2023-014 Inability to Test Compliance and Adequacy of Federal Grant Expenditures (Material Weakness) Federal Agency: All Compliance Requirement: All Type of Finding: Internal Control over Compliance – Material Weakness Material Noncompliance Criteria or Specific Requirement: Uniform Guidance (2 CFR 200.302(b)(3)) requires recipients of federal funds to maintain records that adequately identify the source and application of funds and ensure compliance with program requirements. Condition: We are unable to test compliance with federal program requirements due to pervasive discrepancies in the School District’s accounting for federal grants. Expenditures reported on the Schedule of Expenditures of Federal Awards (SEFA) could not be supported or reconciled to the School District’s financial records. Cause: Inadequate grant accounting procedures and internal controls over federal program expenditures. Effect: We are unable to determine compliance with federal program requirements or assess the allowability of expenditures. A disclaimer of opinion was issued for compliance with major program requirements. Questioned Costs: Unable to determine. We cannot quantify questioned costs because no testing could be performed, and the scope limitation affects all reported federal expenditures. Identification as Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the School District implement procedures to ensure grant expenditures are properly accounted for and supported by sufficient documentation. The School District should develop internal controls to ensure accurate and complete reporting on the SEFA. Views of Responsible Officials: Management’s views and corrective action plan is included at the end of this report.
2023-014 Inability to Test Compliance and Adequacy of Federal Grant Expenditures (Material Weakness) Federal Agency: All Compliance Requirement: All Type of Finding: Internal Control over Compliance – Material Weakness Material Noncompliance Criteria or Specific Requirement: Uniform Guidance (2 CFR 200.302(b)(3)) requires recipients of federal funds to maintain records that adequately identify the source and application of funds and ensure compliance with program requirements. Condition: We are unable to test compliance with federal program requirements due to pervasive discrepancies in the School District’s accounting for federal grants. Expenditures reported on the Schedule of Expenditures of Federal Awards (SEFA) could not be supported or reconciled to the School District’s financial records. Cause: Inadequate grant accounting procedures and internal controls over federal program expenditures. Effect: We are unable to determine compliance with federal program requirements or assess the allowability of expenditures. A disclaimer of opinion was issued for compliance with major program requirements. Questioned Costs: Unable to determine. We cannot quantify questioned costs because no testing could be performed, and the scope limitation affects all reported federal expenditures. Identification as Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the School District implement procedures to ensure grant expenditures are properly accounted for and supported by sufficient documentation. The School District should develop internal controls to ensure accurate and complete reporting on the SEFA. Views of Responsible Officials: Management’s views and corrective action plan is included at the end of this report.
FA 2023-001 Improve Controls over Financial Reporting Compliance Requirement: Reporting Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Number and Title: 84.010 – Title I Grants to Local Educational Agencies Federal Award Number: S010A210010-21A (Year: 2022), S010A220010 (Year: 2023) Questioned Costs: None Identified Description: The School District did not file accurate completion reports for Title I Grants to Local Educational Agencies program. Background Information: The Georgia Department of Education (GaDOE) requires the School District to submit a completion report by October 30 after the 15-month period of performance associated with the Title I Grants to Local Educational Agencies (Title I) program ends. These completion reports are filed through the Grants Application section of the MyGaDOE webportal and reflect budgeted and actual expenditure information for the Title I program for the reporting period. If the total expenditures reflected on the completion report are more than the Title I program funds received by the School District for the grant period, a DE-0147 – Request for Reimbursement of Monthly Cash Disbursements will be automatically generated and the additional funds due to the School District will be disbursed appropriately. Conversely, if the total funds received for the grant period exceed the total expenditures reflected on the completion report, the Grants Application will prompt the School District to enter a check number for the required refund of excess funds drawn down. Therefore, it is imperative that completion reports are filed by the School District in an accurate and timely manner. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.302(a) state in part that “the non-Federal entity’s financial management systems must… be sufficient to permit the preparation of reports required by general and program-specific terms and conditions.” In addition, provisions included in the Uniform Guidance, Section 200.302(b)(2) state in part that the non-federal entity’s financial management system must provide for “accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements.” Condition: A review of the School District’s accounting records and the completion reports related to the Title I program revealed the following deficiencies: 1. The Title I-A, Improving the Academic Achievement of the Disadvantaged completion report for the period July 1, 2022 through June 30, 2023 was under reported by $79,636. 2. The Title I-A, Improving the Academic Achievement of the Disadvantaged completion report for the period July 1, 2023 through September 30, 2023 was over reported by $390. 3. The Title I-A, School Improvement completion report for the period July 1, 2022 through June 30, 2023 was under reported by $4,571. 4. The Title I-A, School Improvement completion report for the period July 1, 2023 through September 30, 2023 was under reported by $32. Cause: Due to high turnover within the School District finance department and lack of strong procedures and controls, the School District had a deficiency in oversight of federal programs and reviews. Effect: The School District was not in compliance with the Uniform Guidance and GaDOE guidance. Failure to accurately report federal award expenditures through the completion report process could lead to the filing of DE-0147 reimbursement requests with GaDOE that do not support actual expenditures. Therefore, the School District may obtain more or less federal funding than they were eligible to receive. Recommendation: The School District should establish procedures to ensure that completion reports submitted to GaDOE are supported by the accounting records and reimbursement requests are prepared based upon actual expenditures incurred. In addition, management should develop and implement a monitoring process to ensure that control procedures are being followed. Views of Responsible Officials: We concur with this finding.
FA 2023-001 Improve Controls over Financial Reporting Compliance Requirement: Reporting Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Number and Title: 84.010 – Title I Grants to Local Educational Agencies Federal Award Number: S010A210010-21A (Year: 2022), S010A220010 (Year: 2023) Questioned Costs: None Identified Description: The School District did not file accurate completion reports for Title I Grants to Local Educational Agencies program. Background Information: The Georgia Department of Education (GaDOE) requires the School District to submit a completion report by October 30 after the 15-month period of performance associated with the Title I Grants to Local Educational Agencies (Title I) program ends. These completion reports are filed through the Grants Application section of the MyGaDOE webportal and reflect budgeted and actual expenditure information for the Title I program for the reporting period. If the total expenditures reflected on the completion report are more than the Title I program funds received by the School District for the grant period, a DE-0147 – Request for Reimbursement of Monthly Cash Disbursements will be automatically generated and the additional funds due to the School District will be disbursed appropriately. Conversely, if the total funds received for the grant period exceed the total expenditures reflected on the completion report, the Grants Application will prompt the School District to enter a check number for the required refund of excess funds drawn down. Therefore, it is imperative that completion reports are filed by the School District in an accurate and timely manner. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.302(a) state in part that “the non-Federal entity’s financial management systems must… be sufficient to permit the preparation of reports required by general and program-specific terms and conditions.” In addition, provisions included in the Uniform Guidance, Section 200.302(b)(2) state in part that the non-federal entity’s financial management system must provide for “accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements.” Condition: A review of the School District’s accounting records and the completion reports related to the Title I program revealed the following deficiencies: 1. The Title I-A, Improving the Academic Achievement of the Disadvantaged completion report for the period July 1, 2022 through June 30, 2023 was under reported by $79,636. 2. The Title I-A, Improving the Academic Achievement of the Disadvantaged completion report for the period July 1, 2023 through September 30, 2023 was over reported by $390. 3. The Title I-A, School Improvement completion report for the period July 1, 2022 through June 30, 2023 was under reported by $4,571. 4. The Title I-A, School Improvement completion report for the period July 1, 2023 through September 30, 2023 was under reported by $32. Cause: Due to high turnover within the School District finance department and lack of strong procedures and controls, the School District had a deficiency in oversight of federal programs and reviews. Effect: The School District was not in compliance with the Uniform Guidance and GaDOE guidance. Failure to accurately report federal award expenditures through the completion report process could lead to the filing of DE-0147 reimbursement requests with GaDOE that do not support actual expenditures. Therefore, the School District may obtain more or less federal funding than they were eligible to receive. Recommendation: The School District should establish procedures to ensure that completion reports submitted to GaDOE are supported by the accounting records and reimbursement requests are prepared based upon actual expenditures incurred. In addition, management should develop and implement a monitoring process to ensure that control procedures are being followed. Views of Responsible Officials: We concur with this finding.
FA 2023-003 Improve Controls over Cash Management Compliance Requirement: Cash Management Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Number and Title: COVID-19 – 84.425U – American Rescue Plan Elementary and Secondary School Emergency Relief Fund Federal Award Number: S425U210012 (Year: 2021) Questioned Costs: None Identified Description: The School District made cash drawdowns in excess of immediate cash needs for the Elementary and Secondary School Emergency Relief Fund program. Background Information: The School District may request Elementary and Secondary Emergency Relief (ESSER) Fund program funds from the Georgia Department of Education (GaDOE) once per month. GaDOE requires the School District to submit DE-0147 – Requests for Reimbursement of Monthly Cash Disbursements through the Grants Accounting Online Reporting System to receive program funds. When a DE-0147 request is submitted and approved, the funds are typically disbursed to the School District through an electronic payment process the next week. The School District submitted DE-0147 requests to receive a total of $3,636,320 in ESSER funds from GaDOE during the fiscal year under review. Criteria: As a recipient of federal awards, the Institution is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance Section 200.305(b) state that “For non-Federal entities other than states, payment methods must minimize the time elapsing between the transfer of funds…the pass-through entity and the disbursement by the non-Federal entity.” In addition, the Uniform Guidance Section 200.302(b)(6) requires the entity to develop written cash management procedures. Condition: A review of all cash drawdowns and disbursements related to the ESSER program was performed to determine if any excessive cash balances were maintained during the fiscal year under review. Cash balances in excess of program materiality were maintained for the ESSER program for 37 days. Additionally, it was noted that the School District did not have appropriate internal controls in place over the cash drawdown process. Cause: In discussing this issue with the School District, they indicated that the lack of review of federal grants resulted in excess cash drawdown requests. Effect: The School District was not in compliance with the Uniform Guidance and GaDOE guidance. In addition, the School District could potentially accrue an interest liability that would be owed back to the federal government. Furthermore, when the School District cannot meet the requirement to minimize the time elapsing between the transfer of funds and disbursement of those funds, provisions included in the Uniform Guidance allow GaDOE to change the method by which the School District is transferred funds and delay the School District’s receipt of these funds. This may include a requirement by GaDOE to submit invoices prior to being reimbursed for program expenditures. Recommendation: The School District should establish procedures to accurately forecast the cash needs of the ESSER program and minimize the time elapsing between the transfer of funds from GaDOE and the disbursement of such funds by the School District. In addition, these procedures should be documented in writing in accordance with the Uniform Guidance Section 200.302(b)(6). Furthermore, management should develop and implement a monitoring process to ensure that these procedures are followed. Views of Responsible Officials: We concur with this finding.
Statement of condition: Lack of adequate supporting documentation for expenditures of federal awards. Criteria: Title 2 U.S. Code of Federal Regulations (CFR) 200.302-303 requires non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Additionally, all recipients and subrecipients of federal awards must maintain records which are sufficient to track expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. Cause of condition: Procedures are in place which require every transaction recorded to be supported by the appropriate documentation. However, these procedures were not appropriately followed as managment has not kept or maintained records of transactions for expenditures of federal awards. Supporting documentation has either been lost or disposed. Effect of condition: Management did not maintain adequate supporting documentation for certain expenditures of federal awards, thus making it impossible to determine if funds were spent in accordance with regulations. Context: Management was unable to provide supporting documentation for 3 of the 10 non-payroll expenditures selected for testing. These expenditures totaled $15,468. Recommendation: To ensure proper records are maintained, after recording all transactions, supporting documentation for which the transaction was derived should be maintained in an organized fashion so that the records and be accessed in a timely manner. This process should be done to ensure accounting records are accurate and to provide support if questions arise from the public or any government agencies. Views of responsible officials and planned corrective actions: Management agrees with this finding and will put procedures in place to maintain adequate supporting documentation for all transactions. Action Plan: Establish clear guidelines and training on allowable costs for federally funded programs. Implement a compliance checklist for all federally funded expenditures to ensure alignment with Education Stabilization Fund requirements. Conduct internal audits every quarter to monitor compliance and document findings. Timeline: Immediate implementation; quarterly compliance reviews. Responsible Parties: Finance Director, APSRC, and Directors.
Statement of condition: Lack of adequate supporting documentation for expenditures of federal awards. Criteria: Title 2 U.S. Code of Federal Regulations (CFR) 200.302-303 requires non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Additionally, all recipients and subrecipients of federal awards must maintain records which are sufficient to track expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. Cause of condition: Procedures are in place which require every transaction recorded to be supported by the appropriate documentation. However, these procedures were not appropriately followed as managment has not kept or maintained records of transactions for expenditures of federal awards. Supporting documentation has either been lost or disposed. Effect of condition: Management did not maintain adequate supporting documentation for certain expenditures of federal awards, thus making it impossible to determine if funds were spent in accordance with regulations. Context: Management was unable to provide supporting documentation for 3 of the 10 non-payroll expenditures selected for testing. These expenditures totaled $15,468. Recommendation: To ensure proper records are maintained, after recording all transactions, supporting documentation for which the transaction was derived should be maintained in an organized fashion so that the records and be accessed in a timely manner. This process should be done to ensure accounting records are accurate and to provide support if questions arise from the public or any government agencies. Views of responsible officials and planned corrective actions: Management agrees with this finding and will put procedures in place to maintain adequate supporting documentation for all transactions. Action Plan: Establish clear guidelines and training on allowable costs for federally funded programs. Implement a compliance checklist for all federally funded expenditures to ensure alignment with Education Stabilization Fund requirements. Conduct internal audits every quarter to monitor compliance and document findings. Timeline: Immediate implementation; quarterly compliance reviews. Responsible Parties: Finance Director, APSRC, and Directors.
