Finding 2023‐001—Significant Deficiency in Internal Controls over Compliance: Research and Development Cluster Program—Research and Development Cluster (R&D) Criteria—Compliance with the financial management and internal control requirements outlined in Title 2 below, exhibited the following U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards; Sections 200.302‐303 (“Section 200.302‐303”) is required for all federal awards. Section 200.302‐303 outlines the various requirements around documentation and internal controls. Condition and Context—Baystate Health’s internal controls over R&D allowable costs, special tests and provisions, and amounts reported on the schedule of expenditures of federal awards (SEFA) in accordance with Section 200.302‐303 were not appropriately designed and implemented, or operated, effectively. Specifically, during the 2023 audit, the following conditions were identified: In instances, controls, as described below, exhibited the following: o Certain roles and responsibilities within the Sponsored Programs Administration (SPA) were inadequately defined and not understood by control owners o inconsistent documentation evidencing review over R&D compliance requirements o lack of a central repository for documentation related to the performance of internal control procedures and compliance with grant requirements For five out of 40 National Institute of Health salary cap selections related to special tests and provisions, the monthly review of the summary report by grant activity was not adequately and consistently performed. The summary report is editable by end users and the review performed was not precise enough to identify formula errors in the calculations; or key personnel who were incorrectly excluded from the report. The review of indirect costs and fringe benefits on the SPA intake form was not precise enough to identify errors in a timely manner. The SPA form includes key grant data and is used in the initial setup of new grants to input indirect cost and fringe benefit rates in the general ledger system. For two out of 16 selections of indirect costs and fringe benefit amounts errors were not identified on a timely basis and were corrected in a subsequent period. The review and preparation of the SEFA for R&D grants was not timely and precise enough to ensure accuracy. This resulted in a lack of accuracy of grant award information presented on the SEFA; as well as the inclusion of grant expenses pertaining to prior fiscal periods on the current year’s SEFA since they were not identified timely in the prior years. Approximately $39 thousand in R&D expenditures related to prior fiscal years was included on the 2023 SEFA as they were not identified timely in prior fiscal years. These control deviations when considered in the aggregate are indicative of a significant deficiency in the design, implementation, and operating effectiveness of the internal controls. Questioned Costs—none Cause—Personnel responsible for internal controls over compliance related to R&D were not adequately aware of the documentation requirements of Section 200.302‐303. Additionally, the internal control framework is not clearly defined and relies heavily on manual control processes that are highly susceptible to human error. Reviews were not performed a precise enough level and on a timely basis. Effect—Failures in internal controls have the potential to result in instances of noncompliance with R&D grant requirements. Recommendation— The delay in completing the September 30, 2023, Uniform Guidance audit procedures as well as the deficiencies in internal controls identified during the audit related to R&D indicates that the controls over compliance for R&D should be assessed and, where necessary, corrective action needs to be taken to enable Baystate Health to produce appropriate supporting documentation on a timely basis and maintain appropriate internal controls over all compliance requirements. Specifically, we recommend that: The roles and responsibilities of the individuals involved in the SPA should be challenged to ensure that all critical functions are addressed; the distribution of responsibilities is appropriate; and positions include an element of cross‐training. The capabilities of the individuals and the level of resources should be assessed to make sure that they are consistent with the responsibilities assigned. Policies and procedures should be developed, documented and maintained/updated for all significant grant‐related activities. On‐going monitoring should take place to assure that such policies and procedures are executed accurately. Internal controls could be enhanced by standardizing best practices and providing ongoing training regarding federal requirements over compliance and documentation. A system should be implemented to maintain documentation related to internal controls and compliance requirements for federal grants in such a way that this documentation is easily accessible and clearly interpretated. The process for calculating and reviewing salary cap requirements should be revised to include a check that the reports reviewed as part of the control process are complete and accurate. Controls should be implemented consistently to facilitate a timely review of indirect cost and fringe benefit rates at the initial set‐up of the activity within the general ledger. A more thorough closing process should be performed to review information included on the SEFA and to record grant‐related expenses timely to minimize the risk of recognizing out‐of‐period expenses for SEFA reporting.
Finding 2023‐001—Significant Deficiency in Internal Controls over Compliance: Research and Development Cluster Program—Research and Development Cluster (R&D) Criteria—Compliance with the financial management and internal control requirements outlined in Title 2 below, exhibited the following U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards; Sections 200.302‐303 (“Section 200.302‐303”) is required for all federal awards. Section 200.302‐303 outlines the various requirements around documentation and internal controls. Condition and Context—Baystate Health’s internal controls over R&D allowable costs, special tests and provisions, and amounts reported on the schedule of expenditures of federal awards (SEFA) in accordance with Section 200.302‐303 were not appropriately designed and implemented, or operated, effectively. Specifically, during the 2023 audit, the following conditions were identified: In instances, controls, as described below, exhibited the following: o Certain roles and responsibilities within the Sponsored Programs Administration (SPA) were inadequately defined and not understood by control owners o inconsistent documentation evidencing review over R&D compliance requirements o lack of a central repository for documentation related to the performance of internal control procedures and compliance with grant requirements For five out of 40 National Institute of Health salary cap selections related to special tests and provisions, the monthly review of the summary report by grant activity was not adequately and consistently performed. The summary report is editable by end users and the review performed was not precise enough to identify formula errors in the calculations; or key personnel who were incorrectly excluded from the report. The review of indirect costs and fringe benefits on the SPA intake form was not precise enough to identify errors in a timely manner. The SPA form includes key grant data and is used in the initial setup of new grants to input indirect cost and fringe benefit rates in the general ledger system. For two out of 16 selections of indirect costs and fringe benefit amounts errors were not identified on a timely basis and were corrected in a subsequent period. The review and preparation of the SEFA for R&D grants was not timely and precise enough to ensure accuracy. This resulted in a lack of accuracy of grant award information presented on the SEFA; as well as the inclusion of grant expenses pertaining to prior fiscal periods on the current year’s SEFA since they were not identified timely in the prior years. Approximately $39 thousand in R&D expenditures related to prior fiscal years was included on the 2023 SEFA as they were not identified timely in prior fiscal years. These control deviations when considered in the aggregate are indicative of a significant deficiency in the design, implementation, and operating effectiveness of the internal controls. Questioned Costs—none Cause—Personnel responsible for internal controls over compliance related to R&D were not adequately aware of the documentation requirements of Section 200.302‐303. Additionally, the internal control framework is not clearly defined and relies heavily on manual control processes that are highly susceptible to human error. Reviews were not performed a precise enough level and on a timely basis. Effect—Failures in internal controls have the potential to result in instances of noncompliance with R&D grant requirements. Recommendation— The delay in completing the September 30, 2023, Uniform Guidance audit procedures as well as the deficiencies in internal controls identified during the audit related to R&D indicates that the controls over compliance for R&D should be assessed and, where necessary, corrective action needs to be taken to enable Baystate Health to produce appropriate supporting documentation on a timely basis and maintain appropriate internal controls over all compliance requirements. Specifically, we recommend that: The roles and responsibilities of the individuals involved in the SPA should be challenged to ensure that all critical functions are addressed; the distribution of responsibilities is appropriate; and positions include an element of cross‐training. The capabilities of the individuals and the level of resources should be assessed to make sure that they are consistent with the responsibilities assigned. Policies and procedures should be developed, documented and maintained/updated for all significant grant‐related activities. On‐going monitoring should take place to assure that such policies and procedures are executed accurately. Internal controls could be enhanced by standardizing best practices and providing ongoing training regarding federal requirements over compliance and documentation. A system should be implemented to maintain documentation related to internal controls and compliance requirements for federal grants in such a way that this documentation is easily accessible and clearly interpretated. The process for calculating and reviewing salary cap requirements should be revised to include a check that the reports reviewed as part of the control process are complete and accurate. Controls should be implemented consistently to facilitate a timely review of indirect cost and fringe benefit rates at the initial set‐up of the activity within the general ledger. A more thorough closing process should be performed to review information included on the SEFA and to record grant‐related expenses timely to minimize the risk of recognizing out‐of‐period expenses for SEFA reporting.
2023-002 Grant Payroll Documentation and Recordkeeping 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: SLFRP3404 - 2021 Award Period: March 3, 2021 through December 31, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matter Criteria: Compliance: 2 CFR 200.302(b)(3) states that 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. 2 CFR 200.403 states that costs must be adequately documented. Controls: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply 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). Condition: The County did not maintain documentation supporting certain payroll expenditures charged to the grant. Questioned Costs: Under $25,000. Context: For four of the sixty employee pays selected for testing the underlying payroll records did not support the amount charged to the grant. Cause: Payroll documentation supporting the wage amounts charged to the grant program was not properly maintained by the County. Effect: Failure to maintain supporting documentation to the employee payroll charged to grant programs may result in unallowed cost and activities being charged to the grant, causing noncompliance with the Federal compliance requirements. Repeat Finding: No Recommendation: We recommend the County establish internal control procedures to ensure that all amounts charged to grant programs for employee payroll costs be reconciled to the specific employee payroll records and that supporting documentation be maintained throughout the grant award period and beyond.
Finding 2023-006 – Allowable Costs - Payroll costs (Material Weakness and Noncompliance) Information on the federal program: U.S. Department of Veterans Affairs, Assistance Listing #64.055 Staff Sergeant Parker Gordon Fox Suicide Prevention Grant Program; U.S. Department of Health and Human Services, Assistance Listing #93.137 Community Programs to Improve Minority Health Grant Program; and U.S. Department of Health and Human Services, Assistance Listing #93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance. Criteria: 2 CFR section 200.302 establishes the requirements for sufficient financial management over grant funding to ensure records adequately identify 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. Condition: We tested 78 payroll disbursements over 3 grant programs. Of those 78, 9 exceptions were noted. The amount of time and corresponding amounts allocated to the grant did not agree to the percentage documented on the employee’s timesheet. Cause: Employee timesheets are turned in after payroll is processed and allocations made, timesheets in these exceptions did not agree to the amount allocated. Effect: The Council did not comply with financial management requirements. Questioned Costs: None Recommendation: We recommend the Council strengthen procedures surrounding payroll so that the source documentation properly supports the amounts being allocated to the grant based on actual employee time. Views of Responsible Officials: See Management’s View and Corrective Action Plan at the end of the report.
Finding 2023-006 – Allowable Costs - Payroll costs (Material Weakness and Noncompliance) Information on the federal program: U.S. Department of Veterans Affairs, Assistance Listing #64.055 Staff Sergeant Parker Gordon Fox Suicide Prevention Grant Program; U.S. Department of Health and Human Services, Assistance Listing #93.137 Community Programs to Improve Minority Health Grant Program; and U.S. Department of Health and Human Services, Assistance Listing #93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance. Criteria: 2 CFR section 200.302 establishes the requirements for sufficient financial management over grant funding to ensure records adequately identify 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. Condition: We tested 78 payroll disbursements over 3 grant programs. Of those 78, 9 exceptions were noted. The amount of time and corresponding amounts allocated to the grant did not agree to the percentage documented on the employee’s timesheet. Cause: Employee timesheets are turned in after payroll is processed and allocations made, timesheets in these exceptions did not agree to the amount allocated. Effect: The Council did not comply with financial management requirements. Questioned Costs: None Recommendation: We recommend the Council strengthen procedures surrounding payroll so that the source documentation properly supports the amounts being allocated to the grant based on actual employee time. Views of Responsible Officials: See Management’s View and Corrective Action Plan at the end of the report.
