Condition: As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Agency. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards state in summary that management should authorize, process, reconcile and close out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The close out process is designed to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity and experience of the current staff do not allow for adequate analysis of grants and contracts, proper allocations of shared costs and support services provided, grantor receivables, deferred revenue, and the reconciliation of bank accounts accurately and in a timely manner. This resulted in adjustments necessary to properly present the financial statements and disclosures of the Agency as of July 31, 2022. We also noted significant weaknesses in internal controls over personnel payroll and the processing, maintaining and reconciling payroll activity to the general ledger and external regulatory reporting (IRS Form 941's, state filings, etc.) Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually). This condition also makes it difficult to prepare accurate external reports required by the various funding sources in a timely manner (i.e., SF-425, LIHEAP reporting, etc.). The systemic cause appears to be the untimely resignation of key personnel, a change in the accounting system, a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of internal accounting controls and monitoring. Policies and procedures are not followed consistently throughout the year. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR ?200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in ??200.327 Financial reporting and 200.328 Monitoring and reporting program performance [2 CFR ?200.302(b)(2)]. Effect: Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Turnover of key staff, change in the accounting system, limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. The implementation of a new accounting system without an adequate close out of the old system was determined to be the systemic cause. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency is determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Agency has hired a new fiscal officer (CFO) and should hire additional staff (grant accountants and a general ledger accountant) to assist the new fiscal officer. New staff should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. Policies and procedures should be updated to adequately address the challenges and dynamics of the community action agency. We believe that the CFO with the supporting staff and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant?s basic responsibilities. Program directors should be involved in the closing process. We further recommend that training be provided to all staff engaged in the financial reporting, allocations and reconciliation functions to ensure that a complete and accurate financial statement close out process is achieved each month and annually. Views of Responsible Officials and Planned Corrective Actions: Management is in the process of assessing the organizational structure and capacity to provide adequate financial reporting. With Board review and approval of the agency?s financial funding sources, the agency will hire additional fiscal clerk to further support financial requirements and segregation of duties to ensure adequate internal controls are fully implemented. The CFO will have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner to eliminate the risk of significant errors occurring. Budget-to-actual schedules will be an integral part of the grant accountant analyst?s basic responsibilities. The fiscal policies and procedures will be updated with the enhancements implemented within the fiscal department. Staff will be trained on revised policies and procedures and uniform guidance regulations. The new automated financial system, will support financial reporting to meet GAAP requirements and to provide informative reports for Board and Management. All enhancements will be implemented by December 31, 2023.
Finding 2022-002: Inaccurate SEFA - Material Weakness Name of Federal Agency: U.S. Department of Health and Human Services Federal Program Name and Assistance Listing Number: CCDF Cluster, 93.575 Federal Award Identification Number and Year: 2101HICSC6, 2021 Name of Pass-through Entity: State of Hawaii Department of Human Services Criteria: In accordance with 2 CFR 200.302 (Financial Management), a grant recipient's financial management system must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statutes, regulations, and the terms and conditions of the federal award. In addition, 2 CFR 200.510 (Financial Statements) states in part that the auditee must prepare a schedule of expenditures of Federal awards ("SEFA") for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. At a minimum, the schedule must include: • All individual Federal programs by Federal agency. • For Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included. • Provide total Federal awards expended for each individual Federal program and the Assistance Listings Number or other identifying number when the Assistance Listings information is not available. • Include the total amount provided to subrecipients from each Federal program. Condition: The Organization had a significant revision to the SEFA and management's initial review and approval process did not detect the error. Cause: The Organization's internal controls over the preparation and review of the SEFA were not operating effectively. Effect or Potential Effect: Inadequate controls over the preparation of the SEFA could result in financial misstatements or potential noncompliance. Questioned Costs: N/A Context: Management's initial review and approval of the SEFA did not identify $2.5M of expenditures that should have been recorded in the subsequent fiscal year. Identification as a Repeat Finding: This finding is not a repeat finding. Recommendation: We recommend the Organization strengthen its policies, procedures, and controls for the identification of federal awards to ensure a complete and accurate SEFA is prepared in a timely manner. Views of Responsible Officials: Management concurs with the finding and will implement a proper expenditure reporting process, reconciled monthly, to avoid recurrence during future audits.
Federal programs: Education Stabilization Fund - Higher Education Emergency Relief Fund (HEERF) CFDA Number: 84.425E / 84.425F Federal award identification number: P425E205418 / P425F204999 Grant period: September 29, 2020 to June 30, 2023 and July 23, 2020 to May 23, 2022 Federal agency: U.S. Department of Education Pass-through entity: N/A Category: Internal Control Finding Type: Material Weakness Compliance requirement: Other ? Policies and procedures requirements Condition and context When obtaining an understanding of the internal controls, policies, and procedures regarding the administration of federal programs, and grant term and conditions, we noted the following deficiencies: a. There is no written policy, nor the procedures designed and implemented by the Institution related to Cash Management were documented. The Institution opted to request the funds on a reimbursement basis. b. There were no written procedures for determining the allowability of costs in accordance with 2 CFR 200 subpart E of this part and the terms and conditions of the Federal award. c. After examination of the Institution procurement policy, we noted that the document was not signed by all members required from management and was not dated. Upon inquiry, we noted that the procurement policy was drafted and submitted to the Institution for review in February 2023. Therefore, no written policy and formal procedures were designed and implemented for the procurement transactions tested for the fiscal year ended July 31, 2022 and thereafter. Criteria 2 CFR 200.302 (b) (6) and (7) establish that the financial management system of each non-Federal entity must provide for the following: written procedures to implement the requirements of ? 200.305, and written procedures for determining the allowability of costs in accordance with subpart E of this part and the terms and conditions of the Federal award. 2 CFR 200.303 establish that 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); (b) comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards; (c) evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards; (d) take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings; and (e) take reasonable measures to safeguard protected personally identifiable information and other information the Federal awarding agency or pass-through entity designates as sensitive or the non-Federal entity considers sensitive consistent with applicable Federal, State, local, and tribal laws regarding privacy and responsibility over confidentiality. 2 CFR 200.318 (a) establishes that the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in 2 CFR 200.317 through 200.327. 2 CFR 200.400 (a) to (d) establish that the application of these cost principles is based on the fundamental premises that: (a) the non-Federal entity is responsible for the efficient and effective administration of the Federal award through the application of sound management practices; (b) the non-Federal entity assumes responsibility for administering Federal funds in a manner consistent with underlying agreements, program objectives, and the terms and conditions of the Federal award; (c) the non-Federal entity, in recognition of its own unique combination of staff, facilities, and experience, has the primary responsibility for employing whatever form of sound organization and management techniques may be necessary in order to assure proper and efficient administration of the Federal award; (d) the application of these cost principles should require no significant changes in the internal accounting policies and practices of the non-Federal entity. However, the accounting practices of the non-Federal entity must be consistent with these cost principles and support the accumulation of costs as required by the principles and must provide for adequate documentation to support costs charged to the Federal award. Cause The Institution?s federal programs received prior the fiscal year ended July 31, 2020 did not require the implementation of written procedures as mentioned in the condition and context section, except for Cash Management policies and procedures for the Student Financial Assistance Programs Cluster for which the Institution has designed and implemented written procedures for such compliance requirement. The Covid-19 pandemic related programs were the reason why this new federal program funds were received, and the entity failed to design and implement on a timely basis the required written documentation and procedures. Effect Noncompliance with the above-mentioned requirement could lead to administrative sanctions by the grantor, including disallowance of costs. It could also be interpreted as a failure to achieve the program?s objectives. Questioned costs None. Identification as a Repeat Finding No repeated finding. Recommendation We recommend the Institution to implement written policies and procedures needed for the administration of federal grants before the acceptance of new grants. Having well sounded policies and procedures will reduce the Institution risk of non-compliance with federal regulations and grants terms and conditions. Also, they will provide guidance to the Institution?s personnel on how to carry-out their responsibilities and functions in relation to the administration of federal programs transactions. Views of Responsible Officials Refer to the Institutional comments included in the Corrective Action Plan.
Assistance listing program: Education Stabilization Fund - Higher Education Emergency Relief Fund (HEERF) Assistance Listing Number: 84.425E / 84.425F Award identification number: P425F204999 / P425E205418 Award period: September 29, 2020 to June 30, 2023 and July 23, 2020 to May 23, 2022 Federal agency: U.S. Department of Education Pass-through entity: N/A Category: Internal Control Finding Type: Significant Deficiency Compliance requirement: Cash Management Condition and context In testing compliance and internal controls over cash management, we selected a sample of four (4) drawdowns which amounted to $342,787 of the total HEERF Institutional aid funds expenditures. Our sample was a statistically valid sample. During our test, we noted that in one (25%) of the four (4) drawdowns selected, for three payments made by the Institution the time elapsed between the receipt of funds and the check issuance was between 20 to 48 days. The total amount disbursed after the three elapsed days requirement was $4,020 from a drawdown total of $56,065. Criteria 2 CFR 200.302 (b) (6) requires written procedures to implement the requirements of 200.305. 2 CFR 200.305 (b) and (b) (1) establish that for non-Federal entities other than states, payments methods must minimize the time elapsing between the transfer of funds from the United States Treasury or the pass-through entity and the disbursement by the non-Federal entity whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means. See also 200.302(b)(6). Except as noted elsewhere in this part, Federal agencies must require recipients to use only OMB-approved, governmentwide information collection requests to request payment. The non-Federal entity must be paid in advance, provided it maintains or demonstrates the willingness to maintain both written procedures that minimize the time elapsing between the transfer of funds and disbursement by the non-Federal entity, and financial management systems that meet the standards for fund control and accountability as established in this part. Advance payments to a non-Federal entity must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the non-Federal entity in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity for direct program or project costs and the proportionate share of any allowable indirect costs. The non-Federal entity must make timely payment to contractors in accordance with the contract provisions. 2 CFR 200.303 (a) to (d) establish that the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal awards that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards. 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). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. Cause The Institution did not design and implemented internal controls and procedures for this compliance requirement, including written policies and procedures. Effect Noncompliance with the above-mentioned requirements could lead to administrative actions by the grantor. It could also be interpreted as a failure to manage federal awards in compliance with laws, regulations, and provisions of contracts and grant agreements. Questioned costs Likely questioned costs are less than $25,000. Identification as a Repeat Finding No repeated finding. Recommendations We recommend the Institution to design and implement written internal controls and procedures for the administration of federal funds requests in accordance with the requirements of grant agreements and 2 CFR 200. Internal controls and procedures must consider maintaining adequate documentation to support the petitions of funds and to maintain the audit trail of the payments that will be issued. The Institution shall request only the amount of funds necessary to meet its immediate cash needs to prevent excess cash balances. Whenever payment amounts are adjusted after the funds were requested or received, such excess cash should be returned to the federal agency immediately. Establishing reliable and thorough cash forecasting procedures and subjecting such forecasts to the formal review and approval of Institution?s management should meet this objective. Also, the Institution shall coordinate and provide pertinent training to the finance personnel regarding the federal regulations related to the cash management requirements. Views of Responsible Officials Refer to the Institutional comments included in the Corrective Action Plan.
Assistance listing program: Education Stabilization Fund - Higher Education Emergency Relief Fund (HEERF) Assistance Listing Number: 84.425E / 84.425F Award identification number: P425F204999 / P425E205418 Award period: September 29, 2020 to June 30, 2023 and July 23, 2020 to May 23, 2022 Federal agency: U.S. Department of Education Pass-through entity: N/A Category: Internal Control / Compliance Finding Type: Material Weakness Compliance requirement: Reporting Condition and context For testing internal controls and compliance with reporting requirements applicable to the HEERF programs, we inquired the Institution about the internal controls and procedures for determining the criteria and methodology used in compiling and reporting the data to be included in the annual and quarterly special reports. We requested a copy of the annual report for the calendar year 2021 and the quarterly reports for the quarter ended on December 31, 2021 related to the institutional aid portion and the student aid portion. As part of our procedures, we tested the method of distribution of grants to ascertain consistency with the method that was actually employed by the Institution to distribute emergency financial aid grants to students. After our examination and tests performed, we noted the following: a) The methodology used to compile the information in the annual report was based on the funds drawdowns which were based on disbursements rather than the actual program expenditures for the Institutional aid funds in accordance with GAAP. b) After examination of the institutional aid portion expenditures amounts reported in the annual special report for the calendar year ended December 31, 2021 to the support provided by the Institution, we noted that the total of institutional annual expenditures was understated by $7,160. c) From the sample of enrollment statistical data selected for verification to the source documents and/or information we noted several differences and were unable to identify some of the information in the source documents in nineteen (19) out of a sample of thirty (30) statistical data lines examined in the annual special report. The exceptions were as follows: d) After examination of the quarterly special report of the student aid portion for the quarter ended December 31, 2021, we noted a difference in the Item #5: ?The total number of students who have received an Emergency Financial Aid Grant to students under the CARES (a)(1) subprogram and the CRRSAA and ARP (a)(1) subprograms?. The total of students that received assistance aid reported was 443; however, the number per the student aid payroll reports examined was 460. Additionally, no support was available to determine if the Institution was timely and accurate in publicly posting the quarterly Student Aid Portion Report selected for testing. e) In one out of a sample of forty (40) disbursements of financial aid to students (2.5%) we noted that the payment made did not agree with the Institution's fund distribution plan to prioritize students with financial need. The aid in excess disbursed to that student was $200. Criteria 2 CFR 200.302 (a) establishes that each state must expend and account for the Federal award in accordance with state laws, and procedures for expending and accounting for the state's own funds. In addition, the state's and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.302 (b) (2) to (4) establish that 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. If a Federal awarding agency requires reporting on an accrual basis from a recipient that maintains its records on other than an accrual basis, the recipient must not be required to establish an accrual accounting system. This recipient may develop accrual data for its reports on the basis of an analysis of the documentation on hand. Records that identify adequately the source and application of funds for federally-funded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income, and interest and be supported by source documentation. Effective control over, and accountability for, all funds, property, and other assets. 2 CFR 200.303 (a) to (d) establish that the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal awards that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards. 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). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. 2 CFR 200.334 establishes that financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. Cause The cause of the deficiencies noted were due to the following situations: a) The source of information provided by the Institution related to the financial information was the G5 report. Such information is on a cash basis; therefore, financial information was not reported on an accrual basis of accounting which is the basis of accounting followed by the Institution. Additionally, the Institution did not appropriately design and maintained documentation and/or analysis performed to prepare and complete the financial information required to be reported in the quarterly and annual reports. b) Lack of recordkeeping controls and procedures to document and maintain the source of information used for the financial and statistical data required in the annual and quarterly special reports. c) The Institution used the student EFC per the ISIR/SAR available at the time of the distribution, even though, an ISIR with a valid EFC was not available since the student FAFSA application was selected for verification by USDE. After the Institution completed the verification the student EFC increased from 0 to 3676. Effect Noncompliance with the reporting requirements could lead to significant administrative actions by the grantor, including a reduction in the amounts to be awarded. It could also be interpreted as a failure to achieve the programs objectives. Questioned costs Likely questioned costs are less than $25,000. Identification as a Repeat Finding No repeated finding. Recommendation We recommend the Institution to establish adequate procedures and controls to ensure that financial and statistical data information is properly supported and detailed to allow adequate audit trail of the information. Establish adequate supervisory procedures to identify, in a reasonable period of time, deficiencies or possible deficiencies in the procedures or guidance established by management to ascertain that the Institution reports the information as required by grantors, and that accurate and adequate support is properly maintained. Views of Responsible Officials Refer to the Institutional comments included in the Corrective Action Plan.
Federal programs: Education Stabilization Fund - Higher Education Emergency Relief Fund (HEERF) CFDA Number: 84.425E / 84.425F Federal award identification number: P425E205418 / P425F204999 Grant period: September 29, 2020 to June 30, 2023 and July 23, 2020 to May 23, 2022 Federal agency: U.S. Department of Education Pass-through entity: N/A Category: Internal Control Finding Type: Material Weakness Compliance requirement: Other ? Policies and procedures requirements Condition and context When obtaining an understanding of the internal controls, policies, and procedures regarding the administration of federal programs, and grant term and conditions, we noted the following deficiencies: a. There is no written policy, nor the procedures designed and implemented by the Institution related to Cash Management were documented. The Institution opted to request the funds on a reimbursement basis. b. There were no written procedures for determining the allowability of costs in accordance with 2 CFR 200 subpart E of this part and the terms and conditions of the Federal award. c. After examination of the Institution procurement policy, we noted that the document was not signed by all members required from management and was not dated. Upon inquiry, we noted that the procurement policy was drafted and submitted to the Institution for review in February 2023. Therefore, no written policy and formal procedures were designed and implemented for the procurement transactions tested for the fiscal year ended July 31, 2022 and thereafter. Criteria 2 CFR 200.302 (b) (6) and (7) establish that the financial management system of each non-Federal entity must provide for the following: written procedures to implement the requirements of ? 200.305, and written procedures for determining the allowability of costs in accordance with subpart E of this part and the terms and conditions of the Federal award. 2 CFR 200.303 establish that 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); (b) comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards; (c) evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards; (d) take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings; and (e) take reasonable measures to safeguard protected personally identifiable information and other information the Federal awarding agency or pass-through entity designates as sensitive or the non-Federal entity considers sensitive consistent with applicable Federal, State, local, and tribal laws regarding privacy and responsibility over confidentiality. 2 CFR 200.318 (a) establishes that the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in 2 CFR 200.317 through 200.327. 2 CFR 200.400 (a) to (d) establish that the application of these cost principles is based on the fundamental premises that: (a) the non-Federal entity is responsible for the efficient and effective administration of the Federal award through the application of sound management practices; (b) the non-Federal entity assumes responsibility for administering Federal funds in a manner consistent with underlying agreements, program objectives, and the terms and conditions of the Federal award; (c) the non-Federal entity, in recognition of its own unique combination of staff, facilities, and experience, has the primary responsibility for employing whatever form of sound organization and management techniques may be necessary in order to assure proper and efficient administration of the Federal award; (d) the application of these cost principles should require no significant changes in the internal accounting policies and practices of the non-Federal entity. However, the accounting practices of the non-Federal entity must be consistent with these cost principles and support the accumulation of costs as required by the principles and must provide for adequate documentation to support costs charged to the Federal award. Cause The Institution?s federal programs received prior the fiscal year ended July 31, 2020 did not require the implementation of written procedures as mentioned in the condition and context section, except for Cash Management policies and procedures for the Student Financial Assistance Programs Cluster for which the Institution has designed and implemented written procedures for such compliance requirement. The Covid-19 pandemic related programs were the reason why this new federal program funds were received, and the entity failed to design and implement on a timely basis the required written documentation and procedures. Effect Noncompliance with the above-mentioned requirement could lead to administrative sanctions by the grantor, including disallowance of costs. It could also be interpreted as a failure to achieve the program?s objectives. Questioned costs None. Identification as a Repeat Finding No repeated finding. Recommendation We recommend the Institution to implement written policies and procedures needed for the administration of federal grants before the acceptance of new grants. Having well sounded policies and procedures will reduce the Institution risk of non-compliance with federal regulations and grants terms and conditions. Also, they will provide guidance to the Institution?s personnel on how to carry-out their responsibilities and functions in relation to the administration of federal programs transactions. Views of Responsible Officials Refer to the Institutional comments included in the Corrective Action Plan.
