2025-006 - Preparation of the Schedule of Expenditures of Federal Awards Finding Type: Material weakness in internal control over compliance. Criteria: The Uniform Guidance (2 CFR 200.302 and 2 CFR 200.510(b)) requires that non-Federal entities maintain records that adequately identify the source and application of Federal awards and prepare a Schedule of Expenditures of Federal Awards (SEFA) that is complete and accurate. Condition: The City did not prepare a Schedule of Expenditures of Federal Awards (SEFA) for the fiscal year ended June 30, 2025. A complete and accurate SEFA was prepared by the external auditor during the audit process. Cause: This condition is the result of the City’s lack of procedures and internal controls to identify, track, and report Federal award activity necessary to prepare the SEFA. Effect: As a result of this condition, the City did not maintain adequate internal control over compliance related to Federal reporting requirements and was not able to ensure that all Federal expenditures were identified and reported in accordance with Uniform Guidance. Recommendation: The City should implement procedures to identify and track Federal awards and expenditures and prepare a complete and accurate SEFA in accordance with Uniform Guidance requirements. Management Response: See Corrective Action Plan.
Reconciliations and Material Adjustments Condition: At the time of audit fieldwork, Community Council of Idaho had not reconciled and closed its grant and contract revenue accounts. As a result, Wipfli LLP proposed and management posted adjusting journal entries to grants receivabl and grant revenue. There were also entries to during the audit to correct property and equipment, pharmaceutical inventory, notes payable, depreciation expense, and interest expense. As Community Council of Idaho’s internal controls did not discover these adjustments prior to the audit, a material weakness exists in Community Council of Idaho’s internal controls over financial reporting. Community Council of Idaho also experienced delays in issuing the June 30, 2025, audited financial statements which were due March 31, 2026. Criteria: An accounting system should provide timely and accurate information for management. The reconciliation of account balances is an integral internal control activity to determine that stated account balances are accurately and fairly reported. Management should reconcile general ledger accounts to subsidiary ledgers and other supporting documents in a timely and effective manner. Federal Regulation 2 CFR 200.302(4) requires that an organization have…Effective control over, and accountability for, all funds, property, and other assets." Furthermore, Federal Regulation 2 CFR 200.512(a) requires audits be submitted nine months after the end of the audit period. Cause: During the audit year, Community Council of Idaho experienced turnover in its business office while preparing for the audit which contributed to the lack of adequate and timely closing procedures, account reconciliations, and review processes. Effect: A material weakness in internal control over financial reporting exists as a result of these matters. Auditor's Recommendations: Accounts should be reconciled monthly with the adjustments posted timely so that management is relying on accurate financial information to make decisions. We recommend management and those charged with governance evaluate the operation of the business office and implement adequate and timely closing procedures to ensure that financial statement amounts are being reconciled, reviewed, and adjusted in a timely manner. Clinic reporting systems and procedures should be evaluated and revised. View of Responsible Officials: Management agrees with the assessment and subsequent to year end, steps were taken to correct the matter.
Finding 2025-003 – Completeness of the Schedule of Expenditures of Federal Awards Criteria: Title 2 CFR 200.302(b)(2) of the Uniform Guidance requires nonfederal entities to maintain records that identify all federal awards received and expended and to ensure accurate, current, and complete reporting of expenditures for each federal program, including the SEFA. Condition: During our audit of the Schedule of Expenditures of Federal Awards (SEFA) for the year ended June 30, 2025, we noted the SEFA was incomplete and required adjustment. Specifically, expenditures for the following program were understated: ALN 14.228 – Community Development Block Grant/State Program and Non-Entitlement Grants in Hawaii: understated by $587,345 The SEFA was subsequently corrected by management. Effect: An incomplete or inaccurate SEFA may result in misstated federal expenditures, which could impact the identification of major programs and the scope of the Single Audit. As a result, noncompliance with federal requirements may not be identified or reported. Cause: Controls over the preparation and review of the SEFA were not operating effectively. The SEFA was not adequately reconciled to the general ledger, grant records, and supporting documentation prior to submission for audit. Recommendation: We recommend the Town strengthen SEFA preparation procedures by: Performing a detailed reconciliation of the SEFA to the general ledger and grant records Implementing a documented review process prior to submission for audit Ensuring all federal expenditures are supported and accurately reported Management’s Response: See Corrective Action Plan.
Criteria: Per 2 CFR 200.302(a) and 2 CFR 200.303, non-Federal entities must maintain adequate records supporting Federal program transactions and implement internal controls to ensure compliance. The OMB Compliance Supplement (2025), Part 4 – HHS, for the CCDF program requires documentation supporting eligibility determinations, including documentation to support applicable health and safety standards, and maintain compliance to remain eligible for payment. Condition: During testing, the Organization was unable to provide required eligibility documentation for four children, representing two unique families. In addition, two providers were noted who were deficient in meeting the health and safety requirements of the Program and were subsequently terminated as participating providers. Despite the termination status, these providers later received additional program payments. The Organization was unable to provide documentation demonstrating that the providers corrected deficiencies or were re-approved prior to receiving subsequent payments. Because supporting documentation was not retained, we could not determine whether the providers met requirements to resume participation. The Organization explained that eligibility and health and safety documentation historically resided within a system of record that has been transferred entirely to the State following a transition of the program’s administration to the State. The Organization no longer retains access to that system or copies of all documentation contained therein. Cause: As part of the transition of program responsibilities back to the State, the Organization returned program records and no longer retained access to the State-managed system that housed eligibility information. The Organization did not maintain its own copies of all eligibility or health and safety documentation needed to support future audits. Effect: The Organization cannot demonstrate compliance with Federal eligibility documentation requirements for the affected participants. In addition, the Organization could not demonstrate that payments totaling $34,018 were made to providers who met health and safety requirements of the Program at the time services were delivered. These costs are considered questioned due to lack of supporting documentation. Questioned Costs: $34,018 Recommendations: The Organization should establish procedures to ensure eligibility documentation is retained by the Organization, even when a third-party system serves as the primary repository. Future programs should include a documented record-retention plan ensuring audit-ready records remain accessible.
Condition – At the time of audit fieldwork, Project NOW, Inc. had not reconciled significant accounts such as grants receivable, accounts receivable, investments in partnerships, property and equipment, accounts payable, accrual accounts, long term debt and the corresponding revenue and expense accounts. In addition, Project NOW, Inc. did not properly record an acquisition of a business that occurred during the audit year. As a result, Wipfli, LLP proposed and management posted adjusting journal entries to the aforementioned accounts. Lastly, due to the lack of audit preparedness, the audit extended past the required nine-month deadline for submission. Due to Project NOW, Inc.’s lack of audit preparedness that led to a delinquent audit submission as well as the breakdown in internal controls surrounding reconciliation of accounts which led to multiple adjusting journal entries, a material weakness exists in Project NOW, Inc.’s internal controls over financial reporting. Criteria – Federal Regulation 2 CFR 200.302(4) requires that an organization have…Effective control over, and accountability for, all funds, property, and other assets. Cause – During the audit year, Project NOW, Inc. experienced turnover in its business office while preparing for the audit which contributed to the lack of adequate and timely closing procedures, account reconciliation's, and review processes. Effect – As a result of not reconciling and adjusting certain account balances, a material weakness exists in internal controls. Recommendation – We recommend management and those charged with governance evaluate the operation of the business office and implement adequate and timely closing procedures to ensure that financial statement amounts are being reconciled and adjusted appropriately which will lead to timely submission of the audited financial statements in the future. View of Responsible Officials – Management agrees with the assessment and has committed to a corrective action plan.
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 sufficiently identify the amount, source and expenditure of funds for federally-funded activities. These records must contain information necessary to identify federal awards, authorizations, obligations, unobligated balances, assets, expenditures, income and interest and must be supported by source documentation. 2 CFR § 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish, document and maintain effective 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/snacks served by category and type during the period (generally a month) covered by the claim. All meals/snacks 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/snack counts and records indicating the number of meals served by category and type. 100% percent of the site claim forms that were prepared by the Nutrition Group and provided to the Treasurer for submission during fiscal year 2025 were not reviewed for accuracy of information before submitting for reimbursement. During the first half of the fiscal year, the School District completed manual counts of snacks served. An over-reimbursement related to snacks in the amount of $179 in 1 month of the 2 months (50%) tested for compliance. This error occurred due to a weakness in internal controls which failed to ensure site claim forms for reimbursable meals and snacks served at each building and submitted 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 prepared and provided by the Nutrition Group are reviewed prior to submission to reflect actual counts for reimbursable meals and snacks served.
Program Titles: Reentry Employment Opportunities; Social Services Block Grant Assistance Listing Numbers: 17.270 and 93.667 Funding Agency’s: U.S. Department of Labor; Illinois Department of Human Services; City of Chicago Department of Family & Support Services Award Year: Reentry Employment Opportunities : 7/01/2023 – 12/31/2026 Social Services Block Grant: 7/1/2024 – 06/30/2025 Criteria or Specific Requirement – The Foundation is required to follow Uniform Guidance, which requires non federal entities to maintain effective internal controls and financial management systems to ensure compliance with cost principles (2 CFR §200.302(b)). Payroll and other expense costs allocated across multiple programs using employee time as the basis for allocation must be supported by documentation to substantiate the allocation (2 CFR §200.430). Condition – During testing of allowable costs, we identified shared payroll and other costs charged to federal programs for which adequate support for the cost allocation methodology was not maintained. Specifically, allocation schedules and underlying documentation supporting how payroll allocation percentages were determined were incomplete or unavailable. As a result, we were unable to conclude that all sampled costs were allocated to the federal programs in proportion to the relative benefit received. Cause – The Foundation transitioned to a new payroll system and did not retain allocation schedules before losing access to the prior system. Effect or potential effect – Inadequate documentation supporting cost allocations increases the risk that costs charged to federal programs may not be allocable in accordance with Uniform Guidance, potentially resulting in questioned costs or required repayment. Questioned Costs – Unknown. Context – Of the transactions tested, 20 out of 25 payroll and 18 of 25 non-payroll expense transactions for the Reentry Employment Opportunities program, and 16 out of 25 payroll transactions for the Social Services Block Grant program, lacked sufficient documentation supporting the allocation percentages applied. The sampling was not a statistically valid sample. Identification as a repeat finding – Not a repeat finding. Recommendation – We recommend that management maintain appropriate documentation to support cost allocations when using employee time as the basis for allocation. Views of responsible officials and planned corrective actions – Management agrees with the finding. The issue resulted from a system conversion and transition between payroll providers. Moving forward, management will ensure that appropriate documentation is consistently maintained and retained to support all payroll-related transactions.