Finding 2023-006 – Allowable Costs - Payroll costs (Material Weakness and Noncompliance) Information on the federal program: U.S. Department of Veterans Affairs, Assistance Listing #64.055 Staff Sergeant Parker Gordon Fox Suicide Prevention Grant Program; U.S. Department of Health and Human Services, Assistance Listing #93.137 Community Programs to Improve Minority Health Grant Program; and U.S. Department of Health and Human Services, Assistance Listing #93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance. Criteria: 2 CFR section 200.302 establishes the requirements for sufficient financial management over grant funding to ensure records adequately identify 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. Condition: We tested 78 payroll disbursements over 3 grant programs. Of those 78, 9 exceptions were noted. The amount of time and corresponding amounts allocated to the grant did not agree to the percentage documented on the employee’s timesheet. Cause: Employee timesheets are turned in after payroll is processed and allocations made, timesheets in these exceptions did not agree to the amount allocated. Effect: The Council did not comply with financial management requirements. Questioned Costs: None Recommendation: We recommend the Council strengthen procedures surrounding payroll so that the source documentation properly supports the amounts being allocated to the grant based on actual employee time. Views of Responsible Officials: See Management’s View and Corrective Action Plan at the end of the report.
Finding 2023-006 – Allowable Costs - Payroll costs (Material Weakness and Noncompliance) Information on the federal program: U.S. Department of Veterans Affairs, Assistance Listing #64.055 Staff Sergeant Parker Gordon Fox Suicide Prevention Grant Program; U.S. Department of Health and Human Services, Assistance Listing #93.137 Community Programs to Improve Minority Health Grant Program; and U.S. Department of Health and Human Services, Assistance Listing #93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance. Criteria: 2 CFR section 200.302 establishes the requirements for sufficient financial management over grant funding to ensure records adequately identify 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. Condition: We tested 78 payroll disbursements over 3 grant programs. Of those 78, 9 exceptions were noted. The amount of time and corresponding amounts allocated to the grant did not agree to the percentage documented on the employee’s timesheet. Cause: Employee timesheets are turned in after payroll is processed and allocations made, timesheets in these exceptions did not agree to the amount allocated. Effect: The Council did not comply with financial management requirements. Questioned Costs: None Recommendation: We recommend the Council strengthen procedures surrounding payroll so that the source documentation properly supports the amounts being allocated to the grant based on actual employee time. Views of Responsible Officials: See Management’s View and Corrective Action Plan at the end of the report.
Finding 2023-006 – Allowable Costs - Payroll costs (Material Weakness and Noncompliance) Information on the federal program: U.S. Department of Veterans Affairs, Assistance Listing #64.055 Staff Sergeant Parker Gordon Fox Suicide Prevention Grant Program; U.S. Department of Health and Human Services, Assistance Listing #93.137 Community Programs to Improve Minority Health Grant Program; and U.S. Department of Health and Human Services, Assistance Listing #93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance. Criteria: 2 CFR section 200.302 establishes the requirements for sufficient financial management over grant funding to ensure records adequately identify 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. Condition: We tested 78 payroll disbursements over 3 grant programs. Of those 78, 9 exceptions were noted. The amount of time and corresponding amounts allocated to the grant did not agree to the percentage documented on the employee’s timesheet. Cause: Employee timesheets are turned in after payroll is processed and allocations made, timesheets in these exceptions did not agree to the amount allocated. Effect: The Council did not comply with financial management requirements. Questioned Costs: None Recommendation: We recommend the Council strengthen procedures surrounding payroll so that the source documentation properly supports the amounts being allocated to the grant based on actual employee time. Views of Responsible Officials: See Management’s View and Corrective Action Plan at the end of the report.
Finding 2023-006 – Allowable Costs - Payroll costs (Material Weakness and Noncompliance) Information on the federal program: U.S. Department of Veterans Affairs, Assistance Listing #64.055 Staff Sergeant Parker Gordon Fox Suicide Prevention Grant Program; U.S. Department of Health and Human Services, Assistance Listing #93.137 Community Programs to Improve Minority Health Grant Program; and U.S. Department of Health and Human Services, Assistance Listing #93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance. Criteria: 2 CFR section 200.302 establishes the requirements for sufficient financial management over grant funding to ensure records adequately identify 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. Condition: We tested 78 payroll disbursements over 3 grant programs. Of those 78, 9 exceptions were noted. The amount of time and corresponding amounts allocated to the grant did not agree to the percentage documented on the employee’s timesheet. Cause: Employee timesheets are turned in after payroll is processed and allocations made, timesheets in these exceptions did not agree to the amount allocated. Effect: The Council did not comply with financial management requirements. Questioned Costs: None Recommendation: We recommend the Council strengthen procedures surrounding payroll so that the source documentation properly supports the amounts being allocated to the grant based on actual employee time. Views of Responsible Officials: See Management’s View and Corrective Action Plan at the end of the report.
Finding 2023-008 – Activities Allowed (Significant Deficiency and Noncompliance) Information on the federal program: U.S. Department of Veterans Affairs, Assistance Listing #64.055 Staff Sergeant Parker Gordon Fox Suicide Prevention Grant Program. Criteria: 2 CFR section 200.302 establishes the requirements for sufficient financial management over grant funding to ensure funds have been used in accordance with Federal statues, regulations, and terms and conditions of the Federal award. These requirements include that the nonfederal entity compare expenditures with the approved award budget. Condition: We tested 22 nonpayroll disbursements, 2 of those expenses did not fit into an expense category in the approved award budget. Cause: The Council began allocating nonreimbursable expenses to their grant codes to track the true costs of running a program. This grant allowed for indirect costs, however these costs were charged directly to the grant and were included in the amount requested for reimbursement and also in the cost base used for the indirect cost calculation. These costs were not in line with the categories of expenses in the award budget. Effect: The Council did not comply with allowable activities requirements. Questioned Costs: $1,901 Recommendation: We recommend the Council strengthen procedures over costs invoiced for reimbursement to ensure those costs are compared to the grant budget for allowability. Views of Responsible Officials: See Management’s View and Corrective Action Plan at the end of the report.
FINDING 2023-023 Pandemic EBT Food Benefits, ALN 10.542, Reporting - Accuracy of Financial Reports See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not submit accurate monthly P-EBT financial reports to the U.S. Department of Agriculture (USDA) Food and Nutrition Service (FNS) for 1 of 3 sampled Report of Disaster Supplemental Nutrition Assistance Benefit Issuance (FNS-292B). For this 1 instance, MDHHS reported inaccurate disaster relief information in the October 2022 FNS-292B. MDHHS overstated: a. Total value of benefits issued by $377.9 million. b. Number of persons issued benefits by 963,633. c. Number of households issued benefits by 802,454. Criteria Federal regulation 2 CFR 200.302(b)(2) requires grantees to submit accurate financial data in accordance with a grant program's reporting requirements. Federal Register 86:89 (11 May 2021) page 25,837 requires state agencies to report the number of eligible children and households receiving P-EBT benefits and total value of the benefits monthly. Cause MDHHS informed us its monitoring activities were not sufficient to detect data entry errors included in the submitted report. Effect MDHHS may have diminished the federal grantor agency's ability to ensure appropriate oversight and monitoring of P-EBT funds. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs None. Recommendation We recommend MDHHS improve its internal control and submit accurate P-EBT financial reports. Management Views MDHHS agrees with the finding.
Federal Aid Policies Finding 2023-002 Condition: The Authority’s management has completely turned over and been restructured. However, the Authority’s policies for federal aid approved in 2021 have not been revised to update for the current management structure. The policies have also not been updated for changes in the 2 CFR 200 that have occurred. Criteria: The 2 CFR 200 requires the adoption of federal aid policies and that they are to be updated and maintained in accordance with the federal regulations. These policies include the following along with the 2 CFR 200 reference. a. Cash Management Procedure –200.302(b)(6) and 200.305 b. Cost Allowability Procedures –200.302(b)(7) c. Conflicts of Interest Policy –200.318(c) d. Procurement Procedures –200.318(a) and 200.319(d) e. Method for Conducting Technical Evaluations of Proposals and Selecting Recipients –200.320(b)(2)(ii) f. Travel Policy –200.475(a) g. Procedures for Managing Equipment –200.313(d) h. Employee Benefits –200.431 Cause: The Authority has experienced a high turnover of employees since 2021 when the policies were adopted and have not been reviewed since their adoption. Effect: The Authority is noncompliant with 2 CFR 200. Directive: We direct the Authority review and update all federal aid policies and implement procedures to ensure that they are being reviewed at least once a year for changes in the Authority’s management structure or changes that occur in the 2 CFR 200. Management’s Response--Corrective Action Plan: Contact person is Rufus Adams, Executive Director, 275 East Wall Street, P.O. Box 837, Benton Harbor, Michigan 49023. Telephone (269) 927-2268. The Authority will update their federal policies to comply with 2 CFR 200 and will review all policies on an annual basis going forward.
Federal Aid Policies Finding 2023-002 Condition: The Authority’s management has completely turned over and been restructured. However, the Authority’s policies for federal aid approved in 2021 have not been revised to update for the current management structure. The policies have also not been updated for changes in the 2 CFR 200 that have occurred. Criteria: The 2 CFR 200 requires the adoption of federal aid policies and that they are to be updated and maintained in accordance with the federal regulations. These policies include the following along with the 2 CFR 200 reference. a. Cash Management Procedure –200.302(b)(6) and 200.305 b. Cost Allowability Procedures –200.302(b)(7) c. Conflicts of Interest Policy –200.318(c) d. Procurement Procedures –200.318(a) and 200.319(d) e. Method for Conducting Technical Evaluations of Proposals and Selecting Recipients –200.320(b)(2)(ii) f. Travel Policy –200.475(a) g. Procedures for Managing Equipment –200.313(d) h. Employee Benefits –200.431 Cause: The Authority has experienced a high turnover of employees since 2021 when the policies were adopted and have not been reviewed since their adoption. Effect: The Authority is noncompliant with 2 CFR 200. Directive: We direct the Authority review and update all federal aid policies and implement procedures to ensure that they are being reviewed at least once a year for changes in the Authority’s management structure or changes that occur in the 2 CFR 200. Management’s Response--Corrective Action Plan: Contact person is Rufus Adams, Executive Director, 275 East Wall Street, P.O. Box 837, Benton Harbor, Michigan 49023. Telephone (269) 927-2268. The Authority will update their federal policies to comply with 2 CFR 200 and will review all policies on an annual basis going forward.
Federal Aid Policies Finding 2023-002 Condition: The Authority’s management has completely turned over and been restructured. However, the Authority’s policies for federal aid approved in 2021 have not been revised to update for the current management structure. The policies have also not been updated for changes in the 2 CFR 200 that have occurred. Criteria: The 2 CFR 200 requires the adoption of federal aid policies and that they are to be updated and maintained in accordance with the federal regulations. These policies include the following along with the 2 CFR 200 reference. a. Cash Management Procedure –200.302(b)(6) and 200.305 b. Cost Allowability Procedures –200.302(b)(7) c. Conflicts of Interest Policy –200.318(c) d. Procurement Procedures –200.318(a) and 200.319(d) e. Method for Conducting Technical Evaluations of Proposals and Selecting Recipients –200.320(b)(2)(ii) f. Travel Policy –200.475(a) g. Procedures for Managing Equipment –200.313(d) h. Employee Benefits –200.431 Cause: The Authority has experienced a high turnover of employees since 2021 when the policies were adopted and have not been reviewed since their adoption. Effect: The Authority is noncompliant with 2 CFR 200. Directive: We direct the Authority review and update all federal aid policies and implement procedures to ensure that they are being reviewed at least once a year for changes in the Authority’s management structure or changes that occur in the 2 CFR 200. Management’s Response--Corrective Action Plan: Contact person is Rufus Adams, Executive Director, 275 East Wall Street, P.O. Box 837, Benton Harbor, Michigan 49023. Telephone (269) 927-2268. The Authority will update their federal policies to comply with 2 CFR 200 and will review all policies on an annual basis going forward.
