SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS 2023-002 Material Weakness Reporting Criteria and Condition: While the Organization has some written financial management procedures documentation, it does not meet all the recent specific requirements under 2 CFR 200.302 in the Uniform Grant Guidance. Context: The financial management requirements under 2 CFR 200.302 require each non-federal entity maintain effective control over, and accountability for all funds, property, and other assets, including having written procedures in place. Key changes which effect the Organization include: • Increased documentation • Time and effort reporting for payroll • Specific purchasing consideration Cause: The Borough did not implement adequate controls to ensure compliance with this reporting requirement. Potential Effect: Errors could occur in financial reporting. Recommendation: We recommend the Organization update its existing policies to comply with the requirements under 2 CFR 200.302. Views of Responsible Officials and Planned Corrective Actions: Management understands the importance of defining and following the necessary policies and procedures to remain in compliance with the requirements under 2 CFR 200.302. Borough of Yardley will implement these policies and procedures to ensure that the organization will comply going forward. Repeat: Repeat finding from 2017-002 Action Taken: The Borough will review guidance and create missing policies. Anticipated Completion: During 2024.
SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS 2023-002 Material Weakness Reporting Criteria and Condition: While the Organization has some written financial management procedures documentation, it does not meet all the recent specific requirements under 2 CFR 200.302 in the Uniform Grant Guidance. Context: The financial management requirements under 2 CFR 200.302 require each non-federal entity maintain effective control over, and accountability for all funds, property, and other assets, including having written procedures in place. Key changes which effect the Organization include: • Increased documentation • Time and effort reporting for payroll • Specific purchasing consideration Cause: The Borough did not implement adequate controls to ensure compliance with this reporting requirement. Potential Effect: Errors could occur in financial reporting. Recommendation: We recommend the Organization update its existing policies to comply with the requirements under 2 CFR 200.302. Views of Responsible Officials and Planned Corrective Actions: Management understands the importance of defining and following the necessary policies and procedures to remain in compliance with the requirements under 2 CFR 200.302. Borough of Yardley will implement these policies and procedures to ensure that the organization will comply going forward. Repeat: Repeat finding from 2017-002 Action Taken: The Borough will review guidance and create missing policies. Anticipated Completion: During 2024.
SECTION III - FEDERAL AND STATE AWARD FINDINGS AND QUESTIONED COSTS 2023 – 002 Federal Agency: U.S. Department of Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: 2023 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: January 1, 2023 - December 31, 2023 Type of Finding: • Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: 2 CFR 200.302 requires that "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 AL title and number, Federal award identification number and year, name of the Federal agency, and name of the pass-through entity, if any." Grant claims filed by the County to the various granting agencies must be accurate, reconcile to the County general ledger system, and for cost-reimbursement grants, represent costs incurred. Internal controls should be designed and implemented to prevent and detect errors in the data reported on the grant claims. Segregation of duties is an internal control intended to prevent or decrease the occurrence of errors or intentional fraud. Segregation of duties ensures that no single employee has control over all phases of a transaction. Condition: There was no final formal review of the quarterly project & expenditure reports in comparison to the general ledger. Questioned costs: None Context: While performing audit procedures, it was noted that there was not a final formal review done of the quarterly project & expenditure reports in comparison to the general ledger. Cause: Due to the County not having a formal review process in place, the County under-reported 2023 expenditures to the U.S. Department of Treasury. Effect: The County could over- or under-report certain expenditures. Repeat Finding: No Recommendation: We recommend the County review its processes and implement controls to formally review these quarterly reports and that they are compared and reconciled to the general ledger. Views of responsible officials: There is no disagreement with the audit finding.