Assistance listing program: Education Stabilization Fund - Higher Education Emergency Relief Fund (HEERF) Assistance Listing Number: 84.425F Award identification number: P425F204999 Award period: September 29, 2020 to June 30, 2023 Federal agency: U.S. Department of Education Pass-through entity: N/A Category: Internal Control / Compliance Finding Type: Material Weakness Compliance requirement: Allowed Cost / Cost Principles Condition and context In testing compliance and internal controls over cost allowability / cost principles, we selected a sample of ten (10) transactions which amounted to $445,522 of HEERF Institutional aid funds expenditures. Our sample was a statistically valid sample. During our expenditure test, we noted the following deficiencies: a) In one transaction of a sample of ten (10) disbursements (10%) the vendor quote was not available for examination. The transaction amounted to $5,899. The Institution indicated that they followed the micro purchase threshold of $10,000 as defined in 48CFR Part 2, subpart 2.1. However, this determination was not properly documented. b) In two (2) transactions of our sample (20%) the cost per quote did not agree with the amount of the invoice. The amount invoiced in excess of the quote cost was $1,090. c) In three (3) transactions of our sample (30%) we did not find documentation that the equipment was received (date and the employee who received the item). We inquired the Institution?s Management about this matter, and they explained that the Institution does not have a formal procedure or form to document the receipt of goods. Management confirmed and represented us that the items were properly received. d) In one transaction of our sample (10%) the expenditure was related to the amount of lost revenue claimed by the Institution in the fiscal year 2021-22. Upon examination of the Institution analysis, we noted that the lost revenue was not properly determined because the following situations: 1. For the loss of revenue calculation, the Institution used the unaudited figures for the fiscal year ended July 31, 2021. 2. We noted that the Institution considered in its analysis revenue that was not in accordance with the program guidelines (transactions that were not reimbursable under the HEERF grant program). 3. We noted that the lost revenue determined by the Institution was incorrectly determined (lost revenue claimed was understated by approximately $80,000) as result of the net effect of the deficiencies 1 and 2, above. Criteria 2 CFR 200.302 (b) (3) and (7) require records that identify adequately the source and application of funds for federally funded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income, and interest and be supported by source documentation. Written procedures for determining the allowability of costs in accordance with subpart E of this part and the terms and conditions of the Federal award. 2 CFR 200.303 (a) to (d) establish that the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal awards that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards. 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). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. 2 CFR 200.400 (a) to (d) establish that the application of these cost principles is based on the fundamental premises that: (a) The non-Federal entity is responsible for the efficient and effective administration of the Federal award through the application of sound management practices. (b) The non-Federal entity assumes responsibility for administering Federal funds in a manner consistent with underlying agreements, program objectives, and the terms and conditions of the Federal award. (c) The non-Federal entity, in recognition of its own unique combination of staff, facilities, and experience, has the primary responsibility for employing whatever form of sound organization and management techniques may be necessary in order to assure proper and efficient administration of the Federal award. (d) The application of these cost principles should require no significant changes in the internal accounting policies and practices of the non-Federal entity. However, the accounting practices of the non-Federal entity must be consistent with these cost principles and support the accumulation of costs as required by the principles and must provide for adequate documentation to support costs charged to the Federal awards. 2 CFR 200.403, related to factors affecting allowability of cost, (c) and (g) establish that except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity, and be adequately documented. 2 CFR 200.404 establishes that a cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to: (a) whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award; (b) the restraints or requirements imposed by such factors as: sound business practices; arm's-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award; (c) market prices for comparable goods or services for the geographic area; (d) whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government; and (e) whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost. 2 CFR 200.406 (a) establishes that applicable credits refer to those receipts or reduction-of-expenditure-type transactions that offset or reduce expense items allocable to the Federal awards as direct or indirect (F&A) costs. Examples of such transactions are: purchase discounts, rebates or allowances, recoveries or indemnities on losses, insurance refunds or rebates, and adjustments of overpayments or erroneous charges. To the extent that such credits accruing to or received by the non-Federal entity relate to allowable costs, they must be credited to the Federal award either as a cost reduction or cash refund, as appropriate. 2 CFR 200.334 establishes that financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. 2 CFR 200.337 (a) establishes that the Federal awarding agency, Inspectors General, the Comptroller General of the United States, and the pass-through entity, or any of their authorized representatives, must have the right of access to any documents, papers, or other records of the non-Federal entity which are pertinent to the Federal award, in order to make audits, examinations, excerpts, and transcripts. The right also includes timely and reasonable access to the non-Federal entity's personnel for the purpose of interview and discussion related to such documents. The Higher Education Emergency Relief Fund (HEERF I, II, and III) Lost Revenue Frequently Asked Questions (FAQs) published on March 19, 2021, in question number four establishes that sources of lost revenue that are not reimbursable under the HEERF grant programs include the following: capital outlays associated with facilities related to athletics (including fees assessed for capital athletic facility construction), acquisition of real property (including bond revenue), contributions or donations to the institution, marketing or recruitment activities, revenue related to sectarian instruction or religious worship, alcohol sales, and investment income (including endowment and quasi-endowment revenue. Cause The cause of the deficiencies noted were the result of the following situations: a) Lack of written policies and procedures did not provide the Institution?s personnel responsible for the purchasing process a guidance on how to perform and document the purchase transactions under this federal program. b) The vendor invoice was not compared to the quote and no inquiries were made and/or documented explaining the cause of the difference. c) The Institution does not have formal and written procedures to document when materials and/or equipment are received by the Institution?s personnel. d) The Institution management did not consult or requested assistance from the Department of Education program coordinator to ascertain that the request was properly performed and to clarify questions related to the allowable revenue to be considered in the analysis. Also, the Institution failed to review the financial figures of the audited trial balance for 2021. Effect Noncompliance with the above-mentioned requirements could lead to administrative actions by the grantor. It could also be interpreted as a failure to manage federal awards in compliance with laws, regulations, and provisions of contracts and grant agreements. Also, the above conditions could result in the reimbursement of federal funds to the grantors for those disbursements not properly supported and reviewed by the Institution?s management. Questioned costs Refer to finding 2022-010. Identification as a Repeat Finding No repeated finding. Recommendations We recommend the Institution to establish adequate procedures and controls, which shall consider, among others, the following: ? Maintain adequate documentation to support the allowability of its expenditures. ? Purchases must be properly documented to provide the appropriate audit trail of the transactions and allow proper review of the transactions. Adequate documentation should be sufficient to explain the Institution?s analysis and determination. ? Improve its policies and procedures, and internal controls to incorporate the comparison of the vendor invoices with the quotes after the invoice is received to ascertain that expenses and liabilities are properly recorded. Instruct personnel of accounts payable to contact the vendor when discrepancies are identified and document in writing the inquiry performed, the results, and conclusions. ? Implement a formal process with receiving reports or checklist where upon receipt of equipment and/or materials purchased could detail description, amount received, date of receipt, and a reference to the invoice. Copies of the receiving reports and invoices should then be forwarded to the accounting department for processing. Payment of a vendor?s invoice should not be made unless a copy of a receiving report is attached. ? The Institution management should review the Loss of Revenue claims and/or analysis performed by any employee or consultant that was designated to perform such a task. The Institution?s management should verify and ascertain that the analysis performed using the Institution?s financial information agree with the Institution?s audited financial statements. ? The Institution?s management should consult with the US Department of Education program coordinator when questions or concerns arise, especially if management is not familiar with program regulations and/or the federal program is new. Views of Responsible Officials Refer to the Institutional comments included in the Corrective Action Plan.
Assistance listing program: Education Stabilization Fund - Higher Education Emergency Relief Fund (HEERF) Assistance Listing Number: 84.425E / 84.425F Award identification number: P425F204999 / P425E205418 Award period: September 29, 2020 to June 30, 2023 and July 23, 2020 to May 23, 2022 Federal agency: U.S. Department of Education Pass-through entity: N/A Category: Internal Control Finding Type: Significant Deficiency Compliance requirement: Cash Management Condition and context In testing compliance and internal controls over cash management, we selected a sample of four (4) drawdowns which amounted to $342,787 of the total HEERF Institutional aid funds expenditures. Our sample was a statistically valid sample. During our test, we noted that in one (25%) of the four (4) drawdowns selected, for three payments made by the Institution the time elapsed between the receipt of funds and the check issuance was between 20 to 48 days. The total amount disbursed after the three elapsed days requirement was $4,020 from a drawdown total of $56,065. Criteria 2 CFR 200.302 (b) (6) requires written procedures to implement the requirements of 200.305. 2 CFR 200.305 (b) and (b) (1) establish that for non-Federal entities other than states, payments methods must minimize the time elapsing between the transfer of funds from the United States Treasury or the pass-through entity and the disbursement by the non-Federal entity whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means. See also 200.302(b)(6). Except as noted elsewhere in this part, Federal agencies must require recipients to use only OMB-approved, governmentwide information collection requests to request payment. The non-Federal entity must be paid in advance, provided it maintains or demonstrates the willingness to maintain both written procedures that minimize the time elapsing between the transfer of funds and disbursement by the non-Federal entity, and financial management systems that meet the standards for fund control and accountability as established in this part. Advance payments to a non-Federal entity must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the non-Federal entity in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity for direct program or project costs and the proportionate share of any allowable indirect costs. The non-Federal entity must make timely payment to contractors in accordance with the contract provisions. 2 CFR 200.303 (a) to (d) establish that the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal awards that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards. 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). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. Cause The Institution did not design and implemented internal controls and procedures for this compliance requirement, including written policies and procedures. Effect Noncompliance with the above-mentioned requirements could lead to administrative actions by the grantor. It could also be interpreted as a failure to manage federal awards in compliance with laws, regulations, and provisions of contracts and grant agreements. Questioned costs Likely questioned costs are less than $25,000. Identification as a Repeat Finding No repeated finding. Recommendations We recommend the Institution to design and implement written internal controls and procedures for the administration of federal funds requests in accordance with the requirements of grant agreements and 2 CFR 200. Internal controls and procedures must consider maintaining adequate documentation to support the petitions of funds and to maintain the audit trail of the payments that will be issued. The Institution shall request only the amount of funds necessary to meet its immediate cash needs to prevent excess cash balances. Whenever payment amounts are adjusted after the funds were requested or received, such excess cash should be returned to the federal agency immediately. Establishing reliable and thorough cash forecasting procedures and subjecting such forecasts to the formal review and approval of Institution?s management should meet this objective. Also, the Institution shall coordinate and provide pertinent training to the finance personnel regarding the federal regulations related to the cash management requirements. Views of Responsible Officials Refer to the Institutional comments included in the Corrective Action Plan.
Assistance listing program: Education Stabilization Fund - Higher Education Emergency Relief Fund (HEERF) Assistance Listing Number: 84.425E / 84.425F Award identification number: P425F204999 / P425E205418 Award period: September 29, 2020 to June 30, 2023 and July 23, 2020 to May 23, 2022 Federal agency: U.S. Department of Education Pass-through entity: N/A Category: Internal Control / Compliance Finding Type: Material Weakness Compliance requirement: Reporting Condition and context For testing internal controls and compliance with reporting requirements applicable to the HEERF programs, we inquired the Institution about the internal controls and procedures for determining the criteria and methodology used in compiling and reporting the data to be included in the annual and quarterly special reports. We requested a copy of the annual report for the calendar year 2021 and the quarterly reports for the quarter ended on December 31, 2021 related to the institutional aid portion and the student aid portion. As part of our procedures, we tested the method of distribution of grants to ascertain consistency with the method that was actually employed by the Institution to distribute emergency financial aid grants to students. After our examination and tests performed, we noted the following: a) The methodology used to compile the information in the annual report was based on the funds drawdowns which were based on disbursements rather than the actual program expenditures for the Institutional aid funds in accordance with GAAP. b) After examination of the institutional aid portion expenditures amounts reported in the annual special report for the calendar year ended December 31, 2021 to the support provided by the Institution, we noted that the total of institutional annual expenditures was understated by $7,160. c) From the sample of enrollment statistical data selected for verification to the source documents and/or information we noted several differences and were unable to identify some of the information in the source documents in nineteen (19) out of a sample of thirty (30) statistical data lines examined in the annual special report. The exceptions were as follows: d) After examination of the quarterly special report of the student aid portion for the quarter ended December 31, 2021, we noted a difference in the Item #5: ?The total number of students who have received an Emergency Financial Aid Grant to students under the CARES (a)(1) subprogram and the CRRSAA and ARP (a)(1) subprograms?. The total of students that received assistance aid reported was 443; however, the number per the student aid payroll reports examined was 460. Additionally, no support was available to determine if the Institution was timely and accurate in publicly posting the quarterly Student Aid Portion Report selected for testing. e) In one out of a sample of forty (40) disbursements of financial aid to students (2.5%) we noted that the payment made did not agree with the Institution's fund distribution plan to prioritize students with financial need. The aid in excess disbursed to that student was $200. Criteria 2 CFR 200.302 (a) establishes that each state must expend and account for the Federal award in accordance with state laws, and procedures for expending and accounting for the state's own funds. In addition, the state's and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.302 (b) (2) to (4) establish that 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. If a Federal awarding agency requires reporting on an accrual basis from a recipient that maintains its records on other than an accrual basis, the recipient must not be required to establish an accrual accounting system. This recipient may develop accrual data for its reports on the basis of an analysis of the documentation on hand. Records that identify adequately the source and application of funds for federally-funded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income, and interest and be supported by source documentation. Effective control over, and accountability for, all funds, property, and other assets. 2 CFR 200.303 (a) to (d) establish that the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal awards that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards. 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). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. 2 CFR 200.334 establishes that financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. Cause The cause of the deficiencies noted were due to the following situations: a) The source of information provided by the Institution related to the financial information was the G5 report. Such information is on a cash basis; therefore, financial information was not reported on an accrual basis of accounting which is the basis of accounting followed by the Institution. Additionally, the Institution did not appropriately design and maintained documentation and/or analysis performed to prepare and complete the financial information required to be reported in the quarterly and annual reports. b) Lack of recordkeeping controls and procedures to document and maintain the source of information used for the financial and statistical data required in the annual and quarterly special reports. c) The Institution used the student EFC per the ISIR/SAR available at the time of the distribution, even though, an ISIR with a valid EFC was not available since the student FAFSA application was selected for verification by USDE. After the Institution completed the verification the student EFC increased from 0 to 3676. Effect Noncompliance with the reporting requirements could lead to significant administrative actions by the grantor, including a reduction in the amounts to be awarded. It could also be interpreted as a failure to achieve the programs objectives. Questioned costs Likely questioned costs are less than $25,000. Identification as a Repeat Finding No repeated finding. Recommendation We recommend the Institution to establish adequate procedures and controls to ensure that financial and statistical data information is properly supported and detailed to allow adequate audit trail of the information. Establish adequate supervisory procedures to identify, in a reasonable period of time, deficiencies or possible deficiencies in the procedures or guidance established by management to ascertain that the Institution reports the information as required by grantors, and that accurate and adequate support is properly maintained. Views of Responsible Officials Refer to the Institutional comments included in the Corrective Action Plan.
Condition: As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Agency. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards state in summary that management should authorize, process, reconcile and close out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The close out process is designed to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity and experience of the current staff do not allow for adequate analysis of grants and contracts, proper allocations of shared costs and support services provided, grantor receivables, deferred revenue, and the reconciliation of bank accounts accurately and in a timely manner. This resulted in adjustments necessary to properly present the financial statements and disclosures of the Agency as of July 31, 2022. We also noted significant weaknesses in internal controls over personnel payroll and the processing, maintaining and reconciling payroll activity to the general ledger and external regulatory reporting (IRS Form 941's, state filings, etc.) Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually). This condition also makes it difficult to prepare accurate external reports required by the various funding sources in a timely manner (i.e., SF-425, LIHEAP reporting, etc.). The systemic cause appears to be the untimely resignation of key personnel, a change in the accounting system, a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of internal accounting controls and monitoring. Policies and procedures are not followed consistently throughout the year. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR ?200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in ??200.327 Financial reporting and 200.328 Monitoring and reporting program performance [2 CFR ?200.302(b)(2)]. Effect: Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Turnover of key staff, change in the accounting system, limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. The implementation of a new accounting system without an adequate close out of the old system was determined to be the systemic cause. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency is determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Agency has hired a new fiscal officer (CFO) and should hire additional staff (grant accountants and a general ledger accountant) to assist the new fiscal officer. New staff should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. Policies and procedures should be updated to adequately address the challenges and dynamics of the community action agency. We believe that the CFO with the supporting staff and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant?s basic responsibilities. Program directors should be involved in the closing process. We further recommend that training be provided to all staff engaged in the financial reporting, allocations and reconciliation functions to ensure that a complete and accurate financial statement close out process is achieved each month and annually. Views of Responsible Officials and Planned Corrective Actions: Management is in the process of assessing the organizational structure and capacity to provide adequate financial reporting. With Board review and approval of the agency?s financial funding sources, the agency will hire additional fiscal clerk to further support financial requirements and segregation of duties to ensure adequate internal controls are fully implemented. The CFO will have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner to eliminate the risk of significant errors occurring. Budget-to-actual schedules will be an integral part of the grant accountant analyst?s basic responsibilities. The fiscal policies and procedures will be updated with the enhancements implemented within the fiscal department. Staff will be trained on revised policies and procedures and uniform guidance regulations. The new automated financial system, will support financial reporting to meet GAAP requirements and to provide informative reports for Board and Management. All enhancements will be implemented by December 31, 2023.
Condition: As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Agency. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards state in summary that management should authorize, process, reconcile and close out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The close out process is designed to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity and experience of the current staff do not allow for adequate analysis of grants and contracts, proper allocations of shared costs and support services provided, grantor receivables, deferred revenue, and the reconciliation of bank accounts accurately and in a timely manner. This resulted in adjustments necessary to properly present the financial statements and disclosures of the Agency as of July 31, 2022. We also noted significant weaknesses in internal controls over personnel payroll and the processing, maintaining and reconciling payroll activity to the general ledger and external regulatory reporting (IRS Form 941's, state filings, etc.) Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually). This condition also makes it difficult to prepare accurate external reports required by the various funding sources in a timely manner (i.e., SF-425, LIHEAP reporting, etc.). The systemic cause appears to be the untimely resignation of key personnel, a change in the accounting system, a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of internal accounting controls and monitoring. Policies and procedures are not followed consistently throughout the year. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR ?200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in ??200.327 Financial reporting and 200.328 Monitoring and reporting program performance [2 CFR ?200.302(b)(2)]. Effect: Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Turnover of key staff, change in the accounting system, limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. The implementation of a new accounting system without an adequate close out of the old system was determined to be the systemic cause. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency is determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Agency has hired a new fiscal officer (CFO) and should hire additional staff (grant accountants and a general ledger accountant) to assist the new fiscal officer. New staff should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. Policies and procedures should be updated to adequately address the challenges and dynamics of the community action agency. We believe that the CFO with the supporting staff and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant?s basic responsibilities. Program directors should be involved in the closing process. We further recommend that training be provided to all staff engaged in the financial reporting, allocations and reconciliation functions to ensure that a complete and accurate financial statement close out process is achieved each month and annually. Views of Responsible Officials and Planned Corrective Actions: Management is in the process of assessing the organizational structure and capacity to provide adequate financial reporting. With Board review and approval of the agency?s financial funding sources, the agency will hire additional fiscal clerk to further support financial requirements and segregation of duties to ensure adequate internal controls are fully implemented. The CFO will have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner to eliminate the risk of significant errors occurring. Budget-to-actual schedules will be an integral part of the grant accountant analyst?s basic responsibilities. The fiscal policies and procedures will be updated with the enhancements implemented within the fiscal department. Staff will be trained on revised policies and procedures and uniform guidance regulations. The new automated financial system, will support financial reporting to meet GAAP requirements and to provide informative reports for Board and Management. All enhancements will be implemented by December 31, 2023.