Item 2025-007 - Cash Management - U.S. Department of Health and Human Services, Health Center Program Cluster (Assistance Listing Number 93.224/93.527) Notice of Award Number 6 H80CS00505-23-04, 6 H2ECS45602-02-04, 1 H8LCS50772-01-00 and 6 H8HCS46163-03-01 - (Significant Deficiency) Criteria: Non-federal entities other than states are required to have internal controls in place to ensure compliance with the requirements of cash management that are contained in 2 CFR sections 200.302(b)(6) and 200,305, 31 CFR Part 205, 48 CFR sections 52.216-7(b) and 52.232-12. Statement of Condition: During our audit, we noted that there is no evidence of review and approval of drawdowns from the Health Center Program Cluster and the supporting records. Cause: LBUCC does not have a policy in place requiring the review and approval of drawdowns from the Health Center Program Cluster to be documented. Effect: Failure to document review and approval of drawdowns may result in unauthorized or incorrect drawdowns from the Health Center Program Cluster. Questioned Costs: None. Context: Although there is no evidence of review and approval of the drawdowns, the amounts of all 8 sample drawdowns tested agreed to the underlying records and supporting documents. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: We recommend that LBUCC implement a policy that requires all drawdowns and supporting documents to be reviewed and that such review and approval be documented. Management Response: Management agrees with the finding and will implement these steps to ensure compliance with the federal cost principles, strengthen internal controls, and reduce the risk of questioned costs.
CFDA Number: 93.224 Federal Program or Cluster: Health Center Program Cluster Grantor Agency: U.S. Department of Health and Human Services Federal Award Identification: H8FCS41177 Compliance Requirements: Cash Management Type of Finding: Noncompliance/Material Weakness in Internal Control over Compliance Questioned Costs: None Criteria: Per 2 CFR Part 200, Section 200.305, Federal payment, "payment methods must minimize the time elapsing between the transfer of funds from the Federal agency...and the disbursement of funds by the recipient… 2 CFR Part 200, Section 200.302(b)(6) also requires written procedures to implement the requirements of Section 200.305. Per HHS Grant Policy Statement: “In accordance with Dept of Treasury regulations, you must draw federal cash only for your immediate needs. At the time of draw down, you will certify you will not hold cash beyond three working days… Do not request cash to cover unliquidated encumbrances, obligation, or accrued expenditures until payment is pending”. Condition: On June 30, 2024, the Organization drew the remaining H8F funds of $1,253,464, and recorded this amount as a credit to a balance sheet account, indicating these were unspent or unearned grant funds. Throughout the year ended May 31, 2025, as expenditures were made, the Organization recorded debits to this balance sheet account, crediting a grant revenue account. The Organization's internal controls over compliance failed to prevent, or detect and correct, this noncompliance. Cause: Organization personnel were not aware of the cash management compliance requirement with respect to this federal award. The Organization's previous CEO retired approximately May 31, 2024. Per inquiry of the Organizaton's CFO, their understanding was that the deadline to obligate for this federal award was December 31, 2024, and the deadline to expend or liquidate was December 31, 2026, and they were spreading it out to what they thought was the deadline. Effect or Potential Effect: By drawing federal award funds prior to expenditure, the Organization did not comply with the requirements of 2 CFR Part 200, Section 200.305, Federal payment and of the HHS Grants Policy Statement. Context: Draws for this Federal award were taken in July, 2024 for $1,270,464. We requested supporting detail of the $1,270,464 expenditures made during the year for this Federal award as reported in the Schedule of Expenditures of Federal Awards. We received a spreadsheet that contained a list of 26 descriptions and amounts, but no transactional detail such as check numbers, check dates, payee, invoice number, invoice date, etc. After determining the check numbers and check dates for 9 of the 26 items in the spreadsheet, we noted that disburesments for 8 of those 9 occurred more than 3 days after the date the draw, with 2 disbursements made more than 5 months after the date of the draw. Repeat Finding? No Recommendation: We recommend that the Organization provide grants management training to all its financial staff and management covering the Uniform Guidance/OMB Guidance for Federal Financial Assistance. We also recommend that the Organization develop and implement policies and procedures that ensure grant funds are drawn at the time of, or following, expenditures for allowable costs by the Organization. These policies and procedures should include that, for each draw from a Federal award, 1) detailed documentation of the expenditures for which the grant funds are being drawn is prepared prior requesting the draw, including transactional details such as vendor, invoice number, invoice amount, check number, check date, payee, and check amount; 2) that the documentation supporting the draw is reviewed and approved by a member of management (other than the person who prepares the documentation) prior to requesting the draw, and 3) that the documentation supported each draw is maintained as part of the Organization's accounting records. Views of Responsible Officials: We agree with the finding. We have never received proper training. See Corrective Action Plan for Reference 2025-005.
CFDA Number: 93.224 Federal Program or Cluster: Health Center Program Cluster Grantor Agency: U.S. Department of Health and Human Services Federal Award Identification: H8FCS41177 Compliance Requirements: Reporting Type of Finding: Noncompliance/Material Weakness in Internal Control over Compliance Quiestioned Costs: None Criteria: 2 CFR Part 200, Section 200.302 Financial management requires that the Organization's financial management system must provide for the following: 1) Identification of all Federal awards received and expended and the Federal programs under which they were received..; and 2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in Sections 200.328 and 200.329. Section 200.328 Financial reporting states that the required financial reporting consists of the Federal Financial Report (SF-425). Condition: The SF-425 Federal Financial Report filed by the Organization for the H8FCS41177 Federal award reported that cash disbursements of $2,675,250, the total amount of the Federal award, had been made. However, $1,248,456 of those cash disbursements were determined during our audit to not be allowable due to not being obligated and/or liquidated by the period of performance deadlines. The cash disbursements reported on the SF-425 were not readily determinable from the Organization's general ledger accounts. Cause: Organization personnel were not aware of the period of performance with respect to this federal award. The Organization's previous CEO retired approximately May 31, 2024. Per inquiry of the Organizaton's CFO, their understanding was that the deadline to obligate for this federal award was December 31, 2024, and the deadline to expend or liquidate was December 31, 2026. The Organizaton's chart of accounts and general ledger do not include separate and distinct accounts or classes to which federal award expenditures are recorded. Effect or Potential Effect: The SF-425 Federal Financial Report filed by the Organization included cash disbursements of $1,248,456 that were not chargeable to the Federal award because they were not obligated before the period of performance end date and/or the payment was not made before the deadline to liquidate obligations. Context: We requested detail of expenditures for the Federal award and were provided with manual spreadsheets lacking all the transactional details needed. Information from the general ledger did not agree with cash disbursements reported on the SF-425. The general ledger information indicated $1,185,164 of the Federal award had not yet been disbursed at the time the SF-425 was filed. Repeat Finding: No Recommendation: We recommend that the Organization provide grants management training to all its financial staff and management covering the Uniform Guidance/OMB Guidance for Federal Financial Assistance. We also recommend that the Organization develop and implement policies and procedures for financial and performance report preparation to ensure information is supported by proper documentation and agrees with the general ledger. These policies and procedures should also include a requirement that all reports are reviewed by a member of management who is not involved in the preparation of the reports. Views of Responsible Officials: We agree with the finding. We have never received proper training. See Corrective Action Plan for Reference 2025-007.
2025-001: U.S. Department of Health and Human Services, National Institutes for Health Research and Development Cluster, Cancer Control, Assistance Listing #93.399; Lack of Required Written Policies Condition Montana Cancer Consortium (the Consortium) does not have written policies and procedures in place as required by 2 CFR § 200.302 and § 200.313. Specifically, the Consortium lacks documented policies for: • The timing of federal cash draws; • The allowability of costs charged to federal awards; and • Documentation of time-and-effort for personal services. Criteria 2 CFR § 200.302(b)(6)–(7) requires nonfederal entities to have written procedures for: (a) cash drawdowns and (b) determining cost allowability. § 200.305 requires written cash-management procedures that minimize the time between draw and disbursement. § 200.430 requires a written policy that is consistently applied to both federal and nonfederal activities for documentation of compensation for personal services. Context At the time of completion of the audit for the year ended May 31, 2025, the written policies were not in place. We noted that the policies were implemented on December 1, 2025, which was after the fiscal year under audit had ended. Cause The Consortium has not yet developed or adopted the required written policies due to limited administrative capacity and reliance on informal practices. Effect The absence of written policies increases the risk of noncompliance with federal requirements, mismanagement of federal funds, and audit findings in future periods. It may also impair the Consortium’s ability to consistently apply federal cost principles and properly safeguard assets. Recommendation We recommend that the Consortium develop and implement written policies and procedures that comply with the requirements of Uniform Guidance. Management Response See Corrective Action Plan.
2025-001: Reconciliations and Material Adjustments Questioned Costs: None How the questioned costs were computed: N/A Grant Funding Source Grant Period Head Start U.S. Department of Health 06/01/2024 05/31/2025 10CH012611 01 and Human Services Head Start U.S. Department of Health 06/01/2024 04/30/2025 10CH010945 05 and Human Services Head Start U.S. Department of Health 07/01/2022 06/30/2025 10HP000422 03 and Human Services Condition: At the time of audit fieldwork, Umatilla Morrow Head Start, Inc. had not reconciled and closed its grant and contract revenue and accrued payroll. Umatilla Morrow Head Start, Inc.'s cash reconciliation also included a deposit in transit that was never deposited. As a result, Wipfli, LLP proposed and management posted adjusting journal entries to grants receivable, refundable advance, accrued liabilities, and grant revenue. A passed adjustment was reported for the misstatement on the cash reconciliation. As Umatilla Morrow Head Start, Inc.’s internal controls did not discover these adjustments prior to our audit, a material weakness exists in Umatilla Morrow Head Start, Inc.’s internal controls over financial reporting. Criteria: Federal Regulation 2 CFR 200.302(4) requires that an organization have…Effective control over, and accountability for, all funds, property, and other assets. Cause: During the audit year, Umatilla Morrow Head Start, Inc. experienced turnover in its business office while preparing for the audit which contributed to the lack of adequate and timely closing procedures, account reconciliations, and review processes. Repeat: Yes - Years as repeat finding: Six Effect: As a result of the lack of segregation of duties surrounding bank reconciliations and not reconciling all account balances resulting in subsequent adjustments to accounts, a material weakness exists in internal controls over financial reporting. Recommendation: Accounts should be reconciled monthly with the adjustments posted timely so that management is relying on accurate financial information to make decisions. We recommend management and those charged with governance evaluate the operation of the business office and implement adequate and timely closing procedures to ensure that financial statement amounts are being reconciled, reviewed, and adjusted in a timely manner. View of Responsible Officials: Management agrees with the assessment and subsequent to year end, steps were taken to correct the matter.
Criteria: Federal regulations require non-federal entities to maintain records that adequately support allowable costs and program activities. Specifically, 2 CFR 200.302 requires financial management systems to provide accurate, current, and complete disclosure of financial results, and 2 CFR 200.403 requires that costs charged to federal awards be allowable, reasonable, and adequately documented. HRSA program requirements further require health centers to maintain patient-level documentation to support reported encounters and costs. Condition: During audit testing of patient eligibility and sliding fee scale application, supporting documentation of income was not available for 25 of 40 patients sampled. As a result, the health center was unable to demonstrate that the sliding fee discounts were appropriately determined in accordance with program requirements. Cause: Per HRSA and UDS requirements, FQHC’s must determine patient eligibility for the sliding fee discount based on income and family size, and retain documentation to support income verification for each patient applying for the discount. Effect: As a result, the health center is in noncompliance with HRSA sliding fee discount program requirements, which represents a material weakness in internal control over compliance and results in an increased risk that patients received sliding fee discounts for which they were not eligible or that eligible patients were improperly classified, and that Uniform Data System (UDS) data related to patient income levels and sliding fee discount utilization may be materially misstated. Questioned Costs: Questioned costs could not be determined due to the lack of supporting documentation for the affected patients. Recommendation: We recommend that management reinforce policies requiring documentation of income and family size before applying sliding fee discounts, implement periodic review of patient files to ensure compliance, provide staff training, and accountability measures for intake procedures, and consider adding monitoring on a quarterly basis to ensure ongoing adherence.
