Federal Agency: U.S. Department of Homeland Security Pass-Through Agency: Central Office of Recovery, Reconstruction and Resiliency of Puerto Rico (COR3) Program: Disaster Grants – Public Assistance (Presidentially-Declared Disaster) (ALN 97.036) Compliance Requirement: Reporting (L) Type of Finding: Significant Deficiency in Internal Control (SD), Instance of Noncompliance (NC) This finding is similar to prior year finding 2023-009. Statement of Condition In our Reporting Test, we evaluated the Quarterly Progress Reports of a total of nine (9) projects for two quarters of fiscal year 2023-2024. During our audit procedures, we noted that the reports did not agree with the accounting and project records. Criteria 2 CFR 200.302 (a) states that the states’ and other non-Federal entities’ 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. Also, 2 CFR 200.302 (b) (2) states that the financial management system of each non-Federal entity must provide accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. Cause of Condition The Municipality’s accounting controls and procedures fail to ensure accurate, current and complete disclosure of the financial results of federal assisted activities. Effect of Condition The expenses reported in the Quarterly Progress Reports do not agree with the accounting records. Recommendation We recommend the Program Administrators reconcile the differences between the quarterly report and the accounting records before the submission to the pass-through entity. Questioned Costs None Views of Responsible Officials and Planned Corrective Action We will give instructions to the accounting staff in charge of the preparation of the quarterly progress reports of the Program, in order to comply with the FEMA reporting requirements. Responsible Official: Mrs. Irma M. Vargas Aguirre, Finance and Budget Director Implementation Date: December 31, 2025
FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Compliance and Internal Control over Compliance Findings Lack of Supporting Documentation for Non-Payroll Disbursements - Activities Allowed or Unallowed and Allowable Costs/Cost Principles (Significant Deficiency) AL Number and Title: 84.362A - Native Hawaiian Education Program Award Number: S362A200024-22 Award Period: October 1, 2022 - September 30, 2024 Federal Agency: Department of Education Criteria: Under 2 CFR § 200.302(b)(3) and 2 CFR § 200.403(g), non-Federal entities are required to maintain documentation to support costs charged to federal awards. Costs must be necessary, reasonable, allocable, and adequately documented to be allowable under a federal program. Internal controls should ensure proper retention of records for audit and compliance purposes. Condition: During our testing of compliance and internal controls over compliance for Activities Allowed or Unallowed and Allowable Costs/Cost Principles, we selected a haphazard sample of 40 non-payroll disbursements and judgmentally selected 1 individually significant item for detailed testing. For one transaction totaling $145.85, the auditee was unable to provide any supporting documentation, such as invoices or receipts, to substantiate the expenditure. For a separate transaction totaling $57.03, the auditee was unable to provide evidence of proper approval prior to payment. Cause: The lack of documentation appears to result from weaknesses in the Organization’s record-keeping practices and non-compliance with established documentation retention policies. The Organization’s internal controls did not ensure that all supporting documentation for federal expenditures was consistently maintained. Effect: Without adequate supporting documentation, we were unable to determine whether these costs were allowable, allocable, and reasonable in accordance with federal grant requirements. We were also unable to determine whether management reviewed and approved these costs. This noncompliance increases the risk that unallowable or unauthorized costs could be charged to the federal program without detection. Repeat Finding? Yes - Finding 2023-001. Recommendation: We recommend that the Organization: 1. Enhance internal controls to ensure that all federal expenditures are properly supported and retained for compliance purposes; 2. Implement a centralized documentation retention system to track and store invoices, receipts, and other supporting records; 3. Provide staff training on documentation requirements for federal grant expenditures to ensure compliance with 2 CFR § 200.302(b)(3) and 2 CFR § 200.403(g); and 4. Conduct periodic internal reviews of disbursement records to verify that required documentation is maintained and readily available for audit purposes. Views of Responsible Officials and Planned Corrective Action: Mana Maoli agrees with the finding and the recommendation. See Part V, Corrective Action Plan.
Finding 2024-002 – Delta Regional Authority ( material weakness): Criteria – Federal regulations governing effective control and accountability for all funds, property, and other assets, and must adequately track and report grant-specific financial data. (2 CFR 200.302b) Condition —Non-compliance was noted as described in the context below. Questioned Costs — N/A Context - We noted deficiencies in the School’s financial management system related to the recording, reconciliation, recordkeeping, reporting, and extraction of grant-related data: • Expenditures charged to the Federal grants and funds received were not consistently or clearly recorded in the general ledger using grant-specific identifiers or cost centers. • Monthly reconciliations between the general ledger and grant reports were either not performed or documented. • The organization lacked a consistent process for extracting accurate and complete financial data specific to the grant for monitoring and reporting purposes. Cause – The deficiencies appear to be due to the absence of standardized internal control procedures specific to federal grant tracking and reporting, as well as limited training for staff responsible for federal grant compliance. Effect – Failure to maintain proper financial records and reporting processes may result in noncompliance with Uniform Guidance requirements, misstatement of grant-related financial activity, and potential questioned costs. It also limits the organization’s ability to provide accurate and timely financial data to funding agencies and internal stakeholders. Auditor’s Recommendation – We recommend the organization implement the following corrective actions: 1. Establish and consistently apply a grant-specific coding structure in the general ledger to clearly identify grant transactions. 2. Perform and document monthly reconciliations between the general ledger and grant financial reports. 3. Develop a standardized grant file structure for retaining supporting documentation. 4. Train staff involved in grant management on Uniform Guidance financial management requirements. 5. Implement a data extraction and reporting process that ensures accuracy and completeness for federal grant reporting. 6. Consider adding a grants accountant to oversee grant accounting and compliance. This will help reduce the burden over this area for the current staff. In addition to adding a grants accountant, a consultant may also be used to assist in developing proper procedures and controls to implement and follow moving forward.
2024-009 Program: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Federal Financial Assistance Listing Number: 21.027 Federal Grantor: U.S. Department of Treasury Award No. and Year: 2021 Program: COVID-19 Coronavirus State and Local Fiscal Recovery Funds passed-through the State Water Resources Control Board Federal Financial Assistance Listing Number: 21.027 Federal Grantor: U.S. Department of Treasury Award No. and Year: A00059, 2024 Compliance Requirement: Allowable Costs/Cost Principles Type of Finding: Significant Deficiency in Internal Control and Instance of Non-Compliance Criteria: Title 2 CFR Section 200.302(b)(7) of the Uniform Guidance requires all non-Federal entities establish written procedures to implement the requirements for determining the allowability of costs in accordance with Subpart E – Cost Principles or the conditions of the Federal award. Condition: The City has not established written procedures for determining allowability of costs in accordance with Subpart E – Cost Principles or the conditions of the Federal award. Cause: The City’s procedures did not ensure the required written procedures were developed and implemented in accordance with the Uniform Guidance. Effect: The City has not compiled with Title 2 CFR Section 200.302(b)(7) regarding establishing written procedures for determining the allowability of costs. Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: The condition above was identified during our procedures related to allowable costs and no sampling was used. Repeat Finding from Prior Year: Yes, prior year finding 2023-007 Recommendation: We recommend the City establish policies and formalize written procedures related to allowable costs in accordance with Subpart E – Cost Principles. Views of Responsible Officials: Management agrees with the finding. See separate corrective action plan.
FA 2024-003 Strengthen Controls over Financial Reporting Compliance Requirement: Reporting Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Number and Title: 84.010 – Title I Grants to Local Educational Agencies Federal Award Numbers: S010A220010 (Year: 2023), S010A230010 (Year: 2024) Questioned Costs: None Identified Repeat of Prior Year Findings: FA 2023-004, FA 2022-004, FA 2021-002, FA 2019-002 Description: The School District did not file accurate completion reports for the Title I Grants to Local Educational Agencies program. Background: The Georgia Department of Education (GaDOE) requires the School District to submit a completion report by October 30 after the 15-month period of performance associated with the Title I Grants to Local Educational Agencies (Title I) program ends. These completion reports are filed through the Grants Application section of the MyGaDOE web portal and reflect budgeted and actual expenditure information for the Title I program for the reporting period. If the total expenditures reflected on the completion report are more than the Title I program funds received by the School District for the grant period, a DE-0147 – Request for Reimbursement of Monthly Cash Disbursements will be automatically generated and the additional funds due to the School District will be disbursed appropriately. Conversely, if the total funds received for the grant period exceed the total expenditures reflected on the completion report, the Grants Application will prompt the School District to enter a check number for the required refund of excess funds drawn down. Therefore, it is imperative that completion reports are filed by the School District in an accurate and timely manner. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance Section 200.302(a) state in part that “the non-Federal entity’s financial management systems must… be sufficient to permit the preparation of reports required by general and program-specific terms and conditions.” In addition, Provisions included in the Uniform Guidance Section 200.302(b)(2) state in part that the non-Federal entity’s financial management system must provide for “accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements.” Further, as noted in the Uniform Guidance Section 200.511, management is responsible for implementing reported corrective action to findings from previous audits. Condition: A review of the School District’s accounting records and the completion reports related to the Title I-A, Improving Academic Achievement of the Disadvantaged and Title I-A, School Improvement programs for the period ending September 30, 2024, revealed that the expenditures were under reported by $68,505.49. Cause: In discussing this deficiency with the School District, they stated this issue was due to not correctly identifying salary accruals during the completion report process. Effect: The School District was not in compliance with the Uniform Guidance and GaDOE guidance. Failure to accurately report federal award expenditures through the completion report process could lead to the filing of DE-0147 reimbursement requests with GaDOE that do not support actual expenditures or the School District not receiving reimbursement for expenditures incurred. In the fiscal year under review, the School District obtained less federal funding than they were eligible to receive. Recommendation: The School District should establish internal control procedures to ensure that completion reports submitted to GaDOE are supported by the accounting records and DE-0147 reimbursement requests are prepared based upon actual expenditures incurred. In addition, management should develop and implement a monitoring process to ensure that control procedures are followed. Views of Responsible Officials: We concur with this finding.
FINDING 2024-014 Subject: Title I Grants to Local Educational Agencies - Reporting Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listings Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A210014, S010A220014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-014. Condition and Context The system of internal controls over the applicable reports, as established by the School Corporation, was not properly implemented nor was it operating effectively to ensure that sufficient audit evidence was maintained to support the requests for reimbursement, as well as the Final Expenditure Reports submitted by the School Corporation. The Title I Director approved the requests for reimbursement and the Final Expenditure Reports prior to submission; however, this review was not effective. The fiscal years 2021-2022 and 2022-2023 Final Expenditure Reports and the six reimbursement requests were selected for testing. The School Corporation was unable to provide for audit documentation to support the underlying data accumulated and summarized in each of the Financial Expenditure Reports or the six reimbursement requests. The reported data could not be traced to records that accumulate or summarize the data; therefore, the accuracy and completeness of the reports could not be verified. 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 47 NORTH LAWRENCE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.334 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for the Federal awards that are renewed quarterly or annual, from the date of submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following: . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . . (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. . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." Cause Due to turnover of staffing in the School Corporation's administrative office, the School Corporation's management had not designed nor implemented a system of internal controls that would have ensured compliance or that supporting documentation would have been maintained and available for audit related to the Reporting compliance requirement. Effect Without a proper system of internal controls in place that operated effectively, the School Corporation did not retain and provide appropriate supporting documentation. This prevented the determination of the School Corporation's compliance with the Reporting compliance requirement. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish an effective system of internal controls to ensure documentation will be maintained and made available for audit as related to the grant agreement and the Reporting compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Significant Deficiencies 2024-003 - Allowable Costs/Cost Principles: Written Financial Policies Federal Program Information: Department of Transportation - ALN: - 20.500, 20.507, 20.525 & 20.526 - Federal Transit Cluster Criteria: The following CFR(s) apply to this finding: 2 CFR Section 200.302(b), Condition: The Committee has not formally adopted certain required written financial management policies as outlined in the Code of Federal Regulations. Cause: The Committee was not aware of this requirement. Effect: Transactions could occur that did not comply with federal regulations. Identification of Questioned Costs: None identified. Context: The finding was based on requesting the Committee’s written financial policies related to federal compliance and therefore was not the result of a statistical sample. Repeat Finding: This is a repeat finding of 2023-003. Recommendation: The auditor recommends that the Committee obtain an understanding of the required written policies in the Code of Federal Regulations as applicable to its federal programs, create and formally adopt those required policies. Views of Responsible Officials and Corrective Action Plan: See attached Corrective Action Plan.
