Finding 2023-077: Various Federal Agencies* ALN #Various*, Research & Development Cluster Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.”. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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. Condition: Internal controls were not sufficient to ensure the University of Montana – Missoula (UM Missoula, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Additionally, UM Missoula could not provide information or documentation on the disposition of assets purchased with federal Research and Development funds once they were no longer needed. Questioned Costs: No questioned costs identified. Context: UM Missoula routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, UM Missoula spent approximately $4.88 million on these purchases. The assets purchased with these funds are added to a central listing at the university. Our testing found UM Missoula only completed a physical inventory at 91 of the 200 locations with assets during the audit period and at an additional 27 locations after the audit period ended. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We sampled 8 of the 106 equipment purchases over the capitalization threshold of $5,000 during the audit period. This was not a statistically valid sample. We identified four items that were untagged. The cost of these items ranged from $13,678 to $154,470. These items were primarily scientific equipment, for example, a chromatography system. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. UM Missoula also logged 32 assets acquired with federal funds as no longer needed and ready for disposal during the audit period. We selected a sample of four of these items to determine whether they had been disposed of appropriately in accordance with university policy and the terms and conditions of each grant award. While these items were fully depreciated on the accounting records, the assets were initially valued at $69,531 in total. This was not a statistically valid sample. University staff could not provide documentation related to the disposal or what the final disposition of the equipment was for any of the items selected. Additionally, attempts to locate the items during testing were unsuccessful. As a result, we cannot determine whether the university truly disposed of the assets, and followed federal regulations while doing so, or if the assets are still in service at an unknown location. Repeat Finding: Montana’s Single Audit report for the two fiscal years ended June 30, 2021, included a recommendation (#2021-034) to UM Missoula regarding tagging equipment. Effect: By not performing physical inventories or tagging capital assets, UM Missoula is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Additionally, the university is at risk of not following federal regulations related to asset disposal. Collectively, these issues could result in UM Missoula failing in their responsibilities as a steward of public resources. Cause: UM Missoula personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. UM Missoula staff also attributed the disposal issue to employee turnover. They had a staff member dedicated to performing and accounting for asset disposals. When that employee left the position, other employees stepped in, but asset disposals were not adequately tracked and accounted for without a staff member dedicated to overseeing the process. Recommendation: We recommend the University of Montana – Missoula: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-077: Various Federal Agencies* ALN #Various*, Research & Development Cluster Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.”. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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. Condition: Internal controls were not sufficient to ensure the University of Montana – Missoula (UM Missoula, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Additionally, UM Missoula could not provide information or documentation on the disposition of assets purchased with federal Research and Development funds once they were no longer needed. Questioned Costs: No questioned costs identified. Context: UM Missoula routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, UM Missoula spent approximately $4.88 million on these purchases. The assets purchased with these funds are added to a central listing at the university. Our testing found UM Missoula only completed a physical inventory at 91 of the 200 locations with assets during the audit period and at an additional 27 locations after the audit period ended. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We sampled 8 of the 106 equipment purchases over the capitalization threshold of $5,000 during the audit period. This was not a statistically valid sample. We identified four items that were untagged. The cost of these items ranged from $13,678 to $154,470. These items were primarily scientific equipment, for example, a chromatography system. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. UM Missoula also logged 32 assets acquired with federal funds as no longer needed and ready for disposal during the audit period. We selected a sample of four of these items to determine whether they had been disposed of appropriately in accordance with university policy and the terms and conditions of each grant award. While these items were fully depreciated on the accounting records, the assets were initially valued at $69,531 in total. This was not a statistically valid sample. University staff could not provide documentation related to the disposal or what the final disposition of the equipment was for any of the items selected. Additionally, attempts to locate the items during testing were unsuccessful. As a result, we cannot determine whether the university truly disposed of the assets, and followed federal regulations while doing so, or if the assets are still in service at an unknown location. Repeat Finding: Montana’s Single Audit report for the two fiscal years ended June 30, 2021, included a recommendation (#2021-034) to UM Missoula regarding tagging equipment. Effect: By not performing physical inventories or tagging capital assets, UM Missoula is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Additionally, the university is at risk of not following federal regulations related to asset disposal. Collectively, these issues could result in UM Missoula failing in their responsibilities as a steward of public resources. Cause: UM Missoula personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. UM Missoula staff also attributed the disposal issue to employee turnover. They had a staff member dedicated to performing and accounting for asset disposals. When that employee left the position, other employees stepped in, but asset disposals were not adequately tracked and accounted for without a staff member dedicated to overseeing the process. Recommendation: We recommend the University of Montana – Missoula: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-077: Various Federal Agencies* ALN #Various*, Research & Development Cluster Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.”. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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. Condition: Internal controls were not sufficient to ensure the University of Montana – Missoula (UM Missoula, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Additionally, UM Missoula could not provide information or documentation on the disposition of assets purchased with federal Research and Development funds once they were no longer needed. Questioned Costs: No questioned costs identified. Context: UM Missoula routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, UM Missoula spent approximately $4.88 million on these purchases. The assets purchased with these funds are added to a central listing at the university. Our testing found UM Missoula only completed a physical inventory at 91 of the 200 locations with assets during the audit period and at an additional 27 locations after the audit period ended. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We sampled 8 of the 106 equipment purchases over the capitalization threshold of $5,000 during the audit period. This was not a statistically valid sample. We identified four items that were untagged. The cost of these items ranged from $13,678 to $154,470. These items were primarily scientific equipment, for example, a chromatography system. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. UM Missoula also logged 32 assets acquired with federal funds as no longer needed and ready for disposal during the audit period. We selected a sample of four of these items to determine whether they had been disposed of appropriately in accordance with university policy and the terms and conditions of each grant award. While these items were fully depreciated on the accounting records, the assets were initially valued at $69,531 in total. This was not a statistically valid sample. University staff could not provide documentation related to the disposal or what the final disposition of the equipment was for any of the items selected. Additionally, attempts to locate the items during testing were unsuccessful. As a result, we cannot determine whether the university truly disposed of the assets, and followed federal regulations while doing so, or if the assets are still in service at an unknown location. Repeat Finding: Montana’s Single Audit report for the two fiscal years ended June 30, 2021, included a recommendation (#2021-034) to UM Missoula regarding tagging equipment. Effect: By not performing physical inventories or tagging capital assets, UM Missoula is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Additionally, the university is at risk of not following federal regulations related to asset disposal. Collectively, these issues could result in UM Missoula failing in their responsibilities as a steward of public resources. Cause: UM Missoula personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. UM Missoula staff also attributed the disposal issue to employee turnover. They had a staff member dedicated to performing and accounting for asset disposals. When that employee left the position, other employees stepped in, but asset disposals were not adequately tracked and accounted for without a staff member dedicated to overseeing the process. Recommendation: We recommend the University of Montana – Missoula: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-077: Various Federal Agencies* ALN #Various*, Research & Development Cluster Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.”. Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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. Condition: Internal controls were not sufficient to ensure the University of Montana – Missoula (UM Missoula, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Additionally, UM Missoula could not provide information or documentation on the disposition of assets purchased with federal Research and Development funds once they were no longer needed. Questioned Costs: No questioned costs identified. Context: UM Missoula routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, UM Missoula spent approximately $4.88 million on these purchases. The assets purchased with these funds are added to a central listing at the university. Our testing found UM Missoula only completed a physical inventory at 91 of the 200 locations with assets during the audit period and at an additional 27 locations after the audit period ended. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We sampled 8 of the 106 equipment purchases over the capitalization threshold of $5,000 during the audit period. This was not a statistically valid sample. We identified four items that were untagged. The cost of these items ranged from $13,678 to $154,470. These items were primarily scientific equipment, for example, a chromatography system. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. UM Missoula also logged 32 assets acquired with federal funds as no longer needed and ready for disposal during the audit period. We selected a sample of four of these items to determine whether they had been disposed of appropriately in accordance with university policy and the terms and conditions of each grant award. While these items were fully depreciated on the accounting records, the assets were initially valued at $69,531 in total. This was not a statistically valid sample. University staff could not provide documentation related to the disposal or what the final disposition of the equipment was for any of the items selected. Additionally, attempts to locate the items during testing were unsuccessful. As a result, we cannot determine whether the university truly disposed of the assets, and followed federal regulations while doing so, or if the assets are still in service at an unknown location. Repeat Finding: Montana’s Single Audit report for the two fiscal years ended June 30, 2021, included a recommendation (#2021-034) to UM Missoula regarding tagging equipment. Effect: By not performing physical inventories or tagging capital assets, UM Missoula is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Additionally, the university is at risk of not following federal regulations related to asset disposal. Collectively, these issues could result in UM Missoula failing in their responsibilities as a steward of public resources. Cause: UM Missoula personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. UM Missoula staff also attributed the disposal issue to employee turnover. They had a staff member dedicated to performing and accounting for asset disposals. When that employee left the position, other employees stepped in, but asset disposals were not adequately tracked and accounted for without a staff member dedicated to overseeing the process. Recommendation: We recommend the University of Montana – Missoula: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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. Condition: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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. Condition: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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. Condition: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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. Condition: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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. Condition: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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. Condition: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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. Condition: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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. Condition: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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. Condition: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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. Condition: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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. Condition: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-076: Various Federal Agencies* ALN #Various*, Research & Development Cluster (COVID-19) Grant #Not Applicable Criteria: Federal regulation, 2 CFR 200.302(b)(4), requires the non-federal entity’s financial management system to provide effective control over and accountability for all funds, property, and other assets. The non-federal entity must also adequately safeguard all assets and assure that they are used solely for authorized purposes. Federal regulation, 2 CFR 200.313(b), requires a state to use, manage, and dispose of equipment acquired under a Federal award by the state in accordance with state laws and procedures. Section 335(XIV), Montana Operations Manual (MOM policy) requires agencies to perform a complete physical inventory of all capital assets no less than every two years. MOM policy 335(V)(A)(3) requires agencies to identify all major equipment in a manner that promotes easy identification and requires property tags to be placed in plain sight on the equipment. While state policy does allow some discretion based on the physical nature of some equipment for situations where property tags may not be feasible, it does require that “whenever possible, the tag number will still be identified on the item by some means such as etching, decal, indelible ink, etc.” Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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. Condition: Internal controls were not sufficient to ensure Montana State University – Bozeman (MSU Bozeman, university) performed a complete physical inventory of equipment every two-year period or that equipment purchased with federal Research and Development funds were tagged as required by federal regulations and state policy during fiscal years 2022 and 2023. Questioned Costs: No questioned costs identified. Context: MSU Bozeman routinely purchases capital assets with federal Research and Development grant funds. During fiscal years 2022 and 2023, MSU Bozeman spent approximately $12.74 million on these purchases. The assets purchased with these funds are added to a central inventory listing at the university. Our testing found MSU Bozeman only inventoried 1,055 of their 4,551 assets during the audit period. We examined equipment purchases at the university to determine whether the assets were tagged and easily identifiable, as required by state policy. We selected 18 high dollar items from the asset listing. We identified four items that were untagged. The cost of these items ranged from $584,579 to $1,344,023. All of these items were scientific equipment, for example a mass spectrometer. For each of the untagged items identified, there were no property tags or other permanent identification affixed to the assets that corresponded to university property records. Additionally, the asset listing does not consistently have other identifiable information, such as serial numbers, for the items. As such, the assets were not easily identifiable as required by state policy, and we were unable to confirm the assets we observed were those purchased by the federal grant funds. For all items, we believe it was feasible to tag or label the assets. Effect: By not performing physical inventories or tagging capital assets, MSU Bozeman is not in compliance with federal requirements to use and manage equipment acquired under federal awards in accordance with state laws and policies. Cause: MSU Bozeman personnel cite staff turnover as the reason physical inventories could not be completed. The university attempted alternative procedures, but without dedicated staff overseeing the process, complete physical inventories and asset tagging could not be performed. While we agree staffing contributed to the noncompliance, even if there were adequate staff, the untagged items would make it difficult to complete a full inventory. Recommendation: We recommend Montana State University – Bozeman: A. Enhance internal controls to ensure compliance with the federal and state requirements governing equipment for the Research and Development Program, B. Perform a complete physical inventory of capital assets at least every two years, and C. Tag all capital assets when feasible. Views of Responsible Officials: The university concurs with this recommendation. For additional information regarding the university’s planned corrective action see the Corrective Action Plan starting on page D-1.
