U.S. Department of State Professional & Cultural Exchange Programs Assistance Listing #19.415 Finding 2023-001 (repeat finding 2022-03) Material Weakness, Material Noncompliance – Reporting Criteria: The A-102 Common Rule requires that non-Federal entities receiving Federal awards establish and maintain internal control designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Adequate segregation of duties provided between performance, review, and recordkeeping of a task is a control activity which will reasonably ensure compliance with Federal laws, regulations, and program requirements. Also, 2 CFR 200.302 requires that non-federal entities must provide for the accurate, current, and complete disclosure of financial results for each Federal award or program in accordance with the reporting requirements set forth in 2 CFR section 200.328. Due dates for reporting are also explicitly noted in the grant award documents. Federal Financial Reports require the entity to report federal expenditures, cash draws, and recipients share of program costs. Condition: Internal control over federal financial reports could not be readily substantiated. Federal financial reports were not submitted timely and activity reported was not representative of actual federal expenditures for the period. Questioned Costs: None noted as amounts appear to be under reported. Context: The Flex award federal financial report was due October 31, 2023. Submission date of the Flex award federal financial report was January 17, 2024. Expense amount and cost share amount reported was not supported by underlying accounting records. The Yes award federal financial report was due October 31, 2023. Submission of the Yes award federal financial report was January 17, 2024. Expense amount and cost share amount reported was not supported by underlying accounting records. Effect: By not submitting reports timely, the Organization is not in compliance with reporting requirements and may risk losing funding. By reporting inaccurate federal expense and cost share amounts, the Organization may not be able to readily prevent, detect, and correct potential errors in reporting. Therefore, the Organization may be incorrectly reimbursed for expenditures under the program requirements. Cause: Current processes do not include a consistent method of preparing and submitting federal financial reports to ensure compliance with reporting requirements. Recommendation: The Organization should improve written policies & procedures to ensure that reports are submitted timely, ensure reports contain accurate and complete financial information related to the reporting period, and to ensure compliance with reporting requirements. Management’s Response: Management considers this finding resolved as of August 2024. In September of 2023, the prior finance manager at Greenheart left the company abruptly without notice. At the time, there were no other staff who were exposed to the grants or could complete the FFR report. Subsequently, Greenheart hired Athena Admin services to manage their finance function. The FFR reports were not filed until January 17, 2024, as Athena Admin needed time to unwind what was happening within the finance department and with the grants. Additionally, the remaining team did not have access to the portal where the filing would take place and had to take administrative steps to gain access to the portal. In 2023, as was done in prior years, there was not a multi-level approval for filing Federal Financial Reports. After the September 2023 staffing changes, the Finance Director and the Accounting Manager reviewed the FFR reports prior to filing. The Finance Director provided verbal approval to file. For all reports going forward, Greenheart will document approval of filing via email exchanges from the Accounting Manager to the Director of Finance
U.S. Department of State Professional & Cultural Exchange Programs Assistance Listing #19.415 Finding 2023-003 Material Weakness, Material Noncompliance – Allowable Costs/Activities Criteria: The A-102 Common Rule requires that non-Federal entities receiving Federal awards establish and maintain internal control designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Adequate segregation of duties provided between performance, review, and recordkeeping of a task is a control activity which will reasonably ensure compliance with Federal laws, regulations, and program requirements. 2 CFR 200.302 requires that non-federal entities must maintain records that identify adequately the source and application of funds for federally funded activities and be supported by source documentation. Condition: Internal control could not be readily substantiated for the allocation percentages applied to personnel expenses. Source documentation could not be readily substantiated for personnel expenses charged to the program and time actually worked. Questioned Costs: Personnel expenses charged to the FLEX and YES awards were approximately $464,332 and $318,813 respectively, for a total of approximately $783,145. Context: Review of personnel expenses and the allocation percentages applied could not be readily substantiated. Effect: By not maintaining adequate and consistent documentation of review and source documentation, the Organization may not be able to readily prevent, detect, and correct potential errors in allowable costs/activities. Therefore, the Organization may be incorrectly reimbursed for expenditures under the program requirements. Cause: Current processes do not include maintaining adequate review and source documentation to support personnel. Recommendation: The Organization should improve policies & procedures to ensure that personnel expenses are adequately supported by source documentation and documentation is readily available. Management’s Response: Management considers this resolved as of August 2024. Greenheart is in the process of establishing a timecard system for all staff who work on grants and have their time allocated to a grant. Investing in hour tracking within the payroll system will ensure that personnel allocations are accurate and approved by management. In the meantime, in early 2024, the Grants Director worked directly with payroll and department leaders to review and update the list of personnel who are working on the grant. This was a documented process.
U.S. Department of State Professional & Cultural Exchange Programs Assistance Listing #19.415 Finding 2023-001 (repeat finding 2022-03) Material Weakness, Material Noncompliance – Reporting Criteria: The A-102 Common Rule requires that non-Federal entities receiving Federal awards establish and maintain internal control designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Adequate segregation of duties provided between performance, review, and recordkeeping of a task is a control activity which will reasonably ensure compliance with Federal laws, regulations, and program requirements. Also, 2 CFR 200.302 requires that non-federal entities must provide for the accurate, current, and complete disclosure of financial results for each Federal award or program in accordance with the reporting requirements set forth in 2 CFR section 200.328. Due dates for reporting are also explicitly noted in the grant award documents. Federal Financial Reports require the entity to report federal expenditures, cash draws, and recipients share of program costs. Condition: Internal control over federal financial reports could not be readily substantiated. Federal financial reports were not submitted timely and activity reported was not representative of actual federal expenditures for the period. Questioned Costs: None noted as amounts appear to be under reported. Context: The Flex award federal financial report was due October 31, 2023. Submission date of the Flex award federal financial report was January 17, 2024. Expense amount and cost share amount reported was not supported by underlying accounting records. The Yes award federal financial report was due October 31, 2023. Submission of the Yes award federal financial report was January 17, 2024. Expense amount and cost share amount reported was not supported by underlying accounting records. Effect: By not submitting reports timely, the Organization is not in compliance with reporting requirements and may risk losing funding. By reporting inaccurate federal expense and cost share amounts, the Organization may not be able to readily prevent, detect, and correct potential errors in reporting. Therefore, the Organization may be incorrectly reimbursed for expenditures under the program requirements. Cause: Current processes do not include a consistent method of preparing and submitting federal financial reports to ensure compliance with reporting requirements. Recommendation: The Organization should improve written policies & procedures to ensure that reports are submitted timely, ensure reports contain accurate and complete financial information related to the reporting period, and to ensure compliance with reporting requirements. Management’s Response: Management considers this finding resolved as of August 2024. In September of 2023, the prior finance manager at Greenheart left the company abruptly without notice. At the time, there were no other staff who were exposed to the grants or could complete the FFR report. Subsequently, Greenheart hired Athena Admin services to manage their finance function. The FFR reports were not filed until January 17, 2024, as Athena Admin needed time to unwind what was happening within the finance department and with the grants. Additionally, the remaining team did not have access to the portal where the filing would take place and had to take administrative steps to gain access to the portal. In 2023, as was done in prior years, there was not a multi-level approval for filing Federal Financial Reports. After the September 2023 staffing changes, the Finance Director and the Accounting Manager reviewed the FFR reports prior to filing. The Finance Director provided verbal approval to file. For all reports going forward, Greenheart will document approval of filing via email exchanges from the Accounting Manager to the Director of Finance
U.S. Department of State Professional & Cultural Exchange Programs Assistance Listing #19.415 Finding 2023-003 Material Weakness, Material Noncompliance – Allowable Costs/Activities Criteria: The A-102 Common Rule requires that non-Federal entities receiving Federal awards establish and maintain internal control designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Adequate segregation of duties provided between performance, review, and recordkeeping of a task is a control activity which will reasonably ensure compliance with Federal laws, regulations, and program requirements. 2 CFR 200.302 requires that non-federal entities must maintain records that identify adequately the source and application of funds for federally funded activities and be supported by source documentation. Condition: Internal control could not be readily substantiated for the allocation percentages applied to personnel expenses. Source documentation could not be readily substantiated for personnel expenses charged to the program and time actually worked. Questioned Costs: Personnel expenses charged to the FLEX and YES awards were approximately $464,332 and $318,813 respectively, for a total of approximately $783,145. Context: Review of personnel expenses and the allocation percentages applied could not be readily substantiated. Effect: By not maintaining adequate and consistent documentation of review and source documentation, the Organization may not be able to readily prevent, detect, and correct potential errors in allowable costs/activities. Therefore, the Organization may be incorrectly reimbursed for expenditures under the program requirements. Cause: Current processes do not include maintaining adequate review and source documentation to support personnel. Recommendation: The Organization should improve policies & procedures to ensure that personnel expenses are adequately supported by source documentation and documentation is readily available. Management’s Response: Management considers this resolved as of August 2024. Greenheart is in the process of establishing a timecard system for all staff who work on grants and have their time allocated to a grant. Investing in hour tracking within the payroll system will ensure that personnel allocations are accurate and approved by management. In the meantime, in early 2024, the Grants Director worked directly with payroll and department leaders to review and update the list of personnel who are working on the grant. This was a documented process.
Finding 2023-002: U.S. Department of Housing and Urban Development, Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Housing Projects (Section 223(f)/207) Statement of Condition: Internal control processes over financial reporting did not ensure that all transactions were properly recorded. Criteria: The HUD Handbook 4370.2, Chapter 2 requires the books and accounts to be complete and accurate. Additionally, 2 CFR Part 200 Section 200.302 Financial Management 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 in accordance with the reporting requirements. Additionally, 2 CFR Part 200 Section 200.303(a), Internal Controls, requires that non-federal entities must establish and maintain effective internal controls over the federal award that provides reasonable assurance that the non-federal entity is managing the award in compliance with federal statutes, regulations and the terms and conditions. Effect: Noncompliance with HUD and Uniform Guidance regulations. Cause: Management oversight. Context: A review of journal entries made during the year revealed journal entries made in the incorrect period and erroneous journal entries. Additionally, the review process of the Corporation's financial information did not discover these errors. Recommendation: We recommend management review/enhance its accounting and internal control procedures to ensure that all key accounts are reconciled and reviewed with supporting evidence of such review. Questioned Costs: N/A Views of Responsible Officials and Corrective Action Plan: Management agrees with the finding and will review the accounting and financial procedures, system of internal controls and policies.
Criteria: Cash management requirements of federal grants are contained in 2 CFR sections 200.302(b)(6) and 200.305, 31 CFR part 205, 48 CFR sections 52.216-7(b) and 52.232-12, as well as federal awarding agency regulations and terms and conditions of the federal award. The Organization must establish written procedures around cash management and must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement by the Organization. Condition: The Organization does not have written procedures around cash management and requests to draw down funds from the federal agency were in excess of current expenditures, resulting in excess time between the transfer of funds and disbursement by the Organization. Effect: As of December 31, 2023, $28,141 of funds had been drawn down from the federal agency in excess of expenditures. Cause: The Organization tracks federal expenditures in the accounting software and the individual that requests the funds from the federal agency does not verify the amount of expenditures with the accounting software and requests an estimated amount each month. Identification of repeat finding: This is a repeat finding from a previous audit. Recommendation: We recommend the Organization develop written policies and procedures around cash management and request funds monthly based on the actual expenditures of that month to minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement by the Organization. Views of responsible officials and planned corrective actions: The Organization agrees with this finding and has created written policies and procedures around cash management.
2023-005 Noncompliance with Uniform Guidance Written Procedures Over Federal Grants (Significant Deficiency – Noncompliance) Criteria – 2 CFR 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, §200.302 requires all non-federal entities receiving federal awards to develop written procedures to implement the requirements to received federal payments and determine the allowability of costs. Condition and Context – Audit procedures revealed that there was a written financial procedures document, but that it contained no language regarding managing and complying with federal award requirements. Cause – Lack of understanding relating to the requirements of federal awards under the Uniform Guidance. Effect – Lack of documented controls over RLHT’s compliance with the Uniform Guidance creates an added risk of noncompliance occurring. Questioned Costs – None Recommendations – RLHT should become familiar with the Uniform Guidance and seek additional training for those staff involved in all phases of receiving payment on and expending of federal awards. Views of Responsible Officials and Planned Corrective Actions – RLHT will add procedures to the current financial policies document that contain oversight over the receipt and use of federal award funds.
2023SA-003 Insufficient Grant Monitoring Federal Agency/Passthrough Agency: US Department of Treasury Program: Coronavirus State and Local Fiscal Recovery Fund- American Rescue Plan Act Federal Award Number: N/A Assistance Listing Number: 21.027 Material Weakness Material Noncompliance – Financial Management Criteria: 2 CFR 200.302 states that the Grantee must have an accounting system that provides accurate, current, and complete disclosure of all financial transactions related to each state and federally funded program. Accounting records must contain information pertaining to state and federal pass-through awards, authorizations, obligations, unobligated balances, assets, outlays, and income. The records must be maintained on a current basis and balances at least quarterly. Condition: The accounting records for the ARPA grant included $328,600 of expenses that were not reported on the annual grant report filed in March 2024. Context: From reviews of the County’s internal control and accounting procedures along with inquiries made, it was indicated that there was a high probability that transactions were not reported correctly. There is no review process in place. Effect: Inaccurate reporting of grant activity. Questioned Costs: None. Cause: There is a systematic problem with lack of adequate documentation and monitoring of expenses paid for with grant funds throughout the County. The County needs to be able to compile a complete list of grants for the entire County and monitor that the grant activity is property reported. The County needs to have a better understanding of grant reporting requirements, grant restrictions, and compliance requirements. Repeated Finding: No Recommendation: The County should have someone review grant reports prior to their submission. Management’s Response: The County will work to improve grant documentation and will consider implementing a review process to ensure the grant records agree to grant reports that are filed.
FINDING 2023-001 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Period of Performance, and Procurement and Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): PO 20011717 Pass-Through Entity: Indiana State Department of Health Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Period of Performance, Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context The County Department of Health, a department within the County, was awarded the Health Issues and Challenges grant through the Indiana State Department of Health financed through the American Rescue Plan Act for the purpose of funding programs that focus on the improvement of chronic disease, specifically, elevated blood lead level reduction. The Health Issues and Challenges grant is a reimbursable grant, whereby the County received reimbursement on a per-case basis at a stated rate for Case Management and Environmental Investigation activities performed. The County Department of Health received federal receipts related to the grant in the amount of $130,479 during 2023. As part of sound management of the federal award, the County Department of Health was responsible for implementing a system of internal controls that would ensure compliance with the applicable requirements. The County Department of Health did not properly design or implement such a system. Receipts of the program were adequately identified through the use of an account number within the County Health Fund (285) in the County's ledger (ledger) which was unique to the Health Issues and Challenges grant receipts. However, the ledger did not adequately identify the expenditures of the grant program within the County Health Fund. Through inquiry with the County Department of Health employees and review of unit-prepared support of grant expenditures, we determined expenditures were made with grant funds during the audit period; however, we were unable to distinguish between the expenditures of the Health Issues and Challenges grant and all other activities of the County Department of Health in the County Health fund. Due to the lack of separate identification of expenditures in the financial records, we were not able to establish a population from which to audit the Health Issues and Challenges grant for compliance with the following compliance requirements of the program: Activities Allowed or Unallowed Allowable Costs/Cost Principles Period of Performance Procurement and Suspension and Debarment As such, the full award amount of $130,479, as reported on the Schedule of Expenditures of Federal Awards, was determined to be questioned costs. 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 200.300(b) states in part: "The non-Federal entity is responsible for complying with all requirements of the Federal award. . . ." 2 CFR 200.302 states in part: "(a) Each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state's own funds. In addition, the state's and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. . . . (b) The financial management system of each non-Federal entity must provide for the following . . . (1) Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number and year, name of the Federal agency, and name of the pass-through entity, if any. (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. (4) Effective control over, and accountability for, all funds, property, and other assets. . . ." Cause The County Department of Health was unable to differentiate expenditures made from federal and non-federal funds within its ledger for the Heath Issues and Challenges grant. Effect Without the proper implementation of an effectively designed system of internal controls, a population of expenditures associated with the Health Issues and Challenges grant could not be determined. As such, the County Department of Health cannot ensure nor can we determine that expenditures of the grant were not unallowable, within the proper period, and adhered to established practices and policies. Questioned Costs We identified $130,479 in known questioned costs as noted in the Condition and Context. Recommendation We recommended that management of the County Department of Health establish a system of internal controls to ensure that grant award funds are adequately accounted for and tracked in such a manner as to determine the activity, receipts, and disbursements associated with the grant. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Item 2023-006 – Allowable Costs/Cost Principles Significant Deficiency Federal Program – Cooperative Extension Service Assistance Listing Number – 10.500 Pass-through Grantor's Number – 1-575259-3 Federal Award Year – December 31, 2023 Federal Agency – U.S. Department of Agriculture Pass-Through Entity – Oklahoma State University 2 CFR 200.302 (b) stipulates federal award recipients and subrecipients' financial management system must provide for the identification of all federal awards received and expended on their SEFA. The Foundation was unable to distinguish federal and non-federal expenditures during the fiscal year for one program administrated by its affiliate. As a result, the amount reported on the SEFA represents the amount of federal dollars reimbursed during the fiscal year, and does not directly correlate to an underlying expenditure detail. Reconciliations of federal expenditures to revenues recorded were not prepared timely, nor were they reviewed for accuracy. For this specific program, the Foundation is at an increased likelihood of expending federal awards for unallowable or questioned costs. Not applicable. This is not a repeat finding. The Foundation should perform reconciliations of federal revenues to expenditures on a monthly basis, which should be reviewed for accuracy. The Foundation should maintain all records of underlying support of expenditures incurred as related to draws of federal money in order to support that the draws were appropriate and for allowable costs. Management's response is reported in "Corrective Action Plan" at the end of this report.