SECTION III - FEDERAL AND STATE AWARD FINDINGS AND QUESTIONED COSTS 2023 – 002 Federal Agency: U.S. Department of Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: 2023 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: January 1, 2023 - December 31, 2023 Type of Finding: • Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: 2 CFR 200.302 requires that "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 AL title and number, Federal award identification number and year, name of the Federal agency, and name of the pass-through entity, if any." Grant claims filed by the County to the various granting agencies must be accurate, reconcile to the County general ledger system, and for cost-reimbursement grants, represent costs incurred. Internal controls should be designed and implemented to prevent and detect errors in the data reported on the grant claims. Segregation of duties is an internal control intended to prevent or decrease the occurrence of errors or intentional fraud. Segregation of duties ensures that no single employee has control over all phases of a transaction. Condition: There was no final formal review of the quarterly project & expenditure reports in comparison to the general ledger. Questioned costs: None Context: While performing audit procedures, it was noted that there was not a final formal review done of the quarterly project & expenditure reports in comparison to the general ledger. Cause: Due to the County not having a formal review process in place, the County under-reported 2023 expenditures to the U.S. Department of Treasury. Effect: The County could over- or under-report certain expenditures. Repeat Finding: No Recommendation: We recommend the County review its processes and implement controls to formally review these quarterly reports and that they are compared and reconciled to the general ledger. Views of responsible officials: There is no disagreement with the audit finding.
FINDING 2023-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Period of Performance Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY 2023 Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Period of Performance Audit Findings: Material Weakness, Modified Opinion Condition and Context Recipients may use COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) funds for any eligible expenses subject to the restrictions set forth in sections 602 and 603 of the Social Security Act as added by section 9901 of the American Rescue Plan Act of 2021 and amended by the Consolidated Appropriations Act of 2023. The SLFRF program provides substantial flexibility for each recipient to meet local needs within seven separate eligible use categories. Recipients may use SLFRF funds to: Respond to the COVID-19 public health emergency and its negative economic impacts; Respond to workers performing essential work during the COVID-19 public health emergency by providing premium pay to eligible workers of eligible employers that have eligible workers who are performing essential work; Provide government services, to the extent COVID-19 caused a reduction in revenues collected in the most recent full fiscal year of the recipient; Make necessary investments in water, sewer, or broadband infrastructure; Provide emergency relief from natural disasters or their negative economic impacts; Fund eligible Surface Transportation projects; and Fund Title I projects that are eligible activities under the Community Development Block Grant and Indiana Community Development Block Grant programs. As part of sound management of the federal award, the City was responsible for implementing a system of internal controls that would ensure compliance with the applicable requirements. The City did not properly design or implement such a system. The City elected to receive the standard revenue loss allowance, allowing it to claim its total SLFRF allocation of $2,290,914 as revenue loss to use for government services. The allocated funds may only be used to cover costs incurred from the period beginning on March 3, 2021, and ending on December 31, 2024. Obligations for costs incurred are required to be liquidated no later than December 31, 2026 (the end of the period of performance). During the audit period, the City completed three separate transfers of SLFRF funds from the ARPA Coronavirus Local Fiscal fund to the Comm Crossing Grant Fund and Water Utility-Operating funds, totaling $976,431 and $494,159, respectively. The transfers allowed for federal grant funds to be commingled with other grant and operating funds. Subsequently, expenditures were disbursed from the Comm Crossing Grant Fund and Water Utility-Operating funds. However, since the transfer of SLFRF funds into the Comm Crossing Grant Fund and Water Utility-Operating funds commingled receipts, and the City did not ensure there was an appropriate system of internal controls in place to account for the federal expenditures separately from other grant and operating expenditures, we were unable to determine a complete population of federal expenditures. Without a complete population of expenditures, we were unable to determine the City's compliance with the Activities Allowed or Unallowed, the Allowable Costs/Cost Principles, and the Period of Performance compliance requirements. As such, the $976,431 and $494,159 transferred from the ARPA Coronavirus Local Fiscal fund are considered questioned costs. The lack of internal controls and appropriate documentation to test the compliance requirements was isolated to the situation described above. 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 Due to the lack of internal controls, the City was unable to differentiate expenditures made from federal and nonfederal funds once it commingled other grant, operating, and federal grant awards into a single fund within its ledger without consideration of the need to separately identify and account for federal expenditures. Effect Without the proper implementation of an effectively designed system of internal controls, the Town cannot identify the expenditures paid with federal grant funds. As such the Town cannot ensure nor can we determine that expenditures of the grant were not unallowable and fell within the period of performance. Questioned Costs We identified $1,470,590 in known questioned costs as noted above in the Condition and Context. Recommendation We recommended that management of the City establish a system of internal controls to ensure that grant award funds are accounted for and tracked in a designated grant fund. All activity of the grant should be in this fund with supporting documentation for each transaction. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