Federal Aid Policies Finding 2023-002 Condition: The Authority’s management has completely turned over and been restructured. However, the Authority’s policies for federal aid approved in 2021 have not been revised to update for the current management structure. The policies have also not been updated for changes in the 2 CFR 200 that have occurred. Criteria: The 2 CFR 200 requires the adoption of federal aid policies and that they are to be updated and maintained in accordance with the federal regulations. These policies include the following along with the 2 CFR 200 reference. a. Cash Management Procedure –200.302(b)(6) and 200.305 b. Cost Allowability Procedures –200.302(b)(7) c. Conflicts of Interest Policy –200.318(c) d. Procurement Procedures –200.318(a) and 200.319(d) e. Method for Conducting Technical Evaluations of Proposals and Selecting Recipients –200.320(b)(2)(ii) f. Travel Policy –200.475(a) g. Procedures for Managing Equipment –200.313(d) h. Employee Benefits –200.431 Cause: The Authority has experienced a high turnover of employees since 2021 when the policies were adopted and have not been reviewed since their adoption. Effect: The Authority is noncompliant with 2 CFR 200. Directive: We direct the Authority review and update all federal aid policies and implement procedures to ensure that they are being reviewed at least once a year for changes in the Authority’s management structure or changes that occur in the 2 CFR 200. Management’s Response--Corrective Action Plan: Contact person is Rufus Adams, Executive Director, 275 East Wall Street, P.O. Box 837, Benton Harbor, Michigan 49023. Telephone (269) 927-2268. The Authority will update their federal policies to comply with 2 CFR 200 and will review all policies on an annual basis going forward.
Federal Aid Policies Finding 2023-002 Condition: The Authority’s management has completely turned over and been restructured. However, the Authority’s policies for federal aid approved in 2021 have not been revised to update for the current management structure. The policies have also not been updated for changes in the 2 CFR 200 that have occurred. Criteria: The 2 CFR 200 requires the adoption of federal aid policies and that they are to be updated and maintained in accordance with the federal regulations. These policies include the following along with the 2 CFR 200 reference. a. Cash Management Procedure –200.302(b)(6) and 200.305 b. Cost Allowability Procedures –200.302(b)(7) c. Conflicts of Interest Policy –200.318(c) d. Procurement Procedures –200.318(a) and 200.319(d) e. Method for Conducting Technical Evaluations of Proposals and Selecting Recipients –200.320(b)(2)(ii) f. Travel Policy –200.475(a) g. Procedures for Managing Equipment –200.313(d) h. Employee Benefits –200.431 Cause: The Authority has experienced a high turnover of employees since 2021 when the policies were adopted and have not been reviewed since their adoption. Effect: The Authority is noncompliant with 2 CFR 200. Directive: We direct the Authority review and update all federal aid policies and implement procedures to ensure that they are being reviewed at least once a year for changes in the Authority’s management structure or changes that occur in the 2 CFR 200. Management’s Response--Corrective Action Plan: Contact person is Rufus Adams, Executive Director, 275 East Wall Street, P.O. Box 837, Benton Harbor, Michigan 49023. Telephone (269) 927-2268. The Authority will update their federal policies to comply with 2 CFR 200 and will review all policies on an annual basis going forward.
Finding Number: 2023-011 Prior Year Finding Number: N/A Compliance Requirement: Reporting Program: Government Department/Agency: U.S. Department of the Treasury COVID-19 – Emergency Rental Assistance (ERA) Program ALN: 21.023 Award #: N/A Award Year: 12/27/2020 – 09/30/2025 Department of Human Services (DHS) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. The Uniform Guidance in 2 CFR Section 2 CFR Section 200.302(a), Financial Management, states that 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. Condition – Certain grant expenditures amounting to approximately $42.4 million, had erroneously been reflected as expenditures under assistance listing number 21.023, COVID-19 – Emergency Rental Assistance Program. Subsequently, DHS adjusted the SEFA to reflect the actual amount of expenditures incurred for the program. Questioned Costs – None. Context – This is a condition identified per review of the DHS’ compliance with the specified requirements. Effect – DHS is not in compliance with the stated provisions. Failure to properly review and support expenditures can result in noncompliance with laws and regulations along with loss of funding. Cause – DHS did not appear to have adequate policies and procedures in place to ensure accuracy of the SEFA. Recommendation – We recommend that DHS adhere to instituted policies and procedures to ensure the accuracy of the SEFA. Related Noncompliance – Material noncompliance. Views of Responsible Officials and Planned Corrective Actions – The DHS OCFO concurs with the finding. Initially, the expenditures were inadvertently categorized to the incorrect program. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-017 Prior Year Finding Number: N/A Compliance Requirement: Reporting Program: Government Department/Agency: U.S. Department of Education COVID-19 – Education Stabilization Fund Elementary and Secondary School Emergency Relief (ESSER) Fund ALN: 84.425D Award #: S425D210034 Award Year: 05/07/2020 – 09/30/2023 COVID-19 – Education Stabilization Fund American Rescue Plan - Elementary and Secondary Schools Emergency Relief Fund (ARP-ESSER) ALN: 84.425U Award #: S425U210034-21A Award Year: 03/24/2021 – 09/30/2023 Office of the State Superintendent of Education (OSSE) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. The Uniform Guidance in 2 CFR Section 2 CFR Section 200.302(a), Financial Management, states that 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. Condition – Certain grant expenditures amounting to approximately $9.7 million, had erroneously been reflected as expenditures under assistance listing number 84.425D, Elementary and Secondary School Emergency Relief (ESSER) Fund. Subsequently, OSSE adjusted the SEFA to reflect the expenditure to 84.425U, American Rescue Plan - Elementary and Secondary Schools Emergency Relief Fund. Further, the amount of subrecipient expenses initially reported is overstated by $269,140. Subsequently, OSSE adjusted the SEFA to reflect the actual amount of subrecipient expenditures incurred for the program. Questioned Costs – None. Context – This is a condition identified per review of OSSE’s compliance with the specified requirements. Effect – OSSE is not in compliance with the stated provisions. Failure to properly review and support expenditures can result in noncompliance with laws and regulations along with loss of funding. Cause – OSSE did not appear to have adequate policies and procedures in place to ensure accuracy of the SEFA. Recommendation – We recommend that OSSE adhere to instituted policies and procedures to ensure the accuracy of the SEFA. Related Noncompliance – Noncompliance. Views of Responsible Officials and Planned Corrective Actions – OSSE agrees with the conditions and recommendations of this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Finding Number: 2023-017 Prior Year Finding Number: N/A Compliance Requirement: Reporting Program: Government Department/Agency: U.S. Department of Education COVID-19 – Education Stabilization Fund Elementary and Secondary School Emergency Relief (ESSER) Fund ALN: 84.425D Award #: S425D210034 Award Year: 05/07/2020 – 09/30/2023 COVID-19 – Education Stabilization Fund American Rescue Plan - Elementary and Secondary Schools Emergency Relief Fund (ARP-ESSER) ALN: 84.425U Award #: S425U210034-21A Award Year: 03/24/2021 – 09/30/2023 Office of the State Superintendent of Education (OSSE) Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. The Uniform Guidance in 2 CFR Section 2 CFR Section 200.302(a), Financial Management, states that 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. Condition – Certain grant expenditures amounting to approximately $9.7 million, had erroneously been reflected as expenditures under assistance listing number 84.425D, Elementary and Secondary School Emergency Relief (ESSER) Fund. Subsequently, OSSE adjusted the SEFA to reflect the expenditure to 84.425U, American Rescue Plan - Elementary and Secondary Schools Emergency Relief Fund. Further, the amount of subrecipient expenses initially reported is overstated by $269,140. Subsequently, OSSE adjusted the SEFA to reflect the actual amount of subrecipient expenditures incurred for the program. Questioned Costs – None. Context – This is a condition identified per review of OSSE’s compliance with the specified requirements. Effect – OSSE is not in compliance with the stated provisions. Failure to properly review and support expenditures can result in noncompliance with laws and regulations along with loss of funding. Cause – OSSE did not appear to have adequate policies and procedures in place to ensure accuracy of the SEFA. Recommendation – We recommend that OSSE adhere to instituted policies and procedures to ensure the accuracy of the SEFA. Related Noncompliance – Noncompliance. Views of Responsible Officials and Planned Corrective Actions – OSSE agrees with the conditions and recommendations of this finding. The District’s corrective action is described in the Management’s Corrective Action Plan included as Appendix B of the attached Management’s Section.
Item 2023‐002 Written policies, procedures, and standards of conduct COVID 19 – Coronavirus State and Local Fiscal Recovery Fund Assistance Listing Number 21.027 U.S. Department of Treasury Grant period: Year ended September 30, 2023 Questioned Costs – $0 Condition – The City does not have all of the written policies, procedures and standards of conduct required by UG. Criteria – 2 CFR 200.303 requires the non‐Federal entity to “(a) establish and maintain effective internal controls over the Federal award that provides reasonable assurance that the non‐Federal entity is managing the Federal statutes, regulations, and the terms and conditions of the Federal award.” Grantees should have written policies, procedures, and standards of conduct as required by 2 CFR 200, Subparts D & E of the Uniform Guidance. 2 CFR 200, Subparts D & E requires the non‐ Federal entity to establish and maintain written policies, procedures, and standards of conduct including internal controls over the Federal awards that provides reasonable assurance that the non‐ Federal entity is managing the Federal statutes, regulations, and the terms and conditions of the Federal award. Specific requirements relate to the following: § 200.302 Financial management § 200.305 Payment § 200.319 Competition § 200.320 Methods of procurement to be followed § 200.430 Compensation—personal services § 200.431 Compensation—fringe benefits Cause of Condition – The City has failed to prepare written policies, procedures, and standards of conduct as required by 2 CFR 200, Subparts D & E of the Uniform Guidance. Potential Effect of Condition – Lack of written policies, procedures, and standards of conduct could result in noncompliance related to federal awards. Recommendation – We recommend that the City implement the required written policies and procedures. Management’s Response – Management agrees with the finding and will implement the necessary written policies to comply with the UG. Management anticipates completion by September 30, 2024.
MANAGEMENT DID NOT HAVE WRITTEN INTERNAL CONTROL PROCEDURES FOR DETERMINING ALLOWABLE COSTS. 2 CFR 200 SUBPART 3, SECTION 200.302(B)(7) REQUIRES 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. NO QUESTIONED COSTS. CAUSE IS THE LACK OF WRITTEN CONTROLS TO IDENTIFY ALLOWABLE COSTS AND SPECIAL TESTS AND PROVISIONS. THIS WAS A REPEAT FINDING. IT WAS PREVIOUSLY NOTED AS FINDING 2022-002
MANAGEMENT DID NOT HAVE WRITTEN INTERNAL CONTROL PROCEDURES FOR DETERMINING ALLOWABLE COSTS. 2 CFR 200 SUBPART 3, SECTION 200.302(B)(7) REQUIRES 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. NO QUESTIONED COSTS. CAUSE IS THE LACK OF WRITTEN CONTROLS TO IDENTIFY ALLOWABLE COSTS AND SPECIAL TESTS AND PROVISIONS. THIS WAS A REPEAT FINDING. IT WAS PREVIOUSLY NOTED AS FINDING 2022-002
Finding 2023-003 Inadequate Tracking of Federal Expenses (Allowable Costs) Federal Programs: All Criteria: In accordance with CFR 200.302 organizations receiving Federal awards must maintain accurate records that adequately identify the source and application of Federal funds. This includes tracking Federal expenditures separately and distinctly within their accounting system. Additionally, in accordance with CFR 200.303, the non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 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). Condition: The Organization's use of class codes in QuickBooks to track Federal expenses was found to be inadequate. Although the Organization uses QuickBooks to record financial transactions, there is no systematic method in place to ensure that Federal expenditures are properly classified and tracked using distinct class codes. Cause: The deficiency in tracking Federal expenses within QuickBooks using class codes appears to stem from a lack of understanding or awareness of the requirements outlined in Uniform Guidance. Additionally, there may be insufficient training provided to staff responsible for financial management and accounting practices. Effect or Potential Effect: Without proper tracking of Federal expenses using class codes, the Organization risks commingling Federal funds with other sources of revenue, which could lead to inaccurate reporting and potential non-compliance with Uniform Guidance requirements. This deficiency increases the likelihood of errors in financial reporting and raises concerns about the Organization's ability to demonstrate proper stewardship of Federal funds. Questioned Costs: Indeterminable. Context: The Organization does not currently use its financial management system to leverage the tracking of Federal funds between programs; the tracking is currently manual, based on Excel spreadsheets, and difficult to track/audit. Recommendation: It is recommended that the Organization establish and implement procedures to effectively track Federal expenses within QuickBooks using distinct class codes in accordance with 2 CFR 200.302. This may involve providing training to staff on the proper use of class codes and ensuring that all Federal expenditures are consistently and accurately classified in the accounting system.
