Finding 2021-003: Reconciliation of AccountsFederal Program: Research and Development Cluster (Education and Human Resources) Assistance Listing Number and Title: 47.076 STEM Education Name of Federal Agency, Pass Through Entity (when applicable), Award Number and Year: National Science Foundation: 1524963 (11/1/2015 – 9/30/2021), 1812860 (9/1/2018 – 8/31/2020) Material Weakness in Internal Control over Compliance, Material Noncompliance Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): According to 2 CFR 200.508 "Auditee Responsibilities" the auditee must prepare appropriate financial statements, including the SEFA (as specifically defined under 2 CFR 200.510 "Financial statements"). Title 2 CFR 200.510 "financial statements" requires recipients of Federal funds to prepare a SEFA for the period covered by the auditee's financial statements, which must include the total Federal awards expended. In addition, as noted in 2 CFR 200.302 "Financial management", the financial management system of each non-Federal entity must provide for identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received, and records that identify adequately the source and application of funds for federally-funded activities including expenditures. Condition: The year-end schedules for federal grants receivable, for net assets, and for vacation payable were not reconciled and needed to be revised and updated. Cause: Errors in transferring balances between years occurred, which impacted carry-over amounts and the ending balances as of 12/31/2021. Related to vacation payables, the schedule had not been properly adjusted to account for the number of days in the last pay period. Effect or Potential Effect: Three federal grant accounts were overdrawn as of 12/31/2021, creating a liability to the federal government. The related grant receivable and liability balances were not properly stated before adjustment as a result. Questioned Costs: $80,822 in total. Assistance listing number 47.076. Of this amount, $62,403 applies to award ID 1505278, which was closed before 1/1/2021 and did not have expenses or drawdowns in 2021 but by the end of 2018 had $138,034 in federal funding provided to AAPT and $75,631 of reimbursable expenses. AAPT had not refunded the overpayment, such as by applying this $62,403 as a reduction in federal reimbursements drawn during 2021. The remaining amounts of $10,112 and $8,307 relate to award IDs 1812860, and 1524963, respectively, and were calculated in the same manner. The period of performance for award ID 1812860 ended on 8/31/2020. The period of performance for award ID 1524963 ended on 9/30/2021. Identification as a Repeat Finding, if Applicable: 2020-003 Recommendation: We recommend AAPT staff prepare schedules used to prepare entries into the accounting information system or which the information in the schedules will otherwise be used to initiate financial transactions, and the transactions and schedules be reviewed by a supervisor. Views of Responsible Officials and Planned Corrective Actions: The outstanding liability due to NSF of $80,978 will be reimbursed when AAPT files the next drawn down request. Anticipated date of drawn down will be by July 31,2024. The senior accountant will be trained to prepare entries previously prepared by the CFO The senior accountant will reconcile accounts, and provide updated current schedules. The CFO will review and approve the entries and schedules prepared by the Senior accountant. Anticipated Completion Date: 10/15/2024 Responsible Official: Michael Brosnan, CFO
Management did not have written internal control procedures for determining allowable costs and other requirements over federal awards specifically relating to the Uniform Guidance. 2 CFR 200, Subpart D, Section 200.302(b)(7) requires “written procedures for determining the allowability of costs in accordance with Subpart E – Cost Principles of this part and the terms and conditions of the Federal Award. no questioned costs. Lack of written controls to identify allowable costs and special tests and provisions. Costs may be disallowed and required to be repaid to the granting agency. Compliance requirements set forth in the grant agreements were not followed. Management should develop written internal control procedures in accordance with the Uniform Guidance. This was a repeat finding as Finding 2020-004.