Statement of condition: Lack of adequate supporting documentation for expenditures of federal awards. Criteria: Title 2 U.S. Code of Federal Regulations (CFR) 200.302-303 requires non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Additionally, all recipients and subrecipients of federal awards must maintain records which are sufficient to track expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. Cause of condition: Procedures are in place which require every transaction recorded to be supported by the appropriate documentation. However, these procedures were not appropriately followed as managment has not kept or maintained records of transactions for expenditures of federal awards. Supporting documentation has either been lost or disposed. Effect of condition: Management did not maintain adequate supporting documentation for certain expenditures of federal awards, thus making it impossible to determine if funds were spent in accordance with regulations. Context: Management was unable to provide supporting documentation for 3 of the 10 non-payroll expenditures selected for testing. These expenditures totaled $15,468. Recommendation: To ensure proper records are maintained, after recording all transactions, supporting documentation for which the transaction was derived should be maintained in an organized fashion so that the records and be accessed in a timely manner. This process should be done to ensure accounting records are accurate and to provide support if questions arise from the public or any government agencies. Views of responsible officials and planned corrective actions: Management agrees with this finding and will put procedures in place to maintain adequate supporting documentation for all transactions. Action Plan: Establish clear guidelines and training on allowable costs for federally funded programs. Implement a compliance checklist for all federally funded expenditures to ensure alignment with Education Stabilization Fund requirements. Conduct internal audits every quarter to monitor compliance and document findings. Timeline: Immediate implementation; quarterly compliance reviews. Responsible Parties: Finance Director, APSRC, and Directors.
Finding 2023-002 – Internal Controls Over Reporting (Material Weakness) Condition: The City did not report accurate expenditures during the year in its Project and Expenditure Quarterly Reports for the uses of ARPA funding. The reports contained incorrect project amounts and expenditure classifications due to internal control failures, including insufficient review by someone other than the preparer. Criteria: Per 2 CFR 200.302(b)(3) and 2 CFR 200.328, recipients of federal funds are required to maintain accurate financial records and report expenditures in accordance with federal award terms. Specifically, recipients of ARPA funding are required to submit accurate quarterly Project and Expenditure Reports to provide transparency and ensure funds are used in compliance with allowable purposes. Cause: The inaccuracies resulted from a lack of sufficient internal controls over the reporting process. Specifically: No independent review was performed to validate the accuracy and completeness of the quarterly reports. Documentation of the expenditure allocation process was not consistently maintained to support the reported amounts. Effect: The lack of accurate reporting undermines compliance with the reporting requirements of the federal award. Although no unallowable costs were identified, the inaccuracies may necessitate correction of reported amounts in the future. Recommendation: We recommend that the City strengthen its internal controls over the reporting process by: 1. Implementing a formal review process where quarterly reports are reviewed and approved by a designated individual other than the preparer. 2. Establishing a documented process for reconciling expenditures reported to the underlying accounting records and federal award guidelines. 3. Providing training to staff responsible for the preparation and review of federal compliance reports to ensure familiarity with reporting requirements. Management’s Response: See Corrective Action Plan.
Allowable Costs and Cost Principles U.S. Department of Treasury, passed through from the Montana Department of Natural Resources and Conservation ALN: 21.027, Coronavirus State and Local Fiscal Recovery Funds Criteria: The grant award RW-22-077A scope of work is for Phase 3, 3A and 4 – LiDAR Survey of Pipeline Routes. Musselshell County also contracted with the Authority to pay for a portion of these costs. Code section 2 CFR 200.302 requires recipients to maintain appropriate records and documentation to sufficiently identify the amount, source and expenditure of federal funds for federal awards. Condition: The Authority received reimbursement for expenses incurred from the County and the Montana Department of Natural Resources and Conservation (DNRC), totaling $55,698. The same costs were incorrectly counted toward both funding sources. Context: The Authority collected revenue twice for the same costs. No funds were reimbursed to the County. For the DNRC, additional costs were incurred through June 30, 2023, that totaled $13,512, which were not included in any draws or cash receipts from DNRC through June 30, 2023. So essentially the Authority used up some of this overage before year end, resulting in an overage of $42,186. Effect: The Authority overdrew on revenue by $55,698. Questioned Costs: We question the costs reported as federal expenditures for this program totaling $42,186. Cause: The Authority made an error when submitting reimbursement for costs incurred. Auditor Recommendation: We recommend the Authority: 1) reimburse DNRC or the County for the overage, 2) strengthen internal controls over tracking of expenditures for grants to ensure duplication does not occur in the future. Authority Response: Based upon DNRC direction, the Authority will pay back DNRC with water user fees from Roundup. The Project Administrator will work with the outside accountant to assist with the record keeping of the Authority
FA 2023-003 Improve Controls over Cash Management Compliance Requirement: Cash Management Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 84.010 - Title I Grants to Local Educational Agencies Federal Award Numbers: S010A210010-21A (Year: 2022), SO10A220010 (Year: 2023) Questioned Costs: None Identified Repeat of Prior Year Findings: FA 2022-003, FA 2021-001, FA 2020-001, FA 2019-001, FA 2018-001, FA 2017-002, FA 2016-001, FA 2015-002, FA 2014-003 Description: The School District made cash drawdowns in excess of immediate cash needs for the Title I Grants to Local Educational Agencies program. Background Information: The School District may request Title I Grants to Local Educational Agencies program funds from the Georgia Department of Education (GaDOE) once per month. GaDOE requires the School District to submit DE-0147 – Requests for Reimbursement of Monthly Cash Disbursements through the Grants Accounting Online Reporting System to receive program funds. When a DE-0147 request is submitted and approved, the funds are typically disbursed to the School District through an electronic payment process the next week. The School District submitted DE-0147 requests to receive a total of $426,546 in Title I funds from GaDOE during the fiscal year under review. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance Section 200.305(b) state that “For non-Federal entities other than states, payment methods must minimize the time elapsing between the transfer of funds…the pass-through entity and the disbursement by the non-Federal entity.” In addition, the Uniform Guidance Section 200.302(b)(6) requires the entity to develop written cash management procedures. Further, as noted in the Uniform Guidance Section 200.511, management is responsible for implementing reported corrective action to findings from previous audits. lll FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Condition: A review of all cash drawdowns and disbursements related to the Title I program was performed to determine if any excessive cash balances were maintained during the fiscal year under review. Cash balances in excess of program materiality were maintained for the Title I program for 273 days. Additionally, it was noted that the School District did not have appropriate internal controls in place over the cash drawdown process. Cause: In discussing this issue with the School District, they indicated that the lack of review of Federal grants resulted in excess cash drawdown request. Effect: The School District was not in compliance with the Uniform Guidance and GaDOE guidance. In addition, the School District could potentially accrue an interest liability that would be owed back to the federal government. Furthermore, when the School District cannot meet the requirement to minimize the time elapsing between the transfer of funds and disbursement of those funds, provisions included in the Uniform Guidance allow GaDOE to change the method by which the School District is transferred funds and delay the School District’s receipt of these funds. This may include a requirement by GaDOE to submit invoices prior to being reimbursed for program expenditures. Recommendation: The School District should establish procedures to accurately forecast the cash needs of the Title I program and minimize the time elapsing between the transfer of funds from GaDOE and the disbursement of such funds by the School District. In addition, these procedures should be documented in writing in accordance with the Uniform Guidance Section 200.302(b)(6). Furthermore, management should develop and implement a monitoring process to ensure that these procedures are followed. Views of Responsible Officials: We concur with this finding.
FA 2023-003 Improve Controls over Cash Management Compliance Requirement: Cash Management Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 84.010 - Title I Grants to Local Educational Agencies Federal Award Numbers: S010A210010-21A (Year: 2022), SO10A220010 (Year: 2023) Questioned Costs: None Identified Repeat of Prior Year Findings: FA 2022-003, FA 2021-001, FA 2020-001, FA 2019-001, FA 2018-001, FA 2017-002, FA 2016-001, FA 2015-002, FA 2014-003 Description: The School District made cash drawdowns in excess of immediate cash needs for the Title I Grants to Local Educational Agencies program. Background Information: The School District may request Title I Grants to Local Educational Agencies program funds from the Georgia Department of Education (GaDOE) once per month. GaDOE requires the School District to submit DE-0147 – Requests for Reimbursement of Monthly Cash Disbursements through the Grants Accounting Online Reporting System to receive program funds. When a DE-0147 request is submitted and approved, the funds are typically disbursed to the School District through an electronic payment process the next week. The School District submitted DE-0147 requests to receive a total of $426,546 in Title I funds from GaDOE during the fiscal year under review. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance Section 200.305(b) state that “For non-Federal entities other than states, payment methods must minimize the time elapsing between the transfer of funds…the pass-through entity and the disbursement by the non-Federal entity.” In addition, the Uniform Guidance Section 200.302(b)(6) requires the entity to develop written cash management procedures. Further, as noted in the Uniform Guidance Section 200.511, management is responsible for implementing reported corrective action to findings from previous audits. lll FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Condition: A review of all cash drawdowns and disbursements related to the Title I program was performed to determine if any excessive cash balances were maintained during the fiscal year under review. Cash balances in excess of program materiality were maintained for the Title I program for 273 days. Additionally, it was noted that the School District did not have appropriate internal controls in place over the cash drawdown process. Cause: In discussing this issue with the School District, they indicated that the lack of review of Federal grants resulted in excess cash drawdown request. Effect: The School District was not in compliance with the Uniform Guidance and GaDOE guidance. In addition, the School District could potentially accrue an interest liability that would be owed back to the federal government. Furthermore, when the School District cannot meet the requirement to minimize the time elapsing between the transfer of funds and disbursement of those funds, provisions included in the Uniform Guidance allow GaDOE to change the method by which the School District is transferred funds and delay the School District’s receipt of these funds. This may include a requirement by GaDOE to submit invoices prior to being reimbursed for program expenditures. Recommendation: The School District should establish procedures to accurately forecast the cash needs of the Title I program and minimize the time elapsing between the transfer of funds from GaDOE and the disbursement of such funds by the School District. In addition, these procedures should be documented in writing in accordance with the Uniform Guidance Section 200.302(b)(6). Furthermore, management should develop and implement a monitoring process to ensure that these procedures are followed. Views of Responsible Officials: We concur with this finding.
FA 2023-004 Strengthen Controls over Financial Reporting Compliance Requirement: Reporting Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Number and Title: 84.010 - Title I Grants to Local Educational Agencies Federal Award Numbers: SO10A210010-21A (Year: 2022), SO10A220010 (Year: 2023) Questioned Costs: $84,283 Repeat of Prior Year Finding: FA 2022-004, FA 2021-002, FA 2019-002 Description: The School District did not file accurate completion reports for the Title I Grants to Local Educational Agencies program. Background Information: The Georgia Department of Education (GaDOE) requires the School District to submit a completion report by October 30 after the 15-month period of performance associated with the Title I Grants to Local Educational Agencies (Title I) program ends. These completion reports are filed through the Grants Application section of the MyGaDOE webportal and reflect budgeted and actual expenditure information for the Title I program for the reporting period. If the total expenditures reflected on the completion report are more than the Title I program funds received by the School District for the grant period, a DE-0147 – Request for Reimbursement of Monthly Cash Disbursements will be automatically generated and the additional funds due to the School District will be disbursed appropriately. Conversely, if the total funds received for the grant period exceed the total expenditures reflected on the completion report, the Grants Application will prompt the School District to enter a check number for the required refund of excess funds drawn down. Therefore, it is imperative that completion reports are filed by the School District in an accurate and timely manner. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance Section 200.302(a) state in part that “the non-Federal entity’s financial management systems must…be sufficient to permit the preparation of reports required by general and program-specific terms and conditions.” In addition, Provisions included in the Uniform Guidance Section 200.302(b)(2) state in part that the non-Federal entity’s financial management systems must provide for “accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements.” Further, as noted in the Uniform Guidance Section 200.511, management is responsible for implementing reported corrective action to findings from previous audits. lll FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Condition: A review of the School District’s accounting records and the completion reports related to the Title I-A, Improving Academic Achievement of the Disadvantaged and Title I-A, School Improvement programs for the period ending September 30, 2023 revealed that the expenditures were over reported by $84,283. Questioned Costs: Questioned costs of $84,283 were identified for cash drawdowns in excess of reimbursable expenditures. Cause: In discussing this deficiency with the School District, they stated these issues were a result of turnover within the central office. Effect: The School District was not in compliance with the Uniform Guidance and GaDOE guidance. Failure to accurately report federal award expenditures through the completion report process could lead to the filing of DE-0147 reimbursement requests with GaDOE that do not support actual expenditures. Therefore, the School District obtained more federal funding than they were eligible to receive. Additionally, this funding must be returned to the GaDOE. Recommendation: The School District should establish internal control procedures to ensure that completion reports submitted to GaDOE are supported by the accounting records and DE-0147 reimbursement requests are prepared based upon actual expenditures incurred. In addition, management should develop and implement a monitoring process to ensure that control procedures are being followed. Views of Responsible Officials: We concur with this finding.