Finding 2023-003 Inadequate Tracking of Federal Expenses (Allowable Costs) Federal Programs: All Criteria: In accordance with CFR 200.302 organizations receiving Federal awards must maintain accurate records that adequately identify the source and application of Federal funds. This includes tracking Federal expenditures separately and distinctly within their accounting system. Additionally, in accordance with CFR 200.303, the non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 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). Condition: The Organization's use of class codes in QuickBooks to track Federal expenses was found to be inadequate. Although the Organization uses QuickBooks to record financial transactions, there is no systematic method in place to ensure that Federal expenditures are properly classified and tracked using distinct class codes. Cause: The deficiency in tracking Federal expenses within QuickBooks using class codes appears to stem from a lack of understanding or awareness of the requirements outlined in Uniform Guidance. Additionally, there may be insufficient training provided to staff responsible for financial management and accounting practices. Effect or Potential Effect: Without proper tracking of Federal expenses using class codes, the Organization risks commingling Federal funds with other sources of revenue, which could lead to inaccurate reporting and potential non-compliance with Uniform Guidance requirements. This deficiency increases the likelihood of errors in financial reporting and raises concerns about the Organization's ability to demonstrate proper stewardship of Federal funds. Questioned Costs: Indeterminable. Context: The Organization does not currently use its financial management system to leverage the tracking of Federal funds between programs; the tracking is currently manual, based on Excel spreadsheets, and difficult to track/audit. Recommendation: It is recommended that the Organization establish and implement procedures to effectively track Federal expenses within QuickBooks using distinct class codes in accordance with 2 CFR 200.302. This may involve providing training to staff on the proper use of class codes and ensuring that all Federal expenditures are consistently and accurately classified in the accounting system.
Finding 2023-003 Inadequate Tracking of Federal Expenses (Allowable Costs) Federal Programs: All Criteria: In accordance with CFR 200.302 organizations receiving Federal awards must maintain accurate records that adequately identify the source and application of Federal funds. This includes tracking Federal expenditures separately and distinctly within their accounting system. Additionally, in accordance with CFR 200.303, the non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 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). Condition: The Organization's use of class codes in QuickBooks to track Federal expenses was found to be inadequate. Although the Organization uses QuickBooks to record financial transactions, there is no systematic method in place to ensure that Federal expenditures are properly classified and tracked using distinct class codes. Cause: The deficiency in tracking Federal expenses within QuickBooks using class codes appears to stem from a lack of understanding or awareness of the requirements outlined in Uniform Guidance. Additionally, there may be insufficient training provided to staff responsible for financial management and accounting practices. Effect or Potential Effect: Without proper tracking of Federal expenses using class codes, the Organization risks commingling Federal funds with other sources of revenue, which could lead to inaccurate reporting and potential non-compliance with Uniform Guidance requirements. This deficiency increases the likelihood of errors in financial reporting and raises concerns about the Organization's ability to demonstrate proper stewardship of Federal funds. Questioned Costs: Indeterminable. Context: The Organization does not currently use its financial management system to leverage the tracking of Federal funds between programs; the tracking is currently manual, based on Excel spreadsheets, and difficult to track/audit. Recommendation: It is recommended that the Organization establish and implement procedures to effectively track Federal expenses within QuickBooks using distinct class codes in accordance with 2 CFR 200.302. This may involve providing training to staff on the proper use of class codes and ensuring that all Federal expenditures are consistently and accurately classified in the accounting system.
Federal Programs: U.S. Department of Health and Human Services, Consolidated Health Centers Cluster: Community Health Centers (Assistance Listing #93.224); American Rescue Plan Act Funding for Health Centers (Assistance Listing #93.224); Primary Care HIV Prevention (Assistance Listing #93.527). Finding Type: Significant Deficiency Criteria: The 2 CFR section 200.302 requires that non-federal entities receiving federal awards present accurate, current, and complete disclosure of the financial results of each Federal award or program. The entity is required to maintain records, supported by source documentation, that identify adequately the source of funds for federally funded programs. Condition and Context: For 3 of the Center’s 50 expense reimbursement request draw-downs for the year ended September 30, 2023, the reimbursement request included more expenses than the amount of respective expenses incurred. Cause: During the year, the Center experienced turnover within the finance department and expense reimbursement requests were inadvertently completed incorrectly using previous or unrelated payroll information reports. Effect: As a result of the incorrect expense reimbursements, the Center received reimbursement payments in excess of related expenses incurred totaling $30,337 for the year ended September 30, 2023. Questioned Costs: $30, 337 Recommendation: The Center should implement a more robust process and related internal controls surrounding the expense reimbursement requests to ensure the submitted requests agree to the respective costs incurred and supported. Views of Responsible Officials: Due to extenuating circumstances, including turnover in the finance department, the reimbursement requests were not properly reviewed and agreed to supporting documentation. However, although the expense reimbursement requests exceeded the respective incurred expenses in the identified requests above, the Center consistently incurs allowable expenses that qualify to be reimbursed in excess of total grant payments received and is working to remediate the issue.
Federal Programs: U.S. Department of Health and Human Services, Consolidated Health Centers Cluster: Community Health Centers (Assistance Listing #93.224); American Rescue Plan Act Funding for Health Centers (Assistance Listing #93.224); Primary Care HIV Prevention (Assistance Listing #93.527). Finding Type: Significant Deficiency Criteria: The 2 CFR section 200.302 requires that non-federal entities receiving federal awards present accurate, current, and complete disclosure of the financial results of each Federal award or program. The entity is required to maintain records, supported by source documentation, that identify adequately the source of funds for federally funded programs. Condition and Context: For 3 of the Center’s 50 expense reimbursement request draw-downs for the year ended September 30, 2023, the reimbursement request included more expenses than the amount of respective expenses incurred. Cause: During the year, the Center experienced turnover within the finance department and expense reimbursement requests were inadvertently completed incorrectly using previous or unrelated payroll information reports. Effect: As a result of the incorrect expense reimbursements, the Center received reimbursement payments in excess of related expenses incurred totaling $30,337 for the year ended September 30, 2023. Questioned Costs: $30, 337 Recommendation: The Center should implement a more robust process and related internal controls surrounding the expense reimbursement requests to ensure the submitted requests agree to the respective costs incurred and supported. Views of Responsible Officials: Due to extenuating circumstances, including turnover in the finance department, the reimbursement requests were not properly reviewed and agreed to supporting documentation. However, although the expense reimbursement requests exceeded the respective incurred expenses in the identified requests above, the Center consistently incurs allowable expenses that qualify to be reimbursed in excess of total grant payments received and is working to remediate the issue.
Federal Programs: U.S. Department of Health and Human Services, Consolidated Health Centers Cluster: Community Health Centers (Assistance Listing #93.224); American Rescue Plan Act Funding for Health Centers (Assistance Listing #93.224); Primary Care HIV Prevention (Assistance Listing #93.527). Finding Type: Significant Deficiency Criteria: The 2 CFR section 200.302 requires that non-federal entities receiving federal awards present accurate, current, and complete disclosure of the financial results of each Federal award or program. The entity is required to maintain records, supported by source documentation, that identify adequately the source of funds for federally funded programs. Condition and Context: For 3 of the Center’s 50 expense reimbursement request draw-downs for the year ended September 30, 2023, the reimbursement request included more expenses than the amount of respective expenses incurred. Cause: During the year, the Center experienced turnover within the finance department and expense reimbursement requests were inadvertently completed incorrectly using previous or unrelated payroll information reports. Effect: As a result of the incorrect expense reimbursements, the Center received reimbursement payments in excess of related expenses incurred totaling $30,337 for the year ended September 30, 2023. Questioned Costs: $30, 337 Recommendation: The Center should implement a more robust process and related internal controls surrounding the expense reimbursement requests to ensure the submitted requests agree to the respective costs incurred and supported. Views of Responsible Officials: Due to extenuating circumstances, including turnover in the finance department, the reimbursement requests were not properly reviewed and agreed to supporting documentation. However, although the expense reimbursement requests exceeded the respective incurred expenses in the identified requests above, the Center consistently incurs allowable expenses that qualify to be reimbursed in excess of total grant payments received and is working to remediate the issue.
2023-005 Internal Controls over Grant Management (Significant Deficiency and Noncompliance) Criteria: 2 CFR 200.302 establishes the requirements of a financial management system adequate to ensure compliance with federal regulations. This system must include written procedures to implement requirements for payment methods and determine the allowability of costs in accordance with subpart E. Statement of Condition: The City has written fiscal policies but they do not meet the financial management system requirements established in the regulations. Cause: The City has processes and procedures in place to administer grant funds but written policies do not contain compliance requirements. Effect: The City is not in compliance with financial management system requirements. Recommendation: The City should develop a grants manual or additional written policies to incorporate all the requirements of 2 CFR 200 and ensure compliance. Views of Management and Planned Corrective Action: See Corrective Action Plan included at the end of the report.
2023-005 Internal Controls over Grant Management (Significant Deficiency and Noncompliance) Criteria: 2 CFR 200.302 establishes the requirements of a financial management system adequate to ensure compliance with federal regulations. This system must include written procedures to implement requirements for payment methods and determine the allowability of costs in accordance with subpart E. Statement of Condition: The City has written fiscal policies but they do not meet the financial management system requirements established in the regulations. Cause: The City has processes and procedures in place to administer grant funds but written policies do not contain compliance requirements. Effect: The City is not in compliance with financial management system requirements. Recommendation: The City should develop a grants manual or additional written policies to incorporate all the requirements of 2 CFR 200 and ensure compliance. Views of Management and Planned Corrective Action: See Corrective Action Plan included at the end of the report.
2023-005: Written Policies and Procedures Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 93.696, Certified Community Behavioral Health Clinic Expansion Grant Federal Award Identification Number and Year: 1H79SM086680-01, Program Grant Period 09/29/2022-09/29/2023 Pass-through Entity: N/A Type: Material weakness in internal control and noncompliance with laws and regulations Repeat Finding: No Criteria: As a precondition to receive federal awards, prospective recipients must have effective internal controls over the federal award. As described in 2 CFR, Part 200.303, nonfederal entities must have certain written policies and procedures surrounding the management of their federal awards. Such policies should include procedures for collecting payments of federal funds per 2 CRF 200.305, cash management (i.e., minimizing the time between draws and actual disbursing of federal awards) per 2 CFR 200.302(b)(6), allowable cost per 2 CFR 200.403, and conflict of interest per 2 CFR 200.318. Per 2 CFR 200.319(d), the non-Federal entity must have written procedures for procurement transactions. Condition: The Authority did not have written procedures for cash management and allowable cost. Identification of How Likely Questioned Costs Were Computed: N/A Known Questioned Costs: None Context: N/A Cause/Effect: Although the Authority is aware that they were required to have written policies and procedures for the items noted above, they were using the grant agreement guidelines that provide grantees with guidance for ensuring the existing accounting and personnel policies and procedures include the necessary controls. These guidelines address the compliance areas required by the Uniform Guidance. Recommendation: We recommend the Authority adopt written policies and procedures over cash management and allowable costs required under the Uniform Guidance. View of Responsible Officials and Planned Corrective Action Plan: See attached corrective action plan.