2021-001 – ACCOUNTING SYSTEM POLICIES AND PROCEDURES (Continued) Federal Program Information: Federal Agency Federal Program Name Assistance Listing Number Grant Award(s) Unique Identifier(s) Department of Defense Basic Scientific Research 12.431 W15QKN-14-1-0001 W15QKN-20-1-1000 Condition: The accounting system utilized did not provide for the accumulation of costs by the applicable budgetary program activities for either the 2014 or the 2020 grant awards. The accounting system also did not immediately provide for the proper allocation of direct and indirect expenses. Functional categories in the accounting system are considered direct expenses or indirect expenses contingent upon the nature of the classification. Therefore, the accounting system does not further readily classify expenditures with budget amounts for each federal award. Furthermore, the entity failed to establish policies and procedures related to the classification of direct and indirect costs and for determining the allowability of costs in accordance with subpart E of 2 CFR 200.302. Questioned Costs: Not applicable. Context: Total federal expenditures for the program as listed on the Schedule of Federal Awards was $6,267,848 with $703,925 charged to indirect expenses. As noted in subsequent findings, the compliance requirements related to Activities Allowed or Unallowed, and Allowable Costs/Cost Principles were impacted by these conditions. Cause: The accounting system utilized is not properly configured to fully comply with the provisions stipulated above. Furthermore, there is a lack of policies and procedures related to the allocation of direct and indirect expenses and the allowability of costs as determined in accordance with Subpart E of 2 CFR 200.302. SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (Continued) 2021-001 – ACCOUNTING SYSTEM POLICIES AND PROCEDURES (Continued) Federal Program Information: Federal Agency Federal Program Name Assistance Listing Number Grant Award(s) Unique Identifier(s) Department of Defense Basic Scientific Research 12.431 W15QKN-14-1-0001 W15QKN-20-1-1000 Effect: The lack of an accounting system to properly allocate by budgetary categories per award documents leads to a greater risk that the program could expend the federal award in a manner that is not consistent with federal award requirements. Additionally, the lack of policies and procedures related to the allocation of direct and indirect expenses and the allowability of costs creates a greater risk that costs may be improperly allocated or be unallowable pursuant to Subpart E of 2 CFR 200.302. Recommendation: Management should develop an effective correction action plan to address this matter in a timely manner. The plan should establish the methodology of designating program costs as either direct or indirect. The accounting system should be configured in a manner which allows for a timely comparison of actual expenses to the budget forecasts for the award program. Views of Responsible Officials: Management concurs with the finding and has developed a plan to correct the finding.
2021-002 – INTERNAL CONTROL OVER COMPLIANCE Material Weakness CRITERIA Per Uniform Guidance (2 CFR Part 200.302), the grantee must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the grantee is managing the Federal award in compliance with statutes, regulations, and the terms and conditions of the Federal award. CONDITION The Authority did not maintain proper monitoring, communication and control activities to ensure adherence to the Authority’s key administrative policies including procurement, occupancy and the HCV administrative plan. The Authority outsourced the management of the Housing Choice Voucher and Mainstream Voucher programs and did not properly monitor the activities of those programs. The third party management company adopted and maintained policies and procedures for the Authority without board approval. CAUSE The Authority did not have proper oversight of their Housing Choice Voucher and Mainstream Voucher programs. EFFECT This deficiency in internal controls resulted in material noncompliance, which could affect the Authority's ability to manage and report on Federal awards accurately. QUESTIONED COSTS None noted. CONTEXT We reviewed the Authority’s internal controls over compliance with federal awards. REPEAT FINDING See finding 2020-002. RECOMMENDATION We recommend the Authority’s management take an active role in reviewing their policies and monitoring the Authority’s compliance with those policies. AUDITEE’S RESPONSE AND PLANNED CORRECTIVE ACTION See Corrective Action Plan.
2021-002 – INTERNAL CONTROL OVER COMPLIANCE Material Weakness CRITERIA Per Uniform Guidance (2 CFR Part 200.302), the grantee must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the grantee is managing the Federal award in compliance with statutes, regulations, and the terms and conditions of the Federal award. CONDITION The Authority did not maintain proper monitoring, communication and control activities to ensure adherence to the Authority’s key administrative policies including procurement, occupancy and the HCV administrative plan. The Authority outsourced the management of the Housing Choice Voucher and Mainstream Voucher programs and did not properly monitor the activities of those programs. The third party management company adopted and maintained policies and procedures for the Authority without board approval. CAUSE The Authority did not have proper oversight of their Housing Choice Voucher and Mainstream Voucher programs. EFFECT This deficiency in internal controls resulted in material noncompliance, which could affect the Authority's ability to manage and report on Federal awards accurately. QUESTIONED COSTS None noted. CONTEXT We reviewed the Authority’s internal controls over compliance with federal awards. REPEAT FINDING See finding 2020-002. RECOMMENDATION We recommend the Authority’s management take an active role in reviewing their policies and monitoring the Authority’s compliance with those policies. AUDITEE’S RESPONSE AND PLANNED CORRECTIVE ACTION See Corrective Action Plan.