Assistance Listing Numbers: 10.001, 10.200, 10.215, 10.307, 10.310, 10.311, and 10.912 Name of Federal Program or Cluster: Research and Development Cluster Name of Federal Agency: Department of Agriculture Federal Award Identification Numbers: 58-5090-2-037 2022-38624-38368 2021-38640-34714 2020-38640-31522 2022-38640-37486 2023-51300-40959 2021-68012-35917 2019-68012-29852 2020-68012-31934 2021-49400-35592 NR225F48XXXXG006 Name of Pass-through Entities and Award Periods: Michigan State University-September 1, 2022 through August 31, 2025; Regents of the University of Minnesota- April 1, 2021 through March 31, 2023, March 1, 2022 through February 28, 2025, and April 1, 2023 through March 31, 2025; Board of Regents of the University of Wisconsin System- September 1, 2019 through August 31, 2024, September 1, 2020 through August 31, 2025, and January 1, 2022 through December 31, 2026 Criteria or Specific Requirement: 2 CFR section 200.302(b)(6) requires the non-Federal entity to provide written procedures to implement the requirements of cash management as defined in 200.305. Condition: 2 out of 5 draw requests did not have documented approvals. Cause: There were no written procedures over cash management and when changes in management and accounting services occurred internal control documentation was not consistent. Effect or Potential Effect: Time elapsing between the transfer of funds and disbursements may not be minimized. Context: 5 out of 46 draw requests were tested. In addition, 4 significant draw requests were tested and all of those had documented approvals for internal control over cash management. Repeat Finding: This finding is a repeat of Finding 2022-004. Recommendation: The Organization document internal control over compliance procedures and document written procedures to ensure compliance with 2 CFR 200.305. Views of Responsible Officials: Management agrees with the finding and will implement documentation of internal controls and document its policies and procedures.
Assistance Listing Numbers: 10.001, 10.200, 10.215, 10.307, 10.310, 10.311, and 10.912 Name of Federal Program or Cluster: Research and Development Cluster Name of Federal Agency: Department of Agriculture Federal Award Identification Numbers: 58-5090-2-037 2022-38624-38368 2021-38640-34714 2020-38640-31522 2022-38640-37486 2023-51300-40959 2021-68012-35917 2019-68012-29852 2020-68012-31934 2021-49400-35592 NR225F48XXXXG006 Name of Pass-through Entities and Award Periods: Michigan State University-September 1, 2022 through August 31, 2025; Regents of the University of Minnesota- April 1, 2021 through March 31, 2023, March 1, 2022 through February 28, 2025, and April 1, 2023 through March 31, 2025; Board of Regents of the University of Wisconsin System- September 1, 2019 through August 31, 2024, September 1, 2020 through August 31, 2025, and January 1, 2022 through December 31, 2026 Criteria or Specific Requirement: 2 CFR section 200.302(b)(6) requires the non-Federal entity to provide written procedures to implement the requirements of cash management as defined in 200.305. Condition: 2 out of 5 draw requests did not have documented approvals. Cause: There were no written procedures over cash management and when changes in management and accounting services occurred internal control documentation was not consistent. Effect or Potential Effect: Time elapsing between the transfer of funds and disbursements may not be minimized. Context: 5 out of 46 draw requests were tested. In addition, 4 significant draw requests were tested and all of those had documented approvals for internal control over cash management. Repeat Finding: This finding is a repeat of Finding 2022-004. Recommendation: The Organization document internal control over compliance procedures and document written procedures to ensure compliance with 2 CFR 200.305. Views of Responsible Officials: Management agrees with the finding and will implement documentation of internal controls and document its policies and procedures.
Assistance Listing Numbers: 10.001, 10.200, 10.215, 10.307, 10.310, 10.311, and 10.912 Name of Federal Program or Cluster: Research and Development Cluster Name of Federal Agency: Department of Agriculture Federal Award Identification Numbers: 58-5090-2-037 2022-38624-38368 2021-38640-34714 2020-38640-31522 2022-38640-37486 2023-51300-40959 2021-68012-35917 2019-68012-29852 2020-68012-31934 2021-49400-35592 NR225F48XXXXG006 Name of Pass-through Entities and Award Periods: Michigan State University-September 1, 2022 through August 31, 2025; Regents of the University of Minnesota- April 1, 2021 through March 31, 2023, March 1, 2022 through February 28, 2025, and April 1, 2023 through March 31, 2025; Board of Regents of the University of Wisconsin System- September 1, 2019 through August 31, 2024, September 1, 2020 through August 31, 2025, and January 1, 2022 through December 31, 2026 Criteria or Specific Requirement: 2 CFR section 200.302(b)(6) requires the non-Federal entity to provide written procedures to implement the requirements of cash management as defined in 200.305. Condition: 2 out of 5 draw requests did not have documented approvals. Cause: There were no written procedures over cash management and when changes in management and accounting services occurred internal control documentation was not consistent. Effect or Potential Effect: Time elapsing between the transfer of funds and disbursements may not be minimized. Context: 5 out of 46 draw requests were tested. In addition, 4 significant draw requests were tested and all of those had documented approvals for internal control over cash management. Repeat Finding: This finding is a repeat of Finding 2022-004. Recommendation: The Organization document internal control over compliance procedures and document written procedures to ensure compliance with 2 CFR 200.305. Views of Responsible Officials: Management agrees with the finding and will implement documentation of internal controls and document its policies and procedures.
Assistance Listing Numbers: 10.001, 10.200, 10.215, 10.307, 10.310, 10.311, and 10.912 Name of Federal Program or Cluster: Research and Development Cluster Name of Federal Agency: Department of Agriculture Federal Award Identification Numbers: 58-5090-2-037 2022-38624-38368 2021-38640-34714 2020-38640-31522 2022-38640-37486 2023-51300-40959 2021-68012-35917 2019-68012-29852 2020-68012-31934 2021-49400-35592 NR225F48XXXXG006 Name of Pass-through Entities and Award Periods: Michigan State University-September 1, 2022 through August 31, 2025; Regents of the University of Minnesota- April 1, 2021 through March 31, 2023, March 1, 2022 through February 28, 2025, and April 1, 2023 through March 31, 2025; Board of Regents of the University of Wisconsin System- September 1, 2019 through August 31, 2024, September 1, 2020 through August 31, 2025, and January 1, 2022 through December 31, 2026 Criteria or Specific Requirement: 2 CFR section 200.302(b)(6) requires the non-Federal entity to provide written procedures to implement the requirements of cash management as defined in 200.305. Condition: 2 out of 5 draw requests did not have documented approvals. Cause: There were no written procedures over cash management and when changes in management and accounting services occurred internal control documentation was not consistent. Effect or Potential Effect: Time elapsing between the transfer of funds and disbursements may not be minimized. Context: 5 out of 46 draw requests were tested. In addition, 4 significant draw requests were tested and all of those had documented approvals for internal control over cash management. Repeat Finding: This finding is a repeat of Finding 2022-004. Recommendation: The Organization document internal control over compliance procedures and document written procedures to ensure compliance with 2 CFR 200.305. Views of Responsible Officials: Management agrees with the finding and will implement documentation of internal controls and document its policies and procedures.
Assistance Listing Numbers: 10.001, 10.200, 10.215, 10.307, 10.310, 10.311, and 10.912 Name of Federal Program or Cluster: Research and Development Cluster Name of Federal Agency: Department of Agriculture Federal Award Identification Numbers: 58-5090-2-037 2022-38624-38368 2021-38640-34714 2020-38640-31522 2022-38640-37486 2023-51300-40959 2021-68012-35917 2019-68012-29852 2020-68012-31934 2021-49400-35592 NR225F48XXXXG006 Name of Pass-through Entities and Award Periods: Michigan State University-September 1, 2022 through August 31, 2025; Regents of the University of Minnesota- April 1, 2021 through March 31, 2023, March 1, 2022 through February 28, 2025, and April 1, 2023 through March 31, 2025; Board of Regents of the University of Wisconsin System- September 1, 2019 through August 31, 2024, September 1, 2020 through August 31, 2025, and January 1, 2022 through December 31, 2026 Criteria or Specific Requirement: 2 CFR section 200.302(b)(6) requires the non-Federal entity to provide written procedures to implement the requirements of cash management as defined in 200.305. Condition: 2 out of 5 draw requests did not have documented approvals. Cause: There were no written procedures over cash management and when changes in management and accounting services occurred internal control documentation was not consistent. Effect or Potential Effect: Time elapsing between the transfer of funds and disbursements may not be minimized. Context: 5 out of 46 draw requests were tested. In addition, 4 significant draw requests were tested and all of those had documented approvals for internal control over cash management. Repeat Finding: This finding is a repeat of Finding 2022-004. Recommendation: The Organization document internal control over compliance procedures and document written procedures to ensure compliance with 2 CFR 200.305. Views of Responsible Officials: Management agrees with the finding and will implement documentation of internal controls and document its policies and procedures.
Assistance Listing Numbers: 10.001, 10.200, 10.215, 10.307, 10.310, 10.311, and 10.912 Name of Federal Program or Cluster: Research and Development Cluster Name of Federal Agency: Department of Agriculture Federal Award Identification Numbers: 58-5090-2-037 2022-38624-38368 2021-38640-34714 2020-38640-31522 2022-38640-37486 2023-51300-40959 2021-68012-35917 2019-68012-29852 2020-68012-31934 2021-49400-35592 NR225F48XXXXG006 Name of Pass-through Entities and Award Periods: Michigan State University-September 1, 2022 through August 31, 2025; Regents of the University of Minnesota- April 1, 2021 through March 31, 2023, March 1, 2022 through February 28, 2025, and April 1, 2023 through March 31, 2025; Board of Regents of the University of Wisconsin System- September 1, 2019 through August 31, 2024, September 1, 2020 through August 31, 2025, and January 1, 2022 through December 31, 2026 Criteria or Specific Requirement: 2 CFR section 200.302(b)(6) requires the non-Federal entity to provide written procedures to implement the requirements of cash management as defined in 200.305. Condition: 2 out of 5 draw requests did not have documented approvals. Cause: There were no written procedures over cash management and when changes in management and accounting services occurred internal control documentation was not consistent. Effect or Potential Effect: Time elapsing between the transfer of funds and disbursements may not be minimized. Context: 5 out of 46 draw requests were tested. In addition, 4 significant draw requests were tested and all of those had documented approvals for internal control over cash management. Repeat Finding: This finding is a repeat of Finding 2022-004. Recommendation: The Organization document internal control over compliance procedures and document written procedures to ensure compliance with 2 CFR 200.305. Views of Responsible Officials: Management agrees with the finding and will implement documentation of internal controls and document its policies and procedures.
Assistance Listing Numbers: 10.001, 10.200, 10.215, 10.307, 10.310, 10.311, and 10.912 Name of Federal Program or Cluster: Research and Development Cluster Name of Federal Agency: Department of Agriculture Federal Award Identification Numbers: 58-5090-2-037 2022-38624-38368 2021-38640-34714 2020-38640-31522 2022-38640-37486 2023-51300-40959 2021-68012-35917 2019-68012-29852 2020-68012-31934 2021-49400-35592 NR225F48XXXXG006 Name of Pass-through Entities and Award Periods: Michigan State University-September 1, 2022 through August 31, 2025; Regents of the University of Minnesota- April 1, 2021 through March 31, 2023, March 1, 2022 through February 28, 2025, and April 1, 2023 through March 31, 2025; Board of Regents of the University of Wisconsin System- September 1, 2019 through August 31, 2024, September 1, 2020 through August 31, 2025, and January 1, 2022 through December 31, 2026 Criteria or Specific Requirement: 2 CFR section 200.302(b)(6) requires the non-Federal entity to provide written procedures to implement the requirements of cash management as defined in 200.305. Condition: 2 out of 5 draw requests did not have documented approvals. Cause: There were no written procedures over cash management and when changes in management and accounting services occurred internal control documentation was not consistent. Effect or Potential Effect: Time elapsing between the transfer of funds and disbursements may not be minimized. Context: 5 out of 46 draw requests were tested. In addition, 4 significant draw requests were tested and all of those had documented approvals for internal control over cash management. Repeat Finding: This finding is a repeat of Finding 2022-004. Recommendation: The Organization document internal control over compliance procedures and document written procedures to ensure compliance with 2 CFR 200.305. Views of Responsible Officials: Management agrees with the finding and will implement documentation of internal controls and document its policies and procedures.
Assistance Listing Numbers: 10.001, 10.200, 10.215, 10.307, 10.310, 10.311, and 10.912 Name of Federal Program or Cluster: Research and Development Cluster Name of Federal Agency: Department of Agriculture Federal Award Identification Numbers: 58-5090-2-037 2022-38624-38368 2021-38640-34714 2020-38640-31522 2022-38640-37486 2023-51300-40959 2021-68012-35917 2019-68012-29852 2020-68012-31934 2021-49400-35592 NR225F48XXXXG006 Name of Pass-through Entities and Award Periods: Michigan State University-September 1, 2022 through August 31, 2025; Regents of the University of Minnesota- April 1, 2021 through March 31, 2023, March 1, 2022 through February 28, 2025, and April 1, 2023 through March 31, 2025; Board of Regents of the University of Wisconsin System- September 1, 2019 through August 31, 2024, September 1, 2020 through August 31, 2025, and January 1, 2022 through December 31, 2026 Criteria or Specific Requirement: 2 CFR section 200.302(b)(6) requires the non-Federal entity to provide written procedures to implement the requirements of cash management as defined in 200.305. Condition: 2 out of 5 draw requests did not have documented approvals. Cause: There were no written procedures over cash management and when changes in management and accounting services occurred internal control documentation was not consistent. Effect or Potential Effect: Time elapsing between the transfer of funds and disbursements may not be minimized. Context: 5 out of 46 draw requests were tested. In addition, 4 significant draw requests were tested and all of those had documented approvals for internal control over cash management. Repeat Finding: This finding is a repeat of Finding 2022-004. Recommendation: The Organization document internal control over compliance procedures and document written procedures to ensure compliance with 2 CFR 200.305. Views of Responsible Officials: Management agrees with the finding and will implement documentation of internal controls and document its policies and procedures.
Assistance Listing Numbers: 10.001, 10.200, 10.215, 10.307, 10.310, 10.311, and 10.912 Name of Federal Program or Cluster: Research and Development Cluster Name of Federal Agency: Department of Agriculture Federal Award Identification Numbers: 58-5090-2-037 2022-38624-38368 2021-38640-34714 2020-38640-31522 2022-38640-37486 2023-51300-40959 2021-68012-35917 2019-68012-29852 2020-68012-31934 2021-49400-35592 NR225F48XXXXG006 Name of Pass-through Entities and Award Periods: Michigan State University-September 1, 2022 through August 31, 2025; Regents of the University of Minnesota- April 1, 2021 through March 31, 2023, March 1, 2022 through February 28, 2025, and April 1, 2023 through March 31, 2025; Board of Regents of the University of Wisconsin System- September 1, 2019 through August 31, 2024, September 1, 2020 through August 31, 2025, and January 1, 2022 through December 31, 2026 Criteria or Specific Requirement: 2 CFR section 200.302(b)(6) requires the non-Federal entity to provide written procedures to implement the requirements of cash management as defined in 200.305. Condition: 2 out of 5 draw requests did not have documented approvals. Cause: There were no written procedures over cash management and when changes in management and accounting services occurred internal control documentation was not consistent. Effect or Potential Effect: Time elapsing between the transfer of funds and disbursements may not be minimized. Context: 5 out of 46 draw requests were tested. In addition, 4 significant draw requests were tested and all of those had documented approvals for internal control over cash management. Repeat Finding: This finding is a repeat of Finding 2022-004. Recommendation: The Organization document internal control over compliance procedures and document written procedures to ensure compliance with 2 CFR 200.305. Views of Responsible Officials: Management agrees with the finding and will implement documentation of internal controls and document its policies and procedures.