2023 – 001 Federal Agency: US Department of Housing and Urban Development Federal Program Title: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Award Period: January 1, 2023 through December 31, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: 2 CFR Subpart D 200.302 (1) and 200.303 (a) stipulates that the auditee must identify, in its accounts, all Federal awards received and expended and the Federal programs under which they were received. Federal programs and award identification shall include, as applicable, the ALN title and number, Federal award identification number and year, name of Federal agency, and name of the pass-through entity; establish and maintain effective internal control over Federal award that provides reasonable assurance that the auditee is managing Federal awards in compliance with Federal statutes, regulation, 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 Controller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee on Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Authority’s schedule of expenditures of federal awards (SEFA) did not include the expenditures related to the Coronavirus State and Local Fiscal Recovery Funds on the SEFA as required by Uniform Guidance for federal program 21.027. Questioned costs: None Context: During the review of revenue, this federal grant discovered and determined it was not reported on the SEFA. Cause: The Agency was not aware of the requirements to include these expenditures on the SEFA. Effect: The Authority was not in compliance with 2 CFR Subpart D 200.302 (1), 200.303 (a). The Agency’s program expenditures may be disallowed if the expenditures are not reported correctly on the SEFA. Repeat Finding: No Recommendation: We recommend that the Agency review current procedures for creating the SEFA to ensure that it is accurately reporting loan balances and expenditures during the year under audit for all federal programs to ensure compliance with Uniform Guidance. Views of responsible officials: There is no disagreement with the audit finding.
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.
FINDING 2023-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Allowable Costs/Cost Principles 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): YR 2023 Compliance Requirements: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Modified Opinion Condition and Context The County elected to receive the standard revenue loss allowance, allowing it to claim its total COVID-19 - Coronavirus State and Local Fiscal Recovery Fund (SLFRF) allocation of $4,014,711 as revenue loss to use for government services. As such, all SLFRF program funds to date were expended under the revenue loss eligible use category. The U.S. Department of the Treasury (Treasury) determined that there are no subawards under this eligible use category and that recipients' use of revenue loss funds would not give rise to subrecipient relationships as there is no federal program or purpose to carry out in the case of the revenue loss portion of the award. INDIANA STATE BOARD OF ACCOUNTS 17 SULLIVAN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) On May 11, 2021, the Board of County Commissioners passed Ordinance 2021-07 that created a new fund and adopted the American Rescue Plan (ARP). The Ordinance included the procedures for spending the ARP funding which included the following: The Board of County Commissioners will establish the plan, conditions, and rules upon which the funds are to be requested and used. Funds shall be appropriated by the County's fiscal body before use. All expenditure of funds shall be approved by the Board of County Commissioners with any and all claims to be paid from the County's ARP fund. The County Council approved appropriations for all eleven expenditures from the ARP fund in 2023. All eleven expenditures were tested for compliance with the Allowable Costs/Cost Principles compliance requirement. Two of the eleven expenditures, totaling $44,500, did not have adequate supporting documentation to determine the allowability of the cost. In addition, the County did not have written procedures for determining the allowability of costs in accordance with subpart E of 2 CFR 200. The lack of effective 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 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. . . . (g) Be adequately documented. . . ." 2 CFR 200.302(b)states: "The financial management system of each non-Federal entity must provide for the following . . . (7) Written procedures for determining the allowability of costs in accordance with subpart E of this part and the terms and conditions of the Federal award." INDIANA STATE BOARD OF ACCOUNTS 18 SULLIVAN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause The lack of internal controls allowed for the County to charge questionable expenditures to the SLFRF program that could be requested to be returned by the Treasury. The County also did not adopt the required written procedures for determining allowability of costs for federal awards. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, costs that were not adequately documented were paid for with federal funds. Questioned Costs Known questioned costs of $44,500 were identified as detailed in the Condition and Context. Recommendation We recommend the County's management establish a proper system of internal controls and develop policies and procedures to ensure costs are allowable for SLFRF award funds. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-006 Subject: Coronavirus State and Local Fiscal Recovery Funds - Reporting Federal Agency: U.S. Department of Treasury Assistance Listing Number: 21.027 Federal Award Number: FY 2021 Pass-Through Entity: N/A Compliance Requirements: Reporting Audit Findings: Significant Deficiency, Internal Controls Criteria: 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 Financial reporting . . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." Condition: The Town did not have a documented review control in place to ensure the annual report was reviewed by someone other than the preparer. Cause: There were not sufficient internal controls in place to ensure the accuracy of the annual report. Context: There was no documented review by someone other than the preparer of the annual report to ensure the information submitted was complete and accurate. Per discussion with management, verbal review occurred but there is no documentation to support that review occurred. Effect: The failure to establish an effective internal control system placed the Town at risk of noncompliance with the grant agreement and the Reporting compliance requirements. Identification as a repeat finding, if applicable: No Recommendation: We recommend someone other than the preparer of the report perform a documented review prior to submission to validate the accuracy and completeness of the data submitted. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
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. Procurement standards and conflict of interest policies. 5. 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 and will take action to develop and implement the necessary written policies and procedures by December 31, 2024. Comprehensive training will be provided to all relevant staff to ensure compliance with federal requirements.