2021-002 – INTERNAL CONTROL OVER COMPLIANCE Material Weakness CRITERIA Per Uniform Guidance (2 CFR Part 200.302), the grantee must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the grantee is managing the Federal award in compliance with statutes, regulations, and the terms and conditions of the Federal award. CONDITION The Authority did not maintain proper monitoring, communication and control activities to ensure adherence to the Authority’s key administrative policies including procurement, occupancy and the HCV administrative plan. The Authority outsourced the management of the Housing Choice Voucher and Mainstream Voucher programs and did not properly monitor the activities of those programs. The third party management company adopted and maintained policies and procedures for the Authority without board approval. CAUSE The Authority did not have proper oversight of their Housing Choice Voucher and Mainstream Voucher programs. EFFECT This deficiency in internal controls resulted in material noncompliance, which could affect the Authority's ability to manage and report on Federal awards accurately. QUESTIONED COSTS None noted. CONTEXT We reviewed the Authority’s internal controls over compliance with federal awards. REPEAT FINDING See finding 2020-002. RECOMMENDATION We recommend the Authority’s management take an active role in reviewing their policies and monitoring the Authority’s compliance with those policies. AUDITEE’S RESPONSE AND PLANNED CORRECTIVE ACTION See Corrective Action Plan.
2021-002 – INTERNAL CONTROL OVER COMPLIANCE Material Weakness CRITERIA Per Uniform Guidance (2 CFR Part 200.302), the grantee must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the grantee is managing the Federal award in compliance with statutes, regulations, and the terms and conditions of the Federal award. CONDITION The Authority did not maintain proper monitoring, communication and control activities to ensure adherence to the Authority’s key administrative policies including procurement, occupancy and the HCV administrative plan. The Authority outsourced the management of the Housing Choice Voucher and Mainstream Voucher programs and did not properly monitor the activities of those programs. The third party management company adopted and maintained policies and procedures for the Authority without board approval. CAUSE The Authority did not have proper oversight of their Housing Choice Voucher and Mainstream Voucher programs. EFFECT This deficiency in internal controls resulted in material noncompliance, which could affect the Authority's ability to manage and report on Federal awards accurately. QUESTIONED COSTS None noted. CONTEXT We reviewed the Authority’s internal controls over compliance with federal awards. REPEAT FINDING See finding 2020-002. RECOMMENDATION We recommend the Authority’s management take an active role in reviewing their policies and monitoring the Authority’s compliance with those policies. AUDITEE’S RESPONSE AND PLANNED CORRECTIVE ACTION See Corrective Action Plan.
2021-002 – INTERNAL CONTROL OVER COMPLIANCE Material Weakness CRITERIA Per Uniform Guidance (2 CFR Part 200.302), the grantee must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the grantee is managing the Federal award in compliance with statutes, regulations, and the terms and conditions of the Federal award. CONDITION The Authority did not maintain proper monitoring, communication and control activities to ensure adherence to the Authority’s key administrative policies including procurement, occupancy and the HCV administrative plan. The Authority outsourced the management of the Housing Choice Voucher and Mainstream Voucher programs and did not properly monitor the activities of those programs. The third party management company adopted and maintained policies and procedures for the Authority without board approval. CAUSE The Authority did not have proper oversight of their Housing Choice Voucher and Mainstream Voucher programs. EFFECT This deficiency in internal controls resulted in material noncompliance, which could affect the Authority's ability to manage and report on Federal awards accurately. QUESTIONED COSTS None noted. CONTEXT We reviewed the Authority’s internal controls over compliance with federal awards. REPEAT FINDING See finding 2020-002. RECOMMENDATION We recommend the Authority’s management take an active role in reviewing their policies and monitoring the Authority’s compliance with those policies. AUDITEE’S RESPONSE AND PLANNED CORRECTIVE ACTION See Corrective Action Plan.