FA 2023-004 Strengthen Controls over Financial Reporting Compliance Requirement: Reporting Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Number and Title: 84.010 - Title I Grants to Local Educational Agencies Federal Award Numbers: SO10A210010-21A (Year: 2022), SO10A220010 (Year: 2023) Questioned Costs: $84,283 Repeat of Prior Year Finding: FA 2022-004, FA 2021-002, FA 2019-002 Description: The School District did not file accurate completion reports for the Title I Grants to Local Educational Agencies program. Background Information: The Georgia Department of Education (GaDOE) requires the School District to submit a completion report by October 30 after the 15-month period of performance associated with the Title I Grants to Local Educational Agencies (Title I) program ends. These completion reports are filed through the Grants Application section of the MyGaDOE webportal and reflect budgeted and actual expenditure information for the Title I program for the reporting period. If the total expenditures reflected on the completion report are more than the Title I program funds received by the School District for the grant period, a DE-0147 – Request for Reimbursement of Monthly Cash Disbursements will be automatically generated and the additional funds due to the School District will be disbursed appropriately. Conversely, if the total funds received for the grant period exceed the total expenditures reflected on the completion report, the Grants Application will prompt the School District to enter a check number for the required refund of excess funds drawn down. Therefore, it is imperative that completion reports are filed by the School District in an accurate and timely manner. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance Section 200.302(a) state in part that “the non-Federal entity’s financial management systems must…be sufficient to permit the preparation of reports required by general and program-specific terms and conditions.” In addition, Provisions included in the Uniform Guidance Section 200.302(b)(2) state in part that the non-Federal entity’s financial management systems must provide for “accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements.” Further, as noted in the Uniform Guidance Section 200.511, management is responsible for implementing reported corrective action to findings from previous audits. lll FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Condition: A review of the School District’s accounting records and the completion reports related to the Title I-A, Improving Academic Achievement of the Disadvantaged and Title I-A, School Improvement programs for the period ending September 30, 2023 revealed that the expenditures were over reported by $84,283. Questioned Costs: Questioned costs of $84,283 were identified for cash drawdowns in excess of reimbursable expenditures. Cause: In discussing this deficiency with the School District, they stated these issues were a result of turnover within the central office. Effect: The School District was not in compliance with the Uniform Guidance and GaDOE guidance. Failure to accurately report federal award expenditures through the completion report process could lead to the filing of DE-0147 reimbursement requests with GaDOE that do not support actual expenditures. Therefore, the School District obtained more federal funding than they were eligible to receive. Additionally, this funding must be returned to the GaDOE. Recommendation: The School District should establish internal control procedures to ensure that completion reports submitted to GaDOE are supported by the accounting records and DE-0147 reimbursement requests are prepared based upon actual expenditures incurred. In addition, management should develop and implement a monitoring process to ensure that control procedures are being followed. Views of Responsible Officials: We concur with this finding.
2023-013 Inability to Test Compliance and Adequacy of Federal Grant Expenditures (Material Weakness) Federal Agency: All Compliance Requirement: All Type of Finding: Internal Control over Compliance – Material Weakness Material Noncompliance Criteria or Specific Requirement: Uniform Guidance (2 CFR 200.302(b)(3)) requires recipients of federal funds to maintain records that adequately identify the source and application of funds and ensure compliance with program requirements. Condition: We are unable to test compliance with federal program requirements due to pervasive discrepancies in the School District’s accounting for federal grants. Expenditures reported on the Schedule of Expenditures of Federal Awards (SEFA) could not be supported or reconciled to the School District’s financial records. Cause: Inadequate grant accounting procedures and internal controls over federal program expenditures. Effect: We are unable to determine compliance with federal program requirements or assess the allowability of expenditures. A disclaimer of opinion was issued for compliance with major program requirements. Questioned Costs: Unable to determine. We cannot quantify questioned costs because no testing could be performed, and the scope limitation affects all reported federal expenditures. Identification as Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the School District implement procedures to ensure grant expenditures are properly accounted for and supported by sufficient documentation. The School District should develop internal controls to ensure accurate and complete reporting on the SEFA. Views of Responsible Officials: Management’s views and corrective action plan is included at the end of this report.
2023-013 Inability to Test Compliance and Adequacy of Federal Grant Expenditures (Material Weakness) Federal Agency: All Compliance Requirement: All Type of Finding: Internal Control over Compliance – Material Weakness Material Noncompliance Criteria or Specific Requirement: Uniform Guidance (2 CFR 200.302(b)(3)) requires recipients of federal funds to maintain records that adequately identify the source and application of funds and ensure compliance with program requirements. Condition: We are unable to test compliance with federal program requirements due to pervasive discrepancies in the School District’s accounting for federal grants. Expenditures reported on the Schedule of Expenditures of Federal Awards (SEFA) could not be supported or reconciled to the School District’s financial records. Cause: Inadequate grant accounting procedures and internal controls over federal program expenditures. Effect: We are unable to determine compliance with federal program requirements or assess the allowability of expenditures. A disclaimer of opinion was issued for compliance with major program requirements. Questioned Costs: Unable to determine. We cannot quantify questioned costs because no testing could be performed, and the scope limitation affects all reported federal expenditures. Identification as Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the School District implement procedures to ensure grant expenditures are properly accounted for and supported by sufficient documentation. The School District should develop internal controls to ensure accurate and complete reporting on the SEFA. Views of Responsible Officials: Management’s views and corrective action plan is included at the end of this report.
2023-013 Inability to Test Compliance and Adequacy of Federal Grant Expenditures (Material Weakness) Federal Agency: All Compliance Requirement: All Type of Finding: Internal Control over Compliance – Material Weakness Material Noncompliance Criteria or Specific Requirement: Uniform Guidance (2 CFR 200.302(b)(3)) requires recipients of federal funds to maintain records that adequately identify the source and application of funds and ensure compliance with program requirements. Condition: We are unable to test compliance with federal program requirements due to pervasive discrepancies in the School District’s accounting for federal grants. Expenditures reported on the Schedule of Expenditures of Federal Awards (SEFA) could not be supported or reconciled to the School District’s financial records. Cause: Inadequate grant accounting procedures and internal controls over federal program expenditures. Effect: We are unable to determine compliance with federal program requirements or assess the allowability of expenditures. A disclaimer of opinion was issued for compliance with major program requirements. Questioned Costs: Unable to determine. We cannot quantify questioned costs because no testing could be performed, and the scope limitation affects all reported federal expenditures. Identification as Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the School District implement procedures to ensure grant expenditures are properly accounted for and supported by sufficient documentation. The School District should develop internal controls to ensure accurate and complete reporting on the SEFA. Views of Responsible Officials: Management’s views and corrective action plan is included at the end of this report.
2023-013 Inability to Test Compliance and Adequacy of Federal Grant Expenditures (Material Weakness) Federal Agency: All Compliance Requirement: All Type of Finding: Internal Control over Compliance – Material Weakness Material Noncompliance Criteria or Specific Requirement: Uniform Guidance (2 CFR 200.302(b)(3)) requires recipients of federal funds to maintain records that adequately identify the source and application of funds and ensure compliance with program requirements. Condition: We are unable to test compliance with federal program requirements due to pervasive discrepancies in the School District’s accounting for federal grants. Expenditures reported on the Schedule of Expenditures of Federal Awards (SEFA) could not be supported or reconciled to the School District’s financial records. Cause: Inadequate grant accounting procedures and internal controls over federal program expenditures. Effect: We are unable to determine compliance with federal program requirements or assess the allowability of expenditures. A disclaimer of opinion was issued for compliance with major program requirements. Questioned Costs: Unable to determine. We cannot quantify questioned costs because no testing could be performed, and the scope limitation affects all reported federal expenditures. Identification as Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the School District implement procedures to ensure grant expenditures are properly accounted for and supported by sufficient documentation. The School District should develop internal controls to ensure accurate and complete reporting on the SEFA. Views of Responsible Officials: Management’s views and corrective action plan is included at the end of this report.
2023-013 Inability to Test Compliance and Adequacy of Federal Grant Expenditures (Material Weakness) Federal Agency: All Compliance Requirement: All Type of Finding: Internal Control over Compliance – Material Weakness Material Noncompliance Criteria or Specific Requirement: Uniform Guidance (2 CFR 200.302(b)(3)) requires recipients of federal funds to maintain records that adequately identify the source and application of funds and ensure compliance with program requirements. Condition: We are unable to test compliance with federal program requirements due to pervasive discrepancies in the School District’s accounting for federal grants. Expenditures reported on the Schedule of Expenditures of Federal Awards (SEFA) could not be supported or reconciled to the School District’s financial records. Cause: Inadequate grant accounting procedures and internal controls over federal program expenditures. Effect: We are unable to determine compliance with federal program requirements or assess the allowability of expenditures. A disclaimer of opinion was issued for compliance with major program requirements. Questioned Costs: Unable to determine. We cannot quantify questioned costs because no testing could be performed, and the scope limitation affects all reported federal expenditures. Identification as Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the School District implement procedures to ensure grant expenditures are properly accounted for and supported by sufficient documentation. The School District should develop internal controls to ensure accurate and complete reporting on the SEFA. Views of Responsible Officials: Management’s views and corrective action plan is included at the end of this report.
2023-013 Inability to Test Compliance and Adequacy of Federal Grant Expenditures (Material Weakness) Federal Agency: All Compliance Requirement: All Type of Finding: Internal Control over Compliance – Material Weakness Material Noncompliance Criteria or Specific Requirement: Uniform Guidance (2 CFR 200.302(b)(3)) requires recipients of federal funds to maintain records that adequately identify the source and application of funds and ensure compliance with program requirements. Condition: We are unable to test compliance with federal program requirements due to pervasive discrepancies in the School District’s accounting for federal grants. Expenditures reported on the Schedule of Expenditures of Federal Awards (SEFA) could not be supported or reconciled to the School District’s financial records. Cause: Inadequate grant accounting procedures and internal controls over federal program expenditures. Effect: We are unable to determine compliance with federal program requirements or assess the allowability of expenditures. A disclaimer of opinion was issued for compliance with major program requirements. Questioned Costs: Unable to determine. We cannot quantify questioned costs because no testing could be performed, and the scope limitation affects all reported federal expenditures. Identification as Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the School District implement procedures to ensure grant expenditures are properly accounted for and supported by sufficient documentation. The School District should develop internal controls to ensure accurate and complete reporting on the SEFA. Views of Responsible Officials: Management’s views and corrective action plan is included at the end of this report.
2023-013 Inability to Test Compliance and Adequacy of Federal Grant Expenditures (Material Weakness) Federal Agency: All Compliance Requirement: All Type of Finding: Internal Control over Compliance – Material Weakness Material Noncompliance Criteria or Specific Requirement: Uniform Guidance (2 CFR 200.302(b)(3)) requires recipients of federal funds to maintain records that adequately identify the source and application of funds and ensure compliance with program requirements. Condition: We are unable to test compliance with federal program requirements due to pervasive discrepancies in the School District’s accounting for federal grants. Expenditures reported on the Schedule of Expenditures of Federal Awards (SEFA) could not be supported or reconciled to the School District’s financial records. Cause: Inadequate grant accounting procedures and internal controls over federal program expenditures. Effect: We are unable to determine compliance with federal program requirements or assess the allowability of expenditures. A disclaimer of opinion was issued for compliance with major program requirements. Questioned Costs: Unable to determine. We cannot quantify questioned costs because no testing could be performed, and the scope limitation affects all reported federal expenditures. Identification as Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the School District implement procedures to ensure grant expenditures are properly accounted for and supported by sufficient documentation. The School District should develop internal controls to ensure accurate and complete reporting on the SEFA. Views of Responsible Officials: Management’s views and corrective action plan is included at the end of this report.
2023-013 Inability to Test Compliance and Adequacy of Federal Grant Expenditures (Material Weakness) Federal Agency: All Compliance Requirement: All Type of Finding: Internal Control over Compliance – Material Weakness Material Noncompliance Criteria or Specific Requirement: Uniform Guidance (2 CFR 200.302(b)(3)) requires recipients of federal funds to maintain records that adequately identify the source and application of funds and ensure compliance with program requirements. Condition: We are unable to test compliance with federal program requirements due to pervasive discrepancies in the School District’s accounting for federal grants. Expenditures reported on the Schedule of Expenditures of Federal Awards (SEFA) could not be supported or reconciled to the School District’s financial records. Cause: Inadequate grant accounting procedures and internal controls over federal program expenditures. Effect: We are unable to determine compliance with federal program requirements or assess the allowability of expenditures. A disclaimer of opinion was issued for compliance with major program requirements. Questioned Costs: Unable to determine. We cannot quantify questioned costs because no testing could be performed, and the scope limitation affects all reported federal expenditures. Identification as Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the School District implement procedures to ensure grant expenditures are properly accounted for and supported by sufficient documentation. The School District should develop internal controls to ensure accurate and complete reporting on the SEFA. Views of Responsible Officials: Management’s views and corrective action plan is included at the end of this report.
2023-013 Inability to Test Compliance and Adequacy of Federal Grant Expenditures (Material Weakness) Federal Agency: All Compliance Requirement: All Type of Finding: Internal Control over Compliance – Material Weakness Material Noncompliance Criteria or Specific Requirement: Uniform Guidance (2 CFR 200.302(b)(3)) requires recipients of federal funds to maintain records that adequately identify the source and application of funds and ensure compliance with program requirements. Condition: We are unable to test compliance with federal program requirements due to pervasive discrepancies in the School District’s accounting for federal grants. Expenditures reported on the Schedule of Expenditures of Federal Awards (SEFA) could not be supported or reconciled to the School District’s financial records. Cause: Inadequate grant accounting procedures and internal controls over federal program expenditures. Effect: We are unable to determine compliance with federal program requirements or assess the allowability of expenditures. A disclaimer of opinion was issued for compliance with major program requirements. Questioned Costs: Unable to determine. We cannot quantify questioned costs because no testing could be performed, and the scope limitation affects all reported federal expenditures. Identification as Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the School District implement procedures to ensure grant expenditures are properly accounted for and supported by sufficient documentation. The School District should develop internal controls to ensure accurate and complete reporting on the SEFA. Views of Responsible Officials: Management’s views and corrective action plan is included at the end of this report.
2023-013 Inability to Test Compliance and Adequacy of Federal Grant Expenditures (Material Weakness) Federal Agency: All Compliance Requirement: All Type of Finding: Internal Control over Compliance – Material Weakness Material Noncompliance Criteria or Specific Requirement: Uniform Guidance (2 CFR 200.302(b)(3)) requires recipients of federal funds to maintain records that adequately identify the source and application of funds and ensure compliance with program requirements. Condition: We are unable to test compliance with federal program requirements due to pervasive discrepancies in the School District’s accounting for federal grants. Expenditures reported on the Schedule of Expenditures of Federal Awards (SEFA) could not be supported or reconciled to the School District’s financial records. Cause: Inadequate grant accounting procedures and internal controls over federal program expenditures. Effect: We are unable to determine compliance with federal program requirements or assess the allowability of expenditures. A disclaimer of opinion was issued for compliance with major program requirements. Questioned Costs: Unable to determine. We cannot quantify questioned costs because no testing could be performed, and the scope limitation affects all reported federal expenditures. Identification as Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the School District implement procedures to ensure grant expenditures are properly accounted for and supported by sufficient documentation. The School District should develop internal controls to ensure accurate and complete reporting on the SEFA. Views of Responsible Officials: Management’s views and corrective action plan is included at the end of this report.