Condition: As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Agency. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards state in summary that management should authorize, process, reconcile and close out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The close out process is designed to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity and experience of the current staff do not allow for adequate analysis of grants and contracts, proper allocations of shared costs and support services provided, grantor receivables, deferred revenue, and the reconciliation of bank accounts accurately and in a timely manner. This resulted in adjustments necessary to properly present the financial statements and disclosures of the Agency as of July 31, 2022. We also noted significant weaknesses in internal controls over personnel payroll and the processing, maintaining and reconciling payroll activity to the general ledger and external regulatory reporting (IRS Form 941's, state filings, etc.) Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually). This condition also makes it difficult to prepare accurate external reports required by the various funding sources in a timely manner (i.e., SF-425, LIHEAP reporting, etc.). The systemic cause appears to be the untimely resignation of key personnel, a change in the accounting system, a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of internal accounting controls and monitoring. Policies and procedures are not followed consistently throughout the year. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR ?200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in ??200.327 Financial reporting and 200.328 Monitoring and reporting program performance [2 CFR ?200.302(b)(2)]. Effect: Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Turnover of key staff, change in the accounting system, limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. The implementation of a new accounting system without an adequate close out of the old system was determined to be the systemic cause. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency is determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Agency has hired a new fiscal officer (CFO) and should hire additional staff (grant accountants and a general ledger accountant) to assist the new fiscal officer. New staff should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. Policies and procedures should be updated to adequately address the challenges and dynamics of the community action agency. We believe that the CFO with the supporting staff and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant?s basic responsibilities. Program directors should be involved in the closing process. We further recommend that training be provided to all staff engaged in the financial reporting, allocations and reconciliation functions to ensure that a complete and accurate financial statement close out process is achieved each month and annually. Views of Responsible Officials and Planned Corrective Actions: Management is in the process of assessing the organizational structure and capacity to provide adequate financial reporting. With Board review and approval of the agency?s financial funding sources, the agency will hire additional fiscal clerk to further support financial requirements and segregation of duties to ensure adequate internal controls are fully implemented. The CFO will have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner to eliminate the risk of significant errors occurring. Budget-to-actual schedules will be an integral part of the grant accountant analyst?s basic responsibilities. The fiscal policies and procedures will be updated with the enhancements implemented within the fiscal department. Staff will be trained on revised policies and procedures and uniform guidance regulations. The new automated financial system, will support financial reporting to meet GAAP requirements and to provide informative reports for Board and Management. All enhancements will be implemented by December 31, 2023.
Condition: As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Agency. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards state in summary that management should authorize, process, reconcile and close out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The close out process is designed to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity and experience of the current staff do not allow for adequate analysis of grants and contracts, proper allocations of shared costs and support services provided, grantor receivables, deferred revenue, and the reconciliation of bank accounts accurately and in a timely manner. This resulted in adjustments necessary to properly present the financial statements and disclosures of the Agency as of July 31, 2022. We also noted significant weaknesses in internal controls over personnel payroll and the processing, maintaining and reconciling payroll activity to the general ledger and external regulatory reporting (IRS Form 941's, state filings, etc.) Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually). This condition also makes it difficult to prepare accurate external reports required by the various funding sources in a timely manner (i.e., SF-425, LIHEAP reporting, etc.). The systemic cause appears to be the untimely resignation of key personnel, a change in the accounting system, a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of internal accounting controls and monitoring. Policies and procedures are not followed consistently throughout the year. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR ?200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in ??200.327 Financial reporting and 200.328 Monitoring and reporting program performance [2 CFR ?200.302(b)(2)]. Effect: Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Turnover of key staff, change in the accounting system, limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. The implementation of a new accounting system without an adequate close out of the old system was determined to be the systemic cause. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency is determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Agency has hired a new fiscal officer (CFO) and should hire additional staff (grant accountants and a general ledger accountant) to assist the new fiscal officer. New staff should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. Policies and procedures should be updated to adequately address the challenges and dynamics of the community action agency. We believe that the CFO with the supporting staff and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant?s basic responsibilities. Program directors should be involved in the closing process. We further recommend that training be provided to all staff engaged in the financial reporting, allocations and reconciliation functions to ensure that a complete and accurate financial statement close out process is achieved each month and annually. Views of Responsible Officials and Planned Corrective Actions: Management is in the process of assessing the organizational structure and capacity to provide adequate financial reporting. With Board review and approval of the agency?s financial funding sources, the agency will hire additional fiscal clerk to further support financial requirements and segregation of duties to ensure adequate internal controls are fully implemented. The CFO will have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner to eliminate the risk of significant errors occurring. Budget-to-actual schedules will be an integral part of the grant accountant analyst?s basic responsibilities. The fiscal policies and procedures will be updated with the enhancements implemented within the fiscal department. Staff will be trained on revised policies and procedures and uniform guidance regulations. The new automated financial system, will support financial reporting to meet GAAP requirements and to provide informative reports for Board and Management. All enhancements will be implemented by December 31, 2023.
Condition: As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Agency. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards state in summary that management should authorize, process, reconcile and close out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The close out process is designed to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity and experience of the current staff do not allow for adequate analysis of grants and contracts, proper allocations of shared costs and support services provided, grantor receivables, deferred revenue, and the reconciliation of bank accounts accurately and in a timely manner. This resulted in adjustments necessary to properly present the financial statements and disclosures of the Agency as of July 31, 2022. We also noted significant weaknesses in internal controls over personnel payroll and the processing, maintaining and reconciling payroll activity to the general ledger and external regulatory reporting (IRS Form 941's, state filings, etc.) Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually). This condition also makes it difficult to prepare accurate external reports required by the various funding sources in a timely manner (i.e., SF-425, LIHEAP reporting, etc.). The systemic cause appears to be the untimely resignation of key personnel, a change in the accounting system, a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of internal accounting controls and monitoring. Policies and procedures are not followed consistently throughout the year. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR ?200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in ??200.327 Financial reporting and 200.328 Monitoring and reporting program performance [2 CFR ?200.302(b)(2)]. Effect: Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Turnover of key staff, change in the accounting system, limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. The implementation of a new accounting system without an adequate close out of the old system was determined to be the systemic cause. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency is determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Agency has hired a new fiscal officer (CFO) and should hire additional staff (grant accountants and a general ledger accountant) to assist the new fiscal officer. New staff should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. Policies and procedures should be updated to adequately address the challenges and dynamics of the community action agency. We believe that the CFO with the supporting staff and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant?s basic responsibilities. Program directors should be involved in the closing process. We further recommend that training be provided to all staff engaged in the financial reporting, allocations and reconciliation functions to ensure that a complete and accurate financial statement close out process is achieved each month and annually. Views of Responsible Officials and Planned Corrective Actions: Management is in the process of assessing the organizational structure and capacity to provide adequate financial reporting. With Board review and approval of the agency?s financial funding sources, the agency will hire additional fiscal clerk to further support financial requirements and segregation of duties to ensure adequate internal controls are fully implemented. The CFO will have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner to eliminate the risk of significant errors occurring. Budget-to-actual schedules will be an integral part of the grant accountant analyst?s basic responsibilities. The fiscal policies and procedures will be updated with the enhancements implemented within the fiscal department. Staff will be trained on revised policies and procedures and uniform guidance regulations. The new automated financial system, will support financial reporting to meet GAAP requirements and to provide informative reports for Board and Management. All enhancements will be implemented by December 31, 2023.
Finding 2022-002: Inaccurate SEFA - Material Weakness Name of Federal Agency: U.S. Department of Health and Human Services Federal Program Name and Assistance Listing Number: CCDF Cluster, 93.575 Federal Award Identification Number and Year: 2101HICSC6, 2021 Name of Pass-through Entity: State of Hawaii Department of Human Services Criteria: In accordance with 2 CFR 200.302 (Financial Management), a grant recipient's financial management system must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statutes, regulations, and the terms and conditions of the federal award. In addition, 2 CFR 200.510 (Financial Statements) states in part that the auditee must prepare a schedule of expenditures of Federal awards ("SEFA") for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. At a minimum, the schedule must include: • All individual Federal programs by Federal agency. • For Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included. • Provide total Federal awards expended for each individual Federal program and the Assistance Listings Number or other identifying number when the Assistance Listings information is not available. • Include the total amount provided to subrecipients from each Federal program. Condition: The Organization had a significant revision to the SEFA and management's initial review and approval process did not detect the error. Cause: The Organization's internal controls over the preparation and review of the SEFA were not operating effectively. Effect or Potential Effect: Inadequate controls over the preparation of the SEFA could result in financial misstatements or potential noncompliance. Questioned Costs: N/A Context: Management's initial review and approval of the SEFA did not identify $2.5M of expenditures that should have been recorded in the subsequent fiscal year. Identification as a Repeat Finding: This finding is not a repeat finding. Recommendation: We recommend the Organization strengthen its policies, procedures, and controls for the identification of federal awards to ensure a complete and accurate SEFA is prepared in a timely manner. Views of Responsible Officials: Management concurs with the finding and will implement a proper expenditure reporting process, reconciled monthly, to avoid recurrence during future audits.
Type: Federal Award, Significant Deficiency, Controls over Schedule of Expenditures of Federal Awards (SEFA) Assistance Listing Number: U.S. Department of Housing 14.218 Community Development Block Grant U.S. Department of Treasury 21.019 Coronavirus Relief Fund Criteria/Requirement: The Organization’s accounting system should clearly identify federal expenditures with minimal adjustments in accordance with 2 CFR 200.302. Condition/Context: The Organization did not identify all federal awards and significant audit adjustments were required to the SEFA prepared by management. Cause: The Organization received additional funding due to COVID-19 increasing the complexities of tracking by specific components of the award. A significant portion of the tracking is maintained in manual spreadsheets outside of the accounting system. Effect: Total expenditures by federal funding source may not be properly reported and Uniform Guidance reporting may be inaccurate. Questioned Costs: None. Recommendation: The Organization should implement additional procedures and controls to accurately capture all activity under federal awards in preparing the SEFA. Management’s Response: The Organization experienced disruption due to COVID-19 that had impacts on capacity. New contracts and source of funding are now being identified and recorded in the accounting system.
Type: Federal Award, Significant Deficiency, Controls over Schedule of Expenditures of Federal Awards (SEFA) Assistance Listing Number: U.S. Department of Housing 14.218 Community Development Block Grant U.S. Department of Treasury 21.019 Coronavirus Relief Fund Criteria/Requirement: The Organization’s accounting system should clearly identify federal expenditures with minimal adjustments in accordance with 2 CFR 200.302. Condition/Context: The Organization did not identify all federal awards and significant audit adjustments were required to the SEFA prepared by management. Cause: The Organization received additional funding due to COVID-19 increasing the complexities of tracking by specific components of the award. A significant portion of the tracking is maintained in manual spreadsheets outside of the accounting system. Effect: Total expenditures by federal funding source may not be properly reported and Uniform Guidance reporting may be inaccurate. Questioned Costs: None. Recommendation: The Organization should implement additional procedures and controls to accurately capture all activity under federal awards in preparing the SEFA. Management’s Response: The Organization experienced disruption due to COVID-19 that had impacts on capacity. New contracts and source of funding are now being identified and recorded in the accounting system.
Type: Federal Award, Significant Deficiency, Controls over Schedule of Expenditures of Federal Awards (SEFA) Assistance Listing Number: U.S. Department of Housing 14.218 Community Development Block Grant U.S. Department of Treasury 21.019 Coronavirus Relief Fund Criteria/Requirement: The Organization’s accounting system should clearly identify federal expenditures with minimal adjustments in accordance with 2 CFR 200.302. Condition/Context: The Organization did not identify all federal awards and significant audit adjustments were required to the SEFA prepared by management. Cause: The Organization received additional funding due to COVID-19 increasing the complexities of tracking by specific components of the award. A significant portion of the tracking is maintained in manual spreadsheets outside of the accounting system. Effect: Total expenditures by federal funding source may not be properly reported and Uniform Guidance reporting may be inaccurate. Questioned Costs: None. Recommendation: The Organization should implement additional procedures and controls to accurately capture all activity under federal awards in preparing the SEFA. Management’s Response: The Organization experienced disruption due to COVID-19 that had impacts on capacity. New contracts and source of funding are now being identified and recorded in the accounting system.
Type: Federal Award, Significant Deficiency, Controls over Schedule of Expenditures of Federal Awards (SEFA) Assistance Listing Number: U.S. Department of Housing 14.218 Community Development Block Grant U.S. Department of Treasury 21.019 Coronavirus Relief Fund Criteria/Requirement: The Organization’s accounting system should clearly identify federal expenditures with minimal adjustments in accordance with 2 CFR 200.302. Condition/Context: The Organization did not identify all federal awards and significant audit adjustments were required to the SEFA prepared by management. Cause: The Organization received additional funding due to COVID-19 increasing the complexities of tracking by specific components of the award. A significant portion of the tracking is maintained in manual spreadsheets outside of the accounting system. Effect: Total expenditures by federal funding source may not be properly reported and Uniform Guidance reporting may be inaccurate. Questioned Costs: None. Recommendation: The Organization should implement additional procedures and controls to accurately capture all activity under federal awards in preparing the SEFA. Management’s Response: The Organization experienced disruption due to COVID-19 that had impacts on capacity. New contracts and source of funding are now being identified and recorded in the accounting system.
2021-005 Material Weakness and Material Noncompliance: Grant and Reporting Compliance Department of Commerce - Investments for Public Works and Economic Development Facilities – CFDA No. 11.300 - Year ended June 30, 2022 Condition: The City failed to adequately review and reconcile the last pay request from the contractor and overpaid the contractor. As a result, the City also requested this overpayment amount from the Federal grant and it was funded to the City. Requests for reimbursement and semi-annual reporting is being reviewed by financial management, but there was no evidence that a reconciliation to the accounting system (i.e. general ledger) was performed, which resulted in material misstatements in the requests and reporting. Criteria: As a requirement of Federal cost principles found in 2 CFR 200.302, as well as the grant agreement with the U.S. Department of Commerce Economic Development Administration (EDA), the City’s accounting system should reconcile directly, and easily, to the grant reports/funds requests submitted to the grantors, the grant reporting should be free of material misstatements, and the grant files should be appropriately organized. Additionally, costs paid on this project with Federal funds cannot consist of improper payments, including overpayments, which are considered unallowable costs under the Federal cost principles. Cause: There was no reconciliation of grant reporting (including funds requests) to the general ledger in the accounting system, which resulted in the overpayment and overfunding. Effect: Grant project costs reporting (SF-425) were submitted to EDA with material misstatements and funds requests (SF-271) were misstated resulting in the overfunding of project costs. Material weakness in internal controls over compliance and material noncompliance with reporting occurred due to these misstatements and the lack of reconciliation to the accounting system. The same questioned costs as stated in Finding 2022-001, $52,446, also relates to this major award program. Context: The audit examined 100% of the fund’s requests (SF-271 #3 through #10) covering the entire fiscal year accrual period. The total Federal share requested exceeded total allowable project costs by $52,446, the amount of the questioned costs. The overpayment of the contractor and overfunding appear to be isolated and not pervasive. This is a repeat finding. Recommendation: I recommend the City ensure the accounting system reconciles to the funds requests without exception, to ensure invoices from contractors are correct before paying and to document the reconciliation to the accounting system. Views of Responsible Officials: The City agrees with the finding.
Finding 2022-003 21.027 - Coronavirus State and Local Fiscal Recovery Funds 93.268 - Immunization Cooperative Agreements 93.323 - Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Criteria 2 CFR Part 200.302(b)(7) requires the financial management system to include written procedures for determining the allowability of costs. Condition Hood River County has not developed written procedures for determining the allowability of costs. Cause Administration did not have written procedures for determining the allowability of costs. Effect Unallowable costs could be charged to the program. Questioned Costs None Recommendations Management should develop written procedures as required by 2 CFR Part 200.302(b)(7). Views of Responsible Officials Hood River County is currently working on several updated Grant procedures that include an update to the procedure related to Allowability of Costs. These updates are happening in the current fiscal year.
Finding 2022-003 21.027 - Coronavirus State and Local Fiscal Recovery Funds 93.268 - Immunization Cooperative Agreements 93.323 - Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Criteria 2 CFR Part 200.302(b)(7) requires the financial management system to include written procedures for determining the allowability of costs. Condition Hood River County has not developed written procedures for determining the allowability of costs. Cause Administration did not have written procedures for determining the allowability of costs. Effect Unallowable costs could be charged to the program. Questioned Costs None Recommendations Management should develop written procedures as required by 2 CFR Part 200.302(b)(7). Views of Responsible Officials Hood River County is currently working on several updated Grant procedures that include an update to the procedure related to Allowability of Costs. These updates are happening in the current fiscal year.
Finding 2022-003 21.027 - Coronavirus State and Local Fiscal Recovery Funds 93.268 - Immunization Cooperative Agreements 93.323 - Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Criteria 2 CFR Part 200.302(b)(7) requires the financial management system to include written procedures for determining the allowability of costs. Condition Hood River County has not developed written procedures for determining the allowability of costs. Cause Administration did not have written procedures for determining the allowability of costs. Effect Unallowable costs could be charged to the program. Questioned Costs None Recommendations Management should develop written procedures as required by 2 CFR Part 200.302(b)(7). Views of Responsible Officials Hood River County is currently working on several updated Grant procedures that include an update to the procedure related to Allowability of Costs. These updates are happening in the current fiscal year.
Finding 2022-003 21.027 - Coronavirus State and Local Fiscal Recovery Funds 93.268 - Immunization Cooperative Agreements 93.323 - Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Criteria 2 CFR Part 200.302(b)(7) requires the financial management system to include written procedures for determining the allowability of costs. Condition Hood River County has not developed written procedures for determining the allowability of costs. Cause Administration did not have written procedures for determining the allowability of costs. Effect Unallowable costs could be charged to the program. Questioned Costs None Recommendations Management should develop written procedures as required by 2 CFR Part 200.302(b)(7). Views of Responsible Officials Hood River County is currently working on several updated Grant procedures that include an update to the procedure related to Allowability of Costs. These updates are happening in the current fiscal year.
Finding 2022-003 21.027 - Coronavirus State and Local Fiscal Recovery Funds 93.268 - Immunization Cooperative Agreements 93.323 - Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Criteria 2 CFR Part 200.302(b)(7) requires the financial management system to include written procedures for determining the allowability of costs. Condition Hood River County has not developed written procedures for determining the allowability of costs. Cause Administration did not have written procedures for determining the allowability of costs. Effect Unallowable costs could be charged to the program. Questioned Costs None Recommendations Management should develop written procedures as required by 2 CFR Part 200.302(b)(7). Views of Responsible Officials Hood River County is currently working on several updated Grant procedures that include an update to the procedure related to Allowability of Costs. These updates are happening in the current fiscal year.
Finding 2022-003 21.027 - Coronavirus State and Local Fiscal Recovery Funds 93.268 - Immunization Cooperative Agreements 93.323 - Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Criteria 2 CFR Part 200.302(b)(7) requires the financial management system to include written procedures for determining the allowability of costs. Condition Hood River County has not developed written procedures for determining the allowability of costs. Cause Administration did not have written procedures for determining the allowability of costs. Effect Unallowable costs could be charged to the program. Questioned Costs None Recommendations Management should develop written procedures as required by 2 CFR Part 200.302(b)(7). Views of Responsible Officials Hood River County is currently working on several updated Grant procedures that include an update to the procedure related to Allowability of Costs. These updates are happening in the current fiscal year.