Assistance Listing Numbers: 10.001, 10.200, 10.215, 10.307, 10.310, 10.311, and 10.912 Name of Federal Program or Cluster: Research and Development Cluster Name of Federal Agency: Department of Agriculture Federal Award Identification Numbers: 58-5090-2-037 2022-38624-38368 2021-38640-34714 2020-38640-31522 2022-38640-37486 2023-51300-40959 2021-68012-35917 2019-68012-29852 2020-68012-31934 2021-49400-35592 NR225F48XXXXG006 Name of Pass-through Entities and Award Periods: Michigan State University-September 1, 2022 through August 31, 2025; Regents of the University of Minnesota- April 1, 2021 through March 31, 2023, March 1, 2022 through February 28, 2025, and April 1, 2023 through March 31, 2025; Board of Regents of the University of Wisconsin System- September 1, 2019 through August 31, 2024, September 1, 2020 through August 31, 2025, and January 1, 2022 through December 31, 2026 Criteria or Specific Requirement: 2 CFR section 200.302(b)(6) requires the non-Federal entity to provide written procedures to implement the requirements of cash management as defined in 200.305. Condition: 2 out of 5 draw requests did not have documented approvals. Cause: There were no written procedures over cash management and when changes in management and accounting services occurred internal control documentation was not consistent. Effect or Potential Effect: Time elapsing between the transfer of funds and disbursements may not be minimized. Context: 5 out of 46 draw requests were tested. In addition, 4 significant draw requests were tested and all of those had documented approvals for internal control over cash management. Repeat Finding: This finding is a repeat of Finding 2022-004. Recommendation: The Organization document internal control over compliance procedures and document written procedures to ensure compliance with 2 CFR 200.305. Views of Responsible Officials: Management agrees with the finding and will implement documentation of internal controls and document its policies and procedures.
Assistance Listing Numbers: 10.001, 10.200, 10.215, 10.307, 10.310, 10.311, and 10.912 Name of Federal Program or Cluster: Research and Development Cluster Name of Federal Agency: Department of Agriculture Federal Award Identification Numbers: 58-5090-2-037 2022-38624-38368 2021-38640-34714 2020-38640-31522 2022-38640-37486 2023-51300-40959 2021-68012-35917 2019-68012-29852 2020-68012-31934 2021-49400-35592 NR225F48XXXXG006 Name of Pass-through Entities and Award Periods: Michigan State University-September 1, 2022 through August 31, 2025; Regents of the University of Minnesota- April 1, 2021 through March 31, 2023, March 1, 2022 through February 28, 2025, and April 1, 2023 through March 31, 2025; Board of Regents of the University of Wisconsin System- September 1, 2019 through August 31, 2024, September 1, 2020 through August 31, 2025, and January 1, 2022 through December 31, 2026 Criteria or Specific Requirement: 2 CFR section 200.302(b)(6) requires the non-Federal entity to provide written procedures to implement the requirements of cash management as defined in 200.305. Condition: 2 out of 5 draw requests did not have documented approvals. Cause: There were no written procedures over cash management and when changes in management and accounting services occurred internal control documentation was not consistent. Effect or Potential Effect: Time elapsing between the transfer of funds and disbursements may not be minimized. Context: 5 out of 46 draw requests were tested. In addition, 4 significant draw requests were tested and all of those had documented approvals for internal control over cash management. Repeat Finding: This finding is a repeat of Finding 2022-004. Recommendation: The Organization document internal control over compliance procedures and document written procedures to ensure compliance with 2 CFR 200.305. Views of Responsible Officials: Management agrees with the finding and will implement documentation of internal controls and document its policies and procedures.
ALN Title and Number COVID-19 Coronavirus State and Local Fiscal Recovery Funds, AL #21.027 Federal Award Number and Year 2023 Federal Agency United States Department of the Treasury Pass-Through Entity Ohio Department of Public Safety Repeat Finding from Prior Audit? No Finding Number (if repeat) N/A Finding 2023-004 – Material Weakness/Noncompliance – Allowable Costs/Cost Principals and Suspension and Debarment 2 CFR 200 outlines the following policies required for a County spending Coronavirus State and Local Fiscal Recovery Funds: • 2 CFR 200.302(b)(7) for determining the allowability of costs in accordance with Subpart E-Cost Principles; • 2 CFR 200.430 for allowability of compensation costs; 2 CFR 200.464(a)(2) for reimbursement of relocation costs; • 2 CFR 200.318(c)(1) for employee conflicts of interest; • 2 CFR 200.318(c)(2) for organizational conflicts of interest; • 2 CFR 200.320(b)(2) for selection and awarding of contracts for competitive proposals; • 2 CFR 200.319(d) for minimum evaluation criteria for bids and proposals. During testing we noted that the County did not have sufficient written policies addressing the above requirements. Failure to adopt and implement policies could lead to noncompliance with federal requirements. We recommend the County approve and implement the above policies to ensure compliance with federal requirements.
ALN Title and Number COVID-19 Coronavirus State and Local Fiscal Recovery Funds, AL #21.027 Federal Award Number and Year 2023 Federal Agency United States Department of the Treasury Pass-Through Entity Ohio Department of Public Safety Repeat Finding from Prior Audit? No Finding Number (if repeat) N/A Finding 2023-004 – Material Weakness/Noncompliance – Allowable Costs/Cost Principals and Suspension and Debarment 2 CFR 200 outlines the following policies required for a County spending Coronavirus State and Local Fiscal Recovery Funds: • 2 CFR 200.302(b)(7) for determining the allowability of costs in accordance with Subpart E-Cost Principles; • 2 CFR 200.430 for allowability of compensation costs; 2 CFR 200.464(a)(2) for reimbursement of relocation costs; • 2 CFR 200.318(c)(1) for employee conflicts of interest; • 2 CFR 200.318(c)(2) for organizational conflicts of interest; • 2 CFR 200.320(b)(2) for selection and awarding of contracts for competitive proposals; • 2 CFR 200.319(d) for minimum evaluation criteria for bids and proposals. During testing we noted that the County did not have sufficient written policies addressing the above requirements. Failure to adopt and implement policies could lead to noncompliance with federal requirements. We recommend the County approve and implement the above policies to ensure compliance with federal requirements.
ALN Title and Number COVID-19 Coronavirus State and Local Fiscal Recovery Funds, AL #21.027 Federal Award Number and Year 2023 Federal Agency United States Department of the Treasury Pass-Through Entity Ohio Department of Public Safety Repeat Finding from Prior Audit? No Finding Number (if repeat) N/A Finding 2023-004 – Material Weakness/Noncompliance – Allowable Costs/Cost Principals and Suspension and Debarment 2 CFR 200 outlines the following policies required for a County spending Coronavirus State and Local Fiscal Recovery Funds: • 2 CFR 200.302(b)(7) for determining the allowability of costs in accordance with Subpart E-Cost Principles; • 2 CFR 200.430 for allowability of compensation costs; 2 CFR 200.464(a)(2) for reimbursement of relocation costs; • 2 CFR 200.318(c)(1) for employee conflicts of interest; • 2 CFR 200.318(c)(2) for organizational conflicts of interest; • 2 CFR 200.320(b)(2) for selection and awarding of contracts for competitive proposals; • 2 CFR 200.319(d) for minimum evaluation criteria for bids and proposals. During testing we noted that the County did not have sufficient written policies addressing the above requirements. Failure to adopt and implement policies could lead to noncompliance with federal requirements. We recommend the County approve and implement the above policies to ensure compliance with federal requirements.
ALN Title and Number COVID-19 Coronavirus State and Local Fiscal Recovery Funds, AL #21.027 Federal Award Number and Year 2023 Federal Agency United States Department of the Treasury Pass-Through Entity Ohio Department of Public Safety Repeat Finding from Prior Audit? No Finding Number (if repeat) N/A Finding 2023-004 – Material Weakness/Noncompliance – Allowable Costs/Cost Principals and Suspension and Debarment 2 CFR 200 outlines the following policies required for a County spending Coronavirus State and Local Fiscal Recovery Funds: • 2 CFR 200.302(b)(7) for determining the allowability of costs in accordance with Subpart E-Cost Principles; • 2 CFR 200.430 for allowability of compensation costs; 2 CFR 200.464(a)(2) for reimbursement of relocation costs; • 2 CFR 200.318(c)(1) for employee conflicts of interest; • 2 CFR 200.318(c)(2) for organizational conflicts of interest; • 2 CFR 200.320(b)(2) for selection and awarding of contracts for competitive proposals; • 2 CFR 200.319(d) for minimum evaluation criteria for bids and proposals. During testing we noted that the County did not have sufficient written policies addressing the above requirements. Failure to adopt and implement policies could lead to noncompliance with federal requirements. We recommend the County approve and implement the above policies to ensure compliance with federal requirements.
Federal Awards Findings and Questioned Costs Finding 2023-003 – Inaccurate SEFA - Reporting – Material Weakness Name of Federal Agency: U.S Department of Housing and Urban Development and U.S. Department of Treasury Federal Program Name: HOME Investments Partnership Program and Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 14.239 and 21.027 Federal Award Identification Number and Year: Identification number unavailable. Program years 2010, 2012, 2015, 2019, 2023. Name of Pass-through Entity (if applicable): Rhode Island Housing and Mortgage Finance Corporation and the City of Providence, Rhode Island. Criteria: In accordance with 2 CFR 200.302 (Financial Management), a grant recipient’s financial management system must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; 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. In addition, 2 CFR 200.510 (Financial Statements), states in part that the auditee must prepare a schedule of expenditures of Federal awards (“SEFA”) for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with 2CFR 200.502. At a minimum, the schedule must include: -All individual Federal programs by Federal agency. -For Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included. -Provide total Federal awards expended for each individual Federal program and the Assistance Listings Number or other identifying number when the Assistance Listings information is not available. -Include the total amount provided to subrecipients from each Federal program. Condition / Context: The Organization management’s review and approval process did not detect the errors that were identified during the audit procedures performed. The errors detected consisted of the understatement of Federal Assistance Listing Numbers 14.239 and 14.218 in the amounts of $364,207 and $295,000, respectively, and an overstatement of Federal Assistance Listing Number 21.027 in the amount of $66,320, for a total net understatement of $592,887. Cause: The Organization’s internal controls over the preparation and review of the SEFA were not operating effectively. Material audit adjustments were proposed during the course of the audit that lead to material changes to the SEFA. Effect or Potential Effect: Inadequate controls over the preparation of the SEFA could result in financial misstatements or potential noncompliance. Questioned Costs: None Identification as a Repeat Finding: This is a repeat finding for Assistance Listing Number 14.239. See 2022-003. Recommendation: We recommend the Organization strengthen its policies, procedures, and controls for the identification of federal awards to ensure a complete and accurate SEFA is prepared in a timely manner. Views of Responsible Officials: Management agrees with the finding and is in the process of revising internal controls to address SEFA preparation.
Federal Awards Findings and Questioned Costs Finding 2023-003 – Inaccurate SEFA - Reporting – Material Weakness Name of Federal Agency: U.S Department of Housing and Urban Development and U.S. Department of Treasury Federal Program Name: HOME Investments Partnership Program and Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 14.239 and 21.027 Federal Award Identification Number and Year: Identification number unavailable. Program years 2010, 2012, 2015, 2019, 2023. Name of Pass-through Entity (if applicable): Rhode Island Housing and Mortgage Finance Corporation and the City of Providence, Rhode Island. Criteria: In accordance with 2 CFR 200.302 (Financial Management), a grant recipient’s financial management system must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; 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. In addition, 2 CFR 200.510 (Financial Statements), states in part that the auditee must prepare a schedule of expenditures of Federal awards (“SEFA”) for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with 2CFR 200.502. At a minimum, the schedule must include: -All individual Federal programs by Federal agency. -For Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included. -Provide total Federal awards expended for each individual Federal program and the Assistance Listings Number or other identifying number when the Assistance Listings information is not available. -Include the total amount provided to subrecipients from each Federal program. Condition / Context: The Organization management’s review and approval process did not detect the errors that were identified during the audit procedures performed. The errors detected consisted of the understatement of Federal Assistance Listing Numbers 14.239 and 14.218 in the amounts of $364,207 and $295,000, respectively, and an overstatement of Federal Assistance Listing Number 21.027 in the amount of $66,320, for a total net understatement of $592,887. Cause: The Organization’s internal controls over the preparation and review of the SEFA were not operating effectively. Material audit adjustments were proposed during the course of the audit that lead to material changes to the SEFA. Effect or Potential Effect: Inadequate controls over the preparation of the SEFA could result in financial misstatements or potential noncompliance. Questioned Costs: None Identification as a Repeat Finding: This is a repeat finding for Assistance Listing Number 14.239. See 2022-003. Recommendation: We recommend the Organization strengthen its policies, procedures, and controls for the identification of federal awards to ensure a complete and accurate SEFA is prepared in a timely manner. Views of Responsible Officials: Management agrees with the finding and is in the process of revising internal controls to address SEFA preparation.
Federal Awards Findings and Questioned Costs Finding 2023-003 – Inaccurate SEFA - Reporting – Material Weakness Name of Federal Agency: U.S Department of Housing and Urban Development and U.S. Department of Treasury Federal Program Name: HOME Investments Partnership Program and Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 14.239 and 21.027 Federal Award Identification Number and Year: Identification number unavailable. Program years 2010, 2012, 2015, 2019, 2023. Name of Pass-through Entity (if applicable): Rhode Island Housing and Mortgage Finance Corporation and the City of Providence, Rhode Island. Criteria: In accordance with 2 CFR 200.302 (Financial Management), a grant recipient’s financial management system must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; 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. In addition, 2 CFR 200.510 (Financial Statements), states in part that the auditee must prepare a schedule of expenditures of Federal awards (“SEFA”) for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with 2CFR 200.502. At a minimum, the schedule must include: -All individual Federal programs by Federal agency. -For Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included. -Provide total Federal awards expended for each individual Federal program and the Assistance Listings Number or other identifying number when the Assistance Listings information is not available. -Include the total amount provided to subrecipients from each Federal program. Condition / Context: The Organization management’s review and approval process did not detect the errors that were identified during the audit procedures performed. The errors detected consisted of the understatement of Federal Assistance Listing Numbers 14.239 and 14.218 in the amounts of $364,207 and $295,000, respectively, and an overstatement of Federal Assistance Listing Number 21.027 in the amount of $66,320, for a total net understatement of $592,887. Cause: The Organization’s internal controls over the preparation and review of the SEFA were not operating effectively. Material audit adjustments were proposed during the course of the audit that lead to material changes to the SEFA. Effect or Potential Effect: Inadequate controls over the preparation of the SEFA could result in financial misstatements or potential noncompliance. Questioned Costs: None Identification as a Repeat Finding: This is a repeat finding for Assistance Listing Number 14.239. See 2022-003. Recommendation: We recommend the Organization strengthen its policies, procedures, and controls for the identification of federal awards to ensure a complete and accurate SEFA is prepared in a timely manner. Views of Responsible Officials: Management agrees with the finding and is in the process of revising internal controls to address SEFA preparation.