Criteria: Federal regulations require non-federal entities to maintain records that adequately support federal program reporting. Specifically, 2 CFR 200.302 requires recipients to maintain financial and programmatic records that provide accurate, current, and complete disclosure of program results, and 2 CFR 200.333 requires records to be retained and available for audit. HRSA Health Center Program requirements further require health centers to maintain documentation supporting data reported in the Uniform Data System (UDS), including patient-level records supporting Table 4 – Selected Patient Characteristics. Condition: The health center did not provide a report or reconciliation that ties source data to the totals reported in UDS Table 4 – Selected Patient Characteristics. Management provided a report based on billable visits and patients only, which excluded visits and patients for which no charge was associated. Management stated that UDS data are pulled directly from the electronic health record system (eClinicalWorks) by the compliance department using system mapping that differs from billing reports, and that the mapping will not change. As a result, the auditors were unable to verify that all patients required to be included in Table 4 were captured and accurately reported. Cause: The health center did not have documentation available to validate the accuracy and completeness of the UDS Table 4 data. Effect: Because a reconciliation or alternative audit trail was not available, the auditors were unable to determine whether UDS Table 4 data were complete and accurate, including whether non-billable patients were appropriately included. This condition increases the risk that the UDS report contains incomplete or inaccurate patient characteristic data, which may affect HRSA’s oversight, monitoring, and funding determinations. Questioned Costs: No questioned costs are reported for this finding, as the UDS report represents programmatic reporting and does not directly result in identifiable questioned costs. Recommendation: We recommend that management establish and document controls over UDS reporting, including developing reconciliations or alternative audit trails that demonstrate completeness of patient populations reported in Table 4, documenting system mapping and logic used to generate UDS data, and implementing management review procedures prior to UDS submission.
2025-002 - Lack of Written Federal Program Policies. Type: Material Weakness. Condition: The Village does not have documented policies and procedures specific to the administration of the Coronavirus State and Local Fiscal Recovery Funds program. This includes the absence of written guidance on key compliance areas such as payments, procurement, allowability of costs charged to federal programs, compensation, and travel costs under Uniform Guidance. Criteria: Per 2 CFR 200.303 and 200.331 of the Uniform Guidance, non-federal entities are required to establish and maintain effective internal controls and written policies to ensure compliance with federal statutes, regulations, and the terms and conditions of federal awards. These policies should be tailored to the specific requirements of each federal program. Cause: The entity has not developed formal written policies and procedures for the Coronavirus State and Local Fiscal Recovery Funds program, possibly due to reliance on informal practices or general administrative policies that do not address federal-specific requirements. Effect: Without documented policies, there is an increased risk of noncompliance with federal requirements, inconsistent program administration, and lack of accountability. This may result in questioned costs, audit findings, or potential repayment of federal funds. Recommendation: We recommend that the Village develop and implement written policies and procedures specific to the Coronavirus State and Local Fiscal Recovery Funds program. These should include: - Payments in accordance with §200.302 (6), - Procurement in accordance with §200.318, - Allowability of costs charged to federal programs in accordance with §200.302 (7), - Compensation in accordance with §200.430 and §200.431, - Travel costs in accordance with §200.474. Training should also be provided to staff responsible for administering the program to ensure consistent application of these policies. Views of Responsible Officials: Management acknowledges the auditor’s finding regarding the absence of formally documented federal program policies. We recognize the importance of maintaining written procedures to ensure consistent compliance with Uniform Guidance requirements and to strengthen internal controls over federal awards. While informal practices have historically guided our federal program administration, we agree that formalizing these policies will enhance transparency, accountability, and operational efficiency. Management is currently in the process of developing written policies covering key areas such as procurement, allowable costs, subrecipient monitoring, and cash management. We anticipate completing this documentation and implementing the policies by February 28, 2026. We are committed to continuous improvement and appreciate the auditor’s recommendations as part of our efforts to maintain strong compliance and stewardship of federal funds.
Finding: 2025-001 Incomplete Tenant Records – Section 8 HCV Program (ALN 14.871) Condition: During our review of forty (40) tenant files under the Section 8 Housing Choice Voucher (HCV) Program, we identified multiple instances of missing documentation and compliance lapses: 1. For one (1) tenant, income verification was not performed for the current year, and prior year income was rolled forward. The HUD-50058 (Family Report) form was reviewed in the PIC system but was not present in the tenant file. 2. For one (1) tenant, the Approved Lease, HUD-52517 (Request for Tenancy Approval), and HUD- 52641 (HAP Contract) forms were not present in the tenant file. Criteria: Under 2 CFR § 200.303, non-Federal entities are required to “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.” Additionally, 2 CFR § 200.302(b)(3) mandates that entities “maintain records which adequately identify the source and application of funds provided for federally-assisted activities.” HUD regulations governing the Section 8 Housing Choice Voucher Program (ALN 14.871) further require that tenant files include complete and timely documentation of income verification, lease approvals, and execution of required HUD forms such as HUD-50058 (Family Report), HUD-52517 (Request for Tenancy Approval), and HUD-52641 (Housing Assistance Payments Contract). These documents are essential to support eligibility determinations and ensure accurate Housing Assistance Payments. Cause: The deficiencies appear to result from inconsistent implementation of file maintenance procedures and inadequate internal controls over documentation and compliance tracking. There may also be a lack of staff training or oversight regarding HUD documentation requirements. Effect: Incomplete tenant records compromise the Housing Authority’s ability to demonstrate compliance with HUD regulations and the proper use of Federal funds. Missing documentation such as income verification and executed lease agreements may result in eligibility determinations that cannot be substantiated, increasing the risk of noncompliance. These issues could lead to program findings, reputational harm, or future funding restrictions if not addressed. Questioned Costs: There were no determinable questioned costs identified during the review. While documentation gaps were noted, the absence of supporting records did not allow for a reliable calculation of financial impact. Recommendation: We recommend that the Housing Authority strengthen internal controls over tenant file documentation by implementing a standardized checklist to ensure all required forms and records are consistently retained. Staff should receive periodic training on HUD documentation and compliance requirements to reinforce expectations and reduce errors. Management should also conduct routine internal reviews to verify that income verification and lease documentation are properly completed and maintained. These measures will help ensure that tenant eligibility and payment determinations are adequately supported and compliant with federal regulations. Reply and Corrective Action: To address these findings, the Housing Authority will implement a standardized checklist for all tenant file changes, ensuring that all required forms and records are consistently retained. The Program Administrator and staff will conduct monthly reviews of completed reexaminations to verify that all necessary documentation is present and properly filed. All paperwork related to annual reexaminations, transfers, move-ins, and interims will be scanned into the Lindsey software system within five working days of receipt, prior to physical filing. The Program Administrator will organize monthly training sessions on HCV/S8 program requirements, with participation tracked to ensure all staff attend. Weekly spot checks will be performed to confirm that the checklist is being used appropriately. These actions will be supported by updated training materials, access to the Lindsey software, and dedicated staff time for audits and training. To mitigate risks such as incomplete documentation, missed scanning deadlines, or low training attendance, the Housing Authority will implement pre-audit checklists, set automated reminders for staff, and make training mandatory. Management will monitor the implementation of these corrective actions and conduct follow-up reviews to ensure sustained compliance with HUD regulations.
U.S. Department of Transportation – AL #20.106 Airport Improvement Program – Reporting Grant Award: 3-38-0022-064-2022 Criteria The Authority is required to submit payment requests using the DOT Electronic Grants payment system, Delphi e-Invoicing. These requests must meet the standards described in 2 CFR ss 200.302 and 200.305. Additionally, Authority is required to submit annual SF-425 reports within 90 days of the end of the federal fiscal year. Condition During review of submitted Request for Reimbursements and Outlay reports, it was noted that one request submitted was not accurately prepared as there was one instance in which the amount requested was greater than invoice documentation, additionally the request included a request for reimbursement of AIP ineligible costs. As of December 31, 2024 no funds have been returned to U.S. DOT. It was also noted that multiple annual SF-425 reports were submitted late. Questioned Costs N/A Context We reviewed the project financial summary for two of the 19 requests submitted during 2024 and SF-425 reports for all open grants. Cause Employee oversight. Effect The Authority could have had federal funding delayed or reduced. Recommendation We recommend that the Authority implement internal controls to ensure all reporting is accurately filed. Repeat Finding Yes. Prior audit finding 2023-003. Views of Responsible Officials Management recognizes the deficiency and plans to implement the auditor’s recommendation.
U.S. Department of Transportation – AL #20.106 Airport Improvement Program – Reporting Grant Award: 3-38-0022-064-2022 Criteria The Authority is required to submit payment requests using the DOT Electronic Grants payment system, Delphi e-Invoicing. These requests must meet the standards described in 2 CFR ss 200.302 and 200.305. Additionally, Authority is required to submit annual SF-425 reports within 90 days of the end of the federal fiscal year. Condition During review of submitted Request for Reimbursements and Outlay reports, it was noted that one request submitted was not accurately prepared as there was one instance in which the amount requested was greater than invoice documentation, additionally the request included a request for reimbursement of AIP ineligible costs. As of December 31, 2024 no funds have been returned to U.S. DOT. It was also noted that multiple annual SF-425 reports were submitted late. Questioned Costs N/A Context We reviewed the project financial summary for two of the 19 requests submitted during 2024 and SF-425 reports for all open grants. Cause Employee oversight. Effect The Authority could have had federal funding delayed or reduced. Recommendation We recommend that the Authority implement internal controls to ensure all reporting is accurately filed. Repeat Finding Yes. Prior audit finding 2023-003. Views of Responsible Officials Management recognizes the deficiency and plans to implement the auditor’s recommendation.
Identification of a Repeat Finding: This is a repeat finding from the immediate previous audit, 2023-002. Criteria: Uniform Guidance requires written procedures for cash management and determining the allowability of costs in accordance with Subpart E – Cost Principals. Condition: Boone County Senior Citizen Services Corporation DBA The Bluffs did not have written procedures for cash management (2 CFR 200.302(b)(6)) and allowable costs determination (2 CFR 200.302(b)(7)) in accordance with Uniform Guidance requirements. Questioned Costs: $0 Cause: Boone County Senior Citizen Services Corporation DBA The Bluffs’ written policies and procedures were not updated to include required Uniform Guidance policies. Effect: Boone County Senior Citizen Services Corporation DBA The Bluffs could enter into a transaction that is not in compliance with Uniform Guidance requirements. Recommendation: We recommend Boone County Senior Citizen Services Corporation DBA The Bluffs draft and adopt written procedures in accordance with Uniform Guidance requirements. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding and is in process of developing and implementing the appropriate policies and procedures. The board anticipates approving written policies and procedures for cash management in May 2025.