Finding 2022-003 21.027 - Coronavirus State and Local Fiscal Recovery Funds 93.268 - Immunization Cooperative Agreements 93.323 - Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Criteria 2 CFR Part 200.302(b)(7) requires the financial management system to include written procedures for determining the allowability of costs. Condition Hood River County has not developed written procedures for determining the allowability of costs. Cause Administration did not have written procedures for determining the allowability of costs. Effect Unallowable costs could be charged to the program. Questioned Costs None Recommendations Management should develop written procedures as required by 2 CFR Part 200.302(b)(7). Views of Responsible Officials Hood River County is currently working on several updated Grant procedures that include an update to the procedure related to Allowability of Costs. These updates are happening in the current fiscal year.
Assistance Listings number and name: 84.010 Title I Grants to Local Educational Agencies Award numbers and years: S010A180003, July 1, 2018 through September 30, 2019; S010A190003, July 1, 2019 through September 30, 2020; S010A200003, July 1, 2020 through September 30, 2021; S010A210003, July 1, 2021 through September 30, 2022 Assistance Listings numbers and names: 84.425C COVID-19 Governor’s Emergency Education Relief (GEER) Fund 84.425D COVID-19 Education Stabilization Fund—Elementary and Secondary School Emergency Relief (ESSER) Fund 84.425R COVID19 Education Stabilization Fund—Emergency Assistance to Non-Public Schools (EANS) 84.425U COVID-19 Education Stabilization Fund—American Rescue Plan—ESSER Fund (ARP ESSER) 84.425V COVID-19 Education Stabilization Fund—American Rescue Plan—Emergency Assistance to Non-Public Schools (ARP EANS) 84.425W COVID-19 Education Stabilization Fund—American Rescue Plan—Elementary and Secondary School Emergency Relief—Homeless Children and Youth Award numbers and years: ISA-ERMT-21-5008, July 1, 2020 through June 30,2021; ISA-GEER-ADE-070121-04, July 1, 2021 through June 30, 2023; ISA-GEER-ADE-070121-02, July 1, 2021 through June 30, 2023; S425D200038, May 11, 2020 through September 30, 2021; S425D210038, March 13, 2020 through September 30, 2023; S425R210003, April 23, 2021 through September 30, 2023; S425U210038, March 13, 2020 through September 30, 2024; S425V210003, February 18, 2022 through September 30, 2024; S425W210003, April 23, 2021 through September 30, 2023 Federal agency: U.S. Department of Education Compliance requirement: Not applicable Questioned costs: Not applicable Condition—Contrary to federal regulation and the State’s accounting manual, the Department of Education’s (Department) initially prepared schedule of expenditures of federal awards (SEFA), which totaled nearly $2.5 billion, contained significant errors that required correction for it to be reliable for determining federal programs to be audited and for inclusion in the State of Arizona’s SEFA. Specifically, the Department: • Understated expenditures for Title I—Grants to States (ALN 84.010) by over $318.3 million. • Overstated expenditures for the Education Stabilization Fund (ALN 84.245) by over $96.2 million. • Misstated total federal award expenditures by nearly $2.6 billion (gross error amount including those described above) for 42 of its 52 programs, which resulted in net overstatement of $37.5 million. • Misstated total expenditures passed through to subrecipients by nearly $3.5 billion (gross error amount) for 37 of its 52 programs, which resulted in a net overstatement of $8 million. • Inaccurately reported program titles for 14 programs and the wrong federal agency for 1 program. Effect—Although the Department corrected the significant misstatements we identified, the Department’s misstatements on its SEFA placed the State’s SEFA at risk of being misstated and potentially wasting public monies because misstated amounts could result in auditors unnecessarily auditing the wrong federal programs. Specifically, the Department’s misstatements on its SEFA could have resulted in it providing inaccurate information to the Arizona Department of Administration (ADOA) for inclusion in the State’s SEFA, which would have resulted in those who rely on the information it contains being misinformed, including ADOA, the Legislature, and federal agencies and pass-through grantors. This finding was not a result of internal control deficiencies of individual federal programs and accordingly, did not have a direct and material effect on the reporting requirements of the federal programs the Department administers. Cause—Although the Department is responsible for preparing a schedule of its federal award expenditures for inclusion in the State’s SEFA for the State’s single audit, it did not follow the requirements in the State’s accounting manual to compile all the federal award information necessary to prepare an accurate and complete SEFA. In addition, the Department’s reviews performed on its initially prepared SEFA were not effective to detect and correct these significant errors because the reviewers lacked training on the SEFA’s required content and how to obtain it. Criteria—Federal Uniform Guidance regulation requires the Department to separately identify in its accounts all federal awards received and expended and prepare an accurate and complete SEFA that reports its federal award expenditures for the year (2 Code of Federal Regulations [CFR] §§200.302 and 200.510). Further, the State’s accounting manual states that in order to reduce the number of deficiencies identified during the State-wide single audit, to better comply with the updated provisions of the federal Single Audit Act, and to increase the efficiency in compiling the State-wide SEFA, the revised formatting guidelines set forth in State’s accounting manual must be adhered to by any agency submitting an agency SEFA to ADOA’s General Accounting Office (State of Arizona Accounting Manual, Topic 70: Grants, Section 15). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—To help ensure that it prepares a SEFA that is accurate and complete, the Department should: 1. Follow the State’s accounting manual requirements to compile all the federal award information necessary to prepare its SEFA, including the sources from which the information is to be obtained. 2. Require an effective and independent review of its SEFA to help ensure the SEFA is accurate and complete and complies with federal Uniform Guidance requirements prior to submitting it for audit. 3. Train those responsible for preparing and reviewing the SEFA on the State’s accounting manual requirements. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.
Assistance Listings number and name: 84.010 Title I Grants to Local Educational Agencies Award numbers and years: S010A180003, July 1, 2018 through September 30, 2019; S010A190003, July 1, 2019 through September 30, 2020; S010A200003, July 1, 2020 through September 30, 2021; S010A210003, July 1, 2021 through September 30, 2022 Assistance Listings numbers and names: 84.425C COVID-19 Governor’s Emergency Education Relief (GEER) Fund 84.425D COVID-19 Education Stabilization Fund—Elementary and Secondary School Emergency Relief (ESSER) Fund 84.425R COVID19 Education Stabilization Fund—Emergency Assistance to Non-Public Schools (EANS) 84.425U COVID-19 Education Stabilization Fund—American Rescue Plan—ESSER Fund (ARP ESSER) 84.425V COVID-19 Education Stabilization Fund—American Rescue Plan—Emergency Assistance to Non-Public Schools (ARP EANS) 84.425W COVID-19 Education Stabilization Fund—American Rescue Plan—Elementary and Secondary School Emergency Relief—Homeless Children and Youth Award numbers and years: ISA-ERMT-21-5008, July 1, 2020 through June 30,2021; ISA-GEER-ADE-070121-04, July 1, 2021 through June 30, 2023; ISA-GEER-ADE-070121-02, July 1, 2021 through June 30, 2023; S425D200038, May 11, 2020 through September 30, 2021; S425D210038, March 13, 2020 through September 30, 2023; S425R210003, April 23, 2021 through September 30, 2023; S425U210038, March 13, 2020 through September 30, 2024; S425V210003, February 18, 2022 through September 30, 2024; S425W210003, April 23, 2021 through September 30, 2023 Federal agency: U.S. Department of Education Compliance requirement: Not applicable Questioned costs: Not applicable Condition—Contrary to federal regulation and the State’s accounting manual, the Department of Education’s (Department) initially prepared schedule of expenditures of federal awards (SEFA), which totaled nearly $2.5 billion, contained significant errors that required correction for it to be reliable for determining federal programs to be audited and for inclusion in the State of Arizona’s SEFA. Specifically, the Department: • Understated expenditures for Title I—Grants to States (ALN 84.010) by over $318.3 million. • Overstated expenditures for the Education Stabilization Fund (ALN 84.245) by over $96.2 million. • Misstated total federal award expenditures by nearly $2.6 billion (gross error amount including those described above) for 42 of its 52 programs, which resulted in net overstatement of $37.5 million. • Misstated total expenditures passed through to subrecipients by nearly $3.5 billion (gross error amount) for 37 of its 52 programs, which resulted in a net overstatement of $8 million. • Inaccurately reported program titles for 14 programs and the wrong federal agency for 1 program. Effect—Although the Department corrected the significant misstatements we identified, the Department’s misstatements on its SEFA placed the State’s SEFA at risk of being misstated and potentially wasting public monies because misstated amounts could result in auditors unnecessarily auditing the wrong federal programs. Specifically, the Department’s misstatements on its SEFA could have resulted in it providing inaccurate information to the Arizona Department of Administration (ADOA) for inclusion in the State’s SEFA, which would have resulted in those who rely on the information it contains being misinformed, including ADOA, the Legislature, and federal agencies and pass-through grantors. This finding was not a result of internal control deficiencies of individual federal programs and accordingly, did not have a direct and material effect on the reporting requirements of the federal programs the Department administers. Cause—Although the Department is responsible for preparing a schedule of its federal award expenditures for inclusion in the State’s SEFA for the State’s single audit, it did not follow the requirements in the State’s accounting manual to compile all the federal award information necessary to prepare an accurate and complete SEFA. In addition, the Department’s reviews performed on its initially prepared SEFA were not effective to detect and correct these significant errors because the reviewers lacked training on the SEFA’s required content and how to obtain it. Criteria—Federal Uniform Guidance regulation requires the Department to separately identify in its accounts all federal awards received and expended and prepare an accurate and complete SEFA that reports its federal award expenditures for the year (2 Code of Federal Regulations [CFR] §§200.302 and 200.510). Further, the State’s accounting manual states that in order to reduce the number of deficiencies identified during the State-wide single audit, to better comply with the updated provisions of the federal Single Audit Act, and to increase the efficiency in compiling the State-wide SEFA, the revised formatting guidelines set forth in State’s accounting manual must be adhered to by any agency submitting an agency SEFA to ADOA’s General Accounting Office (State of Arizona Accounting Manual, Topic 70: Grants, Section 15). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—To help ensure that it prepares a SEFA that is accurate and complete, the Department should: 1. Follow the State’s accounting manual requirements to compile all the federal award information necessary to prepare its SEFA, including the sources from which the information is to be obtained. 2. Require an effective and independent review of its SEFA to help ensure the SEFA is accurate and complete and complies with federal Uniform Guidance requirements prior to submitting it for audit. 3. Train those responsible for preparing and reviewing the SEFA on the State’s accounting manual requirements. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.
Assistance Listings number and name: 84.010 Title I Grants to Local Educational Agencies Award numbers and years: S010A180003, July 1, 2018 through September 30, 2019; S010A190003, July 1, 2019 through September 30, 2020; S010A200003, July 1, 2020 through September 30, 2021; S010A210003, July 1, 2021 through September 30, 2022 Assistance Listings numbers and names: 84.425C COVID-19 Governor’s Emergency Education Relief (GEER) Fund 84.425D COVID-19 Education Stabilization Fund—Elementary and Secondary School Emergency Relief (ESSER) Fund 84.425R COVID19 Education Stabilization Fund—Emergency Assistance to Non-Public Schools (EANS) 84.425U COVID-19 Education Stabilization Fund—American Rescue Plan—ESSER Fund (ARP ESSER) 84.425V COVID-19 Education Stabilization Fund—American Rescue Plan—Emergency Assistance to Non-Public Schools (ARP EANS) 84.425W COVID-19 Education Stabilization Fund—American Rescue Plan—Elementary and Secondary School Emergency Relief—Homeless Children and Youth Award numbers and years: ISA-ERMT-21-5008, July 1, 2020 through June 30,2021; ISA-GEER-ADE-070121-04, July 1, 2021 through June 30, 2023; ISA-GEER-ADE-070121-02, July 1, 2021 through June 30, 2023; S425D200038, May 11, 2020 through September 30, 2021; S425D210038, March 13, 2020 through September 30, 2023; S425R210003, April 23, 2021 through September 30, 2023; S425U210038, March 13, 2020 through September 30, 2024; S425V210003, February 18, 2022 through September 30, 2024; S425W210003, April 23, 2021 through September 30, 2023 Federal agency: U.S. Department of Education Compliance requirement: Not applicable Questioned costs: Not applicable Condition—Contrary to federal regulation and the State’s accounting manual, the Department of Education’s (Department) initially prepared schedule of expenditures of federal awards (SEFA), which totaled nearly $2.5 billion, contained significant errors that required correction for it to be reliable for determining federal programs to be audited and for inclusion in the State of Arizona’s SEFA. Specifically, the Department: • Understated expenditures for Title I—Grants to States (ALN 84.010) by over $318.3 million. • Overstated expenditures for the Education Stabilization Fund (ALN 84.245) by over $96.2 million. • Misstated total federal award expenditures by nearly $2.6 billion (gross error amount including those described above) for 42 of its 52 programs, which resulted in net overstatement of $37.5 million. • Misstated total expenditures passed through to subrecipients by nearly $3.5 billion (gross error amount) for 37 of its 52 programs, which resulted in a net overstatement of $8 million. • Inaccurately reported program titles for 14 programs and the wrong federal agency for 1 program. Effect—Although the Department corrected the significant misstatements we identified, the Department’s misstatements on its SEFA placed the State’s SEFA at risk of being misstated and potentially wasting public monies because misstated amounts could result in auditors unnecessarily auditing the wrong federal programs. Specifically, the Department’s misstatements on its SEFA could have resulted in it providing inaccurate information to the Arizona Department of Administration (ADOA) for inclusion in the State’s SEFA, which would have resulted in those who rely on the information it contains being misinformed, including ADOA, the Legislature, and federal agencies and pass-through grantors. This finding was not a result of internal control deficiencies of individual federal programs and accordingly, did not have a direct and material effect on the reporting requirements of the federal programs the Department administers. Cause—Although the Department is responsible for preparing a schedule of its federal award expenditures for inclusion in the State’s SEFA for the State’s single audit, it did not follow the requirements in the State’s accounting manual to compile all the federal award information necessary to prepare an accurate and complete SEFA. In addition, the Department’s reviews performed on its initially prepared SEFA were not effective to detect and correct these significant errors because the reviewers lacked training on the SEFA’s required content and how to obtain it. Criteria—Federal Uniform Guidance regulation requires the Department to separately identify in its accounts all federal awards received and expended and prepare an accurate and complete SEFA that reports its federal award expenditures for the year (2 Code of Federal Regulations [CFR] §§200.302 and 200.510). Further, the State’s accounting manual states that in order to reduce the number of deficiencies identified during the State-wide single audit, to better comply with the updated provisions of the federal Single Audit Act, and to increase the efficiency in compiling the State-wide SEFA, the revised formatting guidelines set forth in State’s accounting manual must be adhered to by any agency submitting an agency SEFA to ADOA’s General Accounting Office (State of Arizona Accounting Manual, Topic 70: Grants, Section 15). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—To help ensure that it prepares a SEFA that is accurate and complete, the Department should: 1. Follow the State’s accounting manual requirements to compile all the federal award information necessary to prepare its SEFA, including the sources from which the information is to be obtained. 2. Require an effective and independent review of its SEFA to help ensure the SEFA is accurate and complete and complies with federal Uniform Guidance requirements prior to submitting it for audit. 3. Train those responsible for preparing and reviewing the SEFA on the State’s accounting manual requirements. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.
Assistance Listings number and name: 84.010 Title I Grants to Local Educational Agencies Award numbers and years: S010A180003, July 1, 2018 through September 30, 2019; S010A190003, July 1, 2019 through September 30, 2020; S010A200003, July 1, 2020 through September 30, 2021; S010A210003, July 1, 2021 through September 30, 2022 Assistance Listings numbers and names: 84.425C COVID-19 Governor’s Emergency Education Relief (GEER) Fund 84.425D COVID-19 Education Stabilization Fund—Elementary and Secondary School Emergency Relief (ESSER) Fund 84.425R COVID19 Education Stabilization Fund—Emergency Assistance to Non-Public Schools (EANS) 84.425U COVID-19 Education Stabilization Fund—American Rescue Plan—ESSER Fund (ARP ESSER) 84.425V COVID-19 Education Stabilization Fund—American Rescue Plan—Emergency Assistance to Non-Public Schools (ARP EANS) 84.425W COVID-19 Education Stabilization Fund—American Rescue Plan—Elementary and Secondary School Emergency Relief—Homeless Children and Youth Award numbers and years: ISA-ERMT-21-5008, July 1, 2020 through June 30,2021; ISA-GEER-ADE-070121-04, July 1, 2021 through June 30, 2023; ISA-GEER-ADE-070121-02, July 1, 2021 through June 30, 2023; S425D200038, May 11, 2020 through September 30, 2021; S425D210038, March 13, 2020 through September 30, 2023; S425R210003, April 23, 2021 through September 30, 2023; S425U210038, March 13, 2020 through September 30, 2024; S425V210003, February 18, 2022 through September 30, 2024; S425W210003, April 23, 2021 through September 30, 2023 Federal agency: U.S. Department of Education Compliance requirement: Not applicable Questioned costs: Not applicable Condition—Contrary to federal regulation and the State’s accounting manual, the Department of Education’s (Department) initially prepared schedule of expenditures of federal awards (SEFA), which totaled nearly $2.5 billion, contained significant errors that required correction for it to be reliable for determining federal programs to be audited and for inclusion in the State of Arizona’s SEFA. Specifically, the Department: • Understated expenditures for Title I—Grants to States (ALN 84.010) by over $318.3 million. • Overstated expenditures for the Education Stabilization Fund (ALN 84.245) by over $96.2 million. • Misstated total federal award expenditures by nearly $2.6 billion (gross error amount including those described above) for 42 of its 52 programs, which resulted in net overstatement of $37.5 million. • Misstated total expenditures passed through to subrecipients by nearly $3.5 billion (gross error amount) for 37 of its 52 programs, which resulted in a net overstatement of $8 million. • Inaccurately reported program titles for 14 programs and the wrong federal agency for 1 program. Effect—Although the Department corrected the significant misstatements we identified, the Department’s misstatements on its SEFA placed the State’s SEFA at risk of being misstated and potentially wasting public monies because misstated amounts could result in auditors unnecessarily auditing the wrong federal programs. Specifically, the Department’s misstatements on its SEFA could have resulted in it providing inaccurate information to the Arizona Department of Administration (ADOA) for inclusion in the State’s SEFA, which would have resulted in those who rely on the information it contains being misinformed, including ADOA, the Legislature, and federal agencies and pass-through grantors. This finding was not a result of internal control deficiencies of individual federal programs and accordingly, did not have a direct and material effect on the reporting requirements of the federal programs the Department administers. Cause—Although the Department is responsible for preparing a schedule of its federal award expenditures for inclusion in the State’s SEFA for the State’s single audit, it did not follow the requirements in the State’s accounting manual to compile all the federal award information necessary to prepare an accurate and complete SEFA. In addition, the Department’s reviews performed on its initially prepared SEFA were not effective to detect and correct these significant errors because the reviewers lacked training on the SEFA’s required content and how to obtain it. Criteria—Federal Uniform Guidance regulation requires the Department to separately identify in its accounts all federal awards received and expended and prepare an accurate and complete SEFA that reports its federal award expenditures for the year (2 Code of Federal Regulations [CFR] §§200.302 and 200.510). Further, the State’s accounting manual states that in order to reduce the number of deficiencies identified during the State-wide single audit, to better comply with the updated provisions of the federal Single Audit Act, and to increase the efficiency in compiling the State-wide SEFA, the revised formatting guidelines set forth in State’s accounting manual must be adhered to by any agency submitting an agency SEFA to ADOA’s General Accounting Office (State of Arizona Accounting Manual, Topic 70: Grants, Section 15). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—To help ensure that it prepares a SEFA that is accurate and complete, the Department should: 1. Follow the State’s accounting manual requirements to compile all the federal award information necessary to prepare its SEFA, including the sources from which the information is to be obtained. 2. Require an effective and independent review of its SEFA to help ensure the SEFA is accurate and complete and complies with federal Uniform Guidance requirements prior to submitting it for audit. 3. Train those responsible for preparing and reviewing the SEFA on the State’s accounting manual requirements. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.