FINDING 2023-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Period of Performance Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY 2023 Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Period of Performance Audit Findings: Material Weakness, Modified Opinion Condition and Context Prior to receipt of direct COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) award funds, all eligible entities were required to execute a Financial Assistance Agreement (Agreement) which included the Award Terms and Conditions that recipients must comply with in carrying out the objectives of their award. Per the Agreement, the Town was responsible for the effective administration of the federal award as well as the application of sound management practices and administration of federal funds in a manner consistent with program objectives and terms and conditions of the award. Recipients may use SLFRF funds for any eligible expenses subject to the restrictions set forth in sections 602 and 603 of the Social Security Act as added by section 9901 of the American Rescue Plan Act of 2021 and amended by the Consolidated Appropriations Act of 2023. The SLFRF program provides substantial flexibility for each recipient to meet local needs within seven separate eligible use categories. Recipients may use SLFRF funds to: Respond to the COVID-19 public health emergency and its negative economic impacts; Respond to workers performing essential work during the COVID-19 public health emergency by providing premium pay to eligible workers of eligible employers that have eligible workers who are performing essential work; INDIANA STATE BOARD OF ACCOUNTS 17 TOWN OF UPLAND SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Provide government services, to the extent COVID-19 caused a reduction in revenues collected in the most recent full fiscal year of the recipient; Make necessary investments in water, sewer, or broadband infrastructure. Provide emergency relief from natural disasters or their negative economic impacts. Fund eligible Surface Transportation projects; and Fund Title I projects that are eligible activities under the Community Development Block Grant and Indiana Community Development Block Grant programs. As part of sound management of the federal award, the Town was responsible for implementing a system of internal controls that would ensure compliance with the applicable requirements. The Town had not properly designed or implemented such a system. There was no evidence of segregation of duties, such as an oversight, review, or approval process, that would have ensured that expenditures of award funds were made only for activities and costs that were allowable under the federal award and federal regulations and that were within the period of performance. The Town completed five transfers totaling $224,050 to the Town Utility funds. The amounts transferred to these Utility funds were commingled with other receipts; therefore, the expenditures that went with the SLFRF money, if any, could not be identified. Therefore, the $224,050 could not be tested to ensure compliance with the Activities Allowed or Unallowed, the Allowable Costs/Cost Principles, and the Period of Performance compliance requirements. The lack of internal controls and noncompliance were isolated to the transfers noted above. Criteria 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 programspecific 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. . . . INDIANA STATE BOARD OF ACCOUNTS 18 TOWN OF UPLAND SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (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. . . ." 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). . . ." Cause A proper system of internal controls was not designed by management of the Town. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the Town's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Due to the lack of internal controls, the Town was unable to differentiate expenditures made from federal and nonfederal funds once it commingled nonfederal funds and federal grant awards. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system was not effective in preventing, or detecting and correcting, material noncompliance within the grant. The Town was unable to identify all the expenditures paid with federal funds and cannot ensure, nor can we determine, expenditures of the grant were allowable activity, within the proper period, and were an allowable cost. Questioned Costs We identified $224,050 in known questioned costs as noted above in the Condition and Context. Recommendation We recommended that management of the Town establish a system of internal controls to ensure that grant award funds are accounted for and tracked in a designated grant fund. All activity of the grant should be in this fund with supporting documentation for each transaction. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
2023-004 Financial Management Fiscal year finding initially occurred: 2021 CONDITION: While performing our audit procedures for FY 23, there were numerous instances of revenue and expense transactions being miscoded between federal grant program funds and expenditures being misclassified on the balance sheet. In addition, reconciliations of grant revenues to grant expenditures were not being performed which could lead to over drawing of federal funds. CRITERIA: 2 CFR 1.200.302(b) Financial Management requires that the financial management system of a non-Federal entity must provide records that identify adequately the source and application of funds for federally funded 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. CAUSE: Reconciliation and review of detailed general ledger account balances were not performed in a timely manner during FY 23. EFFECT: Inaccurate and incomplete financial statement reports may be submitted to users of the financial statements, as well as grantor agencies. RECOMMENDATION: All detailed general ledger account balances should be reviewed and reconciled on a monthly basis to ensure complete and accurate financial information is provided to all users of the financial information.