Federal Programs Affected: • 11.302 – Economic Development Administration (EDA) • 93.041 – Preventive Health and Health Services – Ombudsman • 93.043 – Prevention and Public Health – Evidence-Based Health Promotion (Title III-D) • 93.071 – Medicare Enrollment Assistance (MIPPA) • 93.324 – State Primary Care Offices (HICAP) • 93.499 – ACA – LIHWAP Cluster • 93.791 – Money Follows the Person – ADRC • 93.917 – HIV Care Formula Grants – Ryan White Service Delivery • 97.067 – Homeland Security Grant Program – SHSP Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of administrative expenditures, we identified a utility payment to NRG Business that included sales tax, which is unallowable under federal cost principles for tax-exempt entities. Specifically, the utility invoice dated June 30, 2023, in the amount of $713.43 included $51.47 in sales tax. Although the vendor later issued a credit for the sales tax amount, the original charge—including the unallowable portion—was allocated to various federal grants through the administrative cost pool. It is not clear whether the vendor credit was properly reallocated to reverse the original federal charges. The table below summarizes the impacted programs and amounts: Federal Program ALN Check No. Amount Charged Economic Development Administration 11.302 #70335 $66.99 Preventive Health & Health Services – Ombudsman 93.041 #70076 $56.16 Evidence-Based Health – Title III-D 93.043 #70335 $66.99 Medicare Enrollment Assistance – MIPPA 93.071 #70583 $75.50 State Primary Care Offices – HICAP 93.324 #71046 $80.00 ACA – LIHWAP Cluster 93.499 #69835 $43.14 Money Follows the Person – ADRC 93.791 #70335 $66.99 HIV Care Formula Grants – Ryan White 93.917 #70460 $35.63 Homeland Security Grant Program – SHSP 97.067 #69835 $43.14 Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be necessary, reasonable, allocable, and allowable under the cost principles. As a tax-exempt entity, sales taxes paid in error are considered unallowable unless excluded from reimbursement or properly credited. Additionally, per §200.302(b)(2), recipients must maintain effective control over and accountability for all funds and ensure proper allocation of costs. Cause: STDC’s internal controls did not identify the inclusion of sales tax in the vendor invoice prior to payment. Furthermore, no mechanism was in place to ensure that vendor credits—once received—were retroactively applied to reverse the original allocations made to federal grants. Effect: Although the vendor issued a credit for the unallowable sales tax, the original amount was temporarily charged to multiple federal programs. The lack of documented reallocation creates a risk that federal programs may have absorbed unallowable costs or that cost allocations remain inaccurate. Recommendation: We recommend that STDC: • Strengthen internal controls to ensure that invoices are reviewed for unallowable costs (such as sales tax) prior to payment and allocation; • Establish procedures to track vendor credits and ensure that corresponding cost reallocations are applied to the correct funding sources; • Enhance documentation and reconciliation processes to demonstrate that post-payment adjustments are handled properly; • Train fiscal and grant staff on exempt status implications and cost allowability under Uniform Guidance. Questioned Costs: None (vendor credit issued); however, audit adjustments or reallocations may be necessary to ensure grant charges are corrected.
Federal Program: Ryan White HIV/AIDS Program – Part B (ALN 93.917) Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our testing of the Ryan White Service Delivery program (grant period ending March 31, 2023), we noted that STDC initially submitted a final financial report to the Texas Department of State Health Services (DSHS) – Ryan White Division, reporting $491,993 in contractual expenditures and $69,458 in administrative expenditures. Subsequently, STDC submitted an additional reimbursement request via Form B-13, which included $162,433 in additional contractual costs and $12,153 in administrative costs. Upon review of the supporting documentation for this supplemental submission, we were unable to obtain sufficient appropriate evidence that the additional $12,153 in administrative expenditures were actually incurred. Despite the lack of adequate supporting documentation, the full amount was reimbursed by DSHS. Criteria: In accordance with 2 CFR §200.403(g), to be allowable under a federal award, costs must be adequately documented. Furthermore, §200.302(b)(3) requires recipients of federal funds to maintain records that identify adequately the source and application of funds, and §200.338(a) authorizes federal agencies to disallow costs that are not properly supported or allocable. Cause: STDC did not maintain contemporaneous or sufficient documentation to support administrative costs included in the post-period reimbursement request. Additionally, internal controls over the review and approval of financial reports and supplemental claims (e.g., Form B-13 submissions) were not operating effectively to prevent or detect the inclusion of unsupported expenditures. Effect: As a result, STDC received federal reimbursement for $12,153 in administrative costs without appropriate documentation, constituting noncompliance with federal cost principles. This condition may result in the disallowance of costs and repayment obligations to the funding agency. Recommendation: We recommend that STDC strengthen internal controls related to post-award financial reporting and reimbursement procedures by: • Ensuring that all costs claimed are supported by contemporaneous documentation clearly demonstrating that costs were incurred and allocable; • Establishing a formal review protocol for post-period adjustments, including documentation validation and supervisory sign-off; • Performing reconciliations of claimed expenditures before submission of final or supplemental reports to granting agencies; and • Consulting with DSHS to determine whether corrective action or repayment is necessary regarding the unsupported amount. Questioned Costs: $12,153
Federal Programs Affected: • 11.302 – Economic Development Administration (EDA) • 93.041 – Preventive Health and Health Services – Ombudsman • 93.043 – Prevention and Public Health – Evidence-Based Health Promotion (Title III-D) • 93.071 – Medicare Enrollment Assistance (MIPPA) • 93.324 – State Primary Care Offices (HICAP) • 93.499 – ACA – LIHWAP Cluster • 93.791 – Money Follows the Person – ADRC • 93.917 – HIV Care Formula Grants – Ryan White Service Delivery • 97.067 – Homeland Security Grant Program – SHSP Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of administrative expenditures, we identified a utility payment to NRG Business that included sales tax, which is unallowable under federal cost principles for tax-exempt entities. Specifically, the utility invoice dated June 30, 2023, in the amount of $713.43 included $51.47 in sales tax. Although the vendor later issued a credit for the sales tax amount, the original charge—including the unallowable portion—was allocated to various federal grants through the administrative cost pool. It is not clear whether the vendor credit was properly reallocated to reverse the original federal charges. The table below summarizes the impacted programs and amounts: Federal Program ALN Check No. Amount Charged Economic Development Administration 11.302 #70335 $66.99 Preventive Health & Health Services – Ombudsman 93.041 #70076 $56.16 Evidence-Based Health – Title III-D 93.043 #70335 $66.99 Medicare Enrollment Assistance – MIPPA 93.071 #70583 $75.50 State Primary Care Offices – HICAP 93.324 #71046 $80.00 ACA – LIHWAP Cluster 93.499 #69835 $43.14 Money Follows the Person – ADRC 93.791 #70335 $66.99 HIV Care Formula Grants – Ryan White 93.917 #70460 $35.63 Homeland Security Grant Program – SHSP 97.067 #69835 $43.14 Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be necessary, reasonable, allocable, and allowable under the cost principles. As a tax-exempt entity, sales taxes paid in error are considered unallowable unless excluded from reimbursement or properly credited. Additionally, per §200.302(b)(2), recipients must maintain effective control over and accountability for all funds and ensure proper allocation of costs. Cause: STDC’s internal controls did not identify the inclusion of sales tax in the vendor invoice prior to payment. Furthermore, no mechanism was in place to ensure that vendor credits—once received—were retroactively applied to reverse the original allocations made to federal grants. Effect: Although the vendor issued a credit for the unallowable sales tax, the original amount was temporarily charged to multiple federal programs. The lack of documented reallocation creates a risk that federal programs may have absorbed unallowable costs or that cost allocations remain inaccurate. Recommendation: We recommend that STDC: • Strengthen internal controls to ensure that invoices are reviewed for unallowable costs (such as sales tax) prior to payment and allocation; • Establish procedures to track vendor credits and ensure that corresponding cost reallocations are applied to the correct funding sources; • Enhance documentation and reconciliation processes to demonstrate that post-payment adjustments are handled properly; • Train fiscal and grant staff on exempt status implications and cost allowability under Uniform Guidance. Questioned Costs: None (vendor credit issued); however, audit adjustments or reallocations may be necessary to ensure grant charges are corrected.
Federal Programs Affected: • 11.302 – Economic Development Administration (EDA) • 93.041 – Preventive Health and Health Services – Ombudsman • 93.043 – Prevention and Public Health – Evidence-Based Health Promotion (Title III-D) • 93.071 – Medicare Enrollment Assistance (MIPPA) • 93.324 – State Primary Care Offices (HICAP) • 93.499 – ACA – LIHWAP Cluster • 93.791 – Money Follows the Person – ADRC • 93.917 – HIV Care Formula Grants – Ryan White Service Delivery • 97.067 – Homeland Security Grant Program – SHSP Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of administrative expenditures, we identified a utility payment to NRG Business that included sales tax, which is unallowable under federal cost principles for tax-exempt entities. Specifically, the utility invoice dated June 30, 2023, in the amount of $713.43 included $51.47 in sales tax. Although the vendor later issued a credit for the sales tax amount, the original charge—including the unallowable portion—was allocated to various federal grants through the administrative cost pool. It is not clear whether the vendor credit was properly reallocated to reverse the original federal charges. The table below summarizes the impacted programs and amounts: Federal Program ALN Check No. Amount Charged Economic Development Administration 11.302 #70335 $66.99 Preventive Health & Health Services – Ombudsman 93.041 #70076 $56.16 Evidence-Based Health – Title III-D 93.043 #70335 $66.99 Medicare Enrollment Assistance – MIPPA 93.071 #70583 $75.50 State Primary Care Offices – HICAP 93.324 #71046 $80.00 ACA – LIHWAP Cluster 93.499 #69835 $43.14 Money Follows the Person – ADRC 93.791 #70335 $66.99 HIV Care Formula Grants – Ryan White 93.917 #70460 $35.63 Homeland Security Grant Program – SHSP 97.067 #69835 $43.14 Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be necessary, reasonable, allocable, and allowable under the cost principles. As a tax-exempt entity, sales taxes paid in error are considered unallowable unless excluded from reimbursement or properly credited. Additionally, per §200.302(b)(2), recipients must maintain effective control over and accountability for all funds and ensure proper allocation of costs. Cause: STDC’s internal controls did not identify the inclusion of sales tax in the vendor invoice prior to payment. Furthermore, no mechanism was in place to ensure that vendor credits—once received—were retroactively applied to reverse the original allocations made to federal grants. Effect: Although the vendor issued a credit for the unallowable sales tax, the original amount was temporarily charged to multiple federal programs. The lack of documented reallocation creates a risk that federal programs may have absorbed unallowable costs or that cost allocations remain inaccurate. Recommendation: We recommend that STDC: • Strengthen internal controls to ensure that invoices are reviewed for unallowable costs (such as sales tax) prior to payment and allocation; • Establish procedures to track vendor credits and ensure that corresponding cost reallocations are applied to the correct funding sources; • Enhance documentation and reconciliation processes to demonstrate that post-payment adjustments are handled properly; • Train fiscal and grant staff on exempt status implications and cost allowability under Uniform Guidance. Questioned Costs: None (vendor credit issued); however, audit adjustments or reallocations may be necessary to ensure grant charges are corrected.