Finding 2024-003 – Lack of Internal Controls over Expenditure Documentation (Material Weakness) Name of Federal Agency: U.S. Environmental Protection Agency Federal Program Name: Nonpoint Source Implementation Grants Assistance Listing Numbers: 66.460 Pass-Through Entity: Oregon Department of Environmental Quality Name of Federal Agency: U.S. Department of Commerce – National Oceanic and Atmospheric Administration Federal Program Name: Pacific Coast Salmon Recovery Program Assistance Listing Numbers: 11.438, 15.015, 15.244 Pass-Through Entity: State of Oregon – Oregon Watershed Enhancement Board (OWEB) Name of Federal Agency: U.S. Department of Agriculture Federal Program Name: National Fish and Wildlife Foundation Assistance Listing Numbers: 10.665 Pass-Through Entity: U.S. Forest Service Name of Federal Agency: U.S. Department of Agriculture Federal Program Name: Natural Resources Conservation ServiceName of Federal Agency: U.S. Department of the Interior Federal Program Name: Wildlife, Sport Fish and Restoration Program Assistance Listing Numbers: 15.244 Pass-Through Entity: Bureau of Land Management Name of Federal Agency: U.S. Department of the Interior Federal Program Name: Secure Rural Schools and community Self-Determination – Watershed and water-quality improvements Assistance Listing Numbers: 15.234 Pass-Through Entity: Bureau of Land Management Criteria: Title 2 CFR §200.303 requires nonfederal entities to establish and maintain effective internal control over federal awards that provides reasonable assurance that the entity is managing the awards in compliance with federal statutes, regulations, and the terms and conditions of the award. Additionally, 2 CFR §200.302(b)(3) requires entities to maintain records that adequately identify the source and application of funds, including supporting documentation for expenditures, and 2 CFR §200.430 requires documentation for compensation for personal services. Condition: During our review of expenditures charged to the federal programs, the entity was unable to provide invoice copies or other sufficient supporting documentation for certain expenditures tested. As a result, we could not verify the allowability, accuracy, and proper approval of these costs in accordance with federal requirements. In addition, records were unavailable for Personnel expenditures that were charged to grant awards, and no support or evidence of time per grant was available. Cause: Partnership for the Umpqua Rivers does not have effective internal controls in place to ensure that invoice documentation and other supporting records are retained, centrally filed, and readily available for audit and monitoring purposes. In addition, management did not perform ongoing monitoring to verify that required documentation was maintained prior to reimbursement or reporting. Effect or Potential Effect: because supporting documentation was not available, expenditures from detail documentation could not be substantiated. This increases the risk that the unallowable, unsupported, or inaccurate costs may be charged to the federal program and reported in the Schedule of Expenditures of Federal Awards (SEFA). Questioned Cost: Yes, $332,409 related to Personnel costs, equipment and other purchases that were not documented with detailed support. Context: During our audit, it was found that the Partnership for the Umpqua Rivers experienced complete staff turnover in Financial Management for the year being audited. No current finance employees had worked for the organization during the year being audited. No financial files for Accounts Payable, invoices, or reporting were available to the current financial staff. Not adequately retaining supporting documents and invoices to support the expenditures of the general ledger and requests for reimbursement for grants, the organization records may be insufficient for testing and review, for internal controls or meeting federal documentation and reporting requirements. Repeat of a Prior-Year Finding: No, Prior- year did not require a Single Audit.Recommendation: Partnership for the Umpqua Rivers should implement policies and procedures requiring invoice copies and supporting documentation to be maintained for all grant expenditures. Management should strengthen record retention practices, provide training to staff on documentation requirements, and implement periodic internal reviews to ensure compliance. District Response: Partnership for the Umpqua Rivers acknowledges the deficiencies. Corrective Action Plan: _____________ (To be completed by Partnership for the Umpqua Rivers) Planned Implementation Date: _________ Responsible Person: Partnership for the Umpqua Rivers Finance Manager
Finding 2024-004 – Insufficient Skills, Knowledge and Training, and Leadership (Material Weakness) Name of Federal Agency: U.S. Environmental Protection Agency Federal Program Name: Nonpoint Source Implementation Grants Assistance Listing Numbers: 66.460 Pass-Through Entity: Oregon Department of Environmental Quality Name of Federal Agency: U.S. Department of Commerce – National Oceanic and Atmospheric Administration Federal Program Name: Pacific Coast Salmon Recovery Program Assistance Listing Numbers: 11.438, 15.015, 15.244 Pass-Through Entity: State of Oregon – Oregon Watershed Enhancement Board (OWEB) Name of Federal Agency: U.S. Department of Agriculture Federal Program Name: National Fish and Wildlife Foundation Assistance Listing Numbers: 10.665 Pass-Through Entity: U.S. Forest Service Name of Federal Agency: U.S. Department of Agriculture Federal Program Name: Natural Resources Conservation Service Assistance Listing Numbers: 10.905 Pass-Through Entity: U.S. Forest Service Name of Federal Agency: U.S. Department of the Interior Federal Program Name: Wildlife, Sport Fish and Restoration Program Assistance Listing Numbers: 15.244 Pass-Through Entity: Bureau of Land Management Name of Federal Agency: U.S. Department of the Interior Federal Program Name: Secure Rural Schools and community Self-Determination – Watershed and water-quality improvements Assistance Listing Numbers: 15.234 Pass-Through Entity: Bureau of Land ManagementCriteria: Under Uniform Guidance 2 CFR §200.303, non-federal entities must establish and maintain effective internal control over federal awards that provides reasonable assurance of compliance with federal statutes, regulations, and the award terms and conditions. This includes ensuring that: Personnel administering federal awards possess adequate skills, knowledge, and experience. Management and leadership provide appropriate oversight of federal award activities. Financial management systems adequately support accurate reporting, documentation, retention, and reconciliation of federal expenditures in accordance with 2 CFR §200.302. Condition: During the audit of federal awards, the entity did not demonstrate sufficient skills, knowledge, or experience of the staff and leadership responsible for administering and overseeing federal programs. Specifically: Adequate supporting documentation for federal award expenditures was not maintained or provided. Leadership oversight of federal award compliance activities was limited, and management review of grant activity were not evidenced. These conditions resulted in weaknesses in financial reporting, compliance monitoring, and documentation related to federal awards. Cause: Partnership for the Umpqua Rivers has not ensured that staffing levels, qualifications, and experience are sufficient to support federal award administration and compliance. In addition, leadership lacks adequate knowledge of federal award requirements to provide effective governance, oversight, and monitoring of compliance activities. Formal training and documented procedures for federal awards management have not been prioritized. Effect or Potential Effect: As a result of these deficiencies: Partnership for the Umpqua Rivers is at increased risk of non-compliance with Uniform Guidance requirements. Federal expenditures may be unsupported, inaccurately reported, or unallowable. Errors or compliance violations may not be detected or corrected in a timely manner. The entity may be subject to questioned costs, repayment of federal funds, or additional scrutiny from grantor agencies. Questioned Cost: None identified Context: During our audit, it was found that the Partnership for the Umpqua Rivers experienced complete staff turnover in Financial Management for the year being audited. No current finance employees had worked for the organization during the year being audited. No financial files for Accounts Payable, invoices, or reporting were available to the current financial staff. Not adequately retaining supporting documents and invoices to support the expenditures of the general ledger and requests for reimbursement for grants, the organization records may be insufficient for testing and review, for internal controls or meeting federal documentation and reporting requirements. Repeat of a Prior-Year Finding: No, Prior- year did not require a Single Audit. Recommendation: We recommend that Partnership for the Umpqua Rivers: Ensure staff responsible for federal awards receive appropriate training on Uniform Guidance requirements, grant financial management, documentation, and compliance monitoring. Assign federal award oversight to personnel with sufficient experience and qualification or obtain external grant management and accounting support as needed. Establish written policies and procedures for federal award administration, including expenditure documentation, reconciliation, compliance review, and management approvals. Require leadership to perform and document periodic oversight and monitoring of federal awards, including review of reconciliations reimbursement requests, and compliance metrics. Implement ongoing monitoring and internal control assessments to ensure compliance with federal award requirements. District Response: Partnership for the Umpqua Rivers acknowledges the deficiencies. Corrective Action Plan: _____________ (To be completed by Partnership for the Umpqua Rivers) Planned Implementation Date: ___________ Responsible Person: Partnership for the Umpqua Rivers Finance Manager
Criteria or Specific Requirement: Per 2 CFR 200.302(b)(3) a grant recipient must maintain adequate financial records that identify the source and application of funds for federally funded activities. These records must contain information pertaining to federal awards, authorizations, obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. Condition: Federally funded expenditures were comingled with expenditures paid for with non federally funded sources in the accounting records. Questioned costs: None. Context: Non federally funded expenditures were recorded in the accounts specifically designated for a federal grant. Effect: The District may be unable to accurately determine the federally funded expenditures for a specific period. Cause: The District did not accurately maintain separate accounts for federal grant expenditures in accordance with 2 CFR 200.302(b)(3). Management's Response: The District agrees with the finding and will review their accounting records and implement a corrective action plan.
2024-001 Supporting Documentation and Approval of Disbursements Federal Program - U.S. Department of the Treasury – Coronavirus State and Local Fiscal Recovery Funds (ALN 21.027) Federal Award Number - SLFRP0136 Compliance Requirement - Allowable Costs/Cost Principles (2 CFR § 200.403 and § 200.302) Repeat Finding - This is a repeat finding of 2023-001. Corrective action was not completed prior to or during the audit period due to the timing of audit completion and recommendations to management. Criteria - Per 2 CFR § 200.403(g), to be allowable under a federal award, costs must be adequately documented. Additionally, 2 CFR § 200.302 requires the non-Federal entity to establish and maintain effective internal controls over federal awards that provide reasonable assurance of compliance with federal statutes, regulations, and the terms and conditions of the award. Condition - During our testing of expense and disbursement transactions charged to the federal program, we identified instances where payments were made without adequate supporting documentation or evidence of appropriate review and approval. While the costs appear consistent with the purpose of the program and are considered allowable in nature, the absence of documentation limits the ability to verify the appropriateness and accuracy of the expenditures. A majority of these transactions were related to temporary housing assistance, including payments to hotels. Cause - The organization does not currently have or did not follow a formal process to ensure that all disbursements are properly documented and reviewed. Effect - Failure to maintain adequate documentation impairs the organization’s ability to demonstrate compliance with federal requirements and increases the risk of errors or inappropriate expenditures going undetected. Questioned Costs - $0. No costs are questioned at this time, as the disbursements appear consistent with program objectives. Recommendation - We recommend that the organization strengthen internal controls over the disbursement process by implementing procedures requiring all expenses to be supported by documentation such as invoices or receipts and be reviewed and approved by appropriate personnel prior to payment. Views of Responsible Officials - we agree with the finding and determined it was due to an oversight by the organization on establishing proper procedures for a new program. Verbal communications were not recorded appropriately and approvals were not signed by management.