2023-004 Financial Management Fiscal year finding initially occurred: 2021 CONDITION: While performing our audit procedures for FY 23, there were numerous instances of revenue and expense transactions being miscoded between federal grant program funds and expenditures being misclassified on the balance sheet. In addition, reconciliations of grant revenues to grant expenditures were not being performed which could lead to over drawing of federal funds. CRITERIA: 2 CFR 1.200.302(b) Financial Management requires that the financial management system of a non-Federal entity must provide records that identify adequately the source and application of funds for federally funded 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. CAUSE: Reconciliation and review of detailed general ledger account balances were not performed in a timely manner during FY 23. EFFECT: Inaccurate and incomplete financial statement reports may be submitted to users of the financial statements, as well as grantor agencies. RECOMMENDATION: All detailed general ledger account balances should be reviewed and reconciled on a monthly basis to ensure complete and accurate financial information is provided to all users of the financial information.
2023-004 Financial Management Fiscal year finding initially occurred: 2021 CONDITION: While performing our audit procedures for FY 23, there were numerous instances of revenue and expense transactions being miscoded between federal grant program funds and expenditures being misclassified on the balance sheet. In addition, reconciliations of grant revenues to grant expenditures were not being performed which could lead to over drawing of federal funds. CRITERIA: 2 CFR 1.200.302(b) Financial Management requires that the financial management system of a non-Federal entity must provide records that identify adequately the source and application of funds for federally funded 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. CAUSE: Reconciliation and review of detailed general ledger account balances were not performed in a timely manner during FY 23. EFFECT: Inaccurate and incomplete financial statement reports may be submitted to users of the financial statements, as well as grantor agencies. RECOMMENDATION: All detailed general ledger account balances should be reviewed and reconciled on a monthly basis to ensure complete and accurate financial information is provided to all users of the financial information.
Assistance Listing, Federal Agency, and Program Name - 21.027 U.S. Department of Treasury, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Federal Award Identification Number and Year - Not Applicable Pass-through Entity - Not Applicable - Direct funded Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - 2 CFR 200.302, Financial Management, states the non-Federal entity's financial management systems, including records documenting compliance with Federal statutes and 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 and regulations and the terms and conditions of the Federal award. Condition - The Township's March 31, 2024 report overstated expenses incurred for the reporting period by approximately $600,000. Questioned Costs - None Identification of How Questioned Costs Were Computed - Not applicable Context - During testing, it was discovered that the project expenditure reported $4,128,095, representing the total amount of the award. However, as of the reporting date of March 31, 2024, the Township had not yet incurred expenditures totaling approximately $600,000. The March 31, 2024 report reflects the total activity through December 31, 2023. The U.S. Department of Treasury requires that the Township file a project and expenditure report annually for annual periods ended March 31 by April 30. Cause and Effect - The Township did not have an internal control structure that reconciled expenditures per the report to expenditures incurred as of the reporting date. The lack of internal control structure resulted in the March 31, 2024 report being overstated by approximately $600,000, i.e., the amount of expenditures not incurred as of the reporting date. Recommendation - We recommend that controls be implemented to ensure that amounts being recorded on grant reporting are traced to supporting costs incurred and documentation as of the reporting date to ensure reported amounts are accurate. Views of Responsible Officials and Corrective Action Plan- The Township will put in place a control where the treasurer, finance director, and department head responsible for the grant are reporting accurately costs incurred with reconciling supporting documentation and ensuring the reported amounts are correct.