Federal Programs Affected: • 11.302 – Economic Development Administration (EDA) • 93.041 – Preventive Health and Health Services – Ombudsman • 93.043 – Prevention and Public Health – Evidence-Based Health Promotion (Title III-D) • 93.071 – Medicare Enrollment Assistance (MIPPA) • 93.324 – State Primary Care Offices (HICAP) • 93.499 – ACA – LIHWAP Cluster • 93.791 – Money Follows the Person – ADRC • 93.917 – HIV Care Formula Grants – Ryan White Service Delivery • 97.067 – Homeland Security Grant Program – SHSP Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of administrative expenditures, we identified a utility payment to NRG Business that included sales tax, which is unallowable under federal cost principles for tax-exempt entities. Specifically, the utility invoice dated June 30, 2023, in the amount of $713.43 included $51.47 in sales tax. Although the vendor later issued a credit for the sales tax amount, the original charge—including the unallowable portion—was allocated to various federal grants through the administrative cost pool. It is not clear whether the vendor credit was properly reallocated to reverse the original federal charges. The table below summarizes the impacted programs and amounts: Federal Program ALN Check No. Amount Charged Economic Development Administration 11.302 #70335 $66.99 Preventive Health & Health Services – Ombudsman 93.041 #70076 $56.16 Evidence-Based Health – Title III-D 93.043 #70335 $66.99 Medicare Enrollment Assistance – MIPPA 93.071 #70583 $75.50 State Primary Care Offices – HICAP 93.324 #71046 $80.00 ACA – LIHWAP Cluster 93.499 #69835 $43.14 Money Follows the Person – ADRC 93.791 #70335 $66.99 HIV Care Formula Grants – Ryan White 93.917 #70460 $35.63 Homeland Security Grant Program – SHSP 97.067 #69835 $43.14 Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be necessary, reasonable, allocable, and allowable under the cost principles. As a tax-exempt entity, sales taxes paid in error are considered unallowable unless excluded from reimbursement or properly credited. Additionally, per §200.302(b)(2), recipients must maintain effective control over and accountability for all funds and ensure proper allocation of costs. Cause: STDC’s internal controls did not identify the inclusion of sales tax in the vendor invoice prior to payment. Furthermore, no mechanism was in place to ensure that vendor credits—once received—were retroactively applied to reverse the original allocations made to federal grants. Effect: Although the vendor issued a credit for the unallowable sales tax, the original amount was temporarily charged to multiple federal programs. The lack of documented reallocation creates a risk that federal programs may have absorbed unallowable costs or that cost allocations remain inaccurate. Recommendation: We recommend that STDC: • Strengthen internal controls to ensure that invoices are reviewed for unallowable costs (such as sales tax) prior to payment and allocation; • Establish procedures to track vendor credits and ensure that corresponding cost reallocations are applied to the correct funding sources; • Enhance documentation and reconciliation processes to demonstrate that post-payment adjustments are handled properly; • Train fiscal and grant staff on exempt status implications and cost allowability under Uniform Guidance. Questioned Costs: None (vendor credit issued); however, audit adjustments or reallocations may be necessary to ensure grant charges are corrected.
Federal Programs Affected: • 11.302 – Economic Development Administration (EDA) • 93.041 – Preventive Health and Health Services – Ombudsman • 93.043 – Prevention and Public Health – Evidence-Based Health Promotion (Title III-D) • 93.071 – Medicare Enrollment Assistance (MIPPA) • 93.324 – State Primary Care Offices (HICAP) • 93.499 – ACA – LIHWAP Cluster • 93.791 – Money Follows the Person – ADRC • 93.917 – HIV Care Formula Grants – Ryan White Service Delivery • 97.067 – Homeland Security Grant Program – SHSP Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of administrative expenditures, we identified a utility payment to NRG Business that included sales tax, which is unallowable under federal cost principles for tax-exempt entities. Specifically, the utility invoice dated June 30, 2023, in the amount of $713.43 included $51.47 in sales tax. Although the vendor later issued a credit for the sales tax amount, the original charge—including the unallowable portion—was allocated to various federal grants through the administrative cost pool. It is not clear whether the vendor credit was properly reallocated to reverse the original federal charges. The table below summarizes the impacted programs and amounts: Federal Program ALN Check No. Amount Charged Economic Development Administration 11.302 #70335 $66.99 Preventive Health & Health Services – Ombudsman 93.041 #70076 $56.16 Evidence-Based Health – Title III-D 93.043 #70335 $66.99 Medicare Enrollment Assistance – MIPPA 93.071 #70583 $75.50 State Primary Care Offices – HICAP 93.324 #71046 $80.00 ACA – LIHWAP Cluster 93.499 #69835 $43.14 Money Follows the Person – ADRC 93.791 #70335 $66.99 HIV Care Formula Grants – Ryan White 93.917 #70460 $35.63 Homeland Security Grant Program – SHSP 97.067 #69835 $43.14 Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be necessary, reasonable, allocable, and allowable under the cost principles. As a tax-exempt entity, sales taxes paid in error are considered unallowable unless excluded from reimbursement or properly credited. Additionally, per §200.302(b)(2), recipients must maintain effective control over and accountability for all funds and ensure proper allocation of costs. Cause: STDC’s internal controls did not identify the inclusion of sales tax in the vendor invoice prior to payment. Furthermore, no mechanism was in place to ensure that vendor credits—once received—were retroactively applied to reverse the original allocations made to federal grants. Effect: Although the vendor issued a credit for the unallowable sales tax, the original amount was temporarily charged to multiple federal programs. The lack of documented reallocation creates a risk that federal programs may have absorbed unallowable costs or that cost allocations remain inaccurate. Recommendation: We recommend that STDC: • Strengthen internal controls to ensure that invoices are reviewed for unallowable costs (such as sales tax) prior to payment and allocation; • Establish procedures to track vendor credits and ensure that corresponding cost reallocations are applied to the correct funding sources; • Enhance documentation and reconciliation processes to demonstrate that post-payment adjustments are handled properly; • Train fiscal and grant staff on exempt status implications and cost allowability under Uniform Guidance. Questioned Costs: None (vendor credit issued); however, audit adjustments or reallocations may be necessary to ensure grant charges are corrected.
Federal Programs Affected: • 11.302 – Economic Development Administration (EDA) • 93.041 – Preventive Health and Health Services – Ombudsman • 93.043 – Prevention and Public Health – Evidence-Based Health Promotion (Title III-D) • 93.071 – Medicare Enrollment Assistance (MIPPA) • 93.324 – State Primary Care Offices (HICAP) • 93.499 – ACA – LIHWAP Cluster • 93.791 – Money Follows the Person – ADRC • 93.917 – HIV Care Formula Grants – Ryan White Service Delivery • 97.067 – Homeland Security Grant Program – SHSP Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of administrative expenditures, we identified a utility payment to NRG Business that included sales tax, which is unallowable under federal cost principles for tax-exempt entities. Specifically, the utility invoice dated June 30, 2023, in the amount of $713.43 included $51.47 in sales tax. Although the vendor later issued a credit for the sales tax amount, the original charge—including the unallowable portion—was allocated to various federal grants through the administrative cost pool. It is not clear whether the vendor credit was properly reallocated to reverse the original federal charges. The table below summarizes the impacted programs and amounts: Federal Program ALN Check No. Amount Charged Economic Development Administration 11.302 #70335 $66.99 Preventive Health & Health Services – Ombudsman 93.041 #70076 $56.16 Evidence-Based Health – Title III-D 93.043 #70335 $66.99 Medicare Enrollment Assistance – MIPPA 93.071 #70583 $75.50 State Primary Care Offices – HICAP 93.324 #71046 $80.00 ACA – LIHWAP Cluster 93.499 #69835 $43.14 Money Follows the Person – ADRC 93.791 #70335 $66.99 HIV Care Formula Grants – Ryan White 93.917 #70460 $35.63 Homeland Security Grant Program – SHSP 97.067 #69835 $43.14 Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be necessary, reasonable, allocable, and allowable under the cost principles. As a tax-exempt entity, sales taxes paid in error are considered unallowable unless excluded from reimbursement or properly credited. Additionally, per §200.302(b)(2), recipients must maintain effective control over and accountability for all funds and ensure proper allocation of costs. Cause: STDC’s internal controls did not identify the inclusion of sales tax in the vendor invoice prior to payment. Furthermore, no mechanism was in place to ensure that vendor credits—once received—were retroactively applied to reverse the original allocations made to federal grants. Effect: Although the vendor issued a credit for the unallowable sales tax, the original amount was temporarily charged to multiple federal programs. The lack of documented reallocation creates a risk that federal programs may have absorbed unallowable costs or that cost allocations remain inaccurate. Recommendation: We recommend that STDC: • Strengthen internal controls to ensure that invoices are reviewed for unallowable costs (such as sales tax) prior to payment and allocation; • Establish procedures to track vendor credits and ensure that corresponding cost reallocations are applied to the correct funding sources; • Enhance documentation and reconciliation processes to demonstrate that post-payment adjustments are handled properly; • Train fiscal and grant staff on exempt status implications and cost allowability under Uniform Guidance. Questioned Costs: None (vendor credit issued); however, audit adjustments or reallocations may be necessary to ensure grant charges are corrected.
Federal Programs Affected: • 11.302 – Economic Development Administration (EDA) • 93.041 – Preventive Health and Health Services – Ombudsman • 93.043 – Prevention and Public Health – Evidence-Based Health Promotion (Title III-D) • 93.071 – Medicare Enrollment Assistance (MIPPA) • 93.324 – State Primary Care Offices (HICAP) • 93.499 – ACA – LIHWAP Cluster • 93.791 – Money Follows the Person – ADRC • 93.917 – HIV Care Formula Grants – Ryan White Service Delivery • 97.067 – Homeland Security Grant Program – SHSP Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of administrative expenditures, we identified a utility payment to NRG Business that included sales tax, which is unallowable under federal cost principles for tax-exempt entities. Specifically, the utility invoice dated June 30, 2023, in the amount of $713.43 included $51.47 in sales tax. Although the vendor later issued a credit for the sales tax amount, the original charge—including the unallowable portion—was allocated to various federal grants through the administrative cost pool. It is not clear whether the vendor credit was properly reallocated to reverse the original federal charges. The table below summarizes the impacted programs and amounts: Federal Program ALN Check No. Amount Charged Economic Development Administration 11.302 #70335 $66.99 Preventive Health & Health Services – Ombudsman 93.041 #70076 $56.16 Evidence-Based Health – Title III-D 93.043 #70335 $66.99 Medicare Enrollment Assistance – MIPPA 93.071 #70583 $75.50 State Primary Care Offices – HICAP 93.324 #71046 $80.00 ACA – LIHWAP Cluster 93.499 #69835 $43.14 Money Follows the Person – ADRC 93.791 #70335 $66.99 HIV Care Formula Grants – Ryan White 93.917 #70460 $35.63 Homeland Security Grant Program – SHSP 97.067 #69835 $43.14 Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be necessary, reasonable, allocable, and allowable under the cost principles. As a tax-exempt entity, sales taxes paid in error are considered unallowable unless excluded from reimbursement or properly credited. Additionally, per §200.302(b)(2), recipients must maintain effective control over and accountability for all funds and ensure proper allocation of costs. Cause: STDC’s internal controls did not identify the inclusion of sales tax in the vendor invoice prior to payment. Furthermore, no mechanism was in place to ensure that vendor credits—once received—were retroactively applied to reverse the original allocations made to federal grants. Effect: Although the vendor issued a credit for the unallowable sales tax, the original amount was temporarily charged to multiple federal programs. The lack of documented reallocation creates a risk that federal programs may have absorbed unallowable costs or that cost allocations remain inaccurate. Recommendation: We recommend that STDC: • Strengthen internal controls to ensure that invoices are reviewed for unallowable costs (such as sales tax) prior to payment and allocation; • Establish procedures to track vendor credits and ensure that corresponding cost reallocations are applied to the correct funding sources; • Enhance documentation and reconciliation processes to demonstrate that post-payment adjustments are handled properly; • Train fiscal and grant staff on exempt status implications and cost allowability under Uniform Guidance. Questioned Costs: None (vendor credit issued); however, audit adjustments or reallocations may be necessary to ensure grant charges are corrected.