FA 2024-001 Improve Controls over Expenditures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Reporting Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 – 84.425D – Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425U – American Rescue Plan Elementary and Secondary School Emergency Relief Fund Federal Award Numbers: S425D210012 (Year: 2021), S425U210012 (Year: 2021) Questioned Costs: $819,799.49 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over expenditures as it relates to the Elementary and Secondary School Emergency Relief Fund program. Background: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan (ARP) Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $3,951,662.00 were expended and reported on the Hancock County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2024. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented…” In addition, to assist school districts in improving their financial management systems and associated compliance over federal programs, GaDOE published the Financial Management for Georgia Local Units of Administration (FMGLUA) manual. The FMGLUA manual requires that LEAs submit a budget as part of each federal program’s Consolidated Application process. The program budget reflects details regarding the manner in which each school district intends to expend the program funds. The Consolidated Application, including the budget, for each program must be reviewed and approved by GaDOE personnel before the LEA is authorized to expend program funds. Amendments to the budget are to be submitted to and approved by GaDOE when a school district intends to spend funds in a manner not initially reported. LEA personnel must also provide program-specific assurances related to the ESSER program within the Consolidated Application system. These assurances are reflected in the Uniform Guidance, Section 200.415 – Required Certifications, and include provisions that require LEAs “to assure that expenditures are proper and in accordance with the terms and conditions of the Federal award and approved project budgets...” Furthermore, provisions included in the Uniform Guidance, Section 200.430 – Compensation- Personal Services prescribe standards for documentation of personnel expenses and state, in part, that “(a) … Costs for compensation are allowable to the extent that they satisfy… specific requirements…, and that the total compensation for individual employees: (1) is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i)…, [as follows:] (i) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity…” Lastly, provisions included in the Uniform Guidance, Section 200.302(a) state in part that “the non- Federal entity’s financial management systems must… be sufficient to permit the preparation of reports required by general and program-specific terms and conditions.” In addition, provisions included in the Uniform Guidance, Section 200.302(b)(2) state in part that the non-federal entity’s financial management system must provide for “accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements.” Condition: A review of the School District’s accounting records and approved expenditures reflected within the ESSER program Consolidated Application reviewed the following deficiencies: • A sample of 13 nonpersonal services expenditures was randomly selected for testing using a non-statistical sampling approach. These expenditures were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. It was noted that prior approval was not obtained from GaDOE for two expenditures totaling $505,229.40 as these expenditures were not reflected in the approved budget or subsequent amendment within the Consolidated Application system as required. • A sample of 37 employees was randomly selected for testing using a non-statistical sampling approach. These employees were reviewed to determine if internal controls were implemented and applicable compliance requirements were met. It was noted that prior approval was not obtained from GaDOE for 29 expenditures totaling $181,761.00 as these expenditures were not reflected in the approved budget or subsequent amendment within the Consolidated Application system as required. • A review of indirect cost amounts charged to the ESSER program revealed that the total indirect cost amount budgeted by the School District, which totaled $600,000.00, was recorded as indirect cost expenditures during the period under review. However, the School District should have applied the indirect cost rate approved by the GaDOE to actual expenditures incurred during the fiscal year to calculate a maximum indirect cost amount of $467,190.96. Therefore, unallowable indirect costs totaling $132,809.04 were recorded within the ESSER fund. • Expenditures reported on the ARP ESSER completion report for the period July 1, 2023 through September 30, 2024 were not supported by the general ledger for several functions and objects reflected in the amended consolidated application. Questioned Costs: Upon testing a sample of $690,319.93 in nonpersonal services expenditures, known questioned costs of $505,229.40 were identified for expenditures not properly approved through the Consolidated Application process. Using the total nonpersonal services expenditures population of $2,507,902.88, we project the likely questioned costs to be approximately $1,835,476.87 In addition, upon testing a sample of $418,831.17 in personal services expenditures, known questioned costs of $181,761.05 were identified for expenditures not approved in the consolidated application. Using the total personal services expenditures population of $1,303,995.07 (excluding benefits payments), we project the likely questioned costs to be approximately $565,897.50. Furthermore, known questioned costs $132,809.04 were identified for unallowable indirect costs charged to the ESSER program. Therefore, the known and likely questioned costs identified for all unallowable payments totaled $819,799.49 and $2,534,183.41, respectively. The following Assistance Listing Numbers were affected by known and likely questioned costs: 84.425D & 84.425U. Cause: In discussing this deficiency with the School District, they stated that they did not consider the expenditure purchases unallowable and recorded them in the wrong account number due to oversight. Indirect costs were charged according to the budget without regard of the appropriate indirect cost rate. Effect: The School District is not in compliance with the Uniform Guidance or GaDOE guidance related to the ESSER Program. Failure to accurately develop and amend budget information through the Consolidated Application process and verify compliance with applicable policies and regulations prior to the expenditure of federal program funds may expose the School District to unnecessary financial strains and shortages as GaDOE may require the School District to return funds associated with unapproved and unallowable expenditures. Recommendation: The School District should evaluate current internal control procedures related to the ESSER Program. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that potential expenditures are approved through the Consolidated Application process and deemed to be allowable before spending federal funds. In addition, management should develop and implement a monitoring process to ensure that control procedures are being followed. Views of Responsible Officials: We concur with this finding.
2024-011 (2023-005) INADEQUATE POLICIES AND PROCEDURES Federal Agency: U.S. Department of Education Federal Program Title and Assistance Listing Number: Higher Educational Institutional Aid, 84.031 Type of Finding: Significant Deficiency Compliance Area: Other - Inadequate Policies and Procedures Federal Award Year: 2024 Questioned Costs: None Condition The College does not maintain written procedures as required by 2 CFR 200, Subparts D and E of the Uniform Guidance. Criteria Per 2 CFR 200.302(b)(6), Financial Management, the financial management system of each non-federal entity must provide the following: Written procedures to implement the requirements of 200.305 Federal Payment. Per 2 CFR 200.302(b)(7), Financial Management, the financial management system of each nonfederal entity must provide the following: Written procedures for determining the allowability of costs in accordance with Subpart E – Cost Principles of this part and the terms and conditions of the Federal award. Cause The College does not have written procedures for the federal program financial management requirements. Effect Not having written procedures for the aforementioned puts the College in direct violation of Federal requirements over Federal programs under the Uniform Guidance, which could result in a loss of programs, funds and/or repayment of federal monies already awarded back to the Federal government.
Criteria: Federal awarding agencies and pass-through entities require recipients to submit periodic financial and performance reports, including but not limited to cash reconciliation reports, quarterly reports, and final expenditure reports, within specified deadlines. These reports must be accurate, complete, and supported by underlying accounting records. Additionally, recipients are required to establish and maintain effective internal controls to ensure the accurate preparation, reconciliation, and timely submission of all required federal reports in accordance with 2 CFR 200.302 and 2 CFR 200.303. Condition: The District did not consistently file required federal reports within established deadlines. Specifically, certain required quarterly cash reconciliation reports were submitted after the required due dates, and in some instances, required reports were not submitted. Additionally, the District was unable to provide adequate supporting documentation to reconcile reported expenditures to the general ledger for certain federal reports. Furthermore, required final expenditure reports were not always submitted after funds were fully expended. These issues were noted across multiple federal programs, indicating deficiencies in the District’s overall internal controls over federal reporting. Cause: The District's internal controls and review process over federal reporting were not operating effectively. There was a lack of adequate supervisory review and monitoring to ensure that all federal reports were prepared accurately, reconciled to the general ledger, and submitted in a timely manner. Effect: The District is not in compliance with federal reporting requirements. Failure to submit accurate and timely reports could result in delayed reimbursements, increased scrutiny by federal and pass-through agencies, or potential withholding or loss of federal funding. Questioned Costs: None Recommendation: We recommend that the District strengthen internal controls over federal reporting for all federal programs. The District should implement formal procedures to ensure that all required federal reports are prepared accurately and completely, reconciled to the general ledger, reviewed by appropriate supervisory personnel, and submitted timely in accordance with federal and pass-through agency requirements. Additionally, the District should provide training to personnel responsible for federal reporting and implement a monitoring process to ensure ongoing compliance with federal requirements. Views of Responsible Officials: Management is in agreement with the finding. Prior Year Finding: 2023-02
MATERIAL WEAKNESS Finding Number: 2024-003 Material Weakness in Internal Control over Compliance Federal Program: 84.027 & 84.173 Special Education Cluster (IDEA) Federal Program: 84.425D/84.425U Education Stabilization Fund Criteria: 2 CFR §200.318(a) requires non-federal entities to establish and maintain effective internal control over procurement transactions to ensure compliance with applicable federal statutes and regulations. 2 CFR §§200.317–200.327 require non-federal entities to maintain written procurement policies and procedures that address procurement methods, documentation requirements, and contract administration. 2 CFR §200.430(i) requires charges to federal awards for salaries and wages to be supported by documentation that accurately reflects the work performed and supports the allowability and allocation of payroll costs.2 CFR §200.302(b)(3) requires financial management systems to maintain records that adequately identify the source and application of funds for federally funded activities. Condition: The entity did not maintain adequate internal controls over procurement and payroll expenditures charged to the federal program. Specifically: • The entity does not have a formally adopted, written procurement policy that complies with federal procurement requirements. • Invoices tested did not include supporting documentation such as purchase orders, executed contracts, or memoranda of understanding (MOUs) to substantiate the procurement of goods or services, approval of the transactions, or the basis for the costs incurred. • Payroll expenditures charged to the federal program lacked sufficient supporting documentation, including employment contracts or documentation identifying the employee’s placement on the applicable salary chart within the Teacher and Support Staff Association agreement. • As a result, the entity was unable to demonstrate that payroll costs were calculated in accordance with approved pay rates and were allowable and properly supported. Cause: The deficiencies resulted from the absence of formal procurement policies and insufficient internal controls over documentation standards and record retention for procurement and payroll transactions. Effect: Due to the lack of written procurement policies and insufficient supporting documentation for procurement and payroll expenditures, the entity is unable to demonstrate compliance with federal procurement and cost principles. These deficiencies increase the risk that unallowable or improperly supported costs could be charged to the federal program and not be detected in a timely manner. Identification of Questioned Costs:None identified. Context: The absence of formal procurement policies and consistent supporting documentation limited the ability to readily demonstrate compliance with federal procurement and cost principles and increased the extent of audit procedures required. Repeat Finding: This is a repeat finding of 2023-03.Recommendation: We recommend that management update its procurement policy to include all current requirements under 2 CFR 200 and implement a process to periodically review and revise the policy to remain compliant with future federal regulation changes. Require that all procurement transactions be supported by purchase orders, executed contracts, MOUs, invoices, and evidence of approval and receipt. Ensure payroll expenditures charged to federal programs are supported by employment contracts and documentation identifying employee placement on the applicable salary schedule in accordance with collective bargaining agreements, as required by 2 CFR §200.430. Implement monitoring and training procedures to ensure consistent compliance with federal documentation requirements. Views of Responsible Officials and Corrective Action Plan: Please see the Corrective Action Plan issued by the entity.