2023-013 Inability to Test Compliance and Adequacy of Federal Grant Expenditures (Material Weakness) Federal Agency: All Compliance Requirement: All Type of Finding: Internal Control over Compliance – Material Weakness Material Noncompliance Criteria or Specific Requirement: Uniform Guidance (2 CFR 200.302(b)(3)) requires recipients of federal funds to maintain records that adequately identify the source and application of funds and ensure compliance with program requirements. Condition: We are unable to test compliance with federal program requirements due to pervasive discrepancies in the School District’s accounting for federal grants. Expenditures reported on the Schedule of Expenditures of Federal Awards (SEFA) could not be supported or reconciled to the School District’s financial records. Cause: Inadequate grant accounting procedures and internal controls over federal program expenditures. Effect: We are unable to determine compliance with federal program requirements or assess the allowability of expenditures. A disclaimer of opinion was issued for compliance with major program requirements. Questioned Costs: Unable to determine. We cannot quantify questioned costs because no testing could be performed, and the scope limitation affects all reported federal expenditures. Identification as Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the School District implement procedures to ensure grant expenditures are properly accounted for and supported by sufficient documentation. The School District should develop internal controls to ensure accurate and complete reporting on the SEFA. Views of Responsible Officials: Management’s views and corrective action plan is included at the end of this report.
2023-013 Inability to Test Compliance and Adequacy of Federal Grant Expenditures (Material Weakness) Federal Agency: All Compliance Requirement: All Type of Finding: Internal Control over Compliance – Material Weakness Material Noncompliance Criteria or Specific Requirement: Uniform Guidance (2 CFR 200.302(b)(3)) requires recipients of federal funds to maintain records that adequately identify the source and application of funds and ensure compliance with program requirements. Condition: We are unable to test compliance with federal program requirements due to pervasive discrepancies in the School District’s accounting for federal grants. Expenditures reported on the Schedule of Expenditures of Federal Awards (SEFA) could not be supported or reconciled to the School District’s financial records. Cause: Inadequate grant accounting procedures and internal controls over federal program expenditures. Effect: We are unable to determine compliance with federal program requirements or assess the allowability of expenditures. A disclaimer of opinion was issued for compliance with major program requirements. Questioned Costs: Unable to determine. We cannot quantify questioned costs because no testing could be performed, and the scope limitation affects all reported federal expenditures. Identification as Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the School District implement procedures to ensure grant expenditures are properly accounted for and supported by sufficient documentation. The School District should develop internal controls to ensure accurate and complete reporting on the SEFA. Views of Responsible Officials: Management’s views and corrective action plan is included at the end of this report.
2023-013 Inability to Test Compliance and Adequacy of Federal Grant Expenditures (Material Weakness) Federal Agency: All Compliance Requirement: All Type of Finding: Internal Control over Compliance – Material Weakness Material Noncompliance Criteria or Specific Requirement: Uniform Guidance (2 CFR 200.302(b)(3)) requires recipients of federal funds to maintain records that adequately identify the source and application of funds and ensure compliance with program requirements. Condition: We are unable to test compliance with federal program requirements due to pervasive discrepancies in the School District’s accounting for federal grants. Expenditures reported on the Schedule of Expenditures of Federal Awards (SEFA) could not be supported or reconciled to the School District’s financial records. Cause: Inadequate grant accounting procedures and internal controls over federal program expenditures. Effect: We are unable to determine compliance with federal program requirements or assess the allowability of expenditures. A disclaimer of opinion was issued for compliance with major program requirements. Questioned Costs: Unable to determine. We cannot quantify questioned costs because no testing could be performed, and the scope limitation affects all reported federal expenditures. Identification as Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the School District implement procedures to ensure grant expenditures are properly accounted for and supported by sufficient documentation. The School District should develop internal controls to ensure accurate and complete reporting on the SEFA. Views of Responsible Officials: Management’s views and corrective action plan is included at the end of this report.
Lack of Supporting Documentation for Non-Payroll Disbursements - Activities Allowed or Unallowed and Allowable Costs/Cost Principles (Significant Deficiency) AL Number and Title: 84.362A - Native Hawaiian Education Program Award Number: S362A200024 Award Year: 2023 Federal Agency: Department of Education Criteria: Under 2 CFR § 200.302(b)(3) and 2 CFR § 200.403(g), non-Federal entities are required to maintain documentation to support costs charged to federal awards. Costs must be necessary, reasonable, allocable, and adequately documented to be allowable under a federal program. Internal controls should ensure proper retention of records for audit and compliance purposes. Condition: During our testing of compliance and internal controls over compliance for Activities Allowed or Unallowed and Allowable Costs/Cost Principles, we selected a haphazard sample of 40 non-payroll disbursements. The auditee was unable to provide any supporting documentation (such as invoices or receipts) for five transactions totaling $200.19. These transactions were for program and class supplies from various vendors. Cause: The lack of documentation appears to result from weaknesses in the Organization’s record-keeping practices and non-compliance with established documentation retention policies. The Organization’s internal controls did not ensure that all supporting documentation for federal expenditures was consistently maintained Effect: Without adequate supporting documentation, we were unable to determine whether these costs were allowable, allocable, and reasonable in accordance with federal grant requirements. This noncompliance increases the risk that unallowable or unauthorized costs could be charged to the federal program without detection. Repeat Finding? No Recommendation: We recommend that the Organization: 1. Enhance internal controls to ensure that all federal expenditures are properly supported and retained for compliance purposes; 2. Implement a centralized documentation retention system to track and store invoices, receipts, and other supporting records; 3. Provide staff training on documentation requirements for federal grant expenditures to ensure compliance with 2 CFR § 200.302(b)(3) and 2 CFR § 200.403(g); and 4. Conduct periodic internal reviews of disbursement records to verify that required documentation is maintained and readily available for audit purposes. Views of Responsible Officials and Planned Corrective Action: Mana Maoli agrees with the finding and the recommendation. See Part V, Corrective Action Plan.
FINDING 2023-011 Subject: COVID-19 - Education Stabilization Fund - Reporting Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013 Pass-Through Entity: Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 34 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The School Corporation had not properly designed or implemented a system of internal controls that would likely be effective in preventing, or detecting and correcting, noncompliance. The School Corporation was required to submit annual data reports to the Indiana Department of Education (IDOE) via JotForm, a form/report builder. Data to be submitted included, but was not limited to, current period expenditures, prior period expenditures, and expenditures per activity. During the audit period the School Corporation submitted two ESSER I reports, two ESSER II reports, and two ESSER III reports, for a total of six reports. The annual data reports were compiled, prepared, and submitted by the Director of Curriculum without oversight or review process in place to prevent, or detect and correct, errors. All six of the submitted reports were selected for testing. One of the reports, ESSER II, Year 2, was not supported by the School Corporation's records. The School Corporation had expenditures of $583,415 from the ESSER II grant which were not included in this report. The lack of internal controls was systemic throughout the audit period. The noncompliance was isolated to the ESSER II, Year 2 report. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following: . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." 34 CFR 76.731 states: "A State and a subgrantee shall keep records to show its compliance with program requirements." INDIANA STATE BOARD OF ACCOUNTS 35 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause A proper system of internal controls was not designed by the School Corporation's management. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, a report submitted to the IDOE was not supported by the School Corporation's underlying accounting records. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure reports are supported by the ledgers or reports used to complete the report. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report. INDIANA STATE BOARD OF ACCOUNTS 36
FINDING 2023-011 Subject: COVID-19 - Education Stabilization Fund - Reporting Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013 Pass-Through Entity: Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 34 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The School Corporation had not properly designed or implemented a system of internal controls that would likely be effective in preventing, or detecting and correcting, noncompliance. The School Corporation was required to submit annual data reports to the Indiana Department of Education (IDOE) via JotForm, a form/report builder. Data to be submitted included, but was not limited to, current period expenditures, prior period expenditures, and expenditures per activity. During the audit period the School Corporation submitted two ESSER I reports, two ESSER II reports, and two ESSER III reports, for a total of six reports. The annual data reports were compiled, prepared, and submitted by the Director of Curriculum without oversight or review process in place to prevent, or detect and correct, errors. All six of the submitted reports were selected for testing. One of the reports, ESSER II, Year 2, was not supported by the School Corporation's records. The School Corporation had expenditures of $583,415 from the ESSER II grant which were not included in this report. The lack of internal controls was systemic throughout the audit period. The noncompliance was isolated to the ESSER II, Year 2 report. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following: . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." 34 CFR 76.731 states: "A State and a subgrantee shall keep records to show its compliance with program requirements." INDIANA STATE BOARD OF ACCOUNTS 35 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause A proper system of internal controls was not designed by the School Corporation's management. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, a report submitted to the IDOE was not supported by the School Corporation's underlying accounting records. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure reports are supported by the ledgers or reports used to complete the report. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report. INDIANA STATE BOARD OF ACCOUNTS 36
FINDING 2023-011 Subject: COVID-19 - Education Stabilization Fund - Reporting Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013 Pass-Through Entity: Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 34 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The School Corporation had not properly designed or implemented a system of internal controls that would likely be effective in preventing, or detecting and correcting, noncompliance. The School Corporation was required to submit annual data reports to the Indiana Department of Education (IDOE) via JotForm, a form/report builder. Data to be submitted included, but was not limited to, current period expenditures, prior period expenditures, and expenditures per activity. During the audit period the School Corporation submitted two ESSER I reports, two ESSER II reports, and two ESSER III reports, for a total of six reports. The annual data reports were compiled, prepared, and submitted by the Director of Curriculum without oversight or review process in place to prevent, or detect and correct, errors. All six of the submitted reports were selected for testing. One of the reports, ESSER II, Year 2, was not supported by the School Corporation's records. The School Corporation had expenditures of $583,415 from the ESSER II grant which were not included in this report. The lack of internal controls was systemic throughout the audit period. The noncompliance was isolated to the ESSER II, Year 2 report. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following: . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." 34 CFR 76.731 states: "A State and a subgrantee shall keep records to show its compliance with program requirements." INDIANA STATE BOARD OF ACCOUNTS 35 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause A proper system of internal controls was not designed by the School Corporation's management. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, a report submitted to the IDOE was not supported by the School Corporation's underlying accounting records. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure reports are supported by the ledgers or reports used to complete the report. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report. INDIANA STATE BOARD OF ACCOUNTS 36
FINDING 2023-011 Subject: COVID-19 - Education Stabilization Fund - Reporting Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013 Pass-Through Entity: Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 34 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The School Corporation had not properly designed or implemented a system of internal controls that would likely be effective in preventing, or detecting and correcting, noncompliance. The School Corporation was required to submit annual data reports to the Indiana Department of Education (IDOE) via JotForm, a form/report builder. Data to be submitted included, but was not limited to, current period expenditures, prior period expenditures, and expenditures per activity. During the audit period the School Corporation submitted two ESSER I reports, two ESSER II reports, and two ESSER III reports, for a total of six reports. The annual data reports were compiled, prepared, and submitted by the Director of Curriculum without oversight or review process in place to prevent, or detect and correct, errors. All six of the submitted reports were selected for testing. One of the reports, ESSER II, Year 2, was not supported by the School Corporation's records. The School Corporation had expenditures of $583,415 from the ESSER II grant which were not included in this report. The lack of internal controls was systemic throughout the audit period. The noncompliance was isolated to the ESSER II, Year 2 report. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following: . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." 34 CFR 76.731 states: "A State and a subgrantee shall keep records to show its compliance with program requirements." INDIANA STATE BOARD OF ACCOUNTS 35 SHENANDOAH SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause A proper system of internal controls was not designed by the School Corporation's management. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, a report submitted to the IDOE was not supported by the School Corporation's underlying accounting records. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure reports are supported by the ledgers or reports used to complete the report. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report. INDIANA STATE BOARD OF ACCOUNTS 36
Condition: For the fiscal year ended June 30, 2023, we requested that Day One prepare and send us a Schedule of Expenditures of Federal Awards. Requested that the expenditures reported in the SEFA be reconciled to Day One’s accounting records. We reviewed the SEFA and compared them to the accounting records; we noted that the expenditures reported were inaccurate. Criteria: Recipients of federal awards are subject to requirements documented in section of the Uniform Guidance Sections 200.510, 200.502, and 200.302. The criteria for each are as follows: § 200.510 Financial statements (b) Schedule of expenditures of Federal awards. The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with § 200.502.” § 200.502 Basis for determining Federal awards expended (a) Determining Federal awards expended. The determination of when a federal award is expended must be based on when the activity related to the Federal award occurs. Generally, the activity pertains to events that require the non-Federal entity to comply with Federal statutes, regulations, and the terms and conditions of Federal awards, such as: expenditure/expense transactions associated with awards including grants, cost-reimbursement contracts under the FAR, compacts with Indian Tribes, cooperative agreements, and direct appropriations; the disbursement of funds to subrecipients; the use of loan proceeds under loan and loan guarantee programs; the receipt of property; the receipt of surplus property; the receipt or use of program income; the distribution or use of food commodities; the disbursement of amounts entitling the non-Federal entity to an interest subsidy; and the period when insurance is in force.§ 200.302 Financial management (a) Each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state's own funds. In addition, the state's and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. The financial management system of each non-Federal entity must provide for (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements…..” Questioned Costs: None Cause: The Organization has not implemented policies and procedures requiring that the Schedule of Federal Awards to complete and accurate. Effect and Context: The Organization reported expenditures that exceeded $750,000 for 2022. In determining the major program to be audited for 2022, the auditor could not rely on the SEFA provided because the SEFA was not complete and expenditures reported were inaccurate. Which could have lead to an inaccurate reporting of federal expenditures for the Organization for 2022. Recommendation: We recommend that management implement policies and procedures requiring all federal expenditures be accurately reported in the year end Schedule of Federal Awards. Management’s Response and Corrective Action Plan: See management’s responses documented on page 46-47.