Assistance Listings number and name: 84.010 Title I Grants to Local Educational Agencies Award numbers and years: S010A180003, July 1, 2018 through September 30, 2019; S010A190003, July 1, 2019 through September 30, 2020; S010A200003, July 1, 2020 through September 30, 2021; S010A210003, July 1, 2021 through September 30, 2022 Assistance Listings numbers and names: 84.425C COVID-19 Governor’s Emergency Education Relief (GEER) Fund 84.425D COVID-19 Education Stabilization Fund—Elementary and Secondary School Emergency Relief (ESSER) Fund 84.425R COVID19 Education Stabilization Fund—Emergency Assistance to Non-Public Schools (EANS) 84.425U COVID-19 Education Stabilization Fund—American Rescue Plan—ESSER Fund (ARP ESSER) 84.425V COVID-19 Education Stabilization Fund—American Rescue Plan—Emergency Assistance to Non-Public Schools (ARP EANS) 84.425W COVID-19 Education Stabilization Fund—American Rescue Plan—Elementary and Secondary School Emergency Relief—Homeless Children and Youth Award numbers and years: ISA-ERMT-21-5008, July 1, 2020 through June 30,2021; ISA-GEER-ADE-070121-04, July 1, 2021 through June 30, 2023; ISA-GEER-ADE-070121-02, July 1, 2021 through June 30, 2023; S425D200038, May 11, 2020 through September 30, 2021; S425D210038, March 13, 2020 through September 30, 2023; S425R210003, April 23, 2021 through September 30, 2023; S425U210038, March 13, 2020 through September 30, 2024; S425V210003, February 18, 2022 through September 30, 2024; S425W210003, April 23, 2021 through September 30, 2023 Federal agency: U.S. Department of Education Compliance requirement: Not applicable Questioned costs: Not applicable Condition—Contrary to federal regulation and the State’s accounting manual, the Department of Education’s (Department) initially prepared schedule of expenditures of federal awards (SEFA), which totaled nearly $2.5 billion, contained significant errors that required correction for it to be reliable for determining federal programs to be audited and for inclusion in the State of Arizona’s SEFA. Specifically, the Department: • Understated expenditures for Title I—Grants to States (ALN 84.010) by over $318.3 million. • Overstated expenditures for the Education Stabilization Fund (ALN 84.245) by over $96.2 million. • Misstated total federal award expenditures by nearly $2.6 billion (gross error amount including those described above) for 42 of its 52 programs, which resulted in net overstatement of $37.5 million. • Misstated total expenditures passed through to subrecipients by nearly $3.5 billion (gross error amount) for 37 of its 52 programs, which resulted in a net overstatement of $8 million. • Inaccurately reported program titles for 14 programs and the wrong federal agency for 1 program. Effect—Although the Department corrected the significant misstatements we identified, the Department’s misstatements on its SEFA placed the State’s SEFA at risk of being misstated and potentially wasting public monies because misstated amounts could result in auditors unnecessarily auditing the wrong federal programs. Specifically, the Department’s misstatements on its SEFA could have resulted in it providing inaccurate information to the Arizona Department of Administration (ADOA) for inclusion in the State’s SEFA, which would have resulted in those who rely on the information it contains being misinformed, including ADOA, the Legislature, and federal agencies and pass-through grantors. This finding was not a result of internal control deficiencies of individual federal programs and accordingly, did not have a direct and material effect on the reporting requirements of the federal programs the Department administers. Cause—Although the Department is responsible for preparing a schedule of its federal award expenditures for inclusion in the State’s SEFA for the State’s single audit, it did not follow the requirements in the State’s accounting manual to compile all the federal award information necessary to prepare an accurate and complete SEFA. In addition, the Department’s reviews performed on its initially prepared SEFA were not effective to detect and correct these significant errors because the reviewers lacked training on the SEFA’s required content and how to obtain it. Criteria—Federal Uniform Guidance regulation requires the Department to separately identify in its accounts all federal awards received and expended and prepare an accurate and complete SEFA that reports its federal award expenditures for the year (2 Code of Federal Regulations [CFR] §§200.302 and 200.510). Further, the State’s accounting manual states that in order to reduce the number of deficiencies identified during the State-wide single audit, to better comply with the updated provisions of the federal Single Audit Act, and to increase the efficiency in compiling the State-wide SEFA, the revised formatting guidelines set forth in State’s accounting manual must be adhered to by any agency submitting an agency SEFA to ADOA’s General Accounting Office (State of Arizona Accounting Manual, Topic 70: Grants, Section 15). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—To help ensure that it prepares a SEFA that is accurate and complete, the Department should: 1. Follow the State’s accounting manual requirements to compile all the federal award information necessary to prepare its SEFA, including the sources from which the information is to be obtained. 2. Require an effective and independent review of its SEFA to help ensure the SEFA is accurate and complete and complies with federal Uniform Guidance requirements prior to submitting it for audit. 3. Train those responsible for preparing and reviewing the SEFA on the State’s accounting manual requirements. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.
Assistance Listings number and name: 84.010 Title I Grants to Local Educational Agencies Award numbers and years: S010A180003, July 1, 2018 through September 30, 2019; S010A190003, July 1, 2019 through September 30, 2020; S010A200003, July 1, 2020 through September 30, 2021; S010A210003, July 1, 2021 through September 30, 2022 Assistance Listings numbers and names: 84.425C COVID-19 Governor’s Emergency Education Relief (GEER) Fund 84.425D COVID-19 Education Stabilization Fund—Elementary and Secondary School Emergency Relief (ESSER) Fund 84.425R COVID19 Education Stabilization Fund—Emergency Assistance to Non-Public Schools (EANS) 84.425U COVID-19 Education Stabilization Fund—American Rescue Plan—ESSER Fund (ARP ESSER) 84.425V COVID-19 Education Stabilization Fund—American Rescue Plan—Emergency Assistance to Non-Public Schools (ARP EANS) 84.425W COVID-19 Education Stabilization Fund—American Rescue Plan—Elementary and Secondary School Emergency Relief—Homeless Children and Youth Award numbers and years: ISA-ERMT-21-5008, July 1, 2020 through June 30,2021; ISA-GEER-ADE-070121-04, July 1, 2021 through June 30, 2023; ISA-GEER-ADE-070121-02, July 1, 2021 through June 30, 2023; S425D200038, May 11, 2020 through September 30, 2021; S425D210038, March 13, 2020 through September 30, 2023; S425R210003, April 23, 2021 through September 30, 2023; S425U210038, March 13, 2020 through September 30, 2024; S425V210003, February 18, 2022 through September 30, 2024; S425W210003, April 23, 2021 through September 30, 2023 Federal agency: U.S. Department of Education Compliance requirement: Not applicable Questioned costs: Not applicable Condition—Contrary to federal regulation and the State’s accounting manual, the Department of Education’s (Department) initially prepared schedule of expenditures of federal awards (SEFA), which totaled nearly $2.5 billion, contained significant errors that required correction for it to be reliable for determining federal programs to be audited and for inclusion in the State of Arizona’s SEFA. Specifically, the Department: • Understated expenditures for Title I—Grants to States (ALN 84.010) by over $318.3 million. • Overstated expenditures for the Education Stabilization Fund (ALN 84.245) by over $96.2 million. • Misstated total federal award expenditures by nearly $2.6 billion (gross error amount including those described above) for 42 of its 52 programs, which resulted in net overstatement of $37.5 million. • Misstated total expenditures passed through to subrecipients by nearly $3.5 billion (gross error amount) for 37 of its 52 programs, which resulted in a net overstatement of $8 million. • Inaccurately reported program titles for 14 programs and the wrong federal agency for 1 program. Effect—Although the Department corrected the significant misstatements we identified, the Department’s misstatements on its SEFA placed the State’s SEFA at risk of being misstated and potentially wasting public monies because misstated amounts could result in auditors unnecessarily auditing the wrong federal programs. Specifically, the Department’s misstatements on its SEFA could have resulted in it providing inaccurate information to the Arizona Department of Administration (ADOA) for inclusion in the State’s SEFA, which would have resulted in those who rely on the information it contains being misinformed, including ADOA, the Legislature, and federal agencies and pass-through grantors. This finding was not a result of internal control deficiencies of individual federal programs and accordingly, did not have a direct and material effect on the reporting requirements of the federal programs the Department administers. Cause—Although the Department is responsible for preparing a schedule of its federal award expenditures for inclusion in the State’s SEFA for the State’s single audit, it did not follow the requirements in the State’s accounting manual to compile all the federal award information necessary to prepare an accurate and complete SEFA. In addition, the Department’s reviews performed on its initially prepared SEFA were not effective to detect and correct these significant errors because the reviewers lacked training on the SEFA’s required content and how to obtain it. Criteria—Federal Uniform Guidance regulation requires the Department to separately identify in its accounts all federal awards received and expended and prepare an accurate and complete SEFA that reports its federal award expenditures for the year (2 Code of Federal Regulations [CFR] §§200.302 and 200.510). Further, the State’s accounting manual states that in order to reduce the number of deficiencies identified during the State-wide single audit, to better comply with the updated provisions of the federal Single Audit Act, and to increase the efficiency in compiling the State-wide SEFA, the revised formatting guidelines set forth in State’s accounting manual must be adhered to by any agency submitting an agency SEFA to ADOA’s General Accounting Office (State of Arizona Accounting Manual, Topic 70: Grants, Section 15). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—To help ensure that it prepares a SEFA that is accurate and complete, the Department should: 1. Follow the State’s accounting manual requirements to compile all the federal award information necessary to prepare its SEFA, including the sources from which the information is to be obtained. 2. Require an effective and independent review of its SEFA to help ensure the SEFA is accurate and complete and complies with federal Uniform Guidance requirements prior to submitting it for audit. 3. Train those responsible for preparing and reviewing the SEFA on the State’s accounting manual requirements. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.
Assistance Listings number and name: 84.010 Title I Grants to Local Educational Agencies Award numbers and years: S010A180003, July 1, 2018 through September 30, 2019; S010A190003, July 1, 2019 through September 30, 2020; S010A200003, July 1, 2020 through September 30, 2021; S010A210003, July 1, 2021 through September 30, 2022 Assistance Listings numbers and names: 84.425C COVID-19 Governor’s Emergency Education Relief (GEER) Fund 84.425D COVID-19 Education Stabilization Fund—Elementary and Secondary School Emergency Relief (ESSER) Fund 84.425R COVID19 Education Stabilization Fund—Emergency Assistance to Non-Public Schools (EANS) 84.425U COVID-19 Education Stabilization Fund—American Rescue Plan—ESSER Fund (ARP ESSER) 84.425V COVID-19 Education Stabilization Fund—American Rescue Plan—Emergency Assistance to Non-Public Schools (ARP EANS) 84.425W COVID-19 Education Stabilization Fund—American Rescue Plan—Elementary and Secondary School Emergency Relief—Homeless Children and Youth Award numbers and years: ISA-ERMT-21-5008, July 1, 2020 through June 30,2021; ISA-GEER-ADE-070121-04, July 1, 2021 through June 30, 2023; ISA-GEER-ADE-070121-02, July 1, 2021 through June 30, 2023; S425D200038, May 11, 2020 through September 30, 2021; S425D210038, March 13, 2020 through September 30, 2023; S425R210003, April 23, 2021 through September 30, 2023; S425U210038, March 13, 2020 through September 30, 2024; S425V210003, February 18, 2022 through September 30, 2024; S425W210003, April 23, 2021 through September 30, 2023 Federal agency: U.S. Department of Education Compliance requirement: Not applicable Questioned costs: Not applicable Condition—Contrary to federal regulation and the State’s accounting manual, the Department of Education’s (Department) initially prepared schedule of expenditures of federal awards (SEFA), which totaled nearly $2.5 billion, contained significant errors that required correction for it to be reliable for determining federal programs to be audited and for inclusion in the State of Arizona’s SEFA. Specifically, the Department: • Understated expenditures for Title I—Grants to States (ALN 84.010) by over $318.3 million. • Overstated expenditures for the Education Stabilization Fund (ALN 84.245) by over $96.2 million. • Misstated total federal award expenditures by nearly $2.6 billion (gross error amount including those described above) for 42 of its 52 programs, which resulted in net overstatement of $37.5 million. • Misstated total expenditures passed through to subrecipients by nearly $3.5 billion (gross error amount) for 37 of its 52 programs, which resulted in a net overstatement of $8 million. • Inaccurately reported program titles for 14 programs and the wrong federal agency for 1 program. Effect—Although the Department corrected the significant misstatements we identified, the Department’s misstatements on its SEFA placed the State’s SEFA at risk of being misstated and potentially wasting public monies because misstated amounts could result in auditors unnecessarily auditing the wrong federal programs. Specifically, the Department’s misstatements on its SEFA could have resulted in it providing inaccurate information to the Arizona Department of Administration (ADOA) for inclusion in the State’s SEFA, which would have resulted in those who rely on the information it contains being misinformed, including ADOA, the Legislature, and federal agencies and pass-through grantors. This finding was not a result of internal control deficiencies of individual federal programs and accordingly, did not have a direct and material effect on the reporting requirements of the federal programs the Department administers. Cause—Although the Department is responsible for preparing a schedule of its federal award expenditures for inclusion in the State’s SEFA for the State’s single audit, it did not follow the requirements in the State’s accounting manual to compile all the federal award information necessary to prepare an accurate and complete SEFA. In addition, the Department’s reviews performed on its initially prepared SEFA were not effective to detect and correct these significant errors because the reviewers lacked training on the SEFA’s required content and how to obtain it. Criteria—Federal Uniform Guidance regulation requires the Department to separately identify in its accounts all federal awards received and expended and prepare an accurate and complete SEFA that reports its federal award expenditures for the year (2 Code of Federal Regulations [CFR] §§200.302 and 200.510). Further, the State’s accounting manual states that in order to reduce the number of deficiencies identified during the State-wide single audit, to better comply with the updated provisions of the federal Single Audit Act, and to increase the efficiency in compiling the State-wide SEFA, the revised formatting guidelines set forth in State’s accounting manual must be adhered to by any agency submitting an agency SEFA to ADOA’s General Accounting Office (State of Arizona Accounting Manual, Topic 70: Grants, Section 15). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—To help ensure that it prepares a SEFA that is accurate and complete, the Department should: 1. Follow the State’s accounting manual requirements to compile all the federal award information necessary to prepare its SEFA, including the sources from which the information is to be obtained. 2. Require an effective and independent review of its SEFA to help ensure the SEFA is accurate and complete and complies with federal Uniform Guidance requirements prior to submitting it for audit. 3. Train those responsible for preparing and reviewing the SEFA on the State’s accounting manual requirements. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.
Assistance Listings number and name: 84.010 Title I Grants to Local Educational Agencies Award numbers and years: S010A180003, July 1, 2018 through September 30, 2019; S010A190003, July 1, 2019 through September 30, 2020; S010A200003, July 1, 2020 through September 30, 2021; S010A210003, July 1, 2021 through September 30, 2022 Assistance Listings numbers and names: 84.425C COVID-19 Governor’s Emergency Education Relief (GEER) Fund 84.425D COVID-19 Education Stabilization Fund—Elementary and Secondary School Emergency Relief (ESSER) Fund 84.425R COVID19 Education Stabilization Fund—Emergency Assistance to Non-Public Schools (EANS) 84.425U COVID-19 Education Stabilization Fund—American Rescue Plan—ESSER Fund (ARP ESSER) 84.425V COVID-19 Education Stabilization Fund—American Rescue Plan—Emergency Assistance to Non-Public Schools (ARP EANS) 84.425W COVID-19 Education Stabilization Fund—American Rescue Plan—Elementary and Secondary School Emergency Relief—Homeless Children and Youth Award numbers and years: ISA-ERMT-21-5008, July 1, 2020 through June 30,2021; ISA-GEER-ADE-070121-04, July 1, 2021 through June 30, 2023; ISA-GEER-ADE-070121-02, July 1, 2021 through June 30, 2023; S425D200038, May 11, 2020 through September 30, 2021; S425D210038, March 13, 2020 through September 30, 2023; S425R210003, April 23, 2021 through September 30, 2023; S425U210038, March 13, 2020 through September 30, 2024; S425V210003, February 18, 2022 through September 30, 2024; S425W210003, April 23, 2021 through September 30, 2023 Federal agency: U.S. Department of Education Compliance requirement: Not applicable Questioned costs: Not applicable Condition—Contrary to federal regulation and the State’s accounting manual, the Department of Education’s (Department) initially prepared schedule of expenditures of federal awards (SEFA), which totaled nearly $2.5 billion, contained significant errors that required correction for it to be reliable for determining federal programs to be audited and for inclusion in the State of Arizona’s SEFA. Specifically, the Department: • Understated expenditures for Title I—Grants to States (ALN 84.010) by over $318.3 million. • Overstated expenditures for the Education Stabilization Fund (ALN 84.245) by over $96.2 million. • Misstated total federal award expenditures by nearly $2.6 billion (gross error amount including those described above) for 42 of its 52 programs, which resulted in net overstatement of $37.5 million. • Misstated total expenditures passed through to subrecipients by nearly $3.5 billion (gross error amount) for 37 of its 52 programs, which resulted in a net overstatement of $8 million. • Inaccurately reported program titles for 14 programs and the wrong federal agency for 1 program. Effect—Although the Department corrected the significant misstatements we identified, the Department’s misstatements on its SEFA placed the State’s SEFA at risk of being misstated and potentially wasting public monies because misstated amounts could result in auditors unnecessarily auditing the wrong federal programs. Specifically, the Department’s misstatements on its SEFA could have resulted in it providing inaccurate information to the Arizona Department of Administration (ADOA) for inclusion in the State’s SEFA, which would have resulted in those who rely on the information it contains being misinformed, including ADOA, the Legislature, and federal agencies and pass-through grantors. This finding was not a result of internal control deficiencies of individual federal programs and accordingly, did not have a direct and material effect on the reporting requirements of the federal programs the Department administers. Cause—Although the Department is responsible for preparing a schedule of its federal award expenditures for inclusion in the State’s SEFA for the State’s single audit, it did not follow the requirements in the State’s accounting manual to compile all the federal award information necessary to prepare an accurate and complete SEFA. In addition, the Department’s reviews performed on its initially prepared SEFA were not effective to detect and correct these significant errors because the reviewers lacked training on the SEFA’s required content and how to obtain it. Criteria—Federal Uniform Guidance regulation requires the Department to separately identify in its accounts all federal awards received and expended and prepare an accurate and complete SEFA that reports its federal award expenditures for the year (2 Code of Federal Regulations [CFR] §§200.302 and 200.510). Further, the State’s accounting manual states that in order to reduce the number of deficiencies identified during the State-wide single audit, to better comply with the updated provisions of the federal Single Audit Act, and to increase the efficiency in compiling the State-wide SEFA, the revised formatting guidelines set forth in State’s accounting manual must be adhered to by any agency submitting an agency SEFA to ADOA’s General Accounting Office (State of Arizona Accounting Manual, Topic 70: Grants, Section 15). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—To help ensure that it prepares a SEFA that is accurate and complete, the Department should: 1. Follow the State’s accounting manual requirements to compile all the federal award information necessary to prepare its SEFA, including the sources from which the information is to be obtained. 2. Require an effective and independent review of its SEFA to help ensure the SEFA is accurate and complete and complies with federal Uniform Guidance requirements prior to submitting it for audit. 3. Train those responsible for preparing and reviewing the SEFA on the State’s accounting manual requirements. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.