Finding 2024-004 Internal Controls Over Compliance for Cash Management, Allowable Costs, Procurement, and Conflicts of Interest Federal Program: 66.468 Capitalization Grants for Drinking Water State Revolving Fund Condition: The City does not have formally documented written controls to ensure compliance with the U.S. Office of Management and Budget’s (OMB) Uniform Administrative Requirement, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), regarding the determination of allowable costs, procurement procedures, conflicts of interest, and cash management. Criteria: 2 CFR § 200.302(b) requires the City to have written procedures related to managing cash from federal award, including determining the allowability of costs in accordance with 2 CFR 200 Subpart E – Cost Principles. Additionally, 2 CFR § 318(a) and (c), requires the City to formally document procedures used for procurements made within federal programs, to demonstrate compliance with Uniform Guidance, which includes written standards of conduct that cover conflicts of interest and govern the performance of individuals engaged in procurement. Cause: The City’s policies and procedures have not been formally drafted and updated in written form. Effect: The failure to have written policies and procedures resulted in the City’s noncompliance with the requirements of the Uniform Guidance. Context: This is a general requirement that pertains to most federal grants. This was not identified via sampling procedures. Questioned Costs: None identified. Recommendation: We recommend the City review the Electronic Code of Federal Regulations, particularly the sections referenced above, to obtain a better understanding of the related requirements under Uniform Guidance. Based on this understanding, we recommend the City adopt written policies and procedures pertaining to cash management, determining the allowability of costs, procurement procedures, and conflicts of interest for all federal programs. Views of Responsible Officials and Planned Corrective Actions: Management agrees with our recommendation. See corresponding Corrective Action Plan.
Finding 2024-001 Internal Controls Over Compliance for Cash Management, Allowable Costs, Procurement, and Conflicts of Interest Federal Program: 14.251 Economic Development Initiative, Community Project Funding, and Miscellaneous Grants Condition: The City did not have formally documented written controls to ensure compliance with the U.S. Office of Management and Budget’s (OMB) Uniform Administrative Requirement, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), in regard to determining allowable costs, procurement procedures, conflicts of interest, and cash management. Criteria: 2 CFR § 200.302(b) requires the City to have written procedures related to managing cash from federal awards, including determining the allowability of costs in accordance with 2 CFR 200 Subpart E – Cost Principles. Additionally, 2 CFR § 318(a) and (c), requires the City to formally document procedures used for procurements made within federal programs, to demonstrate compliance with Uniform Guidance, which includes written standards of conduct that cover conflicts of interest and govern the performance of individuals engaged in procurement. Cause: The City’s policies and procedures were not formally drafted and updated in written form. Effect: The failure to have written policies and procedures during the grant period resulted in the City’s temporary noncompliance with the requirements of the Uniform Guidance. Context: This is a general requirement that pertains to most federal grants. This was not identified via sampling procedures. Questioned Costs: None identified. Recommendation: We recommend the City review the Electronic Code of Federal Regulations, particularly the sections referenced above, to obtain a better understanding of the related requirements under Uniform Guidance. Based on this understanding, we recommend the City adopt written policies and procedures pertaining to cash management, determining the allowability of costs, procurement procedures, and conflicts of interest for all federal programs. Since the discovery of this issue, the City has adopted written policies and procedures pertaining to cash management, determining the allowability of costs, procurement procedures, and conflicts of interest for all federal programs. Views of Responsible Officials and Planned Corrective Actions: Management agrees with our recommendation, and this matter has already been resolved subsequent to year-end. See corresponding Corrective Action Plan.
FINDING 2024-004 Subject: Water and Waste Disposal Systems for Rural Communities - Reporting Federal Agency: Department of Agriculture Federal Program: Water and Waste Disposal Systems for Rural Communities Assistance Listings Number: 10.760 Federal Award Number and Year (or Other Identifying Number): FY2024 Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-003. Condition and Context As part of sound management of the federal award, the Town was responsible for implementing a system of internal controls that would ensure compliance with the applicable requirements. The Town had not properly designed or implemented such a system, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. The Town was required to submit the following reporting to the Department of Agriculture annually: • Statement of Budget, Income, and Equity (Form RD 442-2) • Balance Sheet (Form RD 442-3) INDIANA STATE BOARD OF ACCOUNTS 21 TOWN OF PAOLI SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The Form RD 442-2 covers financial operations relating to the Town's wastewater utility and the Form RD 442-3 presents the financial status of the wastewater utility. In both instances, a borrower may submit the financial data on other forms, provided the forms are in a similar format and signed and dated by the organization's official to certify the correctness of the information. Alternatively, an annual audit may be submitted in lieu of the forms. The Town did not submit the Form RD 442-2 during the audit period as required. The Town submitted the Form RD 442-3 reporting 2023 data in 2024 as required. However, this report is intended to be a comparative balance sheet as described in the USDA Rural Utilities Service Borrower's Guide. The Town did not include comparative data for 2022 in the report. There was also no documentation or other evidence of an oversight, review, or approval process for the report that was filed. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . ." 7 CFR 1780.47 states in part: "(a) Borrowers are required to provide RUS an annual audit or financial statements. . . . (e) Borrowers exempt from audits. All borrowers who are exempt from audits, will, within 60 days following the end of each fiscal year, furnish the RUS with annual financial statements, consisting of a verification of the organization's balance sheet and statement of income and expense by an appropriate official of the organization. Forms RD 442-2, 'Statement of Budget, Income and Equity,' and 442-3 may be used. INDIANA STATE BOARD OF ACCOUNTS 22 TOWN OF PAOLI SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (f) Management reports. These reports will furnish management with a means of evaluating prior decisions and serve as a basis for planning future operations and financial strategies. In those cases where revenues from multiple sources are pledged as security for an RUS loan, two reports will be required; one for the project being financed by RUS and one combining the entire operation of the borrower. In those cases where RUS loans are secured by general obligation bonds or assessments and the borrower combines revenues from all sources, one management report combining all such revenues is acceptable. The following management data will be submitted by the borrower to the processing office. These reports at a minimum will include a balance sheet and income and expense statement. . . . (2) Annual management reports. Prior to the beginning of each fiscal year the following will be submitted to the processing office. (If Form RD 442-2 is used as the annual management report, enter data in column three only of Schedule 1, and complete all of Schedule 2.) (i) Two copies of the management reports and proposed 'Annual Budget'. (ii) Financial information may be reported on Form RD 442-2 which includes Schedule 1, 'Statement of Budget, Income and Equity' and Schedule 2, 'Projected Cash Flow' or information in similar format. (iii) A copy of the rate schedule in effect at the time of submission. . . ." Cause The Clerk-Treasurer was only in her first year of her first term in office when these were due. As such, she was unfamiliar with the reporting requirements of the grant. Effect Without a proper system of internal controls in place that operated effectively, the Town did not file one of the two required reports, and the report that was filed was incomplete. As a result, material noncompliance occurred and remained undetected. By not reporting the comparative data, all information needed to determine the true financial status of the Town was not readily available. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the Town's management establish a proper system of internal controls and develop and implement reporting policies and procedures to ensure that all required reports are filed timely, accurately, and contain all the required information. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Criteria: Per 2 CFR § 200.303(a), the non-Federal entity must establish, document, and maintain effective internal control over Federal awards that provides reasonable assurance that the entity is managing the award in compliance with Federal statutes, regulations, and the terms and conditions of the awards. Additionally, per 2 CFR §200.403 and §200.302, costs charged to federal awards must be allowable, allocable, and properly documented, and financial reporting must be accurate, complete, and supported by the accounting system. Condition: Although the Parish has implemented internal controls related to the allowability of costs and the preparation of required reports for the Coronavirus State and Local Fiscal Recovery funds, they were not operating effectively during fiscal year 2024. Tests of controls indicated that transactions were not tracked appropriately to ensure they were charged to the correct funding source. In addition, quarterly project and expenditure reports submitted to the U.S. Treasury included inaccurate or unsupported information due to a lack of tracking and reconciliation procedures. Cause: As discussed in item 2024-001, the Parish encountered several challenges during the transition of administration and key personnel. Parish administration and management were immediately tasked with enhancing operations related to procedural concerns from the prior administration and performing the accounting function without sufficient documentation on several balances and transactions. The documented controls were not in practice because of this. Effect: While no instances of noncompliance were noted, the lack of documented controls in practice increases the risk that future required reports could be incomplete, inaccurate, or untimely, as well as, federal costs being unallowed per the cost principles which could potentially result in program noncompliance. Recommendation: We recommend that the Parish enhance and document internal controls over financial reporting, as described in our recommendations described under item 2024-001, to prevent noncompliance of the Uniform Guidance as required.
Finding 2024-005 Internal Controls Over Compliance for Subrecipient Monitoring Federal Program: 14.251 Economic Development Initiative, Community Project Funding, and Miscellaneous Grants Condition: The City does not have formally documented written controls to ensure compliance with the U.S. Office of Management and Budget’s (OMB) Uniform Administrative Requirement, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), in regard to determining subrecipient monitoring. Criteria: 2 CFR § 200.302(b) requires the City to have written procedures related to managing subrecipient monitoring in accordance with 2 CFR 200 Subpart D – Subrecipient Monitoring. Cause: The City’s policies and procedures have not been formally drafted and updated in written form. Effect: The failure to have written policies and procedures resulted in the City’s noncompliance with the requirements of the Uniform Guidance. Context: This is a general requirement that pertains to many federal grants. This was not identified via sampling procedures. Questioned Costs: None identified. Recommendation: We recommend the City review the Electronic Code of Federal Regulations, particularly the sections referenced above, to obtain a better understanding of the related requirements under Uniform Guidance. Based on this understanding, we recommend the City adopt written policies and procedures pertaining to subrecipient monitoring for all applicable federal programs. Views of Responsible Officials and Planned Corrective Actions: Management agrees with our recommendation. See corresponding Corrective Action Plan.