Federal Programs Affected: • 11.302 – Economic Development Administration (EDA) • 93.041 – Preventive Health and Health Services – Ombudsman • 93.043 – Prevention and Public Health – Evidence-Based Health Promotion (Title III-D) • 93.071 – Medicare Enrollment Assistance (MIPPA) • 93.324 – State Primary Care Offices (HICAP) • 93.499 – ACA – LIHWAP Cluster • 93.791 – Money Follows the Person – ADRC • 93.917 – HIV Care Formula Grants – Ryan White Service Delivery • 97.067 – Homeland Security Grant Program – SHSP Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of administrative expenditures, we identified a utility payment to NRG Business that included sales tax, which is unallowable under federal cost principles for tax-exempt entities. Specifically, the utility invoice dated June 30, 2023, in the amount of $713.43 included $51.47 in sales tax. Although the vendor later issued a credit for the sales tax amount, the original charge—including the unallowable portion—was allocated to various federal grants through the administrative cost pool. It is not clear whether the vendor credit was properly reallocated to reverse the original federal charges. The table below summarizes the impacted programs and amounts: Federal Program ALN Check No. Amount Charged Economic Development Administration 11.302 #70335 $66.99 Preventive Health & Health Services – Ombudsman 93.041 #70076 $56.16 Evidence-Based Health – Title III-D 93.043 #70335 $66.99 Medicare Enrollment Assistance – MIPPA 93.071 #70583 $75.50 State Primary Care Offices – HICAP 93.324 #71046 $80.00 ACA – LIHWAP Cluster 93.499 #69835 $43.14 Money Follows the Person – ADRC 93.791 #70335 $66.99 HIV Care Formula Grants – Ryan White 93.917 #70460 $35.63 Homeland Security Grant Program – SHSP 97.067 #69835 $43.14 Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be necessary, reasonable, allocable, and allowable under the cost principles. As a tax-exempt entity, sales taxes paid in error are considered unallowable unless excluded from reimbursement or properly credited. Additionally, per §200.302(b)(2), recipients must maintain effective control over and accountability for all funds and ensure proper allocation of costs. Cause: STDC’s internal controls did not identify the inclusion of sales tax in the vendor invoice prior to payment. Furthermore, no mechanism was in place to ensure that vendor credits—once received—were retroactively applied to reverse the original allocations made to federal grants. Effect: Although the vendor issued a credit for the unallowable sales tax, the original amount was temporarily charged to multiple federal programs. The lack of documented reallocation creates a risk that federal programs may have absorbed unallowable costs or that cost allocations remain inaccurate. Recommendation: We recommend that STDC: • Strengthen internal controls to ensure that invoices are reviewed for unallowable costs (such as sales tax) prior to payment and allocation; • Establish procedures to track vendor credits and ensure that corresponding cost reallocations are applied to the correct funding sources; • Enhance documentation and reconciliation processes to demonstrate that post-payment adjustments are handled properly; • Train fiscal and grant staff on exempt status implications and cost allowability under Uniform Guidance. Questioned Costs: None (vendor credit issued); however, audit adjustments or reallocations may be necessary to ensure grant charges are corrected.
Federal Programs Affected: • 11.302 – Economic Development Administration (EDA) • 93.041 – Preventive Health and Health Services – Ombudsman • 93.043 – Prevention and Public Health – Evidence-Based Health Promotion (Title III-D) • 93.071 – Medicare Enrollment Assistance (MIPPA) • 93.324 – State Primary Care Offices (HICAP) • 93.499 – ACA – LIHWAP Cluster • 93.791 – Money Follows the Person – ADRC • 93.917 – HIV Care Formula Grants – Ryan White Service Delivery • 97.067 – Homeland Security Grant Program – SHSP Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of administrative expenditures, we identified a utility payment to NRG Business that included sales tax, which is unallowable under federal cost principles for tax-exempt entities. Specifically, the utility invoice dated June 30, 2023, in the amount of $713.43 included $51.47 in sales tax. Although the vendor later issued a credit for the sales tax amount, the original charge—including the unallowable portion—was allocated to various federal grants through the administrative cost pool. It is not clear whether the vendor credit was properly reallocated to reverse the original federal charges. The table below summarizes the impacted programs and amounts: Federal Program ALN Check No. Amount Charged Economic Development Administration 11.302 #70335 $66.99 Preventive Health & Health Services – Ombudsman 93.041 #70076 $56.16 Evidence-Based Health – Title III-D 93.043 #70335 $66.99 Medicare Enrollment Assistance – MIPPA 93.071 #70583 $75.50 State Primary Care Offices – HICAP 93.324 #71046 $80.00 ACA – LIHWAP Cluster 93.499 #69835 $43.14 Money Follows the Person – ADRC 93.791 #70335 $66.99 HIV Care Formula Grants – Ryan White 93.917 #70460 $35.63 Homeland Security Grant Program – SHSP 97.067 #69835 $43.14 Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be necessary, reasonable, allocable, and allowable under the cost principles. As a tax-exempt entity, sales taxes paid in error are considered unallowable unless excluded from reimbursement or properly credited. Additionally, per §200.302(b)(2), recipients must maintain effective control over and accountability for all funds and ensure proper allocation of costs. Cause: STDC’s internal controls did not identify the inclusion of sales tax in the vendor invoice prior to payment. Furthermore, no mechanism was in place to ensure that vendor credits—once received—were retroactively applied to reverse the original allocations made to federal grants. Effect: Although the vendor issued a credit for the unallowable sales tax, the original amount was temporarily charged to multiple federal programs. The lack of documented reallocation creates a risk that federal programs may have absorbed unallowable costs or that cost allocations remain inaccurate. Recommendation: We recommend that STDC: • Strengthen internal controls to ensure that invoices are reviewed for unallowable costs (such as sales tax) prior to payment and allocation; • Establish procedures to track vendor credits and ensure that corresponding cost reallocations are applied to the correct funding sources; • Enhance documentation and reconciliation processes to demonstrate that post-payment adjustments are handled properly; • Train fiscal and grant staff on exempt status implications and cost allowability under Uniform Guidance. Questioned Costs: None (vendor credit issued); however, audit adjustments or reallocations may be necessary to ensure grant charges are corrected.
Federal Programs Affected: • 11.302 – Economic Development Administration (EDA) • 93.041 – Preventive Health and Health Services – Ombudsman • 93.043 – Prevention and Public Health – Evidence-Based Health Promotion (Title III-D) • 93.071 – Medicare Enrollment Assistance (MIPPA) • 93.324 – State Primary Care Offices (HICAP) • 93.499 – ACA – LIHWAP Cluster • 93.791 – Money Follows the Person – ADRC • 93.917 – HIV Care Formula Grants – Ryan White Service Delivery • 97.067 – Homeland Security Grant Program – SHSP Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of administrative expenditures, we identified a utility payment to NRG Business that included sales tax, which is unallowable under federal cost principles for tax-exempt entities. Specifically, the utility invoice dated June 30, 2023, in the amount of $713.43 included $51.47 in sales tax. Although the vendor later issued a credit for the sales tax amount, the original charge—including the unallowable portion—was allocated to various federal grants through the administrative cost pool. It is not clear whether the vendor credit was properly reallocated to reverse the original federal charges. The table below summarizes the impacted programs and amounts: Federal Program ALN Check No. Amount Charged Economic Development Administration 11.302 #70335 $66.99 Preventive Health & Health Services – Ombudsman 93.041 #70076 $56.16 Evidence-Based Health – Title III-D 93.043 #70335 $66.99 Medicare Enrollment Assistance – MIPPA 93.071 #70583 $75.50 State Primary Care Offices – HICAP 93.324 #71046 $80.00 ACA – LIHWAP Cluster 93.499 #69835 $43.14 Money Follows the Person – ADRC 93.791 #70335 $66.99 HIV Care Formula Grants – Ryan White 93.917 #70460 $35.63 Homeland Security Grant Program – SHSP 97.067 #69835 $43.14 Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be necessary, reasonable, allocable, and allowable under the cost principles. As a tax-exempt entity, sales taxes paid in error are considered unallowable unless excluded from reimbursement or properly credited. Additionally, per §200.302(b)(2), recipients must maintain effective control over and accountability for all funds and ensure proper allocation of costs. Cause: STDC’s internal controls did not identify the inclusion of sales tax in the vendor invoice prior to payment. Furthermore, no mechanism was in place to ensure that vendor credits—once received—were retroactively applied to reverse the original allocations made to federal grants. Effect: Although the vendor issued a credit for the unallowable sales tax, the original amount was temporarily charged to multiple federal programs. The lack of documented reallocation creates a risk that federal programs may have absorbed unallowable costs or that cost allocations remain inaccurate. Recommendation: We recommend that STDC: • Strengthen internal controls to ensure that invoices are reviewed for unallowable costs (such as sales tax) prior to payment and allocation; • Establish procedures to track vendor credits and ensure that corresponding cost reallocations are applied to the correct funding sources; • Enhance documentation and reconciliation processes to demonstrate that post-payment adjustments are handled properly; • Train fiscal and grant staff on exempt status implications and cost allowability under Uniform Guidance. Questioned Costs: None (vendor credit issued); however, audit adjustments or reallocations may be necessary to ensure grant charges are corrected.
Federal Programs Affected: • 11.302 – Economic Development Administration (EDA) • 93.041 – Preventive Health and Health Services – Ombudsman • 93.043 – Prevention and Public Health – Evidence-Based Health Promotion (Title III-D) • 93.071 – Medicare Enrollment Assistance (MIPPA) • 93.324 – State Primary Care Offices (HICAP) • 93.499 – ACA – LIHWAP Cluster • 93.791 – Money Follows the Person – ADRC • 93.917 – HIV Care Formula Grants – Ryan White Service Delivery • 97.067 – Homeland Security Grant Program – SHSP Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of administrative expenditures, we identified a utility payment to NRG Business that included sales tax, which is unallowable under federal cost principles for tax-exempt entities. Specifically, the utility invoice dated June 30, 2023, in the amount of $713.43 included $51.47 in sales tax. Although the vendor later issued a credit for the sales tax amount, the original charge—including the unallowable portion—was allocated to various federal grants through the administrative cost pool. It is not clear whether the vendor credit was properly reallocated to reverse the original federal charges. The table below summarizes the impacted programs and amounts: Federal Program ALN Check No. Amount Charged Economic Development Administration 11.302 #70335 $66.99 Preventive Health & Health Services – Ombudsman 93.041 #70076 $56.16 Evidence-Based Health – Title III-D 93.043 #70335 $66.99 Medicare Enrollment Assistance – MIPPA 93.071 #70583 $75.50 State Primary Care Offices – HICAP 93.324 #71046 $80.00 ACA – LIHWAP Cluster 93.499 #69835 $43.14 Money Follows the Person – ADRC 93.791 #70335 $66.99 HIV Care Formula Grants – Ryan White 93.917 #70460 $35.63 Homeland Security Grant Program – SHSP 97.067 #69835 $43.14 Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be necessary, reasonable, allocable, and allowable under the cost principles. As a tax-exempt entity, sales taxes paid in error are considered unallowable unless excluded from reimbursement or properly credited. Additionally, per §200.302(b)(2), recipients must maintain effective control over and accountability for all funds and ensure proper allocation of costs. Cause: STDC’s internal controls did not identify the inclusion of sales tax in the vendor invoice prior to payment. Furthermore, no mechanism was in place to ensure that vendor credits—once received—were retroactively applied to reverse the original allocations made to federal grants. Effect: Although the vendor issued a credit for the unallowable sales tax, the original amount was temporarily charged to multiple federal programs. The lack of documented reallocation creates a risk that federal programs may have absorbed unallowable costs or that cost allocations remain inaccurate. Recommendation: We recommend that STDC: • Strengthen internal controls to ensure that invoices are reviewed for unallowable costs (such as sales tax) prior to payment and allocation; • Establish procedures to track vendor credits and ensure that corresponding cost reallocations are applied to the correct funding sources; • Enhance documentation and reconciliation processes to demonstrate that post-payment adjustments are handled properly; • Train fiscal and grant staff on exempt status implications and cost allowability under Uniform Guidance. Questioned Costs: None (vendor credit issued); however, audit adjustments or reallocations may be necessary to ensure grant charges are corrected.