Finding 2023-003 Lack of Documentation to Support Expenditures Type of Finding: Noncompliance and Material Weakness in Internal Control over Compliance Condition and Context: The Organization failed to maintain financial records that properly substantiated expenditures which limited the ability to test several compliance requirements as part of audit procedures. These issues were most prevalent in testing direct disbursements. As part of audit procedures, 81 transactions were selected in a testing sample from a population which included 315 transactions. Of the 81 transactions tested, the Organization was unable to provide sufficient source documentation to support 21 of the transactions. Further, vendor and contract files were not consistently maintained and failed to provide adequate support to detail the history, method, and selection of procurement. Criteria: According to Uniform Guidance 2 CFR §200.302(b)(3), the Organization's financial management system 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. Cause: The Organization failed to implement appropriate policies and procedures that would allow the administrative and accounting departments to obtain the necessary documentation to support incurred expenditures. The Organization also failed to implement an effective system of internal controls and processes that would require expenditure approvals which would improve the storage of appropriate documentation. Effect: The effect of not maintaining appropriate source documentation to support expenditures could result in federal funds being misused or inappropriately spent. Failure to obtain the appropriate documentation likely limits the Organization's ability to review and approve expenditures internally. The inability to submit receipts on cost reimbursement grants could lead to disallowed grant claims. Additionally, a lack of documentation prevents the Organization's funders or auditors to evaluate the expenditures and hold the organization accountable for their expenditures to ensure compliance. Consequences of these actions would lead to questioned costs that may require repayment to the funding source and potentially a loss of future funding. Questioned Costs: Known questioned costs of $27,358 were identified. " Repeat Finding: This is not a repeat finding. Recommendation: It is recommended that the Organization's management develop and implement a robust document retention system for all elements of the financial reporting cycle. Documents should be stored in way that allows for them to be recalled upon request. Views of Responsible Officials: The Organization retained a licensed CPA firm with significant expertise in financial reporting and single audit compliance. The Organization will collaborate with the CPA firm to develop a standardized process for recording and tracking gift card transactions and allotments, ensuring accountability and traceability. Develop and enforce a formal policy requiring comprehensive documentation (e.g., invoices, receipts, contracts) for all expenditures over a certain threshold (e.g., $500 or higher). This policy will include requirements for approval and justification prior to disbursement. Require all staff to complete requisition forms for supplies or purchases in advance of procurement. These forms will include itemized details, purpose of purchase, and approval signatures. The Organization will update processes to ensure vendor and contract files include critical details: procurement history, selection method, contract terms, and vendor agreements. These files will be consistently maintained and reviewed for completeness. The Organization will strengthen the credit card usage process to require staff to submit itemized receipts, purpose of purchase, and pre-approval for all credit card transactions. This will include monthly reconciliations and management review of all credit card statements. The Organization will implement periodic internal reviews to ensure compliance with the new documentation and procurement processes. The CPA firm will assist with quality checks and provide ongoing guidance.
Finding 2023-003 Lack of Documentation to Support Expenditures Type of Finding: Noncompliance and Material Weakness in Internal Control over Compliance Condition and Context: The Organization failed to maintain financial records that properly substantiated expenditures which limited the ability to test several compliance requirements as part of audit procedures. These issues were most prevalent in testing direct disbursements. As part of audit procedures, 81 transactions were selected in a testing sample from a population which included 315 transactions. Of the 81 transactions tested, the Organization was unable to provide sufficient source documentation to support 21 of the transactions. Further, vendor and contract files were not consistently maintained and failed to provide adequate support to detail the history, method, and selection of procurement. Criteria: According to Uniform Guidance 2 CFR §200.302(b)(3), the Organization's financial management system 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. Cause: The Organization failed to implement appropriate policies and procedures that would allow the administrative and accounting departments to obtain the necessary documentation to support incurred expenditures. The Organization also failed to implement an effective system of internal controls and processes that would require expenditure approvals which would improve the storage of appropriate documentation. Effect: The effect of not maintaining appropriate source documentation to support expenditures could result in federal funds being misused or inappropriately spent. Failure to obtain the appropriate documentation likely limits the Organization's ability to review and approve expenditures internally. The inability to submit receipts on cost reimbursement grants could lead to disallowed grant claims. Additionally, a lack of documentation prevents the Organization's funders or auditors to evaluate the expenditures and hold the organization accountable for their expenditures to ensure compliance. Consequences of these actions would lead to questioned costs that may require repayment to the funding source and potentially a loss of future funding. Questioned Costs: Known questioned costs of $27,358 were identified. " Repeat Finding: This is not a repeat finding. Recommendation: It is recommended that the Organization's management develop and implement a robust document retention system for all elements of the financial reporting cycle. Documents should be stored in way that allows for them to be recalled upon request. Views of Responsible Officials: The Organization retained a licensed CPA firm with significant expertise in financial reporting and single audit compliance. The Organization will collaborate with the CPA firm to develop a standardized process for recording and tracking gift card transactions and allotments, ensuring accountability and traceability. Develop and enforce a formal policy requiring comprehensive documentation (e.g., invoices, receipts, contracts) for all expenditures over a certain threshold (e.g., $500 or higher). This policy will include requirements for approval and justification prior to disbursement. Require all staff to complete requisition forms for supplies or purchases in advance of procurement. These forms will include itemized details, purpose of purchase, and approval signatures. The Organization will update processes to ensure vendor and contract files include critical details: procurement history, selection method, contract terms, and vendor agreements. These files will be consistently maintained and reviewed for completeness. The Organization will strengthen the credit card usage process to require staff to submit itemized receipts, purpose of purchase, and pre-approval for all credit card transactions. This will include monthly reconciliations and management review of all credit card statements. The Organization will implement periodic internal reviews to ensure compliance with the new documentation and procurement processes. The CPA firm will assist with quality checks and provide ongoing guidance.
Finding 2023-003 Lack of Documentation to Support Expenditures Type of Finding: Noncompliance and Material Weakness in Internal Control over Compliance Condition and Context: The Organization failed to maintain financial records that properly substantiated expenditures which limited the ability to test several compliance requirements as part of audit procedures. These issues were most prevalent in testing direct disbursements. As part of audit procedures, 81 transactions were selected in a testing sample from a population which included 315 transactions. Of the 81 transactions tested, the Organization was unable to provide sufficient source documentation to support 21 of the transactions. Further, vendor and contract files were not consistently maintained and failed to provide adequate support to detail the history, method, and selection of procurement. Criteria: According to Uniform Guidance 2 CFR §200.302(b)(3), the Organization's financial management system 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. Cause: The Organization failed to implement appropriate policies and procedures that would allow the administrative and accounting departments to obtain the necessary documentation to support incurred expenditures. The Organization also failed to implement an effective system of internal controls and processes that would require expenditure approvals which would improve the storage of appropriate documentation. Effect: The effect of not maintaining appropriate source documentation to support expenditures could result in federal funds being misused or inappropriately spent. Failure to obtain the appropriate documentation likely limits the Organization's ability to review and approve expenditures internally. The inability to submit receipts on cost reimbursement grants could lead to disallowed grant claims. Additionally, a lack of documentation prevents the Organization's funders or auditors to evaluate the expenditures and hold the organization accountable for their expenditures to ensure compliance. Consequences of these actions would lead to questioned costs that may require repayment to the funding source and potentially a loss of future funding. Questioned Costs: Known questioned costs of $27,358 were identified. " Repeat Finding: This is not a repeat finding. Recommendation: It is recommended that the Organization's management develop and implement a robust document retention system for all elements of the financial reporting cycle. Documents should be stored in way that allows for them to be recalled upon request. Views of Responsible Officials: The Organization retained a licensed CPA firm with significant expertise in financial reporting and single audit compliance. The Organization will collaborate with the CPA firm to develop a standardized process for recording and tracking gift card transactions and allotments, ensuring accountability and traceability. Develop and enforce a formal policy requiring comprehensive documentation (e.g., invoices, receipts, contracts) for all expenditures over a certain threshold (e.g., $500 or higher). This policy will include requirements for approval and justification prior to disbursement. Require all staff to complete requisition forms for supplies or purchases in advance of procurement. These forms will include itemized details, purpose of purchase, and approval signatures. The Organization will update processes to ensure vendor and contract files include critical details: procurement history, selection method, contract terms, and vendor agreements. These files will be consistently maintained and reviewed for completeness. The Organization will strengthen the credit card usage process to require staff to submit itemized receipts, purpose of purchase, and pre-approval for all credit card transactions. This will include monthly reconciliations and management review of all credit card statements. The Organization will implement periodic internal reviews to ensure compliance with the new documentation and procurement processes. The CPA firm will assist with quality checks and provide ongoing guidance.
Finding 2023-003 Lack of Documentation to Support Expenditures Type of Finding: Noncompliance and Material Weakness in Internal Control over Compliance Condition and Context: The Organization failed to maintain financial records that properly substantiated expenditures which limited the ability to test several compliance requirements as part of audit procedures. These issues were most prevalent in testing direct disbursements. As part of audit procedures, 81 transactions were selected in a testing sample from a population which included 315 transactions. Of the 81 transactions tested, the Organization was unable to provide sufficient source documentation to support 21 of the transactions. Further, vendor and contract files were not consistently maintained and failed to provide adequate support to detail the history, method, and selection of procurement. Criteria: According to Uniform Guidance 2 CFR §200.302(b)(3), the Organization's financial management system 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. Cause: The Organization failed to implement appropriate policies and procedures that would allow the administrative and accounting departments to obtain the necessary documentation to support incurred expenditures. The Organization also failed to implement an effective system of internal controls and processes that would require expenditure approvals which would improve the storage of appropriate documentation. Effect: The effect of not maintaining appropriate source documentation to support expenditures could result in federal funds being misused or inappropriately spent. Failure to obtain the appropriate documentation likely limits the Organization's ability to review and approve expenditures internally. The inability to submit receipts on cost reimbursement grants could lead to disallowed grant claims. Additionally, a lack of documentation prevents the Organization's funders or auditors to evaluate the expenditures and hold the organization accountable for their expenditures to ensure compliance. Consequences of these actions would lead to questioned costs that may require repayment to the funding source and potentially a loss of future funding. Questioned Costs: Known questioned costs of $27,358 were identified. " Repeat Finding: This is not a repeat finding. Recommendation: It is recommended that the Organization's management develop and implement a robust document retention system for all elements of the financial reporting cycle. Documents should be stored in way that allows for them to be recalled upon request. Views of Responsible Officials: The Organization retained a licensed CPA firm with significant expertise in financial reporting and single audit compliance. The Organization will collaborate with the CPA firm to develop a standardized process for recording and tracking gift card transactions and allotments, ensuring accountability and traceability. Develop and enforce a formal policy requiring comprehensive documentation (e.g., invoices, receipts, contracts) for all expenditures over a certain threshold (e.g., $500 or higher). This policy will include requirements for approval and justification prior to disbursement. Require all staff to complete requisition forms for supplies or purchases in advance of procurement. These forms will include itemized details, purpose of purchase, and approval signatures. The Organization will update processes to ensure vendor and contract files include critical details: procurement history, selection method, contract terms, and vendor agreements. These files will be consistently maintained and reviewed for completeness. The Organization will strengthen the credit card usage process to require staff to submit itemized receipts, purpose of purchase, and pre-approval for all credit card transactions. This will include monthly reconciliations and management review of all credit card statements. The Organization will implement periodic internal reviews to ensure compliance with the new documentation and procurement processes. The CPA firm will assist with quality checks and provide ongoing guidance.
FINDING 2023-004 Subject: Water and Waste Disposal System for Rual Communities - Reporting Federal Agency: Department of Agriculture Federal Program: Water and Waste Disposal System for Rural Communities Assistance Listings Number: 10.760 Federal Award Number and Year (or Other Identifying Number): CY 2023 Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Condition and Context The Town had not designed or implemented adequate internal controls and procedures to ensure that reports were prepared, accurate, and submitted in accordance with the applicable compliance requirements for the federal grant. The United States Department of Agriculture (USDA) requires the following reports be submitted annually: Statement of Budget, Income, and Equity (Form RD 442-2) Balance Sheet (Form RD 442-3) The Form RD 442-2 covers financial operations relating to the Town's water main replacement project and the Form RD 442-3 presents the financial status of the project. In both instances, a borrower may submit the financial data on other forms, provided the forms are in a similar format and signed and dated by the organization's official to certify the correctness of the information. Alternatively, an annual audit may be submitted in lieu of the forms. The Town was required to file each report, as noted above, during the audit period; however, the reports were not filed. 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: INDIANA STATE BOARD OF ACCOUNTS 19 TOWN OF LAFONTAINE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (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. . . ." 7 CFR 1780.47 states in part: "Borrower accounting methods, management reporting and audits. . . . (e) Borrowers exempt from audits. All borrowers who are exempt from audits, will, within 60 days following the end of each fiscal year, furnish the RUS with annual financial statements, consisting of a verification of the organization's balance sheet and statement of income and expense by an appropriate official of the organization. Forms RD 442-2, 'Statement of Budget, Income and Equity,' and 442-3 may be used. (f) Management reports. These reports will furnish management with a means of evaluating prior decisions and serve as a basis for planning future operations and financial strategies. In those cases where revenues from multiple sources are pledged as security for an RUS loan, two reports will be required; one for the project being financed by RUS and one combining the entire operation of the borrower. In those cases where RUS loans are secured by general obligation bonds or assessments and the borrower combines revenues from all sources, one management report combining all such revenues is acceptable. The following management data will be submitted by the borrower to the processing office. These reports at a minimum will include a balance sheet and income and expense statement. . . . (2) Annual management reports. Prior to the beginning of each fiscal year the following will be submitted to the processing office. (If Form RD 442-2 is used as the annual management report, enter data in column three only of Schedule 1, and complete all of Schedule 2.) (i) Two copies of the management reports and proposed 'Annual Budget'. (ii) Financial information may be reported on Form RD 442-2 which includes Schedule 1, 'Statement of Budget, Income and Equity' and Schedule 2, 'Projected Cash Flow' or information in similar format. (iii) A copy of the rate schedule in effect at the time of submission. INDIANA STATE BOARD OF ACCOUNTS 20 TOWN OF LAFONTAINE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (g) Substitute for management reports. When RUS loans are secured by the general obligation of the public body or tax assessments which total 100 percent of the debt service requirements, the State program official may authorize an annual audit to substitute for other management reports if the audit is received within nine months after the end of the audit period." Cause The Town incorrectly assumed that the reports were filed by the engineering firm coordinating the grant. Effect Without the proper implementation of an effectively designed system of internal controls, the Town cannot ensure the required reports are filed with the awarding agency. As such, the USDA does not have accurate and current information to discern the financial status of the Town's project. Furthermore, noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the Town. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the Town's management design and implement a system of internal controls to ensure that all required reports are filed. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
2023-002- Activities Allowed and Allowable Costs Federal Assistance Listing Number: 84.287C Name of Program or Cluster: Twenty-First Century Community Learning Centers Agency: U.S. Department of Education Name of Passed-Through Entity: State of New Jersey Department of Education Criteria: According to the 21 CCLC grant agreement’s terms and conditions, a grantee is required to maintain a financial management system that includes the following: (1) accurate, current and complete disclosure of all financial activities related to 21 CCLC’s grant agreement in accordance with generally accepted accounting principles (“GAAP”), (2) records clearly identify the source and application of all funds used for the purposes described in the approved grant application, (3) effective internal and accounting controls over all funds, property and other assets. The grantee shall have in place a system for safeguarding all such assets and shall ensure that they are used solely for authorized purposes. (4) a comparison of actual outlays with budgeted amounts. Financial information shall be correlated with performance and productivity data and shall result in unit cost information. (5) accounting records that are supported by source documentation, and (6) procedures for determining the reasonableness and allowability of costs in a manner that is consistent with the Uniform Guidance. Activities Allowed and Allowable Costs compliance requirements applicable to 21 CCLC include: (1) Expenditures must be allowable under 2 CFR §200.403 (federal cost principles) and align with the grant’s specific terms and objectives and (2) Documentation of expenditures must meet the standards outlined in 2 CFR §200.302 (financial management and internal controls). Condition: In September 2024, legal counsel conducted a formal investigation and identified a potential misappropriation of funds regarding a vendor who submitted twelve invoices for goods and services to be used by children in the after-school programs across three Paterson schools amounting to $94,560 during a nine-month period covering May 2023 through February 2024. According to the formal investigation, there was insufficient evidence that the Organizations actually received the goods and services purchased from this vendor as shipping receipts, purchase orders or other verification support were not provided. Payments were made to the vendor with only an approved invoice. Cause: The lack of proper support documentation stems from insufficient internal controls over compliance due to inadequate segregation of duties, training and understanding of federal grant compliance requirements by staff responsible for grant administration as well as weak management oversight. The Organizations’ grant program administrators lack proper segregation of duties. There should be different individuals responsible for initiating purchase orders, receiving goods, approving invoices, and processing payments. There is no consistent oversight over expense/vendor verification and proper documentation processes, which include purchase orders and receiving reports that must be attached to invoices for verification. Effect: The Organizations’ 21 CCLC grant program was not in compliance with the federal grant terms and conditions, which can result in a potential repayment or “clawback” of misused grant funds by the grantor due to unverified expenditures and also lead to audit penalties or loss of future funding. Questioned Costs: $94,560. Repeat Finding: No. Recommendations: We recommend that the Organizations implement policies and procedures to comply with the federal grant terms and conditions in an effort to provide proper support documentation for verification of the existence that goods were received and services performed. These policies include the following: Recommendation #1 – A policy implemented for deliveries that arrive at the Organizations and that are made directly to the schools (“Units”). The arrival of a delivery must be documented at the Organizations and any deliveries made to the Units must be documented by the Unit Director and/or the individual who is making the delivery. All receiving reports and receipts should be matched to an invoice. Recommendation #2 – The Organizations must renew and enforce its policies regarding documentation the Units are responsible for submitting to the Program Director and/or the Organizations to ensure supplies and materials are received as well as activities and events provided by grant funds are properly documented and maintained. (1) There must be a policy related to the use of daily reports (known as “End of Day Reports”) that Unit Directors submit to the Program Director. The reports should be a template created by the Organizations or Program Director that the Unit Directors have available to them, which must identify what activities occurred on that day, whether parents were provided with anything at drop off or given out to the children and whether the Units accepted any deliveries and from whom. (2) The Unit Directors must also maintain "sign-in sheets". A policy must also be implemented regarding the use of sign-in sheets at the Units. The policy should have a clear mandate, purpose and outline the significance of maintaining these sign-in sheets as it relates to the grant program. The sign-in sheets must contain the number of the Unit, the name of the Director and Assistant Director, the name and a description of the correlating activity or event, whether any items, supplies, materials or kits were given to the children during the activity or event or provided at pickup time for the children to use at home, the number of children that participated in the activity or event, as well as the date and approximate time. The sign-in sheets should be emailed to the Program Director who will need to save these sheets in an online file. These files must be kept separately in a repository for each specific Unit by grant year. Other documentation that should be kept on file to further support the events and activities that occurred includes pictures of the children using the materials or participating in the activity or event. Unit Directors must be required to submit these files to the Program Director within a specified amount of time following an event or activity. Views of Responsible Officials: See corrective action plan attached.