Adjoin Schedule of Findings and Questioned Costs Year Ended December 31, 2024 Section II - Financial Statement Findings Section None noted. Section III - Federal Award Findings and Questioned Costs Section 1. Finding Number: Finding 2024-001 Program Name: Supportive Services for Veterans Families: CFDA 64.033 Pass Through Agency: N/A Type of Finding: Other matters, compliance a. Criteria: Failure to comply with the grant agreement’s terms and applicable regulations: The Organization did not comply with grant compliance requirements such as tracking administrative expenses charged to the program outside of the general ledger and in other matters noted in Supportive Services for Veterans Families (SSVF) reviews. b. Condition: During our audit, JGD reviewed the results of all reviews for the SSVF grant and noted seven compliance deficiencies were indicated in the reporting period. These deficiencies resulted in a failure of controls over compliance. Under the SSVF Program, a minimum of 90% of supportive services grant funds must be used to provide and coordinate the provision of supportive services to very lowincome Veteran families who are occupying permanent housing. A maximum of 10% of supportive services grant funds may be used for administrative costs. Per Section 62.70 of the 38 CFR Part 62, administrative costs are defined as all direct and indirect costs associated with the indirect, of subcontractors. SSVF requires grantees to provide support documentation (payroll records, invoices, receipts etc.) for all costs and expenses associated with the administration of the SSVF grant. Administrative costs should be placed in the Administrative section of an SSVF program budget. An approved Indirect Cost Rate is not considered adequate support or source documentation for costs listed in the Administrative section of the budget. Grantees are required to have a detailed breakout of these administrative costs along with any supporting documents for those expenses for auditing and oversight. Title 2 CFR 200.302 requires the financial management system of each non-Federal entity provide “records that identify adequately the source and application of funds for federally-funded activities. These records must contain information pertaining to Federal awards, authorizations, obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation.” These citations are included for informational purposes: Fiscal Administration – Administrative Expenses: Administrative expenses were not recorded in the general ledger, resulting in questioned costs. Fiscal Administration – Unallowed Supplemental Pay: Five employees did not have evidence to support reasonableness and compliance with incentive compensation requirements, resulting in questioned costs. 25 Adjoin Schedule of Findings and Questioned Costs Year Ended December 31, 2024 Fiscal Administration – Inadequate TFA Identification: TFA expenses were not paid through credit card charges in the general ledger. This deficiency was cleared as corrective action was taken during the review. Participant Eligibility – HMIS Release of Information Forms: Four case files were missing HMIS Release of Information Forms for household members over the age of 18. Participant Eligibility – Missing Income Eligibility Documentation: Three case files missing income eligibility documents for Veterans and one case file missing income eligibility documents for Veteran and household members at certification of eligibility events. Participant Eligibility – Missing Exit Checklist: Five case files did not include exit checklist documentation. This deficiency was cleared as corrective action was taken during the review. Program Operations – Inadequate MOU: MOU for a legal subcontractor was missing required elements, including expectations and requirements for quarterly assessments and annual monitoring of performance, listing of only eligible/allowable legal services, highlighting of response time expectations and requirements to support payments, and account for Veterans that have been separated from the program and those in need of long-term legal services. c. Context: Recipients of Federal grants are required to comply with all terms and applicable regulations of grant agreements. d. Questioned Costs: Administrative expenses resulted in $937,794 and supplemental pay resulted in $1,500 in questioned costs. The Organization has disputed both findings noting the expenses are itemized within their internal tracking files and that the costs are allowable, allocable, and reasonable. The Organization has received no response from the agency. e. Cause: Internal accounting procedures, lack of compliance policies, and lack of training over verification and documentation processes, resulting in a failure of controls over compliance. f. Effect: Considered to be an other matter related to internal control over compliance. g. Recommendation: Management should take steps to ensure that all administrative expenses are properly recorded in the general ledger, supplemental pay is approved with proper evidence of approvals, and proper documentation and policies are in place to comply with all grant compliance requirements. We recommend that management closely monitor areas of non-compliance as noted in the licensing reviews. Section IV – Schedule of Prior Year Findings and Questioned Costs None noted.
Finding 2024-003 Insufficient Documentation of Other Direct Expenses Type of Finding: Noncompliance and Material Weakness in Internal Control over Compliance Condition: During testing of direct costs charged to the federal program, the Organization did not maintain sufficient documentation to fully support all expenditures claimed. In one instance, a receipt supporting a claimed expense was missing. In three additional cases, although the expenditures were generally supported, the documentation did not clearly reflect how the amounts allocated to the major federal program were determined. While these issues were isolated and the known and likely questioned costs were immaterial, the lack of complete documentation represents noncompliance with federal requirements for allowable costs. Criteria: According to Uniform Guidance 2 CFR §200.302(b)(3), the Organization's financial management system must maintain records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. All records must be supported by source documentation. Additionally, 2 CFR §200.403(g) requires that all costs charged to federal awards must be adequately documented. Cause: These exceptions appear to result from informal documentation practices and a lack of consistent application of procedures. Management is heavily involved in the Organization’s financial processes, including allocation of costs, which can limit opportunities for independent oversight or review. The absence of a standardized and consistently enforced process for documenting cost allocations contributes to inconsistent recordkeeping. Possible of Known Effect: Although the overall financial impact of these exceptions was not material, the missing documentation prevents the Organization from fully demonstrating compliance with 2 CFR 200.403 and 200.302. Overreliance on a single individual for documentation and procedural execution without accompanying review or monitoring controls can increase the risk of errors, omissions, or audit findings, even when expenditures are reasonable and allowable. Questioned Costs: Known questioned costs of $2,742 were identified. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Organization implement a standardized procedure for documenting all direct and indirect cost allocations charged to federal programs, ensuring that each claim includes full supporting documentation such as receipts and annotated allocation details with consistent allocation methods. To strengthen internal controls, the Organization should consider establishing a review process for claims preparation that includes someone other than the individual preparing or allocating the expenditures. This will enhance accountability and help ensure compliance with federal documentation requirements. Views of Responsible Officials: The Organization will develop written guidelines specifying the required supporting documentation for each type of direct expense. Set up vendors in QuickBooks. We will hire and train Finance Manager to manage and track revenue and expenses, QuickBooks, grant reporting etc. All receipts and expenses will be scanned in and kept electronically. The Organization will provide training on documentation requirements, proper record submission, and compliance expectations.
2024-004: Written Policies and Procedures – Significant Deficiency Criteria and Condition: 2 CFR 200.302 requires that the recipient or subrecipient’s financial management system must provide written procedures to implement the requirements of 2 CFR 200.305 (Federal payments) and for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award. Additionally, 2 CFR 200.318 requires that the recipient or subrecipient must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services. Context: Although the Organization follows procedures that minimize the time between reimbursement of dollars and expenditure (2 CFR 200.305), verify payments made are in accordance with subpart E and terms and conditions of the award, and follow procurement standards for vendors, there are no written procedures as required by the CFR. Cause and Effect: The Organization did not maintain written procedures as required by the CFR. Questioned Costs: This finding does not result in questioned costs. Recommendation: We recommend that the Organization formally document the current policies and procedures in place to meet documentation requirements of the CFR. Views of Responsible Officials and Planned Corrective Actions: We will adopt formal policies and procedures that document our current practices and also meet the requirements of the CFR.
2024-004: Written Policies and Procedures – Significant Deficiency Criteria and Condition: 2 CFR 200.302 requires that the recipient or subrecipient’s financial management system must provide written procedures to implement the requirements of 2 CFR 200.305 (Federal payments) and for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award. Additionally, 2 CFR 200.318 requires that the recipient or subrecipient must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services. Context: Although the Organization follows procedures that minimize the time between reimbursement of dollars and expenditure (2 CFR 200.305), verify payments made are in accordance with subpart E and terms and conditions of the award, and follow procurement standards for vendors, there are no written procedures as required by the CFR. Cause and Effect: The Organization did not maintain written procedures as required by the CFR. Questioned Costs: This finding does not result in questioned costs. Recommendation: We recommend that the Organization formally document the current policies and procedures in place to meet documentation requirements of the CFR. Views of Responsible Officials and Planned Corrective Actions: We will adopt formal policies and procedures that document our current practices and also meet the requirements of the CFR.
Finding 2024-001 Interproject Payable – Amounts Owed to Other HUD Project Type of finding: Significant deficiency in internal control. Condition and context: During our audit we noted that the project has recorded a payable due to another HUD-assisted project in the amount of $3,072, and there is no documented HUD authorization supporting this obligation. Criteria: Per 2 CFR Part 200 (Uniform Guidance), §§200.302 and 200.403, federal program funds must be used only for allowable costs and in direct support of the objectives of the program. HUD requirements also prohibit the commingling of funds between projects unless explicitly authorized. Interproject payables or advances without proper documentation or timely settlement may constitute an unallowable use of program resources. Cause: Management permitted the use of funds from another HUD-assisted project to support operations of this project without obtaining HUD approval or establishing proper repayment terms. This occurred due to inadequate oversight of cash management and interproject transactions. Effect: Maintaining an outstanding payable to another HUD project: • Indicates potential misuse of federal funds. • Increases the risk of noncompliance with HUD requirements and Uniform Guidance. • May impair the project’s ability to demonstrate financial independence and program accountability. • Exposes the project to possible HUD sanctions, questioned costs, or repayment obligations. Questioned costs: Known questioned costs are $3,072. Recommendation: We recommend that project management: • Repay the outstanding payable to the related HUD project as soon as feasible. • Cease the practice of interproject borrowing unless HUD has provided explicit authorization. • Implement stronger internal controls over cash management and interproject transactions. • Document and monitor all project-level obligations to ensure compliance with HUD regulations. Views of Responsible Officials: Management agrees with this finding and the payment will be corrected. Management will review internal controls and implement a review process to only pay expenses already incurred to avoid future payments.
U.S. Department of Transportation – AL #20.106 Airport Improvement Program – Reporting Grant Award: 3-38-0022-064-2022 Criteria The Authority is required to submit payment requests using the DOT Electronic Grants payment system, Delphi e-Invoicing. These requests must meet the standards described in 2 CFR ss 200.302 and 200.305. Additionally, Authority is required to submit annual SF-425 reports within 90 days of the end of the federal fiscal year. Condition During review of submitted Request for Reimbursements and Outlay reports, it was noted that one request submitted was not accurately prepared as there was one instance in which the amount requested was greater than invoice documentation, additionally the request included a request for reimbursement of AIP ineligible costs. As of December 31, 2024 no funds have been returned to U.S. DOT. It was also noted that multiple annual SF-425 reports were submitted late. Questioned Costs N/A Context We reviewed the project financial summary for two of the 19 requests submitted during 2024 and SF-425 reports for all open grants. Cause Employee oversight. Effect The Authority could have had federal funding delayed or reduced. Recommendation We recommend that the Authority implement internal controls to ensure all reporting is accurately filed. Repeat Finding Yes. Prior audit finding 2023-003. Views of Responsible Officials Management recognizes the deficiency and plans to implement the auditor’s recommendation.
U.S. Department of Transportation – AL #20.106 Airport Improvement Program – Reporting Grant Award: 3-38-0022-064-2022 Criteria The Authority is required to submit payment requests using the DOT Electronic Grants payment system, Delphi e-Invoicing. These requests must meet the standards described in 2 CFR ss 200.302 and 200.305. Additionally, Authority is required to submit annual SF-425 reports within 90 days of the end of the federal fiscal year. Condition During review of submitted Request for Reimbursements and Outlay reports, it was noted that one request submitted was not accurately prepared as there was one instance in which the amount requested was greater than invoice documentation, additionally the request included a request for reimbursement of AIP ineligible costs. As of December 31, 2024 no funds have been returned to U.S. DOT. It was also noted that multiple annual SF-425 reports were submitted late. Questioned Costs N/A Context We reviewed the project financial summary for two of the 19 requests submitted during 2024 and SF-425 reports for all open grants. Cause Employee oversight. Effect The Authority could have had federal funding delayed or reduced. Recommendation We recommend that the Authority implement internal controls to ensure all reporting is accurately filed. Repeat Finding Yes. Prior audit finding 2023-003. Views of Responsible Officials Management recognizes the deficiency and plans to implement the auditor’s recommendation.