2021-002 – INTERNAL CONTROL OVER COMPLIANCE Material Weakness CRITERIA Per Uniform Guidance (2 CFR Part 200.302), the grantee must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the grantee is managing the Federal award in compliance with statutes, regulations, and the terms and conditions of the Federal award. CONDITION The Authority did not maintain proper monitoring, communication and control activities to ensure adherence to the Authority’s key administrative policies including procurement, occupancy and the HCV administrative plan. The Authority outsourced the management of the Housing Choice Voucher and Mainstream Voucher programs and did not properly monitor the activities of those programs. The third party management company adopted and maintained policies and procedures for the Authority without board approval. CAUSE The Authority did not have proper oversight of their Housing Choice Voucher and Mainstream Voucher programs. EFFECT This deficiency in internal controls resulted in material noncompliance, which could affect the Authority's ability to manage and report on Federal awards accurately. QUESTIONED COSTS None noted. CONTEXT We reviewed the Authority’s internal controls over compliance with federal awards. REPEAT FINDING See finding 2020-002. RECOMMENDATION We recommend the Authority’s management take an active role in reviewing their policies and monitoring the Authority’s compliance with those policies. AUDITEE’S RESPONSE AND PLANNED CORRECTIVE ACTION See Corrective Action Plan.
2021-002 – INTERNAL CONTROL OVER COMPLIANCE Material Weakness CRITERIA Per Uniform Guidance (2 CFR Part 200.302), the grantee must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the grantee is managing the Federal award in compliance with statutes, regulations, and the terms and conditions of the Federal award. CONDITION The Authority did not maintain proper monitoring, communication and control activities to ensure adherence to the Authority’s key administrative policies including procurement, occupancy and the HCV administrative plan. The Authority outsourced the management of the Housing Choice Voucher and Mainstream Voucher programs and did not properly monitor the activities of those programs. The third party management company adopted and maintained policies and procedures for the Authority without board approval. CAUSE The Authority did not have proper oversight of their Housing Choice Voucher and Mainstream Voucher programs. EFFECT This deficiency in internal controls resulted in material noncompliance, which could affect the Authority's ability to manage and report on Federal awards accurately. QUESTIONED COSTS None noted. CONTEXT We reviewed the Authority’s internal controls over compliance with federal awards. REPEAT FINDING See finding 2020-002. RECOMMENDATION We recommend the Authority’s management take an active role in reviewing their policies and monitoring the Authority’s compliance with those policies. AUDITEE’S RESPONSE AND PLANNED CORRECTIVE ACTION See Corrective Action Plan.
2021-002 – INTERNAL CONTROL OVER COMPLIANCE Material Weakness CRITERIA Per Uniform Guidance (2 CFR Part 200.302), the grantee must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the grantee is managing the Federal award in compliance with statutes, regulations, and the terms and conditions of the Federal award. CONDITION The Authority did not maintain proper monitoring, communication and control activities to ensure adherence to the Authority’s key administrative policies including procurement, occupancy and the HCV administrative plan. The Authority outsourced the management of the Housing Choice Voucher and Mainstream Voucher programs and did not properly monitor the activities of those programs. The third party management company adopted and maintained policies and procedures for the Authority without board approval. CAUSE The Authority did not have proper oversight of their Housing Choice Voucher and Mainstream Voucher programs. EFFECT This deficiency in internal controls resulted in material noncompliance, which could affect the Authority's ability to manage and report on Federal awards accurately. QUESTIONED COSTS None noted. CONTEXT We reviewed the Authority’s internal controls over compliance with federal awards. REPEAT FINDING See finding 2020-002. RECOMMENDATION We recommend the Authority’s management take an active role in reviewing their policies and monitoring the Authority’s compliance with those policies. AUDITEE’S RESPONSE AND PLANNED CORRECTIVE ACTION See Corrective Action Plan.
