services, did not have contract files, including sealed bids or proposals, to document the history of procurement, selection of contract type, or the basis for the contract. Additionally, there was no documentation available to support the rationale to limit competition nor was a cost or price analysis performed in connection with procurement. Conflict of Interest Policy Although conflicts of interest were addressed in the City's Employee Policy and Procedure Manual (manual), the manual did not include standards of conduct covering conflicts of interest nor govern the actions of its employees engaged in selection, award, and administration of contracts supported by federal awards. Suspension and Debarment Prior to entering into subawards and covered transactions with the State and Local Fiscal Recovery Funds (SLFRF) award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a non-procurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. The City did not have any policies or procedures in place related to the SLFRF suspension and debarment requirements. A population of four covered transactions, totaling $1,507,088, that equaled or exceeded $25,000 paid from the SLFRF funds were identified. All four covered transactions were selected for testing. For each of the four transactions, the City did not verify the vendors' suspension or debarment status prior to payment due to the City not having any policies or procedures in place to verify that contractors were neither suspended nor debarred, or otherwise excluded or disqualified, from participating in federal assistance programs or activities. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 15CITY OF SCOTTSBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in ?? 200.317 through 200.327. . . . (c) (1) The non-Federal entity must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will 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. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and ?? 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in ? 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases ? (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with ? 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the nonFederal entity determines to be appropriate: INDIANA STATE BOARD OF ACCOUNTS 16CITY OF SCOTTSBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; (D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and (E) Any or all bids may be rejected if there is a sound documented reason. (2) Proposals. A procurement method in which either a fixed price or costreimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. They are awarded in accordance with the following requirements: (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number of qualified offerors. Any response to publicized requests for proposals must be considered to the maximum extent practical; (ii) The non-Federal entity must have a written method for conducting technical evaluations of the proposals received and making selections; INDIANA STATE BOARD OF ACCOUNTS 17CITY OF SCOTTSBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (iii) Contracts must be awarded to the responsible offeror whose proposal is most advantageous to the non-Federal entity, with price and other factors considered; and (iv) The non-Federal entity may use competitive proposal procedures for qualifications-based procurement of architectural/engineering (A/E) professional services whereby offeror's qualifications are evaluated and the most qualified offeror is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services though A/E firms that are a potential source to perform the proposed effort. . . ." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Cause A proper system of internal controls over procurement and suspension and debarment was not implemented by the management of the City to ensure that goods and services were properly procured and that vendors to whom payment equaled or exceeded $25,000 were not suspended or debarred. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the City's management statements of what should be done to effect internal controls and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, property and services were not properly procured and vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs There were no questioned cost identified. Recommendations We recommended that management of the City establish a proper system of internal controls and develop procedures to ensure that property and services are properly procured and that contractors are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. INDIANA STATE BOARD OF ACCOUNTS 18CITY OF SCOTTSBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the view of the responsible officials, refer to the Corrective Action plan that is part of this report.
FINDING 2022-002 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): IN0429 Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Condition and Context The City had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties that would likely be effective in preventing, or detecting and correcting, noncompliance. Recipients are required to submit quarterly or annually Project and Expenditure (P&E) reports to the U.S. Department of the Treasury (Treasury). The reporting periods, as well as the respective due dates, are based upon type of recipient and its population, as well as the recipient's allocation amount. Information to be reported includes projects funded, expenditures, and contracts for the appropriate reporting period. The City was classified as a metropolitan city with a population below 250,000 residents that received an allocation of less than $10 million in Coronavirus State and Local Fiscal Recovery Funds (SLFRF). As such, the initial P&E report, covering the period from March 3, 2021 to March 31, 2022, was required to be submitted to the Treasury by April 30, 2022. The subsequent annual reports are to cover one calendar year and must be submitted to the Treasury by April 30 each year. The City submitted one P&E report during the audit period; however, the report was submitted without a review or oversight process in place to prevent, or detect and correct, errors. As a result, errors in reporting were identified. The cumulative expenditures and current period expenditures were incorrectly reported. Expenditures made were $190,784; however, the amount reported was $202,393. In addition, the cumulative obligations and current period obligations reported was the total amount of grant funds received to date instead of funds obligated. The lack of internal controls and noncompliance were isolated to the March P&E report. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 19CITY OF SCOTTSBURG SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance states in part: ". . . 10. Reporting. All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliance financial data, in accordance with appropriate accounting standards and principles. . . ." 31 CFR 35.4(c) states in part: "Reporting and requests for other information. During the period of performance, recipients shall provide to the Secretary periodic reports providing detailed accounting of the uses of funds, . . ." Cause A proper system of internal controls over P&E reports was not implemented by the management of the City to ensure that complete and accurate information related to the SLFRF awards was provided to the Treasury. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the City's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. In addition, not meeting the SLFRF reporting requirements increases the likelihood that the public will not have access to transparent and accurate information regarding expenditures of federal awards. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the City design and implement a proper system of internal controls that would provide a segregation of duties for the preparation and review of federal reports to ensure appropriate reviews, approvals, and oversight are taking place. Additionally, management should develop policies and procedures to ensure that the City provides the Treasury with complete and accurate information for the P&E report. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Formerly 2021-003: Period of Performance: Federal Program: Assistance Listing Nos.: 14.267 Continuum of Care Program Condition: The organization was unable to demonstrate controls over the period of performance for six items selected for testing. Criteria: The requirements for the period of performance are contained in 2 CFR section 200.1 Definitions for “budget period,” “financial obligations,” “period of performance,” 2 CFR section 200.308 (revision of budget and program plans), 2 CFR section 200.309 (modifications to period of performance), 2 CFR section 200.344 (closeout), program legislation, federal awarding agency regulations; and the terms and conditions of the award. Questioned Costs: There were six expenditures where no documentation could be provided to support that the expense was incurred during the grant period resulting in a questioned cost of $2,699 for 14.267. Cause: The Organization did not have good controls on ensuring the period of performance requirement was met due to staff turn over and being unable to locate documentation. Effect: The Organization could have grant expenditures outside the grant period. Recommendation: In order to prevent future occurrences of this deficiency, we recommend that management enhance a set of controls to ensure that they are able to demonstrate the period of performance. Perspective: This is a systemic issue in that controls over the requirement have not been developed to ensure the reported information is accurate. Repeat: This is a repeat finding. Responsible Official’s View: The Organization agrees with the finding. See attached corrective action plan.
Formerly 2021-003: Period of Performance: Federal Program: Assistance Listing Nos.: 14.267 Continuum of Care Program Condition: The organization was unable to demonstrate controls over the period of performance for six items selected for testing. Criteria: The requirements for the period of performance are contained in 2 CFR section 200.1 Definitions for “budget period,” “financial obligations,” “period of performance,” 2 CFR section 200.308 (revision of budget and program plans), 2 CFR section 200.309 (modifications to period of performance), 2 CFR section 200.344 (closeout), program legislation, federal awarding agency regulations; and the terms and conditions of the award. Questioned Costs: There were six expenditures where no documentation could be provided to support that the expense was incurred during the grant period resulting in a questioned cost of $2,699 for 14.267. Cause: The Organization did not have good controls on ensuring the period of performance requirement was met due to staff turn over and being unable to locate documentation. Effect: The Organization could have grant expenditures outside the grant period. Recommendation: In order to prevent future occurrences of this deficiency, we recommend that management enhance a set of controls to ensure that they are able to demonstrate the period of performance. Perspective: This is a systemic issue in that controls over the requirement have not been developed to ensure the reported information is accurate. Repeat: This is a repeat finding. Responsible Official’s View: The Organization agrees with the finding. See attached corrective action plan.
Formerly 2021-003: Period of Performance: Federal Program: Assistance Listing Nos.: 14.267 Continuum of Care Program Condition: The organization was unable to demonstrate controls over the period of performance for six items selected for testing. Criteria: The requirements for the period of performance are contained in 2 CFR section 200.1 Definitions for “budget period,” “financial obligations,” “period of performance,” 2 CFR section 200.308 (revision of budget and program plans), 2 CFR section 200.309 (modifications to period of performance), 2 CFR section 200.344 (closeout), program legislation, federal awarding agency regulations; and the terms and conditions of the award. Questioned Costs: There were six expenditures where no documentation could be provided to support that the expense was incurred during the grant period resulting in a questioned cost of $2,699 for 14.267. Cause: The Organization did not have good controls on ensuring the period of performance requirement was met due to staff turn over and being unable to locate documentation. Effect: The Organization could have grant expenditures outside the grant period. Recommendation: In order to prevent future occurrences of this deficiency, we recommend that management enhance a set of controls to ensure that they are able to demonstrate the period of performance. Perspective: This is a systemic issue in that controls over the requirement have not been developed to ensure the reported information is accurate. Repeat: This is a repeat finding. Responsible Official’s View: The Organization agrees with the finding. See attached corrective action plan.
Formerly 2021-003: Period of Performance: Federal Program: Assistance Listing Nos.: 14.267 Continuum of Care Program Condition: The organization was unable to demonstrate controls over the period of performance for six items selected for testing. Criteria: The requirements for the period of performance are contained in 2 CFR section 200.1 Definitions for “budget period,” “financial obligations,” “period of performance,” 2 CFR section 200.308 (revision of budget and program plans), 2 CFR section 200.309 (modifications to period of performance), 2 CFR section 200.344 (closeout), program legislation, federal awarding agency regulations; and the terms and conditions of the award. Questioned Costs: There were six expenditures where no documentation could be provided to support that the expense was incurred during the grant period resulting in a questioned cost of $2,699 for 14.267. Cause: The Organization did not have good controls on ensuring the period of performance requirement was met due to staff turn over and being unable to locate documentation. Effect: The Organization could have grant expenditures outside the grant period. Recommendation: In order to prevent future occurrences of this deficiency, we recommend that management enhance a set of controls to ensure that they are able to demonstrate the period of performance. Perspective: This is a systemic issue in that controls over the requirement have not been developed to ensure the reported information is accurate. Repeat: This is a repeat finding. Responsible Official’s View: The Organization agrees with the finding. See attached corrective action plan.
Federal Agency: Department of Justice Federal Assistance Listing Numbers: 16.756, 16.726 Programs: Court Appointed Special Advocates, Juvenile Mentoring Program Award/Pass-Through Entity Identifying Numbers: 2018-CH-BX-K001, 15PJDP-21-GK-02762-CASA, 2019-MU-FX-0004, 2020-JU-FX-0028 Criteria: The Uniform Guidance in 2 CFR §200.332 details requirements for pass-through entities in regard to subrecipient monitoring and management. Per 2 CFR §200.332, Requirements for Pass-Through Entities: “All pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the federal award and subaward. Required information includes: (1) Federal award identification. i. Subrecipient name (which must match the name associated with its unique entity identifier); ii. Subrecipient’s unique entity identifier; iii. Federal Award Identification Number (FAIN); iv. Federal Award Date (see the definition of federal award date in §200.1 of this part) of award to the recipient by the federal agency; v. Subaward Period of Performance Start and End Date; vi. Subaward Budget Period Start and End Date; vii. Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; viii. Total Amount of Federal Funds Obligated to the subrecipient by the pass through entity, including the current financial obligation; ix. Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; x. Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); xi. Name of federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; xii. Assistance Listings Number and Title; the pass-through entity must identify the dollar amount made available under each federal award and the Assistance Listings Number at time of disbursement; xiii. Identification of whether the award is R&D; and xiv. Indirect cost rate for the federal award (including if the de minimis rate is charged) per § 200.414. (2) All requirements imposed by the pass-through entity on the subrecipient so that the federal award is used in accordance with federal statutes, regulations, and the terms and conditions of the federal award; (3) Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the federal awarding agency, including identification of any required financial and performance reports; (4) i. An approved federally recognized indirect cost rate negotiated between the subrecipient and the Federal Government. If no approved rate exists, the pass-through entity must determine the appropriate rate in collaboration with the subrecipient, which is either: (A) The negotiated indirect cost rate between the pass-through entity and the subrecipient, which can be based on a prior negotiated rate between a different PTE and the same subrecipient. If basing the rate on a previously negotiated rate, the pass-through entity is not required to collect information justifying this rate, but may elect to do so; (B) The de minimis indirect cost rate. ii. The pass-through entity must not require use of a de minimis indirect cost rate if the subrecipient has a federally approved rate. Subrecipients can elect to use the cost allocation method to account for indirect costs in accordance with §200.405(d). (5) A requirement that the subrecipient permits the pass-through entity and auditors to have access to the subrecipient’s records and financial statements as necessary for the pass-through entity to meet the requirements of this part; and (6) Appropriate terms and conditions concerning closeout of the subaward.” Condition: National CASA/GAL’s subrecipient agreements do not contain a level of specificity to fully comply with federal subrecipient regulations. During our testing of subrecipient monitoring, we selected 20 subrecipient awards within Court Appointed Special Advocates and 17 subrecipient awards within the Juvenile Mentoring Program. For all awards tested, National CASA/GAL’s subaward agreements did not comply with 2 CFR §200.332, Requirements for Pass-Through Entities, as they do not contain a specific scope of work or project description. Cause: National CASA/GAL did not have the proper policies and procedures in place to ensure subaward agreements complied to relevant federal regulation, and that all required elements are located in subaward agreements, and not in the application or by reference to other documents. Effect or Potential Effect: Without adequate controls in place to ensure conformity with subaward requirements, grantees may not ensure compliance with any award special conditions or revised budgets agreed upon at contract implementation. Questioned Costs: None. Context: This is a condition identified per review of National CASA/GAL’s compliance with specified requirements using a non-statistically valid sample. For the Court Appointed Special Advocates Program, the population consisted of 100 subawards made totaling to $1,471,827 provided to subrecipients in 2022. The sample consisted of 20 subawards totaling $410,352 provided to subrecipients in 2022. For the Juvenile Mentoring Program, the population consisted of 83 subawards totaling to $2,339,039 provided to subrecipients in 2022. The sample consisted of 17 subawards totaling $441,399 provided to subrecipients in 2022. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend establishing and maintaining written policies and procedures to ensure subaward agreements conform to the requirements outlined in 2 CFR §200.332. Views of Responsible Officials: Management agrees that subrecipient agreements in place in 2022 did not fully comply with 2 CFR §200.332. Updates were made to the policies and procedures as well to ensure subaward files contain the requisite components. Management has additionally implemented a Grant Master File Checklist to ensure compliance with terms and conditions required in subaward agreements.