Identification of a Repeat Finding: This is a repeat finding from the immediate previous audit, 2023-002. Criteria: Uniform Guidance requires written procedures for cash management and determining the allowability of costs in accordance with Subpart E – Cost Principals. Condition: Boone County Senior Citizen Services Corporation DBA The Bluffs did not have written procedures for cash management (2 CFR 200.302(b)(6)) and allowable costs determination (2 CFR 200.302(b)(7)) in accordance with Uniform Guidance requirements. Questioned Costs: $0 Cause: Boone County Senior Citizen Services Corporation DBA The Bluffs’ written policies and procedures were not updated to include required Uniform Guidance policies. Effect: Boone County Senior Citizen Services Corporation DBA The Bluffs could enter into a transaction that is not in compliance with Uniform Guidance requirements. Recommendation: We recommend Boone County Senior Citizen Services Corporation DBA The Bluffs draft and adopt written procedures in accordance with Uniform Guidance requirements. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding and is in process of developing and implementing the appropriate policies and procedures. The board anticipates approving written policies and procedures for cash management in May 2025.
Finding 2024-004 Internal Controls Over Compliance for Cash Management, Allowable Costs, Procurement, and Conflicts of Interest Federal Program: 66.468 Capitalization Grants for Drinking Water State Revolving Fund Condition: The City does not have formally documented written controls to ensure compliance with the U.S. Office of Management and Budget’s (OMB) Uniform Administrative Requirement, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), regarding the determination of allowable costs, procurement procedures, conflicts of interest, and cash management. Criteria: 2 CFR § 200.302(b) requires the City to have written procedures related to managing cash from federal award, including determining the allowability of costs in accordance with 2 CFR 200 Subpart E – Cost Principles. Additionally, 2 CFR § 318(a) and (c), requires the City to formally document procedures used for procurements made within federal programs, to demonstrate compliance with Uniform Guidance, which includes written standards of conduct that cover conflicts of interest and govern the performance of individuals engaged in procurement. Cause: The City’s policies and procedures have not been formally drafted and updated in written form. Effect: The failure to have written policies and procedures resulted in the City’s noncompliance with the requirements of the Uniform Guidance. Context: This is a general requirement that pertains to most federal grants. This was not identified via sampling procedures. Questioned Costs: None identified. Recommendation: We recommend the City review the Electronic Code of Federal Regulations, particularly the sections referenced above, to obtain a better understanding of the related requirements under Uniform Guidance. Based on this understanding, we recommend the City adopt written policies and procedures pertaining to cash management, determining the allowability of costs, procurement procedures, and conflicts of interest for all federal programs. Views of Responsible Officials and Planned Corrective Actions: Management agrees with our recommendation. See corresponding Corrective Action Plan.
Finding 2024-001 Internal Controls Over Compliance for Cash Management, Allowable Costs, Procurement, and Conflicts of Interest Federal Program: 14.251 Economic Development Initiative, Community Project Funding, and Miscellaneous Grants Condition: The City did not have formally documented written controls to ensure compliance with the U.S. Office of Management and Budget’s (OMB) Uniform Administrative Requirement, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), in regard to determining allowable costs, procurement procedures, conflicts of interest, and cash management. Criteria: 2 CFR § 200.302(b) requires the City to have written procedures related to managing cash from federal awards, including determining the allowability of costs in accordance with 2 CFR 200 Subpart E – Cost Principles. Additionally, 2 CFR § 318(a) and (c), requires the City to formally document procedures used for procurements made within federal programs, to demonstrate compliance with Uniform Guidance, which includes written standards of conduct that cover conflicts of interest and govern the performance of individuals engaged in procurement. Cause: The City’s policies and procedures were not formally drafted and updated in written form. Effect: The failure to have written policies and procedures during the grant period resulted in the City’s temporary noncompliance with the requirements of the Uniform Guidance. Context: This is a general requirement that pertains to most federal grants. This was not identified via sampling procedures. Questioned Costs: None identified. Recommendation: We recommend the City review the Electronic Code of Federal Regulations, particularly the sections referenced above, to obtain a better understanding of the related requirements under Uniform Guidance. Based on this understanding, we recommend the City adopt written policies and procedures pertaining to cash management, determining the allowability of costs, procurement procedures, and conflicts of interest for all federal programs. Since the discovery of this issue, the City has adopted written policies and procedures pertaining to cash management, determining the allowability of costs, procurement procedures, and conflicts of interest for all federal programs. Views of Responsible Officials and Planned Corrective Actions: Management agrees with our recommendation, and this matter has already been resolved subsequent to year-end. See corresponding Corrective Action Plan.
FINDING 2024-004 Subject: Water and Waste Disposal Systems for Rural Communities - Reporting Federal Agency: Department of Agriculture Federal Program: Water and Waste Disposal Systems for Rural Communities Assistance Listings Number: 10.760 Federal Award Number and Year (or Other Identifying Number): FY2024 Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-003. Condition and Context As part of sound management of the federal award, the Town was responsible for implementing a system of internal controls that would ensure compliance with the applicable requirements. The Town had not properly designed or implemented such a system, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. The Town was required to submit the following reporting to the Department of Agriculture annually: • Statement of Budget, Income, and Equity (Form RD 442-2) • Balance Sheet (Form RD 442-3) INDIANA STATE BOARD OF ACCOUNTS 21 TOWN OF PAOLI SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The Form RD 442-2 covers financial operations relating to the Town's wastewater utility and the Form RD 442-3 presents the financial status of the wastewater utility. In both instances, a borrower may submit the financial data on other forms, provided the forms are in a similar format and signed and dated by the organization's official to certify the correctness of the information. Alternatively, an annual audit may be submitted in lieu of the forms. The Town did not submit the Form RD 442-2 during the audit period as required. The Town submitted the Form RD 442-3 reporting 2023 data in 2024 as required. However, this report is intended to be a comparative balance sheet as described in the USDA Rural Utilities Service Borrower's Guide. The Town did not include comparative data for 2022 in the report. There was also no documentation or other evidence of an oversight, review, or approval process for the report that was filed. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . ." 7 CFR 1780.47 states in part: "(a) Borrowers are required to provide RUS an annual audit or financial statements. . . . (e) Borrowers exempt from audits. All borrowers who are exempt from audits, will, within 60 days following the end of each fiscal year, furnish the RUS with annual financial statements, consisting of a verification of the organization's balance sheet and statement of income and expense by an appropriate official of the organization. Forms RD 442-2, 'Statement of Budget, Income and Equity,' and 442-3 may be used. INDIANA STATE BOARD OF ACCOUNTS 22 TOWN OF PAOLI SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (f) Management reports. These reports will furnish management with a means of evaluating prior decisions and serve as a basis for planning future operations and financial strategies. In those cases where revenues from multiple sources are pledged as security for an RUS loan, two reports will be required; one for the project being financed by RUS and one combining the entire operation of the borrower. In those cases where RUS loans are secured by general obligation bonds or assessments and the borrower combines revenues from all sources, one management report combining all such revenues is acceptable. The following management data will be submitted by the borrower to the processing office. These reports at a minimum will include a balance sheet and income and expense statement. . . . (2) Annual management reports. Prior to the beginning of each fiscal year the following will be submitted to the processing office. (If Form RD 442-2 is used as the annual management report, enter data in column three only of Schedule 1, and complete all of Schedule 2.) (i) Two copies of the management reports and proposed 'Annual Budget'. (ii) Financial information may be reported on Form RD 442-2 which includes Schedule 1, 'Statement of Budget, Income and Equity' and Schedule 2, 'Projected Cash Flow' or information in similar format. (iii) A copy of the rate schedule in effect at the time of submission. . . ." Cause The Clerk-Treasurer was only in her first year of her first term in office when these were due. As such, she was unfamiliar with the reporting requirements of the grant. Effect Without a proper system of internal controls in place that operated effectively, the Town did not file one of the two required reports, and the report that was filed was incomplete. As a result, material noncompliance occurred and remained undetected. By not reporting the comparative data, all information needed to determine the true financial status of the Town was not readily available. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the Town's management establish a proper system of internal controls and develop and implement reporting policies and procedures to ensure that all required reports are filed timely, accurately, and contain all the required information. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Criteria: Per 2 CFR § 200.303(a), the non-Federal entity must establish, document, and maintain effective internal control over Federal awards that provides reasonable assurance that the entity is managing the award in compliance with Federal statutes, regulations, and the terms and conditions of the awards. Additionally, per 2 CFR §200.403 and §200.302, costs charged to federal awards must be allowable, allocable, and properly documented, and financial reporting must be accurate, complete, and supported by the accounting system. Condition: Although the Parish has implemented internal controls related to the allowability of costs and the preparation of required reports for the Coronavirus State and Local Fiscal Recovery funds, they were not operating effectively during fiscal year 2024. Tests of controls indicated that transactions were not tracked appropriately to ensure they were charged to the correct funding source. In addition, quarterly project and expenditure reports submitted to the U.S. Treasury included inaccurate or unsupported information due to a lack of tracking and reconciliation procedures. Cause: As discussed in item 2024-001, the Parish encountered several challenges during the transition of administration and key personnel. Parish administration and management were immediately tasked with enhancing operations related to procedural concerns from the prior administration and performing the accounting function without sufficient documentation on several balances and transactions. The documented controls were not in practice because of this. Effect: While no instances of noncompliance were noted, the lack of documented controls in practice increases the risk that future required reports could be incomplete, inaccurate, or untimely, as well as, federal costs being unallowed per the cost principles which could potentially result in program noncompliance. Recommendation: We recommend that the Parish enhance and document internal controls over financial reporting, as described in our recommendations described under item 2024-001, to prevent noncompliance of the Uniform Guidance as required.
Finding 2024-005 Internal Controls Over Compliance for Subrecipient Monitoring Federal Program: 14.251 Economic Development Initiative, Community Project Funding, and Miscellaneous Grants Condition: The City does not have formally documented written controls to ensure compliance with the U.S. Office of Management and Budget’s (OMB) Uniform Administrative Requirement, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), in regard to determining subrecipient monitoring. Criteria: 2 CFR § 200.302(b) requires the City to have written procedures related to managing subrecipient monitoring in accordance with 2 CFR 200 Subpart D – Subrecipient Monitoring. Cause: The City’s policies and procedures have not been formally drafted and updated in written form. Effect: The failure to have written policies and procedures resulted in the City’s noncompliance with the requirements of the Uniform Guidance. Context: This is a general requirement that pertains to many federal grants. This was not identified via sampling procedures. Questioned Costs: None identified. Recommendation: We recommend the City review the Electronic Code of Federal Regulations, particularly the sections referenced above, to obtain a better understanding of the related requirements under Uniform Guidance. Based on this understanding, we recommend the City adopt written policies and procedures pertaining to subrecipient monitoring for all applicable federal programs. Views of Responsible Officials and Planned Corrective Actions: Management agrees with our recommendation. See corresponding Corrective Action Plan.