Finding Number: 2024-004 Internal control weakness over activities allowed/allowable costs Federal Program: 84.027 & 84.173 Special Education Cluster (IDEA) Federal Program: 84.425D/84.425U Education Stabilization Fund Criteria: 2 CFR §200.302(b)(7) requires non-federal entities to establish and maintain effective internal control over federal awards that provides reasonable assurance that the entity is managing the federal award in compliance with Federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR §200.403 requires that costs charged to a federal award be allowable, reasonable, and allocable to the federal program. 2 CFR §§200.302(b)(3) and 200.302(b)(4) require financial management systems to maintain records that adequately identify the source and application of funds for federally funded activities and support the allowability of costs charged to federal programs. Condition: The District did not maintain adequate internal controls to ensure that expenditures charged to Education Stabilization Fund grants were for activities allowed and allowable under Uniform Guidance. Specifically, the District lacked documented procedures and control activities to review and approve expenditures for allowability prior to charging costs to the federal program. Cause: The deficiencies resulted from the absence of formally documented procedures and internal control activities addressing the review and approval of expenditures for allowability under Uniform Guidance. As a result, management did not establish controls to ensure that costs charged to Education Stabilization Fund grants were evaluated for allowability in accordance with federal requirements. Effect: This condition increases the risk that unallowable or improperly supported costs could be charged to Education Stabilization Fund grants and not be identified or corrected in a timely manner, resulting in noncompliance with Uniform Guidance requirements. Identification of Questioned Costs: None identified. Context: The absence of documented internal control procedures over activities allowed and allowable costs limited the District’s ability to readily demonstrate compliance with Uniform Guidance. Repeat Finding: This is a repeat finding of 2023-04. Views of Responsible Officials and Corrective Action Plan: Please see the Corrective Action Plan issued by the entity.
Retain Supporting Documentation for Journal Entries (Material Weakness, Compliance Finding) Federal Agency: Department of Agriculture/Department of Education Cluster/Program: Child Nutrition Cluster/Education Stabilization Fund Assistance Listing Number(s): 10.553/10.555/10.559/84.425D Award Year: 2024 Compliance Requirement: Allowable Costs/Cost Principles Criteria Per 2 CFR 200.302 (Financial Management) and 2 CFR 200.403 (Factors Affecting Allowability of Costs) of the Uniform Guidance, recipients of federal awards must maintain records that identify adequately the source and application of funds. All accounting records, including journal entries affecting federal programs, must be supported by sufficient documentation to ensure costs are allowable, allocable, and properly authorized. Condition During our audit of federal grant programs, we identified several journal entries affecting federal grant expenditures that lacked adequate supporting documentation. Specifically, these entries did not include invoices, detailed calculations, approval signatures, or written explanations substantiating the nature and purpose of the transactions. Cause The District does not have a formalized policy or consistent procedure requiring that all journal entries be accompanied by adequate supporting documentation and maintained for audit and review purposes. Effect Without adequate supporting documentation, there is an increased risk that unallowable, inaccurate, or unauthorized costs could be charged to federal programs. This deficiency also impedes the ability to demonstrate compliance with federal requirements. Context Supporting documentation for journal entries was not maintained in fiscal year 2024. This was a recurring issue throughout the year. This issue was not present in previous fiscal years. Questioned Costs As a result of this finding, we have identified $54,856 in Child Nutrition Cluster federal expenditures and $523,315 in Education Stabilization Fund federal grant expenditures as questioned costs. These costs represent journal entries for which sufficient supporting documentation was not provided to substantiate allowability and compliance with federal requirements. Recommendation To rectify this material weakness, we recommend the District implement and enforce policies requiring that all journal entries be accompanied by appropriate supporting documentation and reviewed and approved by supervisory personnel prior to posting. View of Responsible Officials and Planned Corrective Actions The District’s corrective action plan is included at the end of this report.
Finding 2024-002 Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Foster Care Title IV-E Federal Assistance Listing Number: 93.658 Compliance Requirements: Activities allowed or unallowed, Allowable costs/Cost Principles Type of Finding: Significant Deficiencies in Internal Control over Compliance Federal Award Identification Number and Year: 2201CAFOST 2024 Criteria: According to 2 CFR, Part 200.302(b)(3), recipients of federal awards are responsible for maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. Condition/Context: In connection with the Activities allowed or unallowed, and Allowable Costs/Cost Principles compliance requirements for the Foster Care Title IV-E grant, we noted that management was unable to locate 3 approved invoices out of 40 items selected for test work. Cause: Due to turnover in the accounting department, some accounting records became misplaced and current accounting staff could not locate these records. Effect or Potential Effect: Failure to ensure expenses are being accurately supported and recorded could result in noncompliance with the grant requirements or unallowable costs being charged. Questioned Costs: $32,420 Identification as a Repeat Finding This finding is a repeat finding (see prior year finding number: 2023-002). Auditor's Recommendation: We recommend that management implement policies, procedures, and controls to ensure supporting documentation over expenses is properly retained and expenses charged to Federal awards are accurate. Views of Responsible Officials: Management understands the critical importance of maintaining proper documentation to ensure compliance with federal program requirements. To this end, the Organization will implement and reinforce a comprehensive system for retaining all invoices, payment records, and supporting documentation associated with federal awards. Additionally, the Organization will create and maintain a clear record retention policy. Invoice and Payment Documentation: • All invoices related to the federal program will be promptly reviewed and approved by the appropriate personnel to ensure they reflect allowable costs under the specific terms and conditions of the award. • Management will establish clear procedures for the proper recording and classification of payments, ensuring that they are linked directly to the corresponding federal program expenses. • All supporting documentation (e.g., purchase orders, contracts, receipts) will be retained in electronic formats within the accounting system, in accordance with the Organization’s record retention policy, ensuring availability for future audits or reviews. Retention and Accessibility: • The Organization will maintain a secure, organized filing system for all invoices and payments, ensuring that each record is easily accessible for audit purposes. This system will include electronic records that are stored in a centralized database, with restricted access to authorized personnel. • Retained invoices and payment documentation will be kept for the full duration required by federal regulations, typically for a period of at least seven years after the final expenditure report for the federal award has been submitted, or as otherwise required by the specific federal agency. Periodic Reviews and Monitoring: • To ensure ongoing compliance, Management will perform periodic reviews of federal program expenditures and documentation. This will include random sampling of invoices and payment records to confirm that they are complete, accurate, and in compliance with federal regulations. • In the event of any discrepancies or issues identified during these reviews, Management will take immediate corrective action to address the issue and prevent recurrence. By maintaining thorough records of all invoices and payments, the Organization aims to not only comply with federal audit requirements but also to ensure transparency, accountability, and sound financial management of federal funds.
Finding 2024-009 U.S. Department of Health and Human Services Assistance Listing Number 93.224, 93.527 – Health Center Program Cluster Material Weakness and Noncompliance over Cash Management Repeat Finding: No Criteria: In accordance with 2 CFR 200.302: Financial management, each recipient must expend and account for the federal award in accordance with state laws and procedures for expending and accounting for the recipient’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. Condition and Context: For 1 out of 3 selections, we were unable to agree the drawdown amount to the general ledger to ensure funds were expended prior to requesting reimbursement. Additionally, for 1 out of 3 selections, there was a misapplied payment and incorrect drawdown was requested. Cause: Controls surrounding the cash drawdown process are not operating effectively. Expenditures are not reviewed prior to submission of request. Management could not reconcile information presented in the expenditure report to the underlying records. Effect or Potential Effect: Expenditures reported to the federal government could be inaccurate. Questioned Costs: Unknown. Recommendation: We recommend that the City review policies, procedures and practices in place to ensure drawdowns are reconciled to the general ledger, and reviewed and approved before requests have been submitted. Views of Responsible Officials: Management agrees with the finding. Refer to the Corrective Action Plan Section of this report.
Finding 2024-004 U.S. Department of Health and Human Services Assistance Listing Number 93.137 – Community Programs to Improve Minority Health Grant Program Significant Deficiency and Noncompliance over Cash Management Repeat Finding: No Criteria: In accordance with 2 CFR 200.302: Financial management. (a) Each recipient must expend and account for the federal award in accordance with state laws and procedures for expending and accounting for the recipient’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. Condition and Context: For 1 out of 1 selection, we were unable to agree the drawdown amount to the general ledger to ensure funds were being expended prior to requesting reimbursement. Cause: Controls surrounding the cash drawdown process are not operating effectively. Management could not reconcile information presented in the expenditure report to the underlying records. Effect or Potential Effect: Expenditures are not reviewed prior to submission of request. Expenditures reported to the federal government could be inaccurate. Questioned Costs: $37,527.16. Recommendation: We recommend that the City review policies, procedures and practices in place to ensure drawdowns are reconciled to the general ledger, and reviewed and approved before requests have been submitted. Views of Responsible Officials: Management agrees with the finding. Refer to the Corrective Action Plan Section of this report.
Finding No. 2024-006 – Purchases and disbursement cycle Federal Program ALN 93.498 Provider Relief Fund - CARES Act Name of Federal Agency U.S. Department of Health and Human Services Category Non-compliance / Material Weakness in internal controls over compliance Compliance Requirement Activities Allowed/Cost Principl Criteria The Purchasing Procedures Manual or “Reglamento de compras” of the Corporation, in its articles 14 “Inicio de las gestiones de compra” and 15 “Subastas informales”, establishes the parameters and process to begin a purchase, that includes the issuance of a purchase requisition as well as of the requirement of a quotation for determined purchases. In addition, 2 CFR §200.302 – Financial Management, states that management must maintain records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. Also, 2 CFR §200.334 – Retention Requirements for Records, states that the recipient and subrecipient must retain all Federal award records for three years from the date of submission of their final financial report. Records to be retained include but are not limited to, financial records, supporting documentation, and statistical records. Finally, 2 CFR §200.303 – Internal Controls state that the recipient and subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition During testing of internal control procedures over purchases and cash disbursements of Provider Relief Funds, we examined processed invoices and payments that lacked properly approved purchase requisitions and quotations. The documents could not be located by management and thus, were not made available for examination. Cause This deficiency is the result of lack of knowledge from the employees and overall absence of implementation, monitoring and proper compliance with internal controls of the Corporation’s procedures. Effect The Corporation did not comply with its purchasing procedures manual. This condition increases the risk of improper or fraudulent purchases, the selection of higher-cost vendors, and other procurement irregularities. Because these transactions were funded with federal awards, this condition also increases the risk of noncompliance with federal requirements and the potential for questioned costs. Questioned cost None. Context During the audit of substantive tests of compliance related to Provider Relief Fund disbursements, from a sample of twenty-five (25) disbursements, we examined twenty-five (25) invoices, in which, six (6) of them lacked an approved requisition, and proper documentation of quotations. Identification of a repeat finding A similar condition was found in the previous audit on Finding 2023-003 which was an Internal Control over Financial Reporting finding. Recommendation We recommend that the Corporation strengthen its internal controls over the purchasing and disbursement processes to ensure compliance with its established policies and procedures. Specifically, all supporting documentation for purchases and cash disbursements should be reviewed for completeness, accuracy, and compliance with procurement requirements prior to the approval and signing of checks. Any exceptions or unusual items should be resolved and documented before payment is processed. In addition, management should implement supervisory review and monitoring procedures to ensure that procurement activities are performed in accordance with the Corporation’s policies and applicable federal requirements. All supporting documentation should be properly maintained to support transactions and facilitate audit and internal review purposes. Views of responsible officials and planned corrective actions The Corporation’s management and responsible officers agree with this finding. Please refer to the corrective action plan section for the Corporation’s response on pages 85 to 90.