Federal Agency: Department of Justice Federal Assistance Listing Numbers: 16.756, 16.726 Programs: Court Appointed Special Advocates, Juvenile Mentoring Program Award/Pass-Through Entity Identifying Numbers: 2018-CH-BX-K001, 15PJDP-21-GK-02762-CASA, 2019-MU-FX-0004, 2020-JU-FX-0028 Criteria: The Uniform Guidance in 2 CFR §200.332 details requirements for pass-through entities in regard to subrecipient monitoring and management. Per 2 CFR §200.332, Requirements for Pass-Through Entities: “All pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the federal award and subaward. Required information includes: (1) Federal award identification. i. Subrecipient name (which must match the name associated with its unique entity identifier); ii. Subrecipient’s unique entity identifier; iii. Federal Award Identification Number (FAIN); iv. Federal Award Date (see the definition of federal award date in §200.1 of this part) of award to the recipient by the federal agency; v. Subaward Period of Performance Start and End Date; vi. Subaward Budget Period Start and End Date; vii. Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; viii. Total Amount of Federal Funds Obligated to the subrecipient by the pass through entity, including the current financial obligation; ix. Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; x. Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); xi. Name of federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; xii. Assistance Listings Number and Title; the pass-through entity must identify the dollar amount made available under each federal award and the Assistance Listings Number at time of disbursement; xiii. Identification of whether the award is R&D; and xiv. Indirect cost rate for the federal award (including if the de minimis rate is charged) per § 200.414. (2) All requirements imposed by the pass-through entity on the subrecipient so that the federal award is used in accordance with federal statutes, regulations, and the terms and conditions of the federal award; (3) Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the federal awarding agency, including identification of any required financial and performance reports; (4) i. An approved federally recognized indirect cost rate negotiated between the subrecipient and the Federal Government. If no approved rate exists, the pass-through entity must determine the appropriate rate in collaboration with the subrecipient, which is either: (A) The negotiated indirect cost rate between the pass-through entity and the subrecipient, which can be based on a prior negotiated rate between a different PTE and the same subrecipient. If basing the rate on a previously negotiated rate, the pass-through entity is not required to collect information justifying this rate, but may elect to do so; (B) The de minimis indirect cost rate. ii. The pass-through entity must not require use of a de minimis indirect cost rate if the subrecipient has a federally approved rate. Subrecipients can elect to use the cost allocation method to account for indirect costs in accordance with §200.405(d). (5) A requirement that the subrecipient permits the pass-through entity and auditors to have access to the subrecipient’s records and financial statements as necessary for the pass-through entity to meet the requirements of this part; and (6) Appropriate terms and conditions concerning closeout of the subaward.” Condition: National CASA/GAL’s subrecipient agreements do not contain a level of specificity to fully comply with federal subrecipient regulations. During our testing of subrecipient monitoring, we selected 20 subrecipient awards within Court Appointed Special Advocates and 17 subrecipient awards within the Juvenile Mentoring Program. For all awards tested, National CASA/GAL’s subaward agreements did not comply with 2 CFR §200.332, Requirements for Pass-Through Entities, as they do not contain a specific scope of work or project description. Cause: National CASA/GAL did not have the proper policies and procedures in place to ensure subaward agreements complied to relevant federal regulation, and that all required elements are located in subaward agreements, and not in the application or by reference to other documents. Effect or Potential Effect: Without adequate controls in place to ensure conformity with subaward requirements, grantees may not ensure compliance with any award special conditions or revised budgets agreed upon at contract implementation. Questioned Costs: None. Context: This is a condition identified per review of National CASA/GAL’s compliance with specified requirements using a non-statistically valid sample. For the Court Appointed Special Advocates Program, the population consisted of 100 subawards made totaling to $1,471,827 provided to subrecipients in 2022. The sample consisted of 20 subawards totaling $410,352 provided to subrecipients in 2022. For the Juvenile Mentoring Program, the population consisted of 83 subawards totaling to $2,339,039 provided to subrecipients in 2022. The sample consisted of 17 subawards totaling $441,399 provided to subrecipients in 2022. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend establishing and maintaining written policies and procedures to ensure subaward agreements conform to the requirements outlined in 2 CFR §200.332. Views of Responsible Officials: Management agrees that subrecipient agreements in place in 2022 did not fully comply with 2 CFR §200.332. Updates were made to the policies and procedures as well to ensure subaward files contain the requisite components. Management has additionally implemented a Grant Master File Checklist to ensure compliance with terms and conditions required in subaward agreements.
Federal Agency: Department of Justice Federal Assistance Listing Numbers: 16.756, 16.726 Programs: Court Appointed Special Advocates, Juvenile Mentoring Program Award/Pass-Through Entity Identifying Numbers: 2018-CH-BX-K001, 15PJDP-21-GK-02762-CASA, 2019-MU-FX-0004, 2020-JU-FX-0028 Criteria: The Uniform Guidance in 2 CFR §200.332 details requirements for pass-through entities in regard to subrecipient monitoring and management. Per 2 CFR §200.332, Requirements for Pass-Through Entities: “All pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the federal award and subaward. Required information includes: (1) Federal award identification. i. Subrecipient name (which must match the name associated with its unique entity identifier); ii. Subrecipient’s unique entity identifier; iii. Federal Award Identification Number (FAIN); iv. Federal Award Date (see the definition of federal award date in §200.1 of this part) of award to the recipient by the federal agency; v. Subaward Period of Performance Start and End Date; vi. Subaward Budget Period Start and End Date; vii. Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; viii. Total Amount of Federal Funds Obligated to the subrecipient by the pass through entity, including the current financial obligation; ix. Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; x. Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); xi. Name of federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; xii. Assistance Listings Number and Title; the pass-through entity must identify the dollar amount made available under each federal award and the Assistance Listings Number at time of disbursement; xiii. Identification of whether the award is R&D; and xiv. Indirect cost rate for the federal award (including if the de minimis rate is charged) per § 200.414. (2) All requirements imposed by the pass-through entity on the subrecipient so that the federal award is used in accordance with federal statutes, regulations, and the terms and conditions of the federal award; (3) Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the federal awarding agency, including identification of any required financial and performance reports; (4) i. An approved federally recognized indirect cost rate negotiated between the subrecipient and the Federal Government. If no approved rate exists, the pass-through entity must determine the appropriate rate in collaboration with the subrecipient, which is either: (A) The negotiated indirect cost rate between the pass-through entity and the subrecipient, which can be based on a prior negotiated rate between a different PTE and the same subrecipient. If basing the rate on a previously negotiated rate, the pass-through entity is not required to collect information justifying this rate, but may elect to do so; (B) The de minimis indirect cost rate. ii. The pass-through entity must not require use of a de minimis indirect cost rate if the subrecipient has a federally approved rate. Subrecipients can elect to use the cost allocation method to account for indirect costs in accordance with §200.405(d). (5) A requirement that the subrecipient permits the pass-through entity and auditors to have access to the subrecipient’s records and financial statements as necessary for the pass-through entity to meet the requirements of this part; and (6) Appropriate terms and conditions concerning closeout of the subaward.” Condition: National CASA/GAL’s subrecipient agreements do not contain a level of specificity to fully comply with federal subrecipient regulations. During our testing of subrecipient monitoring, we selected 20 subrecipient awards within Court Appointed Special Advocates and 17 subrecipient awards within the Juvenile Mentoring Program. For all awards tested, National CASA/GAL’s subaward agreements did not comply with 2 CFR §200.332, Requirements for Pass-Through Entities, as they do not contain a specific scope of work or project description. Cause: National CASA/GAL did not have the proper policies and procedures in place to ensure subaward agreements complied to relevant federal regulation, and that all required elements are located in subaward agreements, and not in the application or by reference to other documents. Effect or Potential Effect: Without adequate controls in place to ensure conformity with subaward requirements, grantees may not ensure compliance with any award special conditions or revised budgets agreed upon at contract implementation. Questioned Costs: None. Context: This is a condition identified per review of National CASA/GAL’s compliance with specified requirements using a non-statistically valid sample. For the Court Appointed Special Advocates Program, the population consisted of 100 subawards made totaling to $1,471,827 provided to subrecipients in 2022. The sample consisted of 20 subawards totaling $410,352 provided to subrecipients in 2022. For the Juvenile Mentoring Program, the population consisted of 83 subawards totaling to $2,339,039 provided to subrecipients in 2022. The sample consisted of 17 subawards totaling $441,399 provided to subrecipients in 2022. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend establishing and maintaining written policies and procedures to ensure subaward agreements conform to the requirements outlined in 2 CFR §200.332. Views of Responsible Officials: Management agrees that subrecipient agreements in place in 2022 did not fully comply with 2 CFR §200.332. Updates were made to the policies and procedures as well to ensure subaward files contain the requisite components. Management has additionally implemented a Grant Master File Checklist to ensure compliance with terms and conditions required in subaward agreements.
Federal Agency: Department of Justice Federal Assistance Listing Numbers: 16.756, 16.726 Programs: Court Appointed Special Advocates, Juvenile Mentoring Program Award/Pass-Through Entity Identifying Numbers: 2018-CH-BX-K001, 15PJDP-21-GK-02762-CASA, 2019-MU-FX-0004, 2020-JU-FX-0028 Criteria: The Uniform Guidance in 2 CFR §200.332 details requirements for pass-through entities in regard to subrecipient monitoring and management. Per 2 CFR §200.332, Requirements for Pass-Through Entities: “All pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the federal award and subaward. Required information includes: (1) Federal award identification. i. Subrecipient name (which must match the name associated with its unique entity identifier); ii. Subrecipient’s unique entity identifier; iii. Federal Award Identification Number (FAIN); iv. Federal Award Date (see the definition of federal award date in §200.1 of this part) of award to the recipient by the federal agency; v. Subaward Period of Performance Start and End Date; vi. Subaward Budget Period Start and End Date; vii. Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; viii. Total Amount of Federal Funds Obligated to the subrecipient by the pass through entity, including the current financial obligation; ix. Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; x. Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); xi. Name of federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; xii. Assistance Listings Number and Title; the pass-through entity must identify the dollar amount made available under each federal award and the Assistance Listings Number at time of disbursement; xiii. Identification of whether the award is R&D; and xiv. Indirect cost rate for the federal award (including if the de minimis rate is charged) per § 200.414. (2) All requirements imposed by the pass-through entity on the subrecipient so that the federal award is used in accordance with federal statutes, regulations, and the terms and conditions of the federal award; (3) Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the federal awarding agency, including identification of any required financial and performance reports; (4) i. An approved federally recognized indirect cost rate negotiated between the subrecipient and the Federal Government. If no approved rate exists, the pass-through entity must determine the appropriate rate in collaboration with the subrecipient, which is either: (A) The negotiated indirect cost rate between the pass-through entity and the subrecipient, which can be based on a prior negotiated rate between a different PTE and the same subrecipient. If basing the rate on a previously negotiated rate, the pass-through entity is not required to collect information justifying this rate, but may elect to do so; (B) The de minimis indirect cost rate. ii. The pass-through entity must not require use of a de minimis indirect cost rate if the subrecipient has a federally approved rate. Subrecipients can elect to use the cost allocation method to account for indirect costs in accordance with §200.405(d). (5) A requirement that the subrecipient permits the pass-through entity and auditors to have access to the subrecipient’s records and financial statements as necessary for the pass-through entity to meet the requirements of this part; and (6) Appropriate terms and conditions concerning closeout of the subaward.” Condition: National CASA/GAL’s subrecipient agreements do not contain a level of specificity to fully comply with federal subrecipient regulations. During our testing of subrecipient monitoring, we selected 20 subrecipient awards within Court Appointed Special Advocates and 17 subrecipient awards within the Juvenile Mentoring Program. For all awards tested, National CASA/GAL’s subaward agreements did not comply with 2 CFR §200.332, Requirements for Pass-Through Entities, as they do not contain a specific scope of work or project description. Cause: National CASA/GAL did not have the proper policies and procedures in place to ensure subaward agreements complied to relevant federal regulation, and that all required elements are located in subaward agreements, and not in the application or by reference to other documents. Effect or Potential Effect: Without adequate controls in place to ensure conformity with subaward requirements, grantees may not ensure compliance with any award special conditions or revised budgets agreed upon at contract implementation. Questioned Costs: None. Context: This is a condition identified per review of National CASA/GAL’s compliance with specified requirements using a non-statistically valid sample. For the Court Appointed Special Advocates Program, the population consisted of 100 subawards made totaling to $1,471,827 provided to subrecipients in 2022. The sample consisted of 20 subawards totaling $410,352 provided to subrecipients in 2022. For the Juvenile Mentoring Program, the population consisted of 83 subawards totaling to $2,339,039 provided to subrecipients in 2022. The sample consisted of 17 subawards totaling $441,399 provided to subrecipients in 2022. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend establishing and maintaining written policies and procedures to ensure subaward agreements conform to the requirements outlined in 2 CFR §200.332. Views of Responsible Officials: Management agrees that subrecipient agreements in place in 2022 did not fully comply with 2 CFR §200.332. Updates were made to the policies and procedures as well to ensure subaward files contain the requisite components. Management has additionally implemented a Grant Master File Checklist to ensure compliance with terms and conditions required in subaward agreements.