Assistance Listings number and name: 84.010 Title I Grants to Local Educational Agencies Award numbers and years: S010A180003, July 1, 2018 through September 30, 2019; S010A190003, July 1, 2019 through September 30, 2020; S010A200003, July 1, 2020 through September 30, 2021; S010A210003, July 1, 2021 through September 30, 2022 Assistance Listings numbers and names: 84.425C COVID-19 Governor’s Emergency Education Relief (GEER) Fund 84.425D COVID-19 Education Stabilization Fund—Elementary and Secondary School Emergency Relief (ESSER) Fund 84.425R COVID19 Education Stabilization Fund—Emergency Assistance to Non-Public Schools (EANS) 84.425U COVID-19 Education Stabilization Fund—American Rescue Plan—ESSER Fund (ARP ESSER) 84.425V COVID-19 Education Stabilization Fund—American Rescue Plan—Emergency Assistance to Non-Public Schools (ARP EANS) 84.425W COVID-19 Education Stabilization Fund—American Rescue Plan—Elementary and Secondary School Emergency Relief—Homeless Children and Youth Award numbers and years: ISA-ERMT-21-5008, July 1, 2020 through June 30,2021; ISA-GEER-ADE-070121-04, July 1, 2021 through June 30, 2023; ISA-GEER-ADE-070121-02, July 1, 2021 through June 30, 2023; S425D200038, May 11, 2020 through September 30, 2021; S425D210038, March 13, 2020 through September 30, 2023; S425R210003, April 23, 2021 through September 30, 2023; S425U210038, March 13, 2020 through September 30, 2024; S425V210003, February 18, 2022 through September 30, 2024; S425W210003, April 23, 2021 through September 30, 2023 Federal agency: U.S. Department of Education Compliance requirement: Not applicable Questioned costs: Not applicable Condition—Contrary to federal regulation and the State’s accounting manual, the Department of Education’s (Department) initially prepared schedule of expenditures of federal awards (SEFA), which totaled nearly $2.5 billion, contained significant errors that required correction for it to be reliable for determining federal programs to be audited and for inclusion in the State of Arizona’s SEFA. Specifically, the Department: • Understated expenditures for Title I—Grants to States (ALN 84.010) by over $318.3 million. • Overstated expenditures for the Education Stabilization Fund (ALN 84.245) by over $96.2 million. • Misstated total federal award expenditures by nearly $2.6 billion (gross error amount including those described above) for 42 of its 52 programs, which resulted in net overstatement of $37.5 million. • Misstated total expenditures passed through to subrecipients by nearly $3.5 billion (gross error amount) for 37 of its 52 programs, which resulted in a net overstatement of $8 million. • Inaccurately reported program titles for 14 programs and the wrong federal agency for 1 program. Effect—Although the Department corrected the significant misstatements we identified, the Department’s misstatements on its SEFA placed the State’s SEFA at risk of being misstated and potentially wasting public monies because misstated amounts could result in auditors unnecessarily auditing the wrong federal programs. Specifically, the Department’s misstatements on its SEFA could have resulted in it providing inaccurate information to the Arizona Department of Administration (ADOA) for inclusion in the State’s SEFA, which would have resulted in those who rely on the information it contains being misinformed, including ADOA, the Legislature, and federal agencies and pass-through grantors. This finding was not a result of internal control deficiencies of individual federal programs and accordingly, did not have a direct and material effect on the reporting requirements of the federal programs the Department administers. Cause—Although the Department is responsible for preparing a schedule of its federal award expenditures for inclusion in the State’s SEFA for the State’s single audit, it did not follow the requirements in the State’s accounting manual to compile all the federal award information necessary to prepare an accurate and complete SEFA. In addition, the Department’s reviews performed on its initially prepared SEFA were not effective to detect and correct these significant errors because the reviewers lacked training on the SEFA’s required content and how to obtain it. Criteria—Federal Uniform Guidance regulation requires the Department to separately identify in its accounts all federal awards received and expended and prepare an accurate and complete SEFA that reports its federal award expenditures for the year (2 Code of Federal Regulations [CFR] §§200.302 and 200.510). Further, the State’s accounting manual states that in order to reduce the number of deficiencies identified during the State-wide single audit, to better comply with the updated provisions of the federal Single Audit Act, and to increase the efficiency in compiling the State-wide SEFA, the revised formatting guidelines set forth in State’s accounting manual must be adhered to by any agency submitting an agency SEFA to ADOA’s General Accounting Office (State of Arizona Accounting Manual, Topic 70: Grants, Section 15). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—To help ensure that it prepares a SEFA that is accurate and complete, the Department should: 1. Follow the State’s accounting manual requirements to compile all the federal award information necessary to prepare its SEFA, including the sources from which the information is to be obtained. 2. Require an effective and independent review of its SEFA to help ensure the SEFA is accurate and complete and complies with federal Uniform Guidance requirements prior to submitting it for audit. 3. Train those responsible for preparing and reviewing the SEFA on the State’s accounting manual requirements. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.
Assistance Listings number and name: 84.010 Title I Grants to Local Educational Agencies Award numbers and years: S010A180003, July 1, 2018 through September 30, 2019; S010A190003, July 1, 2019 through September 30, 2020; S010A200003, July 1, 2020 through September 30, 2021; S010A210003, July 1, 2021 through September 30, 2022 Assistance Listings numbers and names: 84.425C COVID-19 Governor’s Emergency Education Relief (GEER) Fund 84.425D COVID-19 Education Stabilization Fund—Elementary and Secondary School Emergency Relief (ESSER) Fund 84.425R COVID19 Education Stabilization Fund—Emergency Assistance to Non-Public Schools (EANS) 84.425U COVID-19 Education Stabilization Fund—American Rescue Plan—ESSER Fund (ARP ESSER) 84.425V COVID-19 Education Stabilization Fund—American Rescue Plan—Emergency Assistance to Non-Public Schools (ARP EANS) 84.425W COVID-19 Education Stabilization Fund—American Rescue Plan—Elementary and Secondary School Emergency Relief—Homeless Children and Youth Award numbers and years: ISA-ERMT-21-5008, July 1, 2020 through June 30,2021; ISA-GEER-ADE-070121-04, July 1, 2021 through June 30, 2023; ISA-GEER-ADE-070121-02, July 1, 2021 through June 30, 2023; S425D200038, May 11, 2020 through September 30, 2021; S425D210038, March 13, 2020 through September 30, 2023; S425R210003, April 23, 2021 through September 30, 2023; S425U210038, March 13, 2020 through September 30, 2024; S425V210003, February 18, 2022 through September 30, 2024; S425W210003, April 23, 2021 through September 30, 2023 Federal agency: U.S. Department of Education Compliance requirement: Not applicable Questioned costs: Not applicable Condition—Contrary to federal regulation and the State’s accounting manual, the Department of Education’s (Department) initially prepared schedule of expenditures of federal awards (SEFA), which totaled nearly $2.5 billion, contained significant errors that required correction for it to be reliable for determining federal programs to be audited and for inclusion in the State of Arizona’s SEFA. Specifically, the Department: • Understated expenditures for Title I—Grants to States (ALN 84.010) by over $318.3 million. • Overstated expenditures for the Education Stabilization Fund (ALN 84.245) by over $96.2 million. • Misstated total federal award expenditures by nearly $2.6 billion (gross error amount including those described above) for 42 of its 52 programs, which resulted in net overstatement of $37.5 million. • Misstated total expenditures passed through to subrecipients by nearly $3.5 billion (gross error amount) for 37 of its 52 programs, which resulted in a net overstatement of $8 million. • Inaccurately reported program titles for 14 programs and the wrong federal agency for 1 program. Effect—Although the Department corrected the significant misstatements we identified, the Department’s misstatements on its SEFA placed the State’s SEFA at risk of being misstated and potentially wasting public monies because misstated amounts could result in auditors unnecessarily auditing the wrong federal programs. Specifically, the Department’s misstatements on its SEFA could have resulted in it providing inaccurate information to the Arizona Department of Administration (ADOA) for inclusion in the State’s SEFA, which would have resulted in those who rely on the information it contains being misinformed, including ADOA, the Legislature, and federal agencies and pass-through grantors. This finding was not a result of internal control deficiencies of individual federal programs and accordingly, did not have a direct and material effect on the reporting requirements of the federal programs the Department administers. Cause—Although the Department is responsible for preparing a schedule of its federal award expenditures for inclusion in the State’s SEFA for the State’s single audit, it did not follow the requirements in the State’s accounting manual to compile all the federal award information necessary to prepare an accurate and complete SEFA. In addition, the Department’s reviews performed on its initially prepared SEFA were not effective to detect and correct these significant errors because the reviewers lacked training on the SEFA’s required content and how to obtain it. Criteria—Federal Uniform Guidance regulation requires the Department to separately identify in its accounts all federal awards received and expended and prepare an accurate and complete SEFA that reports its federal award expenditures for the year (2 Code of Federal Regulations [CFR] §§200.302 and 200.510). Further, the State’s accounting manual states that in order to reduce the number of deficiencies identified during the State-wide single audit, to better comply with the updated provisions of the federal Single Audit Act, and to increase the efficiency in compiling the State-wide SEFA, the revised formatting guidelines set forth in State’s accounting manual must be adhered to by any agency submitting an agency SEFA to ADOA’s General Accounting Office (State of Arizona Accounting Manual, Topic 70: Grants, Section 15). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—To help ensure that it prepares a SEFA that is accurate and complete, the Department should: 1. Follow the State’s accounting manual requirements to compile all the federal award information necessary to prepare its SEFA, including the sources from which the information is to be obtained. 2. Require an effective and independent review of its SEFA to help ensure the SEFA is accurate and complete and complies with federal Uniform Guidance requirements prior to submitting it for audit. 3. Train those responsible for preparing and reviewing the SEFA on the State’s accounting manual requirements. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.
Assistance Listings number and name: 84.010 Title I Grants to Local Educational Agencies Award numbers and years: S010A180003, July 1, 2018 through September 30, 2019; S010A190003, July 1, 2019 through September 30, 2020; S010A200003, July 1, 2020 through September 30, 2021; S010A210003, July 1, 2021 through September 30, 2022 Assistance Listings numbers and names: 84.425C COVID-19 Governor’s Emergency Education Relief (GEER) Fund 84.425D COVID-19 Education Stabilization Fund—Elementary and Secondary School Emergency Relief (ESSER) Fund 84.425R COVID19 Education Stabilization Fund—Emergency Assistance to Non-Public Schools (EANS) 84.425U COVID-19 Education Stabilization Fund—American Rescue Plan—ESSER Fund (ARP ESSER) 84.425V COVID-19 Education Stabilization Fund—American Rescue Plan—Emergency Assistance to Non-Public Schools (ARP EANS) 84.425W COVID-19 Education Stabilization Fund—American Rescue Plan—Elementary and Secondary School Emergency Relief—Homeless Children and Youth Award numbers and years: ISA-ERMT-21-5008, July 1, 2020 through June 30,2021; ISA-GEER-ADE-070121-04, July 1, 2021 through June 30, 2023; ISA-GEER-ADE-070121-02, July 1, 2021 through June 30, 2023; S425D200038, May 11, 2020 through September 30, 2021; S425D210038, March 13, 2020 through September 30, 2023; S425R210003, April 23, 2021 through September 30, 2023; S425U210038, March 13, 2020 through September 30, 2024; S425V210003, February 18, 2022 through September 30, 2024; S425W210003, April 23, 2021 through September 30, 2023 Federal agency: U.S. Department of Education Compliance requirement: Not applicable Questioned costs: Not applicable Condition—Contrary to federal regulation and the State’s accounting manual, the Department of Education’s (Department) initially prepared schedule of expenditures of federal awards (SEFA), which totaled nearly $2.5 billion, contained significant errors that required correction for it to be reliable for determining federal programs to be audited and for inclusion in the State of Arizona’s SEFA. Specifically, the Department: • Understated expenditures for Title I—Grants to States (ALN 84.010) by over $318.3 million. • Overstated expenditures for the Education Stabilization Fund (ALN 84.245) by over $96.2 million. • Misstated total federal award expenditures by nearly $2.6 billion (gross error amount including those described above) for 42 of its 52 programs, which resulted in net overstatement of $37.5 million. • Misstated total expenditures passed through to subrecipients by nearly $3.5 billion (gross error amount) for 37 of its 52 programs, which resulted in a net overstatement of $8 million. • Inaccurately reported program titles for 14 programs and the wrong federal agency for 1 program. Effect—Although the Department corrected the significant misstatements we identified, the Department’s misstatements on its SEFA placed the State’s SEFA at risk of being misstated and potentially wasting public monies because misstated amounts could result in auditors unnecessarily auditing the wrong federal programs. Specifically, the Department’s misstatements on its SEFA could have resulted in it providing inaccurate information to the Arizona Department of Administration (ADOA) for inclusion in the State’s SEFA, which would have resulted in those who rely on the information it contains being misinformed, including ADOA, the Legislature, and federal agencies and pass-through grantors. This finding was not a result of internal control deficiencies of individual federal programs and accordingly, did not have a direct and material effect on the reporting requirements of the federal programs the Department administers. Cause—Although the Department is responsible for preparing a schedule of its federal award expenditures for inclusion in the State’s SEFA for the State’s single audit, it did not follow the requirements in the State’s accounting manual to compile all the federal award information necessary to prepare an accurate and complete SEFA. In addition, the Department’s reviews performed on its initially prepared SEFA were not effective to detect and correct these significant errors because the reviewers lacked training on the SEFA’s required content and how to obtain it. Criteria—Federal Uniform Guidance regulation requires the Department to separately identify in its accounts all federal awards received and expended and prepare an accurate and complete SEFA that reports its federal award expenditures for the year (2 Code of Federal Regulations [CFR] §§200.302 and 200.510). Further, the State’s accounting manual states that in order to reduce the number of deficiencies identified during the State-wide single audit, to better comply with the updated provisions of the federal Single Audit Act, and to increase the efficiency in compiling the State-wide SEFA, the revised formatting guidelines set forth in State’s accounting manual must be adhered to by any agency submitting an agency SEFA to ADOA’s General Accounting Office (State of Arizona Accounting Manual, Topic 70: Grants, Section 15). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—To help ensure that it prepares a SEFA that is accurate and complete, the Department should: 1. Follow the State’s accounting manual requirements to compile all the federal award information necessary to prepare its SEFA, including the sources from which the information is to be obtained. 2. Require an effective and independent review of its SEFA to help ensure the SEFA is accurate and complete and complies with federal Uniform Guidance requirements prior to submitting it for audit. 3. Train those responsible for preparing and reviewing the SEFA on the State’s accounting manual requirements. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.
Assistance Listings number and name: 84.010 Title I Grants to Local Educational Agencies Award numbers and years: S010A180003, July 1, 2018 through September 30, 2019; S010A190003, July 1, 2019 through September 30, 2020; S010A200003, July 1, 2020 through September 30, 2021; S010A210003, July 1, 2021 through September 30, 2022 Assistance Listings numbers and names: 84.425C COVID-19 Governor’s Emergency Education Relief (GEER) Fund 84.425D COVID-19 Education Stabilization Fund—Elementary and Secondary School Emergency Relief (ESSER) Fund 84.425R COVID19 Education Stabilization Fund—Emergency Assistance to Non-Public Schools (EANS) 84.425U COVID-19 Education Stabilization Fund—American Rescue Plan—ESSER Fund (ARP ESSER) 84.425V COVID-19 Education Stabilization Fund—American Rescue Plan—Emergency Assistance to Non-Public Schools (ARP EANS) 84.425W COVID-19 Education Stabilization Fund—American Rescue Plan—Elementary and Secondary School Emergency Relief—Homeless Children and Youth Award numbers and years: ISA-ERMT-21-5008, July 1, 2020 through June 30,2021; ISA-GEER-ADE-070121-04, July 1, 2021 through June 30, 2023; ISA-GEER-ADE-070121-02, July 1, 2021 through June 30, 2023; S425D200038, May 11, 2020 through September 30, 2021; S425D210038, March 13, 2020 through September 30, 2023; S425R210003, April 23, 2021 through September 30, 2023; S425U210038, March 13, 2020 through September 30, 2024; S425V210003, February 18, 2022 through September 30, 2024; S425W210003, April 23, 2021 through September 30, 2023 Federal agency: U.S. Department of Education Compliance requirement: Not applicable Questioned costs: Not applicable Condition—Contrary to federal regulation and the State’s accounting manual, the Department of Education’s (Department) initially prepared schedule of expenditures of federal awards (SEFA), which totaled nearly $2.5 billion, contained significant errors that required correction for it to be reliable for determining federal programs to be audited and for inclusion in the State of Arizona’s SEFA. Specifically, the Department: • Understated expenditures for Title I—Grants to States (ALN 84.010) by over $318.3 million. • Overstated expenditures for the Education Stabilization Fund (ALN 84.245) by over $96.2 million. • Misstated total federal award expenditures by nearly $2.6 billion (gross error amount including those described above) for 42 of its 52 programs, which resulted in net overstatement of $37.5 million. • Misstated total expenditures passed through to subrecipients by nearly $3.5 billion (gross error amount) for 37 of its 52 programs, which resulted in a net overstatement of $8 million. • Inaccurately reported program titles for 14 programs and the wrong federal agency for 1 program. Effect—Although the Department corrected the significant misstatements we identified, the Department’s misstatements on its SEFA placed the State’s SEFA at risk of being misstated and potentially wasting public monies because misstated amounts could result in auditors unnecessarily auditing the wrong federal programs. Specifically, the Department’s misstatements on its SEFA could have resulted in it providing inaccurate information to the Arizona Department of Administration (ADOA) for inclusion in the State’s SEFA, which would have resulted in those who rely on the information it contains being misinformed, including ADOA, the Legislature, and federal agencies and pass-through grantors. This finding was not a result of internal control deficiencies of individual federal programs and accordingly, did not have a direct and material effect on the reporting requirements of the federal programs the Department administers. Cause—Although the Department is responsible for preparing a schedule of its federal award expenditures for inclusion in the State’s SEFA for the State’s single audit, it did not follow the requirements in the State’s accounting manual to compile all the federal award information necessary to prepare an accurate and complete SEFA. In addition, the Department’s reviews performed on its initially prepared SEFA were not effective to detect and correct these significant errors because the reviewers lacked training on the SEFA’s required content and how to obtain it. Criteria—Federal Uniform Guidance regulation requires the Department to separately identify in its accounts all federal awards received and expended and prepare an accurate and complete SEFA that reports its federal award expenditures for the year (2 Code of Federal Regulations [CFR] §§200.302 and 200.510). Further, the State’s accounting manual states that in order to reduce the number of deficiencies identified during the State-wide single audit, to better comply with the updated provisions of the federal Single Audit Act, and to increase the efficiency in compiling the State-wide SEFA, the revised formatting guidelines set forth in State’s accounting manual must be adhered to by any agency submitting an agency SEFA to ADOA’s General Accounting Office (State of Arizona Accounting Manual, Topic 70: Grants, Section 15). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—To help ensure that it prepares a SEFA that is accurate and complete, the Department should: 1. Follow the State’s accounting manual requirements to compile all the federal award information necessary to prepare its SEFA, including the sources from which the information is to be obtained. 2. Require an effective and independent review of its SEFA to help ensure the SEFA is accurate and complete and complies with federal Uniform Guidance requirements prior to submitting it for audit. 3. Train those responsible for preparing and reviewing the SEFA on the State’s accounting manual requirements. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.