2024-001: Reconciliations and Material Adjustments Questioned Costs: None How the questioned costs were computed: N/A Grant Funding Source Grant Period Head Start U.S. Department of Health 06/01/2023 - 05/31/2024 10CH010945-05 and Human Services Early Head Start U.S. Department of Health 07/01/2023 - 06/30/2024 Child Care Partnerships and Human Services 10HP000422-04 Condition: At the time of audit fieldwork, Umatilla-Morrow Head Start, Inc. had not reconciled all account balances. As a result, Wipfli, LLP proposed and management posted adjusting journal entries to contributions receivable, grants receivable, refundable advance, accrued liabilities, operating right of use assets and lease obligations, property and equipment, grant revenue, in-kind, and net assets with donor restrictions. As Umatilla-Morrow Head Start, Inc.’s internal controls did not discover these adjustments prior to our audit, a material weakness exists in Umatilla-Morrow Head Start, Inc.’s internal controls over financial reporting. Criteria: Federal Regulation 2 CFR 200.302(4) requires that an organization have…Effective control over, and accountability for, all funds, property, and other assets. Cause: During the audit year, Umatilla-Morrow Head Start, Inc. experienced turnover in its business office which contributed to the lack of timely reconciliations, review of reconciliations performed, and subsequent adjustments to account balances. Repeat: Yes - Years as repeat finding: Five 2023-001 Effect: As a result of the lack of segregation of duties surrounding bank reconciliations and not reconciling all account balances resulting in subsequent adjustments to accounts, a material weakness exists in internal controls over financial reporting. Recommendation: Accounts should be reconciled monthly with the adjustments posted timely so that management is relying on accurate financial information to make decisions. We recommend management and those charged with governance evaluate the operation of the business office and implement adequate and timely closing procedures to ensure that financial statement amounts are being reconciled, reviewed, and adjusted in a timely manner. View of Responsible Officials: Management agrees with the assessment and subsequent to year end, steps were taken to correct the matter.
2024-001: Reconciliations and Material Adjustments Questioned Costs: None How the questioned costs were computed: N/A Grant Funding Source Grant Period Head Start U.S. Department of Health 06/01/2023 - 05/31/2024 10CH010945-05 and Human Services Early Head Start U.S. Department of Health 07/01/2023 - 06/30/2024 Child Care Partnerships and Human Services 10HP000422-04 Condition: At the time of audit fieldwork, Umatilla-Morrow Head Start, Inc. had not reconciled all account balances. As a result, Wipfli, LLP proposed and management posted adjusting journal entries to contributions receivable, grants receivable, refundable advance, accrued liabilities, operating right of use assets and lease obligations, property and equipment, grant revenue, in-kind, and net assets with donor restrictions. As Umatilla-Morrow Head Start, Inc.’s internal controls did not discover these adjustments prior to our audit, a material weakness exists in Umatilla-Morrow Head Start, Inc.’s internal controls over financial reporting. Criteria: Federal Regulation 2 CFR 200.302(4) requires that an organization have…Effective control over, and accountability for, all funds, property, and other assets. Cause: During the audit year, Umatilla-Morrow Head Start, Inc. experienced turnover in its business office which contributed to the lack of timely reconciliations, review of reconciliations performed, and subsequent adjustments to account balances. Repeat: Yes - Years as repeat finding: Five 2023-001 Effect: As a result of the lack of segregation of duties surrounding bank reconciliations and not reconciling all account balances resulting in subsequent adjustments to accounts, a material weakness exists in internal controls over financial reporting. Recommendation: Accounts should be reconciled monthly with the adjustments posted timely so that management is relying on accurate financial information to make decisions. We recommend management and those charged with governance evaluate the operation of the business office and implement adequate and timely closing procedures to ensure that financial statement amounts are being reconciled, reviewed, and adjusted in a timely manner. View of Responsible Officials: Management agrees with the assessment and subsequent to year end, steps were taken to correct the matter.
#2024-001: Grant Program: Department of Health and Human Services – National Institutes for Health Research and Development Cluster – Cancer Control – Assistance Listing #93.399 – Lack of Required Written Policies Condition: The Consortium does not have written policies and procedures in place as required by 2 CFR § 200.302 and § 200.313. Specifically, the Consortium lacks documented policies for: • The timing of federal cash draws; • The allowability of costs charged to federal awards; and • Documentation of time-and-effort for personal services. Criteria: 2 CFR § 200.302(b)(6)–(7) requires nonfederal entities to have written procedures for (a) cash drawdowns and (b) determining cost allowability. § 200.305 requires written cash-management procedures that minimize the time between draw and disbursement. § 200.430 requires a written policy that is consistently applied to both federal and nonfederal activities for documentation of compensation for personal services. Context: At the time of completion of the audit for the year ended May 31, 2024, the written policies were not in place. Cause: The Consortium has not yet developed or adopted the required written policies due to limited administrative capacity and reliance on informal practices. Effect: The absence of written policies increases the risk of noncompliance with federal requirements, mismanagement of federal funds, and audit findings in future periods. It may also impair the Consortium’s ability to consistently apply federal cost principles and properly safeguard assets. Recommendation: We recommend that the Consortium develop and implement written policies and procedures that comply with the requirements of Uniform Guidance. Management Response: See Corrective Action Plan.
Material Weakness in Internal Control over Federal Programs Inadequate Internal Controls over Financial Management in Accordance with the Uniform Guidance – Reporting Review and Approval Assistance Listing Number: 93.129 Name of Federal Program or Cluster: Technical and Non-Financial Assistance to Health Centers Name of Federal Agency: Department of Health and Human Services Name of Pass-Through Entities: N/A WI DHS Contract Number: 435100-G24-226233-490 Profile ID #: 155043 Name of State Program: WI Primary Care 2 CFR §200.302 Financial Management: The Code of Federal Regulations (CFR) Section 200.302 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. - All recipient and subrecipient 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 the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal Statutes, regulations, and the terms and conditions of the Federal Award. -Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal Awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. The State Award is passed through from the Federal government and is required to follow the Uniform Guidance as well. Management’s grant tracking for Federal Awards were not properly updated or reviewed and approved during the year. Due to staff turnover during the year, Management was unable to provide the general ledger information that reconciles to the grant cost reimbursement requests submitted to the funding sources. In addition, Management was unable to provide supporting documentation that information submitted to the funding sources was reviewed and approved. There is an increased risk that the Organization could potentially charge unallowable costs to Federal or State Awards. In addition, there is an increased risk that a material misstatement of the financial statements or the Schedule of Expenditures of Federal Awards may not be prevented, or detected and corrected, in a timely manner. WHPCA hired a new third party accountant after the end of the fiscal year and has been working with the new accountant to implement additional monitoring and review and approval procedures. We recommend that WHPCA continues this process to strengthen its internal controls. No Staff at WHPCA are dedicated to adhering to the regulations. WHPCA has hired a third-party accountant as well as implemented additional monitoring and review and approval procedures to strengthen its financial management.
Material Weakness in Internal Control over Federal Programs Inadequate Internal Controls over Financial Management in Accordance with the Uniform Guidance – Reporting Review and Approval Assistance Listing Number: 93.129 Name of Federal Program or Cluster: Technical and Non-Financial Assistance to Health Centers Name of Federal Agency: Department of Health and Human Services Name of Pass-Through Entities: N/A WI DHS Contract Number: 435100-G24-226233-490 Profile ID #: 155043 Name of State Program: WI Primary Care 2 CFR §200.302 Financial Management: The Code of Federal Regulations (CFR) Section 200.302 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. - All recipient and subrecipient 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 the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal Statutes, regulations, and the terms and conditions of the Federal Award. -Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal Awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. The State Award is passed through from the Federal government and is required to follow the Uniform Guidance as well. Management’s grant tracking for Federal Awards were not properly updated or reviewed and approved during the year. Due to staff turnover during the year, Management was unable to provide the general ledger information that reconciles to the grant cost reimbursement requests submitted to the funding sources. In addition, Management was unable to provide supporting documentation that information submitted to the funding sources was reviewed and approved. There is an increased risk that the Organization could potentially charge unallowable costs to Federal or State Awards. In addition, there is an increased risk that a material misstatement of the financial statements or the Schedule of Expenditures of Federal Awards may not be prevented, or detected and corrected, in a timely manner. WHPCA hired a new third party accountant after the end of the fiscal year and has been working with the new accountant to implement additional monitoring and review and approval procedures. We recommend that WHPCA continues this process to strengthen its internal controls. No Staff at WHPCA are dedicated to adhering to the regulations. WHPCA has hired a third-party accountant as well as implemented additional monitoring and review and approval procedures to strengthen its financial management.
Material Weakness in Internal Control over Federal and State Programs Inadequate Internal Controls over Financial Management in Accordance with the Uniform Guidance – Expenditure Documentation & Approval Assistance Listing Number: 93.129 Name of Federal Program or Cluster: Technical and Non-Financial Assistance to Health Centers Name of Federal Agency: Department of Health and Human Services Name of Pass-Through Entities: N/A 2 CFR §200.302 Financial Management: The Code of Federal Regulations (CFR) Section 200.302 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. - All recipient and subrecipient 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 the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal Statutes, regulations, and the terms and conditions of the Federal Award. -Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal Awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. Management was unable to provide supporting documentation such as invoices or receipts for 4 out of 25 transactions for the Technical and Non-Financial Assistance to Health Centers program (ALN # 93.129). In addition, Management was unable to provide supporting documentation of the related reviews and approvals of those expenditures. The extrapolated error is not material to the major programs, and is below the questioned costs threshold. However, there is an increased risk that the Organization could potentially charge unallowable costs to Federal or State Awards. In addition, there is an increased risk that a material misstatement of the financial statements or the Schedule of Expenditures of Federal Awards may not be prevented, or detected and corrected, in a timely manner. WHPCA hired a new third party accountant after the end of the fiscal year and has been working with the new accountant to implement additional monitoring and review and approval procedures. We recommend that WHPCA continues this process to strengthen its internal controls. No Staff at WHPCA are dedicated to adhering to the regulations. WHPCA has hired a third-party accountant as well as implemented additional monitoring and review and approval procedures to strengthen its financial management.
Material Weakness in Internal Control over Federal and State Programs Inadequate Internal Controls over Financial Management in Accordance with the Uniform Guidance – Expenditure Documentation & Approval Assistance Listing Number: 93.129 Name of Federal Program or Cluster: Technical and Non-Financial Assistance to Health Centers Name of Federal Agency: Department of Health and Human Services Name of Pass-Through Entities: N/A 2 CFR §200.302 Financial Management: The Code of Federal Regulations (CFR) Section 200.302 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. - All recipient and subrecipient 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 the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal Statutes, regulations, and the terms and conditions of the Federal Award. -Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal Awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. Management was unable to provide supporting documentation such as invoices or receipts for 4 out of 25 transactions for the Technical and Non-Financial Assistance to Health Centers program (ALN # 93.129). In addition, Management was unable to provide supporting documentation of the related reviews and approvals of those expenditures. The extrapolated error is not material to the major programs, and is below the questioned costs threshold. However, there is an increased risk that the Organization could potentially charge unallowable costs to Federal or State Awards. In addition, there is an increased risk that a material misstatement of the financial statements or the Schedule of Expenditures of Federal Awards may not be prevented, or detected and corrected, in a timely manner. WHPCA hired a new third party accountant after the end of the fiscal year and has been working with the new accountant to implement additional monitoring and review and approval procedures. We recommend that WHPCA continues this process to strengthen its internal controls. No Staff at WHPCA are dedicated to adhering to the regulations. WHPCA has hired a third-party accountant as well as implemented additional monitoring and review and approval procedures to strengthen its financial management.