Finding 2023-002: U.S. Department of Agriculture ALN #10.542, Pandemic EBT Food Benefits (P-EBT) (COVID-19) Grant #Not Applicable ALN #10.551 and 10.561, Supplemental Nutrition Assistance Program Cluster (SNAP) Grant #Various Criteria: Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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. Condition: The Department of Public Health and Human Services (department) did not have sufficient internal controls in place to ensure accounting records for SNAP and P-EBT were accurate and adequate to trace expenditures to each federal program. Questioned Costs: No questioned costs identified. Context: The P-EBT program was established in 2021 in response to the pandemic. When the initial accounting for the program was set up, it was co-mingled with SNAP funds on the accounting records. The department made correcting entries to separate the activity between the P-EBT and SNAP programs. The initial error and subsequent corrections resulted in SEFA misstatements in fiscal years 2021 and 2022. This issue is discussed in finding 2023-11. While we did not identify any reportable errors related to the SEFA in fiscal year 2023, underlying accounting records contained multiple errors due to additional clean-up and numerous correcting entries. As a result of these accounting errors and adjustments, financial activity in both programs was also misstated in both years of the audit period. Our analysis of the P-EBT and SNAP activity involved a review of revenue and expenditure totals at the end of each fiscal years 2021, 2022, and 2023. We compared ending totals on the accounting records to amounts of benefits issued and settled from a separate system. We did not review the individual accounting transactions made throughout the year. As state accounting policy allows for prior year corrections, we considered the need for correcting entries as part of our analysis. Based on our analysis, we projected the cumulative errors remaining in each program. The table below summarizes these errors in revenue and expenditures at the end of fiscal year 2023. See the Schedule of Findings and Questioned Costs for chart/table. As a result of the initial co-mingled funds, the department is not in compliance with federal regulation 2 CFR 200.302 which in part requires the state’s financial management system be able to trace expenditures adequately and identify the source and application of funds for each federal program. Department personnel provided additional reports separate from the accounting records that allowed us to distinguish activity by program. Therefore, we do not consider this to be material noncompliance for either PEBT or SNAP. Effect: Without adequate internal control over the accounting for federal programs, the department is at risk of noncompliance with federal regulations. Additionally, since the state uses accounting records to compile the Schedule of Expenditures of Federal Awards (SEFA), corresponding misstatements on the SEFA could impact major federal program determinations. Misstating expenditures could also result in federal revenues drawn in advance of actual expenditures, which doesn’t follow federal regulations for reimbursement grants. Cause: Per the department, the initial accounting for P-EBT was not set up correctly and was co-mingled with SNAP due to limited award guidance received. Additionally, the original pandemic-related budget authority was initially insufficient to cover actual issuances and redemptions under the program, resulting in the department using SNAP budget authority until additional P-EBT authorization was obtained. As part of clean-up and corrections for this activity, numerous journal entries were made, resulting in additional errors. Recommendation: We recommend the Department of Public Health and Human Services enhance internal controls to ensure accounting records accurately reflect the financial activity of a federal program. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department disagrees with our position that they were not in compliance with 2 CFR 200.302, as they tracked activity by program in a separate system. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence, however, since the system used to track program activity was not the state’s financial management system, it is our position that the department’s internal controls are not adequate to ensure compliance with 2 CFR 200.302. As such, our recommendation stands.
Finding 2023-002: U.S. Department of Agriculture ALN #10.542, Pandemic EBT Food Benefits (P-EBT) (COVID-19) Grant #Not Applicable ALN #10.551 and 10.561, Supplemental Nutrition Assistance Program Cluster (SNAP) Grant #Various Criteria: Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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. Condition: The Department of Public Health and Human Services (department) did not have sufficient internal controls in place to ensure accounting records for SNAP and P-EBT were accurate and adequate to trace expenditures to each federal program. Questioned Costs: No questioned costs identified. Context: The P-EBT program was established in 2021 in response to the pandemic. When the initial accounting for the program was set up, it was co-mingled with SNAP funds on the accounting records. The department made correcting entries to separate the activity between the P-EBT and SNAP programs. The initial error and subsequent corrections resulted in SEFA misstatements in fiscal years 2021 and 2022. This issue is discussed in finding 2023-11. While we did not identify any reportable errors related to the SEFA in fiscal year 2023, underlying accounting records contained multiple errors due to additional clean-up and numerous correcting entries. As a result of these accounting errors and adjustments, financial activity in both programs was also misstated in both years of the audit period. Our analysis of the P-EBT and SNAP activity involved a review of revenue and expenditure totals at the end of each fiscal years 2021, 2022, and 2023. We compared ending totals on the accounting records to amounts of benefits issued and settled from a separate system. We did not review the individual accounting transactions made throughout the year. As state accounting policy allows for prior year corrections, we considered the need for correcting entries as part of our analysis. Based on our analysis, we projected the cumulative errors remaining in each program. The table below summarizes these errors in revenue and expenditures at the end of fiscal year 2023. See the Schedule of Findings and Questioned Costs for chart/table. As a result of the initial co-mingled funds, the department is not in compliance with federal regulation 2 CFR 200.302 which in part requires the state’s financial management system be able to trace expenditures adequately and identify the source and application of funds for each federal program. Department personnel provided additional reports separate from the accounting records that allowed us to distinguish activity by program. Therefore, we do not consider this to be material noncompliance for either PEBT or SNAP. Effect: Without adequate internal control over the accounting for federal programs, the department is at risk of noncompliance with federal regulations. Additionally, since the state uses accounting records to compile the Schedule of Expenditures of Federal Awards (SEFA), corresponding misstatements on the SEFA could impact major federal program determinations. Misstating expenditures could also result in federal revenues drawn in advance of actual expenditures, which doesn’t follow federal regulations for reimbursement grants. Cause: Per the department, the initial accounting for P-EBT was not set up correctly and was co-mingled with SNAP due to limited award guidance received. Additionally, the original pandemic-related budget authority was initially insufficient to cover actual issuances and redemptions under the program, resulting in the department using SNAP budget authority until additional P-EBT authorization was obtained. As part of clean-up and corrections for this activity, numerous journal entries were made, resulting in additional errors. Recommendation: We recommend the Department of Public Health and Human Services enhance internal controls to ensure accounting records accurately reflect the financial activity of a federal program. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department disagrees with our position that they were not in compliance with 2 CFR 200.302, as they tracked activity by program in a separate system. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence, however, since the system used to track program activity was not the state’s financial management system, it is our position that the department’s internal controls are not adequate to ensure compliance with 2 CFR 200.302. As such, our recommendation stands.
Finding 2023-002: U.S. Department of Agriculture ALN #10.542, Pandemic EBT Food Benefits (P-EBT) (COVID-19) Grant #Not Applicable ALN #10.551 and 10.561, Supplemental Nutrition Assistance Program Cluster (SNAP) Grant #Various Criteria: Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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. Condition: The Department of Public Health and Human Services (department) did not have sufficient internal controls in place to ensure accounting records for SNAP and P-EBT were accurate and adequate to trace expenditures to each federal program. Questioned Costs: No questioned costs identified. Context: The P-EBT program was established in 2021 in response to the pandemic. When the initial accounting for the program was set up, it was co-mingled with SNAP funds on the accounting records. The department made correcting entries to separate the activity between the P-EBT and SNAP programs. The initial error and subsequent corrections resulted in SEFA misstatements in fiscal years 2021 and 2022. This issue is discussed in finding 2023-11. While we did not identify any reportable errors related to the SEFA in fiscal year 2023, underlying accounting records contained multiple errors due to additional clean-up and numerous correcting entries. As a result of these accounting errors and adjustments, financial activity in both programs was also misstated in both years of the audit period. Our analysis of the P-EBT and SNAP activity involved a review of revenue and expenditure totals at the end of each fiscal years 2021, 2022, and 2023. We compared ending totals on the accounting records to amounts of benefits issued and settled from a separate system. We did not review the individual accounting transactions made throughout the year. As state accounting policy allows for prior year corrections, we considered the need for correcting entries as part of our analysis. Based on our analysis, we projected the cumulative errors remaining in each program. The table below summarizes these errors in revenue and expenditures at the end of fiscal year 2023. See the Schedule of Findings and Questioned Costs for chart/table. As a result of the initial co-mingled funds, the department is not in compliance with federal regulation 2 CFR 200.302 which in part requires the state’s financial management system be able to trace expenditures adequately and identify the source and application of funds for each federal program. Department personnel provided additional reports separate from the accounting records that allowed us to distinguish activity by program. Therefore, we do not consider this to be material noncompliance for either PEBT or SNAP. Effect: Without adequate internal control over the accounting for federal programs, the department is at risk of noncompliance with federal regulations. Additionally, since the state uses accounting records to compile the Schedule of Expenditures of Federal Awards (SEFA), corresponding misstatements on the SEFA could impact major federal program determinations. Misstating expenditures could also result in federal revenues drawn in advance of actual expenditures, which doesn’t follow federal regulations for reimbursement grants. Cause: Per the department, the initial accounting for P-EBT was not set up correctly and was co-mingled with SNAP due to limited award guidance received. Additionally, the original pandemic-related budget authority was initially insufficient to cover actual issuances and redemptions under the program, resulting in the department using SNAP budget authority until additional P-EBT authorization was obtained. As part of clean-up and corrections for this activity, numerous journal entries were made, resulting in additional errors. Recommendation: We recommend the Department of Public Health and Human Services enhance internal controls to ensure accounting records accurately reflect the financial activity of a federal program. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department disagrees with our position that they were not in compliance with 2 CFR 200.302, as they tracked activity by program in a separate system. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence, however, since the system used to track program activity was not the state’s financial management system, it is our position that the department’s internal controls are not adequate to ensure compliance with 2 CFR 200.302. As such, our recommendation stands.