2023-002- Activities Allowed and Allowable Costs Federal Assistance Listing Number: 84.287C Name of Program or Cluster: Twenty-First Century Community Learning Centers Agency: U.S. Department of Education Name of Passed-Through Entity: State of New Jersey Department of Education Criteria: According to the 21 CCLC grant agreement’s terms and conditions, a grantee is required to maintain a financial management system that includes the following: (1) accurate, current and complete disclosure of all financial activities related to 21 CCLC’s grant agreement in accordance with generally accepted accounting principles (“GAAP”), (2) records clearly identify the source and application of all funds used for the purposes described in the approved grant application, (3) effective internal and accounting controls over all funds, property and other assets. The grantee shall have in place a system for safeguarding all such assets and shall ensure that they are used solely for authorized purposes. (4) a comparison of actual outlays with budgeted amounts. Financial information shall be correlated with performance and productivity data and shall result in unit cost information. (5) accounting records that are supported by source documentation, and (6) procedures for determining the reasonableness and allowability of costs in a manner that is consistent with the Uniform Guidance. Activities Allowed and Allowable Costs compliance requirements applicable to 21 CCLC include: (1) Expenditures must be allowable under 2 CFR §200.403 (federal cost principles) and align with the grant’s specific terms and objectives and (2) Documentation of expenditures must meet the standards outlined in 2 CFR §200.302 (financial management and internal controls). Condition: In September 2024, legal counsel conducted a formal investigation and identified a potential misappropriation of funds regarding a vendor who submitted twelve invoices for goods and services to be used by children in the after-school programs across three Paterson schools amounting to $94,560 during a nine-month period covering May 2023 through February 2024. According to the formal investigation, there was insufficient evidence that the Organizations actually received the goods and services purchased from this vendor as shipping receipts, purchase orders or other verification support were not provided. Payments were made to the vendor with only an approved invoice. Cause: The lack of proper support documentation stems from insufficient internal controls over compliance due to inadequate segregation of duties, training and understanding of federal grant compliance requirements by staff responsible for grant administration as well as weak management oversight. The Organizations’ grant program administrators lack proper segregation of duties. There should be different individuals responsible for initiating purchase orders, receiving goods, approving invoices, and processing payments. There is no consistent oversight over expense/vendor verification and proper documentation processes, which include purchase orders and receiving reports that must be attached to invoices for verification. Effect: The Organizations’ 21 CCLC grant program was not in compliance with the federal grant terms and conditions, which can result in a potential repayment or “clawback” of misused grant funds by the grantor due to unverified expenditures and also lead to audit penalties or loss of future funding. Questioned Costs: $94,560. Repeat Finding: No. Recommendations: We recommend that the Organizations implement policies and procedures to comply with the federal grant terms and conditions in an effort to provide proper support documentation for verification of the existence that goods were received and services performed. These policies include the following: Recommendation #1 – A policy implemented for deliveries that arrive at the Organizations and that are made directly to the schools (“Units”). The arrival of a delivery must be documented at the Organizations and any deliveries made to the Units must be documented by the Unit Director and/or the individual who is making the delivery. All receiving reports and receipts should be matched to an invoice. Recommendation #2 – The Organizations must renew and enforce its policies regarding documentation the Units are responsible for submitting to the Program Director and/or the Organizations to ensure supplies and materials are received as well as activities and events provided by grant funds are properly documented and maintained. (1) There must be a policy related to the use of daily reports (known as “End of Day Reports”) that Unit Directors submit to the Program Director. The reports should be a template created by the Organizations or Program Director that the Unit Directors have available to them, which must identify what activities occurred on that day, whether parents were provided with anything at drop off or given out to the children and whether the Units accepted any deliveries and from whom. (2) The Unit Directors must also maintain "sign-in sheets". A policy must also be implemented regarding the use of sign-in sheets at the Units. The policy should have a clear mandate, purpose and outline the significance of maintaining these sign-in sheets as it relates to the grant program. The sign-in sheets must contain the number of the Unit, the name of the Director and Assistant Director, the name and a description of the correlating activity or event, whether any items, supplies, materials or kits were given to the children during the activity or event or provided at pickup time for the children to use at home, the number of children that participated in the activity or event, as well as the date and approximate time. The sign-in sheets should be emailed to the Program Director who will need to save these sheets in an online file. These files must be kept separately in a repository for each specific Unit by grant year. Other documentation that should be kept on file to further support the events and activities that occurred includes pictures of the children using the materials or participating in the activity or event. Unit Directors must be required to submit these files to the Program Director within a specified amount of time following an event or activity. Views of Responsible Officials: See corrective action plan attached.
31 CFR § 35.4(c) requires, in part, recipients, during the period of performance, to provide the Secretary of the U.S. Department of Treasury periodic reports providing detailed accounting of the uses of funds, modifications to a State or Territory's tax revenue sources, and such other information as the Secretary may require for the administration of this section. 2 CFR 1000.10 provides that, except for the deviations set forth elsewhere in this Part, the Department of Treasury adopts the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards set forth at 2 CFR Part 200. 2 CFR 200.302(b) states, in part, that the financial management system of each non-Federal entity must provide for the 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. The County was required to submit a Project and Expenditure Report by October 31, 2023, to the U.S Department of the Treasury through the Treasury’s Portal. However, the lack of adequate control procedures in place for reporting resulted in the County omitting $2,000,851 in expenditures that were reported on their 2023 Schedule of Expenditures of Federal Awards from their 2023 third quarter Project and Expenditure Report. We also noted the County submitted the 2023 fourth quarter Project and Expenditure Report on March 7, 2024 instead of the required date of January 31 2024. The County should establish a proper control process over reporting to ensure the timely, complete, and accurate submission of the Project and Expenditure Reports. This will help reduce the risk of Treasury taking action against the County for failure to comply with programmatic requirements.
31 CFR § 35.4(c) requires, in part, recipients, during the period of performance, to provide the Secretary of the U.S. Department of Treasury periodic reports providing detailed accounting of the uses of funds, modifications to a State or Territory's tax revenue sources, and such other information as the Secretary may require for the administration of this section. 2 CFR 1000.10 provides that, except for the deviations set forth elsewhere in this Part, the Department of Treasury adopts the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards set forth at 2 CFR Part 200. 2 CFR 200.302(b) states, in part, that the financial management system of each non-Federal entity must provide for the 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. The County was required to submit a Project and Expenditure Report by October 31, 2023, to the U.S Department of the Treasury through the Treasury’s Portal. However, the lack of adequate control procedures in place for reporting resulted in the County omitting $2,000,851 in expenditures that were reported on their 2023 Schedule of Expenditures of Federal Awards from their 2023 third quarter Project and Expenditure Report. We also noted the County submitted the 2023 fourth quarter Project and Expenditure Report on March 7, 2024 instead of the required date of January 31 2024. The County should establish a proper control process over reporting to ensure the timely, complete, and accurate submission of the Project and Expenditure Reports. This will help reduce the risk of Treasury taking action against the County for failure to comply with programmatic requirements.
Identification of a Repeat Finding: This is a repeat finding from the immediate previous audit, 2022-001. Criteria: Uniform Guidance requires written procedures for cash management and determining the allowability of costs in accordance with Subpart E – Cost Principles. Condition: Ozarks Regional YMCA did not have written procedures for cash management (2 CFR 200.302(b)(6)) and allowable costs determination (2 CFR 200.302(b)(7)) in accordance with Uniform Guidance requirements. Questioned Costs: $0 Cause: Ozarks Regional YMCA’s written policies and procedures were not updated to include required Uniform Guidance policies. Effect: Employees of Ozarks Regional YMCA could enter into a transaction that is not in compliance with Uniform Guidance requirements. Recommendation: We recommend Ozarks Regional YMCA draft and adopt written procedures in accordance with Uniform Guidance requirements. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding and has developed and implemented the appropriate policies and procedures effective September 2024.
Finding 2023-001; Lack of Written Policies and Procedures Condition: The Organization does not have written policies and procedures in place for the administration and management of federal awards, as required by the Uniform Guidance (2 CFR Part 200). Specifically, the organization lacks documented procedures for financial management, internal controls, allowable costs, procurement, and other key operational areas. Criteria: According to 2 CFR § 200.302(b)(7), non-federal entities must have written procedures to implement the requirements of § 200.305 (Payment) and must maintain 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. Additionally, 2 CFR § 200.303 requires non-federal entities to establish and maintain effective internal controls, including written policies and procedures, to ensure compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Cause: The absence of written policies and procedures appears to be due to a lack of awareness of the specific requirements under the Uniform Guidance, coupled with insufficient resources allocated to the development of these necessary internal controls. Effect: Without written policies and procedures, the Organization is at risk of non-compliance with federal regulations, which could lead to unallowable costs being charged to federal awards, inefficient or improper use of federal funds, and potential disallowance of costs during audits. This deficiency could also reduce the Organization's ability to ensure consistency and accountability in the management of federal funds. Recommendation: The Organization should develop and implement comprehensive written policies and procedures in accordance with the requirements of the Uniform Guidance. These should include, but not be limited to, the following areas: 1. Financial management, including procedures for payments and cash management. 2. Internal controls to ensure compliance with federal requirements. 3. Determination of allowable costs in accordance with federal regulations and the terms and conditions of the award. 4. Time and effort reporting and compensation. The Organization should also ensure that staff are adequately trained in these policies and procedures to enhance compliance and operational efficiency. Views of Responsible Officials of Auditee: In response to the finding, management will take action to develop and implement the necessary written policies and procedures by June 30, 2025. Comprehensive training will be provided to all relevant staff to ensure compliance with federal requirements.
Criteria: 2 CFR Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post Federal Awards Requirements, Standards for Financial and Program Management, and §200.302 (b), Financial Management. Identification, in its accounts, of all federal awards received and expended and the federal program under which they were received. Federal program and federal award identification must include, as applicable, the federal assistance listing title and number, federal award identification number, name of the federal agency, and name of the pass-through entity, if any. Additional Criteria: 2 CFR Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart F – Audit Requirements, §200.510, Financial Statements. Schedule of Expenditures of Federal Awards – The auditee also must prepare a schedule of expenditures of federal awards for the period covered by the auditee’s financial statements, which must include the total federal awards expended, as determined in accordance with §200.502, Basis for Determining Federal Awards Expended. At a minimum, the schedule must provide total federal awards expended for each individual federal program and the federal assistance listing number or other identifying number when the federal assistance listing information is not available. For a cluster of programs, also provide the total for the cluster. Condition: PCRI did not maintain a complete schedule of expenditures of federal awards. Cause: PCRI did not adequately track which government grants were federally-funded, resulting in an incomplete schedule of expenditures of federal awards. Effect: Failure to prepare an accurate and complete schedule of expenditures of federal awards results in noncompliance with 2 CFR Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post Federal Awards Requirements, Standards for Financial and Program Management, §200.302, Financial Management, and Subpart F – Audit Requirements, §200.510, Financial Statements. Recommendation: We recommend that PCRI document and implement policies and procedures to ensure the schedule of expenditures of federal awards is accurate and complete in accordance with 2 CFR Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post Federal Awards Requirements, Standards for Financial and Program Management, §200.302, Financial Management, and Subpart F – Audit Requirements, §200.510, Financial Statements, in order to obtain accurate calculations of major federal programs for the Single Audit and to ensure that PCRI is in compliance with all of the reporting requirements as to identify the source and application of funds for federally-funded activities.
Criteria: 2 CFR Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post Federal Awards Requirements, Standards for Financial and Program Management, and §200.302 (b), Financial Management. Identification, in its accounts, of all federal awards received and expended and the federal program under which they were received. Federal program and federal award identification must include, as applicable, the federal assistance listing title and number, federal award identification number, name of the federal agency, and name of the pass-through entity, if any. Additional Criteria: 2 CFR Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart F – Audit Requirements, §200.510, Financial Statements. Schedule of Expenditures of Federal Awards – The auditee also must prepare a schedule of expenditures of federal awards for the period covered by the auditee’s financial statements, which must include the total federal awards expended, as determined in accordance with §200.502, Basis for Determining Federal Awards Expended. At a minimum, the schedule must provide total federal awards expended for each individual federal program and the federal assistance listing number or other identifying number when the federal assistance listing information is not available. For a cluster of programs, also provide the total for the cluster. Condition: PCRI did not maintain a complete schedule of expenditures of federal awards. Cause: PCRI did not adequately track which government grants were federally-funded, resulting in an incomplete schedule of expenditures of federal awards. Effect: Failure to prepare an accurate and complete schedule of expenditures of federal awards results in noncompliance with 2 CFR Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post Federal Awards Requirements, Standards for Financial and Program Management, §200.302, Financial Management, and Subpart F – Audit Requirements, §200.510, Financial Statements. Recommendation: We recommend that PCRI document and implement policies and procedures to ensure the schedule of expenditures of federal awards is accurate and complete in accordance with 2 CFR Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post Federal Awards Requirements, Standards for Financial and Program Management, §200.302, Financial Management, and Subpart F – Audit Requirements, §200.510, Financial Statements, in order to obtain accurate calculations of major federal programs for the Single Audit and to ensure that PCRI is in compliance with all of the reporting requirements as to identify the source and application of funds for federally-funded activities.