Condition: Out of the 36 grant drawdowns during the year, of the 15 drawdowns that were tested, 3 of the drawdowns were made in advance of the supporting invoices being paid and subsequently the invoices were not paid within the 72-hours, as required. Context: The auditor haphazardly selected 15 grant drawdowns from the population, which we consider to be a statistically valid sample size. The auditor reviewed the drawdowns and supporting documentation to ensure proper procedures are being followed and that the Authority is in compliance with HUD requirements. Criteria: The U.S. Treasury per 2 CFR section 200.305 (2 CFR section 200.302(b)(6)) requires grant funds received by the Authority to be properly spent within 72 hours of receipt. HUD regulations require that proper documentation be maintained for all Capital Fund Program per 24 CFR 905.326. Cause: The Authority experienced staff turnover in the finance department as well as difficulty replacing personnel knowledgeable with HUD and grant reporting requirements. Effect: The Authority did not disburse the capital funds in a timely manner for some of the draws made during the year. Questioned Costs: $379,570 Auditor’s Recommendations: The Authority should continue to develop and implement internal controls over grant management to coordinate capital fund draws with the timing of invoice payments. View of Responsible Officials: See Corrective Action Plan
Material Weakness in Internal Control over Federal Programs Inadequate Internal Controls over Financial Management in Accordance with the Uniform Guidance – Reporting Review and Approval Assistance Listing Number: 93.129 Name of Federal Program or Cluster: Technical and Non-Financial Assistance to Health Centers Name of Federal Agency: Department of Health and Human Services Name of Pass-Through Entities: N/A WI DHS Contract Number: 435100-G24-226233-490 Profile ID #: 155043 Name of State Program: WI Primary Care 2 CFR §200.302 Financial Management: The Code of Federal Regulations (CFR) Section 200.302 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. - All recipient and subrecipient 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 the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal Statutes, regulations, and the terms and conditions of the Federal Award. -Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal Awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. The State Award is passed through from the Federal government and is required to follow the Uniform Guidance as well. Management’s grant tracking for Federal Awards were not properly updated or reviewed and approved during the year. Due to staff turnover during the year, Management was unable to provide the general ledger information that reconciles to the grant cost reimbursement requests submitted to the funding sources. In addition, Management was unable to provide supporting documentation that information submitted to the funding sources was reviewed and approved. There is an increased risk that the Organization could potentially charge unallowable costs to Federal or State Awards. In addition, there is an increased risk that a material misstatement of the financial statements or the Schedule of Expenditures of Federal Awards may not be prevented, or detected and corrected, in a timely manner. WHPCA hired a new third party accountant after the end of the fiscal year and has been working with the new accountant to implement additional monitoring and review and approval procedures. We recommend that WHPCA continues this process to strengthen its internal controls. No Staff at WHPCA are dedicated to adhering to the regulations. WHPCA has hired a third-party accountant as well as implemented additional monitoring and review and approval procedures to strengthen its financial management.
Material Weakness in Internal Control over Federal Programs Inadequate Internal Controls over Financial Management in Accordance with the Uniform Guidance – Reporting Review and Approval Assistance Listing Number: 93.129 Name of Federal Program or Cluster: Technical and Non-Financial Assistance to Health Centers Name of Federal Agency: Department of Health and Human Services Name of Pass-Through Entities: N/A WI DHS Contract Number: 435100-G24-226233-490 Profile ID #: 155043 Name of State Program: WI Primary Care 2 CFR §200.302 Financial Management: The Code of Federal Regulations (CFR) Section 200.302 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. - All recipient and subrecipient 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 the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal Statutes, regulations, and the terms and conditions of the Federal Award. -Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal Awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. The State Award is passed through from the Federal government and is required to follow the Uniform Guidance as well. Management’s grant tracking for Federal Awards were not properly updated or reviewed and approved during the year. Due to staff turnover during the year, Management was unable to provide the general ledger information that reconciles to the grant cost reimbursement requests submitted to the funding sources. In addition, Management was unable to provide supporting documentation that information submitted to the funding sources was reviewed and approved. There is an increased risk that the Organization could potentially charge unallowable costs to Federal or State Awards. In addition, there is an increased risk that a material misstatement of the financial statements or the Schedule of Expenditures of Federal Awards may not be prevented, or detected and corrected, in a timely manner. WHPCA hired a new third party accountant after the end of the fiscal year and has been working with the new accountant to implement additional monitoring and review and approval procedures. We recommend that WHPCA continues this process to strengthen its internal controls. No Staff at WHPCA are dedicated to adhering to the regulations. WHPCA has hired a third-party accountant as well as implemented additional monitoring and review and approval procedures to strengthen its financial management.
Material Weakness in Internal Control over Federal and State Programs Inadequate Internal Controls over Financial Management in Accordance with the Uniform Guidance – Expenditure Documentation & Approval Assistance Listing Number: 93.129 Name of Federal Program or Cluster: Technical and Non-Financial Assistance to Health Centers Name of Federal Agency: Department of Health and Human Services Name of Pass-Through Entities: N/A 2 CFR §200.302 Financial Management: The Code of Federal Regulations (CFR) Section 200.302 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. - All recipient and subrecipient 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 the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal Statutes, regulations, and the terms and conditions of the Federal Award. -Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal Awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. Management was unable to provide supporting documentation such as invoices or receipts for 4 out of 25 transactions for the Technical and Non-Financial Assistance to Health Centers program (ALN # 93.129). In addition, Management was unable to provide supporting documentation of the related reviews and approvals of those expenditures. The extrapolated error is not material to the major programs, and is below the questioned costs threshold. However, there is an increased risk that the Organization could potentially charge unallowable costs to Federal or State Awards. In addition, there is an increased risk that a material misstatement of the financial statements or the Schedule of Expenditures of Federal Awards may not be prevented, or detected and corrected, in a timely manner. WHPCA hired a new third party accountant after the end of the fiscal year and has been working with the new accountant to implement additional monitoring and review and approval procedures. We recommend that WHPCA continues this process to strengthen its internal controls. No Staff at WHPCA are dedicated to adhering to the regulations. WHPCA has hired a third-party accountant as well as implemented additional monitoring and review and approval procedures to strengthen its financial management.
Material Weakness in Internal Control over Federal and State Programs Inadequate Internal Controls over Financial Management in Accordance with the Uniform Guidance – Expenditure Documentation & Approval Assistance Listing Number: 93.129 Name of Federal Program or Cluster: Technical and Non-Financial Assistance to Health Centers Name of Federal Agency: Department of Health and Human Services Name of Pass-Through Entities: N/A 2 CFR §200.302 Financial Management: The Code of Federal Regulations (CFR) Section 200.302 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. - All recipient and subrecipient 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 the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal Statutes, regulations, and the terms and conditions of the Federal Award. -Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal Awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. Management was unable to provide supporting documentation such as invoices or receipts for 4 out of 25 transactions for the Technical and Non-Financial Assistance to Health Centers program (ALN # 93.129). In addition, Management was unable to provide supporting documentation of the related reviews and approvals of those expenditures. The extrapolated error is not material to the major programs, and is below the questioned costs threshold. However, there is an increased risk that the Organization could potentially charge unallowable costs to Federal or State Awards. In addition, there is an increased risk that a material misstatement of the financial statements or the Schedule of Expenditures of Federal Awards may not be prevented, or detected and corrected, in a timely manner. WHPCA hired a new third party accountant after the end of the fiscal year and has been working with the new accountant to implement additional monitoring and review and approval procedures. We recommend that WHPCA continues this process to strengthen its internal controls. No Staff at WHPCA are dedicated to adhering to the regulations. WHPCA has hired a third-party accountant as well as implemented additional monitoring and review and approval procedures to strengthen its financial management.
Condition: Out of the 36 grant drawdowns during the year, of the 15 drawdowns that were tested, 3 of the drawdowns were made in advance of the supporting invoices being paid and subsequently the invoices were not paid within the 72-hours, as required. Context: The auditor haphazardly selected 15 grant drawdowns from the population, which we consider to be a statistically valid sample size. The auditor reviewed the drawdowns and supporting documentation to ensure proper procedures are being followed and that the Authority is in compliance with HUD requirements. Criteria: The U.S. Treasury per 2 CFR section 200.305 (2 CFR section 200.302(b)(6)) requires grant funds received by the Authority to be properly spent within 72 hours of receipt. HUD regulations require that proper documentation be maintained for all Capital Fund Program per 24 CFR 905.326. Cause: The Authority experienced staff turnover in the finance department as well as difficulty replacing personnel knowledgeable with HUD and grant reporting requirements. Effect: The Authority did not disburse the capital funds in a timely manner for some of the draws made during the year. Questioned Costs: $379,570 Auditor’s Recommendations: The Authority should continue to develop and implement internal controls over grant management to coordinate capital fund draws with the timing of invoice payments. View of Responsible Officials: See Corrective Action Plan
2023-003 U.S. Department of Transportation – AL #20.106 Airport Improvement Program – Reporting Grant Award: 3-38-0022-064-2022 Criteria The Authority is required to submit payment requests using the DOT Electronic Grants payment system, Delphi e-Invoicing. These requests must meet the standards described in 2 CFR ss 200.302 and 200.305. Condition During review of submitted Request for Reimbursements and Outlay reports, it was noted that one request submitted was not accurately prepared as there were two instances in which the amount requested was greater than invoice documentation, additionally the request included a request for reimbursement of AIP ineligible costs. As of December 31, 2023 no funds have been returned to U.S. DOT. Questioned Costs N/A Context We reviewed the project financial summary for two of the 19 requests submitted during 2023 Cause Employee oversight. Effect The Authority could have had federal funding delayed or reduced. Recommendation We recommend that the Authority implement internal controls to ensure all reporting is accurately filed. Repeat Finding This is not a repeat finding. Views of Responsible Officials Management recognizes the deficiency and plans to implement the auditor’s recommendation.
2023-003 U.S. Department of Transportation – AL #20.106 Airport Improvement Program – Reporting Grant Award: 3-38-0022-064-2022 Criteria The Authority is required to submit payment requests using the DOT Electronic Grants payment system, Delphi e-Invoicing. These requests must meet the standards described in 2 CFR ss 200.302 and 200.305. Condition During review of submitted Request for Reimbursements and Outlay reports, it was noted that one request submitted was not accurately prepared as there were two instances in which the amount requested was greater than invoice documentation, additionally the request included a request for reimbursement of AIP ineligible costs. As of December 31, 2023 no funds have been returned to U.S. DOT. Questioned Costs N/A Context We reviewed the project financial summary for two of the 19 requests submitted during 2023 Cause Employee oversight. Effect The Authority could have had federal funding delayed or reduced. Recommendation We recommend that the Authority implement internal controls to ensure all reporting is accurately filed. Repeat Finding This is not a repeat finding. Views of Responsible Officials Management recognizes the deficiency and plans to implement the auditor’s recommendation.