FINDING 2022-003 Subject: CDBG - Entitlement Grants Cluster - Program Income Federal Agency: Department of Housing and Urban Development Federal Program: Community Development Block Grants/Entitlement Grants Assistance Listings Number: 14.218 Federal Award Numbers and Years (or Other Identifying Numbers): B-11-UN-18-0002, B-17-UC-18-0016, B-18-UC-18-0016, B-19-UC-18-0016, B-20-UC-18-0016, B-21-UC-18-0016 Compliance Requirement: Program Income Audit Findings: Material Weakness, Modified Opinion Condition and Context The County received program income through various loan programs it offered to qualifying individuals. Once the County received a loan payment, the receipt was posted into the financial accounting system of the County and recorded in a grant fund. The amount received was also to be recorded in the Department of Housing and Urban Development's (HUD) Integrated Disbursement and Information System (IDIS) website. The recorded program income in the IDIS would then appear on the Drawdown Report by Voucher Number report (PR07). One individual was responsible for notifying the County Auditor's office when program income money was received, so it could be receipted in the County's financial accounting system. The same individual was also responsible for reporting the information on the IDIS site. No internal controls were established to ensure the program income that was recorded in the financial accounting system was also reported on the IDIS site and the PR07 report. Four receipts totaling $38,960 were selected for testing from the County's receipt ledger. The four receipts were unable to be located on the PR07 report provided for audit. However, one of the four receipts was recorded in the IDIS system after information regarding the receipt was requested. In addition, we were unable to verify the total amount recorded in the receipt ledger to the total reported on the PR07 report. The County's ledger was greater than the PR07 report by $30,324 and is primarily attributed to under reporting of program income in the IDIS as identified above. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 21 LAKE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.1 states in part: ". . . Internal controls for non-Federal entities means: (1) Processes designed and implemented by non-Federal entities to provide reasonable assurance regarding the achievement of objectives in the following categories: (i) Effectiveness and efficiency of operations; (ii) Reliability of reporting for internal and external use; . . ." 2 CFR 200.302 states in part: "(a) Each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state's own funds. In addition, the state's and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. . . . (b) The financial management system of each non-Federal entity must provide for the following: . . . (3) Records that identify adequately the source and application of funds for federallyfunded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. . . ." 24 CFR 570.504 states in part: "(a) Recording program income. The receipt and expenditure of program income as defined in § 570.500(a) shall be recorded as part of the financial transactions of the grant program. (b) Disposition of program income received by recipients. (1) Program income received before grant closeout may be retained by the recipient if the income is treated as additional CDBG funds subject to all applicable requirements governing the use of CDBG funds. (2) If the recipient chooses to retain program income, that program income shall be disposed of as follows: (i) Program income in the form of repayments to, or interest earned on, a revolving fund as defined in § 570.500(b) shall be substantially disbursed from the fund before additional cash withdrawals are made from the U.S. Treasury for the same activity. (This rule does not prevent a lump sum disbursement to finance the rehabilitation of privately owned properties as provided for in § 570.513.) (ii) Substantially all other program income shall be disbursed for eligible activities before additional cash withdrawals are made from the U.S. Treasury. . . ." INDIANA STATE BOARD OF ACCOUNTS 22 LAKE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause A turnover of staff in the County's Community Development office, and management not ensuring that a system of internal controls that segregated key functions was designed, implemented, and operating effectively, contributed to the program income issue identified above. Effect Without the proper implementation of an effectively designed system of internal controls, the County could not ensure that program income was properly reported and used before the drawdown of federal funds as required. The County could be at risk of losing federal funds by the federal awarding agency due to noncompliance with federal regulations. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the management of the County establish a system of internal controls to ensure that all program income received is properly reported in the IDIS system and expended prior to drawing down federal awards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-004 Subject: CDBG - Entitlement Grants Cluster - Reporting Federal Agency: Department of Housing and Urban Development Federal Programs: Community Development Block Grants/Entitlement Grants; COVID-19 - Community Development Block Grants/Entitlement Grants Assistance Listings Number: 14.218 Federal Award Numbers and Years (or Other Identifying Numbers): B-11-UN-18-0002, B-17-UC-18-0016, B-18-UC-18-0016, B-19-UC-18-0016, B-20-UC-18-0016, B-21-UC-18-0016, B-20-UW-18-0016 Compliance Requirement: Reporting Audit Finding: Material Weakness Condition and Context The County did not have internal control procedures over the Quarterly Reports (PR29), the IDIS Section 3 Performance Report, and the NSP Quarterly Reports. One individual prepared or generated the report without a review or oversight process. INDIANA STATE BOARD OF ACCOUNTS 23 LAKE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Additionally, the County's internal controls were not consistently documented over the drawdown requests for the CDBG grant during the audit period. The drawdown requests were entered into the IDIS, which then became the basis for several of the reports. The internal control presented by the County was that one individual prepared and entered the request, which would then be printed, and another individual would review and sign the printed request to document the review. Of the 13 reimbursement requests tested, internal control documentation for 8 of the requests was printed and signed during the current period, after the documentation was requested. The creation of documentation of the internal control procedure did not support that internal controls were properly implemented and effective during the audit period. The lack of internal controls were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.1 states in part: ". . . Internal controls for non-Federal entities means: (1) Processes designed and implemented by non-Federal entities to provide reasonable assurance regarding the achievement of objectives in the following categories: (i) Effectiveness and efficiency of operations; (ii) Reliability of reporting for internal and external use; . . ." Cause A turnover of staff in the County's Community Development office, and management not ensuring that a system of internal controls that segregated key functions was designed, implemented, and operating effectively, contributed to the program income issue identified above. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. INDIANA STATE BOARD OF ACCOUNTS 24 LAKE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that the County's management design and implement a proper system of internal controls, and retain documentation of its system of internal controls, to ensure compliance with reporting requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-004 Subject: CDBG - Entitlement Grants Cluster - Reporting Federal Agency: Department of Housing and Urban Development Federal Programs: Community Development Block Grants/Entitlement Grants; COVID-19 - Community Development Block Grants/Entitlement Grants Assistance Listings Number: 14.218 Federal Award Numbers and Years (or Other Identifying Numbers): B-11-UN-18-0002, B-17-UC-18-0016, B-18-UC-18-0016, B-19-UC-18-0016, B-20-UC-18-0016, B-21-UC-18-0016, B-20-UW-18-0016 Compliance Requirement: Reporting Audit Finding: Material Weakness Condition and Context The County did not have internal control procedures over the Quarterly Reports (PR29), the IDIS Section 3 Performance Report, and the NSP Quarterly Reports. One individual prepared or generated the report without a review or oversight process. INDIANA STATE BOARD OF ACCOUNTS 23 LAKE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Additionally, the County's internal controls were not consistently documented over the drawdown requests for the CDBG grant during the audit period. The drawdown requests were entered into the IDIS, which then became the basis for several of the reports. The internal control presented by the County was that one individual prepared and entered the request, which would then be printed, and another individual would review and sign the printed request to document the review. Of the 13 reimbursement requests tested, internal control documentation for 8 of the requests was printed and signed during the current period, after the documentation was requested. The creation of documentation of the internal control procedure did not support that internal controls were properly implemented and effective during the audit period. The lack of internal controls were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.1 states in part: ". . . Internal controls for non-Federal entities means: (1) Processes designed and implemented by non-Federal entities to provide reasonable assurance regarding the achievement of objectives in the following categories: (i) Effectiveness and efficiency of operations; (ii) Reliability of reporting for internal and external use; . . ." Cause A turnover of staff in the County's Community Development office, and management not ensuring that a system of internal controls that segregated key functions was designed, implemented, and operating effectively, contributed to the program income issue identified above. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. INDIANA STATE BOARD OF ACCOUNTS 24 LAKE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that the County's management design and implement a proper system of internal controls, and retain documentation of its system of internal controls, to ensure compliance with reporting requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-005 Subject: CDBG - Entitlement Grants Cluster - Period of Performance Federal Agency: Department of Housing and Urban Development Federal Program: Community Development Block Grants/Entitlement Grants Assistance Listings Number: 14.218 Federal Award Numbers and Years (or Other Identifying Numbers): B-11-UN-18-0002, B-17-UC-18-0016, B-18-UC-18-0016, B-19-UC-18-0016, B-20-UC-18-0016, B-21-UC-18-0016 Compliance Requirement: Period of Performance Audit Finding: Material Weakness Condition and Context The County did not have internal control procedures over adjustments to Community Development Block Grants/Entitlement Grants funds. During and after the transition to a new financial accounting software system for the County, various adjusting entries were entered by outside consultants without any oversight or review by County management. The lack of internal controls was a systematic issue from July 1, 2022 to December 31, 2022. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 25 LAKE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.1 states in part: ". . . Internal controls for non-Federal entities means: (1) Processes designed and implemented by non-Federal entities to provide reasonable assurance regarding the achievement of objectives in the following categories: (i) Effectiveness and efficiency of operations; (ii) Reliability of reporting for internal and external use; . . ." Cause The conversion process due to the change in financial software in the middle of year 2022 caused abnormal activity which was not a part of the system of internal controls as designed and implemented by the County. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the County's management design and implement a proper system of internal controls, and retain documentation of its system of internal controls, to ensure compliance with period of performance requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-005 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Numbers and Years (or Other Identifying Numbers): Regular FY 2022, Revenue Loss FY 2022 Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 27 LA PORTE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context An effective internal control system, which would include segregation of duties, was not in place at the County in order to ensure compliance with requirements related to the grant agreement and the Reporting compliance requirement. Recipients are required to quarterly or annually submit Project and Expenditure (P&E) Reports to the U.S. Department of the Treasury (Treasury). The reporting periods, as well as the respective due dates, are based upon type of recipient and its population, as well as the recipient's allocation amount. Information to be reported includes projects funded, expenditures, and contracts for the appropriate reporting period. The County was classified as a metropolitan county with a population below 250,000 residents that received an allocation of more than $10 million in COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) funding. As such, the initial P&E Report, covering three calendar quarters from March 3, 2021 to December 31, 2021, was required to be submitted to the Treasury by January 31, 2022. The subsequent quarterly reports were to cover one calendar quarter and must be submitted to the Treasury by the last day of the month following the end of the period covered. The County submitted four quarterly P&E Reports during the audit period. The County's process for the completion and submission of the P&E Reports was that the County Auditor prepared each P&E Report based on the County's Financial Ledgers without a proper oversight or review process in place prior to submission. All four quarterly reports that were due during the audit period were not properly supported by the County's records and contained the following errors: The 2021 Quarter 4 P&E Report period expenditures were overstated by $159,541. The 2022 Quarter 1 P&E Report period expenditures were understated by $15,375. The 2022 Quarter 2 P&E Report period expenditures were understated by $21,109. The 2022 Quarter 3 P&E Report period expenditures were overstated by $216,216. The lack of internal controls and noncompliance occurred throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 28 LA PORTE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, page 10, states in part: ". . . 10. Reporting. All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. . . ." 31 CFR 35.4(c) states in part: "Reporting and requests for other information. During the period of performance, recipients shall provide to the Secretary periodic reports providing detailed accounting of the uses of funds, . . ." Cause A proper system of internal controls was not designed or implemented by management of the County to ensure that policies and procedures were in place related to reporting to ensure the amounts reported were accurate. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, noncompliance. Noncompliance with the provision of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of federal funding to the County. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the management of the County establish a system of internal controls and develop policies and procedures over the preparation and review of federal reports to ensure appropriate reviews, approval, and oversight are taking place. Additionally, management should develop policies and procedures to ensure that the County provides the Treasury with complete and accurate information for all reports. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding 2022-5 No Prior Written Approval for Capital Disbursements in Excess of $10,000 Name of Federal Agency: Listing Award Number Number 64.033 13-ZZ-134 U. S. Department of Veterans Affairs (VA) Program Title VA Supportive Services for Veteran Families (SSVF) Criteria or specific requirement: 2 CFR 200.1 Definition for: Capital Expenditures means expenditures to acquire capital assets or expenditures to make additions, improvements, modifications, replacements, rearrangements, reinstallations, renovations, or alterations to capital assets that materially increase their value or useful life. 14 THE ALSTON WILKES SOCIETY SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED DECEMBER 31, 2022 Section III - Federal Award Findings and Questioned Costs (continued) 2 CFR 200.452 Maintenance and repair costs states: Costs incurred for utilities, insurance, security, necessary maintenance, janitorial services, repair, or upkeep of buildings and equipment (including Federal property unless otherwise provided for) which neither add to the permanent value of the property nor appreciably prolong its intended life, but keep it in an efficient operating condition, are allowable. Costs incurred for improvements that add to the permanent value of the buildings and equipment or appreciably prolong their intended life must be treated as capital expenditures (see § 200.439). These costs are only allowable to the extent not paid through rental or other agreements. 2 CFR 200.439 Equipment and Other Capital Expenditures, (b) (1-3) 1 Capital expenditures for general purpose equipment, buildings, and land are allowable as direct costs, but only with the prior written approval of the Federal agency or pass-through entity. 2 Capital expenditures for special purpose equipment are allowable as direct costs, provided that items with a unit cost of $10,000 or more have the prior written approval of the Federal agency or pass-through entity, and 3 Capital expenditures for improvements to land, buildings, or equipment that materially increase their value or useful life are allowable as a direct cost, but only with the prior written approval of the Federal agency or pass-through entity. Condition: We identified two transactions where the Society should have received prior written approval from the awarding agency, before incurring the costs. The transactions, in the amounts of $26,057 and $18,000, were recorded as equipment maintenance expense, and floor repairs, respectively. In accordance 2 CFR 200.439 b, it appears the cost should have had prior written approval. Cause of condition: The reason the condition occurred appears to be the lack of a thorough understanding of the cost principles under the Uniform Guidance (2 CFR Part 200, Subpart E - Cost Principles). Potential effect of condition: The possible effect of this condition is non-compliance with prior written approval requirements for disbursements totaling $44,057.51. Section III - Federal Award Findings and Questioned Costs (continued) Questioned Costs: This condition resulted in questioned costs totaling $44,057.51. The questioned cost amount was computed by adding the total of the two sample items tested for this condition, as shown below: Sample # Description 28 Floor Repairs 29 Equipment Maintenance Amount $18,000.00 26,057.51 $ 44,057.51 Prevalence and Consequence: A judgmental sample of 40 disbursements totaling $134,400.16 was selected. Out of the 40 sample items tested, two were identified where prior written approval was not obtained, totaling $44,057.51. Repeat Finding: No Recommendation: We recommend management ensure accounting personnel responsible for the administration of funds related to award programs, refamiliarize themselves with 2 CFR 200 Subpart E - Cost Principles, to enable them to recognize when prior written approval is required, and when to capitalize certain capital expenditures when the federal criteria are met for nongovernmental entities.