Finding number: 2023-004 – Material Weakness in Internal Control Over Preparation, Reconciliation, and Retention of the Schedule of Expenditures of Federal Awards (SEFA) Federal Program #1 HIV Emergency Relief Project Grants: CFDA Number: 93.914 Federal Program #2 HIV Care Formula Grants): CFDA Number: 93.917 Federal Program #3: HIV Prevention Activities: CFDA Number: 93.941 Name of federal agency: U.S. Department of Health and Human Services (HHS) Name of pass-through entity: Multiple Repeat finding: No AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Criteria: Under 2 CFR §200.510(b), recipients of federal funds are required to prepare a Schedule of Expenditures of Federal Awards (SEFA) that fairly presents federal expenditures for each grant program and is derived from and supported by the entity's accounting records. Additionally, 2 CFR §200.302 requires that financial management systems adequately identify and account for federal awards to ensure accuracy and compliance with applicable federal requirements. Best practices dictate that federal expenditures should be reconciled regularly to the general ledger, and supporting documentation should be maintained to substantiate amounts reported on the SEFA. Condition: The Organization lacked adequate controls over the preparation, reconciliation, and retention of records related to the SEFA. Specifically: The SEFA incorrectly reported certain federal awards as non-federal awards. The SEFA is prepared based on amounts requested for reimbursement instead of directly based on expenditures incurred. Reconciliation schedules that tied SEFA expenditures directly back to the expenses recorded in the general ledger could not be located. Expenses recorded in the general ledger represent expenses incurred to operate the program in addition to direct grant expenditures; the Organization only requests reimbursement for direct program expenditures allowable under the program. Documentation of Excel-based reconciliations did not agree to reported monthly expenditures, indicating manual reclassification entries between program codes that were not clearly supported. Cause: The deficiencies noted were primarily due to: Lack of system controls to ensure that state and federal expenditures were separately tracked from non-grant funds spent within the same source codes. Turnover in grants management personnel, which resulted in missing, incomplete, or inaccurate reconciling records. Possible effect: Without a complete and accurate SEFA, the Organization risks noncompliance with Uniform Guidance reporting requirements, which could impact its ability to receive and administer federal funds in the future. Additionally, inaccurate SEFA reporting increases the risk of errors in administering funds, questioned costs, and over or under expenditure of grants. Questioned cost: None identified at this time. AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Recommendation: We recommend that the Organization implement the following measures to improve SEFA preparation and record retention: 1. Develop a Standardized SEFA Reconciliation Process – Implement formal policies and procedures requiring that SEFA expenditures be reconciled to the general ledger on a monthly basis, with documentation maintained for audit purposes. 2. Enhance System Controls for Grant Expenditures – Modify the financial system to allow for the proper segregation of state and federal expenditures from non-grant funds, ensuring that expenditures are properly classified at the time of entry. 3. Require Monthly Documentation Reviews – Establish a control requiring management to review and approve SEFA reconciliation schedules on a monthly or quarterly basis to ensure accuracy and completeness. 4. Implement a Centralized Documentation Retention Policy – Require that all SEFA-related reconciliation records, including general ledger tie-outs and manual adjustments, be retained in a centralized, accessible location. 5. Provide Grants Management Training – Conduct training for grants management and accounting personnel on SEFA preparation requirements, including Uniform Guidance compliance and best practices for documentation and reconciliation. 6. By implementing these measures, the Organization can improve its internal controls over SEFA preparation, ensure compliance with Uniform Guidance, and reduce the risk of reporting inaccuracies. AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Views of responsible officials: Management partially agrees with the finding. While we acknowledge that documentation supporting SEFA reconciliation was incomplete, we believe that federal expenditures were properly accounted for. We would like to address some of the auditors' points individually: "The SEFA is prepared based on amounts requested for reimbursement instead of directly based on expenditures incurred." Most grant awards do not fully fund the programs they support, most grant awards do not run concurrently with Prism Health North Texas' fiscal year (i.e., with the Calendar Year), and most grant awards are not spent in equal monthly amounts. It is correct that the 2023 SEFA was based on grant-appropriate expenditures that occurred during Calendar Year 2023 and were submitted to those grant sponsors for reimbursement. This will not necessarily reach the full cost to Prism for each grant-supported program, nor is it likely to exactly match any annual grant award amount. "Expenses recorded in the general ledger represent expenses incurred to operate the program in addition to direct grant expenditures; the Organization only requests reimbursement for direct program expenditures allowable under the program." As we confirmed verbally with the audit partner on April 25, 2025, this statement is intended to provide information and context and is not a criticism or intended to point out any problem. As stated above, most grant awards do not fully fund the programs they support; therefore, the general ledger necessarily includes both expenses the sponsor will reimburse and expenses the sponsor will not reimburse. Nonetheless, we are enhancing our reconciliation procedures and documentation practices to fully meet audit requirements. Finding 2023-004 refers to the auditors' assessment of the SEFA preparation and reconciliation processes that occurred in Calendar Year 2023. As of this writing, Prism Health North Texas has already changed its SEFA preparation and reconciliation processes and meets many of the recommendations above. Action Taken: Documentation Retention – On April 25, 2025, management created a structured and easily accessible system for storing all relevant information for all grants management personnel. A logical naming system for files identifying the SEFA period, the funding agency and identified general ledger expenditures claimed on the SEFA. We are now documenting the difference between all GL transactions and those submitted for sponsor reimbursement (i.e., SEFA components) in a single document per fund code, arranged by fiscal year. Previously this documentation was kept by invoice and arranged by grant year. Management will continue to ensure all expenditure-related support, such as invoices and purchase orders, is saved electronically to all AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) financial transactions. SEFA Reconciliation – Management has decided to move from an annual to quarterly SEFA reconciliation process to enhance the frequency of management oversight in SEFA draft preparation. VP of Finance will prepare the SEFA for independent review by the CFO. This will be put into a written policy/procedure. System Enhancements – Prism's current accounting system does not accommodate this. However, Prism is already in the later stages of selecting a new Enterprise Resource Planning (ERP) solution, with this as one of our key selection criteria. Our new ERP should allow for expenditures within the same cost center to be identified as grant-reimbursable or non-grant-reimbursable at the time of entry. We have identified opportunities in new financial management software solutions that we are scheduled to demo May 12th and the 16th of 2025. Opportunities such as: The ability to tag grant-reimbursable transactions, to segment our award cost center into two important categories. The full cost to manage a specific program. Identified cost claimed on the SEFA. Dedicated grant modules that will allow us to establish business rules and workflows to streamline and digitize critical aspects of grant management. Staff Engagement – Cross department coordination meetings occur monthly between the Finance organization and the Grants Management team to continue to foster alignment and collaboration in our grant cycles. A general overview of SEFA, including how to prepare and organize the monthly reconciliations, has already occurred with some of the grants accountants. _________________________________________________________
Finding number: 2023-005 Significant Deficiency in Internal Control Over Compliance: Allowable Costs and Activities Federal Program #1 HIV Emergency Relief Project Grants: CFDA Number 93.914 Federal Program #2 HIV Care Formula Grants: CFDA Number 93.917 Federal Program #3 HIV Prevention Activities: CFDA Number: 93.941 Name of federal agency: U.S. Department of Health and Human Services (HHS) Name of pass-through entity: Multiple Repeat finding: No AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Criteria: Under 2 CFR §200.303, recipients of federal funds must establish and maintain effective internal controls to ensure compliance with federal statutes, regulations, and the terms of grant agreements. 2 CFR §200.403 specifies that costs charged to federal programs must be allowable, necessary, reasonable, and allocable to the respective award. Additionally, 2 CFR §200.302 requires financial management systems to provide effective control and accountability over federal funds, including documented approval of expenditures. A best practice for grant compliance is to implement a documented approval process for expenditures charged to federal programs, ensuring that all costs are reviewed and supported by adequate documentation before reimbursement requests are submitted. Condition: The Organization did not have readily-available documented evidence of review and approval for expenditures charged to federal grants during the fiscal year. Specifically: The financial system did not capture or document approval of expenditures before they were charged to federal programs. No formalized system existed to retain evidence of grant-related expenditure reviews. While the prior Chief Financial Officer (CFO) manually reviewed each invoice, there was no indication of approval on the supporting documentation, making it impossible to verify that an appropriate review occurred before costs were charged to the grants. Cause: The issue arose due to the Organization's reliance on a manual review process conducted by the previous CFO, without requiring a formal approval signature or electronic system control to document review. This lack of a structured approval process resulted in insufficient evidence to support compliance with federal allowable cost requirements. AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Possible effect: Without a documented approval process, the Organization cannot demonstrate that expenditures charged to the grants were properly reviewed for allowability, reasonableness, and allocability in accordance with federal regulations. This increases the risk that: Unallowable or misclassified expenditures could be charged to the grants without detection. Noncompliance with federal grant requirements could result in questioned costs or additional oversight from funding agencies. Financial statement and grant reporting inaccuracies may occur if expenditures are not properly reviewed and approved. Although no specific unallowable costs were identified during the audit, the lack of documented review represents a significant deficiency in internal control over compliance. Questioned cost: None identified at this time. Recommendation: We recommend that the Organization strengthen its internal controls over grant expenditures by implementing the following measures: 1. Implement a Formal Expenditure Review and Approval Policy – Establish a policy requiring that all expenditures charged to grants be reviewed and approved by an appropriate individual before being recorded in the system. 2. Require Documentation of Review and Approval – Ensure that invoices, payroll allocations, and other cost support documents include a signature, initials, or system-generated approval to confirm review. 3. Utilize System-Based Controls – If possible, configure the financial system to require electronic approval for all grant-related expenditures before costs are recorded. AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Views of responsible officials: Management partially agrees with the finding. While we acknowledge that documentation of expenditure approval was not always retrievable, we believe the expenditures reviewed were all appropriate. Finding 2023-005 refers to the auditors' assessment of expenditure review and approval processes that occurred in Calendar Year 2023. During Calendar Year 2023, Prism relied on email routing of expenditures for review and approval. As of this writing, Prism Health North Texas' expenditure review and approval processes already meet or exceed the recommendations above. Action Taken: Expenditure Review – All expenditures charged to grants are reviewed and approved by two qualified individuals. Documentation of Review and Approval – Such review and approval for non-payroll expenditures occur in and are documented in the SAP Concur software before the costs are recorded in the accounting system (Abila). Such review and approval for payroll-related expenditures occur via and are documented via a combination of methods, also before they are recorded in Abila. Employees report their time, including how much time was devoted to grant activities, in the ExponentHR payroll system, and their supervisors approve both the time and the allocation in that system. Programmatic measures that also support grant billing ("units") are calculated from activity documented in the athenaOne electronic health record (EHR). Payroll allocation is calculated by one person, based on the ExponentHR documentation and the units, then reviewed and imported into Abila by a second person. The unposted transactions are reviewed again before posting. Utilize System-Based Controls – In place as above. _________________________________________________________
Finding number: 2023-004 – Material Weakness in Internal Control Over Preparation, Reconciliation, and Retention of the Schedule of Expenditures of Federal Awards (SEFA) Federal Program #1 HIV Emergency Relief Project Grants: CFDA Number: 93.914 Federal Program #2 HIV Care Formula Grants): CFDA Number: 93.917 Federal Program #3: HIV Prevention Activities: CFDA Number: 93.941 Name of federal agency: U.S. Department of Health and Human Services (HHS) Name of pass-through entity: Multiple Repeat finding: No AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Criteria: Under 2 CFR §200.510(b), recipients of federal funds are required to prepare a Schedule of Expenditures of Federal Awards (SEFA) that fairly presents federal expenditures for each grant program and is derived from and supported by the entity's accounting records. Additionally, 2 CFR §200.302 requires that financial management systems adequately identify and account for federal awards to ensure accuracy and compliance with applicable federal requirements. Best practices dictate that federal expenditures should be reconciled regularly to the general ledger, and supporting documentation should be maintained to substantiate amounts reported on the SEFA. Condition: The Organization lacked adequate controls over the preparation, reconciliation, and retention of records related to the SEFA. Specifically: The SEFA incorrectly reported certain federal awards as non-federal awards. The SEFA is prepared based on amounts requested for reimbursement instead of directly based on expenditures incurred. Reconciliation schedules that tied SEFA expenditures directly back to the expenses recorded in the general ledger could not be located. Expenses recorded in the general ledger represent expenses incurred to operate the program in addition to direct grant expenditures; the Organization only requests reimbursement for direct program expenditures allowable under the program. Documentation of Excel-based reconciliations did not agree to reported monthly expenditures, indicating manual reclassification entries between program codes that were not clearly supported. Cause: The deficiencies noted were primarily due to: Lack of system controls to ensure that state and federal expenditures were separately tracked from non-grant funds spent within the same source codes. Turnover in grants management personnel, which resulted in missing, incomplete, or inaccurate reconciling records. Possible effect: Without a complete and accurate SEFA, the Organization risks noncompliance with Uniform Guidance reporting requirements, which could impact its ability to receive and administer federal funds in the future. Additionally, inaccurate SEFA reporting increases the risk of errors in administering funds, questioned costs, and over or under expenditure of grants. Questioned cost: None identified at this time. AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Recommendation: We recommend that the Organization implement the following measures to improve SEFA preparation and record retention: 1. Develop a Standardized SEFA Reconciliation Process – Implement formal policies and procedures requiring that SEFA expenditures be reconciled to the general ledger on a monthly basis, with documentation maintained for audit purposes. 2. Enhance System Controls for Grant Expenditures – Modify the financial system to allow for the proper segregation of state and federal expenditures from non-grant funds, ensuring that expenditures are properly classified at the time of entry. 3. Require Monthly Documentation Reviews – Establish a control requiring management to review and approve SEFA reconciliation schedules on a monthly or quarterly basis to ensure accuracy and completeness. 4. Implement a Centralized Documentation Retention Policy – Require that all SEFA-related reconciliation records, including general ledger tie-outs and manual adjustments, be retained in a centralized, accessible location. 5. Provide Grants Management Training – Conduct training for grants management and accounting personnel on SEFA preparation requirements, including Uniform Guidance compliance and best practices for documentation and reconciliation. 6. By implementing these measures, the Organization can improve its internal controls over SEFA preparation, ensure compliance with Uniform Guidance, and reduce the risk of reporting inaccuracies. AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Views of responsible officials: Management partially agrees with the finding. While we acknowledge that documentation supporting SEFA reconciliation was incomplete, we believe that federal expenditures were properly accounted for. We would like to address some of the auditors' points individually: "The SEFA is prepared based on amounts requested for reimbursement instead of directly based on expenditures incurred." Most grant awards do not fully fund the programs they support, most grant awards do not run concurrently with Prism Health North Texas' fiscal year (i.e., with the Calendar Year), and most grant awards are not spent in equal monthly amounts. It is correct that the 2023 SEFA was based on grant-appropriate expenditures that occurred during Calendar Year 2023 and were submitted to those grant sponsors for reimbursement. This will not necessarily reach the full cost to Prism for each grant-supported program, nor is it likely to exactly match any annual grant award amount. "Expenses recorded in the general ledger represent expenses incurred to operate the program in addition to direct grant expenditures; the Organization only requests reimbursement for direct program expenditures allowable under the program." As we confirmed verbally with the audit partner on April 25, 2025, this statement is intended to provide information and context and is not a criticism or intended to point out any problem. As stated above, most grant awards do not fully fund the programs they support; therefore, the general ledger necessarily includes both expenses the sponsor will reimburse and expenses the sponsor will not reimburse. Nonetheless, we are enhancing our reconciliation procedures and documentation practices to fully meet audit requirements. Finding 2023-004 refers to the auditors' assessment of the SEFA preparation and reconciliation processes that occurred in Calendar Year 2023. As of this writing, Prism Health North Texas has already changed its SEFA preparation and reconciliation processes and meets many of the recommendations above. Action Taken: Documentation Retention – On April 25, 2025, management created a structured and easily accessible system for storing all relevant information for all grants management personnel. A logical naming system for files identifying the SEFA period, the funding agency and identified general ledger expenditures claimed on the SEFA. We are now documenting the difference between all GL transactions and those submitted for sponsor reimbursement (i.e., SEFA components) in a single document per fund code, arranged by fiscal year. Previously this documentation was kept by invoice and arranged by grant year. Management will continue to ensure all expenditure-related support, such as invoices and purchase orders, is saved electronically to all AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) financial transactions. SEFA Reconciliation – Management has decided to move from an annual to quarterly SEFA reconciliation process to enhance the frequency of management oversight in SEFA draft preparation. VP of Finance will prepare the SEFA for independent review by the CFO. This will be put into a written policy/procedure. System Enhancements – Prism's current accounting system does not accommodate this. However, Prism is already in the later stages of selecting a new Enterprise Resource Planning (ERP) solution, with this as one of our key selection criteria. Our new ERP should allow for expenditures within the same cost center to be identified as grant-reimbursable or non-grant-reimbursable at the time of entry. We have identified opportunities in new financial management software solutions that we are scheduled to demo May 12th and the 16th of 2025. Opportunities such as: The ability to tag grant-reimbursable transactions, to segment our award cost center into two important categories. The full cost to manage a specific program. Identified cost claimed on the SEFA. Dedicated grant modules that will allow us to establish business rules and workflows to streamline and digitize critical aspects of grant management. Staff Engagement – Cross department coordination meetings occur monthly between the Finance organization and the Grants Management team to continue to foster alignment and collaboration in our grant cycles. A general overview of SEFA, including how to prepare and organize the monthly reconciliations, has already occurred with some of the grants accountants. _________________________________________________________