CASH MANAGEMENT, I NOTED THAT THE NATIVE VILLAGE OF TYONEK (NVT) HAD AN EXCESS OF EARNED GRANT REVENUES AND RESTRICTED FUND BALANCE AS COMPARED TO CASH ON HAND. TOTAL CASH ON HAND AT YEAR END WAS $8,113,152 AND TOTAL UNEARNED GRANT REVENUE WAS $8,182,093. PER 2 CFR, SECTION 200.302, THE NATIVE VILLAGE MUST COMPLY WITH THE REQUIREMENT THAT ANY AND ALL GRANT ADVANCES BE RETAINED WITHIN THE ORGANIZATION UNTIL EXPENDED ON ALLOWABLE GRANT EXPENDITURES. QUESTIONED COSTS NOT DETERMINED. IN PRIOR YEARS, THERE WAS AN OVEREXPENDITURE OF GENERAL AND ADMINISTRATIVE EXPENSES IN EXCESS OF REVENUES FOR THE YEAR. MOST OF THIS WAS BILLINGS FROM THE VILLAGES CONSULTANTS (4 AND 5 YEARS AGO) WHOSE BILLINGS WERE FAR IN EXCESS OF THE AVAILABLE UNRESTRICTED FUNDS WHICH THE VILLAGE HAD TO PAY THEM. GRANTING AGENCIES COULD REQUEST REIMBURSEMENT OF THESE UNALLOWABLE ADVANCES CAUSING FINANCIAL HARDSHIP FOR THE NVT. MANAGEMENT NEEDS TO ENSURE THAT ALL NONGRANT EXPENSES NEED TO BE KEPT TO A MINIMUM TO ENSURE THAT ADVANCED GRANT FUNDS ARE NOT SPENT ON UNALLOWABLE ITEMS. IT IS IMPORTANT THAT THE NVT TRACK THROUGHOUT THE YEAR THE NET PROFIT OR LOSS IN THE GENERAL FUND AND IMMEDIATELY TAKE CORRECTIVE STEPS IF THE GENERAL FUND IS SHOWING A LOSS. IT IS ALSO IMPORTANT THAT CONTINUING RELATIONSHIPS WITH VENDORS ARE EVALUATED THROUGHOUT THE YEAR TO ENSURE REASONABLENESS OF PAYMENTS. THIS FINDING WAS ALSO NOTED AS FINDING 2020-001
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, 2021, $1,055,864 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, 2021, $344,461 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.
CLAYTON COUNTY COMMUNITY SERVICES AUTHORITY, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS Financial Statement Findings and Questioned Costs June 30, 2021 Comment #2021-001 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, PROPER APPROVAL OF DISBURSEMENTS, GRANT CLOSE-OUT PROCEDURES AND REQUIRED REGULATORY REPORTING POLICIES AND PROCEDURES SHOULD IMPROVED GENERAL (Repeat Finding) 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 Authority. 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 closeout process is designed to help 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 of the current staff does not allow for adequate analysis of grants and contracts, other internal shared costs and support services provided, grantor receivables, deferred revenue, allocation of indirect costs and the reconciliation of bank accounts accurately and in a timely manner. Various regulatory reports were not filed accurately and in a timely manner (i.e., SF-425's for the Head Start Programs and DHS’s State budget reports for the LIHEAP programs). Specifically, revenue was recorded in excess of expenditures for the LIHEAP programs. 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), which is consistent with our audit findings for the year ended June 30, 2020. The systemic cause appears to be a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of accounting controls, monitoring and policies and procedures not followed consistently. 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: 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. 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 Authority has a chief financial officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. The workload on the CFO is overwhelming. New staff hired should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. We believe that the CFO with the grant accountant 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. We further recommend that training be provided to all staff engaged in the financial reporting, allocation and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. New policies and procedures should be established that conforms to the Uniform Guidance requirements. Views of Responsible Officials and Planned Corrective Actions: The management of Clayton County Community Services Authority, Inc. has reviewed the above referenced finding and fully agrees with the need for improved internal controls over financial statement preparation. Management believes that the proper approval of disbursements was adhered to during the reporting period with minimal deviation and continues to ensure proper policies are followed. Federal reports (SF425’s, LIHEAP) were filed during this period and may not have been properly reviewed during the course of this audit. For example, the LIHEAP reports were reconciled with the assistance of the State Program Specialist to ensure proper return of funds as requested by the funding agency. Management reserves the right to discuss this further as needed for the purpose of this finding. Adequate fiscal personnel staff has continued to be a challenge for the agency as management has done an exhaustive search for additional fiscal personnel and made job offers to qualified individuals only to have them decline the offer at the last moment. We have just offered the position of General Ledger Accountant to an individual and they are expected to start in two weeks. This will assist the CFO in the area of financial controls and reporting. It should also be noted that all bank reconciliations are current and being completed in a timely manner as dictated by our policies and procedures. Management continues to ensure all federal, state, and local and local regulatory reports and completed and submitted in a timely manner. As stated previously, the CFO worked directly with the State LIHEAP Program Staff to ensure proper reporting and reconciliation before returning unused funds.