Condition: For the fiscal year ended June 30, 2023, we requested that Day One prepare and send us a Schedule of Expenditures of Federal Awards. Requested that the expenditures reported in the SEFA be reconciled to Day One’s accounting records. We reviewed the SEFA and compared them to the accounting records; we noted that the expenditures reported were inaccurate. Criteria: Recipients of federal awards are subject to requirements documented in section of the Uniform Guidance Sections 200.510, 200.502, and 200.302. The criteria for each are as follows: § 200.510 Financial statements (b) Schedule of expenditures of Federal awards. The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with § 200.502.” § 200.502 Basis for determining Federal awards expended (a) Determining Federal awards expended. The determination of when a federal award is expended must be based on when the activity related to the Federal award occurs. Generally, the activity pertains to events that require the non-Federal entity to comply with Federal statutes, regulations, and the terms and conditions of Federal awards, such as: expenditure/expense transactions associated with awards including grants, cost-reimbursement contracts under the FAR, compacts with Indian Tribes, cooperative agreements, and direct appropriations; the disbursement of funds to subrecipients; the use of loan proceeds under loan and loan guarantee programs; the receipt of property; the receipt of surplus property; the receipt or use of program income; the distribution or use of food commodities; the disbursement of amounts entitling the non-Federal entity to an interest subsidy; and the period when insurance is in force.§ 200.302 Financial management (a) Each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state's own funds. In addition, the state's and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. The financial management system of each non-Federal entity must provide for (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements…..” Questioned Costs: None Cause: The Organization has not implemented policies and procedures requiring that the Schedule of Federal Awards to complete and accurate. Effect and Context: The Organization reported expenditures that exceeded $750,000 for 2022. In determining the major program to be audited for 2022, the auditor could not rely on the SEFA provided because the SEFA was not complete and expenditures reported were inaccurate. Which could have lead to an inaccurate reporting of federal expenditures for the Organization for 2022. Recommendation: We recommend that management implement policies and procedures requiring all federal expenditures be accurately reported in the year end Schedule of Federal Awards. Management’s Response and Corrective Action Plan: See management’s responses documented on page 46-47.
Finding 2023-003 - Material Weakness in Internal Control over Compliance and Material Noncompliance (Qualified Opinion) - Inadequate Tracking of Expenditures and Retention of Documentation: Activities Allowed or Unallowed: Allowable Costs/Cost Principles and Reporting (A/B/L) for Assistance Listing Number 19.510 and 93.567 Criteria: The Code of Federal Regulations (CFR) Section 200.510(b) states in part, “The auditee must also prepare a schedule of federal expenditures for the period covered by the auditee’s consolidated financial statements which must include the total Federal awards expended as determined in accordance with 200.502.” Also, in accordance with CFR Section 200.302(b) - Financial Management, the auditees financial management system must provide 1) identification of all federal awards received and expended; 2) accurate, current, and complete disclosure of the financial results of each federal award or program; 3) records that identify adequately the source and application of funds for federally‐funded activities; 4) effective control over, and accountability for, all funds, property, and other assets; 5) comparison of expenditures with budget amounts for each Federal award; 6) written procedures to implement the requirements of section 200.305 and; 7) written procedures for determining the allowability of costs in accordance with Subpart E and the terms and conditions of the Federal award. Recipients of federal awards must submit accurate, complete and timely financial and performance reports. The Organization should have internal controls designed to ensure compliance with those provisions. The Organization should retain sufficient documentation such as invoice and allocation support for expenditures to retain documentation for audit purposes. Condition: During detail testing of expenditures, it was noted that the Organization did not maintain adequate documentation to support how certain costs were allocated to the federal program. Several transactions lacked sufficient detail, such as invoice or expense reimbursement form. Several expenditures selected for testing did not obtain sufficient approval by an individual at the Organization. It was noted that quarterly reports provided to the federal program were not reviewed by an individual at the Organization prior to submission to ensure accurate report of expenditures. Cause: The Organization does not have an adequate system in place to ensure quarterly reports have sufficient supporting documentation, proper approval/review, and accurate reporting prior to submission. Responsibilities for expenditure tracking were not clearly assigned, and there was no formal review process in place. The Organization is not following their Document Retention Policy. Effect: The effect of this condition increases the possibility that quarterly financial reports are misstated or inaccurate and increase the risk of noncompliance with federal requirements. The effect of this condition also increases the risk that expenditures are unallowable per the grant, federal regulations, or cost principles due to the insufficient support of proper approval retained. Questioned costs: None Repeat Finding: Yes - 2022-004 Recommendation: Policies and procedures should be in place to ensure quarterly financial reports are properly supported, accurately reported, and adequately approved and reviewed. A formal review process should be established to ensure compliance. The Organization should following the Document Retention Policy that was put in place and required by law. Views of Responsible Officials: Management agrees with this finding and their response is included in the Corrective Action Plan.
Finding 2023-003 - Material Weakness in Internal Control over Compliance and Material Noncompliance (Qualified Opinion) - Inadequate Tracking of Expenditures and Retention of Documentation: Activities Allowed or Unallowed: Allowable Costs/Cost Principles and Reporting (A/B/L) for Assistance Listing Number 19.510 and 93.567 Criteria: The Code of Federal Regulations (CFR) Section 200.510(b) states in part, “The auditee must also prepare a schedule of federal expenditures for the period covered by the auditee’s consolidated financial statements which must include the total Federal awards expended as determined in accordance with 200.502.” Also, in accordance with CFR Section 200.302(b) - Financial Management, the auditees financial management system must provide 1) identification of all federal awards received and expended; 2) accurate, current, and complete disclosure of the financial results of each federal award or program; 3) records that identify adequately the source and application of funds for federally‐funded activities; 4) effective control over, and accountability for, all funds, property, and other assets; 5) comparison of expenditures with budget amounts for each Federal award; 6) written procedures to implement the requirements of section 200.305 and; 7) written procedures for determining the allowability of costs in accordance with Subpart E and the terms and conditions of the Federal award. Recipients of federal awards must submit accurate, complete and timely financial and performance reports. The Organization should have internal controls designed to ensure compliance with those provisions. The Organization should retain sufficient documentation such as invoice and allocation support for expenditures to retain documentation for audit purposes. Condition: During detail testing of expenditures, it was noted that the Organization did not maintain adequate documentation to support how certain costs were allocated to the federal program. Several transactions lacked sufficient detail, such as invoice or expense reimbursement form. Several expenditures selected for testing did not obtain sufficient approval by an individual at the Organization. It was noted that quarterly reports provided to the federal program were not reviewed by an individual at the Organization prior to submission to ensure accurate report of expenditures. Cause: The Organization does not have an adequate system in place to ensure quarterly reports have sufficient supporting documentation, proper approval/review, and accurate reporting prior to submission. Responsibilities for expenditure tracking were not clearly assigned, and there was no formal review process in place. The Organization is not following their Document Retention Policy. Effect: The effect of this condition increases the possibility that quarterly financial reports are misstated or inaccurate and increase the risk of noncompliance with federal requirements. The effect of this condition also increases the risk that expenditures are unallowable per the grant, federal regulations, or cost principles due to the insufficient support of proper approval retained. Questioned costs: None Repeat Finding: Yes - 2022-004 Recommendation: Policies and procedures should be in place to ensure quarterly financial reports are properly supported, accurately reported, and adequately approved and reviewed. A formal review process should be established to ensure compliance. The Organization should following the Document Retention Policy that was put in place and required by law. Views of Responsible Officials: Management agrees with this finding and their response is included in the Corrective Action Plan.
FINDING REFERENCE NUMBER 2023-029 (See Finding Reference Number 2023-001) FEDERAL PROGRAM (ALN – 10.542) PANDEMIC EBT FOOD BENEFITS (P-EBT) U.S. DEPARTMENT OF AGRICULTURE AWARD NUMBERS 221PR456S9032; 2301PR456S9032 (Federal Award Years: 2022 through 2023) ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM) COMPLIANCE REQUIREMENT ACTIVITIES ALLOWED OR UNALLOWED // REPORTING TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS CRITERIA Uniform Guidance at 2 CFR 200 §200.302, Financial Management, establishes that: “(a) Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (See § 200.450). (b) The recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337): (1) Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity. (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand. (3) Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. … (6) Written procedures to implement the requirements of § 200.305. (7) Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award. STATEMENT OF CONDITION As part of our internal control procedures for the financial management system, allowable activities and reporting requirements, we found the following deficiencies: • Of ten (10) expenditure accounting transactions, three (3) were selected for documentation review. It was found that a transaction posted in August 2022 for $193,642,697.32 included $54,195,406.92, corresponding to benefit payrolls for May 2022, which had previously been claimed in June 2022. They subsequently adjusted the expenditure reported for this amount. • All expenditure transactions are coded under the ID number PANDEMICEBT-B22; although, in the SF-778 report for the quarter ended June 30, 2023, for the grant award period for 2023, expenditures in the amount of $29,606,939 were reported as incurred. This data does not agree with the accounting information of PRIFAS. QUESTIONED COSTS No questioned costs identified. PERSPECTIVE INFORMATION This is a systematic deficiency. After conducting several interviews, we were able to identify the staff responsible for validating the benefit payrolls. This person told us these benefit payrolls were processed via email, which indicated that the information submitted was preliminary. However, the finance staff proceeded with the adjustment in the accounting system. We conducted interviews to determine if anything had been modified in the benefit payroll processing process. To prevent this situation from happening again, they told us it wasn't necessary because it hasn't happened again. Procedures and internal controls manuals should provide for and ensure the segregation of duties, and the reconciliation of financial information reported to federal agencies against the accounting records used to prepare financial statements and SEFA. ADSEF failure to support reported amounts with verifiable documentation and the absence of independent review increases the risk of inaccurate or misstated financial data being reported to the federal awarding agency. STATEMENT OF CAUSE ADSEF has not established an adequate control procedure to identify duplicate claims before they are filed and recorded. During our interviews and understanding of the internal controls over financial reporting, we noted that only one person prepares, submits and certifies the SF-425 reports. No proper segregation of duties exists, that allows for validation of all accounting data before submitting the reports. In addition, the procedures manual for preparing reports does not establish a clear process for obtaining information, validating it, recording it, preparing it, and reporting it, as well as the responsibilities and segregation of duties to ensure that the reported information is consistent with ADSEF's accounting records. ADSEF lacks internal controls that allow for the timely validation and reconciliation of financial information. Furthermore, they lack a written procedures manual detailing the processes to follow in obtaining accounting data and reporting it to the federal government, ensuring that the responsibility does not fall on a single individual. POSSIBLE ASSERTED EFFECT The failure to have an internal control procedure that identifies standard documentation or forms, personnel responsible for validating the information included, and controls payroll and benefit expenses and other previously claimed expenses allowed for the recognition and claim of an expense incurred twice. ADSEF is not ensuring that the reports are accurate and traceable to the accounting database used to prepare their financial reports to the Federal Agencies and their financial statements. IDENTIFICATION OF REPEAT FINDING No reported as prior audit finding. RECOMMENDATIONS We recommend that management establish an adequate internal controls process that identifies documentation, personnel responsible, authorizations, and validations that can prevent this situation from recurring. In addition, we recommend management to establish written procedures and internal controls manuals to provide and document the segregation of duties related to the reporting compliance requirement.
FINDING REFERENCE NUMBER 2023-030 (See Finding Reference Number 2023-002) FEDERAL PROGRAM (ALN – 93.489; 93.575 AND 93.596) CHILD CARE CLUSTER U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES AWARD NUMBER G2101PRCDC6 (Federal Award Years: 2020 through 2023) ADMINISTRATION ADMINISTRATION FOR THE CARE AND COMPREHENSIVE DEVELOPMENT OF CHILDREN (ACUDEN, BY ITS SPANISH ACRONYM) COMPLIANCE REQUIREMENT ACTIVITIES ALLOWED OR UNALLOWED // ALLOWABLE COSTS/COSTS PRINCIPLES TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS CRITERIA Uniform Guidance at 2 CFR Section 200.302 (b)(4) establishes that the financial management system of each non-Federal entity must provide effective control over, and accountability for, all funds, property, and other assets. The non-Federal entity must adequately safeguard all assets and assure that they are used solely for authorized purposes. In 2 CFR 200.405 (a)(1) establishes that a cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. This standard is met if the cost: is incurred specifically for the Federal award. In addition, 34 CFR 76.702 establishes that a State and a subgrantee shall use fiscal control and fund accounting procedures that insure proper disbursement of and accounting for Federal funds. STATEMENT OF CONDITION As part of our audit procedures over internal controls and compliance with the allowable activities’ requirement, we selected a sample of forty-four (44) disbursements to suppliers made during the fiscal year under audit of a total population of 2,534. In one (1) instance, we found that the ACUDEN issued an advance payment to a supplier who in turn subcontracted with other suppliers for professional services or consumer education advertising campaign, media plan, and event coordination not performed, and that they had been invoiced in advance as of the invoice date. QUESTIONED COSTS $208,823.33. PERSPECTIVE INFORMATION This deficiency is a systemic problem. When the invoices reach the ACUDEN finance personnel in charge of the payment issuance process, they must review the invoice in all its parts, ensuring that the billed services are received accordingly, identifying the period of service performed. However, a supplier issued an invoice dated March 21, 2023, which included professional services of marketing for a consumer education campaign, media planning, and event coordination for the ACUDEN Child Care Program and PDG-B-5 programs. These services had been invoiced in advance for the period from April 1, 2023 through September 30, 2023 and during the payment process this situation was not detected and the payment for these services invoiced in advance was incorrectly issued on May 2, 2023, according to the disbursement voucher. During our inspection of the disbursement voucher, we noted the voucher had a note from de Finance Director indicating her refusing to authorize the disbursement voucher. However, although the disbursement voucher had this note, the Administrator signed the disbursement voucher and authorized the payment. STATEMENT OF CAUSE The lack of proper training and controls that requires standard evaluation and approval of expenditures incurred, in accordance with the state and Federal regulation. POSSIBLE ASSERTED EFFECT ACUDEN incurred in overpayments to suppliers for services not rendered to ACUDEN. IDENTIFICATION OF REPEAT FINDING No reported as prior audit finding. RECOMMENDATIONS We recommend management to establish internal control processes consistent with the requirements of 2 CFR 200. In addition, design and implement internal control processes to meet the requirements of subrecipient monitoring and procurement standards.