Finding number: 2023-005 Significant Deficiency in Internal Control Over Compliance: Allowable Costs and Activities Federal Program #1 HIV Emergency Relief Project Grants: CFDA Number 93.914 Federal Program #2 HIV Care Formula Grants: CFDA Number 93.917 Federal Program #3 HIV Prevention Activities: CFDA Number: 93.941 Name of federal agency: U.S. Department of Health and Human Services (HHS) Name of pass-through entity: Multiple Repeat finding: No AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Criteria: Under 2 CFR §200.303, recipients of federal funds must establish and maintain effective internal controls to ensure compliance with federal statutes, regulations, and the terms of grant agreements. 2 CFR §200.403 specifies that costs charged to federal programs must be allowable, necessary, reasonable, and allocable to the respective award. Additionally, 2 CFR §200.302 requires financial management systems to provide effective control and accountability over federal funds, including documented approval of expenditures. A best practice for grant compliance is to implement a documented approval process for expenditures charged to federal programs, ensuring that all costs are reviewed and supported by adequate documentation before reimbursement requests are submitted. Condition: The Organization did not have readily-available documented evidence of review and approval for expenditures charged to federal grants during the fiscal year. Specifically: The financial system did not capture or document approval of expenditures before they were charged to federal programs. No formalized system existed to retain evidence of grant-related expenditure reviews. While the prior Chief Financial Officer (CFO) manually reviewed each invoice, there was no indication of approval on the supporting documentation, making it impossible to verify that an appropriate review occurred before costs were charged to the grants. Cause: The issue arose due to the Organization's reliance on a manual review process conducted by the previous CFO, without requiring a formal approval signature or electronic system control to document review. This lack of a structured approval process resulted in insufficient evidence to support compliance with federal allowable cost requirements. AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Possible effect: Without a documented approval process, the Organization cannot demonstrate that expenditures charged to the grants were properly reviewed for allowability, reasonableness, and allocability in accordance with federal regulations. This increases the risk that: Unallowable or misclassified expenditures could be charged to the grants without detection. Noncompliance with federal grant requirements could result in questioned costs or additional oversight from funding agencies. Financial statement and grant reporting inaccuracies may occur if expenditures are not properly reviewed and approved. Although no specific unallowable costs were identified during the audit, the lack of documented review represents a significant deficiency in internal control over compliance. Questioned cost: None identified at this time. Recommendation: We recommend that the Organization strengthen its internal controls over grant expenditures by implementing the following measures: 1. Implement a Formal Expenditure Review and Approval Policy – Establish a policy requiring that all expenditures charged to grants be reviewed and approved by an appropriate individual before being recorded in the system. 2. Require Documentation of Review and Approval – Ensure that invoices, payroll allocations, and other cost support documents include a signature, initials, or system-generated approval to confirm review. 3. Utilize System-Based Controls – If possible, configure the financial system to require electronic approval for all grant-related expenditures before costs are recorded. AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Views of responsible officials: Management partially agrees with the finding. While we acknowledge that documentation of expenditure approval was not always retrievable, we believe the expenditures reviewed were all appropriate. Finding 2023-005 refers to the auditors' assessment of expenditure review and approval processes that occurred in Calendar Year 2023. During Calendar Year 2023, Prism relied on email routing of expenditures for review and approval. As of this writing, Prism Health North Texas' expenditure review and approval processes already meet or exceed the recommendations above. Action Taken: Expenditure Review – All expenditures charged to grants are reviewed and approved by two qualified individuals. Documentation of Review and Approval – Such review and approval for non-payroll expenditures occur in and are documented in the SAP Concur software before the costs are recorded in the accounting system (Abila). Such review and approval for payroll-related expenditures occur via and are documented via a combination of methods, also before they are recorded in Abila. Employees report their time, including how much time was devoted to grant activities, in the ExponentHR payroll system, and their supervisors approve both the time and the allocation in that system. Programmatic measures that also support grant billing ("units") are calculated from activity documented in the athenaOne electronic health record (EHR). Payroll allocation is calculated by one person, based on the ExponentHR documentation and the units, then reviewed and imported into Abila by a second person. The unposted transactions are reviewed again before posting. Utilize System-Based Controls – In place as above. _________________________________________________________
Finding number: 2023-004 – Material Weakness in Internal Control Over Preparation, Reconciliation, and Retention of the Schedule of Expenditures of Federal Awards (SEFA) Federal Program #1 HIV Emergency Relief Project Grants: CFDA Number: 93.914 Federal Program #2 HIV Care Formula Grants): CFDA Number: 93.917 Federal Program #3: HIV Prevention Activities: CFDA Number: 93.941 Name of federal agency: U.S. Department of Health and Human Services (HHS) Name of pass-through entity: Multiple Repeat finding: No AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Criteria: Under 2 CFR §200.510(b), recipients of federal funds are required to prepare a Schedule of Expenditures of Federal Awards (SEFA) that fairly presents federal expenditures for each grant program and is derived from and supported by the entity's accounting records. Additionally, 2 CFR §200.302 requires that financial management systems adequately identify and account for federal awards to ensure accuracy and compliance with applicable federal requirements. Best practices dictate that federal expenditures should be reconciled regularly to the general ledger, and supporting documentation should be maintained to substantiate amounts reported on the SEFA. Condition: The Organization lacked adequate controls over the preparation, reconciliation, and retention of records related to the SEFA. Specifically: The SEFA incorrectly reported certain federal awards as non-federal awards. The SEFA is prepared based on amounts requested for reimbursement instead of directly based on expenditures incurred. Reconciliation schedules that tied SEFA expenditures directly back to the expenses recorded in the general ledger could not be located. Expenses recorded in the general ledger represent expenses incurred to operate the program in addition to direct grant expenditures; the Organization only requests reimbursement for direct program expenditures allowable under the program. Documentation of Excel-based reconciliations did not agree to reported monthly expenditures, indicating manual reclassification entries between program codes that were not clearly supported. Cause: The deficiencies noted were primarily due to: Lack of system controls to ensure that state and federal expenditures were separately tracked from non-grant funds spent within the same source codes. Turnover in grants management personnel, which resulted in missing, incomplete, or inaccurate reconciling records. Possible effect: Without a complete and accurate SEFA, the Organization risks noncompliance with Uniform Guidance reporting requirements, which could impact its ability to receive and administer federal funds in the future. Additionally, inaccurate SEFA reporting increases the risk of errors in administering funds, questioned costs, and over or under expenditure of grants. Questioned cost: None identified at this time. AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Recommendation: We recommend that the Organization implement the following measures to improve SEFA preparation and record retention: 1. Develop a Standardized SEFA Reconciliation Process – Implement formal policies and procedures requiring that SEFA expenditures be reconciled to the general ledger on a monthly basis, with documentation maintained for audit purposes. 2. Enhance System Controls for Grant Expenditures – Modify the financial system to allow for the proper segregation of state and federal expenditures from non-grant funds, ensuring that expenditures are properly classified at the time of entry. 3. Require Monthly Documentation Reviews – Establish a control requiring management to review and approve SEFA reconciliation schedules on a monthly or quarterly basis to ensure accuracy and completeness. 4. Implement a Centralized Documentation Retention Policy – Require that all SEFA-related reconciliation records, including general ledger tie-outs and manual adjustments, be retained in a centralized, accessible location. 5. Provide Grants Management Training – Conduct training for grants management and accounting personnel on SEFA preparation requirements, including Uniform Guidance compliance and best practices for documentation and reconciliation. 6. By implementing these measures, the Organization can improve its internal controls over SEFA preparation, ensure compliance with Uniform Guidance, and reduce the risk of reporting inaccuracies. AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Views of responsible officials: Management partially agrees with the finding. While we acknowledge that documentation supporting SEFA reconciliation was incomplete, we believe that federal expenditures were properly accounted for. We would like to address some of the auditors' points individually: "The SEFA is prepared based on amounts requested for reimbursement instead of directly based on expenditures incurred." Most grant awards do not fully fund the programs they support, most grant awards do not run concurrently with Prism Health North Texas' fiscal year (i.e., with the Calendar Year), and most grant awards are not spent in equal monthly amounts. It is correct that the 2023 SEFA was based on grant-appropriate expenditures that occurred during Calendar Year 2023 and were submitted to those grant sponsors for reimbursement. This will not necessarily reach the full cost to Prism for each grant-supported program, nor is it likely to exactly match any annual grant award amount. "Expenses recorded in the general ledger represent expenses incurred to operate the program in addition to direct grant expenditures; the Organization only requests reimbursement for direct program expenditures allowable under the program." As we confirmed verbally with the audit partner on April 25, 2025, this statement is intended to provide information and context and is not a criticism or intended to point out any problem. As stated above, most grant awards do not fully fund the programs they support; therefore, the general ledger necessarily includes both expenses the sponsor will reimburse and expenses the sponsor will not reimburse. Nonetheless, we are enhancing our reconciliation procedures and documentation practices to fully meet audit requirements. Finding 2023-004 refers to the auditors' assessment of the SEFA preparation and reconciliation processes that occurred in Calendar Year 2023. As of this writing, Prism Health North Texas has already changed its SEFA preparation and reconciliation processes and meets many of the recommendations above. Action Taken: Documentation Retention – On April 25, 2025, management created a structured and easily accessible system for storing all relevant information for all grants management personnel. A logical naming system for files identifying the SEFA period, the funding agency and identified general ledger expenditures claimed on the SEFA. We are now documenting the difference between all GL transactions and those submitted for sponsor reimbursement (i.e., SEFA components) in a single document per fund code, arranged by fiscal year. Previously this documentation was kept by invoice and arranged by grant year. Management will continue to ensure all expenditure-related support, such as invoices and purchase orders, is saved electronically to all AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) financial transactions. SEFA Reconciliation – Management has decided to move from an annual to quarterly SEFA reconciliation process to enhance the frequency of management oversight in SEFA draft preparation. VP of Finance will prepare the SEFA for independent review by the CFO. This will be put into a written policy/procedure. System Enhancements – Prism's current accounting system does not accommodate this. However, Prism is already in the later stages of selecting a new Enterprise Resource Planning (ERP) solution, with this as one of our key selection criteria. Our new ERP should allow for expenditures within the same cost center to be identified as grant-reimbursable or non-grant-reimbursable at the time of entry. We have identified opportunities in new financial management software solutions that we are scheduled to demo May 12th and the 16th of 2025. Opportunities such as: The ability to tag grant-reimbursable transactions, to segment our award cost center into two important categories. The full cost to manage a specific program. Identified cost claimed on the SEFA. Dedicated grant modules that will allow us to establish business rules and workflows to streamline and digitize critical aspects of grant management. Staff Engagement – Cross department coordination meetings occur monthly between the Finance organization and the Grants Management team to continue to foster alignment and collaboration in our grant cycles. A general overview of SEFA, including how to prepare and organize the monthly reconciliations, has already occurred with some of the grants accountants. _________________________________________________________
Finding number: 2023-005 Significant Deficiency in Internal Control Over Compliance: Allowable Costs and Activities Federal Program #1 HIV Emergency Relief Project Grants: CFDA Number 93.914 Federal Program #2 HIV Care Formula Grants: CFDA Number 93.917 Federal Program #3 HIV Prevention Activities: CFDA Number: 93.941 Name of federal agency: U.S. Department of Health and Human Services (HHS) Name of pass-through entity: Multiple Repeat finding: No AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Criteria: Under 2 CFR §200.303, recipients of federal funds must establish and maintain effective internal controls to ensure compliance with federal statutes, regulations, and the terms of grant agreements. 2 CFR §200.403 specifies that costs charged to federal programs must be allowable, necessary, reasonable, and allocable to the respective award. Additionally, 2 CFR §200.302 requires financial management systems to provide effective control and accountability over federal funds, including documented approval of expenditures. A best practice for grant compliance is to implement a documented approval process for expenditures charged to federal programs, ensuring that all costs are reviewed and supported by adequate documentation before reimbursement requests are submitted. Condition: The Organization did not have readily-available documented evidence of review and approval for expenditures charged to federal grants during the fiscal year. Specifically: The financial system did not capture or document approval of expenditures before they were charged to federal programs. No formalized system existed to retain evidence of grant-related expenditure reviews. While the prior Chief Financial Officer (CFO) manually reviewed each invoice, there was no indication of approval on the supporting documentation, making it impossible to verify that an appropriate review occurred before costs were charged to the grants. Cause: The issue arose due to the Organization's reliance on a manual review process conducted by the previous CFO, without requiring a formal approval signature or electronic system control to document review. This lack of a structured approval process resulted in insufficient evidence to support compliance with federal allowable cost requirements. AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Possible effect: Without a documented approval process, the Organization cannot demonstrate that expenditures charged to the grants were properly reviewed for allowability, reasonableness, and allocability in accordance with federal regulations. This increases the risk that: Unallowable or misclassified expenditures could be charged to the grants without detection. Noncompliance with federal grant requirements could result in questioned costs or additional oversight from funding agencies. Financial statement and grant reporting inaccuracies may occur if expenditures are not properly reviewed and approved. Although no specific unallowable costs were identified during the audit, the lack of documented review represents a significant deficiency in internal control over compliance. Questioned cost: None identified at this time. Recommendation: We recommend that the Organization strengthen its internal controls over grant expenditures by implementing the following measures: 1. Implement a Formal Expenditure Review and Approval Policy – Establish a policy requiring that all expenditures charged to grants be reviewed and approved by an appropriate individual before being recorded in the system. 2. Require Documentation of Review and Approval – Ensure that invoices, payroll allocations, and other cost support documents include a signature, initials, or system-generated approval to confirm review. 3. Utilize System-Based Controls – If possible, configure the financial system to require electronic approval for all grant-related expenditures before costs are recorded. AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Views of responsible officials: Management partially agrees with the finding. While we acknowledge that documentation of expenditure approval was not always retrievable, we believe the expenditures reviewed were all appropriate. Finding 2023-005 refers to the auditors' assessment of expenditure review and approval processes that occurred in Calendar Year 2023. During Calendar Year 2023, Prism relied on email routing of expenditures for review and approval. As of this writing, Prism Health North Texas' expenditure review and approval processes already meet or exceed the recommendations above. Action Taken: Expenditure Review – All expenditures charged to grants are reviewed and approved by two qualified individuals. Documentation of Review and Approval – Such review and approval for non-payroll expenditures occur in and are documented in the SAP Concur software before the costs are recorded in the accounting system (Abila). Such review and approval for payroll-related expenditures occur via and are documented via a combination of methods, also before they are recorded in Abila. Employees report their time, including how much time was devoted to grant activities, in the ExponentHR payroll system, and their supervisors approve both the time and the allocation in that system. Programmatic measures that also support grant billing ("units") are calculated from activity documented in the athenaOne electronic health record (EHR). Payroll allocation is calculated by one person, based on the ExponentHR documentation and the units, then reviewed and imported into Abila by a second person. The unposted transactions are reviewed again before posting. Utilize System-Based Controls – In place as above. _________________________________________________________