Reference Number: 2022-002 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development Pass-through Agency: Various Federal Program: Emergency Solutions Grant Program ALN Number: 14.231 Compliance Requirement: Equipment and Real Property Management Type of Finding: Significant Deficiency, Noncompliance Criteria or specific requirement: Compliance Requirements- Equipment Management -- Grants and Cooperative Agreements Equipment means tangible personal property, including information technology systems, having a useful life of more than one year and a per-unit acquisition cost which equals or exceeds the lesser of the capitalization level established by the non-federal entity for financial statement purposes or $5,000 (2 CFR section 200.1). Title to equipment acquired by a non-federal entity under grants and cooperative agreements vests in the non-federal entity subject to certain obligations and conditions (2 CFR section 200.313(a)). Non-federal entities other than states must follow 2 CFR sections 200.313(c) through (e) which require that: (b) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property (2 CFR section 200.313(d)(1)). (c) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Condition: Based on our review of the Equipment and Real Property Management compliance requirements, we noted that the Division has written policies regarding Equipment and Real property management. We noted that, Division’s property records did not include all required elements as required by (2 CFR section 200.313(d)(1)). We also noted that, physical inventory of the property was not performed and thus the results were not reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Cause: The Division did not ensure that as a non-Federal entity Division’s, Property records must: (1) include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Effect: Division is not in compliance with federal compliance requirements for Equipment and Real Property management. Questioned costs: Cannot be determined Recommendation: We recommend that the Division must: • include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. • A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Views of responsible officials: Divisional Headquarters and the local units will include all relevant information on the master vehicle list and take a physical inventory at leas once every two years. See corrective action plan.
Reference Number: 2022-002 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development Pass-through Agency: Various Federal Program: Emergency Solutions Grant Program ALN Number: 14.231 Compliance Requirement: Equipment and Real Property Management Type of Finding: Significant Deficiency, Noncompliance Criteria or specific requirement: Compliance Requirements- Equipment Management -- Grants and Cooperative Agreements Equipment means tangible personal property, including information technology systems, having a useful life of more than one year and a per-unit acquisition cost which equals or exceeds the lesser of the capitalization level established by the non-federal entity for financial statement purposes or $5,000 (2 CFR section 200.1). Title to equipment acquired by a non-federal entity under grants and cooperative agreements vests in the non-federal entity subject to certain obligations and conditions (2 CFR section 200.313(a)). Non-federal entities other than states must follow 2 CFR sections 200.313(c) through (e) which require that: (b) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property (2 CFR section 200.313(d)(1)). (c) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Condition: Based on our review of the Equipment and Real Property Management compliance requirements, we noted that the Division has written policies regarding Equipment and Real property management. We noted that, Division’s property records did not include all required elements as required by (2 CFR section 200.313(d)(1)). We also noted that, physical inventory of the property was not performed and thus the results were not reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Cause: The Division did not ensure that as a non-Federal entity Division’s, Property records must: (1) include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Effect: Division is not in compliance with federal compliance requirements for Equipment and Real Property management. Questioned costs: Cannot be determined Recommendation: We recommend that the Division must: • include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. • A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Views of responsible officials: Divisional Headquarters and the local units will include all relevant information on the master vehicle list and take a physical inventory at leas once every two years. See corrective action plan.
Reference Number: 2022-002 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development Pass-through Agency: Various Federal Program: Emergency Solutions Grant Program ALN Number: 14.231 Compliance Requirement: Equipment and Real Property Management Type of Finding: Significant Deficiency, Noncompliance Criteria or specific requirement: Compliance Requirements- Equipment Management -- Grants and Cooperative Agreements Equipment means tangible personal property, including information technology systems, having a useful life of more than one year and a per-unit acquisition cost which equals or exceeds the lesser of the capitalization level established by the non-federal entity for financial statement purposes or $5,000 (2 CFR section 200.1). Title to equipment acquired by a non-federal entity under grants and cooperative agreements vests in the non-federal entity subject to certain obligations and conditions (2 CFR section 200.313(a)). Non-federal entities other than states must follow 2 CFR sections 200.313(c) through (e) which require that: (b) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property (2 CFR section 200.313(d)(1)). (c) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Condition: Based on our review of the Equipment and Real Property Management compliance requirements, we noted that the Division has written policies regarding Equipment and Real property management. We noted that, Division’s property records did not include all required elements as required by (2 CFR section 200.313(d)(1)). We also noted that, physical inventory of the property was not performed and thus the results were not reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Cause: The Division did not ensure that as a non-Federal entity Division’s, Property records must: (1) include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Effect: Division is not in compliance with federal compliance requirements for Equipment and Real Property management. Questioned costs: Cannot be determined Recommendation: We recommend that the Division must: • include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. • A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Views of responsible officials: Divisional Headquarters and the local units will include all relevant information on the master vehicle list and take a physical inventory at leas once every two years. See corrective action plan.
Reference Number: 2022-002 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development Pass-through Agency: Various Federal Program: Emergency Solutions Grant Program ALN Number: 14.231 Compliance Requirement: Equipment and Real Property Management Type of Finding: Significant Deficiency, Noncompliance Criteria or specific requirement: Compliance Requirements- Equipment Management -- Grants and Cooperative Agreements Equipment means tangible personal property, including information technology systems, having a useful life of more than one year and a per-unit acquisition cost which equals or exceeds the lesser of the capitalization level established by the non-federal entity for financial statement purposes or $5,000 (2 CFR section 200.1). Title to equipment acquired by a non-federal entity under grants and cooperative agreements vests in the non-federal entity subject to certain obligations and conditions (2 CFR section 200.313(a)). Non-federal entities other than states must follow 2 CFR sections 200.313(c) through (e) which require that: (b) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property (2 CFR section 200.313(d)(1)). (c) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Condition: Based on our review of the Equipment and Real Property Management compliance requirements, we noted that the Division has written policies regarding Equipment and Real property management. We noted that, Division’s property records did not include all required elements as required by (2 CFR section 200.313(d)(1)). We also noted that, physical inventory of the property was not performed and thus the results were not reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Cause: The Division did not ensure that as a non-Federal entity Division’s, Property records must: (1) include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Effect: Division is not in compliance with federal compliance requirements for Equipment and Real Property management. Questioned costs: Cannot be determined Recommendation: We recommend that the Division must: • include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. • A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Views of responsible officials: Divisional Headquarters and the local units will include all relevant information on the master vehicle list and take a physical inventory at leas once every two years. See corrective action plan.
Reference Number: 2022-002 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development Pass-through Agency: Various Federal Program: Emergency Solutions Grant Program ALN Number: 14.231 Compliance Requirement: Equipment and Real Property Management Type of Finding: Significant Deficiency, Noncompliance Criteria or specific requirement: Compliance Requirements- Equipment Management -- Grants and Cooperative Agreements Equipment means tangible personal property, including information technology systems, having a useful life of more than one year and a per-unit acquisition cost which equals or exceeds the lesser of the capitalization level established by the non-federal entity for financial statement purposes or $5,000 (2 CFR section 200.1). Title to equipment acquired by a non-federal entity under grants and cooperative agreements vests in the non-federal entity subject to certain obligations and conditions (2 CFR section 200.313(a)). Non-federal entities other than states must follow 2 CFR sections 200.313(c) through (e) which require that: (b) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property (2 CFR section 200.313(d)(1)). (c) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Condition: Based on our review of the Equipment and Real Property Management compliance requirements, we noted that the Division has written policies regarding Equipment and Real property management. We noted that, Division’s property records did not include all required elements as required by (2 CFR section 200.313(d)(1)). We also noted that, physical inventory of the property was not performed and thus the results were not reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Cause: The Division did not ensure that as a non-Federal entity Division’s, Property records must: (1) include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Effect: Division is not in compliance with federal compliance requirements for Equipment and Real Property management. Questioned costs: Cannot be determined Recommendation: We recommend that the Division must: • include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. • A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Views of responsible officials: Divisional Headquarters and the local units will include all relevant information on the master vehicle list and take a physical inventory at leas once every two years. See corrective action plan.
Reference Number: 2022-002 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development Pass-through Agency: Various Federal Program: Emergency Solutions Grant Program ALN Number: 14.231 Compliance Requirement: Equipment and Real Property Management Type of Finding: Significant Deficiency, Noncompliance Criteria or specific requirement: Compliance Requirements- Equipment Management -- Grants and Cooperative Agreements Equipment means tangible personal property, including information technology systems, having a useful life of more than one year and a per-unit acquisition cost which equals or exceeds the lesser of the capitalization level established by the non-federal entity for financial statement purposes or $5,000 (2 CFR section 200.1). Title to equipment acquired by a non-federal entity under grants and cooperative agreements vests in the non-federal entity subject to certain obligations and conditions (2 CFR section 200.313(a)). Non-federal entities other than states must follow 2 CFR sections 200.313(c) through (e) which require that: (b) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property (2 CFR section 200.313(d)(1)). (c) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Condition: Based on our review of the Equipment and Real Property Management compliance requirements, we noted that the Division has written policies regarding Equipment and Real property management. We noted that, Division’s property records did not include all required elements as required by (2 CFR section 200.313(d)(1)). We also noted that, physical inventory of the property was not performed and thus the results were not reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Cause: The Division did not ensure that as a non-Federal entity Division’s, Property records must: (1) include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Effect: Division is not in compliance with federal compliance requirements for Equipment and Real Property management. Questioned costs: Cannot be determined Recommendation: We recommend that the Division must: • include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. • A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Views of responsible officials: Divisional Headquarters and the local units will include all relevant information on the master vehicle list and take a physical inventory at leas once every two years. See corrective action plan.
Reference Number: 2022-002 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development Pass-through Agency: Various Federal Program: Emergency Solutions Grant Program ALN Number: 14.231 Compliance Requirement: Equipment and Real Property Management Type of Finding: Significant Deficiency, Noncompliance Criteria or specific requirement: Compliance Requirements- Equipment Management -- Grants and Cooperative Agreements Equipment means tangible personal property, including information technology systems, having a useful life of more than one year and a per-unit acquisition cost which equals or exceeds the lesser of the capitalization level established by the non-federal entity for financial statement purposes or $5,000 (2 CFR section 200.1). Title to equipment acquired by a non-federal entity under grants and cooperative agreements vests in the non-federal entity subject to certain obligations and conditions (2 CFR section 200.313(a)). Non-federal entities other than states must follow 2 CFR sections 200.313(c) through (e) which require that: (b) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property (2 CFR section 200.313(d)(1)). (c) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Condition: Based on our review of the Equipment and Real Property Management compliance requirements, we noted that the Division has written policies regarding Equipment and Real property management. We noted that, Division’s property records did not include all required elements as required by (2 CFR section 200.313(d)(1)). We also noted that, physical inventory of the property was not performed and thus the results were not reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Cause: The Division did not ensure that as a non-Federal entity Division’s, Property records must: (1) include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Effect: Division is not in compliance with federal compliance requirements for Equipment and Real Property management. Questioned costs: Cannot be determined Recommendation: We recommend that the Division must: • include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. • A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Views of responsible officials: Divisional Headquarters and the local units will include all relevant information on the master vehicle list and take a physical inventory at leas once every two years. See corrective action plan.
Criteria or Specific Requirement: 2 CFR 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. One of the objectives of internal control over compliance as found in 2 CFR section 200.1 include that transactions should be properly recorded and accounted for in order to permit the preparation of reliable financial statements and federal reports. Condition: This deficiency is directly related to the financial statements finding 2022-01, as listed in Part II above. The City’s financial statements required material audit adjusting journal entries for the financial statements to be presented in accordance with generally accepted accounting principles (GAAP). The financial statements are required to be the product of a financial reporting system that offers reasonable assurance that management is able to produce financial statements in accordance with GAAP. The adjustment was related to expenditures which were paid by and applied to funding provided by the ARPA Coronavirus State and Local Fiscal Recovery Funds Program. The issue pertained to the financial statement assertion of cutoff; the expenditures were allowable expenditures in accordance with the federal award requirements. Cause: The City’s year-end procedures did not identify certain necessary adjustments in a timely manner in order to remove capital outlay expenditures that were incorrectly recorded during the fiscal year ended September 30, 2022. Effect or Potential Effect: Adjusting journal entries were proposed as certain accounts were misstated on the unadjusted financial statements, resulting in expenditures being incorrectly included in the unadjusted schedule of expenditures of federal awards. Questioned Costs: None. Context: During testing of subsequent disbursements and the potential for unrecorded liabilities and during internal control and compliance testing of the major Federal program, it was noted there were four invoices, amounting to a total of $549,431, recorded within accounts payable as capital outlay expenditures which were improperly recorded in the fiscal year ended September 30, 2022. As evidenced by the invoice date and ship date within the invoices, the equipment was not shipped, and the equipment was not received by the City, until after year-end. The expenditures should be recorded in the fiscal year ended September 30, 2023. Recommendation: Management should ensure year-end closing procedures are completed in a timely manner and are sufficient to assure accounts and financial statements are prepared in accordance with GAAP. Management should assess the risk associated with this condition and identify any additional processes that can be incorporated into their existing controls to improve the deficiency; such as, minimizing the likelihood of year-end material audit adjustments through review of transactions and balances for general propriety and accuracy within one month after year-end. Follow-up and inquiries can be made timely for any transactions for which proper recording is unclear to management, if any. The Grants Administrator should maintain an up-to-date listing of expenditures by award (for all federal, state, and local awards) and should communicate with the Finance Department on a monthly basis to review the listing and determine the proper period in which the expenditures should be recorded and presented.