FINDING REFERENCE NUMBER 2023-030 (See Finding Reference Number 2023-002) FEDERAL PROGRAM (ALN – 93.489; 93.575 AND 93.596) CHILD CARE CLUSTER U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES AWARD NUMBER G2101PRCDC6 (Federal Award Years: 2020 through 2023) ADMINISTRATION ADMINISTRATION FOR THE CARE AND COMPREHENSIVE DEVELOPMENT OF CHILDREN (ACUDEN, BY ITS SPANISH ACRONYM) COMPLIANCE REQUIREMENT ACTIVITIES ALLOWED OR UNALLOWED // ALLOWABLE COSTS/COSTS PRINCIPLES TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS CRITERIA Uniform Guidance at 2 CFR Section 200.302 (b)(4) establishes that the financial management system of each non-Federal entity must provide effective control over, and accountability for, all funds, property, and other assets. The non-Federal entity must adequately safeguard all assets and assure that they are used solely for authorized purposes. In 2 CFR 200.405 (a)(1) establishes that a cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. This standard is met if the cost: is incurred specifically for the Federal award. In addition, 34 CFR 76.702 establishes that a State and a subgrantee shall use fiscal control and fund accounting procedures that insure proper disbursement of and accounting for Federal funds. STATEMENT OF CONDITION As part of our audit procedures over internal controls and compliance with the allowable activities’ requirement, we selected a sample of forty-four (44) disbursements to suppliers made during the fiscal year under audit of a total population of 2,534. In one (1) instance, we found that the ACUDEN issued an advance payment to a supplier who in turn subcontracted with other suppliers for professional services or consumer education advertising campaign, media plan, and event coordination not performed, and that they had been invoiced in advance as of the invoice date. QUESTIONED COSTS $208,823.33. PERSPECTIVE INFORMATION This deficiency is a systemic problem. When the invoices reach the ACUDEN finance personnel in charge of the payment issuance process, they must review the invoice in all its parts, ensuring that the billed services are received accordingly, identifying the period of service performed. However, a supplier issued an invoice dated March 21, 2023, which included professional services of marketing for a consumer education campaign, media planning, and event coordination for the ACUDEN Child Care Program and PDG-B-5 programs. These services had been invoiced in advance for the period from April 1, 2023 through September 30, 2023 and during the payment process this situation was not detected and the payment for these services invoiced in advance was incorrectly issued on May 2, 2023, according to the disbursement voucher. During our inspection of the disbursement voucher, we noted the voucher had a note from de Finance Director indicating her refusing to authorize the disbursement voucher. However, although the disbursement voucher had this note, the Administrator signed the disbursement voucher and authorized the payment. STATEMENT OF CAUSE The lack of proper training and controls that requires standard evaluation and approval of expenditures incurred, in accordance with the state and Federal regulation. POSSIBLE ASSERTED EFFECT ACUDEN incurred in overpayments to suppliers for services not rendered to ACUDEN. IDENTIFICATION OF REPEAT FINDING No reported as prior audit finding. RECOMMENDATIONS We recommend management to establish internal control processes consistent with the requirements of 2 CFR 200. In addition, design and implement internal control processes to meet the requirements of subrecipient monitoring and procurement standards.
FINDING REFERENCE NUMBER 2023-030 (See Finding Reference Number 2023-002) FEDERAL PROGRAM (ALN – 93.489; 93.575 AND 93.596) CHILD CARE CLUSTER U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES AWARD NUMBER G2101PRCDC6 (Federal Award Years: 2020 through 2023) ADMINISTRATION ADMINISTRATION FOR THE CARE AND COMPREHENSIVE DEVELOPMENT OF CHILDREN (ACUDEN, BY ITS SPANISH ACRONYM) COMPLIANCE REQUIREMENT ACTIVITIES ALLOWED OR UNALLOWED // ALLOWABLE COSTS/COSTS PRINCIPLES TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS CRITERIA Uniform Guidance at 2 CFR Section 200.302 (b)(4) establishes that the financial management system of each non-Federal entity must provide effective control over, and accountability for, all funds, property, and other assets. The non-Federal entity must adequately safeguard all assets and assure that they are used solely for authorized purposes. In 2 CFR 200.405 (a)(1) establishes that a cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. This standard is met if the cost: is incurred specifically for the Federal award. In addition, 34 CFR 76.702 establishes that a State and a subgrantee shall use fiscal control and fund accounting procedures that insure proper disbursement of and accounting for Federal funds. STATEMENT OF CONDITION As part of our audit procedures over internal controls and compliance with the allowable activities’ requirement, we selected a sample of forty-four (44) disbursements to suppliers made during the fiscal year under audit of a total population of 2,534. In one (1) instance, we found that the ACUDEN issued an advance payment to a supplier who in turn subcontracted with other suppliers for professional services or consumer education advertising campaign, media plan, and event coordination not performed, and that they had been invoiced in advance as of the invoice date. QUESTIONED COSTS $208,823.33. PERSPECTIVE INFORMATION This deficiency is a systemic problem. When the invoices reach the ACUDEN finance personnel in charge of the payment issuance process, they must review the invoice in all its parts, ensuring that the billed services are received accordingly, identifying the period of service performed. However, a supplier issued an invoice dated March 21, 2023, which included professional services of marketing for a consumer education campaign, media planning, and event coordination for the ACUDEN Child Care Program and PDG-B-5 programs. These services had been invoiced in advance for the period from April 1, 2023 through September 30, 2023 and during the payment process this situation was not detected and the payment for these services invoiced in advance was incorrectly issued on May 2, 2023, according to the disbursement voucher. During our inspection of the disbursement voucher, we noted the voucher had a note from de Finance Director indicating her refusing to authorize the disbursement voucher. However, although the disbursement voucher had this note, the Administrator signed the disbursement voucher and authorized the payment. STATEMENT OF CAUSE The lack of proper training and controls that requires standard evaluation and approval of expenditures incurred, in accordance with the state and Federal regulation. POSSIBLE ASSERTED EFFECT ACUDEN incurred in overpayments to suppliers for services not rendered to ACUDEN. IDENTIFICATION OF REPEAT FINDING No reported as prior audit finding. RECOMMENDATIONS We recommend management to establish internal control processes consistent with the requirements of 2 CFR 200. In addition, design and implement internal control processes to meet the requirements of subrecipient monitoring and procurement standards.
FINDING REFERENCE NUMBER 2023-032 (See Finding Reference Number 2023-004) FEDERAL PROGRAMS (ALN – 10.566) NUTRITION ASSISTANCE FOR PUERTO RICO U.S. DEPARTMENT OF AGRICULTURE (ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF) (ALN – 93.560) PAYMENT TO TERRITORIES – ADULT (ALN – 93.568) LOW-INCOME HOME ENERGY ASSISTANCE U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES AWARD NUMBERS 211PR426S7003/4; 221PR426S7003/4; 231PR426S7003/4 (Federal Award Years: 2021 through 2023) 2021G996117; 2022G996117; 2023996117 (Federal Award Years: 2021 through 2023) 2022G9922PT; 2301PRTABD (Federal Award Years: 2022 through 2023) 2201PRLIEA; 2301PRLIEA (Federal Award Years: 2022 through 2023) ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM) COMPLIANCE REQUIREMENT ALLOWABLE COSTS/COSTS PRINCIPLES TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS CRITERIA Uniform Guidance at 2 CFR 200 §200.302, Financial Management, establishes that: “(a) Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (See § 200.450). (b) The recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337): (1) Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity. (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand. (3) Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. (4) Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes. See § 200.303. (5) Comparison of expenditures with budget amounts for each Federal award. (6) Written procedures to implement the requirements of § 200.305. (7) Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.” STATEMENT OF CONDITION As part of our audit procedures, we conducted an analysis of the process used to distribute administrative costs among the various programs administered by ADSEF. Administrative expenses are distributed based on a methodology called "Random Moment Sampling" (RMS). We identified the following deficiencies in the implementation and execution of this process: i. There is no written procedure that outlines the process for applying this formula for distributing administrative expenses. ii. There is no standardized monitoring or communication to ensure that employees who are required to complete this form are fully assigned to the roles subject to this process. In other words, the Human Resources Department or the Appointments Office do not communicate periodically or whenever a staff change occurs, in order to adjust the population subject to this questionnaire. iii. Among the options provided for responding to the RMS survey, three options are not assigned to a Federal program. These options include licenses; other types of work not directly tied to a Federal program function for which administrative expenses can be allocated. According to the State Plan, 3,300 questionnaires will be administered for functions performed by employees who are not at the central level, and 300 for employees who are at the central level. Two quarters of the Fiscal Year 2022-2023 were observed, in which these three options represented between 33% and 22% for local offices and 29% at the central level. Because these options are not tied to a Federal program function, they reduce the percentage to zero and redistribute the percentage among Federal programs. QUESTIONED COSTS None. PERSPECTIVE INFORMATION We consider this deficiency a systemic problem. This allocation of administrative expenses is made quarterly; however, the adjustment in the accounting system (PRIFAS) is not necessarily made in the same period. The administrative expenses of each program contain the redistribution of expenses not assigned to a Federal program. STATEMENT OF CAUSE ADSEF does not have a written procedure establishing the process for implementing and monitoring the execution of this methodology. Additionally, among the responses regarding functions performed, time may be allocated to functions not related to Federal programs. POSSIBLE ASSERTED EFFECT They lack a standardized process that ensures that the methodology used allocates reasonable administrative costs among Federal programs, ensures that the distribution base is complete, and is periodically monitored. Furthermore, by redistributing the percentage of responses not directly related to a Federal program function, administrative costs could be claimed from Federal programs that should likely be allocated to state funds. IDENTIFICATION OF REPEAT FINDING No reported as prior audit finding. RECOMMENDATIONS We recommend that management establish a written internal control procedure that provides certainty, monitoring frequency, data validation, and responsibilities for those responsible for executing this process. Additionally, it should be considered that there are functions performed by the personnel in charge of answering the RMS that are not directly linked to a Federal program and should be assigned to state funds.
FINDING REFERENCE NUMBER 2023-032 (See Finding Reference Number 2023-004) FEDERAL PROGRAMS (ALN – 10.566) NUTRITION ASSISTANCE FOR PUERTO RICO U.S. DEPARTMENT OF AGRICULTURE (ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF) (ALN – 93.560) PAYMENT TO TERRITORIES – ADULT (ALN – 93.568) LOW-INCOME HOME ENERGY ASSISTANCE U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES AWARD NUMBERS 211PR426S7003/4; 221PR426S7003/4; 231PR426S7003/4 (Federal Award Years: 2021 through 2023) 2021G996117; 2022G996117; 2023996117 (Federal Award Years: 2021 through 2023) 2022G9922PT; 2301PRTABD (Federal Award Years: 2022 through 2023) 2201PRLIEA; 2301PRLIEA (Federal Award Years: 2022 through 2023) ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM) COMPLIANCE REQUIREMENT ALLOWABLE COSTS/COSTS PRINCIPLES TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS CRITERIA Uniform Guidance at 2 CFR 200 §200.302, Financial Management, establishes that: “(a) Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (See § 200.450). (b) The recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337): (1) Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity. (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand. (3) Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. (4) Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes. See § 200.303. (5) Comparison of expenditures with budget amounts for each Federal award. (6) Written procedures to implement the requirements of § 200.305. (7) Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.” STATEMENT OF CONDITION As part of our audit procedures, we conducted an analysis of the process used to distribute administrative costs among the various programs administered by ADSEF. Administrative expenses are distributed based on a methodology called "Random Moment Sampling" (RMS). We identified the following deficiencies in the implementation and execution of this process: i. There is no written procedure that outlines the process for applying this formula for distributing administrative expenses. ii. There is no standardized monitoring or communication to ensure that employees who are required to complete this form are fully assigned to the roles subject to this process. In other words, the Human Resources Department or the Appointments Office do not communicate periodically or whenever a staff change occurs, in order to adjust the population subject to this questionnaire. iii. Among the options provided for responding to the RMS survey, three options are not assigned to a Federal program. These options include licenses; other types of work not directly tied to a Federal program function for which administrative expenses can be allocated. According to the State Plan, 3,300 questionnaires will be administered for functions performed by employees who are not at the central level, and 300 for employees who are at the central level. Two quarters of the Fiscal Year 2022-2023 were observed, in which these three options represented between 33% and 22% for local offices and 29% at the central level. Because these options are not tied to a Federal program function, they reduce the percentage to zero and redistribute the percentage among Federal programs. QUESTIONED COSTS None. PERSPECTIVE INFORMATION We consider this deficiency a systemic problem. This allocation of administrative expenses is made quarterly; however, the adjustment in the accounting system (PRIFAS) is not necessarily made in the same period. The administrative expenses of each program contain the redistribution of expenses not assigned to a Federal program. STATEMENT OF CAUSE ADSEF does not have a written procedure establishing the process for implementing and monitoring the execution of this methodology. Additionally, among the responses regarding functions performed, time may be allocated to functions not related to Federal programs. POSSIBLE ASSERTED EFFECT They lack a standardized process that ensures that the methodology used allocates reasonable administrative costs among Federal programs, ensures that the distribution base is complete, and is periodically monitored. Furthermore, by redistributing the percentage of responses not directly related to a Federal program function, administrative costs could be claimed from Federal programs that should likely be allocated to state funds. IDENTIFICATION OF REPEAT FINDING No reported as prior audit finding. RECOMMENDATIONS We recommend that management establish a written internal control procedure that provides certainty, monitoring frequency, data validation, and responsibilities for those responsible for executing this process. Additionally, it should be considered that there are functions performed by the personnel in charge of answering the RMS that are not directly linked to a Federal program and should be assigned to state funds.