Assistance Listing Number, Federal Agency, and Program Name – 59.059, U.S. Small Business Administration, Congressional Grants Federal Award Identification Number and Year SBAHQ23I0070, 2023 Pass through Entity – Not applicable Finding Type Material weakness and material noncompliance with laws and regulation Repeat Finding – No Criteria – Per CFR 200.302, the Organization must maintain written procedures to implement the requirements of CFR 200.305. Under these Federal payment requirements, the Organization must maintain advance payments of Federal awards in interest-bearing accounts. Any interest earned on Federal advance payments above $500 must be remitted annually to the Department of Health and Human Services Payment Management System (PMS). Condition – The Organization does not have written procedures to implement the requirements of CFR 200.305. The advance payment of the Federal award was not maintained in an interest-bearing account and no interest was remitted back to the Federal government. Questioned Costs Not applicable Identification of How Questioned Costs Were Computed Not applicable. Context – There was only one advance payment of Federal awards received during 2023 which amounted to $921,000. Cause and Effect – Policies and procedures and related internal controls did not ensure compliance with Federal payment requirements under Uniform Guidance. Recommendation - We recommend establishing and maintaining written procedures to ensure 1) advance payments of Federal Awards are maintained in interest-bearing accounts; 2) interest earned is monitored; 3) interest earned above $500 is remitted at least annually. Views of Responsible Officials and Corrective Action Plan – The Organization acknowledges receipt of the finding. The following corrective actions have been taken: Management is in the process of updating written procedures for Federal award compliance. Management will calculate and remit interest for 2023 to the Department of Health and Human Services Payment Management System (PMS).
Criteria: Uniform Guidance requires written procedures for cash management and determining the allowability of costs in accordance with Subpart E – Cost Principals. Condition: Boone County Senior Citizen Services Corporation DBA The Bluffs 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: $0Cause: Boone County Senior Citizen Services Corporation DBA The Bluffs’ written policies and procedures were not updated to include required Uniform Guidance policies.Effect: Boone County Senior Citizen Services Corporation DBA The Bluffs could enter into a transaction that is not in compliance with Uniform Guidance requirements. Recommendation: We recommend Boone County Senior Citizen Services Corporation DBA The Bluffs 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 is in process of developing and implementing the appropriate policies and procedures.
Type of Finding: Significant Deficiency in Compliance and Internal Control over Compliance Federal Agency: U.S. Department of Defense Federal Program Name: Conservation and Rehabilitation of Natural Resources on Military Installations Assistance Listing Number: 12.005 Federal Award Identification Number and Year: H79TI083313 - 2020 Award Period: September 28, 2020, through September 27, 2025 Criteria or specific requirement: 2 CFR 200.302(a) on Financial management states that "... the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award". Condition: During testing, 2 of the 5 samples selected did not include sufficient documentation to agree all amounts requested for reimbursement for the month in question to the expenditures listed in the general ledger detail by program. Questioned costs: Unknown. Context: A sample of 5 monthly reimbursement requests were taken from a population of 13. Of the 5 sampled, two were insufficiently supported to agree the amounts requested for reimbursement for the month in question to the expenditures listed in the general ledger detail by program. Cause: The Organization was using a cumulative profit and loss to file monthly reimbursement requests (beginning of the year through the reimbursement month). In addition, profit and loss reports were not consistently saved at the time the reports were prepared for reimbursement for January and February 2023. Effect: The Organization is currently in noncompliance with federal regulations with regard to adequate documentation. Without adequate documentation in place to ensure costs are evidenced and reconcile to the expenditures documented in the underlying accounting information that is used to prepare the SEFA, the Organization could incorrectly charge expenditures to the federal program, or not request appropriate reimbursement that the Organization is entitled to under the terms of the grant. Repeat Finding: The finding is a repeat of a finding in the immediately prior year. Prior year finding number was 2022-005. Recommendation: Starting in March 2023, the Organization has already implemented a new process for the preparation of monthly reimbursement requests, including documentation retention. Point-in-time reports (i.e., profit and losses) are saved at the time of report preparation. This has enhanced clarity of costs attributable to each monthly period and reduces the chance that costs will be missed when requesting for reimbursement. Views of responsible officials: There is no disagreement with the audit finding.