Assistance Listings number and name: 84.010 Title I Grants to Local Educational Agencies Award numbers and years: S010A180003, July 1, 2018 through September 30, 2019; S010A190003, July 1, 2019 through September 30, 2020; S010A200003, July 1, 2020 through September 30, 2021; S010A210003, July 1, 2021 through September 30, 2022 Assistance Listings numbers and names: 84.425C COVID-19 Governor’s Emergency Education Relief (GEER) Fund 84.425D COVID-19 Education Stabilization Fund—Elementary and Secondary School Emergency Relief (ESSER) Fund 84.425R COVID19 Education Stabilization Fund—Emergency Assistance to Non-Public Schools (EANS) 84.425U COVID-19 Education Stabilization Fund—American Rescue Plan—ESSER Fund (ARP ESSER) 84.425V COVID-19 Education Stabilization Fund—American Rescue Plan—Emergency Assistance to Non-Public Schools (ARP EANS) 84.425W COVID-19 Education Stabilization Fund—American Rescue Plan—Elementary and Secondary School Emergency Relief—Homeless Children and Youth Award numbers and years: ISA-ERMT-21-5008, July 1, 2020 through June 30,2021; ISA-GEER-ADE-070121-04, July 1, 2021 through June 30, 2023; ISA-GEER-ADE-070121-02, July 1, 2021 through June 30, 2023; S425D200038, May 11, 2020 through September 30, 2021; S425D210038, March 13, 2020 through September 30, 2023; S425R210003, April 23, 2021 through September 30, 2023; S425U210038, March 13, 2020 through September 30, 2024; S425V210003, February 18, 2022 through September 30, 2024; S425W210003, April 23, 2021 through September 30, 2023 Federal agency: U.S. Department of Education Compliance requirement: Not applicable Questioned costs: Not applicable Condition—Contrary to federal regulation and the State’s accounting manual, the Department of Education’s (Department) initially prepared schedule of expenditures of federal awards (SEFA), which totaled nearly $2.5 billion, contained significant errors that required correction for it to be reliable for determining federal programs to be audited and for inclusion in the State of Arizona’s SEFA. Specifically, the Department: • Understated expenditures for Title I—Grants to States (ALN 84.010) by over $318.3 million. • Overstated expenditures for the Education Stabilization Fund (ALN 84.245) by over $96.2 million. • Misstated total federal award expenditures by nearly $2.6 billion (gross error amount including those described above) for 42 of its 52 programs, which resulted in net overstatement of $37.5 million. • Misstated total expenditures passed through to subrecipients by nearly $3.5 billion (gross error amount) for 37 of its 52 programs, which resulted in a net overstatement of $8 million. • Inaccurately reported program titles for 14 programs and the wrong federal agency for 1 program. Effect—Although the Department corrected the significant misstatements we identified, the Department’s misstatements on its SEFA placed the State’s SEFA at risk of being misstated and potentially wasting public monies because misstated amounts could result in auditors unnecessarily auditing the wrong federal programs. Specifically, the Department’s misstatements on its SEFA could have resulted in it providing inaccurate information to the Arizona Department of Administration (ADOA) for inclusion in the State’s SEFA, which would have resulted in those who rely on the information it contains being misinformed, including ADOA, the Legislature, and federal agencies and pass-through grantors. This finding was not a result of internal control deficiencies of individual federal programs and accordingly, did not have a direct and material effect on the reporting requirements of the federal programs the Department administers. Cause—Although the Department is responsible for preparing a schedule of its federal award expenditures for inclusion in the State’s SEFA for the State’s single audit, it did not follow the requirements in the State’s accounting manual to compile all the federal award information necessary to prepare an accurate and complete SEFA. In addition, the Department’s reviews performed on its initially prepared SEFA were not effective to detect and correct these significant errors because the reviewers lacked training on the SEFA’s required content and how to obtain it. Criteria—Federal Uniform Guidance regulation requires the Department to separately identify in its accounts all federal awards received and expended and prepare an accurate and complete SEFA that reports its federal award expenditures for the year (2 Code of Federal Regulations [CFR] §§200.302 and 200.510). Further, the State’s accounting manual states that in order to reduce the number of deficiencies identified during the State-wide single audit, to better comply with the updated provisions of the federal Single Audit Act, and to increase the efficiency in compiling the State-wide SEFA, the revised formatting guidelines set forth in State’s accounting manual must be adhered to by any agency submitting an agency SEFA to ADOA’s General Accounting Office (State of Arizona Accounting Manual, Topic 70: Grants, Section 15). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—To help ensure that it prepares a SEFA that is accurate and complete, the Department should: 1. Follow the State’s accounting manual requirements to compile all the federal award information necessary to prepare its SEFA, including the sources from which the information is to be obtained. 2. Require an effective and independent review of its SEFA to help ensure the SEFA is accurate and complete and complies with federal Uniform Guidance requirements prior to submitting it for audit. 3. Train those responsible for preparing and reviewing the SEFA on the State’s accounting manual requirements. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.
Assistance Listings number and name: 84.010 Title I Grants to Local Educational Agencies Award numbers and years: S010A180003, July 1, 2018 through September 30, 2019; S010A190003, July 1, 2019 through September 30, 2020; S010A200003, July 1, 2020 through September 30, 2021; S010A210003, July 1, 2021 through September 30, 2022 Assistance Listings numbers and names: 84.425C COVID-19 Governor’s Emergency Education Relief (GEER) Fund 84.425D COVID-19 Education Stabilization Fund—Elementary and Secondary School Emergency Relief (ESSER) Fund 84.425R COVID19 Education Stabilization Fund—Emergency Assistance to Non-Public Schools (EANS) 84.425U COVID-19 Education Stabilization Fund—American Rescue Plan—ESSER Fund (ARP ESSER) 84.425V COVID-19 Education Stabilization Fund—American Rescue Plan—Emergency Assistance to Non-Public Schools (ARP EANS) 84.425W COVID-19 Education Stabilization Fund—American Rescue Plan—Elementary and Secondary School Emergency Relief—Homeless Children and Youth Award numbers and years: ISA-ERMT-21-5008, July 1, 2020 through June 30,2021; ISA-GEER-ADE-070121-04, July 1, 2021 through June 30, 2023; ISA-GEER-ADE-070121-02, July 1, 2021 through June 30, 2023; S425D200038, May 11, 2020 through September 30, 2021; S425D210038, March 13, 2020 through September 30, 2023; S425R210003, April 23, 2021 through September 30, 2023; S425U210038, March 13, 2020 through September 30, 2024; S425V210003, February 18, 2022 through September 30, 2024; S425W210003, April 23, 2021 through September 30, 2023 Federal agency: U.S. Department of Education Compliance requirement: Not applicable Questioned costs: Not applicable Condition—Contrary to federal regulation and the State’s accounting manual, the Department of Education’s (Department) initially prepared schedule of expenditures of federal awards (SEFA), which totaled nearly $2.5 billion, contained significant errors that required correction for it to be reliable for determining federal programs to be audited and for inclusion in the State of Arizona’s SEFA. Specifically, the Department: • Understated expenditures for Title I—Grants to States (ALN 84.010) by over $318.3 million. • Overstated expenditures for the Education Stabilization Fund (ALN 84.245) by over $96.2 million. • Misstated total federal award expenditures by nearly $2.6 billion (gross error amount including those described above) for 42 of its 52 programs, which resulted in net overstatement of $37.5 million. • Misstated total expenditures passed through to subrecipients by nearly $3.5 billion (gross error amount) for 37 of its 52 programs, which resulted in a net overstatement of $8 million. • Inaccurately reported program titles for 14 programs and the wrong federal agency for 1 program. Effect—Although the Department corrected the significant misstatements we identified, the Department’s misstatements on its SEFA placed the State’s SEFA at risk of being misstated and potentially wasting public monies because misstated amounts could result in auditors unnecessarily auditing the wrong federal programs. Specifically, the Department’s misstatements on its SEFA could have resulted in it providing inaccurate information to the Arizona Department of Administration (ADOA) for inclusion in the State’s SEFA, which would have resulted in those who rely on the information it contains being misinformed, including ADOA, the Legislature, and federal agencies and pass-through grantors. This finding was not a result of internal control deficiencies of individual federal programs and accordingly, did not have a direct and material effect on the reporting requirements of the federal programs the Department administers. Cause—Although the Department is responsible for preparing a schedule of its federal award expenditures for inclusion in the State’s SEFA for the State’s single audit, it did not follow the requirements in the State’s accounting manual to compile all the federal award information necessary to prepare an accurate and complete SEFA. In addition, the Department’s reviews performed on its initially prepared SEFA were not effective to detect and correct these significant errors because the reviewers lacked training on the SEFA’s required content and how to obtain it. Criteria—Federal Uniform Guidance regulation requires the Department to separately identify in its accounts all federal awards received and expended and prepare an accurate and complete SEFA that reports its federal award expenditures for the year (2 Code of Federal Regulations [CFR] §§200.302 and 200.510). Further, the State’s accounting manual states that in order to reduce the number of deficiencies identified during the State-wide single audit, to better comply with the updated provisions of the federal Single Audit Act, and to increase the efficiency in compiling the State-wide SEFA, the revised formatting guidelines set forth in State’s accounting manual must be adhered to by any agency submitting an agency SEFA to ADOA’s General Accounting Office (State of Arizona Accounting Manual, Topic 70: Grants, Section 15). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—To help ensure that it prepares a SEFA that is accurate and complete, the Department should: 1. Follow the State’s accounting manual requirements to compile all the federal award information necessary to prepare its SEFA, including the sources from which the information is to be obtained. 2. Require an effective and independent review of its SEFA to help ensure the SEFA is accurate and complete and complies with federal Uniform Guidance requirements prior to submitting it for audit. 3. Train those responsible for preparing and reviewing the SEFA on the State’s accounting manual requirements. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.
Assistance Listings number and name: 84.010 Title I Grants to Local Educational Agencies Award numbers and years: S010A180003, July 1, 2018 through September 30, 2019; S010A190003, July 1, 2019 through September 30, 2020; S010A200003, July 1, 2020 through September 30, 2021; S010A210003, July 1, 2021 through September 30, 2022 Assistance Listings numbers and names: 84.425C COVID-19 Governor’s Emergency Education Relief (GEER) Fund 84.425D COVID-19 Education Stabilization Fund—Elementary and Secondary School Emergency Relief (ESSER) Fund 84.425R COVID19 Education Stabilization Fund—Emergency Assistance to Non-Public Schools (EANS) 84.425U COVID-19 Education Stabilization Fund—American Rescue Plan—ESSER Fund (ARP ESSER) 84.425V COVID-19 Education Stabilization Fund—American Rescue Plan—Emergency Assistance to Non-Public Schools (ARP EANS) 84.425W COVID-19 Education Stabilization Fund—American Rescue Plan—Elementary and Secondary School Emergency Relief—Homeless Children and Youth Award numbers and years: ISA-ERMT-21-5008, July 1, 2020 through June 30,2021; ISA-GEER-ADE-070121-04, July 1, 2021 through June 30, 2023; ISA-GEER-ADE-070121-02, July 1, 2021 through June 30, 2023; S425D200038, May 11, 2020 through September 30, 2021; S425D210038, March 13, 2020 through September 30, 2023; S425R210003, April 23, 2021 through September 30, 2023; S425U210038, March 13, 2020 through September 30, 2024; S425V210003, February 18, 2022 through September 30, 2024; S425W210003, April 23, 2021 through September 30, 2023 Federal agency: U.S. Department of Education Compliance requirement: Not applicable Questioned costs: Not applicable Condition—Contrary to federal regulation and the State’s accounting manual, the Department of Education’s (Department) initially prepared schedule of expenditures of federal awards (SEFA), which totaled nearly $2.5 billion, contained significant errors that required correction for it to be reliable for determining federal programs to be audited and for inclusion in the State of Arizona’s SEFA. Specifically, the Department: • Understated expenditures for Title I—Grants to States (ALN 84.010) by over $318.3 million. • Overstated expenditures for the Education Stabilization Fund (ALN 84.245) by over $96.2 million. • Misstated total federal award expenditures by nearly $2.6 billion (gross error amount including those described above) for 42 of its 52 programs, which resulted in net overstatement of $37.5 million. • Misstated total expenditures passed through to subrecipients by nearly $3.5 billion (gross error amount) for 37 of its 52 programs, which resulted in a net overstatement of $8 million. • Inaccurately reported program titles for 14 programs and the wrong federal agency for 1 program. Effect—Although the Department corrected the significant misstatements we identified, the Department’s misstatements on its SEFA placed the State’s SEFA at risk of being misstated and potentially wasting public monies because misstated amounts could result in auditors unnecessarily auditing the wrong federal programs. Specifically, the Department’s misstatements on its SEFA could have resulted in it providing inaccurate information to the Arizona Department of Administration (ADOA) for inclusion in the State’s SEFA, which would have resulted in those who rely on the information it contains being misinformed, including ADOA, the Legislature, and federal agencies and pass-through grantors. This finding was not a result of internal control deficiencies of individual federal programs and accordingly, did not have a direct and material effect on the reporting requirements of the federal programs the Department administers. Cause—Although the Department is responsible for preparing a schedule of its federal award expenditures for inclusion in the State’s SEFA for the State’s single audit, it did not follow the requirements in the State’s accounting manual to compile all the federal award information necessary to prepare an accurate and complete SEFA. In addition, the Department’s reviews performed on its initially prepared SEFA were not effective to detect and correct these significant errors because the reviewers lacked training on the SEFA’s required content and how to obtain it. Criteria—Federal Uniform Guidance regulation requires the Department to separately identify in its accounts all federal awards received and expended and prepare an accurate and complete SEFA that reports its federal award expenditures for the year (2 Code of Federal Regulations [CFR] §§200.302 and 200.510). Further, the State’s accounting manual states that in order to reduce the number of deficiencies identified during the State-wide single audit, to better comply with the updated provisions of the federal Single Audit Act, and to increase the efficiency in compiling the State-wide SEFA, the revised formatting guidelines set forth in State’s accounting manual must be adhered to by any agency submitting an agency SEFA to ADOA’s General Accounting Office (State of Arizona Accounting Manual, Topic 70: Grants, Section 15). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—To help ensure that it prepares a SEFA that is accurate and complete, the Department should: 1. Follow the State’s accounting manual requirements to compile all the federal award information necessary to prepare its SEFA, including the sources from which the information is to be obtained. 2. Require an effective and independent review of its SEFA to help ensure the SEFA is accurate and complete and complies with federal Uniform Guidance requirements prior to submitting it for audit. 3. Train those responsible for preparing and reviewing the SEFA on the State’s accounting manual requirements. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.
Assistance Listings number and name: 84.010 Title I Grants to Local Educational Agencies Award numbers and years: S010A180003, July 1, 2018 through September 30, 2019; S010A190003, July 1, 2019 through September 30, 2020; S010A200003, July 1, 2020 through September 30, 2021; S010A210003, July 1, 2021 through September 30, 2022 Assistance Listings numbers and names: 84.425C COVID-19 Governor’s Emergency Education Relief (GEER) Fund 84.425D COVID-19 Education Stabilization Fund—Elementary and Secondary School Emergency Relief (ESSER) Fund 84.425R COVID19 Education Stabilization Fund—Emergency Assistance to Non-Public Schools (EANS) 84.425U COVID-19 Education Stabilization Fund—American Rescue Plan—ESSER Fund (ARP ESSER) 84.425V COVID-19 Education Stabilization Fund—American Rescue Plan—Emergency Assistance to Non-Public Schools (ARP EANS) 84.425W COVID-19 Education Stabilization Fund—American Rescue Plan—Elementary and Secondary School Emergency Relief—Homeless Children and Youth Award numbers and years: ISA-ERMT-21-5008, July 1, 2020 through June 30,2021; ISA-GEER-ADE-070121-04, July 1, 2021 through June 30, 2023; ISA-GEER-ADE-070121-02, July 1, 2021 through June 30, 2023; S425D200038, May 11, 2020 through September 30, 2021; S425D210038, March 13, 2020 through September 30, 2023; S425R210003, April 23, 2021 through September 30, 2023; S425U210038, March 13, 2020 through September 30, 2024; S425V210003, February 18, 2022 through September 30, 2024; S425W210003, April 23, 2021 through September 30, 2023 Federal agency: U.S. Department of Education Compliance requirement: Not applicable Questioned costs: Not applicable Condition—Contrary to federal regulation and the State’s accounting manual, the Department of Education’s (Department) initially prepared schedule of expenditures of federal awards (SEFA), which totaled nearly $2.5 billion, contained significant errors that required correction for it to be reliable for determining federal programs to be audited and for inclusion in the State of Arizona’s SEFA. Specifically, the Department: • Understated expenditures for Title I—Grants to States (ALN 84.010) by over $318.3 million. • Overstated expenditures for the Education Stabilization Fund (ALN 84.245) by over $96.2 million. • Misstated total federal award expenditures by nearly $2.6 billion (gross error amount including those described above) for 42 of its 52 programs, which resulted in net overstatement of $37.5 million. • Misstated total expenditures passed through to subrecipients by nearly $3.5 billion (gross error amount) for 37 of its 52 programs, which resulted in a net overstatement of $8 million. • Inaccurately reported program titles for 14 programs and the wrong federal agency for 1 program. Effect—Although the Department corrected the significant misstatements we identified, the Department’s misstatements on its SEFA placed the State’s SEFA at risk of being misstated and potentially wasting public monies because misstated amounts could result in auditors unnecessarily auditing the wrong federal programs. Specifically, the Department’s misstatements on its SEFA could have resulted in it providing inaccurate information to the Arizona Department of Administration (ADOA) for inclusion in the State’s SEFA, which would have resulted in those who rely on the information it contains being misinformed, including ADOA, the Legislature, and federal agencies and pass-through grantors. This finding was not a result of internal control deficiencies of individual federal programs and accordingly, did not have a direct and material effect on the reporting requirements of the federal programs the Department administers. Cause—Although the Department is responsible for preparing a schedule of its federal award expenditures for inclusion in the State’s SEFA for the State’s single audit, it did not follow the requirements in the State’s accounting manual to compile all the federal award information necessary to prepare an accurate and complete SEFA. In addition, the Department’s reviews performed on its initially prepared SEFA were not effective to detect and correct these significant errors because the reviewers lacked training on the SEFA’s required content and how to obtain it. Criteria—Federal Uniform Guidance regulation requires the Department to separately identify in its accounts all federal awards received and expended and prepare an accurate and complete SEFA that reports its federal award expenditures for the year (2 Code of Federal Regulations [CFR] §§200.302 and 200.510). Further, the State’s accounting manual states that in order to reduce the number of deficiencies identified during the State-wide single audit, to better comply with the updated provisions of the federal Single Audit Act, and to increase the efficiency in compiling the State-wide SEFA, the revised formatting guidelines set forth in State’s accounting manual must be adhered to by any agency submitting an agency SEFA to ADOA’s General Accounting Office (State of Arizona Accounting Manual, Topic 70: Grants, Section 15). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—To help ensure that it prepares a SEFA that is accurate and complete, the Department should: 1. Follow the State’s accounting manual requirements to compile all the federal award information necessary to prepare its SEFA, including the sources from which the information is to be obtained. 2. Require an effective and independent review of its SEFA to help ensure the SEFA is accurate and complete and complies with federal Uniform Guidance requirements prior to submitting it for audit. 3. Train those responsible for preparing and reviewing the SEFA on the State’s accounting manual requirements. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.