Finding 2023-002: U.S. Department of Agriculture ALN #10.542, Pandemic EBT Food Benefits (P-EBT) (COVID-19) Grant #Not Applicable ALN #10.551 and 10.561, Supplemental Nutrition Assistance Program Cluster (SNAP) Grant #Various Criteria: Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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. Condition: The Department of Public Health and Human Services (department) did not have sufficient internal controls in place to ensure accounting records for SNAP and P-EBT were accurate and adequate to trace expenditures to each federal program. Questioned Costs: No questioned costs identified. Context: The P-EBT program was established in 2021 in response to the pandemic. When the initial accounting for the program was set up, it was co-mingled with SNAP funds on the accounting records. The department made correcting entries to separate the activity between the P-EBT and SNAP programs. The initial error and subsequent corrections resulted in SEFA misstatements in fiscal years 2021 and 2022. This issue is discussed in finding 2023-11. While we did not identify any reportable errors related to the SEFA in fiscal year 2023, underlying accounting records contained multiple errors due to additional clean-up and numerous correcting entries. As a result of these accounting errors and adjustments, financial activity in both programs was also misstated in both years of the audit period. Our analysis of the P-EBT and SNAP activity involved a review of revenue and expenditure totals at the end of each fiscal years 2021, 2022, and 2023. We compared ending totals on the accounting records to amounts of benefits issued and settled from a separate system. We did not review the individual accounting transactions made throughout the year. As state accounting policy allows for prior year corrections, we considered the need for correcting entries as part of our analysis. Based on our analysis, we projected the cumulative errors remaining in each program. The table below summarizes these errors in revenue and expenditures at the end of fiscal year 2023. See the Schedule of Findings and Questioned Costs for chart/table. As a result of the initial co-mingled funds, the department is not in compliance with federal regulation 2 CFR 200.302 which in part requires the state’s financial management system be able to trace expenditures adequately and identify the source and application of funds for each federal program. Department personnel provided additional reports separate from the accounting records that allowed us to distinguish activity by program. Therefore, we do not consider this to be material noncompliance for either PEBT or SNAP. Effect: Without adequate internal control over the accounting for federal programs, the department is at risk of noncompliance with federal regulations. Additionally, since the state uses accounting records to compile the Schedule of Expenditures of Federal Awards (SEFA), corresponding misstatements on the SEFA could impact major federal program determinations. Misstating expenditures could also result in federal revenues drawn in advance of actual expenditures, which doesn’t follow federal regulations for reimbursement grants. Cause: Per the department, the initial accounting for P-EBT was not set up correctly and was co-mingled with SNAP due to limited award guidance received. Additionally, the original pandemic-related budget authority was initially insufficient to cover actual issuances and redemptions under the program, resulting in the department using SNAP budget authority until additional P-EBT authorization was obtained. As part of clean-up and corrections for this activity, numerous journal entries were made, resulting in additional errors. Recommendation: We recommend the Department of Public Health and Human Services enhance internal controls to ensure accounting records accurately reflect the financial activity of a federal program. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department disagrees with our position that they were not in compliance with 2 CFR 200.302, as they tracked activity by program in a separate system. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence, however, since the system used to track program activity was not the state’s financial management system, it is our position that the department’s internal controls are not adequate to ensure compliance with 2 CFR 200.302. As such, our recommendation stands.
Finding 2023-002: U.S. Department of Agriculture ALN #10.542, Pandemic EBT Food Benefits (P-EBT) (COVID-19) Grant #Not Applicable ALN #10.551 and 10.561, Supplemental Nutrition Assistance Program Cluster (SNAP) Grant #Various Criteria: Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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. Condition: The Department of Public Health and Human Services (department) did not have sufficient internal controls in place to ensure accounting records for SNAP and P-EBT were accurate and adequate to trace expenditures to each federal program. Questioned Costs: No questioned costs identified. Context: The P-EBT program was established in 2021 in response to the pandemic. When the initial accounting for the program was set up, it was co-mingled with SNAP funds on the accounting records. The department made correcting entries to separate the activity between the P-EBT and SNAP programs. The initial error and subsequent corrections resulted in SEFA misstatements in fiscal years 2021 and 2022. This issue is discussed in finding 2023-11. While we did not identify any reportable errors related to the SEFA in fiscal year 2023, underlying accounting records contained multiple errors due to additional clean-up and numerous correcting entries. As a result of these accounting errors and adjustments, financial activity in both programs was also misstated in both years of the audit period. Our analysis of the P-EBT and SNAP activity involved a review of revenue and expenditure totals at the end of each fiscal years 2021, 2022, and 2023. We compared ending totals on the accounting records to amounts of benefits issued and settled from a separate system. We did not review the individual accounting transactions made throughout the year. As state accounting policy allows for prior year corrections, we considered the need for correcting entries as part of our analysis. Based on our analysis, we projected the cumulative errors remaining in each program. The table below summarizes these errors in revenue and expenditures at the end of fiscal year 2023. See the Schedule of Findings and Questioned Costs for chart/table. As a result of the initial co-mingled funds, the department is not in compliance with federal regulation 2 CFR 200.302 which in part requires the state’s financial management system be able to trace expenditures adequately and identify the source and application of funds for each federal program. Department personnel provided additional reports separate from the accounting records that allowed us to distinguish activity by program. Therefore, we do not consider this to be material noncompliance for either PEBT or SNAP. Effect: Without adequate internal control over the accounting for federal programs, the department is at risk of noncompliance with federal regulations. Additionally, since the state uses accounting records to compile the Schedule of Expenditures of Federal Awards (SEFA), corresponding misstatements on the SEFA could impact major federal program determinations. Misstating expenditures could also result in federal revenues drawn in advance of actual expenditures, which doesn’t follow federal regulations for reimbursement grants. Cause: Per the department, the initial accounting for P-EBT was not set up correctly and was co-mingled with SNAP due to limited award guidance received. Additionally, the original pandemic-related budget authority was initially insufficient to cover actual issuances and redemptions under the program, resulting in the department using SNAP budget authority until additional P-EBT authorization was obtained. As part of clean-up and corrections for this activity, numerous journal entries were made, resulting in additional errors. Recommendation: We recommend the Department of Public Health and Human Services enhance internal controls to ensure accounting records accurately reflect the financial activity of a federal program. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department disagrees with our position that they were not in compliance with 2 CFR 200.302, as they tracked activity by program in a separate system. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence, however, since the system used to track program activity was not the state’s financial management system, it is our position that the department’s internal controls are not adequate to ensure compliance with 2 CFR 200.302. As such, our recommendation stands.
Finding 2023-002: U.S. Department of Agriculture ALN #10.542, Pandemic EBT Food Benefits (P-EBT) (COVID-19) Grant #Not Applicable ALN #10.551 and 10.561, Supplemental Nutrition Assistance Program Cluster (SNAP) Grant #Various Criteria: Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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. Condition: The Department of Public Health and Human Services (department) did not have sufficient internal controls in place to ensure accounting records for SNAP and P-EBT were accurate and adequate to trace expenditures to each federal program. Questioned Costs: No questioned costs identified. Context: The P-EBT program was established in 2021 in response to the pandemic. When the initial accounting for the program was set up, it was co-mingled with SNAP funds on the accounting records. The department made correcting entries to separate the activity between the P-EBT and SNAP programs. The initial error and subsequent corrections resulted in SEFA misstatements in fiscal years 2021 and 2022. This issue is discussed in finding 2023-11. While we did not identify any reportable errors related to the SEFA in fiscal year 2023, underlying accounting records contained multiple errors due to additional clean-up and numerous correcting entries. As a result of these accounting errors and adjustments, financial activity in both programs was also misstated in both years of the audit period. Our analysis of the P-EBT and SNAP activity involved a review of revenue and expenditure totals at the end of each fiscal years 2021, 2022, and 2023. We compared ending totals on the accounting records to amounts of benefits issued and settled from a separate system. We did not review the individual accounting transactions made throughout the year. As state accounting policy allows for prior year corrections, we considered the need for correcting entries as part of our analysis. Based on our analysis, we projected the cumulative errors remaining in each program. The table below summarizes these errors in revenue and expenditures at the end of fiscal year 2023. See the Schedule of Findings and Questioned Costs for chart/table. As a result of the initial co-mingled funds, the department is not in compliance with federal regulation 2 CFR 200.302 which in part requires the state’s financial management system be able to trace expenditures adequately and identify the source and application of funds for each federal program. Department personnel provided additional reports separate from the accounting records that allowed us to distinguish activity by program. Therefore, we do not consider this to be material noncompliance for either PEBT or SNAP. Effect: Without adequate internal control over the accounting for federal programs, the department is at risk of noncompliance with federal regulations. Additionally, since the state uses accounting records to compile the Schedule of Expenditures of Federal Awards (SEFA), corresponding misstatements on the SEFA could impact major federal program determinations. Misstating expenditures could also result in federal revenues drawn in advance of actual expenditures, which doesn’t follow federal regulations for reimbursement grants. Cause: Per the department, the initial accounting for P-EBT was not set up correctly and was co-mingled with SNAP due to limited award guidance received. Additionally, the original pandemic-related budget authority was initially insufficient to cover actual issuances and redemptions under the program, resulting in the department using SNAP budget authority until additional P-EBT authorization was obtained. As part of clean-up and corrections for this activity, numerous journal entries were made, resulting in additional errors. Recommendation: We recommend the Department of Public Health and Human Services enhance internal controls to ensure accounting records accurately reflect the financial activity of a federal program. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department disagrees with our position that they were not in compliance with 2 CFR 200.302, as they tracked activity by program in a separate system. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence, however, since the system used to track program activity was not the state’s financial management system, it is our position that the department’s internal controls are not adequate to ensure compliance with 2 CFR 200.302. As such, our recommendation stands.
Finding 2023-002: U.S. Department of Agriculture ALN #10.542, Pandemic EBT Food Benefits (P-EBT) (COVID-19) Grant #Not Applicable ALN #10.551 and 10.561, Supplemental Nutrition Assistance Program Cluster (SNAP) Grant #Various Criteria: Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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. Condition: The Department of Public Health and Human Services (department) did not have sufficient internal controls in place to ensure accounting records for SNAP and P-EBT were accurate and adequate to trace expenditures to each federal program. Questioned Costs: No questioned costs identified. Context: The P-EBT program was established in 2021 in response to the pandemic. When the initial accounting for the program was set up, it was co-mingled with SNAP funds on the accounting records. The department made correcting entries to separate the activity between the P-EBT and SNAP programs. The initial error and subsequent corrections resulted in SEFA misstatements in fiscal years 2021 and 2022. This issue is discussed in finding 2023-11. While we did not identify any reportable errors related to the SEFA in fiscal year 2023, underlying accounting records contained multiple errors due to additional clean-up and numerous correcting entries. As a result of these accounting errors and adjustments, financial activity in both programs was also misstated in both years of the audit period. Our analysis of the P-EBT and SNAP activity involved a review of revenue and expenditure totals at the end of each fiscal years 2021, 2022, and 2023. We compared ending totals on the accounting records to amounts of benefits issued and settled from a separate system. We did not review the individual accounting transactions made throughout the year. As state accounting policy allows for prior year corrections, we considered the need for correcting entries as part of our analysis. Based on our analysis, we projected the cumulative errors remaining in each program. The table below summarizes these errors in revenue and expenditures at the end of fiscal year 2023. See the Schedule of Findings and Questioned Costs for chart/table. As a result of the initial co-mingled funds, the department is not in compliance with federal regulation 2 CFR 200.302 which in part requires the state’s financial management system be able to trace expenditures adequately and identify the source and application of funds for each federal program. Department personnel provided additional reports separate from the accounting records that allowed us to distinguish activity by program. Therefore, we do not consider this to be material noncompliance for either PEBT or SNAP. Effect: Without adequate internal control over the accounting for federal programs, the department is at risk of noncompliance with federal regulations. Additionally, since the state uses accounting records to compile the Schedule of Expenditures of Federal Awards (SEFA), corresponding misstatements on the SEFA could impact major federal program determinations. Misstating expenditures could also result in federal revenues drawn in advance of actual expenditures, which doesn’t follow federal regulations for reimbursement grants. Cause: Per the department, the initial accounting for P-EBT was not set up correctly and was co-mingled with SNAP due to limited award guidance received. Additionally, the original pandemic-related budget authority was initially insufficient to cover actual issuances and redemptions under the program, resulting in the department using SNAP budget authority until additional P-EBT authorization was obtained. As part of clean-up and corrections for this activity, numerous journal entries were made, resulting in additional errors. Recommendation: We recommend the Department of Public Health and Human Services enhance internal controls to ensure accounting records accurately reflect the financial activity of a federal program. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department disagrees with our position that they were not in compliance with 2 CFR 200.302, as they tracked activity by program in a separate system. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence, however, since the system used to track program activity was not the state’s financial management system, it is our position that the department’s internal controls are not adequate to ensure compliance with 2 CFR 200.302. As such, our recommendation stands.