FINDING REFERENCE NUMBER 2023-032 (See Finding Reference Number 2023-004) FEDERAL PROGRAMS (ALN – 10.566) NUTRITION ASSISTANCE FOR PUERTO RICO U.S. DEPARTMENT OF AGRICULTURE (ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF) (ALN – 93.560) PAYMENT TO TERRITORIES – ADULT (ALN – 93.568) LOW-INCOME HOME ENERGY ASSISTANCE U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES AWARD NUMBERS 211PR426S7003/4; 221PR426S7003/4; 231PR426S7003/4 (Federal Award Years: 2021 through 2023) 2021G996117; 2022G996117; 2023996117 (Federal Award Years: 2021 through 2023) 2022G9922PT; 2301PRTABD (Federal Award Years: 2022 through 2023) 2201PRLIEA; 2301PRLIEA (Federal Award Years: 2022 through 2023) ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM) COMPLIANCE REQUIREMENT ALLOWABLE COSTS/COSTS PRINCIPLES TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS CRITERIA Uniform Guidance at 2 CFR 200 §200.302, Financial Management, establishes that: “(a) Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (See § 200.450). (b) The recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337): (1) Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity. (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand. (3) Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. (4) Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes. See § 200.303. (5) Comparison of expenditures with budget amounts for each Federal award. (6) Written procedures to implement the requirements of § 200.305. (7) Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.” STATEMENT OF CONDITION As part of our audit procedures, we conducted an analysis of the process used to distribute administrative costs among the various programs administered by ADSEF. Administrative expenses are distributed based on a methodology called "Random Moment Sampling" (RMS). We identified the following deficiencies in the implementation and execution of this process: i. There is no written procedure that outlines the process for applying this formula for distributing administrative expenses. ii. There is no standardized monitoring or communication to ensure that employees who are required to complete this form are fully assigned to the roles subject to this process. In other words, the Human Resources Department or the Appointments Office do not communicate periodically or whenever a staff change occurs, in order to adjust the population subject to this questionnaire. iii. Among the options provided for responding to the RMS survey, three options are not assigned to a Federal program. These options include licenses; other types of work not directly tied to a Federal program function for which administrative expenses can be allocated. According to the State Plan, 3,300 questionnaires will be administered for functions performed by employees who are not at the central level, and 300 for employees who are at the central level. Two quarters of the Fiscal Year 2022-2023 were observed, in which these three options represented between 33% and 22% for local offices and 29% at the central level. Because these options are not tied to a Federal program function, they reduce the percentage to zero and redistribute the percentage among Federal programs. QUESTIONED COSTS None. PERSPECTIVE INFORMATION We consider this deficiency a systemic problem. This allocation of administrative expenses is made quarterly; however, the adjustment in the accounting system (PRIFAS) is not necessarily made in the same period. The administrative expenses of each program contain the redistribution of expenses not assigned to a Federal program. STATEMENT OF CAUSE ADSEF does not have a written procedure establishing the process for implementing and monitoring the execution of this methodology. Additionally, among the responses regarding functions performed, time may be allocated to functions not related to Federal programs. POSSIBLE ASSERTED EFFECT They lack a standardized process that ensures that the methodology used allocates reasonable administrative costs among Federal programs, ensures that the distribution base is complete, and is periodically monitored. Furthermore, by redistributing the percentage of responses not directly related to a Federal program function, administrative costs could be claimed from Federal programs that should likely be allocated to state funds. IDENTIFICATION OF REPEAT FINDING No reported as prior audit finding. RECOMMENDATIONS We recommend that management establish a written internal control procedure that provides certainty, monitoring frequency, data validation, and responsibilities for those responsible for executing this process. Additionally, it should be considered that there are functions performed by the personnel in charge of answering the RMS that are not directly linked to a Federal program and should be assigned to state funds.
FINDING REFERENCE NUMBER 2023-032 (See Finding Reference Number 2023-004) FEDERAL PROGRAMS (ALN – 10.566) NUTRITION ASSISTANCE FOR PUERTO RICO U.S. DEPARTMENT OF AGRICULTURE (ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF) (ALN – 93.560) PAYMENT TO TERRITORIES – ADULT (ALN – 93.568) LOW-INCOME HOME ENERGY ASSISTANCE U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES AWARD NUMBERS 211PR426S7003/4; 221PR426S7003/4; 231PR426S7003/4 (Federal Award Years: 2021 through 2023) 2021G996117; 2022G996117; 2023996117 (Federal Award Years: 2021 through 2023) 2022G9922PT; 2301PRTABD (Federal Award Years: 2022 through 2023) 2201PRLIEA; 2301PRLIEA (Federal Award Years: 2022 through 2023) ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM) COMPLIANCE REQUIREMENT ALLOWABLE COSTS/COSTS PRINCIPLES TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS CRITERIA Uniform Guidance at 2 CFR 200 §200.302, Financial Management, establishes that: “(a) Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (See § 200.450). (b) The recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337): (1) Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity. (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand. (3) Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. (4) Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes. See § 200.303. (5) Comparison of expenditures with budget amounts for each Federal award. (6) Written procedures to implement the requirements of § 200.305. (7) Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.” STATEMENT OF CONDITION As part of our audit procedures, we conducted an analysis of the process used to distribute administrative costs among the various programs administered by ADSEF. Administrative expenses are distributed based on a methodology called "Random Moment Sampling" (RMS). We identified the following deficiencies in the implementation and execution of this process: i. There is no written procedure that outlines the process for applying this formula for distributing administrative expenses. ii. There is no standardized monitoring or communication to ensure that employees who are required to complete this form are fully assigned to the roles subject to this process. In other words, the Human Resources Department or the Appointments Office do not communicate periodically or whenever a staff change occurs, in order to adjust the population subject to this questionnaire. iii. Among the options provided for responding to the RMS survey, three options are not assigned to a Federal program. These options include licenses; other types of work not directly tied to a Federal program function for which administrative expenses can be allocated. According to the State Plan, 3,300 questionnaires will be administered for functions performed by employees who are not at the central level, and 300 for employees who are at the central level. Two quarters of the Fiscal Year 2022-2023 were observed, in which these three options represented between 33% and 22% for local offices and 29% at the central level. Because these options are not tied to a Federal program function, they reduce the percentage to zero and redistribute the percentage among Federal programs. QUESTIONED COSTS None. PERSPECTIVE INFORMATION We consider this deficiency a systemic problem. This allocation of administrative expenses is made quarterly; however, the adjustment in the accounting system (PRIFAS) is not necessarily made in the same period. The administrative expenses of each program contain the redistribution of expenses not assigned to a Federal program. STATEMENT OF CAUSE ADSEF does not have a written procedure establishing the process for implementing and monitoring the execution of this methodology. Additionally, among the responses regarding functions performed, time may be allocated to functions not related to Federal programs. POSSIBLE ASSERTED EFFECT They lack a standardized process that ensures that the methodology used allocates reasonable administrative costs among Federal programs, ensures that the distribution base is complete, and is periodically monitored. Furthermore, by redistributing the percentage of responses not directly related to a Federal program function, administrative costs could be claimed from Federal programs that should likely be allocated to state funds. IDENTIFICATION OF REPEAT FINDING No reported as prior audit finding. RECOMMENDATIONS We recommend that management establish a written internal control procedure that provides certainty, monitoring frequency, data validation, and responsibilities for those responsible for executing this process. Additionally, it should be considered that there are functions performed by the personnel in charge of answering the RMS that are not directly linked to a Federal program and should be assigned to state funds.
FINDING REFERENCE NUMBER 2023-033 (See Finding Reference Number 2023-005) FEDERAL PROGRAMS (ALN – 10.566) NUTRITION ASSISTANCE FOR PUERTO RICO U.S. DEPARTMENT OF AGRICULTURE (ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF) U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES AWARD NUMBERS 211PR426S7003/4; 221PR426S7003/4; 231PR426S7003/4 (Federal Award Years: 2021 through 2023) 2021G990229 (TANF – COVID-19) (Federal Award Year: 2021) 2022G996117; 2023996117 (Federal Award Years: 2022 through 2023) ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM) COMPLIANCE REQUIREMENT ALLOWABLE COSTS/COSTS PRINCIPLES TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS CRITERIA Uniform Guidance at 2 CFR 200 §200.302, Financial Management, establishes that: “(a) Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (See § 200.450). (b) The recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337): (1) Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity. (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand. (3) Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. … (6) Written procedures to implement the requirements of § 200.305. (7) Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.” In addition, 45 CFR 260.31 (b)(1), defines what non-recurrent, short-term (NRST) benefits are. In relation to Pandemic Emergency Assistance Fund (PEAF), the regulation establishes that: “NRST benefits, like all NRSTs under TANF, must: be designed to deal with a specific crisis situation or episode of need; not be intended to meet on-going needs; and not extend beyond four months; and (as explained in the instructions for reporting on line 15 of the ACF-196R) NRSTs paid for with PEAF funds: must only include expenditures such as emergency assistance and diversion payments, emergency housing and short-term homelessness assistance, emergency food aid, short-term utilities payments, burial assistance, clothing allowances, and back-to-school payments; and may not include tax credits, child care, transportation, or short-term education and training.” STATEMENT OF CONDITION As part of our audit procedures over transactions related to emissions of benefits for the TANF program, we selected five (5) transactions, from a population of fifty-three (53) emissions made during the fiscal year. We noted the following deficiencies: i. An emission of benefits for $16,236,447.24 related to PEAF funding was made. We request evidence of an established manual or guide that defines or identifies the need that would be addressed with the issuance of these funds, and the subsequent monitoring of the usage. ii. An emission of benefits for $3,633,800 was made related to a bonus. The documentation for this issuance includes an authorization letter establishing a benefit of $800 per child between the ages of 5 and 17 years and 11 months, serving a population of 4,492 participants, for a total of $3,593,600. Later, another authorization letter added $37,000 but did not specify the number of children included in this amendment. The sum of both authorizations is $3,630,600; however, the amount reflected in PRIFAS is $3,633,800. According to the EBT document related to this issuance, the amount issued was $3,596,800 and indicates that the number of participants benefited was 4,974, giving an average benefit of $723.12. In this EBT document, beneficiaries are distributed by region; however, there are 5 beneficiaries who are not assigned to a region, for a total of $4,000. iii. An emission of $1,988,000 was made related to an incentive for some beneficiaries. In accordance with an authorization letter, the benefit included $3,500 per participants who worked or participated in an activity leading to employment for 3 months or more. In accordance with the State Plan, active recipients may receive a 6-months period Work Incentive Bonus payment. Per the authorization letter the benefit of $3,500 was issued to 522 participants, for a total of $1,827,000; another authorization letter increased $3,500 in funds. This amount does not agree with the PRIFAS amount of $1,988,000. ADSEF is allowed to claim 16.80% of indirect costs. As part of our audit procedures over the Nutrition Assistance for Puerto Rico and TANF program, we selected some transactions to evaluate the compliance with the indirect costs claims. The TANF program reported four (4) transactions related to indirect costs, and for the Nutrition Assistance for Puerto Rico five (5) transactions were reported. We requested evidence of two (2) transactions for the TANF program and one (1) for the Nutrition Assistance for Puerto Rico, no evidence of class object was provided in order to ascertain that only allowable expenditure transactions were considered in the calculation and claim of indirect costs. QUESTIONED COSTS None. PERSPECTIVE INFORMATION We consider this deficiency a systemic problem. There are no processes to reconcile PRIFAS information with emissions reported in EBT, nor to claim indirect costs. STATEMENT OF CAUSE ADSEF does not have a process for validating EBT issuances with PRIFAS, and this reconciliation is not performed periodically to detect any errors or missing information when accounting for transactions. POSSIBLE ASSERTED EFFECT The PRIFAS accounting system is not reconciled with EBT reports. This process is not stipulated as part of the internal controls required to ensure that the records used to prepare the financial statement, SEFA, and Federal reports are reconciled, and any discrepancies are identified. In addition, indirect costs calculation may include unallowable costs and not be detected timely. IDENTIFICATION OF REPEAT FINDING No reported as prior audit finding. RECOMMENDATIONS We recommend that management establish internal control processes to reconcile PRIFAS and the various sources of information used for reporting. Additionally, maintain clear records of indirect costs claimed and awarded.