2022-001 PROCUREMENT PROCEDURES COVID-19 Health Center Program (Community Health Centers, Migrant Health Centers, Health Care For Homeless and Public Housing Primary Care) ? American Rescue Plan Act Assistance Listing Number: 93.224, Contract Numbers- H8F41284 Department of Health and Human Services (HHS) 2022 Funding Criteria: Pursuant to 2 CFR ?200.1, Simplified Acquisition Threshold (?SAT?), acquisitions which exceed the SAT of $250,000 must use one of the following procurement methods: the sealed bid method, the competitive proposals method, or the noncompetitive proposal method (sole source). Condition: The Alliance did not utilize the sealed bid method or competitive proposals method for a purchase of computer hardware, which exceeded the $250,000 SAT. The Alliance?s procurement policy was not updated to be in compliance 2 CFR 200.1 until April 2022. This purchase began in fiscal year 2021, but the remaining items under the contract were procured in fiscal year 2022. Cause: The Alliance?s policy only required bids for construction purchases, and not all purchases above the SAT. The expense for computer hardware exceeded the SAT of $250,000. The Controller believed the purchase met the qualification for a sole source purchase; however, the CIO did not document the purchase as a sole source purchase and reached out to another entity after the purchase to verify that no other vendor had the products with the required specifications. Effect: The purchase was not procured through a competitive practice, and therefore the purchase is a questioned cost. Questioned Costs: Known questioned costs is $291,982 for assistance listing 93.224. Perspective: The purchase made at the beginning of the year was procured under the old purchasing policy. The policy was updated in April 2022, and the additional purchase exceeding the bid threshold made subsequent to the new purchasing policy was procured under a competitive process. Recommendation: The Alliance should continue to follow its updated procurement policy. Management?s Response: Management has updated the procurement policy to comply with the provisions of 2 CFR ?200.1, 2 CFR ?200.67, and 2 CFR ?200.214. The updated policy has been implemented since this occurrence and will continue to be followed.
Reference Number: 2022-002 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development Pass-through Agency: Various Federal Program: Emergency Solutions Grant Program ALN Number: 14.231 Compliance Requirement: Equipment and Real Property Management Type of Finding: Significant Deficiency, Noncompliance Criteria or specific requirement: Compliance Requirements- Equipment Management -- Grants and Cooperative Agreements Equipment means tangible personal property, including information technology systems, having a useful life of more than one year and a per-unit acquisition cost which equals or exceeds the lesser of the capitalization level established by the non-federal entity for financial statement purposes or $5,000 (2 CFR section 200.1). Title to equipment acquired by a non-federal entity under grants and cooperative agreements vests in the non-federal entity subject to certain obligations and conditions (2 CFR section 200.313(a)). Non-federal entities other than states must follow 2 CFR sections 200.313(c) through (e) which require that: (b) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property (2 CFR section 200.313(d)(1)). (c) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Condition: Based on our review of the Equipment and Real Property Management compliance requirements, we noted that the Division has written policies regarding Equipment and Real property management. We noted that, Division’s property records did not include all required elements as required by (2 CFR section 200.313(d)(1)). We also noted that, physical inventory of the property was not performed and thus the results were not reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Cause: The Division did not ensure that as a non-Federal entity Division’s, Property records must: (1) include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Effect: Division is not in compliance with federal compliance requirements for Equipment and Real Property management. Questioned costs: Cannot be determined Recommendation: We recommend that the Division must: • include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. • A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Views of responsible officials: Divisional Headquarters and the local units will include all relevant information on the master vehicle list and take a physical inventory at leas once every two years. See corrective action plan.
Reference Number: 2022-002 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development Pass-through Agency: Various Federal Program: Emergency Solutions Grant Program ALN Number: 14.231 Compliance Requirement: Equipment and Real Property Management Type of Finding: Significant Deficiency, Noncompliance Criteria or specific requirement: Compliance Requirements- Equipment Management -- Grants and Cooperative Agreements Equipment means tangible personal property, including information technology systems, having a useful life of more than one year and a per-unit acquisition cost which equals or exceeds the lesser of the capitalization level established by the non-federal entity for financial statement purposes or $5,000 (2 CFR section 200.1). Title to equipment acquired by a non-federal entity under grants and cooperative agreements vests in the non-federal entity subject to certain obligations and conditions (2 CFR section 200.313(a)). Non-federal entities other than states must follow 2 CFR sections 200.313(c) through (e) which require that: (b) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property (2 CFR section 200.313(d)(1)). (c) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Condition: Based on our review of the Equipment and Real Property Management compliance requirements, we noted that the Division has written policies regarding Equipment and Real property management. We noted that, Division’s property records did not include all required elements as required by (2 CFR section 200.313(d)(1)). We also noted that, physical inventory of the property was not performed and thus the results were not reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Cause: The Division did not ensure that as a non-Federal entity Division’s, Property records must: (1) include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Effect: Division is not in compliance with federal compliance requirements for Equipment and Real Property management. Questioned costs: Cannot be determined Recommendation: We recommend that the Division must: • include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. • A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Views of responsible officials: Divisional Headquarters and the local units will include all relevant information on the master vehicle list and take a physical inventory at leas once every two years. See corrective action plan.
Reference Number: 2022-002 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development Pass-through Agency: Various Federal Program: Emergency Solutions Grant Program ALN Number: 14.231 Compliance Requirement: Equipment and Real Property Management Type of Finding: Significant Deficiency, Noncompliance Criteria or specific requirement: Compliance Requirements- Equipment Management -- Grants and Cooperative Agreements Equipment means tangible personal property, including information technology systems, having a useful life of more than one year and a per-unit acquisition cost which equals or exceeds the lesser of the capitalization level established by the non-federal entity for financial statement purposes or $5,000 (2 CFR section 200.1). Title to equipment acquired by a non-federal entity under grants and cooperative agreements vests in the non-federal entity subject to certain obligations and conditions (2 CFR section 200.313(a)). Non-federal entities other than states must follow 2 CFR sections 200.313(c) through (e) which require that: (b) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property (2 CFR section 200.313(d)(1)). (c) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Condition: Based on our review of the Equipment and Real Property Management compliance requirements, we noted that the Division has written policies regarding Equipment and Real property management. We noted that, Division’s property records did not include all required elements as required by (2 CFR section 200.313(d)(1)). We also noted that, physical inventory of the property was not performed and thus the results were not reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Cause: The Division did not ensure that as a non-Federal entity Division’s, Property records must: (1) include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Effect: Division is not in compliance with federal compliance requirements for Equipment and Real Property management. Questioned costs: Cannot be determined Recommendation: We recommend that the Division must: • include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. • A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Views of responsible officials: Divisional Headquarters and the local units will include all relevant information on the master vehicle list and take a physical inventory at leas once every two years. See corrective action plan.
Reference Number: 2022-002 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development Pass-through Agency: Various Federal Program: Emergency Solutions Grant Program ALN Number: 14.231 Compliance Requirement: Equipment and Real Property Management Type of Finding: Significant Deficiency, Noncompliance Criteria or specific requirement: Compliance Requirements- Equipment Management -- Grants and Cooperative Agreements Equipment means tangible personal property, including information technology systems, having a useful life of more than one year and a per-unit acquisition cost which equals or exceeds the lesser of the capitalization level established by the non-federal entity for financial statement purposes or $5,000 (2 CFR section 200.1). Title to equipment acquired by a non-federal entity under grants and cooperative agreements vests in the non-federal entity subject to certain obligations and conditions (2 CFR section 200.313(a)). Non-federal entities other than states must follow 2 CFR sections 200.313(c) through (e) which require that: (b) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property (2 CFR section 200.313(d)(1)). (c) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Condition: Based on our review of the Equipment and Real Property Management compliance requirements, we noted that the Division has written policies regarding Equipment and Real property management. We noted that, Division’s property records did not include all required elements as required by (2 CFR section 200.313(d)(1)). We also noted that, physical inventory of the property was not performed and thus the results were not reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Cause: The Division did not ensure that as a non-Federal entity Division’s, Property records must: (1) include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Effect: Division is not in compliance with federal compliance requirements for Equipment and Real Property management. Questioned costs: Cannot be determined Recommendation: We recommend that the Division must: • include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. • A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Views of responsible officials: Divisional Headquarters and the local units will include all relevant information on the master vehicle list and take a physical inventory at leas once every two years. See corrective action plan.
Reference Number: 2022-002 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development Pass-through Agency: Various Federal Program: Emergency Solutions Grant Program ALN Number: 14.231 Compliance Requirement: Equipment and Real Property Management Type of Finding: Significant Deficiency, Noncompliance Criteria or specific requirement: Compliance Requirements- Equipment Management -- Grants and Cooperative Agreements Equipment means tangible personal property, including information technology systems, having a useful life of more than one year and a per-unit acquisition cost which equals or exceeds the lesser of the capitalization level established by the non-federal entity for financial statement purposes or $5,000 (2 CFR section 200.1). Title to equipment acquired by a non-federal entity under grants and cooperative agreements vests in the non-federal entity subject to certain obligations and conditions (2 CFR section 200.313(a)). Non-federal entities other than states must follow 2 CFR sections 200.313(c) through (e) which require that: (b) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property (2 CFR section 200.313(d)(1)). (c) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Condition: Based on our review of the Equipment and Real Property Management compliance requirements, we noted that the Division has written policies regarding Equipment and Real property management. We noted that, Division’s property records did not include all required elements as required by (2 CFR section 200.313(d)(1)). We also noted that, physical inventory of the property was not performed and thus the results were not reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Cause: The Division did not ensure that as a non-Federal entity Division’s, Property records must: (1) include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Effect: Division is not in compliance with federal compliance requirements for Equipment and Real Property management. Questioned costs: Cannot be determined Recommendation: We recommend that the Division must: • include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. • A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Views of responsible officials: Divisional Headquarters and the local units will include all relevant information on the master vehicle list and take a physical inventory at leas once every two years. See corrective action plan.
Reference Number: 2022-002 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development Pass-through Agency: Various Federal Program: Emergency Solutions Grant Program ALN Number: 14.231 Compliance Requirement: Equipment and Real Property Management Type of Finding: Significant Deficiency, Noncompliance Criteria or specific requirement: Compliance Requirements- Equipment Management -- Grants and Cooperative Agreements Equipment means tangible personal property, including information technology systems, having a useful life of more than one year and a per-unit acquisition cost which equals or exceeds the lesser of the capitalization level established by the non-federal entity for financial statement purposes or $5,000 (2 CFR section 200.1). Title to equipment acquired by a non-federal entity under grants and cooperative agreements vests in the non-federal entity subject to certain obligations and conditions (2 CFR section 200.313(a)). Non-federal entities other than states must follow 2 CFR sections 200.313(c) through (e) which require that: (b) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property (2 CFR section 200.313(d)(1)). (c) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Condition: Based on our review of the Equipment and Real Property Management compliance requirements, we noted that the Division has written policies regarding Equipment and Real property management. We noted that, Division’s property records did not include all required elements as required by (2 CFR section 200.313(d)(1)). We also noted that, physical inventory of the property was not performed and thus the results were not reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Cause: The Division did not ensure that as a non-Federal entity Division’s, Property records must: (1) include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Effect: Division is not in compliance with federal compliance requirements for Equipment and Real Property management. Questioned costs: Cannot be determined Recommendation: We recommend that the Division must: • include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. • A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Views of responsible officials: Divisional Headquarters and the local units will include all relevant information on the master vehicle list and take a physical inventory at leas once every two years. See corrective action plan.
Reference Number: 2022-002 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development Pass-through Agency: Various Federal Program: Emergency Solutions Grant Program ALN Number: 14.231 Compliance Requirement: Equipment and Real Property Management Type of Finding: Significant Deficiency, Noncompliance Criteria or specific requirement: Compliance Requirements- Equipment Management -- Grants and Cooperative Agreements Equipment means tangible personal property, including information technology systems, having a useful life of more than one year and a per-unit acquisition cost which equals or exceeds the lesser of the capitalization level established by the non-federal entity for financial statement purposes or $5,000 (2 CFR section 200.1). Title to equipment acquired by a non-federal entity under grants and cooperative agreements vests in the non-federal entity subject to certain obligations and conditions (2 CFR section 200.313(a)). Non-federal entities other than states must follow 2 CFR sections 200.313(c) through (e) which require that: (b) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property (2 CFR section 200.313(d)(1)). (c) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Condition: Based on our review of the Equipment and Real Property Management compliance requirements, we noted that the Division has written policies regarding Equipment and Real property management. We noted that, Division’s property records did not include all required elements as required by (2 CFR section 200.313(d)(1)). We also noted that, physical inventory of the property was not performed and thus the results were not reconciled with the property records at least once every two years (2 CFR section 200.313(d)(2)). Cause: The Division did not ensure that as a non-Federal entity Division’s, Property records must: (1) include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Effect: Division is not in compliance with federal compliance requirements for Equipment and Real Property management. Questioned costs: Cannot be determined Recommendation: We recommend that the Division must: • include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. • A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Views of responsible officials: Divisional Headquarters and the local units will include all relevant information on the master vehicle list and take a physical inventory at leas once every two years. See corrective action plan.