Finding 2023-002: U.S. Department of Agriculture ALN #10.542, Pandemic EBT Food Benefits (P-EBT) (COVID-19) Grant #Not Applicable ALN #10.551 and 10.561, Supplemental Nutrition Assistance Program Cluster (SNAP) Grant #Various Criteria: Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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. Condition: The Department of Public Health and Human Services (department) did not have sufficient internal controls in place to ensure accounting records for SNAP and P-EBT were accurate and adequate to trace expenditures to each federal program. Questioned Costs: No questioned costs identified. Context: The P-EBT program was established in 2021 in response to the pandemic. When the initial accounting for the program was set up, it was co-mingled with SNAP funds on the accounting records. The department made correcting entries to separate the activity between the P-EBT and SNAP programs. The initial error and subsequent corrections resulted in SEFA misstatements in fiscal years 2021 and 2022. This issue is discussed in finding 2023-11. While we did not identify any reportable errors related to the SEFA in fiscal year 2023, underlying accounting records contained multiple errors due to additional clean-up and numerous correcting entries. As a result of these accounting errors and adjustments, financial activity in both programs was also misstated in both years of the audit period. Our analysis of the P-EBT and SNAP activity involved a review of revenue and expenditure totals at the end of each fiscal years 2021, 2022, and 2023. We compared ending totals on the accounting records to amounts of benefits issued and settled from a separate system. We did not review the individual accounting transactions made throughout the year. As state accounting policy allows for prior year corrections, we considered the need for correcting entries as part of our analysis. Based on our analysis, we projected the cumulative errors remaining in each program. The table below summarizes these errors in revenue and expenditures at the end of fiscal year 2023. See the Schedule of Findings and Questioned Costs for chart/table. As a result of the initial co-mingled funds, the department is not in compliance with federal regulation 2 CFR 200.302 which in part requires the state’s financial management system be able to trace expenditures adequately and identify the source and application of funds for each federal program. Department personnel provided additional reports separate from the accounting records that allowed us to distinguish activity by program. Therefore, we do not consider this to be material noncompliance for either PEBT or SNAP. Effect: Without adequate internal control over the accounting for federal programs, the department is at risk of noncompliance with federal regulations. Additionally, since the state uses accounting records to compile the Schedule of Expenditures of Federal Awards (SEFA), corresponding misstatements on the SEFA could impact major federal program determinations. Misstating expenditures could also result in federal revenues drawn in advance of actual expenditures, which doesn’t follow federal regulations for reimbursement grants. Cause: Per the department, the initial accounting for P-EBT was not set up correctly and was co-mingled with SNAP due to limited award guidance received. Additionally, the original pandemic-related budget authority was initially insufficient to cover actual issuances and redemptions under the program, resulting in the department using SNAP budget authority until additional P-EBT authorization was obtained. As part of clean-up and corrections for this activity, numerous journal entries were made, resulting in additional errors. Recommendation: We recommend the Department of Public Health and Human Services enhance internal controls to ensure accounting records accurately reflect the financial activity of a federal program. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department disagrees with our position that they were not in compliance with 2 CFR 200.302, as they tracked activity by program in a separate system. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence, however, since the system used to track program activity was not the state’s financial management system, it is our position that the department’s internal controls are not adequate to ensure compliance with 2 CFR 200.302. As such, our recommendation stands.
Finding 2023-002: U.S. Department of Agriculture ALN #10.542, Pandemic EBT Food Benefits (P-EBT) (COVID-19) Grant #Not Applicable ALN #10.551 and 10.561, Supplemental Nutrition Assistance Program Cluster (SNAP) Grant #Various Criteria: Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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. Condition: The Department of Public Health and Human Services (department) did not have sufficient internal controls in place to ensure accounting records for SNAP and P-EBT were accurate and adequate to trace expenditures to each federal program. Questioned Costs: No questioned costs identified. Context: The P-EBT program was established in 2021 in response to the pandemic. When the initial accounting for the program was set up, it was co-mingled with SNAP funds on the accounting records. The department made correcting entries to separate the activity between the P-EBT and SNAP programs. The initial error and subsequent corrections resulted in SEFA misstatements in fiscal years 2021 and 2022. This issue is discussed in finding 2023-11. While we did not identify any reportable errors related to the SEFA in fiscal year 2023, underlying accounting records contained multiple errors due to additional clean-up and numerous correcting entries. As a result of these accounting errors and adjustments, financial activity in both programs was also misstated in both years of the audit period. Our analysis of the P-EBT and SNAP activity involved a review of revenue and expenditure totals at the end of each fiscal years 2021, 2022, and 2023. We compared ending totals on the accounting records to amounts of benefits issued and settled from a separate system. We did not review the individual accounting transactions made throughout the year. As state accounting policy allows for prior year corrections, we considered the need for correcting entries as part of our analysis. Based on our analysis, we projected the cumulative errors remaining in each program. The table below summarizes these errors in revenue and expenditures at the end of fiscal year 2023. See the Schedule of Findings and Questioned Costs for chart/table. As a result of the initial co-mingled funds, the department is not in compliance with federal regulation 2 CFR 200.302 which in part requires the state’s financial management system be able to trace expenditures adequately and identify the source and application of funds for each federal program. Department personnel provided additional reports separate from the accounting records that allowed us to distinguish activity by program. Therefore, we do not consider this to be material noncompliance for either PEBT or SNAP. Effect: Without adequate internal control over the accounting for federal programs, the department is at risk of noncompliance with federal regulations. Additionally, since the state uses accounting records to compile the Schedule of Expenditures of Federal Awards (SEFA), corresponding misstatements on the SEFA could impact major federal program determinations. Misstating expenditures could also result in federal revenues drawn in advance of actual expenditures, which doesn’t follow federal regulations for reimbursement grants. Cause: Per the department, the initial accounting for P-EBT was not set up correctly and was co-mingled with SNAP due to limited award guidance received. Additionally, the original pandemic-related budget authority was initially insufficient to cover actual issuances and redemptions under the program, resulting in the department using SNAP budget authority until additional P-EBT authorization was obtained. As part of clean-up and corrections for this activity, numerous journal entries were made, resulting in additional errors. Recommendation: We recommend the Department of Public Health and Human Services enhance internal controls to ensure accounting records accurately reflect the financial activity of a federal program. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department disagrees with our position that they were not in compliance with 2 CFR 200.302, as they tracked activity by program in a separate system. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence, however, since the system used to track program activity was not the state’s financial management system, it is our position that the department’s internal controls are not adequate to ensure compliance with 2 CFR 200.302. As such, our recommendation stands.
Finding 2023-002: U.S. Department of Agriculture ALN #10.542, Pandemic EBT Food Benefits (P-EBT) (COVID-19) Grant #Not Applicable ALN #10.551 and 10.561, Supplemental Nutrition Assistance Program Cluster (SNAP) Grant #Various Criteria: Federal regulation, 2 CFR 200.303, requires non-Federal entities to, among other things, 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. Condition: The Department of Public Health and Human Services (department) did not have sufficient internal controls in place to ensure accounting records for SNAP and P-EBT were accurate and adequate to trace expenditures to each federal program. Questioned Costs: No questioned costs identified. Context: The P-EBT program was established in 2021 in response to the pandemic. When the initial accounting for the program was set up, it was co-mingled with SNAP funds on the accounting records. The department made correcting entries to separate the activity between the P-EBT and SNAP programs. The initial error and subsequent corrections resulted in SEFA misstatements in fiscal years 2021 and 2022. This issue is discussed in finding 2023-11. While we did not identify any reportable errors related to the SEFA in fiscal year 2023, underlying accounting records contained multiple errors due to additional clean-up and numerous correcting entries. As a result of these accounting errors and adjustments, financial activity in both programs was also misstated in both years of the audit period. Our analysis of the P-EBT and SNAP activity involved a review of revenue and expenditure totals at the end of each fiscal years 2021, 2022, and 2023. We compared ending totals on the accounting records to amounts of benefits issued and settled from a separate system. We did not review the individual accounting transactions made throughout the year. As state accounting policy allows for prior year corrections, we considered the need for correcting entries as part of our analysis. Based on our analysis, we projected the cumulative errors remaining in each program. The table below summarizes these errors in revenue and expenditures at the end of fiscal year 2023. See the Schedule of Findings and Questioned Costs for chart/table. As a result of the initial co-mingled funds, the department is not in compliance with federal regulation 2 CFR 200.302 which in part requires the state’s financial management system be able to trace expenditures adequately and identify the source and application of funds for each federal program. Department personnel provided additional reports separate from the accounting records that allowed us to distinguish activity by program. Therefore, we do not consider this to be material noncompliance for either PEBT or SNAP. Effect: Without adequate internal control over the accounting for federal programs, the department is at risk of noncompliance with federal regulations. Additionally, since the state uses accounting records to compile the Schedule of Expenditures of Federal Awards (SEFA), corresponding misstatements on the SEFA could impact major federal program determinations. Misstating expenditures could also result in federal revenues drawn in advance of actual expenditures, which doesn’t follow federal regulations for reimbursement grants. Cause: Per the department, the initial accounting for P-EBT was not set up correctly and was co-mingled with SNAP due to limited award guidance received. Additionally, the original pandemic-related budget authority was initially insufficient to cover actual issuances and redemptions under the program, resulting in the department using SNAP budget authority until additional P-EBT authorization was obtained. As part of clean-up and corrections for this activity, numerous journal entries were made, resulting in additional errors. Recommendation: We recommend the Department of Public Health and Human Services enhance internal controls to ensure accounting records accurately reflect the financial activity of a federal program. Views of Responsible Officials: The department conditionally concurs with this recommendation. The department disagrees with our position that they were not in compliance with 2 CFR 200.302, as they tracked activity by program in a separate system. Rebuttal of Views of Responsible Officials: We considered the department’s conditional concurrence, however, since the system used to track program activity was not the state’s financial management system, it is our position that the department’s internal controls are not adequate to ensure compliance with 2 CFR 200.302. As such, our recommendation stands.
Uniform Guidance 2 CFR 200.302 requires districts must ensure that expenditures are charged to the proper budget accounts and that a system is in place to prevent over budgeted expenditures.
Uniform Guidance 2 CFR 200.302 requires districts must ensure that expenditures are charged to the proper budget accounts and that a system is in place to prevent over budgeted expenditures.
Uniform Guidance 2 CFR 200.302 requires districts must ensure that expenditures are charged to the proper budget accounts and that a system is in place to prevent over budgeted expenditures.
Uniform Guidance 2 CFR 200.302 requires districts must ensure that expenditures are charged to the proper budget accounts and that a system is in place to prevent over budgeted expenditures.