Finding number: 2023-004 – Material Weakness in Internal Control Over Preparation, Reconciliation, and Retention of the Schedule of Expenditures of Federal Awards (SEFA) Federal Program #1 HIV Emergency Relief Project Grants: CFDA Number: 93.914 Federal Program #2 HIV Care Formula Grants): CFDA Number: 93.917 Federal Program #3: HIV Prevention Activities: CFDA Number: 93.941 Name of federal agency: U.S. Department of Health and Human Services (HHS) Name of pass-through entity: Multiple Repeat finding: No AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Criteria: Under 2 CFR §200.510(b), recipients of federal funds are required to prepare a Schedule of Expenditures of Federal Awards (SEFA) that fairly presents federal expenditures for each grant program and is derived from and supported by the entity's accounting records. Additionally, 2 CFR §200.302 requires that financial management systems adequately identify and account for federal awards to ensure accuracy and compliance with applicable federal requirements. Best practices dictate that federal expenditures should be reconciled regularly to the general ledger, and supporting documentation should be maintained to substantiate amounts reported on the SEFA. Condition: The Organization lacked adequate controls over the preparation, reconciliation, and retention of records related to the SEFA. Specifically: The SEFA incorrectly reported certain federal awards as non-federal awards. The SEFA is prepared based on amounts requested for reimbursement instead of directly based on expenditures incurred. Reconciliation schedules that tied SEFA expenditures directly back to the expenses recorded in the general ledger could not be located. Expenses recorded in the general ledger represent expenses incurred to operate the program in addition to direct grant expenditures; the Organization only requests reimbursement for direct program expenditures allowable under the program. Documentation of Excel-based reconciliations did not agree to reported monthly expenditures, indicating manual reclassification entries between program codes that were not clearly supported. Cause: The deficiencies noted were primarily due to: Lack of system controls to ensure that state and federal expenditures were separately tracked from non-grant funds spent within the same source codes. Turnover in grants management personnel, which resulted in missing, incomplete, or inaccurate reconciling records. Possible effect: Without a complete and accurate SEFA, the Organization risks noncompliance with Uniform Guidance reporting requirements, which could impact its ability to receive and administer federal funds in the future. Additionally, inaccurate SEFA reporting increases the risk of errors in administering funds, questioned costs, and over or under expenditure of grants. Questioned cost: None identified at this time. AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Recommendation: We recommend that the Organization implement the following measures to improve SEFA preparation and record retention: 1. Develop a Standardized SEFA Reconciliation Process – Implement formal policies and procedures requiring that SEFA expenditures be reconciled to the general ledger on a monthly basis, with documentation maintained for audit purposes. 2. Enhance System Controls for Grant Expenditures – Modify the financial system to allow for the proper segregation of state and federal expenditures from non-grant funds, ensuring that expenditures are properly classified at the time of entry. 3. Require Monthly Documentation Reviews – Establish a control requiring management to review and approve SEFA reconciliation schedules on a monthly or quarterly basis to ensure accuracy and completeness. 4. Implement a Centralized Documentation Retention Policy – Require that all SEFA-related reconciliation records, including general ledger tie-outs and manual adjustments, be retained in a centralized, accessible location. 5. Provide Grants Management Training – Conduct training for grants management and accounting personnel on SEFA preparation requirements, including Uniform Guidance compliance and best practices for documentation and reconciliation. 6. By implementing these measures, the Organization can improve its internal controls over SEFA preparation, ensure compliance with Uniform Guidance, and reduce the risk of reporting inaccuracies. AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Views of responsible officials: Management partially agrees with the finding. While we acknowledge that documentation supporting SEFA reconciliation was incomplete, we believe that federal expenditures were properly accounted for. We would like to address some of the auditors' points individually: "The SEFA is prepared based on amounts requested for reimbursement instead of directly based on expenditures incurred." Most grant awards do not fully fund the programs they support, most grant awards do not run concurrently with Prism Health North Texas' fiscal year (i.e., with the Calendar Year), and most grant awards are not spent in equal monthly amounts. It is correct that the 2023 SEFA was based on grant-appropriate expenditures that occurred during Calendar Year 2023 and were submitted to those grant sponsors for reimbursement. This will not necessarily reach the full cost to Prism for each grant-supported program, nor is it likely to exactly match any annual grant award amount. "Expenses recorded in the general ledger represent expenses incurred to operate the program in addition to direct grant expenditures; the Organization only requests reimbursement for direct program expenditures allowable under the program." As we confirmed verbally with the audit partner on April 25, 2025, this statement is intended to provide information and context and is not a criticism or intended to point out any problem. As stated above, most grant awards do not fully fund the programs they support; therefore, the general ledger necessarily includes both expenses the sponsor will reimburse and expenses the sponsor will not reimburse. Nonetheless, we are enhancing our reconciliation procedures and documentation practices to fully meet audit requirements. Finding 2023-004 refers to the auditors' assessment of the SEFA preparation and reconciliation processes that occurred in Calendar Year 2023. As of this writing, Prism Health North Texas has already changed its SEFA preparation and reconciliation processes and meets many of the recommendations above. Action Taken: Documentation Retention – On April 25, 2025, management created a structured and easily accessible system for storing all relevant information for all grants management personnel. A logical naming system for files identifying the SEFA period, the funding agency and identified general ledger expenditures claimed on the SEFA. We are now documenting the difference between all GL transactions and those submitted for sponsor reimbursement (i.e., SEFA components) in a single document per fund code, arranged by fiscal year. Previously this documentation was kept by invoice and arranged by grant year. Management will continue to ensure all expenditure-related support, such as invoices and purchase orders, is saved electronically to all AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) financial transactions. SEFA Reconciliation – Management has decided to move from an annual to quarterly SEFA reconciliation process to enhance the frequency of management oversight in SEFA draft preparation. VP of Finance will prepare the SEFA for independent review by the CFO. This will be put into a written policy/procedure. System Enhancements – Prism's current accounting system does not accommodate this. However, Prism is already in the later stages of selecting a new Enterprise Resource Planning (ERP) solution, with this as one of our key selection criteria. Our new ERP should allow for expenditures within the same cost center to be identified as grant-reimbursable or non-grant-reimbursable at the time of entry. We have identified opportunities in new financial management software solutions that we are scheduled to demo May 12th and the 16th of 2025. Opportunities such as: The ability to tag grant-reimbursable transactions, to segment our award cost center into two important categories. The full cost to manage a specific program. Identified cost claimed on the SEFA. Dedicated grant modules that will allow us to establish business rules and workflows to streamline and digitize critical aspects of grant management. Staff Engagement – Cross department coordination meetings occur monthly between the Finance organization and the Grants Management team to continue to foster alignment and collaboration in our grant cycles. A general overview of SEFA, including how to prepare and organize the monthly reconciliations, has already occurred with some of the grants accountants. _________________________________________________________
Finding number: 2023-005 Significant Deficiency in Internal Control Over Compliance: Allowable Costs and Activities Federal Program #1 HIV Emergency Relief Project Grants: CFDA Number 93.914 Federal Program #2 HIV Care Formula Grants: CFDA Number 93.917 Federal Program #3 HIV Prevention Activities: CFDA Number: 93.941 Name of federal agency: U.S. Department of Health and Human Services (HHS) Name of pass-through entity: Multiple Repeat finding: No AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Criteria: Under 2 CFR §200.303, recipients of federal funds must establish and maintain effective internal controls to ensure compliance with federal statutes, regulations, and the terms of grant agreements. 2 CFR §200.403 specifies that costs charged to federal programs must be allowable, necessary, reasonable, and allocable to the respective award. Additionally, 2 CFR §200.302 requires financial management systems to provide effective control and accountability over federal funds, including documented approval of expenditures. A best practice for grant compliance is to implement a documented approval process for expenditures charged to federal programs, ensuring that all costs are reviewed and supported by adequate documentation before reimbursement requests are submitted. Condition: The Organization did not have readily-available documented evidence of review and approval for expenditures charged to federal grants during the fiscal year. Specifically: The financial system did not capture or document approval of expenditures before they were charged to federal programs. No formalized system existed to retain evidence of grant-related expenditure reviews. While the prior Chief Financial Officer (CFO) manually reviewed each invoice, there was no indication of approval on the supporting documentation, making it impossible to verify that an appropriate review occurred before costs were charged to the grants. Cause: The issue arose due to the Organization's reliance on a manual review process conducted by the previous CFO, without requiring a formal approval signature or electronic system control to document review. This lack of a structured approval process resulted in insufficient evidence to support compliance with federal allowable cost requirements. AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Possible effect: Without a documented approval process, the Organization cannot demonstrate that expenditures charged to the grants were properly reviewed for allowability, reasonableness, and allocability in accordance with federal regulations. This increases the risk that: Unallowable or misclassified expenditures could be charged to the grants without detection. Noncompliance with federal grant requirements could result in questioned costs or additional oversight from funding agencies. Financial statement and grant reporting inaccuracies may occur if expenditures are not properly reviewed and approved. Although no specific unallowable costs were identified during the audit, the lack of documented review represents a significant deficiency in internal control over compliance. Questioned cost: None identified at this time. Recommendation: We recommend that the Organization strengthen its internal controls over grant expenditures by implementing the following measures: 1. Implement a Formal Expenditure Review and Approval Policy – Establish a policy requiring that all expenditures charged to grants be reviewed and approved by an appropriate individual before being recorded in the system. 2. Require Documentation of Review and Approval – Ensure that invoices, payroll allocations, and other cost support documents include a signature, initials, or system-generated approval to confirm review. 3. Utilize System-Based Controls – If possible, configure the financial system to require electronic approval for all grant-related expenditures before costs are recorded. AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Views of responsible officials: Management partially agrees with the finding. While we acknowledge that documentation of expenditure approval was not always retrievable, we believe the expenditures reviewed were all appropriate. Finding 2023-005 refers to the auditors' assessment of expenditure review and approval processes that occurred in Calendar Year 2023. During Calendar Year 2023, Prism relied on email routing of expenditures for review and approval. As of this writing, Prism Health North Texas' expenditure review and approval processes already meet or exceed the recommendations above. Action Taken: Expenditure Review – All expenditures charged to grants are reviewed and approved by two qualified individuals. Documentation of Review and Approval – Such review and approval for non-payroll expenditures occur in and are documented in the SAP Concur software before the costs are recorded in the accounting system (Abila). Such review and approval for payroll-related expenditures occur via and are documented via a combination of methods, also before they are recorded in Abila. Employees report their time, including how much time was devoted to grant activities, in the ExponentHR payroll system, and their supervisors approve both the time and the allocation in that system. Programmatic measures that also support grant billing ("units") are calculated from activity documented in the athenaOne electronic health record (EHR). Payroll allocation is calculated by one person, based on the ExponentHR documentation and the units, then reviewed and imported into Abila by a second person. The unposted transactions are reviewed again before posting. Utilize System-Based Controls – In place as above. _________________________________________________________
Finding number: 2023-004 – Material Weakness in Internal Control Over Preparation, Reconciliation, and Retention of the Schedule of Expenditures of Federal Awards (SEFA) Federal Program #1 HIV Emergency Relief Project Grants: CFDA Number: 93.914 Federal Program #2 HIV Care Formula Grants): CFDA Number: 93.917 Federal Program #3: HIV Prevention Activities: CFDA Number: 93.941 Name of federal agency: U.S. Department of Health and Human Services (HHS) Name of pass-through entity: Multiple Repeat finding: No AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Criteria: Under 2 CFR §200.510(b), recipients of federal funds are required to prepare a Schedule of Expenditures of Federal Awards (SEFA) that fairly presents federal expenditures for each grant program and is derived from and supported by the entity's accounting records. Additionally, 2 CFR §200.302 requires that financial management systems adequately identify and account for federal awards to ensure accuracy and compliance with applicable federal requirements. Best practices dictate that federal expenditures should be reconciled regularly to the general ledger, and supporting documentation should be maintained to substantiate amounts reported on the SEFA. Condition: The Organization lacked adequate controls over the preparation, reconciliation, and retention of records related to the SEFA. Specifically: The SEFA incorrectly reported certain federal awards as non-federal awards. The SEFA is prepared based on amounts requested for reimbursement instead of directly based on expenditures incurred. Reconciliation schedules that tied SEFA expenditures directly back to the expenses recorded in the general ledger could not be located. Expenses recorded in the general ledger represent expenses incurred to operate the program in addition to direct grant expenditures; the Organization only requests reimbursement for direct program expenditures allowable under the program. Documentation of Excel-based reconciliations did not agree to reported monthly expenditures, indicating manual reclassification entries between program codes that were not clearly supported. Cause: The deficiencies noted were primarily due to: Lack of system controls to ensure that state and federal expenditures were separately tracked from non-grant funds spent within the same source codes. Turnover in grants management personnel, which resulted in missing, incomplete, or inaccurate reconciling records. Possible effect: Without a complete and accurate SEFA, the Organization risks noncompliance with Uniform Guidance reporting requirements, which could impact its ability to receive and administer federal funds in the future. Additionally, inaccurate SEFA reporting increases the risk of errors in administering funds, questioned costs, and over or under expenditure of grants. Questioned cost: None identified at this time. AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Recommendation: We recommend that the Organization implement the following measures to improve SEFA preparation and record retention: 1. Develop a Standardized SEFA Reconciliation Process – Implement formal policies and procedures requiring that SEFA expenditures be reconciled to the general ledger on a monthly basis, with documentation maintained for audit purposes. 2. Enhance System Controls for Grant Expenditures – Modify the financial system to allow for the proper segregation of state and federal expenditures from non-grant funds, ensuring that expenditures are properly classified at the time of entry. 3. Require Monthly Documentation Reviews – Establish a control requiring management to review and approve SEFA reconciliation schedules on a monthly or quarterly basis to ensure accuracy and completeness. 4. Implement a Centralized Documentation Retention Policy – Require that all SEFA-related reconciliation records, including general ledger tie-outs and manual adjustments, be retained in a centralized, accessible location. 5. Provide Grants Management Training – Conduct training for grants management and accounting personnel on SEFA preparation requirements, including Uniform Guidance compliance and best practices for documentation and reconciliation. 6. By implementing these measures, the Organization can improve its internal controls over SEFA preparation, ensure compliance with Uniform Guidance, and reduce the risk of reporting inaccuracies. AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) Views of responsible officials: Management partially agrees with the finding. While we acknowledge that documentation supporting SEFA reconciliation was incomplete, we believe that federal expenditures were properly accounted for. We would like to address some of the auditors' points individually: "The SEFA is prepared based on amounts requested for reimbursement instead of directly based on expenditures incurred." Most grant awards do not fully fund the programs they support, most grant awards do not run concurrently with Prism Health North Texas' fiscal year (i.e., with the Calendar Year), and most grant awards are not spent in equal monthly amounts. It is correct that the 2023 SEFA was based on grant-appropriate expenditures that occurred during Calendar Year 2023 and were submitted to those grant sponsors for reimbursement. This will not necessarily reach the full cost to Prism for each grant-supported program, nor is it likely to exactly match any annual grant award amount. "Expenses recorded in the general ledger represent expenses incurred to operate the program in addition to direct grant expenditures; the Organization only requests reimbursement for direct program expenditures allowable under the program." As we confirmed verbally with the audit partner on April 25, 2025, this statement is intended to provide information and context and is not a criticism or intended to point out any problem. As stated above, most grant awards do not fully fund the programs they support; therefore, the general ledger necessarily includes both expenses the sponsor will reimburse and expenses the sponsor will not reimburse. Nonetheless, we are enhancing our reconciliation procedures and documentation practices to fully meet audit requirements. Finding 2023-004 refers to the auditors' assessment of the SEFA preparation and reconciliation processes that occurred in Calendar Year 2023. As of this writing, Prism Health North Texas has already changed its SEFA preparation and reconciliation processes and meets many of the recommendations above. Action Taken: Documentation Retention – On April 25, 2025, management created a structured and easily accessible system for storing all relevant information for all grants management personnel. A logical naming system for files identifying the SEFA period, the funding agency and identified general ledger expenditures claimed on the SEFA. We are now documenting the difference between all GL transactions and those submitted for sponsor reimbursement (i.e., SEFA components) in a single document per fund code, arranged by fiscal year. Previously this documentation was kept by invoice and arranged by grant year. Management will continue to ensure all expenditure-related support, such as invoices and purchase orders, is saved electronically to all AIDS Arms, Inc. dba Prism Health North Texas and Subsidiary Schedule of Findings and Questioned Costs For the Year Ended December 31, 2023 SECTION III - SUMMARY OF FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (continued) financial transactions. SEFA Reconciliation – Management has decided to move from an annual to quarterly SEFA reconciliation process to enhance the frequency of management oversight in SEFA draft preparation. VP of Finance will prepare the SEFA for independent review by the CFO. This will be put into a written policy/procedure. System Enhancements – Prism's current accounting system does not accommodate this. However, Prism is already in the later stages of selecting a new Enterprise Resource Planning (ERP) solution, with this as one of our key selection criteria. Our new ERP should allow for expenditures within the same cost center to be identified as grant-reimbursable or non-grant-reimbursable at the time of entry. We have identified opportunities in new financial management software solutions that we are scheduled to demo May 12th and the 16th of 2025. Opportunities such as: The ability to tag grant-reimbursable transactions, to segment our award cost center into two important categories. The full cost to manage a specific program. Identified cost claimed on the SEFA. Dedicated grant modules that will allow us to establish business rules and workflows to streamline and digitize critical aspects of grant management. Staff Engagement – Cross department coordination meetings occur monthly between the Finance organization and the Grants Management team to continue to foster alignment and collaboration in our grant cycles. A general overview of SEFA, including how to prepare and organize the monthly reconciliations, has already occurred with some of the grants accountants. _________________________________________________________