Adjoin Schedule of Findings and Questioned Costs Year Ended December 31, 2024 Section II - Financial Statement Findings Section None noted. Section III - Federal Award Findings and Questioned Costs Section 1. Finding Number: Finding 2024-001 Program Name: Supportive Services for Veterans Families: CFDA 64.033 Pass Through Agency: N/A Type of Finding: Other matters, compliance a. Criteria: Failure to comply with the grant agreement’s terms and applicable regulations: The Organization did not comply with grant compliance requirements such as tracking administrative expenses charged to the program outside of the general ledger and in other matters noted in Supportive Services for Veterans Families (SSVF) reviews. b. Condition: During our audit, JGD reviewed the results of all reviews for the SSVF grant and noted seven compliance deficiencies were indicated in the reporting period. These deficiencies resulted in a failure of controls over compliance. Under the SSVF Program, a minimum of 90% of supportive services grant funds must be used to provide and coordinate the provision of supportive services to very lowincome Veteran families who are occupying permanent housing. A maximum of 10% of supportive services grant funds may be used for administrative costs. Per Section 62.70 of the 38 CFR Part 62, administrative costs are defined as all direct and indirect costs associated with the indirect, of subcontractors. SSVF requires grantees to provide support documentation (payroll records, invoices, receipts etc.) for all costs and expenses associated with the administration of the SSVF grant. Administrative costs should be placed in the Administrative section of an SSVF program budget. An approved Indirect Cost Rate is not considered adequate support or source documentation for costs listed in the Administrative section of the budget. Grantees are required to have a detailed breakout of these administrative costs along with any supporting documents for those expenses for auditing and oversight. Title 2 CFR 200.302 requires the financial management system of each non-Federal entity provide “records that identify adequately the source and application of funds for federally-funded activities. These records must contain information pertaining to Federal awards, authorizations, obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation.” These citations are included for informational purposes: Fiscal Administration – Administrative Expenses: Administrative expenses were not recorded in the general ledger, resulting in questioned costs. Fiscal Administration – Unallowed Supplemental Pay: Five employees did not have evidence to support reasonableness and compliance with incentive compensation requirements, resulting in questioned costs. 25 Adjoin Schedule of Findings and Questioned Costs Year Ended December 31, 2024 Fiscal Administration – Inadequate TFA Identification: TFA expenses were not paid through credit card charges in the general ledger. This deficiency was cleared as corrective action was taken during the review. Participant Eligibility – HMIS Release of Information Forms: Four case files were missing HMIS Release of Information Forms for household members over the age of 18. Participant Eligibility – Missing Income Eligibility Documentation: Three case files missing income eligibility documents for Veterans and one case file missing income eligibility documents for Veteran and household members at certification of eligibility events. Participant Eligibility – Missing Exit Checklist: Five case files did not include exit checklist documentation. This deficiency was cleared as corrective action was taken during the review. Program Operations – Inadequate MOU: MOU for a legal subcontractor was missing required elements, including expectations and requirements for quarterly assessments and annual monitoring of performance, listing of only eligible/allowable legal services, highlighting of response time expectations and requirements to support payments, and account for Veterans that have been separated from the program and those in need of long-term legal services. c. Context: Recipients of Federal grants are required to comply with all terms and applicable regulations of grant agreements. d. Questioned Costs: Administrative expenses resulted in $937,794 and supplemental pay resulted in $1,500 in questioned costs. The Organization has disputed both findings noting the expenses are itemized within their internal tracking files and that the costs are allowable, allocable, and reasonable. The Organization has received no response from the agency. e. Cause: Internal accounting procedures, lack of compliance policies, and lack of training over verification and documentation processes, resulting in a failure of controls over compliance. f. Effect: Considered to be an other matter related to internal control over compliance. g. Recommendation: Management should take steps to ensure that all administrative expenses are properly recorded in the general ledger, supplemental pay is approved with proper evidence of approvals, and proper documentation and policies are in place to comply with all grant compliance requirements. We recommend that management closely monitor areas of non-compliance as noted in the licensing reviews. Section IV – Schedule of Prior Year Findings and Questioned Costs None noted.
Finding 2024-003 Insufficient Documentation of Other Direct Expenses Type of Finding: Noncompliance and Material Weakness in Internal Control over Compliance Condition: During testing of direct costs charged to the federal program, the Organization did not maintain sufficient documentation to fully support all expenditures claimed. In one instance, a receipt supporting a claimed expense was missing. In three additional cases, although the expenditures were generally supported, the documentation did not clearly reflect how the amounts allocated to the major federal program were determined. While these issues were isolated and the known and likely questioned costs were immaterial, the lack of complete documentation represents noncompliance with federal requirements for allowable costs. Criteria: According to Uniform Guidance 2 CFR §200.302(b)(3), the Organization's financial management system must maintain records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. All records must be supported by source documentation. Additionally, 2 CFR §200.403(g) requires that all costs charged to federal awards must be adequately documented. Cause: These exceptions appear to result from informal documentation practices and a lack of consistent application of procedures. Management is heavily involved in the Organization’s financial processes, including allocation of costs, which can limit opportunities for independent oversight or review. The absence of a standardized and consistently enforced process for documenting cost allocations contributes to inconsistent recordkeeping. Possible of Known Effect: Although the overall financial impact of these exceptions was not material, the missing documentation prevents the Organization from fully demonstrating compliance with 2 CFR 200.403 and 200.302. Overreliance on a single individual for documentation and procedural execution without accompanying review or monitoring controls can increase the risk of errors, omissions, or audit findings, even when expenditures are reasonable and allowable. Questioned Costs: Known questioned costs of $2,742 were identified. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Organization implement a standardized procedure for documenting all direct and indirect cost allocations charged to federal programs, ensuring that each claim includes full supporting documentation such as receipts and annotated allocation details with consistent allocation methods. To strengthen internal controls, the Organization should consider establishing a review process for claims preparation that includes someone other than the individual preparing or allocating the expenditures. This will enhance accountability and help ensure compliance with federal documentation requirements. Views of Responsible Officials: The Organization will develop written guidelines specifying the required supporting documentation for each type of direct expense. Set up vendors in QuickBooks. We will hire and train Finance Manager to manage and track revenue and expenses, QuickBooks, grant reporting etc. All receipts and expenses will be scanned in and kept electronically. The Organization will provide training on documentation requirements, proper record submission, and compliance expectations.
2024-004: Written Policies and Procedures – Significant Deficiency Criteria and Condition: 2 CFR 200.302 requires that the recipient or subrecipient’s financial management system must provide written procedures to implement the requirements of 2 CFR 200.305 (Federal payments) and for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award. Additionally, 2 CFR 200.318 requires that the recipient or subrecipient must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services. Context: Although the Organization follows procedures that minimize the time between reimbursement of dollars and expenditure (2 CFR 200.305), verify payments made are in accordance with subpart E and terms and conditions of the award, and follow procurement standards for vendors, there are no written procedures as required by the CFR. Cause and Effect: The Organization did not maintain written procedures as required by the CFR. Questioned Costs: This finding does not result in questioned costs. Recommendation: We recommend that the Organization formally document the current policies and procedures in place to meet documentation requirements of the CFR. Views of Responsible Officials and Planned Corrective Actions: We will adopt formal policies and procedures that document our current practices and also meet the requirements of the CFR.
2024-004: Written Policies and Procedures – Significant Deficiency Criteria and Condition: 2 CFR 200.302 requires that the recipient or subrecipient’s financial management system must provide written procedures to implement the requirements of 2 CFR 200.305 (Federal payments) and for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award. Additionally, 2 CFR 200.318 requires that the recipient or subrecipient must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services. Context: Although the Organization follows procedures that minimize the time between reimbursement of dollars and expenditure (2 CFR 200.305), verify payments made are in accordance with subpart E and terms and conditions of the award, and follow procurement standards for vendors, there are no written procedures as required by the CFR. Cause and Effect: The Organization did not maintain written procedures as required by the CFR. Questioned Costs: This finding does not result in questioned costs. Recommendation: We recommend that the Organization formally document the current policies and procedures in place to meet documentation requirements of the CFR. Views of Responsible Officials and Planned Corrective Actions: We will adopt formal policies and procedures that document our current practices and also meet the requirements of the CFR.
Finding 2024-001 Interproject Payable – Amounts Owed to Other HUD Project Type of finding: Significant deficiency in internal control. Condition and context: During our audit we noted that the project has recorded a payable due to another HUD-assisted project in the amount of $3,072, and there is no documented HUD authorization supporting this obligation. Criteria: Per 2 CFR Part 200 (Uniform Guidance), §§200.302 and 200.403, federal program funds must be used only for allowable costs and in direct support of the objectives of the program. HUD requirements also prohibit the commingling of funds between projects unless explicitly authorized. Interproject payables or advances without proper documentation or timely settlement may constitute an unallowable use of program resources. Cause: Management permitted the use of funds from another HUD-assisted project to support operations of this project without obtaining HUD approval or establishing proper repayment terms. This occurred due to inadequate oversight of cash management and interproject transactions. Effect: Maintaining an outstanding payable to another HUD project: • Indicates potential misuse of federal funds. • Increases the risk of noncompliance with HUD requirements and Uniform Guidance. • May impair the project’s ability to demonstrate financial independence and program accountability. • Exposes the project to possible HUD sanctions, questioned costs, or repayment obligations. Questioned costs: Known questioned costs are $3,072. Recommendation: We recommend that project management: • Repay the outstanding payable to the related HUD project as soon as feasible. • Cease the practice of interproject borrowing unless HUD has provided explicit authorization. • Implement stronger internal controls over cash management and interproject transactions. • Document and monitor all project-level obligations to ensure compliance with HUD regulations. Views of Responsible Officials: Management agrees with this finding and the payment will be corrected. Management will review internal controls and implement a review process to only pay expenses already incurred to avoid future payments.
2 CFR § 300 codified in 45 CFR part 75 and gives regulatory effect to the Department of Health and Human Services 2 CFR § 200; while 2 CFR § 400 gives regulatory effect to the Department of Agriculture for 2 CFR § 200. 2 CFR § 200.302(b)(6) states the financial management system of each non-Federal entity must provide for written procedures to implement the requirements of 2 CFR § 200.305 for Payment. 2 CFR 200.302(b)(7) requires written procedures for determining the allowability of costs in accordance with Subpart E-Cost Principles of this part and the terms and conditions of the Federal award. 2 CFR 200.430 states that costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity's laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable. 2 CFR 200.431 requires established written leave policies if the entity intends to pay fringe benefits. 2 CFR 200.464(a)(2) requires reimbursement of relocation costs to employees be in accordance with an established written policy must be consistently followed by the employer. 2 CFR 200.475 requires reimbursement and/or charges to be consistent with those normally allowed in like circumstances in the non-Federal entity's non-federally-funded activities and in accordance with non-Federal entity's written travel reimbursement policies. Additionally, for Federal awards, the Uniform Guidance requires a written policy for the procurement requirements outlined in 2 CFR § 200.318(c)(1), 2 CFR § 200.318(c)(2), and 2 CFR § 200.320(B). The Board of Health did not have written policies as required by the Uniform Guidance as they were not aware of the requirements. The failure to implement written policies as required by the Uniform Guidance could result in noncompliance with the District’s federal programs. The Board of Health should adopt written policies in accordance with the Uniform Guidance to help improve internal controls over federal compliance.