CLAYTON COUNTY COMMUNITY SERVICES AUTHORITY, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS Financial Statement Findings and Questioned Costs June 30, 2021 Comment #2021-001 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, PROPER APPROVAL OF DISBURSEMENTS, GRANT CLOSE-OUT PROCEDURES AND REQUIRED REGULATORY REPORTING POLICIES AND PROCEDURES SHOULD IMPROVED GENERAL (Repeat Finding) 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 Authority. 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 closeout process is designed to help 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 of the current staff does not allow for adequate analysis of grants and contracts, other internal shared costs and support services provided, grantor receivables, deferred revenue, allocation of indirect costs and the reconciliation of bank accounts accurately and in a timely manner. Various regulatory reports were not filed accurately and in a timely manner (i.e., SF-425's for the Head Start Programs and DHS’s State budget reports for the LIHEAP programs). Specifically, revenue was recorded in excess of expenditures for the LIHEAP programs. 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), which is consistent with our audit findings for the year ended June 30, 2020. The systemic cause appears to be a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of accounting controls, monitoring and policies and procedures not followed consistently. 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: 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. 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 Authority has a chief financial officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. The workload on the CFO is overwhelming. New staff hired should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. We believe that the CFO with the grant accountant 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. We further recommend that training be provided to all staff engaged in the financial reporting, allocation and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. New policies and procedures should be established that conforms to the Uniform Guidance requirements. Views of Responsible Officials and Planned Corrective Actions: The management of Clayton County Community Services Authority, Inc. has reviewed the above referenced finding and fully agrees with the need for improved internal controls over financial statement preparation. Management believes that the proper approval of disbursements was adhered to during the reporting period with minimal deviation and continues to ensure proper policies are followed. Federal reports (SF425’s, LIHEAP) were filed during this period and may not have been properly reviewed during the course of this audit. For example, the LIHEAP reports were reconciled with the assistance of the State Program Specialist to ensure proper return of funds as requested by the funding agency. Management reserves the right to discuss this further as needed for the purpose of this finding. Adequate fiscal personnel staff has continued to be a challenge for the agency as management has done an exhaustive search for additional fiscal personnel and made job offers to qualified individuals only to have them decline the offer at the last moment. We have just offered the position of General Ledger Accountant to an individual and they are expected to start in two weeks. This will assist the CFO in the area of financial controls and reporting. It should also be noted that all bank reconciliations are current and being completed in a timely manner as dictated by our policies and procedures. Management continues to ensure all federal, state, and local and local regulatory reports and completed and submitted in a timely manner. As stated previously, the CFO worked directly with the State LIHEAP Program Staff to ensure proper reporting and reconciliation before returning unused funds.