Federal Programs Affected: • 11.302 – Economic Development Administration (EDA) • 93.041 – Preventive Health and Health Services – Ombudsman • 93.043 – Prevention and Public Health – Evidence-Based Health Promotion (Title III-D) • 93.071 – Medicare Enrollment Assistance (MIPPA) • 93.324 – State Primary Care Offices (HICAP) • 93.499 – ACA – LIHWAP Cluster • 93.791 – Money Follows the Person – ADRC • 93.917 – HIV Care Formula Grants – Ryan White Service Delivery • 97.067 – Homeland Security Grant Program – SHSP Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of administrative expenditures, we identified a utility payment to NRG Business that included sales tax, which is unallowable under federal cost principles for tax-exempt entities. Specifically, the utility invoice dated June 30, 2023, in the amount of $713.43 included $51.47 in sales tax. Although the vendor later issued a credit for the sales tax amount, the original charge—including the unallowable portion—was allocated to various federal grants through the administrative cost pool. It is not clear whether the vendor credit was properly reallocated to reverse the original federal charges. The table below summarizes the impacted programs and amounts: Federal Program ALN Check No. Amount Charged Economic Development Administration 11.302 #70335 $66.99 Preventive Health & Health Services – Ombudsman 93.041 #70076 $56.16 Evidence-Based Health – Title III-D 93.043 #70335 $66.99 Medicare Enrollment Assistance – MIPPA 93.071 #70583 $75.50 State Primary Care Offices – HICAP 93.324 #71046 $80.00 ACA – LIHWAP Cluster 93.499 #69835 $43.14 Money Follows the Person – ADRC 93.791 #70335 $66.99 HIV Care Formula Grants – Ryan White 93.917 #70460 $35.63 Homeland Security Grant Program – SHSP 97.067 #69835 $43.14 Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be necessary, reasonable, allocable, and allowable under the cost principles. As a tax-exempt entity, sales taxes paid in error are considered unallowable unless excluded from reimbursement or properly credited. Additionally, per §200.302(b)(2), recipients must maintain effective control over and accountability for all funds and ensure proper allocation of costs. Cause: STDC’s internal controls did not identify the inclusion of sales tax in the vendor invoice prior to payment. Furthermore, no mechanism was in place to ensure that vendor credits—once received—were retroactively applied to reverse the original allocations made to federal grants. Effect: Although the vendor issued a credit for the unallowable sales tax, the original amount was temporarily charged to multiple federal programs. The lack of documented reallocation creates a risk that federal programs may have absorbed unallowable costs or that cost allocations remain inaccurate. Recommendation: We recommend that STDC: • Strengthen internal controls to ensure that invoices are reviewed for unallowable costs (such as sales tax) prior to payment and allocation; • Establish procedures to track vendor credits and ensure that corresponding cost reallocations are applied to the correct funding sources; • Enhance documentation and reconciliation processes to demonstrate that post-payment adjustments are handled properly; • Train fiscal and grant staff on exempt status implications and cost allowability under Uniform Guidance. Questioned Costs: None (vendor credit issued); however, audit adjustments or reallocations may be necessary to ensure grant charges are corrected.
Federal Programs Affected: • 11.302 – Economic Development Administration (EDA) • 93.041 – Preventive Health and Health Services – Ombudsman • 93.043 – Prevention and Public Health – Evidence-Based Health Promotion (Title III-D) • 93.071 – Medicare Enrollment Assistance (MIPPA) • 93.324 – State Primary Care Offices (HICAP) • 93.499 – ACA – LIHWAP Cluster • 93.791 – Money Follows the Person – ADRC • 93.917 – HIV Care Formula Grants – Ryan White Service Delivery • 97.067 – Homeland Security Grant Program – SHSP Compliance Requirement: Allowable Costs/Cost Principles (2 CFR Part 200, Subpart E) Type of Finding: Compliance and Internal Control Deficiency Condition: During our review of administrative expenditures, we identified a utility payment to NRG Business that included sales tax, which is unallowable under federal cost principles for tax-exempt entities. Specifically, the utility invoice dated June 30, 2023, in the amount of $713.43 included $51.47 in sales tax. Although the vendor later issued a credit for the sales tax amount, the original charge—including the unallowable portion—was allocated to various federal grants through the administrative cost pool. It is not clear whether the vendor credit was properly reallocated to reverse the original federal charges. The table below summarizes the impacted programs and amounts: Federal Program ALN Check No. Amount Charged Economic Development Administration 11.302 #70335 $66.99 Preventive Health & Health Services – Ombudsman 93.041 #70076 $56.16 Evidence-Based Health – Title III-D 93.043 #70335 $66.99 Medicare Enrollment Assistance – MIPPA 93.071 #70583 $75.50 State Primary Care Offices – HICAP 93.324 #71046 $80.00 ACA – LIHWAP Cluster 93.499 #69835 $43.14 Money Follows the Person – ADRC 93.791 #70335 $66.99 HIV Care Formula Grants – Ryan White 93.917 #70460 $35.63 Homeland Security Grant Program – SHSP 97.067 #69835 $43.14 Criteria: In accordance with 2 CFR §200.403 and §200.405, costs charged to federal awards must be necessary, reasonable, allocable, and allowable under the cost principles. As a tax-exempt entity, sales taxes paid in error are considered unallowable unless excluded from reimbursement or properly credited. Additionally, per §200.302(b)(2), recipients must maintain effective control over and accountability for all funds and ensure proper allocation of costs. Cause: STDC’s internal controls did not identify the inclusion of sales tax in the vendor invoice prior to payment. Furthermore, no mechanism was in place to ensure that vendor credits—once received—were retroactively applied to reverse the original allocations made to federal grants. Effect: Although the vendor issued a credit for the unallowable sales tax, the original amount was temporarily charged to multiple federal programs. The lack of documented reallocation creates a risk that federal programs may have absorbed unallowable costs or that cost allocations remain inaccurate. Recommendation: We recommend that STDC: • Strengthen internal controls to ensure that invoices are reviewed for unallowable costs (such as sales tax) prior to payment and allocation; • Establish procedures to track vendor credits and ensure that corresponding cost reallocations are applied to the correct funding sources; • Enhance documentation and reconciliation processes to demonstrate that post-payment adjustments are handled properly; • Train fiscal and grant staff on exempt status implications and cost allowability under Uniform Guidance. Questioned Costs: None (vendor credit issued); however, audit adjustments or reallocations may be necessary to ensure grant charges are corrected.
Special Tests and Provisions – ERA Funds Reallocation Federal Agency: U.S. Department of the Treasury Federal Program Title: Emergency Rental Assistance Program ALN: 21.023 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 1505-0270 – 2021 May 5, 2021 – September 30, 2025 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR §200.302, 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. Further, the financial management system of each non-Federal entity must provide accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements. Per 2 CFR §200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 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). Per Treasury’s ERA2 Reallocation Guidance Updated November 15, 2022, the ERA2 statute requires Treasury to identify funds for reallocation from amounts allocated to eligible Grantees, but not yet paid out to them. Specifically, the statute provides that beginning on March 31, 2022, Treasury must “reallocate funds allocated to eligible grantees … but not yet paid,” according to a procedure established by Treasury. Condition: Audit procedures included a review of the ERA2 Quarter 3 2022 (July-September) and ERA2 Quarter 4 2022 (October-December) Compliance Reports. We noted that $6,777,186 was double counted on the ‘Cumulative Amount of Award Obligated as of the end of the Reporting Period’ amount in the ERA2 Quarter 4 2022 Compliance Report. Questioned costs: None. Context: See "Condition" Cause: Obligated amounts were duplicated when preparing the supporting worksheets due to management oversight. Effect: Inaccurate supporting data when calculating reallocation expenditure ratios may result in an incorrect amount of excess funds subject to recapture by Treasury. Repeat finding: 2022-025 Recommendation: We recommend management enhance its internal controls over the review of supporting reallocation expenditure ratio calculations. Views of responsible officials: Management agrees with the finding and recommendation
Health Center Infrastructure Support Financial Reporting Federal Agency: Department of Health and Human Services Program: Health Center Infrastructure Support Assistance Listing #: 93.526 Criteria In accordance with OMB Uniform Guidance 2 CFR 200.302(2), 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. Condition The Health Center Infrastructure Support award requires recipients to submit a Federal Financial Report (FFR) on an annual basis. Sunset Park submitted the FFRs due in 2023 and 2024 (for expenses incurred in 2022 and 2023, respectively) in a timely manner, however, the financial information included on the FFRs was reported on a cash basis instead of the accrual basis indicated by Sunset Park on the FFRs. Cause Sunset Park did not select the appropriate basis of accounting on the FFRs that correlated to the financial information being reported. Effect The FFRs submitted for the 2022 and 2023 budget periods underreported cumulative federal expenditures incurred under the program by $1,049,618, which represents the difference between expenditures incurred through the end of the 2023 budget period and cash receipts as of that same date. The Schedule of Expenditures of Federal Awards in both years, however, accurately reported the accrual basis expenditures. Questioned Costs There are no questioned costs associated with this finding. Recommendation Sunset Park should contact the Federal awarding agency to determine appropriate action to correct the previously submitted FFRs. Sunset Park should also enhance its control procedures to ensure that FFRs submitted are reconciled to the underlying accounting records to ensure accurate, current, and complete disclosure.
: Per 2 CFR 200.302, 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. Further, the financial management system of each non-Federal entity must provide accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements. According to §200.303 Internal controls of 2 CFR Part 200, the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.
Special Tests and Provisions – ERA Funds Reallocation Federal Agency: U.S. Department of the Treasury Federal Program Title: Emergency Rental Assistance Program ALN: 21.023 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 1505-0270 – 2021 May 5, 2021 – September 30, 2025 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR §200.302, 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. Further, the financial management system of each non-Federal entity must provide accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements. Per 2 CFR §200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 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). Per Treasury’s ERA2 Reallocation Guidance Updated November 15, 2022, the ERA2 statute requires Treasury to identify funds for reallocation from amounts allocated to eligible Grantees, but not yet paid out to them. Specifically, the statute provides that beginning on March 31, 2022, Treasury must “reallocate funds allocated to eligible grantees … but not yet paid,” according to a procedure established by Treasury. Condition: Audit procedures included a review of the ERA2 Quarter 3 2022 (July-September) and ERA2 Quarter 4 2022 (October-December) Compliance Reports. We noted that $6,777,186 was double counted on the ‘Cumulative Amount of Award Obligated as of the end of the Reporting Period’ amount in the ERA2 Quarter 4 2022 Compliance Report. Questioned costs: None. Context: See "Condition" Cause: Obligated amounts were duplicated when preparing the supporting worksheets due to management oversight. Effect: Inaccurate supporting data when calculating reallocation expenditure ratios may result in an incorrect amount of excess funds subject to recapture by Treasury. Repeat finding: 2022-025 Recommendation: We recommend management enhance its internal controls over the review of supporting reallocation expenditure ratio calculations. Views of responsible officials: Management agrees with the finding and recommendation
Health Center Infrastructure Support Financial Reporting Federal Agency: Department of Health and Human Services Program: Health Center Infrastructure Support Assistance Listing #: 93.526 Criteria In accordance with OMB Uniform Guidance 2 CFR 200.302(2), 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. Condition The Health Center Infrastructure Support award requires recipients to submit a Federal Financial Report (FFR) on an annual basis. Sunset Park submitted the FFRs due in 2023 and 2024 (for expenses incurred in 2022 and 2023, respectively) in a timely manner, however, the financial information included on the FFRs was reported on a cash basis instead of the accrual basis indicated by Sunset Park on the FFRs. Cause Sunset Park did not select the appropriate basis of accounting on the FFRs that correlated to the financial information being reported. Effect The FFRs submitted for the 2022 and 2023 budget periods underreported cumulative federal expenditures incurred under the program by $1,049,618, which represents the difference between expenditures incurred through the end of the 2023 budget period and cash receipts as of that same date. The Schedule of Expenditures of Federal Awards in both years, however, accurately reported the accrual basis expenditures. Questioned Costs There are no questioned costs associated with this finding. Recommendation Sunset Park should contact the Federal awarding agency to determine appropriate action to correct the previously submitted FFRs. Sunset Park should also enhance its control procedures to ensure that FFRs submitted are reconciled to the underlying accounting records to ensure accurate, current, and complete disclosure.