2 CFR § 300 codified in 45 CFR part 75 and gives regulatory effect to the Department of Health and Human Services 2 CFR § 200; while 2 CFR § 400 gives regulatory effect to the Department of Agriculture for 2 CFR § 200. 2 CFR § 200.302(b)(6) states the financial management system of each non-Federal entity must provide for written procedures to implement the requirements of 2 CFR § 200.305 for Payment. 2 CFR 200.302(b)(7) requires written procedures for determining the allowability of costs in accordance with Subpart E-Cost Principles of this part and the terms and conditions of the Federal award. 2 CFR 200.430 states that costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity's laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable. 2 CFR 200.431 requires established written leave policies if the entity intends to pay fringe benefits. 2 CFR 200.464(a)(2) requires reimbursement of relocation costs to employees be in accordance with an established written policy must be consistently followed by the employer. 2 CFR 200.475 requires reimbursement and/or charges to be consistent with those normally allowed in like circumstances in the non-Federal entity's non-federally-funded activities and in accordance with non-Federal entity's written travel reimbursement policies. Additionally, for Federal awards, the Uniform Guidance requires a written policy for the procurement requirements outlined in 2 CFR § 200.318(c)(1), 2 CFR § 200.318(c)(2), and 2 CFR § 200.320(B). The Board of Health did not have written policies as required by the Uniform Guidance as they were not aware of the requirements. The failure to implement written policies as required by the Uniform Guidance could result in noncompliance with the District’s federal programs. The Board of Health should adopt written policies in accordance with the Uniform Guidance to help improve internal controls over federal compliance.
2 CFR § 300 codified in 45 CFR part 75 and gives regulatory effect to the Department of Health and Human Services 2 CFR § 200; while 2 CFR § 400 gives regulatory effect to the Department of Agriculture for 2 CFR § 200. 2 CFR § 200.302(b)(6) states the financial management system of each non-Federal entity must provide for written procedures to implement the requirements of 2 CFR § 200.305 for Payment. 2 CFR 200.302(b)(7) requires written procedures for determining the allowability of costs in accordance with Subpart E-Cost Principles of this part and the terms and conditions of the Federal award. 2 CFR 200.430 states that costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity's laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable. 2 CFR 200.431 requires established written leave policies if the entity intends to pay fringe benefits. 2 CFR 200.464(a)(2) requires reimbursement of relocation costs to employees be in accordance with an established written policy must be consistently followed by the employer. 2 CFR 200.475 requires reimbursement and/or charges to be consistent with those normally allowed in like circumstances in the non-Federal entity's non-federally-funded activities and in accordance with non-Federal entity's written travel reimbursement policies. Additionally, for Federal awards, the Uniform Guidance requires a written policy for the procurement requirements outlined in 2 CFR § 200.318(c)(1), 2 CFR § 200.318(c)(2), and 2 CFR § 200.320(B). The Board of Health did not have written policies as required by the Uniform Guidance as they were not aware of the requirements. The failure to implement written policies as required by the Uniform Guidance could result in noncompliance with the District’s federal programs. The Board of Health should adopt written policies in accordance with the Uniform Guidance to help improve internal controls over federal compliance.
2 CFR § 300 codified in 45 CFR part 75 and gives regulatory effect to the Department of Health and Human Services 2 CFR § 200; while 2 CFR § 400 gives regulatory effect to the Department of Agriculture for 2 CFR § 200. 2 CFR § 200.302(b)(6) states the financial management system of each non-Federal entity must provide for written procedures to implement the requirements of 2 CFR § 200.305 for Payment. 2 CFR 200.302(b)(7) requires written procedures for determining the allowability of costs in accordance with Subpart E-Cost Principles of this part and the terms and conditions of the Federal award. 2 CFR 200.430 states that costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity's laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable. 2 CFR 200.431 requires established written leave policies if the entity intends to pay fringe benefits. 2 CFR 200.464(a)(2) requires reimbursement of relocation costs to employees be in accordance with an established written policy must be consistently followed by the employer. 2 CFR 200.475 requires reimbursement and/or charges to be consistent with those normally allowed in like circumstances in the non-Federal entity's non-federally-funded activities and in accordance with non-Federal entity's written travel reimbursement policies. Additionally, for Federal awards, the Uniform Guidance requires a written policy for the procurement requirements outlined in 2 CFR § 200.318(c)(1), 2 CFR § 200.318(c)(2), and 2 CFR § 200.320(B). The Board of Health did not have written policies as required by the Uniform Guidance as they were not aware of the requirements. The failure to implement written policies as required by the Uniform Guidance could result in noncompliance with the District’s federal programs. The Board of Health should adopt written policies in accordance with the Uniform Guidance to help improve internal controls over federal compliance.
2 CFR § 300 codified in 45 CFR part 75 and gives regulatory effect to the Department of Health and Human Services 2 CFR § 200; while 2 CFR § 400 gives regulatory effect to the Department of Agriculture for 2 CFR § 200. 2 CFR § 200.302(b)(6) states the financial management system of each non-Federal entity must provide for written procedures to implement the requirements of 2 CFR § 200.305 for Payment. 2 CFR 200.302(b)(7) requires written procedures for determining the allowability of costs in accordance with Subpart E-Cost Principles of this part and the terms and conditions of the Federal award. 2 CFR 200.430 states that costs of compensation are allowable to the extent that they satisfy the specific requirements of this part, and that the total compensation for individual employees: (1) Is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity's laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i) of this section, Standards for Documentation of Personnel Expenses, when applicable. 2 CFR 200.431 requires established written leave policies if the entity intends to pay fringe benefits. 2 CFR 200.464(a)(2) requires reimbursement of relocation costs to employees be in accordance with an established written policy must be consistently followed by the employer. 2 CFR 200.475 requires reimbursement and/or charges to be consistent with those normally allowed in like circumstances in the non-Federal entity's non-federally-funded activities and in accordance with non-Federal entity's written travel reimbursement policies. Additionally, for Federal awards, the Uniform Guidance requires a written policy for the procurement requirements outlined in 2 CFR § 200.318(c)(1), 2 CFR § 200.318(c)(2), and 2 CFR § 200.320(B). The Board of Health did not have written policies as required by the Uniform Guidance as they were not aware of the requirements. The failure to implement written policies as required by the Uniform Guidance could result in noncompliance with the District’s federal programs. The Board of Health should adopt written policies in accordance with the Uniform Guidance to help improve internal controls over federal compliance.
Finding 2024-01: Considered a significant deficiency. Criteria: Uniform Guidance (2 CFR §§200.302–303 and 200.318–320) requires non-federal entities to establish and maintain effective internal controls and written policies and procedures to ensure compliance with federal award requirements. These policies must be sufficiently detailed to provide consistent and proper administration of federal programs Condition: As part of our audit of compliance with the requirements of the Uniform Guidance for the year ended December 31, 2024, we noted that West Michigan Food Processing Association does not have formal, written policies and procedures in place related to the administration of its federal awards. Specifically, we noted the absence of written procedures addressing: ➢ Financial management systems (including allowable costs and cash management) ➢ Procurement standards ➢ Subrecipient monitoring ➢ Internal controls over compliance ➢ Conflicts of interest Effect: Without formal written policies and procedures, there is an increased risk that federal program requirements may not be followed consistently. This could result in noncompliance with federal regulations, mismanagement of federal funds, or potential questioned costs. Additionally, the absence of documentation limits the ability to demonstrate compliance during audit or grantor review processes. Cause: The absence of written policies appears to result from the entity historically depending on established practices and staff knowledge, rather than formally documenting procedures as required under Uniform Guidance. Recommendation: We recommend that West Michigan Food Processing Association develop and implement comprehensive written policies and procedures to address the requirements of the Uniform Guidance. These should be tailored to the Association’s structure and operations and cover all applicable federal compliance areas. Management should also establish a process to periodically review and update these documents to ensure continued compliance. Response: West Michigan Food Processing Association concurs with the facts of the finding and is implementing procedures to prevent this in the future.
Finding 2024-01: Considered a significant deficiency. Criteria: Uniform Guidance (2 CFR §§200.302–303 and 200.318–320) requires non-federal entities to establish and maintain effective internal controls and written policies and procedures to ensure compliance with federal award requirements. These policies must be sufficiently detailed to provide consistent and proper administration of federal programs Condition: As part of our audit of compliance with the requirements of the Uniform Guidance for the year ended December 31, 2024, we noted that West Michigan Food Processing Association does not have formal, written policies and procedures in place related to the administration of its federal awards. Specifically, we noted the absence of written procedures addressing: ➢ Financial management systems (including allowable costs and cash management) ➢ Procurement standards ➢ Subrecipient monitoring ➢ Internal controls over compliance ➢ Conflicts of interest Effect: Without formal written policies and procedures, there is an increased risk that federal program requirements may not be followed consistently. This could result in noncompliance with federal regulations, mismanagement of federal funds, or potential questioned costs. Additionally, the absence of documentation limits the ability to demonstrate compliance during audit or grantor review processes. Cause: The absence of written policies appears to result from the entity historically depending on established practices and staff knowledge, rather than formally documenting procedures as required under Uniform Guidance. Recommendation: We recommend that West Michigan Food Processing Association develop and implement comprehensive written policies and procedures to address the requirements of the Uniform Guidance. These should be tailored to the Association’s structure and operations and cover all applicable federal compliance areas. Management should also establish a process to periodically review and update these documents to ensure continued compliance. Response: West Michigan Food Processing Association concurs with the facts of the finding and is implementing procedures to prevent this in the future.
Assistance Listing Number: 93.193 Name of Federal Program: COVID-19 Urban Indian Health Services Name of Federal Agency: Department of Health and Human Services Award Period: January 1, 2024 – December 31, 2024 Criteria or Specific Requirement: Per 2 CFR Part 200, non-federal entities receiving federal awards must establish and maintain written policies and procedures addressing areas including, but not limited to: procurement (§200.317–§200.327); travel costs (§200.475); methods for avoiding duplication of costs (§200.403); subrecipient monitoring (§200.332); cash management and allowable costs (§200.302, §200.305). Condition: The organization has not implemented all policies and procedures required under the Uniform Guidance. Specifically, certain written policies and procedures required by 2 CFR Part 200, such as cash management, allowability of costs, equipment management, conflict of interest, procurement, travel, compensation, and fringe benefits, were either incomplete, not formally documented, or not in place during the audit period. Cause: The Council has not detailed its policies to conform with the requirements of the Uniform Guidance. Effect or Potential Effect: Without documented and implemented policies and procedures, the organization increases the risk of noncompliance with federal regulations, inconsistent application of requirements, unallowable costs being charged to federal awards, and potential questioned costs or sanctions from funding agencies. Repeat Finding: No Recommendation: Management should develop, formally adopt, and implement all required Uniform Guidance policies and procedures. Policies should be documented, communicated to relevant staff, and periodically reviewed to ensure ongoing compliance. Views of Responsible Officials: Management agrees with the finding and revise its policies and procedures to meet the criteria of the Uniform Guidance.