CLAYTON COUNTY COMMUNITY SERVICES AUTHORITY, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS Financial Statement Findings and Questioned Costs June 30, 2021 Comment #2021-001 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, PROPER APPROVAL OF DISBURSEMENTS, GRANT CLOSE-OUT PROCEDURES AND REQUIRED REGULATORY REPORTING POLICIES AND PROCEDURES SHOULD IMPROVED GENERAL (Repeat Finding) 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 Authority. 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 closeout process is designed to help 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 of the current staff does not allow for adequate analysis of grants and contracts, other internal shared costs and support services provided, grantor receivables, deferred revenue, allocation of indirect costs and the reconciliation of bank accounts accurately and in a timely manner. Various regulatory reports were not filed accurately and in a timely manner (i.e., SF-425's for the Head Start Programs and DHS’s State budget reports for the LIHEAP programs). Specifically, revenue was recorded in excess of expenditures for the LIHEAP programs. 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), which is consistent with our audit findings for the year ended June 30, 2020. The systemic cause appears to be a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of accounting controls, monitoring and policies and procedures not followed consistently. 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: 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. 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 Authority has a chief financial officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. The workload on the CFO is overwhelming. New staff hired should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. We believe that the CFO with the grant accountant 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. We further recommend that training be provided to all staff engaged in the financial reporting, allocation and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. New policies and procedures should be established that conforms to the Uniform Guidance requirements. Views of Responsible Officials and Planned Corrective Actions: The management of Clayton County Community Services Authority, Inc. has reviewed the above referenced finding and fully agrees with the need for improved internal controls over financial statement preparation. Management believes that the proper approval of disbursements was adhered to during the reporting period with minimal deviation and continues to ensure proper policies are followed. Federal reports (SF425’s, LIHEAP) were filed during this period and may not have been properly reviewed during the course of this audit. For example, the LIHEAP reports were reconciled with the assistance of the State Program Specialist to ensure proper return of funds as requested by the funding agency. Management reserves the right to discuss this further as needed for the purpose of this finding. Adequate fiscal personnel staff has continued to be a challenge for the agency as management has done an exhaustive search for additional fiscal personnel and made job offers to qualified individuals only to have them decline the offer at the last moment. We have just offered the position of General Ledger Accountant to an individual and they are expected to start in two weeks. This will assist the CFO in the area of financial controls and reporting. It should also be noted that all bank reconciliations are current and being completed in a timely manner as dictated by our policies and procedures. Management continues to ensure all federal, state, and local and local regulatory reports and completed and submitted in a timely manner. As stated previously, the CFO worked directly with the State LIHEAP Program Staff to ensure proper reporting and reconciliation before returning unused funds.
CLAYTON COUNTY COMMUNITY SERVICES AUTHORITY, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS Financial Statement Findings and Questioned Costs June 30, 2021 Comment #2021-001 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, PROPER APPROVAL OF DISBURSEMENTS, GRANT CLOSE-OUT PROCEDURES AND REQUIRED REGULATORY REPORTING POLICIES AND PROCEDURES SHOULD IMPROVED GENERAL (Repeat Finding) 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 Authority. 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 closeout process is designed to help 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 of the current staff does not allow for adequate analysis of grants and contracts, other internal shared costs and support services provided, grantor receivables, deferred revenue, allocation of indirect costs and the reconciliation of bank accounts accurately and in a timely manner. Various regulatory reports were not filed accurately and in a timely manner (i.e., SF-425's for the Head Start Programs and DHS’s State budget reports for the LIHEAP programs). Specifically, revenue was recorded in excess of expenditures for the LIHEAP programs. 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), which is consistent with our audit findings for the year ended June 30, 2020. The systemic cause appears to be a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of accounting controls, monitoring and policies and procedures not followed consistently. 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: 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. 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 Authority has a chief financial officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. The workload on the CFO is overwhelming. New staff hired should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. We believe that the CFO with the grant accountant 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. We further recommend that training be provided to all staff engaged in the financial reporting, allocation and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. New policies and procedures should be established that conforms to the Uniform Guidance requirements. Views of Responsible Officials and Planned Corrective Actions: The management of Clayton County Community Services Authority, Inc. has reviewed the above referenced finding and fully agrees with the need for improved internal controls over financial statement preparation. Management believes that the proper approval of disbursements was adhered to during the reporting period with minimal deviation and continues to ensure proper policies are followed. Federal reports (SF425’s, LIHEAP) were filed during this period and may not have been properly reviewed during the course of this audit. For example, the LIHEAP reports were reconciled with the assistance of the State Program Specialist to ensure proper return of funds as requested by the funding agency. Management reserves the right to discuss this further as needed for the purpose of this finding. Adequate fiscal personnel staff has continued to be a challenge for the agency as management has done an exhaustive search for additional fiscal personnel and made job offers to qualified individuals only to have them decline the offer at the last moment. We have just offered the position of General Ledger Accountant to an individual and they are expected to start in two weeks. This will assist the CFO in the area of financial controls and reporting. It should also be noted that all bank reconciliations are current and being completed in a timely manner as dictated by our policies and procedures. Management continues to ensure all federal, state, and local and local regulatory reports and completed and submitted in a timely manner. As stated previously, the CFO worked directly with the State LIHEAP Program Staff to ensure proper reporting and reconciliation before returning unused funds.