1. Site Claim Reporting Finding Number: 2023-002 Assistance Listing Number and Title: AL # 10.555/10.553 Child Nutrition Cluster Federal Award Identification Number / Year: 2023 Federal Agency: U.S. Department of Agriculture Compliance Requirement: Reporting Pass-Through Entity: Ohio Department of Education and Workforce Repeat Finding from Prior Audit? No Noncompliance and Material Weakness 2 CFR § 400.1 gives regulatory effect to the Department of Agriculture for 2 CFR §200.302(b)(3) which provides that the financial management system of each non-Federal entity must provide for records that identify adequately the source and application of funds for federally- funded activities. These records must contain information pertaining to federal awards, authorizations, obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. 2 CFR § 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 7 CFR §§ 210.7(c), 210.8(c), and 225.9(d)) provide that at a minimum, a claim must include the number of reimbursable meals/milk served by category and type during the period (generally a month) covered by the claim. All meals claimed for reimbursement must (a) be of types authorized by the school food authority’s, institution’s, or sponsor’s administering agency; (b) be served to eligible children; and (c) be supported by accurate meal counts and records indicating the number of meals served by category and type. 20% percent of the site claim form submissions during fiscal year 2023 did not agree to underlying supporting documentation. These inaccurate submissions resulted in an under-reimbursement of $6,047. The School District contacted the Ohio Department of Education and Workforce in April 2024 and were granted a One-Time-Exception for the one month's underreporting of $6,275. These errors occurred due to a weakness in internal controls, which failed to ensure site claim forms for reimbursable meals served at each building and submitted by the Center to the Ohio Department of Education were entered correctly. The School District should implement policies and procedures to help ensure that monthly site claim forms are reviewed and submitted to reflect actual counts for reimbursable meals served. Further, measures should be taken to ensure staff completing the site claim forms are adequately trained.
1. Site Claim Reporting Finding Number: 2023-002 Assistance Listing Number and Title: AL # 10.555/10.553 Child Nutrition Cluster Federal Award Identification Number / Year: 2023 Federal Agency: U.S. Department of Agriculture Compliance Requirement: Reporting Pass-Through Entity: Ohio Department of Education and Workforce Repeat Finding from Prior Audit? No Noncompliance and Material Weakness 2 CFR § 400.1 gives regulatory effect to the Department of Agriculture for 2 CFR §200.302(b)(3) which provides that the financial management system of each non-Federal entity must provide for records that identify adequately the source and application of funds for federally- funded activities. These records must contain information pertaining to federal awards, authorizations, obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. 2 CFR § 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 7 CFR §§ 210.7(c), 210.8(c), and 225.9(d)) provide that at a minimum, a claim must include the number of reimbursable meals/milk served by category and type during the period (generally a month) covered by the claim. All meals claimed for reimbursement must (a) be of types authorized by the school food authority’s, institution’s, or sponsor’s administering agency; (b) be served to eligible children; and (c) be supported by accurate meal counts and records indicating the number of meals served by category and type. 20% percent of the site claim form submissions during fiscal year 2023 did not agree to underlying supporting documentation. These inaccurate submissions resulted in an under-reimbursement of $6,047. The School District contacted the Ohio Department of Education and Workforce in April 2024 and were granted a One-Time-Exception for the one month's underreporting of $6,275. These errors occurred due to a weakness in internal controls, which failed to ensure site claim forms for reimbursable meals served at each building and submitted by the Center to the Ohio Department of Education were entered correctly. The School District should implement policies and procedures to help ensure that monthly site claim forms are reviewed and submitted to reflect actual counts for reimbursable meals served. Further, measures should be taken to ensure staff completing the site claim forms are adequately trained.
1. Site Claim Reporting Finding Number: 2023-002 Assistance Listing Number and Title: AL # 10.555/10.553 Child Nutrition Cluster Federal Award Identification Number / Year: 2023 Federal Agency: U.S. Department of Agriculture Compliance Requirement: Reporting Pass-Through Entity: Ohio Department of Education and Workforce Repeat Finding from Prior Audit? No Noncompliance and Material Weakness 2 CFR § 400.1 gives regulatory effect to the Department of Agriculture for 2 CFR §200.302(b)(3) which provides that the financial management system of each non-Federal entity must provide for records that identify adequately the source and application of funds for federally- funded activities. These records must contain information pertaining to federal awards, authorizations, obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. 2 CFR § 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 7 CFR §§ 210.7(c), 210.8(c), and 225.9(d)) provide that at a minimum, a claim must include the number of reimbursable meals/milk served by category and type during the period (generally a month) covered by the claim. All meals claimed for reimbursement must (a) be of types authorized by the school food authority’s, institution’s, or sponsor’s administering agency; (b) be served to eligible children; and (c) be supported by accurate meal counts and records indicating the number of meals served by category and type. 20% percent of the site claim form submissions during fiscal year 2023 did not agree to underlying supporting documentation. These inaccurate submissions resulted in an under-reimbursement of $6,047. The School District contacted the Ohio Department of Education and Workforce in April 2024 and were granted a One-Time-Exception for the one month's underreporting of $6,275. These errors occurred due to a weakness in internal controls, which failed to ensure site claim forms for reimbursable meals served at each building and submitted by the Center to the Ohio Department of Education were entered correctly. The School District should implement policies and procedures to help ensure that monthly site claim forms are reviewed and submitted to reflect actual counts for reimbursable meals served. Further, measures should be taken to ensure staff completing the site claim forms are adequately trained.
1. Site Claim Reporting Finding Number: 2023-002 Assistance Listing Number and Title: AL # 10.555/10.553 Child Nutrition Cluster Federal Award Identification Number / Year: 2023 Federal Agency: U.S. Department of Agriculture Compliance Requirement: Reporting Pass-Through Entity: Ohio Department of Education and Workforce Repeat Finding from Prior Audit? No Noncompliance and Material Weakness 2 CFR § 400.1 gives regulatory effect to the Department of Agriculture for 2 CFR §200.302(b)(3) which provides that the financial management system of each non-Federal entity must provide for records that identify adequately the source and application of funds for federally- funded activities. These records must contain information pertaining to federal awards, authorizations, obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. 2 CFR § 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 7 CFR §§ 210.7(c), 210.8(c), and 225.9(d)) provide that at a minimum, a claim must include the number of reimbursable meals/milk served by category and type during the period (generally a month) covered by the claim. All meals claimed for reimbursement must (a) be of types authorized by the school food authority’s, institution’s, or sponsor’s administering agency; (b) be served to eligible children; and (c) be supported by accurate meal counts and records indicating the number of meals served by category and type. 20% percent of the site claim form submissions during fiscal year 2023 did not agree to underlying supporting documentation. These inaccurate submissions resulted in an under-reimbursement of $6,047. The School District contacted the Ohio Department of Education and Workforce in April 2024 and were granted a One-Time-Exception for the one month's underreporting of $6,275. These errors occurred due to a weakness in internal controls, which failed to ensure site claim forms for reimbursable meals served at each building and submitted by the Center to the Ohio Department of Education were entered correctly. The School District should implement policies and procedures to help ensure that monthly site claim forms are reviewed and submitted to reflect actual counts for reimbursable meals served. Further, measures should be taken to ensure staff completing the site claim forms are adequately trained.
Finding 2023-001 – B. Allowable Costs Federal Agency: U.S. Department of Health and Human Services Passthrough Entity: N/A Assistance Listing Number and Federal Program: 93.829 Section 223 Demonstration Programs to Improve Community Mental Health Services Criteria: In accordance with 2 CFR part 200.302, the Association is required to maintain financial management systems to trace funds to expenditures to establish that funds have been used according to Federal statutes, regulations, and the terms and conditions of the Federal award. The financial management system must provide for records that identify adequately the source and application of funds for federally funded activities, among other conditions. The reporting of the federal expenditures should be supported by these records. Amounts may not be expended from project funds on an arbitrary basis. Additionally, in accordance with 2 CFR 200.430, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records, among other things, should support the distribution of the employee’s salary or wages among specific activities if the employee works on a Federal award and non-Federal award. Budget estimates do not qualify as support for charges to Federal awards. Statement of Condition: During the course of our audit, supporting detail for expenses allocated and charged to the grant was not available and could not be determined. Salaries and benefits charged to the grant were based on estimates of employees’ expected workload and client needs, and not supported by records that accurately reflected the work performed on the Federal program. Additionally, the de minimis indirect cost rate was not correctly calculated and applied. The indirect cost charged to the grant was based on the indirect cost obligated by the Notice of Award rather than by calculating the indirect cost from the modified total direct cost base. Statement Cause: This is the second year the Association received this type of grant funding, coupled with significant growth experienced by the Association, the accounting system and staff were not yet prepared to effectively adhere to the requirements of the grant. Supporting documentation is not available for employees’ actual time spent and charged to the grants. Statement of Effect: Without proper accounting of expenditures and support of salaries and wages, grant expenditures can be over or understated on the drawdown requests. This could result in noncompliance with grant agreements which could lead to adverse conditions with the grantors. Questioned Costs: No questioned costs were identified. Identification of Repeat Findings: 2022-001 Recommendations: Project codes or classes should be created within the accounting system, if available. This will allow for expenses to be properly segregated by grant or other funding. When expenses are properly segregated, the indirect cost can be properly calculated using the correct direct cost base. The Association should also implement that all employees submit personnel activity reports to provide documentation of their time allocated to the grant. Views of Responsible Official(s): The Association is in agreement with the finding and is continuing to expand their knowledge on grant expenditures and compliance as it relates to the new financial management software to aid in tracking grants. See corrective action plan.