Criteria or specific requirement: According to §200.302 Financial management of 2 CFR Part 200, MTW Agencies must ensure that housing assisted under the demonstration program meets housing quality standards established or approved by the secretary. The HCV program regulations at 24 CFR sections 982.401 through 982.405 set forth basic housing quality standards (HQS) which all units must meet, and the PHA must verify by inspection, before initial assistance can be paid on behalf of a family and at least annually throughout the term of the assisted tenancy. Current HQS regulations consist of 13 key aspects of housing quality, performance requirements, and acceptability criteria to meet each performance requirement. HQS include requirements for all housing types, including single and multi-family dwelling units, as well as specific requirements for special housing types, such as manufactured homes, congregate housing, single room occupancy, shared housing, and group residences (Section 204(c)(3)(E) of Pub. L. No. 104-134 (42 USC 1437f (note))). Per the HCVP Administrative Plan, the Authority is required to inspect tenant units no less than every 26 months. Condition: During the testing of 40 HCV files selected, we noted 1 of the 40 tenant files did not have an inspection completed on the unit within the established timeline of the Authority’s policy. Questioned costs: $30,000 Context: Out of 40 files, 1 contained errors as noted above. Per the HCVP Administrative Plan, the Authority is required to inspect tenant units no less than every 26 months. Cause: There was an issue with Yardi and the notice letters that outlined deficiencies were printing out incorrect mailing information. This resulted in the housing provider not being properly notified of the deficiencies, so as a result the Authority could not abate until the housing provider received proper notice. Effect: The auditor noted an instance of noncompliance. Noncompliance results in possible over charges to the grant. Repeat Finding: No. Recommendation: We recommend the Authority review their process and internal controls over HQS inspections to ensure compliance with HUD requirements and their administrative plan. Furthermore, management should ensure no HAP payments are issued for units that have not passed HQS housing inspections. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: According to §200.302 Financial management of 2 CFR Part 200, MTW Agencies must ensure that housing assisted under the demonstration program meets housing quality standards established or approved by the secretary. The HCV program regulations at 24 CFR sections 982.401 through 982.405 set forth basic housing quality standards (HQS) which all units must meet, and the PHA must verify by inspection, before initial assistance can be paid on behalf of a family and at least annually throughout the term of the assisted tenancy. Current HQS regulations consist of 13 key aspects of housing quality, performance requirements, and acceptability criteria to meet each performance requirement. HQS include requirements for all housing types, including single and multi-family dwelling units, as well as specific requirements for special housing types, such as manufactured homes, congregate housing, single room occupancy, shared housing, and group residences (Section 204(c)(3)(E) of Pub. L. No. 104-134 (42 USC 1437f (note))). Per the HCVP Administrative Plan, the Authority is required to inspect tenant units no less than every 26 months. Condition: During the testing of 40 HCV files selected, we noted 1 of the 40 tenant files did not have an inspection completed on the unit within the established timeline of the Authority’s policy. Questioned costs: $30,000 Context: Out of 40 files, 1 contained errors as noted above. Per the HCVP Administrative Plan, the Authority is required to inspect tenant units no less than every 26 months. Cause: There was an issue with Yardi and the notice letters that outlined deficiencies were printing out incorrect mailing information. This resulted in the housing provider not being properly notified of the deficiencies, so as a result the Authority could not abate until the housing provider received proper notice. Effect: The auditor noted an instance of noncompliance. Noncompliance results in possible over charges to the grant. Repeat Finding: No. Recommendation: We recommend the Authority review their process and internal controls over HQS inspections to ensure compliance with HUD requirements and their administrative plan. Furthermore, management should ensure no HAP payments are issued for units that have not passed HQS housing inspections. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: According to §200.302 Financial management of 2 CFR Part 200, MTW Agencies must ensure that housing assisted under the demonstration program meets housing quality standards established or approved by the secretary. The HCV program regulations at 24 CFR sections 982.401 through 982.405 set forth basic housing quality standards (HQS) which all units must meet, and the PHA must verify by inspection, before initial assistance can be paid on behalf of a family and at least annually throughout the term of the assisted tenancy. Current HQS regulations consist of 13 key aspects of housing quality, performance requirements, and acceptability criteria to meet each performance requirement. HQS include requirements for all housing types, including single and multi-family dwelling units, as well as specific requirements for special housing types, such as manufactured homes, congregate housing, single room occupancy, shared housing, and group residences (Section 204(c)(3)(E) of Pub. L. No. 104-134 (42 USC 1437f (note))). Per the HCVP Administrative Plan, the Authority is required to inspect tenant units no less than every 26 months. Condition: During the testing of 40 HCV files selected, we noted 1 of the 40 tenant files did not have an inspection completed on the unit within the established timeline of the Authority’s policy. Questioned costs: $30,000 Context: Out of 40 files, 1 contained errors as noted above. Per the HCVP Administrative Plan, the Authority is required to inspect tenant units no less than every 26 months. Cause: There was an issue with Yardi and the notice letters that outlined deficiencies were printing out incorrect mailing information. This resulted in the housing provider not being properly notified of the deficiencies, so as a result the Authority could not abate until the housing provider received proper notice. Effect: The auditor noted an instance of noncompliance. Noncompliance results in possible over charges to the grant. Repeat Finding: No. Recommendation: We recommend the Authority review their process and internal controls over HQS inspections to ensure compliance with HUD requirements and their administrative plan. Furthermore, management should ensure no HAP payments are issued for units that have not passed HQS housing inspections. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: According to §200.302 Financial management of 2 CFR Part 200, MTW Agencies must ensure that housing assisted under the demonstration program meets housing quality standards established or approved by the secretary. The HCV program regulations at 24 CFR sections 982.401 through 982.405 set forth basic housing quality standards (HQS) which all units must meet, and the PHA must verify by inspection, before initial assistance can be paid on behalf of a family and at least annually throughout the term of the assisted tenancy. Current HQS regulations consist of 13 key aspects of housing quality, performance requirements, and acceptability criteria to meet each performance requirement. HQS include requirements for all housing types, including single and multi-family dwelling units, as well as specific requirements for special housing types, such as manufactured homes, congregate housing, single room occupancy, shared housing, and group residences (Section 204(c)(3)(E) of Pub. L. No. 104-134 (42 USC 1437f (note))). Per the HCVP Administrative Plan, the Authority is required to inspect tenant units no less than every 26 months. Condition: During the testing of 40 HCV files selected, we noted 1 of the 40 tenant files did not have an inspection completed on the unit within the established timeline of the Authority’s policy. Questioned costs: $30,000 Context: Out of 40 files, 1 contained errors as noted above. Per the HCVP Administrative Plan, the Authority is required to inspect tenant units no less than every 26 months. Cause: There was an issue with Yardi and the notice letters that outlined deficiencies were printing out incorrect mailing information. This resulted in the housing provider not being properly notified of the deficiencies, so as a result the Authority could not abate until the housing provider received proper notice. Effect: The auditor noted an instance of noncompliance. Noncompliance results in possible over charges to the grant. Repeat Finding: No. Recommendation: We recommend the Authority review their process and internal controls over HQS inspections to ensure compliance with HUD requirements and their administrative plan. Furthermore, management should ensure no HAP payments are issued for units that have not passed HQS housing inspections. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: According to §200.302 Financial management of 2 CFR Part 200, MTW Agencies must ensure that housing assisted under the demonstration program meets housing quality standards established or approved by the secretary. The HCV program regulations at 24 CFR sections 982.401 through 982.405 set forth basic housing quality standards (HQS) which all units must meet, and the PHA must verify by inspection, before initial assistance can be paid on behalf of a family and at least annually throughout the term of the assisted tenancy. Current HQS regulations consist of 13 key aspects of housing quality, performance requirements, and acceptability criteria to meet each performance requirement. HQS include requirements for all housing types, including single and multi-family dwelling units, as well as specific requirements for special housing types, such as manufactured homes, congregate housing, single room occupancy, shared housing, and group residences (Section 204(c)(3)(E) of Pub. L. No. 104-134 (42 USC 1437f (note))). Per the HCVP Administrative Plan, the Authority is required to inspect tenant units no less than every 26 months. Condition: During the testing of 40 HCV files selected, we noted 1 of the 40 tenant files did not have an inspection completed on the unit within the established timeline of the Authority’s policy. Questioned costs: $30,000 Context: Out of 40 files, 1 contained errors as noted above. Per the HCVP Administrative Plan, the Authority is required to inspect tenant units no less than every 26 months. Cause: There was an issue with Yardi and the notice letters that outlined deficiencies were printing out incorrect mailing information. This resulted in the housing provider not being properly notified of the deficiencies, so as a result the Authority could not abate until the housing provider received proper notice. Effect: The auditor noted an instance of noncompliance. Noncompliance results in possible over charges to the grant. Repeat Finding: No. Recommendation: We recommend the Authority review their process and internal controls over HQS inspections to ensure compliance with HUD requirements and their administrative plan. Furthermore, management should ensure no HAP payments are issued for units that have not passed HQS housing inspections. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: According to §200.302 Financial management of 2 CFR Part 200, MTW Agencies must ensure that housing assisted under the demonstration program meets housing quality standards established or approved by the secretary. The HCV program regulations at 24 CFR sections 982.401 through 982.405 set forth basic housing quality standards (HQS) which all units must meet, and the PHA must verify by inspection, before initial assistance can be paid on behalf of a family and at least annually throughout the term of the assisted tenancy. Current HQS regulations consist of 13 key aspects of housing quality, performance requirements, and acceptability criteria to meet each performance requirement. HQS include requirements for all housing types, including single and multi-family dwelling units, as well as specific requirements for special housing types, such as manufactured homes, congregate housing, single room occupancy, shared housing, and group residences (Section 204(c)(3)(E) of Pub. L. No. 104-134 (42 USC 1437f (note))). Per the HCVP Administrative Plan, the Authority is required to inspect tenant units no less than every 26 months. Condition: During the testing of 40 HCV files selected, we noted 1 of the 40 tenant files did not have an inspection completed on the unit within the established timeline of the Authority’s policy. Questioned costs: $30,000 Context: Out of 40 files, 1 contained errors as noted above. Per the HCVP Administrative Plan, the Authority is required to inspect tenant units no less than every 26 months. Cause: There was an issue with Yardi and the notice letters that outlined deficiencies were printing out incorrect mailing information. This resulted in the housing provider not being properly notified of the deficiencies, so as a result the Authority could not abate until the housing provider received proper notice. Effect: The auditor noted an instance of noncompliance. Noncompliance results in possible over charges to the grant. Repeat Finding: No. Recommendation: We recommend the Authority review their process and internal controls over HQS inspections to ensure compliance with HUD requirements and their administrative plan. Furthermore, management should ensure no HAP payments are issued for units that have not passed HQS housing inspections. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: According to §200.302 Financial management of 2 CFR Part 200, MTW Agencies must ensure that housing assisted under the demonstration program meets housing quality standards established or approved by the secretary. The HCV program regulations at 24 CFR sections 982.401 through 982.405 set forth basic housing quality standards (HQS) which all units must meet, and the PHA must verify by inspection, before initial assistance can be paid on behalf of a family and at least annually throughout the term of the assisted tenancy. Current HQS regulations consist of 13 key aspects of housing quality, performance requirements, and acceptability criteria to meet each performance requirement. HQS include requirements for all housing types, including single and multi-family dwelling units, as well as specific requirements for special housing types, such as manufactured homes, congregate housing, single room occupancy, shared housing, and group residences (Section 204(c)(3)(E) of Pub. L. No. 104-134 (42 USC 1437f (note))). Per the HCVP Administrative Plan, the Authority is required to inspect tenant units no less than every 26 months. Condition: During the testing of 40 HCV files selected, we noted 1 of the 40 tenant files did not have an inspection completed on the unit within the established timeline of the Authority’s policy. Questioned costs: $30,000 Context: Out of 40 files, 1 contained errors as noted above. Per the HCVP Administrative Plan, the Authority is required to inspect tenant units no less than every 26 months. Cause: There was an issue with Yardi and the notice letters that outlined deficiencies were printing out incorrect mailing information. This resulted in the housing provider not being properly notified of the deficiencies, so as a result the Authority could not abate until the housing provider received proper notice. Effect: The auditor noted an instance of noncompliance. Noncompliance results in possible over charges to the grant. Repeat Finding: No. Recommendation: We recommend the Authority review their process and internal controls over HQS inspections to ensure compliance with HUD requirements and their administrative plan. Furthermore, management should ensure no HAP payments are issued for units that have not passed HQS housing inspections. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: According to §200.302 Financial management of 2 CFR Part 200, MTW Agencies must ensure that housing assisted under the demonstration program meets housing quality standards established or approved by the secretary. The HCV program regulations at 24 CFR sections 982.401 through 982.405 set forth basic housing quality standards (HQS) which all units must meet, and the PHA must verify by inspection, before initial assistance can be paid on behalf of a family and at least annually throughout the term of the assisted tenancy. Current HQS regulations consist of 13 key aspects of housing quality, performance requirements, and acceptability criteria to meet each performance requirement. HQS include requirements for all housing types, including single and multi-family dwelling units, as well as specific requirements for special housing types, such as manufactured homes, congregate housing, single room occupancy, shared housing, and group residences (Section 204(c)(3)(E) of Pub. L. No. 104-134 (42 USC 1437f (note))). Per the HCVP Administrative Plan, the Authority is required to inspect tenant units no less than every 26 months. Condition: During the testing of 40 HCV files selected, we noted 1 of the 40 tenant files did not have an inspection completed on the unit within the established timeline of the Authority’s policy. Questioned costs: $30,000 Context: Out of 40 files, 1 contained errors as noted above. Per the HCVP Administrative Plan, the Authority is required to inspect tenant units no less than every 26 months. Cause: There was an issue with Yardi and the notice letters that outlined deficiencies were printing out incorrect mailing information. This resulted in the housing provider not being properly notified of the deficiencies, so as a result the Authority could not abate until the housing provider received proper notice. Effect: The auditor noted an instance of noncompliance. Noncompliance results in possible over charges to the grant. Repeat Finding: No. Recommendation: We recommend the Authority review their process and internal controls over HQS inspections to ensure compliance with HUD requirements and their administrative plan. Furthermore, management should ensure no HAP payments are issued for units that have not passed HQS housing inspections. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: According to §200.302 Financial management of 2 CFR Part 200, MTW Agencies must ensure that housing assisted under the demonstration program meets housing quality standards established or approved by the secretary. The HCV program regulations at 24 CFR sections 982.401 through 982.405 set forth basic housing quality standards (HQS) which all units must meet, and the PHA must verify by inspection, before initial assistance can be paid on behalf of a family and at least annually throughout the term of the assisted tenancy. Current HQS regulations consist of 13 key aspects of housing quality, performance requirements, and acceptability criteria to meet each performance requirement. HQS include requirements for all housing types, including single and multi-family dwelling units, as well as specific requirements for special housing types, such as manufactured homes, congregate housing, single room occupancy, shared housing, and group residences (Section 204(c)(3)(E) of Pub. L. No. 104-134 (42 USC 1437f (note))). Per the HCVP Administrative Plan, the Authority is required to inspect tenant units no less than every 26 months. Condition: During the testing of 40 HCV files selected, we noted 1 of the 40 tenant files did not have an inspection completed on the unit within the established timeline of the Authority’s policy. Questioned costs: $30,000 Context: Out of 40 files, 1 contained errors as noted above. Per the HCVP Administrative Plan, the Authority is required to inspect tenant units no less than every 26 months. Cause: There was an issue with Yardi and the notice letters that outlined deficiencies were printing out incorrect mailing information. This resulted in the housing provider not being properly notified of the deficiencies, so as a result the Authority could not abate until the housing provider received proper notice. Effect: The auditor noted an instance of noncompliance. Noncompliance results in possible over charges to the grant. Repeat Finding: No. Recommendation: We recommend the Authority review their process and internal controls over HQS inspections to ensure compliance with HUD requirements and their administrative plan. Furthermore, management should ensure no HAP payments are issued for units that have not passed HQS housing inspections. Views of responsible officials: There is no disagreement with the audit finding.
Significant Deficiency in Internal Control over Federal Programs Lack of Fiscal Policies and Procedures in Accordance with the Uniform Guidance Assistance Listing Number: 93.328 Name of Federal Program or Cluster: Epidemiology and Laboratory Capacity for Infectious Diseases Name of Federal Agency: Department of Health and Human Services Name of Pass-Through Entities: State of Wisconsin Department of Health Services The Code of Federal Regulations (CFR) Section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. 2 CFR§200.302(b)(6-7) Financial Management: - Written procedures are required to implement the requirements of §200.305. - Written procedures are required for determining the allowability of costs in accordance with subpart E of this part and the terms and conditions of the Federal award.WHCA’s written policies and procedures lack some of the requirements required by the Code of Federal Regulations. There is an increased risk that the Association could potentially charge unallowable costs to federal awards or be noncompliant with other areas of the Code of Federal Regulations. We recommend the Association create formal written fiscal policies and procedures that conform to the uniform guidance. No Staff at the WHCA are dedicated to adhering to the regulations. The Executive Director, Vice President of Workforce Development, and the Director of Administration & Association completed a certification course on Federal allowable costs. In managing the federal awards, staff references this knowledge to guide the spending of the award.
Significant Deficiency in Internal Control over Federal Programs Lack of Fiscal Policies and Procedures in Accordance with the Uniform Guidance Assistance Listing Number: 93.328 Name of Federal Program or Cluster: Epidemiology and Laboratory Capacity for Infectious Diseases Name of Federal Agency: Department of Health and Human Services Name of Pass-Through Entities: State of Wisconsin Department of Health Services The Code of Federal Regulations (CFR) Section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. 2 CFR§200.302(b)(6-7) Financial Management: - Written procedures are required to implement the requirements of §200.305. - Written procedures are required for determining the allowability of costs in accordance with subpart E of this part and the terms and conditions of the Federal award.WHCA’s written policies and procedures lack some of the requirements required by the Code of Federal Regulations. There is an increased risk that the Association could potentially charge unallowable costs to federal awards or be noncompliant with other areas of the Code of Federal Regulations. We recommend the Association create formal written fiscal policies and procedures that conform to the uniform guidance. No Staff at the WHCA are dedicated to adhering to the regulations. The Executive Director, Vice President of Workforce Development, and the Director of Administration & Association completed a certification course on Federal allowable costs. In managing the federal awards, staff references this knowledge to guide the spending of the award.
FINDING 2023-001 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): ILBC-2023-Body Camera-00052 Pass-Through Entity: Indiana Department of Homeland Security Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 13 KOSCIUSKO COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The County Sheriff applied for the Indiana Local Body Camera Grant (ILBC). The grant is a reimbursable grant through the Indiana Department of Homeland Security. The County Sheriff was awarded this grant on January 1, 2023, with a grant cost amount of up to $31,920 to be spent from January 1, 2023 to December 31, 2023. The County Sheriff ordered body-worn cameras and other equipment on April 26, 2023. A Reimbursement Claim Form (Form) was submitted for the cameras and other equipment on September 11, 2023. The Form shows the County Sheriff requested the full $31,920; however, the County had only spent $9,581 from the grant fund towards the purchase. The reimbursement of $31,920 from the Indiana Department of Homeland Security was received on September 27, 2023. The fund had a balance of $22,339 as of December 31, 2023. As there are no grant expenditures for the remaining reimbursements received and the period of performance had ended, the County should have reimbursed the Indiana Department of Homeland Security $22,339. On May 9, 2023, the County Sheriff's grant administrator submitted a Program Report for the ILBC grant. The report was completed and submitted by the County Sheriff's grant administrator without a documented oversight or review process to ensure the completeness and accuracy of the report. The report incorrectly indicated that all expenditures had been completed. However, as of the date of the submission, the County had not purchased the body-worn cameras, and all federal funds had not been expended. 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). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." INDIANA STATE BOARD OF ACCOUNTS 14 KOSCIUSKO COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.344(d) states in part: "The non-Federal entity must promptly refund any balances of unobligated cash that the Federal awarding agency or pass-through entity paid in advance or paid and that are not authorized to be retained by the non-Federal entity for use in other projects. . . ." Cause A proper system of internal controls, which would include segregation of key functions, was not designed by management of the County to ensure the accuracy of the reimbursement invoice and the Program Report. 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 design or implementation of the components of a 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. As such, federal reimbursement was requested in excess of the amount spent. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County establish a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place to ensure reimbursement invoices are complete and accurate prior to submission. Furthermore, we recommended the County contact the awarding agency to discuss the funds remaining. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
2023-002: U.S. Department of Environment Protection – Assistance Listing # 66.468 Capitalization Grants for Drinking Water State Revolving Fund (Drinking Water State Revolving Fund Cluster) Lack of Required Written Policies & Procedures – Compliance Condition & Criteria: The Authority does not currently have all the written policies and procedures in place as required by the Uniform Guidance as it relates to financial management and determining allowability of costs for the federal program (Title 2 U.S. Code of Federal Regulations (CFR) 200.302 & 200.305). In addition CFR sections 200.318, 200.319, and 200.320 require there to be written policies and procedures regarding procurement and conflicts of interest. Effect: Although not likely, the oversight agency could disallow all costs associated with this program. Cause: The Authority has not had any significant federal grant funding in many years. The current federal project is the first time that the Authority has been subject to the requirements of the Uniform Guidance. The Authority does have a set of informal policies and procedures that are followed as it relates to financial management, allowability of costs, procurement, and conflicts of interest, and have been very careful to carry out all federal program activities in accordance with established regulations; however, the Authority was not aware that the Uniform Guidance requires these policies and procedures be documented in writing. Recommendation: We recommend that the Authority work towards getting those policies and procedures documented in writing so that they are in compliance with the requirements of the Uniform Guidance. Views of Responsible Officials and Planned Corrective Actions: The Authority understands the potential effects of the condition described above and is currently consulting with their attorney to draft written policies and procedures as they relate to federal programs that are required by the Uniform Guidance.
SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS 2023-002 Material Weakness Reporting Criteria and Condition: While the Organization has some written financial management procedures documentation, it does not meet all the recent specific requirements under 2 CFR 200.302 in the Uniform Grant Guidance. Context: The financial management requirements under 2 CFR 200.302 require each non-federal entity maintain effective control over, and accountability for all funds, property, and other assets, including having written procedures in place. Key changes which effect the Organization include: • Increased documentation • Time and effort reporting for payroll • Specific purchasing consideration Cause: The Borough did not implement adequate controls to ensure compliance with this reporting requirement. Potential Effect: Errors could occur in financial reporting. Recommendation: We recommend the Organization update its existing policies to comply with the requirements under 2 CFR 200.302. Views of Responsible Officials and Planned Corrective Actions: Management understands the importance of defining and following the necessary policies and procedures to remain in compliance with the requirements under 2 CFR 200.302. Borough of Yardley will implement these policies and procedures to ensure that the organization will comply going forward. Repeat: Repeat finding from 2017-002 Action Taken: The Borough will review guidance and create missing policies. Anticipated Completion: During 2024.