Criteria or Specific Requirement: 2 CFR 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. One of the objectives of internal control over compliance as found in 2 CFR section 200.1 include that transactions should be properly recorded and accounted for in order to permit the preparation of reliable financial statements and federal reports. Condition: This deficiency is directly related to the financial statements finding 2022-01, as listed in Part II above. The City’s financial statements required material audit adjusting journal entries for the financial statements to be presented in accordance with generally accepted accounting principles (GAAP). The financial statements are required to be the product of a financial reporting system that offers reasonable assurance that management is able to produce financial statements in accordance with GAAP. The adjustment was related to expenditures which were paid by and applied to funding provided by the ARPA Coronavirus State and Local Fiscal Recovery Funds Program. The issue pertained to the financial statement assertion of cutoff; the expenditures were allowable expenditures in accordance with the federal award requirements. Cause: The City’s year-end procedures did not identify certain necessary adjustments in a timely manner in order to remove capital outlay expenditures that were incorrectly recorded during the fiscal year ended September 30, 2022. Effect or Potential Effect: Adjusting journal entries were proposed as certain accounts were misstated on the unadjusted financial statements, resulting in expenditures being incorrectly included in the unadjusted schedule of expenditures of federal awards. Questioned Costs: None. Context: During testing of subsequent disbursements and the potential for unrecorded liabilities and during internal control and compliance testing of the major Federal program, it was noted there were four invoices, amounting to a total of $549,431, recorded within accounts payable as capital outlay expenditures which were improperly recorded in the fiscal year ended September 30, 2022. As evidenced by the invoice date and ship date within the invoices, the equipment was not shipped, and the equipment was not received by the City, until after year-end. The expenditures should be recorded in the fiscal year ended September 30, 2023. Recommendation: Management should ensure year-end closing procedures are completed in a timely manner and are sufficient to assure accounts and financial statements are prepared in accordance with GAAP. Management should assess the risk associated with this condition and identify any additional processes that can be incorporated into their existing controls to improve the deficiency; such as, minimizing the likelihood of year-end material audit adjustments through review of transactions and balances for general propriety and accuracy within one month after year-end. Follow-up and inquiries can be made timely for any transactions for which proper recording is unclear to management, if any. The Grants Administrator should maintain an up-to-date listing of expenditures by award (for all federal, state, and local awards) and should communicate with the Finance Department on a monthly basis to review the listing and determine the proper period in which the expenditures should be recorded and presented.
2022-001 PROCUREMENT PROCEDURES COVID-19 Health Center Program (Community Health Centers, Migrant Health Centers, Health Care For Homeless and Public Housing Primary Care) ? American Rescue Plan Act Assistance Listing Number: 93.224, Contract Numbers- H8F41284 Department of Health and Human Services (HHS) 2022 Funding Criteria: Pursuant to 2 CFR ?200.1, Simplified Acquisition Threshold (?SAT?), acquisitions which exceed the SAT of $250,000 must use one of the following procurement methods: the sealed bid method, the competitive proposals method, or the noncompetitive proposal method (sole source). Condition: The Alliance did not utilize the sealed bid method or competitive proposals method for a purchase of computer hardware, which exceeded the $250,000 SAT. The Alliance?s procurement policy was not updated to be in compliance 2 CFR 200.1 until April 2022. This purchase began in fiscal year 2021, but the remaining items under the contract were procured in fiscal year 2022. Cause: The Alliance?s policy only required bids for construction purchases, and not all purchases above the SAT. The expense for computer hardware exceeded the SAT of $250,000. The Controller believed the purchase met the qualification for a sole source purchase; however, the CIO did not document the purchase as a sole source purchase and reached out to another entity after the purchase to verify that no other vendor had the products with the required specifications. Effect: The purchase was not procured through a competitive practice, and therefore the purchase is a questioned cost. Questioned Costs: Known questioned costs is $291,982 for assistance listing 93.224. Perspective: The purchase made at the beginning of the year was procured under the old purchasing policy. The policy was updated in April 2022, and the additional purchase exceeding the bid threshold made subsequent to the new purchasing policy was procured under a competitive process. Recommendation: The Alliance should continue to follow its updated procurement policy. Management?s Response: Management has updated the procurement policy to comply with the provisions of 2 CFR ?200.1, 2 CFR ?200.67, and 2 CFR ?200.214. The updated policy has been implemented since this occurrence and will continue to be followed.
Finding Number: 2022-039 Prior Year Finding Number: N/A Compliance Requirement: Period of Performance Program: U.S. Department of Treasury COVID-19 - Coronavirus Relief Fund ALN: 21.019 Award #: N/A Award Period: 03/01/2020 – 12/31/2021 Government Department/Agency: Office of Management and Budget (OMB) Criteria – The CARES Act provides that payments from the Coronavirus Relief Fund (CRF) may only be used to cover costs that were incurred during the period that begins on March 1, 2020 and ends on December 31, 2021. All such obligations would need to be liquidated by September 30, 2022. (Section 601(d)(3) of the Social Security Act (42 U.S.C. 801(d)(3)), as added by section 5001 of the CARES Act and as amended by section 1001 of Division N of the Consolidated Appropriations Act, 2021) In “Revision to Guidance Regarding When a Cost is Considered Incurred, December 14, 2021” Treasury revised the guidance to provide that a cost associated with a necessary expenditure incurred due to the public health emergency shall be considered to have been incurred by December 31, 2021, if the recipient has incurred an obligation with respect to such cost by December 31, 2021. Treasury defines obligation for this purpose consistently with the Uniform Guidance definition in 2 C.F.R. 200.1 as an order placed for property and services and entry into contracts, subawards, and similar transactions that require payment. Further, the Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition – During our testing of 12 expenditures sampled of a population of 53 we found 3 expenditures that were not incurred within the period of performance. Further, it does not appear that the controls in place are operating at a level of precision to ensure compliance with the compliance requirements. Questioned Costs – $45,300. Context – This is a condition identified per review of OMB’s compliance with the specified requirements using a statistically valid sample. The total amount of non-payroll disbursements totaled $5,277,012. The total amount sampled was $4,636,495. Effect – OMB is not in compliance with the stated provisions. Failure to properly review and support expenditures can result in noncompliance with laws and regulations along with loss of funding. Cause – OMB does not appear to have adequate policies and procedures in place to ensure compliance with the period of performance compliance requirements. Recommendation – We recommend that OMB strengthen its process with respect to incurring and charging expenditures. We also recommend that OMB enhance its review process to properly determine the activities of the grant relative to the appropriate period of performance. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. The Office of Management and Budget will collaborate with the Department of Finance to implement control measures designed to prevent the approval of transactions beyond the designated period of performance. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
Finding No. 2022-019 Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D17AP00016, D18AP00016, D19AP00081 D21AP10043, D21AP000138, D19AP00090 Area: Subrecipient Monitoring Questioned Costs: $549,849 Criteria: 1. In accordance with 2 CFR § 200.332, pass-through entity (PTE) must: a. Verify that the subrecipient is not excluded or disqualified in accordance with § 180.300. Verification methods are provided in § 180.300, which include confirming in SAM.gov that a potential subrecipient is not suspended, debarred, or otherwise excluded from receiving Federal funds. b. Verify that a subrecipient is audited as required by subpart F. 2. In accordance with 2 CFR §200.1, a subrecipient is defined as an entity that receives a subaward from a PTE to carry out part of a Federal award. The term subrecipient does not include a beneficiary or participant. A subrecipient may also be a recipient of other Federal awards directly from a Federal agency. 3. Evaluate each subrecipient’s fraud risk and risk of noncompliance with a subaward to determine the appropriate subrecipient monitoring described in paragraph (f) of this section. When evaluating a subrecipient’s risk, a PTE should consider the following: (1) The subrecipient’s prior experience with the same or similar subawards; (2) The results of previous audits. This includes considering whether or not the subrecipient receives a Single Audit in accordance with subpart F and the extent to which the same or similar subawards have been audited as a major program; (3) Whether the subrecipient has new personnel or new or substantially changed systems; and (4) The extent and results of any Federal agency monitoring (for example, if the subrecipient also receives Federal awards directly from the Federal agency). Condition: Of nine subrecipients tested, aggregating $1,263,952 of a total population of $2,022,623, the following were noted: 1. For nine (or 100%), documentation of the risk assessments performed and verification as to whether the subrecipients are not suspended or debarred were not provided. No questioned costs for grant awards with no corresponding FY2022 expenditures. Of eight subrecipient monitoring procedure requirements tested, the following were noted: 2. For two (or 25%), the subrecipients’ performance reports did not include the required project narrative report that entails the current state or progress completion in accordance with the scope of work. 3. For eight (or 100%), no verification as to whether the subrecipients are subject to the audit requirements were provided. No questioned costs are presented as amounts are questioned at Condition 1 for grant award numbers D18AP00026, D21AP00138 and D21AP10043 while the other grant awards have no corresponding FY2022 expenditures. Cause: The CNMI does not have written subrecipient monitoring policies and procedures. In addition, the CNMI failed to enforce compliance with subrecipient monitoring requirements and lacks monitoring controls over the following: 1. Monitoring activities of a subrecipient to ensure that the subrecipient complies with Federal statutes, regulations, and the terms and conditions of the subaward; 2. Adequate documentation and systematic filing of relevant documentation supporting program costs. Effect: CNMI is in noncompliance with the applicable subrecipient monitoring requirements and questioned costs of $549,849 result for Condition 1. Identification as a Repeat Finding: Finding No. 2021-022 Recommendation: We recommend the CNMI establish an approved/adopted written subrecipient monitoring policies and procedures and implement monitoring internal control procedures over the following: 1. Verification that subrecipients are not excluded or disqualified in accordance with § 180.300, which includes confirming in SAM.gov that a potential subrecipient is not suspended, debarred, or otherwise excluded from receiving federal funds; 2. Verification that subrecipients are audited as required by subpart F; 3. Monitoring activities of a subrecipient to ensure that the subrecipient complies with Federal statutes, regulations, and the terms and conditions of the subaward; 4. Adequate documentation and systematic filing of relevant documentations to support program costs. Views of Responsible Officials: Condition 1 - CIP agrees with this finding. To address this finding, CIP will implement a standardized risk assessment checklist to be used for all subrecipients to confirm they are not suspended, debarred, or excluded under 2 CFR §180.300; all staff responsible for subrecipient monitoring will receive training on federal requirements for exclusion checks and proper documentation procedures; and conduct periodic reviews to ensure that SAM.gov checks are consistently performed and documented for all new and existing subrecipients. Condition 2 - CIP disagrees with this finding. The subrecipient was not required to submit the required project narrative report; instead, the report was prepared and submitted by the project manager responsible for managing the project as assigned by CIP. Condition 3 - We acknowledge the finding that documentation was not provided to verify whether eight subrecipients were subject to the audit requirements. CIP will strengthen its subrecipient monitoring procedures to ensure compliance with 2 CFR 200.331(f) and related audit requirements. Refer to CNMI’s Corrective Action Plan for additional information. Auditor Response: Condition 2 - As stated in the subaward agreements, subrecipients shall furnish to the CNMI, project documents certifying beneficiary occupancy and/or substantial completion. This is done through submission of a project narrative status report to the CNMI, which includes information such as scope of work, percentage of completion, status of the project and anticipated completion date. As subrecipients are required to submit certification of project status, report should be prepared by the subrecipients and should be consistently required for all subawards.
Finding No. 2022-028 Federal Agency: U.S. Department of the Treasury AL Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No.: COVID-19 Area: Activities Allowed or Unallowed Allowable Costs/Cost Principles Questioned Costs: $33,815,438 Criteria: 1. In accordance with the Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) interim and final rules, recipients may use CSLFRF payments for any eligible expenses subject to the restrictions set forth in sections 602 and 603 of the Social Security Act as added by section 9901 of the American Rescue Plan Act of 2021 (codified as 42 USC 802 and 42 USC 803 respectively), Treasury’s Interim Final Rule and Final Rule at 31 CFR sections 35.7 and 35.8, and Frequently Asked Questions (FAQs). 2. CSLFRF is considered “other financial assistance” per 2 CFR section 200.1 and is administered as direct payments for specified use. The 2 CFR Part 200, Subpart E is applicable to expenditures under CSLFRF unless stated otherwise; and 3. In accordance with 2 CFR Part 200, Subpart E, cost must be necessary and reasonable for the performance of the federal award and be allocable thereto. Further costs must conform to any limitations or exclusions and be adequately documented. Condition: Of forty-seven nonpayroll expenditures tested, aggregating $91,046,132 of a total population of $192,051,799, the following were noted: 1. For sixteen (or 34%), transactions were only supported with journal entry reports and manual spreadsheets reflecting breakdown of charges, while Project Accounting Journal Number 13675 was only supported with a journal entry report and an inter-office memorandum. We were not provided with adequate documentation intended to substantiate transactions are for eligible use and for allowable costs in accordance with the restrictions set forth in sections 602 and 603 of the Social Security Act and 2 CFR section 200.1. In addition, the check/ACH payment for Project Accounting Journal Number 13675 was not provided. 2. For two (or 4%), either the purchase requisitions, purchase orders and/or contract agreements or equivalent documentation were not provided. 3. For three (or 6%), either the invoice or budget allotment requests, or equivalent documentations, were not provided. 4. For two (or 4%), receiving reports or equivalent documentation evidencing receipt of items or that services were rendered were not provided. No questioned costs are presented as amounts are questioned at Condition 3. 5. For three (or 6%), payment approvals for the following transactions were not evident. No questioned costs are presented as amounts are questioned at Condition 3 for Project Accounting Journal Numbers 5113 and 7440 and at Condition 1 for Project Accounting Journal Number 13675. Of thirteen payroll expenditures tested, aggregating $706,186 of a total population of $54,700,842, the following were noted: 6. For one (or 8%), the payroll distribution report or equivalent documentation was not provided. We were not provided adequate documentation intended to substantiate the transaction pertains to premium pay expenditures and are for eligible uses and for allowable costs in accordance with the restrictions set forth in sections 602 and 603 of the Social Security Act and 2 CFR section 200.1, for which the corresponding directly associated costs are also questioned. 7. For nine (or 69%), either the notice of personnel action forms (NOPA) and/or timesheets were not provided, for which the corresponding directly associated costs are also questioned. In addition, included in the gross pay for Employee Number 163508, was an adjustment to increase the gross pay by $165; however, documentation supporting the adjustment was also not provided. 8. Of sixty journal entries tested, aggregating $1,186,206 of a total population of $120,047,567, for fifty-one (or 85%), underlying accounting records for the original entries were not provided. For Project Accounting Journal Number 7310, documentation provided was not clear. No questioned costs are presented, as the extent of noncompliance, if any, could not be quantified. 9. FY2022 and FY2021 expenditures for the Municipality of Tinian, amounting to $1,015,815 and $394,397, respectively, were not tested; accordingly, we were not able to determine allowability. No questioned costs are presented as the extent of noncompliance, if any, could not be quantified. Cause: CNMI did not enforce compliance with applicable allowable costs/cost principles requirements and lacks monitoring controls over the following: 1. Adequate documentation and systematic filing of relevant documentation supporting program costs. 2. Municipality of Tinian’s expenditures were not recorded in the CNMI’s FY2022 and FY2021 financial statements and SEFA schedules. 3. Legal opinion as to whether the Municipality of Tinian is legally separated from the CNMI Central Government was not timely sought. Effect: CNMI is in noncompliance with applicable allowable costs/cost principles requirements and questioned costs of $33,815,438 result. Unknown questioned costs are presented for Conditions 8 and 9 as the extent of noncompliance, if any, could not be quantified. Identification as a Repeat Finding: Finding No. 2020-031 Recommendation: CNMI should strengthen and enforce compliance with applicable allowable costs/cost principles requirements, develop and implement effective monitoring controls over the following: 1. Establish and maintain effective systematic filing of relevant documentation to support program costs and for easier retrieval; 2. Effective monitoring controls over compliance with Sections 602 and 603 of the Social Security Act (the “Act”) requirements, 2 CFR section 200.1 and 2 CFR Part 200, Subpart E; and 3. The CNMI should timely seek clarification and guidance on matters affecting the CNMI’s financial reporting requirements and its federal programs requirements. Views of Responsible Officials: Conditions 1 and 6 - The Department of Finance agrees with this finding. It is important to note that the issue occurred during FY2022, a period marked by the transition from the legacy financial system (JDE) to the new Tyler Munis platform. During this time, processes for retaining and reconciling supporting documents had not been standardized, resulting in inconsistencies and a heightened risk of missing or improperly uploaded records. Conditions 2 to 5, 7 and 8 - The Department of Finance disagrees with this finding. Due to internal scheduling constraints and the compressed timeline required to complete the FY2022 audit, the requested documents were not submitted by the specified deadline, resulting in this finding. However, the office maintains all relevant supporting documentation and is prepared to provide it upon request from the Grantor. Condition 9 - The Department of Finance agrees with the findings. Following the legal opinion from the CNMI Attorney General’s Office in August 2025, we secured all necessary documentation from the Municipality of Tinian to ensure proper recording and reconciliation of transactions in our financial system. Refer to CNMI’s Corrective Action Plan for additional information. Auditor Response: Conditions 2 to 5, 7 and 8 - CNMI states disagreement; however, CNMI also acknowledges that documentation supporting program costs were not provided.