Condition -The Municipality’s staff could not provide us with the officially prepared and certified reports that supported compliance with the filing or submission of reports and financial information, as required by federal award and regulatory agreements. Likewise, reconciliations were not provided between the information used to prepare the required and submitted reports with the formal information presented and accounted for in the official Municipality’s accounting system. Criteria - The state is required to make an accounting to FEMA of eligible costs. Similarly, the subrecipient must make an accounting to the state. In submitting the accounting, the entity is required to certify that reported costs were incurred in performance of eligible work, that the approved work was completed, that the project in in compliance with the provisions of the FEMA-State Agreement, all grants conditions were met, ant the provisions for that project were made in accordance with the applicable payment provisions. Also, as established in the 2 CFR Section 200.302 (a) of the Uniform Guidance, the non-Federal entity’s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. In addition, 2 CFR Section 200.403, states that otherwise authorized by statue, costs must be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity and be adequately documented. Cause - There is a lack of knowledge and training to the personnel assigned to the management and reports preparation, as required by this federal award. Additionally, the Municipality does not have an adequate monitoring and internal control regarding the activity, filing and custody of reports, as required by the federal awards and the pass-through entity, and in a way that documents and supports the compliance with reporting requirements. Effect - The program is exposed to not being in compliance with the Reporting Requirements as established in agreement. Also, the Municipality is exposed to the Grantor questioning the use of funds. Recommendation - We recommend that the staff or department in charge locate and document all required reports that were filed according to the requirements of the grant agreement, including the reconciliation thereof with the official Municipality’s accounting subsidiaries. Also, it is absolutely necessary for the Municipality to design, document, establish and provide the necessary and required training, including guidelines and procedures, to all personnel who work directly or indirectly with the management of these federal funds. Questioned Costs - None
Condition -The Municipality’s staff could not provide us with the officially prepared and certified reports that supported compliance with the filing or submission of reports and financial information, as required by federal award and regulatory agreements. Likewise, reconciliations were not provided between the information used to prepare the required and submitted reports with the formal information presented and accounted for in the official Municipality’s accounting system. Criteria - The state is required to make an accounting to FEMA of eligible costs. Similarly, the subrecipient must make an accounting to the state. In submitting the accounting, the entity is required to certify that reported costs were incurred in performance of eligible work, that the approved work was completed, that the project in in compliance with the provisions of the FEMA-State Agreement, all grants conditions were met, ant the provisions for that project were made in accordance with the applicable payment provisions. Also, as established in the 2 CFR Section 200.302 (a) of the Uniform Guidance, the non-Federal entity’s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. In addition, 2 CFR Section 200.403, states that otherwise authorized by statue, costs must be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity and be adequately documented. Cause - There is a lack of knowledge and training to the personnel assigned to the management and reports preparation, as required by this federal award. Additionally, the Municipality does not have an adequate monitoring and internal control regarding the activity, filing and custody of reports, as required by the federal awards and the pass-through entity, and in a way that documents and supports the compliance with reporting requirements. Effect - The program is exposed to not being in compliance with the Reporting Requirements as established in agreement. Also, the Municipality is exposed to the Grantor questioning the use of funds. Recommendation - We recommend that the staff or department in charge locate and document all required reports that were filed according to the requirements of the grant agreement, including the reconciliation thereof with the official Municipality’s accounting subsidiaries. Also, it is absolutely necessary for the Municipality to design, document, establish and provide the necessary and required training, including guidelines and procedures, to all personnel who work directly or indirectly with the management of these federal funds. Questioned Costs - None
Condition -The Municipality’s staff could not provide us with the officially prepared and certified reports that supported compliance with the filing or submission of reports and financial information, as required by federal award and regulatory agreements. Likewise, reconciliations were not provided between the information used to prepare the required and submitted reports with the formal information presented and accounted for in the official Municipality’s accounting system. Criteria - The state is required to make an accounting to FEMA of eligible costs. Similarly, the subrecipient must make an accounting to the state. In submitting the accounting, the entity is required to certify that reported costs were incurred in performance of eligible work, that the approved work was completed, that the project in in compliance with the provisions of the FEMA-State Agreement, all grants conditions were met, ant the provisions for that project were made in accordance with the applicable payment provisions. Also, as established in the 2 CFR Section 200.302 (a) of the Uniform Guidance, the non-Federal entity’s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. In addition, 2 CFR Section 200.403, states that otherwise authorized by statue, costs must be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity and be adequately documented. Cause - There is a lack of knowledge and training to the personnel assigned to the management and reports preparation, as required by this federal award. Additionally, the Municipality does not have an adequate monitoring and internal control regarding the activity, filing and custody of reports, as required by the federal awards and the pass-through entity, and in a way that documents and supports the compliance with reporting requirements. Effect - The program is exposed to not being in compliance with the Reporting Requirements as established in agreement. Also, the Municipality is exposed to the Grantor questioning the use of funds. Recommendation - We recommend that the staff or department in charge locate and document all required reports that were filed according to the requirements of the grant agreement, including the reconciliation thereof with the official Municipality’s accounting subsidiaries. Also, it is absolutely necessary for the Municipality to design, document, establish and provide the necessary and required training, including guidelines and procedures, to all personnel who work directly or indirectly with the management of these federal funds. Questioned Costs - None
Condition -The Municipality’s staff could not provide us with the officially prepared and certified reports that supported compliance with the filing or submission of reports and financial information, as required by federal award and regulatory agreements. Likewise, reconciliations were not provided between the information used to prepare the required and submitted reports with the formal information presented and accounted for in the official Municipality’s accounting system. Criteria - The state is required to make an accounting to FEMA of eligible costs. Similarly, the subrecipient must make an accounting to the state. In submitting the accounting, the entity is required to certify that reported costs were incurred in performance of eligible work, that the approved work was completed, that the project in in compliance with the provisions of the FEMA-State Agreement, all grants conditions were met, ant the provisions for that project were made in accordance with the applicable payment provisions. Also, as established in the 2 CFR Section 200.302 (a) of the Uniform Guidance, the non-Federal entity’s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. In addition, 2 CFR Section 200.403, states that otherwise authorized by statue, costs must be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity and be adequately documented. Cause - There is a lack of knowledge and training to the personnel assigned to the management and reports preparation, as required by this federal award. Additionally, the Municipality does not have an adequate monitoring and internal control regarding the activity, filing and custody of reports, as required by the federal awards and the pass-through entity, and in a way that documents and supports the compliance with reporting requirements. Effect - The program is exposed to not being in compliance with the Reporting Requirements as established in agreement. Also, the Municipality is exposed to the Grantor questioning the use of funds. Recommendation - We recommend that the staff or department in charge locate and document all required reports that were filed according to the requirements of the grant agreement, including the reconciliation thereof with the official Municipality’s accounting subsidiaries. Also, it is absolutely necessary for the Municipality to design, document, establish and provide the necessary and required training, including guidelines and procedures, to all personnel who work directly or indirectly with the management of these federal funds. Questioned Costs - None
FINDING 2023-002 Subject: COVID-19 - Education Stabilization Fund - Reporting Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425U Federal Award Number and Year (or Other Identifying Number): S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-003. Condition and Context The School Corporation was required to submit an annual data report to the Indiana Department of Education via JotForm, a form/report builder. Data to be submitted included, but was not limited to, current period expenditures, prior period expenditure, and expenditures per activity. During the audit period, the School Corporation submitted one ESSER I report, one ESSER II report, and one ESSER III report, for a total of three reports. The annual data reports were prepared by the Director of Grants and reviewed by the Chief Academic Officer; however, this process did not allow for the prevention, or detection and corrections, of errors prior to submission. Due to the lack of effective internal controls, one of the three annual data reports was not supported by the School Corporation's records. For the ESSER III report, which covered the period of July 1, 2021 to June 30, 2022, total expenses per the report were $6,026,425. However, the ledger had total expenses for the award, for that period, of $6,686,286. The lack of effective internal controls and noncompliance were isolated to the ESSER III 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: . . . INDIANA STATE BOARD OF ACCOUNTS 21 METROPOLITAN SCHOOL DISTRICT OF LAWRENCE TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (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." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporations 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, the ESSER III report was not supported by the School Corporation's 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 by 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 strengthen its policies and procedures to ensure all reports submitted on behalf of the Education Stabilization Fund program funds are accurate. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding 2023-002 - Source Documentation (Significant Deficiency) CFDA Title and Number: 20.513 (5310) Enhanced Mobility of Seniors and Individuals with Disabilities. Name of Federal Agency: Transit Services Program Cluster Internal Control over Compliance: Cash Management CFDA Title and Number: 20.509 (5311) CARES 5311 Operating Assistance. Formula Grants for Rural. Name of Federal Agency: Transit Services Program Cluster Internal Control over Compliance: Cash Management Criteria: 2 CFR Part 200.302(b)(1) The financial management system of each non-federal entity must provide for the following: Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. 200.302(b)(2) Accurate, current, and complete disclosure of the fi-nancial results of each Federal award or program in accordance with the reporting requirements set forth in 200.328 and 200.329. Condition: The District prepared reimbursement calculations according to an internally developed spreadsheet tool, rather than using amounts directly obtained from the general ledger and supporting documentation Cause: General ledger data used to prepare spreadsheets, then used to complete reimbursement requests added unnecessary complexity and potential for errors in the reimbursement and request and grant reporting process. Internal control procedures assuring accurate and timely review of reports and filing of the reimbursement re-quests were not designed or implemented. Effect or Potential Effect: The lack of effective internal control activities over financial reporting could allow for inadvertent errors, such as calculation errors, payments for unauthorized purposes, and result in improper grant accounting, reporting, and reimbursement. Questioned Cost: No Context: Internal disputes regarding grant reimbursement request procedures were evident. The weak or nonex-istent controls over the reimbursement request procedures created a potential for inaccurate, incomplete report-ing. Repeat of a Prior-Year Finding: Yes, Findings and Questioned Costs 2022-003 Recommendation: The District should continue to improve grant accounting efforts, and establish a more simplified and effective process for the review and approval of grant accounting and reimbursement requests. Additional training of management should occur to ensure they fully understand all compliance regulations and have the skills to assist in designing and implementing effective controls. Monitoring of the control procedures related to the grant accounting and reimbursement request should be performed regularly to ensure reports are filed accurately and timely. Information and communication regarding identified weaknesses and opportunities to improve the policies and procedures should occur among management and the individual performing the monitoring of the procedures. District's Response: The District’s Finance Manager and District Manager are working towards using general ledger reporting exclusively for reimbursement request reporting. General ledger activity became more timely as improvements were implemented based on prior year findings. Management acknowledges delays in that pro-cess that continued as a result, to some extent, of the use of the self-developed spreadsheet reports then used for completing grant reimbursement requests. Corrective Action Plan: The District’s Finance Manager will continue to make improvements in general ledg-er recording and reporting systems so that those reports can then be used without intermediary report methods to prepare reimbursement request forms. Review of the reimbursement requests will take place within data re-ports generated directly from the general ledger. The district will engage an individual or firm to ensure that the timing and overall processes related to grant reimbursement and reporting does not result in reporting errors or omissions. . Planned Implementation Date: September 30, 2024 Responsible Person: General Manager, Umpqua Public Transit District