Assistance Listings number and name: 84.010 Title I Grants to Local Educational Agencies Award numbers and years: S010A180003, July 1, 2018 through September 30, 2019; S010A190003, July 1, 2019 through September 30, 2020; S010A200003, July 1, 2020 through September 30, 2021; S010A210003, July 1, 2021 through September 30, 2022 Assistance Listings numbers and names: 84.425C COVID-19 Governor’s Emergency Education Relief (GEER) Fund 84.425D COVID-19 Education Stabilization Fund—Elementary and Secondary School Emergency Relief (ESSER) Fund 84.425R COVID19 Education Stabilization Fund—Emergency Assistance to Non-Public Schools (EANS) 84.425U COVID-19 Education Stabilization Fund—American Rescue Plan—ESSER Fund (ARP ESSER) 84.425V COVID-19 Education Stabilization Fund—American Rescue Plan—Emergency Assistance to Non-Public Schools (ARP EANS) 84.425W COVID-19 Education Stabilization Fund—American Rescue Plan—Elementary and Secondary School Emergency Relief—Homeless Children and Youth Award numbers and years: ISA-ERMT-21-5008, July 1, 2020 through June 30,2021; ISA-GEER-ADE-070121-04, July 1, 2021 through June 30, 2023; ISA-GEER-ADE-070121-02, July 1, 2021 through June 30, 2023; S425D200038, May 11, 2020 through September 30, 2021; S425D210038, March 13, 2020 through September 30, 2023; S425R210003, April 23, 2021 through September 30, 2023; S425U210038, March 13, 2020 through September 30, 2024; S425V210003, February 18, 2022 through September 30, 2024; S425W210003, April 23, 2021 through September 30, 2023 Federal agency: U.S. Department of Education Compliance requirement: Not applicable Questioned costs: Not applicable Condition—Contrary to federal regulation and the State’s accounting manual, the Department of Education’s (Department) initially prepared schedule of expenditures of federal awards (SEFA), which totaled nearly $2.5 billion, contained significant errors that required correction for it to be reliable for determining federal programs to be audited and for inclusion in the State of Arizona’s SEFA. Specifically, the Department: • Understated expenditures for Title I—Grants to States (ALN 84.010) by over $318.3 million. • Overstated expenditures for the Education Stabilization Fund (ALN 84.245) by over $96.2 million. • Misstated total federal award expenditures by nearly $2.6 billion (gross error amount including those described above) for 42 of its 52 programs, which resulted in net overstatement of $37.5 million. • Misstated total expenditures passed through to subrecipients by nearly $3.5 billion (gross error amount) for 37 of its 52 programs, which resulted in a net overstatement of $8 million. • Inaccurately reported program titles for 14 programs and the wrong federal agency for 1 program. Effect—Although the Department corrected the significant misstatements we identified, the Department’s misstatements on its SEFA placed the State’s SEFA at risk of being misstated and potentially wasting public monies because misstated amounts could result in auditors unnecessarily auditing the wrong federal programs. Specifically, the Department’s misstatements on its SEFA could have resulted in it providing inaccurate information to the Arizona Department of Administration (ADOA) for inclusion in the State’s SEFA, which would have resulted in those who rely on the information it contains being misinformed, including ADOA, the Legislature, and federal agencies and pass-through grantors. This finding was not a result of internal control deficiencies of individual federal programs and accordingly, did not have a direct and material effect on the reporting requirements of the federal programs the Department administers. Cause—Although the Department is responsible for preparing a schedule of its federal award expenditures for inclusion in the State’s SEFA for the State’s single audit, it did not follow the requirements in the State’s accounting manual to compile all the federal award information necessary to prepare an accurate and complete SEFA. In addition, the Department’s reviews performed on its initially prepared SEFA were not effective to detect and correct these significant errors because the reviewers lacked training on the SEFA’s required content and how to obtain it. Criteria—Federal Uniform Guidance regulation requires the Department to separately identify in its accounts all federal awards received and expended and prepare an accurate and complete SEFA that reports its federal award expenditures for the year (2 Code of Federal Regulations [CFR] §§200.302 and 200.510). Further, the State’s accounting manual states that in order to reduce the number of deficiencies identified during the State-wide single audit, to better comply with the updated provisions of the federal Single Audit Act, and to increase the efficiency in compiling the State-wide SEFA, the revised formatting guidelines set forth in State’s accounting manual must be adhered to by any agency submitting an agency SEFA to ADOA’s General Accounting Office (State of Arizona Accounting Manual, Topic 70: Grants, Section 15). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—To help ensure that it prepares a SEFA that is accurate and complete, the Department should: 1. Follow the State’s accounting manual requirements to compile all the federal award information necessary to prepare its SEFA, including the sources from which the information is to be obtained. 2. Require an effective and independent review of its SEFA to help ensure the SEFA is accurate and complete and complies with federal Uniform Guidance requirements prior to submitting it for audit. 3. Train those responsible for preparing and reviewing the SEFA on the State’s accounting manual requirements. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.
Assistance Listings number and name: 84.010 Title I Grants to Local Educational Agencies Award numbers and years: S010A180003, July 1, 2018 through September 30, 2019; S010A190003, July 1, 2019 through September 30, 2020; S010A200003, July 1, 2020 through September 30, 2021; S010A210003, July 1, 2021 through September 30, 2022 Assistance Listings numbers and names: 84.425C COVID-19 Governor’s Emergency Education Relief (GEER) Fund 84.425D COVID-19 Education Stabilization Fund—Elementary and Secondary School Emergency Relief (ESSER) Fund 84.425R COVID19 Education Stabilization Fund—Emergency Assistance to Non-Public Schools (EANS) 84.425U COVID-19 Education Stabilization Fund—American Rescue Plan—ESSER Fund (ARP ESSER) 84.425V COVID-19 Education Stabilization Fund—American Rescue Plan—Emergency Assistance to Non-Public Schools (ARP EANS) 84.425W COVID-19 Education Stabilization Fund—American Rescue Plan—Elementary and Secondary School Emergency Relief—Homeless Children and Youth Award numbers and years: ISA-ERMT-21-5008, July 1, 2020 through June 30,2021; ISA-GEER-ADE-070121-04, July 1, 2021 through June 30, 2023; ISA-GEER-ADE-070121-02, July 1, 2021 through June 30, 2023; S425D200038, May 11, 2020 through September 30, 2021; S425D210038, March 13, 2020 through September 30, 2023; S425R210003, April 23, 2021 through September 30, 2023; S425U210038, March 13, 2020 through September 30, 2024; S425V210003, February 18, 2022 through September 30, 2024; S425W210003, April 23, 2021 through September 30, 2023 Federal agency: U.S. Department of Education Compliance requirement: Not applicable Questioned costs: Not applicable Condition—Contrary to federal regulation and the State’s accounting manual, the Department of Education’s (Department) initially prepared schedule of expenditures of federal awards (SEFA), which totaled nearly $2.5 billion, contained significant errors that required correction for it to be reliable for determining federal programs to be audited and for inclusion in the State of Arizona’s SEFA. Specifically, the Department: • Understated expenditures for Title I—Grants to States (ALN 84.010) by over $318.3 million. • Overstated expenditures for the Education Stabilization Fund (ALN 84.245) by over $96.2 million. • Misstated total federal award expenditures by nearly $2.6 billion (gross error amount including those described above) for 42 of its 52 programs, which resulted in net overstatement of $37.5 million. • Misstated total expenditures passed through to subrecipients by nearly $3.5 billion (gross error amount) for 37 of its 52 programs, which resulted in a net overstatement of $8 million. • Inaccurately reported program titles for 14 programs and the wrong federal agency for 1 program. Effect—Although the Department corrected the significant misstatements we identified, the Department’s misstatements on its SEFA placed the State’s SEFA at risk of being misstated and potentially wasting public monies because misstated amounts could result in auditors unnecessarily auditing the wrong federal programs. Specifically, the Department’s misstatements on its SEFA could have resulted in it providing inaccurate information to the Arizona Department of Administration (ADOA) for inclusion in the State’s SEFA, which would have resulted in those who rely on the information it contains being misinformed, including ADOA, the Legislature, and federal agencies and pass-through grantors. This finding was not a result of internal control deficiencies of individual federal programs and accordingly, did not have a direct and material effect on the reporting requirements of the federal programs the Department administers. Cause—Although the Department is responsible for preparing a schedule of its federal award expenditures for inclusion in the State’s SEFA for the State’s single audit, it did not follow the requirements in the State’s accounting manual to compile all the federal award information necessary to prepare an accurate and complete SEFA. In addition, the Department’s reviews performed on its initially prepared SEFA were not effective to detect and correct these significant errors because the reviewers lacked training on the SEFA’s required content and how to obtain it. Criteria—Federal Uniform Guidance regulation requires the Department to separately identify in its accounts all federal awards received and expended and prepare an accurate and complete SEFA that reports its federal award expenditures for the year (2 Code of Federal Regulations [CFR] §§200.302 and 200.510). Further, the State’s accounting manual states that in order to reduce the number of deficiencies identified during the State-wide single audit, to better comply with the updated provisions of the federal Single Audit Act, and to increase the efficiency in compiling the State-wide SEFA, the revised formatting guidelines set forth in State’s accounting manual must be adhered to by any agency submitting an agency SEFA to ADOA’s General Accounting Office (State of Arizona Accounting Manual, Topic 70: Grants, Section 15). Finally, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—To help ensure that it prepares a SEFA that is accurate and complete, the Department should: 1. Follow the State’s accounting manual requirements to compile all the federal award information necessary to prepare its SEFA, including the sources from which the information is to be obtained. 2. Require an effective and independent review of its SEFA to help ensure the SEFA is accurate and complete and complies with federal Uniform Guidance requirements prior to submitting it for audit. 3. Train those responsible for preparing and reviewing the SEFA on the State’s accounting manual requirements. The State’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.
CONDITION -The Municipality’s staff could not provide us with the officially prepared and certified reports that supported compliance with the filing or submission of reports and financial information, as required by federal award and regulatory agreements. Likewise, reconciliations were not provided between the information used to prepare the required and submitted reports with the formal information presented and accounted for in the official Municipality’s accounting system. According to an analysis prepared by the Municipality of the bank account assigned to manage the use of Coronavirus Relief Fund (CRF) PHE - Transfer Funds, and transactions through this bank account during the fiscal year ended June 30, 2022, $1,802,962 has been expended or transferred to the general fund to cover eligible expenses under the terms allowed by the CRF PHE - Transfer Funds. As a consequence of these conditions, compliance with reporting requirements established by the pass-through entity, and related internal controls, could not be verified. CRITERIA - According to the Transfer Agreements, the transferee shall submit reports as the transferor determines are needed to verify use of the funds and compliance with conditions that are imposed on the transfer, and such reports shall be in such form, with such content, as specified by the transferor in the transfer plan and future program instructions directed to all recipients. Transferor will transfer emergency assistance fund to transferee for necessary expenditures related to the COVID-19 emergency by making a transfer on the basis set out in this Agreement and in the Transfer Plan. The reports must be due on the 15th day of each month, the transferee will submit a use of funds transfer report for the prior month’s expenses. Also, as established in the 2 CFR Section 200.302 (a) of the Uniform Guidance, the non-Federal entity’s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. In addition, 2 CFR Section 200.403, states that otherwise authorized by statue, costs must be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity and be adequately documented. CAUSE - There is a lack of knowledge and training to the personnel assigned to the management and reports preparation, as required by this federal award. Additionally, the Municipality does not have an adequate monitoring and internal control regarding the activity, filing and custody of reports, as required by the federal awards and the pass-through entity, and in a way that documents and supports the compliance with reporting requirements. EFFECT - The program is exposed to not being in compliance with the Reporting Requirements as established in agreement. Also, the Municipality is exposed to the Grantor questioning the use of funds. RECOMMENDATION - We recommend that the staff or department in charge locate and document all required reports that were filed according to the requirements of the grant agreement, including the reconciliation thereof with the official Municipality’s accounting subsidiaries. Also, it is absolutely necessary for the Municipality to design, document, establish and provide the necessary and required training, including guidelines and procedures, to all personnel who work directly or indirectly with the management of these federal funds.
CONDITION - The Municipality’s staff could not provide us with the officially prepared and certified reports that supported compliance with the filing or submission of reports and financial information, as required by federal award and regulatory agreements. Likewise, reconciliations were not provided between the information used to prepare the required and submitted reports with the formal information presented and accounted for in the official Municipality’s accounting system. According to an analysis prepared by the Municipality of the bank account assigned to manage the use of Coronavirus Relief Fund (CRF) PHE – Testing and Contact Tracing, and transactions through this bank account during the fiscal year ended June 30, 2022, $156,846 has been expended or transferred to the general fund to cover eligible expenses under the terms allowed by the CRF PHA - Tracing and Contact Tracing. As a consequence of these conditions, compliance with reporting requirements established by the pass-through entity, and related internal controls, could not be verified. CRITERIA - According to the Transfer Agreements, the transferee shall submit reports as the transferor determines are needed to verify use of the funds and compliance with conditions that are imposed on the transfer, and such reports shall be in such form, with such content, as specified by the transferor in the transfer plan and future program instructions directed to all recipients. Transferor will transfer emergency assistance fund to transferee for necessary expenditures related to the COVID-19 emergency by making a transfer on the basis set out in this Agreement and in the Transfer Plan. The reports must be due on the 15th day of each month, the transferee will submit a use of funds transfer report for the prior month’s expenses. Also, as established in the 2 CFR Section 200.302 (a) of the Uniform Guidance, the non-Federal entity’s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. In addition, 2 CFR Section 200.403, states that otherwise authorized by statue, costs must be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity and be adequately documented. CAUSE - There is a lack of knowledge and training to the personnel assigned to the management and reports preparation, as required by this federal award. Additionally, the Municipality does not have an adequate monitoring and internal control regarding the activity, filing and custody of reports, as required by the federal awards and the pass-through entity, and in a way that documents and supports the compliance with reporting requirements. EFFECT - The program is exposed to not being in compliance with the Reporting Requirements as established in agreement. Also, the Municipality is exposed to the Grantor questioning the use of funds. RECOMMENDATION - We recommend that the staff or department in charge locate and document all required reports that were filed according to the requirements of the grant agreement, including the reconciliation thereof with the official Municipality’s accounting subsidiaries. Also, it is absolutely necessary for the Municipality to design, document, establish and provide the necessary and required training, including guidelines and procedures, to all personnel who work directly or indirectly with the management of these federal funds.
CONDITION - The Municipality’s staff could not provide us with the officially prepared and certified reports that supported compliance with the filing or submission of reports and financial information, as required by federal award and regulatory agreements. Likewise, reconciliations were not provided between the information used to prepare the required and submitted reports with the formal information presented and accounted for in the official Municipality’s accounting system. According to an analysis prepared by the Municipality of the bank account assigned to manage the use of Coronavirus State and Local Fiscal Recovery Funds (CSLFRF), and transactions through this bank account during the fiscal year ended June 30, 2022, $625,053 has been expended or transferred to the general fund to cover eligible expenses under the terms allowed by the CSLFRF. As a consequence of these conditions, compliance with reporting requirements established by the federal grantor, and related internal controls, could not be verified. CRITERIA - Per the Compliance and Reporting Guidance – Part I: General Guidance – Section D: Uniform Administrative Requirements – Section 10: Reporting: establishes that: All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Recipients should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. In addition, where appropriate, recipients need to establish controls to ensure completion and timely submission of all mandatory performance and/or compliance reporting. Also, as established in the 2 CFR Section 200.302 (a) of the Uniform Guidance, the non-Federal entity’s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. In addition, 2 CFR Section 200.403, states that otherwise authorized by statue, costs must be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity and be adequately documented. CAUSE - There is a lack of knowledge and training to the personnel assigned to the management and reports preparation, as required by this federal award. Additionally, the Municipality does not have an adequate monitoring and internal control regarding the activity, filing and custody of reports, as required by the federal awards and the pass-through entity, and in a way that documents and supports the compliance with reporting requirements. EFFECT - The program is exposed to not being in compliance with the Reporting Requirements as established in agreement. Also, the Municipality is exposed to the Grantor questioning the use of funds. RECOMMENDATION - We recommend that the staff or department in charge locate and document all required reports that were filed according to the requirements of the grant agreement, including the reconciliation thereof with the official Municipality’s accounting subsidiaries. Also, it is absolutely necessary for the Municipality to design, document, establish and provide the necessary and required training, including guidelines and procedures, to all personnel who work directly or indirectly with the management of these federal funds.
CONDITION - The Municipality’s staff could not provide us with the officially prepared and certified reports that supported compliance with the filing or submission of reports and financial information, as required by federal award and regulatory agreements. Likewise, reconciliations were not provided between the information used to prepare the required and submitted reports with the formal information presented and accounted for in the official Municipality’s accounting system. According to an analysis prepared by the Municipality of the bank account assigned to manage the use of Coronavirus State and Local Fiscal Recovery Funds (CSLFRF), and transactions through this bank account during the fiscal year ended June 30, 2022, $625,053 has been expended or transferred to the general fund to cover eligible expenses under the terms allowed by the CSLFRF. As a consequence of these conditions, compliance with reporting requirements established by the federal grantor, and related internal controls, could not be verified. CRITERIA - Per the Compliance and Reporting Guidance – Part I: General Guidance – Section D: Uniform Administrative Requirements – Section 10: Reporting: establishes that: All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Recipients should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. In addition, where appropriate, recipients need to establish controls to ensure completion and timely submission of all mandatory performance and/or compliance reporting. Also, as established in the 2 CFR Section 200.302 (a) of the Uniform Guidance, the non-Federal entity’s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. In addition, 2 CFR Section 200.403, states that otherwise authorized by statue, costs must be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity and be adequately documented. CAUSE - There is a lack of knowledge and training to the personnel assigned to the management and reports preparation, as required by this federal award. Additionally, the Municipality does not have an adequate monitoring and internal control regarding the activity, filing and custody of reports, as required by the federal awards and the pass-through entity, and in a way that documents and supports the compliance with reporting requirements. EFFECT - The program is exposed to not being in compliance with the Reporting Requirements as established in agreement. Also, the Municipality is exposed to the Grantor questioning the use of funds. RECOMMENDATION - We recommend that the staff or department in charge locate and document all required reports that were filed according to the requirements of the grant agreement, including the reconciliation thereof with the official Municipality’s accounting subsidiaries. Also, it is absolutely necessary for the Municipality to design, document, establish and provide the necessary and required training, including guidelines and procedures, to all personnel who work directly or indirectly with the management of these federal funds.
CONDITION - The Municipality’s staff could not provide us with the officially prepared and certified reports that supported compliance with the filing or submission of reports and financial information, as required by federal award and regulatory agreements. Likewise, reconciliations were not provided between the information used to prepare the required and submitted reports with the formal information presented and accounted for in the official Municipality’s accounting system. CRITERIA - The state is required to make an accounting to FEMA of eligible costs. Similarly, the subrecipient must make an accounting to the state. In submitting the accounting, the entity is required to certify that reported costs were incurred in performance of eligible work, that the approved work was completed, that the project in in compliance with the provisions of the FEMA-State Agreement, all grants conditions were met, ant the provisions for that project were made in accordance with the applicable payment provisions. Also, as established in the 2 CFR Section 200.302 (a) of the Uniform Guidance, the non-Federal entity’s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. In addition, 2 CFR Section 200.403, states that otherwise authorized by statue, costs must be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity and be adequately documented. CAUSE - There is a lack of knowledge and training to the personnel assigned to the management and reports preparation, as required by this federal award. Additionally, the Municipality does not have an adequate monitoring and internal control regarding the activity, filing and custody of reports, as required by the federal awards and the pass-through entity, and in a way that documents and supports the compliance with reporting requirements. EFFECT - The program is exposed to not being in compliance with the Reporting Requirements as established in agreement. Also, the Municipality is exposed to the Grantor questioning the use of funds. RECOMMENDATION - We recommend that the staff or department in charge locate and document all required reports that were filed according to the requirements of the grant agreement, including the reconciliation thereof with the official Municipality’s accounting subsidiaries. Also, it is absolutely necessary for the Municipality to design, document, establish and provide the necessary and required training, including guidelines and procedures, to all personnel who work directly or indirectly with the management of these federal funds.