Finding No. 2022-045 Federal Agency: U.S. Department of Homeland Security AL Program: 97.039 Hazard Mitigation Grant Federal Award No.: DR-4235 Area: Allowable Costs/Cost Principles Questioned Costs: $99,924 Criteria: Grantees are required to ensure that payments made under the grant are not improper payments as defined under 2 CFR 200.1. Improper payments means a payment that should not have been made or that was made in an incorrect amount under statutory, contractual, administrative, or other legally applicable requirements. The term improper payment includes: any payment to an ineligible recipient; any payment for an ineligible good or service; any duplicate payment; any payment for a good or service not received, except for those payments where authorized by law; any payment that is not authorized by law; and any payment that does not account for credit for applicable discounts. Condition: Of thirty-six nonpayroll expenditures tested, aggregating $3,932,053 of a total population of $4,097,083, one (or 3%) (under business unit M4235, object account no. 8812210002, contract no. 704583-OC, amounting to $99,924) was recorded twice in the general ledger and was requested for reimbursement twice under the Federal award on December 22, 2021 and on January 18, 2022, for which the amount is questioned. Cause: CNMI did not effectively enforce recordkeeping controls and perform monitoring controls over compliance with applicable allowable costs/cost principles requirements. Effect: CNMI is in noncompliance with applicable allowable costs/cost principles requirements and questioned costs of $99,924 result. Recommendation: CNMI management should establish a recordkeeping system whereby underlying support is filed accordingly to substantiate costs and management should also strengthen monitoring controls over transactions to substantiate program costs in accordance with applicable allowable costs/cost principles. Views of responsible officials: The Hazard Mitigation Grant Program (HMGP) agrees with this finding. During the audit submission process, HMGP provided the support documents for the journal entries and reversals associated with the $99,923 to the auditor, as requested. However, it was only upon receiving this audit finding, that the discrepancy of a duplicate audit drawdown was called into question. HMGP’s ledger for this project as well as the Munis drawdown history does not indicate a remaining balance of $99,923 and the project related to this finding has already been closed out. To address this audit finding that HMGP received this last week on September 17th, HMGP reached out to the Department of Finance to provide related documents for the drawdowns. Based on the documents provided by DOF, the questioned cost was not a direct result of the duplicate drawdown but as a result of the reverse journal entries made by Tyler Munis staff in an effort to correct the duplicate drawdown. HMGP is prepared to provide additional documentation upon request. Additionally, acknowledging that the second debit to construction in August of 2022 for $99,924 was recorded and was not corrected for this project. HMGP will work with DOF to correct the journal entry and return the funds to FEMA. Refer to CNMI’s Corrective Action Plan for additional information.
2022-003 ? Formal Policies for Federal Awards Information on the Federal Program: U.S. Small Business Administration Assistance Listing Number: 59.008 Assistance Listing Name: Economic Injury Disaster Loan Criteria ? The Code of Federal Regulation (CFR) Section ?200.300 and Section ?200.400 states in part: (1) The non-Federal entity is responsible for the efficient and effective administration of the Federal award through the application of sound management practices. (2) The non-Federal entity assumes responsibility for administering Federal funds in a manner consistent with underlying agreements, program objectives, and the terms and conditions of the Federal award. (3) The non-Federal entity, in recognition of its own unique combination of staff, facilities, and experience, has the primary responsibility for employing whatever form of sound organization and management techniques may be necessary in order to assure proper and efficient administration of the Federal award. (4) The application of these cost principles should require no significant changes in the internal accounting policies and practices of the non-Federal entity. However, the accounting practices of the non-Federal entity must be consistent with these cost principles and support the accumulation of costs as required by the principles, and must provide for adequate documentation to support costs charged to the Federal award. (5) In reviewing, negotiating and approving cost allocation plans or indirect cost proposals, the cognizant agency for indirect costs should generally assure that the non-Federal entity is applying these cost accounting principles on a consistent basis during their review and negotiation of indirect cost proposals. Where wide variations exist in the treatment of a given cost item by the non-Federal entity, the reasonableness and equity of such treatments should be fully considered. See the definition of indirect (facilities & administrative (F&A)) costs in ? 200.1 of this part. (6) For non-Federal entities that educate and engage students in research, the dual role of students as both trainees and employees (including pre- and post-doctoral staff) contributing to the completion of Federal awards for research must be recognized in the application of these principles. (7) The non-Federal entity may not earn or keep any profit resulting from Federal financial assistance, unless explicitly authorized by the terms and conditions of the Federal award. Condition ? During the year ended August 31, 2022, the Center received additional EIDL funds. Prior to the COVID-19 pandemic, the Center did not receive and spend federal dollars in excess of the limit that require a single audit to be performed. Due to the lack of expertise surrounding controls on Federal awards, the Center did not adopt and approve written policies surrounding Federal awards. Cause ? The written policies over Federal awards were not established during fiscal year 2022 and therefore the Center was not in compliance with CFR Section ?200.300 and Section ?200.400. Effect ? The Center was not able to provide written policies as required by CFR Section ?200.300 and Section ?200.400. Questioned Costs: There are no questioned costs related to the items described above. Context: The conditions outlined above are based on our testing of the Center?s major program. The nature of this finding is detailed in the condition section above. Repeat Finding: This is not a repeat finding. Recommendation ? We recommend management attend federal award trainings to ensure the documented policies and procedures can be performed as necessary. This will ensure the Center is in compliance with compliance requirements surrounding Federal awards. Views of Responsible Officials ? Beck Center for the Arts concurs with the finding and the recommendation. Management with the Center?s Audit Committee will review and document policies and procedures for managing federal awards to supplement existing policies and procedures associated with awards from non-federal funders. The Center?s corrective action plan is described in Managements Corrective Action Plan included at page 42 of this reporting package.
2022-003 ? Formal Policies for Federal Awards Information on the Federal Program: U.S. Small Business Administration Assistance Listing Number: 59.008 Assistance Listing Name: Economic Injury Disaster Loan Criteria ? The Code of Federal Regulation (CFR) Section ?200.300 and Section ?200.400 states in part: (1) The non-Federal entity is responsible for the efficient and effective administration of the Federal award through the application of sound management practices. (2) The non-Federal entity assumes responsibility for administering Federal funds in a manner consistent with underlying agreements, program objectives, and the terms and conditions of the Federal award. (3) The non-Federal entity, in recognition of its own unique combination of staff, facilities, and experience, has the primary responsibility for employing whatever form of sound organization and management techniques may be necessary in order to assure proper and efficient administration of the Federal award. (4) The application of these cost principles should require no significant changes in the internal accounting policies and practices of the non-Federal entity. However, the accounting practices of the non-Federal entity must be consistent with these cost principles and support the accumulation of costs as required by the principles, and must provide for adequate documentation to support costs charged to the Federal award. (5) In reviewing, negotiating and approving cost allocation plans or indirect cost proposals, the cognizant agency for indirect costs should generally assure that the non-Federal entity is applying these cost accounting principles on a consistent basis during their review and negotiation of indirect cost proposals. Where wide variations exist in the treatment of a given cost item by the non-Federal entity, the reasonableness and equity of such treatments should be fully considered. See the definition of indirect (facilities & administrative (F&A)) costs in ? 200.1 of this part. (6) For non-Federal entities that educate and engage students in research, the dual role of students as both trainees and employees (including pre- and post-doctoral staff) contributing to the completion of Federal awards for research must be recognized in the application of these principles. (7) The non-Federal entity may not earn or keep any profit resulting from Federal financial assistance, unless explicitly authorized by the terms and conditions of the Federal award. Condition ? During the year ended August 31, 2022, the Center received additional EIDL funds. Prior to the COVID-19 pandemic, the Center did not receive and spend federal dollars in excess of the limit that require a single audit to be performed. Due to the lack of expertise surrounding controls on Federal awards, the Center did not adopt and approve written policies surrounding Federal awards. Cause ? The written policies over Federal awards were not established during fiscal year 2022 and therefore the Center was not in compliance with CFR Section ?200.300 and Section ?200.400. Effect ? The Center was not able to provide written policies as required by CFR Section ?200.300 and Section ?200.400. Questioned Costs: There are no questioned costs related to the items described above. Context: The conditions outlined above are based on our testing of the Center?s major program. The nature of this finding is detailed in the condition section above. Repeat Finding: This is not a repeat finding. Recommendation ? We recommend management attend federal award trainings to ensure the documented policies and procedures can be performed as necessary. This will ensure the Center is in compliance with compliance requirements surrounding Federal awards. Views of Responsible Officials ? Beck Center for the Arts concurs with the finding and the recommendation. Management with the Center?s Audit Committee will review and document policies and procedures for managing federal awards to supplement existing policies and procedures associated with awards from non-federal funders. The Center?s corrective action plan is described in Managements Corrective Action Plan included at page 42 of this reporting package.
U.S. Department of the Treasury COVID-19 – Coronavirus State and Local Fiscal Recovery Funds – CFDA 21.027 Criteria: The compliance supplement identifies four Key Line Items required to be reported to the federal awarding agency which include (1) current period obligation, (2) cumulative obligation, (3) current period expenditure and (4) cumulative expenditure. Per 2 CFR 200.1, an obligation is an order placed for property and services, contracts and subawards made, and similar transactions that require payment. Condition: On the June 30, 2022 Project and Expenditure report the City reported $7,292,100 of obligations for expenditures that had yet to be specifically identified nor met the definition of an obligation. Cause: The City did not have a clear understanding of the reporting requirements for obligations. Effect: The City overstated the amounts obligated in the June 30, 2022 Project and Expenditure report. Questioned Costs: None Repeat Finding from Prior Year: No Recommendation: The City should implement procedures to only report obligations on the Project and Expenditure reporting for items that meet the federal criteria for reporting as an obligation. Views of Responsible Official: Management agrees with the finding.