Finding 2023-002 - Source Documentation (Significant Deficiency) CFDA Title and Number: 20.513 (5310) Enhanced Mobility of Seniors and Individuals with Disabilities. Name of Federal Agency: Transit Services Program Cluster Internal Control over Compliance: Cash Management CFDA Title and Number: 20.509 (5311) CARES 5311 Operating Assistance. Formula Grants for Rural. Name of Federal Agency: Transit Services Program Cluster Internal Control over Compliance: Cash Management Criteria: 2 CFR Part 200.302(b)(1) The financial management system of each non-federal entity must provide for the following: Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. 200.302(b)(2) Accurate, current, and complete disclosure of the fi-nancial results of each Federal award or program in accordance with the reporting requirements set forth in 200.328 and 200.329. Condition: The District prepared reimbursement calculations according to an internally developed spreadsheet tool, rather than using amounts directly obtained from the general ledger and supporting documentation Cause: General ledger data used to prepare spreadsheets, then used to complete reimbursement requests added unnecessary complexity and potential for errors in the reimbursement and request and grant reporting process. Internal control procedures assuring accurate and timely review of reports and filing of the reimbursement re-quests were not designed or implemented. Effect or Potential Effect: The lack of effective internal control activities over financial reporting could allow for inadvertent errors, such as calculation errors, payments for unauthorized purposes, and result in improper grant accounting, reporting, and reimbursement. Questioned Cost: No Context: Internal disputes regarding grant reimbursement request procedures were evident. The weak or nonex-istent controls over the reimbursement request procedures created a potential for inaccurate, incomplete report-ing. Repeat of a Prior-Year Finding: Yes, Findings and Questioned Costs 2022-003 Recommendation: The District should continue to improve grant accounting efforts, and establish a more simplified and effective process for the review and approval of grant accounting and reimbursement requests. Additional training of management should occur to ensure they fully understand all compliance regulations and have the skills to assist in designing and implementing effective controls. Monitoring of the control procedures related to the grant accounting and reimbursement request should be performed regularly to ensure reports are filed accurately and timely. Information and communication regarding identified weaknesses and opportunities to improve the policies and procedures should occur among management and the individual performing the monitoring of the procedures. District's Response: The District’s Finance Manager and District Manager are working towards using general ledger reporting exclusively for reimbursement request reporting. General ledger activity became more timely as improvements were implemented based on prior year findings. Management acknowledges delays in that pro-cess that continued as a result, to some extent, of the use of the self-developed spreadsheet reports then used for completing grant reimbursement requests. Corrective Action Plan: The District’s Finance Manager will continue to make improvements in general ledg-er recording and reporting systems so that those reports can then be used without intermediary report methods to prepare reimbursement request forms. Review of the reimbursement requests will take place within data re-ports generated directly from the general ledger. The district will engage an individual or firm to ensure that the timing and overall processes related to grant reimbursement and reporting does not result in reporting errors or omissions. . Planned Implementation Date: September 30, 2024 Responsible Person: General Manager, Umpqua Public Transit District
Finding 2023-002 - Source Documentation (Significant Deficiency) CFDA Title and Number: 20.513 (5310) Enhanced Mobility of Seniors and Individuals with Disabilities. Name of Federal Agency: Transit Services Program Cluster Internal Control over Compliance: Cash Management CFDA Title and Number: 20.509 (5311) CARES 5311 Operating Assistance. Formula Grants for Rural. Name of Federal Agency: Transit Services Program Cluster Internal Control over Compliance: Cash Management Criteria: 2 CFR Part 200.302(b)(1) The financial management system of each non-federal entity must provide for the following: Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. 200.302(b)(2) Accurate, current, and complete disclosure of the fi-nancial results of each Federal award or program in accordance with the reporting requirements set forth in 200.328 and 200.329. Condition: The District prepared reimbursement calculations according to an internally developed spreadsheet tool, rather than using amounts directly obtained from the general ledger and supporting documentation Cause: General ledger data used to prepare spreadsheets, then used to complete reimbursement requests added unnecessary complexity and potential for errors in the reimbursement and request and grant reporting process. Internal control procedures assuring accurate and timely review of reports and filing of the reimbursement re-quests were not designed or implemented. Effect or Potential Effect: The lack of effective internal control activities over financial reporting could allow for inadvertent errors, such as calculation errors, payments for unauthorized purposes, and result in improper grant accounting, reporting, and reimbursement. Questioned Cost: No Context: Internal disputes regarding grant reimbursement request procedures were evident. The weak or nonex-istent controls over the reimbursement request procedures created a potential for inaccurate, incomplete report-ing. Repeat of a Prior-Year Finding: Yes, Findings and Questioned Costs 2022-003 Recommendation: The District should continue to improve grant accounting efforts, and establish a more simplified and effective process for the review and approval of grant accounting and reimbursement requests. Additional training of management should occur to ensure they fully understand all compliance regulations and have the skills to assist in designing and implementing effective controls. Monitoring of the control procedures related to the grant accounting and reimbursement request should be performed regularly to ensure reports are filed accurately and timely. Information and communication regarding identified weaknesses and opportunities to improve the policies and procedures should occur among management and the individual performing the monitoring of the procedures. District's Response: The District’s Finance Manager and District Manager are working towards using general ledger reporting exclusively for reimbursement request reporting. General ledger activity became more timely as improvements were implemented based on prior year findings. Management acknowledges delays in that pro-cess that continued as a result, to some extent, of the use of the self-developed spreadsheet reports then used for completing grant reimbursement requests. Corrective Action Plan: The District’s Finance Manager will continue to make improvements in general ledg-er recording and reporting systems so that those reports can then be used without intermediary report methods to prepare reimbursement request forms. Review of the reimbursement requests will take place within data re-ports generated directly from the general ledger. The district will engage an individual or firm to ensure that the timing and overall processes related to grant reimbursement and reporting does not result in reporting errors or omissions. . Planned Implementation Date: September 30, 2024 Responsible Person: General Manager, Umpqua Public Transit District
Finding 2023-002 - Source Documentation (Significant Deficiency) CFDA Title and Number: 20.513 (5310) Enhanced Mobility of Seniors and Individuals with Disabilities. Name of Federal Agency: Transit Services Program Cluster Internal Control over Compliance: Cash Management CFDA Title and Number: 20.509 (5311) CARES 5311 Operating Assistance. Formula Grants for Rural. Name of Federal Agency: Transit Services Program Cluster Internal Control over Compliance: Cash Management Criteria: 2 CFR Part 200.302(b)(1) The financial management system of each non-federal entity must provide for the following: Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. 200.302(b)(2) Accurate, current, and complete disclosure of the fi-nancial results of each Federal award or program in accordance with the reporting requirements set forth in 200.328 and 200.329. Condition: The District prepared reimbursement calculations according to an internally developed spreadsheet tool, rather than using amounts directly obtained from the general ledger and supporting documentation Cause: General ledger data used to prepare spreadsheets, then used to complete reimbursement requests added unnecessary complexity and potential for errors in the reimbursement and request and grant reporting process. Internal control procedures assuring accurate and timely review of reports and filing of the reimbursement re-quests were not designed or implemented. Effect or Potential Effect: The lack of effective internal control activities over financial reporting could allow for inadvertent errors, such as calculation errors, payments for unauthorized purposes, and result in improper grant accounting, reporting, and reimbursement. Questioned Cost: No Context: Internal disputes regarding grant reimbursement request procedures were evident. The weak or nonex-istent controls over the reimbursement request procedures created a potential for inaccurate, incomplete report-ing. Repeat of a Prior-Year Finding: Yes, Findings and Questioned Costs 2022-003 Recommendation: The District should continue to improve grant accounting efforts, and establish a more simplified and effective process for the review and approval of grant accounting and reimbursement requests. Additional training of management should occur to ensure they fully understand all compliance regulations and have the skills to assist in designing and implementing effective controls. Monitoring of the control procedures related to the grant accounting and reimbursement request should be performed regularly to ensure reports are filed accurately and timely. Information and communication regarding identified weaknesses and opportunities to improve the policies and procedures should occur among management and the individual performing the monitoring of the procedures. District's Response: The District’s Finance Manager and District Manager are working towards using general ledger reporting exclusively for reimbursement request reporting. General ledger activity became more timely as improvements were implemented based on prior year findings. Management acknowledges delays in that pro-cess that continued as a result, to some extent, of the use of the self-developed spreadsheet reports then used for completing grant reimbursement requests. Corrective Action Plan: The District’s Finance Manager will continue to make improvements in general ledg-er recording and reporting systems so that those reports can then be used without intermediary report methods to prepare reimbursement request forms. Review of the reimbursement requests will take place within data re-ports generated directly from the general ledger. The district will engage an individual or firm to ensure that the timing and overall processes related to grant reimbursement and reporting does not result in reporting errors or omissions. . Planned Implementation Date: September 30, 2024 Responsible Person: General Manager, Umpqua Public Transit District
Finding 2023-002 - Source Documentation (Significant Deficiency) CFDA Title and Number: 20.513 (5310) Enhanced Mobility of Seniors and Individuals with Disabilities. Name of Federal Agency: Transit Services Program Cluster Internal Control over Compliance: Cash Management CFDA Title and Number: 20.509 (5311) CARES 5311 Operating Assistance. Formula Grants for Rural. Name of Federal Agency: Transit Services Program Cluster Internal Control over Compliance: Cash Management Criteria: 2 CFR Part 200.302(b)(1) The financial management system of each non-federal entity must provide for the following: Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. 200.302(b)(2) Accurate, current, and complete disclosure of the fi-nancial results of each Federal award or program in accordance with the reporting requirements set forth in 200.328 and 200.329. Condition: The District prepared reimbursement calculations according to an internally developed spreadsheet tool, rather than using amounts directly obtained from the general ledger and supporting documentation Cause: General ledger data used to prepare spreadsheets, then used to complete reimbursement requests added unnecessary complexity and potential for errors in the reimbursement and request and grant reporting process. Internal control procedures assuring accurate and timely review of reports and filing of the reimbursement re-quests were not designed or implemented. Effect or Potential Effect: The lack of effective internal control activities over financial reporting could allow for inadvertent errors, such as calculation errors, payments for unauthorized purposes, and result in improper grant accounting, reporting, and reimbursement. Questioned Cost: No Context: Internal disputes regarding grant reimbursement request procedures were evident. The weak or nonex-istent controls over the reimbursement request procedures created a potential for inaccurate, incomplete report-ing. Repeat of a Prior-Year Finding: Yes, Findings and Questioned Costs 2022-003 Recommendation: The District should continue to improve grant accounting efforts, and establish a more simplified and effective process for the review and approval of grant accounting and reimbursement requests. Additional training of management should occur to ensure they fully understand all compliance regulations and have the skills to assist in designing and implementing effective controls. Monitoring of the control procedures related to the grant accounting and reimbursement request should be performed regularly to ensure reports are filed accurately and timely. Information and communication regarding identified weaknesses and opportunities to improve the policies and procedures should occur among management and the individual performing the monitoring of the procedures. District's Response: The District’s Finance Manager and District Manager are working towards using general ledger reporting exclusively for reimbursement request reporting. General ledger activity became more timely as improvements were implemented based on prior year findings. Management acknowledges delays in that pro-cess that continued as a result, to some extent, of the use of the self-developed spreadsheet reports then used for completing grant reimbursement requests. Corrective Action Plan: The District’s Finance Manager will continue to make improvements in general ledg-er recording and reporting systems so that those reports can then be used without intermediary report methods to prepare reimbursement request forms. Review of the reimbursement requests will take place within data re-ports generated directly from the general ledger. The district will engage an individual or firm to ensure that the timing and overall processes related to grant reimbursement and reporting does not result in reporting errors or omissions. . Planned Implementation Date: September 30, 2024 Responsible Person: General Manager, Umpqua Public Transit District
Finding 2023-002 - Source Documentation (Significant Deficiency) CFDA Title and Number: 20.513 (5310) Enhanced Mobility of Seniors and Individuals with Disabilities. Name of Federal Agency: Transit Services Program Cluster Internal Control over Compliance: Cash Management CFDA Title and Number: 20.509 (5311) CARES 5311 Operating Assistance. Formula Grants for Rural. Name of Federal Agency: Transit Services Program Cluster Internal Control over Compliance: Cash Management Criteria: 2 CFR Part 200.302(b)(1) The financial management system of each non-federal entity must provide for the following: Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. 200.302(b)(2) Accurate, current, and complete disclosure of the fi-nancial results of each Federal award or program in accordance with the reporting requirements set forth in 200.328 and 200.329. Condition: The District prepared reimbursement calculations according to an internally developed spreadsheet tool, rather than using amounts directly obtained from the general ledger and supporting documentation Cause: General ledger data used to prepare spreadsheets, then used to complete reimbursement requests added unnecessary complexity and potential for errors in the reimbursement and request and grant reporting process. Internal control procedures assuring accurate and timely review of reports and filing of the reimbursement re-quests were not designed or implemented. Effect or Potential Effect: The lack of effective internal control activities over financial reporting could allow for inadvertent errors, such as calculation errors, payments for unauthorized purposes, and result in improper grant accounting, reporting, and reimbursement. Questioned Cost: No Context: Internal disputes regarding grant reimbursement request procedures were evident. The weak or nonex-istent controls over the reimbursement request procedures created a potential for inaccurate, incomplete report-ing. Repeat of a Prior-Year Finding: Yes, Findings and Questioned Costs 2022-003 Recommendation: The District should continue to improve grant accounting efforts, and establish a more simplified and effective process for the review and approval of grant accounting and reimbursement requests. Additional training of management should occur to ensure they fully understand all compliance regulations and have the skills to assist in designing and implementing effective controls. Monitoring of the control procedures related to the grant accounting and reimbursement request should be performed regularly to ensure reports are filed accurately and timely. Information and communication regarding identified weaknesses and opportunities to improve the policies and procedures should occur among management and the individual performing the monitoring of the procedures. District's Response: The District’s Finance Manager and District Manager are working towards using general ledger reporting exclusively for reimbursement request reporting. General ledger activity became more timely as improvements were implemented based on prior year findings. Management acknowledges delays in that pro-cess that continued as a result, to some extent, of the use of the self-developed spreadsheet reports then used for completing grant reimbursement requests. Corrective Action Plan: The District’s Finance Manager will continue to make improvements in general ledg-er recording and reporting systems so that those reports can then be used without intermediary report methods to prepare reimbursement request forms. Review of the reimbursement requests will take place within data re-ports generated directly from the general ledger. The district will engage an individual or firm to ensure that the timing and overall processes related to grant reimbursement and reporting does not result in reporting errors or omissions. . Planned Implementation Date: September 30, 2024 Responsible Person: General Manager, Umpqua Public Transit District