Criteria: 2 CFR 200.303 requires nonfederal entities to establish and maintain effective internal control over federal awards to provide reasonable assurance that organizations who manage the federal award: • Understand and comply with the federal statutes, regulations, and terms and conditions of the award; • Evaluate and monitor compliance; • Take prompt action when instances of noncompliance is identified. 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). Additionally, the Uniform Guidance requires non-federal entities to develop written procedures related to the following areas: 1. Cash Management 2 CFR 200.302(b)(6) states that the financial management system of each non-Federal entity must provide for the written procedures to implement the requirements of 2 CFR 200.305 Federal Payment. 2. Allowability of Costs 2 CFR 200.302(b)(7) states that the financial management system of each non-Federal entity must provide for the 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. 3. Conflict of Interest 2 CFR 200.318(c)(1) states that the non-Federal entity must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. No employee, officer, or agent may participate in the selection, award, or administration of a contract supported by a Federal award if he or she has a real or apparent conflict of interest. Such a conflict of interest would arise when the employee, officer, or agent, any member of his or her immediate family, his or her partner, or an organization which employs or is about to employ any of the parties indicated herein, has a financial or other interest in or a tangible personal benefit from a firm considered for a contract. The officers, employees, and agents of the non-Federal entity may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts. However, non-Federal entities may set standards for situations in which the financial interest is not substantial, or the gift is an unsolicited item of nominal value. The standards of conduct must provide for disciplinary actions to be applied for violations of such standards by officers, employees, or agents of the non-Federal entity. In addition, the organizations should ensure that existing written procedures are in compliance with: a. Equipment Management Requirements 2 CFR 200.313(b) states that “A state must use, manage and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures b. General Procurement Standards 2 CFR 200.317 to 200.326 discusses that contracts must be established and managed in accordance with the procurement requirements in 2 CFR Part 200. Grantees must have written procurement policies and procedures that demonstrate a fair and reliable process, with standards of conduct addressing conflicts of interest, for obtaining grant-funded goods and services. Condition The Foundation does not have documented policies and procedures concerning the following key compliances areas which are required by the Uniform Guidance: • Cash Management • Allowability of Cost • Conflict of Interest • Equipment and Real Property Management • Procurement, Suspension & Debarment Cause This is attributed to the insufficient resources or staffing to develop and formalize the policies and procedures. Effect The absence of formal policies and procedures in the key compliance areas could result in non-compliance with federal regulations, which may lead to unnecessary sanctions. Additionally, without formal written policies and procedures, it is difficult to ensure consistent practices across the organization. Questioned Costs None Recommendation The Foundation should develop and implement formal written policies and procedures for the specific areas required by the Uniform Guidance. These policies and procedures must clearly delineate the requirements of the Uniform Guidance. Personnel responsible for these areas should receive adequate training and apply the policies effectively. Regular reviews should be conducted to update the policies and procedures as needed. Views of Responsible Officials and Planned Corrective Action We understand how crucial it is to have strong policies and procedures in place. Here’s how we plan to move forward: 1. Review of Existing Policies and Procedures: We’re currently taking a close look at our existing policies and procedures to ensure they align with the Uniform Guidance. This will help us identify any gaps and make necessary updates so that we’re fully compliant. 2. Development of New Policies: Alongside this review, we will create clear and comprehensive written policies in key areas, such as: • Cash Management: Setting up procedures that comply with 2 CFR 200.305 to ensure timely payments. eCFR :: 2 CFR 200.305 -- Federal payment. • Allowability of Costs: Crafting guidelines that follow Subpart E—Cost Principles, so we can confidently determine which expenses are allowable. https://www.ecfr.gov/current/title-48/chapter-7/subchapter-E/part-731/subpart-731.7/section-731.770. • Conflict of Interest: Establishing standards of conduct that address potential conflicts and promote transparency. • Equipment and Real Property Management: Developing policies for managing equipment acquired under federal awards in line with 2 CFR 200.313(b). eCFR :: 2 CFR 200.313 -- Equipment. • Procurement Procedures: Creating clear procurement guidelines that align with 2 CFR 200.318 through 200.326 to ensure fairness and oversight. eCFR :: 2 CFR 200.318 -- General procurement standards. 3. Training and Communication: The Finance Department will be responsible for training all staff involved in managing federal awards. Training sessions will ensure that everyone understands the requirements and their roles in maintaining compliance. This training will be completed by December 31, 2024. Personnel responsible: Eduardo Cedeno, Director of Finance Anticipated completion date: December 31, 2024