Assistance Listings numbers and names: 93.268 Immunization Cooperative Agreements 93.268 COVID-19 Immunization Cooperative Agreements Award number and year: NH23IP922599, July 1, 2019 through June 30, 2024 Assistance Listings numbers and names: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases 93.323 COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases Award number and year: NU50CK000511, August 1, 2019 through July 31, 2024 Federal agency: U.S. Department of Health and Human Services Compliance requirement: Reporting Questioned costs: Not applicable Condition—Contrary to federal laws and regulations and the State’s accounting manual, the Department of Health Services (Department) failed to report required information on the federal government’s reporting system related to its $12.9 million in Immunization Cooperative Agreements (Immunization) and $102.8 million in Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) subawards it made to subrecipients during fiscal year 2022. As shown in the bullets and tables below, we tested a total sample of 49 subawards for these federal programs at the Department and found that, for 28 and 11 subawards related to Immunization and ELC programs, respectively, the Department failed to report the following: • Any required information about the subawards, including the subaward organization names and subaward amounts and terms, as follows: o 13 Immunization subawards, totaling over $6.1 million of the total $42.8 million of Immunization subawards we tested in our sample. o 9 ELC subawards, totaling over $33.8 million of the total $129.1 million of ELC subawards we tested in our sample. • Required information within the time frame for: o 4 Immunization subawards tested, totaling $1.8 million, resulting in the reports being submitted 3 months late. o 2 ELC subawards tested, totaling $69.0 million, resulting in the reports being submitted 4 and 12 months late. • Correct subaward amounts for 3 Immunization subawards tested, totaling $128,062. • Any required key elements such as subaward number, action date, and description for 3 Immunization subawards we tested, totaling $878,345. • Correct key elements for 5 Immunization subawards we tested, totaling over $4.0 million. The table below describes results for the subawards we tested. Immunization (93.268) Number of subawards Total subawards tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements Subaward with other incorrect key elements 30 13 4 3 3 5 Dollar amount of subawards Total subawards tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements Subaward with other incorrect key elements $42,846,925 $6,160,922 $1,770,868 $128,062 $878,345 $4,000,569 Total errors $12,938,766 ELC (93.323) Number of subawards Total subawards tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements Subaward with other incorrect key elements 19 9 2 0 0 0 Dollar amount of subawards Total subawards tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements Subaward with other incorrect key elements $129,124,079 $33,782,859 $69,036,821 $0 $0 $0 Total errors $102,819,680 Effect—The State’s stakeholders and the public did not have access to transparent and timely information about the Department’s federal award spending decisions on the USAspending.gov website as required by federal laws and regulations. Additionally, the Department is at risk that this finding applies to other federal programs it administers. During fiscal year 2022, the Department spent $21.8 million and $41.1 million of federal monies related to the Immunization and ELC subawards, respectively, which comprised 14 percent and 21 percent, respectively, of the Department’s $155.4 million and $200.1 million total federal expenditures the Department spent for these particular programs. Cause—Although the programs’ reporting requirements were provided as additional award terms and conditions on the federal agency’s website, and the State’s accounting manual instructed State departments to follow them, the Department did not require independent reviews of the reports for accuracy and completeness prior to uploading subaward data to the federal government’s reporting system. In addition, the Department’s program administrators did not always communicate with the employee responsible for reporting to the federal government’s reporting system when new subawards and modifications to subawards required reporting. Finally, the Department did not require a post-upload review to verify that the subaward data it uploaded to the federal government’s reporting system was complete and correctly displayed. Therefore, the Department was unaware of the errors. Criteria—The Federal Funding Accountability and Transparency Act (FFATA) and federal Uniform Guidance regulations require the Department, as a direct recipient of federal awards, to report certain information about each subaward action exceeding $30,000 in federal monies on the FFATA Subaward Reporting System no later than month-end of the month following the subaward action so that the information can be displayed to the public on the website, USAspending.gov.1 Specifically, the federal Uniform Guidance requires the Department to report the subrecipient organization’s name, award amount, award term, and other information about the subaward, if applicable, for each subaward action exceeding the $30,000 threshold (2 CFR §170.320 and Appendix A to Part 170). Additionally, the State’s accounting manual requires the Department to perform this reporting for federal awards (State of Arizona Accounting Manual, Topic 70: Grants, Section 45). Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Immediately report on the FFATA Subaward Reporting System the required information for its subawards for these programs. 2. Follow the State’s accounting manual for reporting subaward actions exceeding $30,000 no later than month-end of the month following the subaward action, as required by the FFATA and federal Uniform Guidance. 3. Implement procedures requiring independent reviews to: a. Ensure the subaward data is complete and accurate prior to uploading it to the federal government’s reporting system. b. Verify that the subaward data it uploaded to the federal government’s reporting system was complete and correctly displayed. 4. Implement a procedure for Department program administrators to communicate subaward activities, such as new subawards or modifications to existing subawards, to those employees responsible for reporting the Department’s subaward actions to the federal government’s reporting system. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 The FFATA of 2006 (Public Law 109-282), as amended by section 6202 of Public Law 110-252, was enacted to provide the public with transparency on federal award spending to hold the recipient government accountable for each spending decision and to help reduce wasteful spending of federal monies. As such, federal Uniform Guidance requires reporting on the FFATA Subaward Reporting System at FSRS—Federal Funding Accountability and Transparency Act Subaward Reporting System.
Assistance Listings numbers and names: 93.268 Immunization Cooperative Agreements 93.268 COVID-19 Immunization Cooperative Agreements Award number and year: NH23IP922599, July 1, 2019 through June 30, 2024 Assistance Listings numbers and names: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases 93.323 COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases Award number and year: NU50CK000511, August 1, 2019 through July 31, 2024 Federal agency: U.S. Department of Health and Human Services Compliance requirement: Reporting Questioned costs: Not applicable Condition—Contrary to federal laws and regulations and the State’s accounting manual, the Department of Health Services (Department) failed to report required information on the federal government’s reporting system related to its $12.9 million in Immunization Cooperative Agreements (Immunization) and $102.8 million in Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) subawards it made to subrecipients during fiscal year 2022. As shown in the bullets and tables below, we tested a total sample of 49 subawards for these federal programs at the Department and found that, for 28 and 11 subawards related to Immunization and ELC programs, respectively, the Department failed to report the following: • Any required information about the subawards, including the subaward organization names and subaward amounts and terms, as follows: o 13 Immunization subawards, totaling over $6.1 million of the total $42.8 million of Immunization subawards we tested in our sample. o 9 ELC subawards, totaling over $33.8 million of the total $129.1 million of ELC subawards we tested in our sample. • Required information within the time frame for: o 4 Immunization subawards tested, totaling $1.8 million, resulting in the reports being submitted 3 months late. o 2 ELC subawards tested, totaling $69.0 million, resulting in the reports being submitted 4 and 12 months late. • Correct subaward amounts for 3 Immunization subawards tested, totaling $128,062. • Any required key elements such as subaward number, action date, and description for 3 Immunization subawards we tested, totaling $878,345. • Correct key elements for 5 Immunization subawards we tested, totaling over $4.0 million. The table below describes results for the subawards we tested. Immunization (93.268) Number of subawards Total subawards tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements Subaward with other incorrect key elements 30 13 4 3 3 5 Dollar amount of subawards Total subawards tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements Subaward with other incorrect key elements $42,846,925 $6,160,922 $1,770,868 $128,062 $878,345 $4,000,569 Total errors $12,938,766 ELC (93.323) Number of subawards Total subawards tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements Subaward with other incorrect key elements 19 9 2 0 0 0 Dollar amount of subawards Total subawards tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements Subaward with other incorrect key elements $129,124,079 $33,782,859 $69,036,821 $0 $0 $0 Total errors $102,819,680 Effect—The State’s stakeholders and the public did not have access to transparent and timely information about the Department’s federal award spending decisions on the USAspending.gov website as required by federal laws and regulations. Additionally, the Department is at risk that this finding applies to other federal programs it administers. During fiscal year 2022, the Department spent $21.8 million and $41.1 million of federal monies related to the Immunization and ELC subawards, respectively, which comprised 14 percent and 21 percent, respectively, of the Department’s $155.4 million and $200.1 million total federal expenditures the Department spent for these particular programs. Cause—Although the programs’ reporting requirements were provided as additional award terms and conditions on the federal agency’s website, and the State’s accounting manual instructed State departments to follow them, the Department did not require independent reviews of the reports for accuracy and completeness prior to uploading subaward data to the federal government’s reporting system. In addition, the Department’s program administrators did not always communicate with the employee responsible for reporting to the federal government’s reporting system when new subawards and modifications to subawards required reporting. Finally, the Department did not require a post-upload review to verify that the subaward data it uploaded to the federal government’s reporting system was complete and correctly displayed. Therefore, the Department was unaware of the errors. Criteria—The Federal Funding Accountability and Transparency Act (FFATA) and federal Uniform Guidance regulations require the Department, as a direct recipient of federal awards, to report certain information about each subaward action exceeding $30,000 in federal monies on the FFATA Subaward Reporting System no later than month-end of the month following the subaward action so that the information can be displayed to the public on the website, USAspending.gov.1 Specifically, the federal Uniform Guidance requires the Department to report the subrecipient organization’s name, award amount, award term, and other information about the subaward, if applicable, for each subaward action exceeding the $30,000 threshold (2 CFR §170.320 and Appendix A to Part 170). Additionally, the State’s accounting manual requires the Department to perform this reporting for federal awards (State of Arizona Accounting Manual, Topic 70: Grants, Section 45). Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Immediately report on the FFATA Subaward Reporting System the required information for its subawards for these programs. 2. Follow the State’s accounting manual for reporting subaward actions exceeding $30,000 no later than month-end of the month following the subaward action, as required by the FFATA and federal Uniform Guidance. 3. Implement procedures requiring independent reviews to: a. Ensure the subaward data is complete and accurate prior to uploading it to the federal government’s reporting system. b. Verify that the subaward data it uploaded to the federal government’s reporting system was complete and correctly displayed. 4. Implement a procedure for Department program administrators to communicate subaward activities, such as new subawards or modifications to existing subawards, to those employees responsible for reporting the Department’s subaward actions to the federal government’s reporting system. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 The FFATA of 2006 (Public Law 109-282), as amended by section 6202 of Public Law 110-252, was enacted to provide the public with transparency on federal award spending to hold the recipient government accountable for each spending decision and to help reduce wasteful spending of federal monies. As such, federal Uniform Guidance requires reporting on the FFATA Subaward Reporting System at FSRS—Federal Funding Accountability and Transparency Act Subaward Reporting System.
Assistance Listings numbers and names: 93.268 Immunization Cooperative Agreements 93.268 COVID-19 Immunization Cooperative Agreements Award number and year: NH23IP922599, July 1, 2019 through June 30, 2024 Assistance Listings numbers and names: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases 93.323 COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases Award number and year: NU50CK000511, August 1, 2019 through July 31, 2024 Federal agency: U.S. Department of Health and Human Services Compliance requirement: Reporting Questioned costs: Not applicable Condition—Contrary to federal laws and regulations and the State’s accounting manual, the Department of Health Services (Department) failed to report required information on the federal government’s reporting system related to its $12.9 million in Immunization Cooperative Agreements (Immunization) and $102.8 million in Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) subawards it made to subrecipients during fiscal year 2022. As shown in the bullets and tables below, we tested a total sample of 49 subawards for these federal programs at the Department and found that, for 28 and 11 subawards related to Immunization and ELC programs, respectively, the Department failed to report the following: • Any required information about the subawards, including the subaward organization names and subaward amounts and terms, as follows: o 13 Immunization subawards, totaling over $6.1 million of the total $42.8 million of Immunization subawards we tested in our sample. o 9 ELC subawards, totaling over $33.8 million of the total $129.1 million of ELC subawards we tested in our sample. • Required information within the time frame for: o 4 Immunization subawards tested, totaling $1.8 million, resulting in the reports being submitted 3 months late. o 2 ELC subawards tested, totaling $69.0 million, resulting in the reports being submitted 4 and 12 months late. • Correct subaward amounts for 3 Immunization subawards tested, totaling $128,062. • Any required key elements such as subaward number, action date, and description for 3 Immunization subawards we tested, totaling $878,345. • Correct key elements for 5 Immunization subawards we tested, totaling over $4.0 million. The table below describes results for the subawards we tested. Immunization (93.268) Number of subawards Total subawards tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements Subaward with other incorrect key elements 30 13 4 3 3 5 Dollar amount of subawards Total subawards tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements Subaward with other incorrect key elements $42,846,925 $6,160,922 $1,770,868 $128,062 $878,345 $4,000,569 Total errors $12,938,766 ELC (93.323) Number of subawards Total subawards tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements Subaward with other incorrect key elements 19 9 2 0 0 0 Dollar amount of subawards Total subawards tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements Subaward with other incorrect key elements $129,124,079 $33,782,859 $69,036,821 $0 $0 $0 Total errors $102,819,680 Effect—The State’s stakeholders and the public did not have access to transparent and timely information about the Department’s federal award spending decisions on the USAspending.gov website as required by federal laws and regulations. Additionally, the Department is at risk that this finding applies to other federal programs it administers. During fiscal year 2022, the Department spent $21.8 million and $41.1 million of federal monies related to the Immunization and ELC subawards, respectively, which comprised 14 percent and 21 percent, respectively, of the Department’s $155.4 million and $200.1 million total federal expenditures the Department spent for these particular programs. Cause—Although the programs’ reporting requirements were provided as additional award terms and conditions on the federal agency’s website, and the State’s accounting manual instructed State departments to follow them, the Department did not require independent reviews of the reports for accuracy and completeness prior to uploading subaward data to the federal government’s reporting system. In addition, the Department’s program administrators did not always communicate with the employee responsible for reporting to the federal government’s reporting system when new subawards and modifications to subawards required reporting. Finally, the Department did not require a post-upload review to verify that the subaward data it uploaded to the federal government’s reporting system was complete and correctly displayed. Therefore, the Department was unaware of the errors. Criteria—The Federal Funding Accountability and Transparency Act (FFATA) and federal Uniform Guidance regulations require the Department, as a direct recipient of federal awards, to report certain information about each subaward action exceeding $30,000 in federal monies on the FFATA Subaward Reporting System no later than month-end of the month following the subaward action so that the information can be displayed to the public on the website, USAspending.gov.1 Specifically, the federal Uniform Guidance requires the Department to report the subrecipient organization’s name, award amount, award term, and other information about the subaward, if applicable, for each subaward action exceeding the $30,000 threshold (2 CFR §170.320 and Appendix A to Part 170). Additionally, the State’s accounting manual requires the Department to perform this reporting for federal awards (State of Arizona Accounting Manual, Topic 70: Grants, Section 45). Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Immediately report on the FFATA Subaward Reporting System the required information for its subawards for these programs. 2. Follow the State’s accounting manual for reporting subaward actions exceeding $30,000 no later than month-end of the month following the subaward action, as required by the FFATA and federal Uniform Guidance. 3. Implement procedures requiring independent reviews to: a. Ensure the subaward data is complete and accurate prior to uploading it to the federal government’s reporting system. b. Verify that the subaward data it uploaded to the federal government’s reporting system was complete and correctly displayed. 4. Implement a procedure for Department program administrators to communicate subaward activities, such as new subawards or modifications to existing subawards, to those employees responsible for reporting the Department’s subaward actions to the federal government’s reporting system. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 The FFATA of 2006 (Public Law 109-282), as amended by section 6202 of Public Law 110-252, was enacted to provide the public with transparency on federal award spending to hold the recipient government accountable for each spending decision and to help reduce wasteful spending of federal monies. As such, federal Uniform Guidance requires reporting on the FFATA Subaward Reporting System at FSRS—Federal Funding Accountability and Transparency Act Subaward Reporting System.