Finding 2023-002 - Source Documentation (Significant Deficiency) CFDA Title and Number: 20.513 (5310) Enhanced Mobility of Seniors and Individuals with Disabilities. Name of Federal Agency: Transit Services Program Cluster Internal Control over Compliance: Cash Management CFDA Title and Number: 20.509 (5311) CARES 5311 Operating Assistance. Formula Grants for Rural. Name of Federal Agency: Transit Services Program Cluster Internal Control over Compliance: Cash Management Criteria: 2 CFR Part 200.302(b)(1) The financial management system of each non-federal entity must provide for the following: Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. 200.302(b)(2) Accurate, current, and complete disclosure of the fi-nancial results of each Federal award or program in accordance with the reporting requirements set forth in 200.328 and 200.329. Condition: The District prepared reimbursement calculations according to an internally developed spreadsheet tool, rather than using amounts directly obtained from the general ledger and supporting documentation Cause: General ledger data used to prepare spreadsheets, then used to complete reimbursement requests added unnecessary complexity and potential for errors in the reimbursement and request and grant reporting process. Internal control procedures assuring accurate and timely review of reports and filing of the reimbursement re-quests were not designed or implemented. Effect or Potential Effect: The lack of effective internal control activities over financial reporting could allow for inadvertent errors, such as calculation errors, payments for unauthorized purposes, and result in improper grant accounting, reporting, and reimbursement. Questioned Cost: No Context: Internal disputes regarding grant reimbursement request procedures were evident. The weak or nonex-istent controls over the reimbursement request procedures created a potential for inaccurate, incomplete report-ing. Repeat of a Prior-Year Finding: Yes, Findings and Questioned Costs 2022-003 Recommendation: The District should continue to improve grant accounting efforts, and establish a more simplified and effective process for the review and approval of grant accounting and reimbursement requests. Additional training of management should occur to ensure they fully understand all compliance regulations and have the skills to assist in designing and implementing effective controls. Monitoring of the control procedures related to the grant accounting and reimbursement request should be performed regularly to ensure reports are filed accurately and timely. Information and communication regarding identified weaknesses and opportunities to improve the policies and procedures should occur among management and the individual performing the monitoring of the procedures. District's Response: The District’s Finance Manager and District Manager are working towards using general ledger reporting exclusively for reimbursement request reporting. General ledger activity became more timely as improvements were implemented based on prior year findings. Management acknowledges delays in that pro-cess that continued as a result, to some extent, of the use of the self-developed spreadsheet reports then used for completing grant reimbursement requests. Corrective Action Plan: The District’s Finance Manager will continue to make improvements in general ledg-er recording and reporting systems so that those reports can then be used without intermediary report methods to prepare reimbursement request forms. Review of the reimbursement requests will take place within data re-ports generated directly from the general ledger. The district will engage an individual or firm to ensure that the timing and overall processes related to grant reimbursement and reporting does not result in reporting errors or omissions. . Planned Implementation Date: September 30, 2024 Responsible Person: General Manager, Umpqua Public Transit District
Finding 2023-003 – Fiscal Management System (Material Weakness) Criteria: CFR Part 200.302.b Auditee Responsibilities includes the requirement that the financial management system of each non-Federal entity provide the following: Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Accurate, current, and complete disclosure of the financial results of each Federal award or program. Condition: The District prepared reimbursement calculations according to an internally developed spreadsheet tool, rather than using amounts directly obtained from the general ledger and supporting documentation. The reimbursement reports were to be reviewed by the District Manager prior to submission. Approval of the reimbursement requests and supporting reports by the District Manager were often delayed. Cause: General ledger data used to prepare spreadsheets, then used to complete reimbursement requests added unnecessary complexity and potential for errors in the reimbursement and request and grant reporting process. Internal control procedures assuring timely review of reports and filing of the reimbursement requests were not designed or implemented. Effect or Potential Effect: The lack of effective internal control activities over financial reporting could allow for inadvertent errors, such as calculation errors, payments for unauthorized purposes, and result in improper financial reporting. Lack of timely filing of reimbursement requests could result in overstating accounts receivable balances and critical revenues lost due to cutoff terms of the grant award. Questioned Cost: No Context: Delays in filing reimbursement claims and internal disputes regarding grant reimbursement request procedures were evident. The weak or nonexistent controls over the reimbursement request procedures resulted in lost revenues and delayed recognition of revenue, which required adjustments to correct the financial statements. Repeat of a Prior-Year Finding: Yes, Financial Statement Findings 2022-001 Recommendation: The District should establish a more simplified and effective process for the review and approval of GAAP basis reporting and grant reimbursement requests and grant reporting. As part of this process, supporting general ledger reports and supporting data should be subject to a qualified individual to review and approval on a timely basis. Monitoring of the control procedures related to the grant accounting and reimbursement request should be performed regularly to ensure reports are filed accurately and timely. Information and communication regarding identified weaknesses and opportunities to improve the policies and procedures should occur among management and the individual performing the monitoring of the procedures. District's Response: The District’s Finance Manager and District Manager are working towards using general ledger reporting exclusively for reimbursement request reporting. General ledger activity became more timely as improvements were implemented based on prior year findings. Management acknowledges delays in that process that continued as a result, to some extent, of the use of the self-developed spreadsheet reports then used for completing grant reimbursement requests. Corrective Action Plan: The District’s Finance Manager will continue to make improvements in general ledger recording and reporting systems so that those reports can then be used without intermediary report methods to prepare reimbursement request forms. Review of the reimbursement requests will take place within data reports generated directly from the general ledger. The district will engage an individual or firm to ensure that the timing and overall processes related to grant reimbursement and reporting does not result in reporting errors or omissions. Planned Implementation Date: September 30, 2024 Responsible Person: General Manager, Umpqua Public Transit District
Finding 2023-003 – Fiscal Management System (Material Weakness) Criteria: CFR Part 200.302.b Auditee Responsibilities includes the requirement that the financial management system of each non-Federal entity provide the following: Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Accurate, current, and complete disclosure of the financial results of each Federal award or program. Condition: The District prepared reimbursement calculations according to an internally developed spreadsheet tool, rather than using amounts directly obtained from the general ledger and supporting documentation. The reimbursement reports were to be reviewed by the District Manager prior to submission. Approval of the reimbursement requests and supporting reports by the District Manager were often delayed. Cause: General ledger data used to prepare spreadsheets, then used to complete reimbursement requests added unnecessary complexity and potential for errors in the reimbursement and request and grant reporting process. Internal control procedures assuring timely review of reports and filing of the reimbursement requests were not designed or implemented. Effect or Potential Effect: The lack of effective internal control activities over financial reporting could allow for inadvertent errors, such as calculation errors, payments for unauthorized purposes, and result in improper financial reporting. Lack of timely filing of reimbursement requests could result in overstating accounts receivable balances and critical revenues lost due to cutoff terms of the grant award. Questioned Cost: No Context: Delays in filing reimbursement claims and internal disputes regarding grant reimbursement request procedures were evident. The weak or nonexistent controls over the reimbursement request procedures resulted in lost revenues and delayed recognition of revenue, which required adjustments to correct the financial statements. Repeat of a Prior-Year Finding: Yes, Financial Statement Findings 2022-001 Recommendation: The District should establish a more simplified and effective process for the review and approval of GAAP basis reporting and grant reimbursement requests and grant reporting. As part of this process, supporting general ledger reports and supporting data should be subject to a qualified individual to review and approval on a timely basis. Monitoring of the control procedures related to the grant accounting and reimbursement request should be performed regularly to ensure reports are filed accurately and timely. Information and communication regarding identified weaknesses and opportunities to improve the policies and procedures should occur among management and the individual performing the monitoring of the procedures. District's Response: The District’s Finance Manager and District Manager are working towards using general ledger reporting exclusively for reimbursement request reporting. General ledger activity became more timely as improvements were implemented based on prior year findings. Management acknowledges delays in that process that continued as a result, to some extent, of the use of the self-developed spreadsheet reports then used for completing grant reimbursement requests. Corrective Action Plan: The District’s Finance Manager will continue to make improvements in general ledger recording and reporting systems so that those reports can then be used without intermediary report methods to prepare reimbursement request forms. Review of the reimbursement requests will take place within data reports generated directly from the general ledger. The district will engage an individual or firm to ensure that the timing and overall processes related to grant reimbursement and reporting does not result in reporting errors or omissions. Planned Implementation Date: September 30, 2024 Responsible Person: General Manager, Umpqua Public Transit District
Finding 2023-003 – Fiscal Management System (Material Weakness) Criteria: CFR Part 200.302.b Auditee Responsibilities includes the requirement that the financial management system of each non-Federal entity provide the following: Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Accurate, current, and complete disclosure of the financial results of each Federal award or program. Condition: The District prepared reimbursement calculations according to an internally developed spreadsheet tool, rather than using amounts directly obtained from the general ledger and supporting documentation. The reimbursement reports were to be reviewed by the District Manager prior to submission. Approval of the reimbursement requests and supporting reports by the District Manager were often delayed. Cause: General ledger data used to prepare spreadsheets, then used to complete reimbursement requests added unnecessary complexity and potential for errors in the reimbursement and request and grant reporting process. Internal control procedures assuring timely review of reports and filing of the reimbursement requests were not designed or implemented. Effect or Potential Effect: The lack of effective internal control activities over financial reporting could allow for inadvertent errors, such as calculation errors, payments for unauthorized purposes, and result in improper financial reporting. Lack of timely filing of reimbursement requests could result in overstating accounts receivable balances and critical revenues lost due to cutoff terms of the grant award. Questioned Cost: No Context: Delays in filing reimbursement claims and internal disputes regarding grant reimbursement request procedures were evident. The weak or nonexistent controls over the reimbursement request procedures resulted in lost revenues and delayed recognition of revenue, which required adjustments to correct the financial statements. Repeat of a Prior-Year Finding: Yes, Financial Statement Findings 2022-001 Recommendation: The District should establish a more simplified and effective process for the review and approval of GAAP basis reporting and grant reimbursement requests and grant reporting. As part of this process, supporting general ledger reports and supporting data should be subject to a qualified individual to review and approval on a timely basis. Monitoring of the control procedures related to the grant accounting and reimbursement request should be performed regularly to ensure reports are filed accurately and timely. Information and communication regarding identified weaknesses and opportunities to improve the policies and procedures should occur among management and the individual performing the monitoring of the procedures. District's Response: The District’s Finance Manager and District Manager are working towards using general ledger reporting exclusively for reimbursement request reporting. General ledger activity became more timely as improvements were implemented based on prior year findings. Management acknowledges delays in that process that continued as a result, to some extent, of the use of the self-developed spreadsheet reports then used for completing grant reimbursement requests. Corrective Action Plan: The District’s Finance Manager will continue to make improvements in general ledger recording and reporting systems so that those reports can then be used without intermediary report methods to prepare reimbursement request forms. Review of the reimbursement requests will take place within data reports generated directly from the general ledger. The district will engage an individual or firm to ensure that the timing and overall processes related to grant reimbursement and reporting does not result in reporting errors or omissions. Planned Implementation Date: September 30, 2024 Responsible Person: General Manager, Umpqua Public Transit District