2 CFR 1000.10 gives regulatory effect to the Department of Treasury for 2 CFR part 200. 2 CFR 200.302 states, in part, the 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. 2 CFR 200.302 further states, in part, the financial management system of each non-Federal entity must provide for 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. Additionally, the Ohio Department of Development (ODOD) Water and Wastewater Infrastructure Program Grant Agreement provides in paragraph 1 that “[e]xpenditures shall be supported by contracts, invoices, vouchers, and other data as appropriate, including the reports listed in accordance with the schedule set forth in Exhibit II: Reporting, evidencing the costs incurred.” For funding received directly from the Department of Treasury as an NEU, the Village did not appropriately report the correct cumulative obligations or cumulative expenditures on the April 2023 annual project and expenditure report. This caused an understatement of $17,191 in the April 2023 report. This is due to the misinterpretation of guidance provided to the Village. Failure to accurately report cumulative obligations and cumulative expenditures could result in grants being overspent. For SLFRF funding passed through the Ohio Department of Development, the Village requested reimbursements totaling $61,788 for expenditures that were paid for by funding received directly from the Department of Treasury as an NEU. This was caused due to the Village submitting incorrect invoices to the Engineering Firm. The Village identified the error and worked with ODOD to submit alternative reimbursement requests which were not paid for by other funding sources. These requests were submitted to ODOD September 12, 2024. Failure to submit correct invoices for reimbursement could result in the Village not receiving the reimbursements that it is entitled to. The Village should implement internal controls to ensure the correct amounts are included in reports submitted to the US Department of Treasury and that requests for reimbursement to ODOD only include allowable expenditures not paid by other funding sources.
2 CFR 1000.10 gives regulatory effect to the Department of Treasury for 2 CFR part 200. 2 CFR 200.302 states, in part, the 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. 2 CFR 200.302 further states, in part, the financial management system of each non-Federal entity must provide for 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. Additionally, the Ohio Department of Development (ODOD) Water and Wastewater Infrastructure Program Grant Agreement provides in paragraph 1 that “[e]xpenditures shall be supported by contracts, invoices, vouchers, and other data as appropriate, including the reports listed in accordance with the schedule set forth in Exhibit II: Reporting, evidencing the costs incurred.” For funding received directly from the Department of Treasury as an NEU, the Village did not appropriately report the correct cumulative obligations or cumulative expenditures on the April 2023 annual project and expenditure report. This caused an understatement of $17,191 in the April 2023 report. This is due to the misinterpretation of guidance provided to the Village. Failure to accurately report cumulative obligations and cumulative expenditures could result in grants being overspent. For SLFRF funding passed through the Ohio Department of Development, the Village requested reimbursements totaling $61,788 for expenditures that were paid for by funding received directly from the Department of Treasury as an NEU. This was caused due to the Village submitting incorrect invoices to the Engineering Firm. The Village identified the error and worked with ODOD to submit alternative reimbursement requests which were not paid for by other funding sources. These requests were submitted to ODOD September 12, 2024. Failure to submit correct invoices for reimbursement could result in the Village not receiving the reimbursements that it is entitled to. The Village should implement internal controls to ensure the correct amounts are included in reports submitted to the US Department of Treasury and that requests for reimbursement to ODOD only include allowable expenditures not paid by other funding sources.
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.