FINDING REFERENCE NUMBER 2023-033 (See Finding Reference Number 2023-005) FEDERAL PROGRAMS (ALN – 10.566) NUTRITION ASSISTANCE FOR PUERTO RICO U.S. DEPARTMENT OF AGRICULTURE (ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF) U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES AWARD NUMBERS 211PR426S7003/4; 221PR426S7003/4; 231PR426S7003/4 (Federal Award Years: 2021 through 2023) 2021G990229 (TANF – COVID-19) (Federal Award Year: 2021) 2022G996117; 2023996117 (Federal Award Years: 2022 through 2023) ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM) COMPLIANCE REQUIREMENT ALLOWABLE COSTS/COSTS PRINCIPLES TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS CRITERIA Uniform Guidance at 2 CFR 200 §200.302, Financial Management, establishes that: “(a) Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (See § 200.450). (b) The recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337): (1) Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity. (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a Federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand. (3) Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. … (6) Written procedures to implement the requirements of § 200.305. (7) Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.” In addition, 45 CFR 260.31 (b)(1), defines what non-recurrent, short-term (NRST) benefits are. In relation to Pandemic Emergency Assistance Fund (PEAF), the regulation establishes that: “NRST benefits, like all NRSTs under TANF, must: be designed to deal with a specific crisis situation or episode of need; not be intended to meet on-going needs; and not extend beyond four months; and (as explained in the instructions for reporting on line 15 of the ACF-196R) NRSTs paid for with PEAF funds: must only include expenditures such as emergency assistance and diversion payments, emergency housing and short-term homelessness assistance, emergency food aid, short-term utilities payments, burial assistance, clothing allowances, and back-to-school payments; and may not include tax credits, child care, transportation, or short-term education and training.” STATEMENT OF CONDITION As part of our audit procedures over transactions related to emissions of benefits for the TANF program, we selected five (5) transactions, from a population of fifty-three (53) emissions made during the fiscal year. We noted the following deficiencies: i. An emission of benefits for $16,236,447.24 related to PEAF funding was made. We request evidence of an established manual or guide that defines or identifies the need that would be addressed with the issuance of these funds, and the subsequent monitoring of the usage. ii. An emission of benefits for $3,633,800 was made related to a bonus. The documentation for this issuance includes an authorization letter establishing a benefit of $800 per child between the ages of 5 and 17 years and 11 months, serving a population of 4,492 participants, for a total of $3,593,600. Later, another authorization letter added $37,000 but did not specify the number of children included in this amendment. The sum of both authorizations is $3,630,600; however, the amount reflected in PRIFAS is $3,633,800. According to the EBT document related to this issuance, the amount issued was $3,596,800 and indicates that the number of participants benefited was 4,974, giving an average benefit of $723.12. In this EBT document, beneficiaries are distributed by region; however, there are 5 beneficiaries who are not assigned to a region, for a total of $4,000. iii. An emission of $1,988,000 was made related to an incentive for some beneficiaries. In accordance with an authorization letter, the benefit included $3,500 per participants who worked or participated in an activity leading to employment for 3 months or more. In accordance with the State Plan, active recipients may receive a 6-months period Work Incentive Bonus payment. Per the authorization letter the benefit of $3,500 was issued to 522 participants, for a total of $1,827,000; another authorization letter increased $3,500 in funds. This amount does not agree with the PRIFAS amount of $1,988,000. ADSEF is allowed to claim 16.80% of indirect costs. As part of our audit procedures over the Nutrition Assistance for Puerto Rico and TANF program, we selected some transactions to evaluate the compliance with the indirect costs claims. The TANF program reported four (4) transactions related to indirect costs, and for the Nutrition Assistance for Puerto Rico five (5) transactions were reported. We requested evidence of two (2) transactions for the TANF program and one (1) for the Nutrition Assistance for Puerto Rico, no evidence of class object was provided in order to ascertain that only allowable expenditure transactions were considered in the calculation and claim of indirect costs. QUESTIONED COSTS None. PERSPECTIVE INFORMATION We consider this deficiency a systemic problem. There are no processes to reconcile PRIFAS information with emissions reported in EBT, nor to claim indirect costs. STATEMENT OF CAUSE ADSEF does not have a process for validating EBT issuances with PRIFAS, and this reconciliation is not performed periodically to detect any errors or missing information when accounting for transactions. POSSIBLE ASSERTED EFFECT The PRIFAS accounting system is not reconciled with EBT reports. This process is not stipulated as part of the internal controls required to ensure that the records used to prepare the financial statement, SEFA, and Federal reports are reconciled, and any discrepancies are identified. In addition, indirect costs calculation may include unallowable costs and not be detected timely. IDENTIFICATION OF REPEAT FINDING No reported as prior audit finding. RECOMMENDATIONS We recommend that management establish internal control processes to reconcile PRIFAS and the various sources of information used for reporting. Additionally, maintain clear records of indirect costs claimed and awarded.
FINDING REFERENCE NUMBER 2023-034 (See Finding Reference Number 2023-006) FEDERAL PROGRAMS (ALN – 93.556) MARYLEE ALLEN PROMOTING SAFE AND STABLE FAMILIES (ALN – 93.556) COVID-19 – MARYLEE ALLEN PROMOTING SAFE AND STABLE FAMILIES (ALN – 93.667) SOCIAL SERVICES BLOCK GRANT U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES AWARD NUMBERS 2101PRFPSS; 2101PRFPSC; 2101PRFPCV; 2202PRFPCV; 2203PRFPSS (Federal Award Years: 2021 through 2023) 2111PRSOSR; 2211PRSOSR (Federal Award Years: 2021 through 2023) ADMINISTRATION ADMINISTRATION FOR FAMILIES AND CHILDREN (ADFAN, BY ITS SPANISH ACRONYM) COMPLIANCE REQUIREMENT ALLOWABLE COSTS/COSTS PRINCIPLES // CASH MANAGEMENT TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS CRITERIA Uniform Guidance at 2 CFR 200 §200.302, Financial Management, establishes that: “(a) Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (See § 200.450). (b) The recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337): … (6) Written procedures to implement the requirements of § 200.305. (7) Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.” STATEMENT OF CONDITION As part of our audit procedures, we verified the requirements for the written procedures policies, and we didn’t obtain by ADFAN the required documentation. This represents a scope limitation. QUESTIONED COSTS None. PERSPECTIVE INFORMATION This deficiency is a systemic problem that is related to lack of proper training, segregation of duties and written policies and procedures. STATEMENT OF CAUSE ADFAN has not established a work plan to maintain the written procedures policies required by the Uniform Guidance. POSSIBLE ASSERTED EFFECT The absence of written procedures may lead to inconsistent program implementation, unclear assignment of responsibilities, and inadequate oversight. This increases the risk of noncompliance with applicable regulations, inefficiencies in operations, and reduced effectiveness in achieving program objectives. IDENTIFICATION OF REPEAT FINDING No reported as prior audit finding. RECOMMENDATIONS We recommend that ADFAN develop, formalize, and implement comprehensive written procedures for the programs to comply with the Uniform Guidance. These procedures should clearly define roles and responsibilities, establish operational workflows, and include mechanisms for monitoring and compliance. Doing so will help ensure consistency in program execution, accountability, and alignment with regulatory and performance requirements.
FINDING REFERENCE NUMBER 2023-034 (See Finding Reference Number 2023-006) FEDERAL PROGRAMS (ALN – 93.556) MARYLEE ALLEN PROMOTING SAFE AND STABLE FAMILIES (ALN – 93.556) COVID-19 – MARYLEE ALLEN PROMOTING SAFE AND STABLE FAMILIES (ALN – 93.667) SOCIAL SERVICES BLOCK GRANT U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES AWARD NUMBERS 2101PRFPSS; 2101PRFPSC; 2101PRFPCV; 2202PRFPCV; 2203PRFPSS (Federal Award Years: 2021 through 2023) 2111PRSOSR; 2211PRSOSR (Federal Award Years: 2021 through 2023) ADMINISTRATION ADMINISTRATION FOR FAMILIES AND CHILDREN (ADFAN, BY ITS SPANISH ACRONYM) COMPLIANCE REQUIREMENT ALLOWABLE COSTS/COSTS PRINCIPLES // CASH MANAGEMENT TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS CRITERIA Uniform Guidance at 2 CFR 200 §200.302, Financial Management, establishes that: “(a) Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (See § 200.450). (b) The recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337): … (6) Written procedures to implement the requirements of § 200.305. (7) Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.” STATEMENT OF CONDITION As part of our audit procedures, we verified the requirements for the written procedures policies, and we didn’t obtain by ADFAN the required documentation. This represents a scope limitation. QUESTIONED COSTS None. PERSPECTIVE INFORMATION This deficiency is a systemic problem that is related to lack of proper training, segregation of duties and written policies and procedures. STATEMENT OF CAUSE ADFAN has not established a work plan to maintain the written procedures policies required by the Uniform Guidance. POSSIBLE ASSERTED EFFECT The absence of written procedures may lead to inconsistent program implementation, unclear assignment of responsibilities, and inadequate oversight. This increases the risk of noncompliance with applicable regulations, inefficiencies in operations, and reduced effectiveness in achieving program objectives. IDENTIFICATION OF REPEAT FINDING No reported as prior audit finding. RECOMMENDATIONS We recommend that ADFAN develop, formalize, and implement comprehensive written procedures for the programs to comply with the Uniform Guidance. These procedures should clearly define roles and responsibilities, establish operational workflows, and include mechanisms for monitoring and compliance. Doing so will help ensure consistency in program execution, accountability, and alignment with regulatory and performance requirements.
FINDING REFERENCE NUMBER 2023-034 (See Finding Reference Number 2023-006) FEDERAL PROGRAMS (ALN – 93.556) MARYLEE ALLEN PROMOTING SAFE AND STABLE FAMILIES (ALN – 93.556) COVID-19 – MARYLEE ALLEN PROMOTING SAFE AND STABLE FAMILIES (ALN – 93.667) SOCIAL SERVICES BLOCK GRANT U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES AWARD NUMBERS 2101PRFPSS; 2101PRFPSC; 2101PRFPCV; 2202PRFPCV; 2203PRFPSS (Federal Award Years: 2021 through 2023) 2111PRSOSR; 2211PRSOSR (Federal Award Years: 2021 through 2023) ADMINISTRATION ADMINISTRATION FOR FAMILIES AND CHILDREN (ADFAN, BY ITS SPANISH ACRONYM) COMPLIANCE REQUIREMENT ALLOWABLE COSTS/COSTS PRINCIPLES // CASH MANAGEMENT TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS CRITERIA Uniform Guidance at 2 CFR 200 §200.302, Financial Management, establishes that: “(a) Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (See § 200.450). (b) The recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337): … (6) Written procedures to implement the requirements of § 200.305. (7) Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award.” STATEMENT OF CONDITION As part of our audit procedures, we verified the requirements for the written procedures policies, and we didn’t obtain by ADFAN the required documentation. This represents a scope limitation. QUESTIONED COSTS None. PERSPECTIVE INFORMATION This deficiency is a systemic problem that is related to lack of proper training, segregation of duties and written policies and procedures. STATEMENT OF CAUSE ADFAN has not established a work plan to maintain the written procedures policies required by the Uniform Guidance. POSSIBLE ASSERTED EFFECT The absence of written procedures may lead to inconsistent program implementation, unclear assignment of responsibilities, and inadequate oversight. This increases the risk of noncompliance with applicable regulations, inefficiencies in operations, and reduced effectiveness in achieving program objectives. IDENTIFICATION OF REPEAT FINDING No reported as prior audit finding. RECOMMENDATIONS We recommend that ADFAN develop, formalize, and implement comprehensive written procedures for the programs to comply with the Uniform Guidance. These procedures should clearly define roles and responsibilities, establish operational workflows, and include mechanisms for monitoring and compliance. Doing so will help ensure consistency in program execution, accountability, and alignment with regulatory and performance requirements.
FINDING REFERENCE NUMBER 2023-035 (See Finding Reference Number 2023-007) FEDERAL PROGRAMS (ALN – 93.568) LOW-INCOME HOME ENERGY ASSISTANCE (ALN – 93.568) COVID-19 – LOW-INCOME HOME ENERGY ASSISTANCE U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES AWARD NUMBERS 2101PRLIEA; 2201PRLIEA; 2301PRLIEA; 2001PRLIEA; 2001PRE5C3 (Federal Award Years: 2020 through 2023) ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM) COMPLIANCE REQUIREMENT CASH MANAGEMENT TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS CRITERIA Uniform Guidance at 2 CFR 200.302, requires recipient's and subrecipient's financial management system must provide for the following: (3) maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation; (4) effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes. See § 200.303; and (6) written procedures to implement the requirements of § 200.305. 2 CFR 200.305, Federal Payments, establishes that: (a) payments for States are governed by Treasury-State Cash Management Improvement Act (CMIA) agreements and default procedures codified at 31 CFR part 205 and Treasury Financial Manual (TFM) 4A-2000, “Overall Disbursing Rules for All Federal Agencies”; (b) for recipients and subrecipients other than States, payment methods must minimize the time elapsing between the transfer of funds from the Federal agency or the pass-through entity and the disbursement of funds by the recipient or subrecipient regardless of whether the payment is made by electronic funds transfer or by other means. See § 200.302(b)(6). Except as noted in this part, the Federal agency must require recipients to use only OMB-approved, government-wide information collections to request payment. STATEMENT OF CONDITION As part of our understanding of internal controls and compliance regarding cash management, we obtained a procedures manual. We found the following deficiencies: 1. The effective date is April 2024. 2. In the section describing the LIHEAP process, the US Department of Agriculture is mentioned instead of the US Department of Health and Human Services. 3. It does not identify the personnel responsible for the processes to establish segregation of duties. 4. In our interviews it was noted that only one person is in charge of all drawdowns, and no proper supervision or review of the documentation is performed. In addition, a detail of the requests related to the program was obtained; however, this request information does not reconcile with the revenue recognized in PRIFAS. The following deficiencies were identified: 1. The document includes amounts identified as LIHEAP, which belong to another Federal program, the Low-Income Household Water Assistance Program (ALN 93.499), in the amount of $4,590,528. 2. The amount of $306,483.12 is presented twice and is only recognized in PRIFAS once. 3. PRIFAS includes revenue of $3,900,000 related to the COVID-19 portion of funds, which is not included in the breakdown. From a population of fifty-seven (57) revenue transactions, six (6) transactions were selected to ensure that the correct amounts were requested from the Federal program and that the documents indicated in the manual were included with each petition. The following deficiencies were observed: 1. The documents included do not contain signatures from the personnel who perform each process. 2. The documentation included in the manual does not match the documentation included in the documents submitted with each petition. 3. In an emission of ARPA funding through LUMA, part of the documentation provided was document EMISM210, which stated that the authorized amount was $16,014,374. In a recap made in the document (not signed), the amount of $4,181 was adjusted in the petition, indicating that this amount was rejected by LUMA. In a letter from LUMA, they certified that the total cases reported were 327,499 for a total amount of $16,010,193. A detail of participants was provided, and the total was 327,498, although the benefits were $16,010,193. QUESTIONED COSTS No questioned costs identified. PERSPECTIVE INFORMATION This deficiency is a systemic problem, lack of proper training and updated information to all personnel with the responsibility of determining, supervising, and monitoring the eligibility determinations and follow-up. The sampling was a statistical valid sample. STATEMENT OF CAUSE ADSEF does not have a procedures manual that clearly establishes a segregation of duties, demonstrating compliance with the required internal control components. POSSIBLE ASSERTED EFFECT This is a systematic deficiency. IDENTIFICATION OF REPEAT FINDING No reported as prior audit finding. RECOMMENDATIONS We recommend that management establish a written internal controls process that demonstrates compliance with cash management requirements and appropriate segregation of duties.