CLAYTON COUNTY COMMUNITY SERVICES AUTHORITY, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS Financial Statement Findings and Questioned Costs June 30, 2021 Comment #2021-001 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, PROPER APPROVAL OF DISBURSEMENTS, GRANT CLOSE-OUT PROCEDURES AND REQUIRED REGULATORY REPORTING POLICIES AND PROCEDURES SHOULD IMPROVED GENERAL (Repeat Finding) 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 Authority. 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 closeout process is designed to help 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 of the current staff does not allow for adequate analysis of grants and contracts, other internal shared costs and support services provided, grantor receivables, deferred revenue, allocation of indirect costs and the reconciliation of bank accounts accurately and in a timely manner. Various regulatory reports were not filed accurately and in a timely manner (i.e., SF-425's for the Head Start Programs and DHS’s State budget reports for the LIHEAP programs). Specifically, revenue was recorded in excess of expenditures for the LIHEAP programs. 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), which is consistent with our audit findings for the year ended June 30, 2020. The systemic cause appears to be a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of accounting controls, monitoring and policies and procedures not followed consistently. 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: 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. 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 Authority has a chief financial officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. The workload on the CFO is overwhelming. New staff hired should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. We believe that the CFO with the grant accountant 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. We further recommend that training be provided to all staff engaged in the financial reporting, allocation and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. New policies and procedures should be established that conforms to the Uniform Guidance requirements. Views of Responsible Officials and Planned Corrective Actions: The management of Clayton County Community Services Authority, Inc. has reviewed the above referenced finding and fully agrees with the need for improved internal controls over financial statement preparation. Management believes that the proper approval of disbursements was adhered to during the reporting period with minimal deviation and continues to ensure proper policies are followed. Federal reports (SF425’s, LIHEAP) were filed during this period and may not have been properly reviewed during the course of this audit. For example, the LIHEAP reports were reconciled with the assistance of the State Program Specialist to ensure proper return of funds as requested by the funding agency. Management reserves the right to discuss this further as needed for the purpose of this finding. Adequate fiscal personnel staff has continued to be a challenge for the agency as management has done an exhaustive search for additional fiscal personnel and made job offers to qualified individuals only to have them decline the offer at the last moment. We have just offered the position of General Ledger Accountant to an individual and they are expected to start in two weeks. This will assist the CFO in the area of financial controls and reporting. It should also be noted that all bank reconciliations are current and being completed in a timely manner as dictated by our policies and procedures. Management continues to ensure all federal, state, and local and local regulatory reports and completed and submitted in a timely manner. As stated previously, the CFO worked directly with the State LIHEAP Program Staff to ensure proper reporting and reconciliation before returning unused funds.
CLAYTON COUNTY COMMUNITY SERVICES AUTHORITY, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS Financial Statement Findings and Questioned Costs June 30, 2021 Comment #2021-001 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, PROPER APPROVAL OF DISBURSEMENTS, GRANT CLOSE-OUT PROCEDURES AND REQUIRED REGULATORY REPORTING POLICIES AND PROCEDURES SHOULD IMPROVED GENERAL (Repeat Finding) 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 Authority. 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 closeout process is designed to help 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 of the current staff does not allow for adequate analysis of grants and contracts, other internal shared costs and support services provided, grantor receivables, deferred revenue, allocation of indirect costs and the reconciliation of bank accounts accurately and in a timely manner. Various regulatory reports were not filed accurately and in a timely manner (i.e., SF-425's for the Head Start Programs and DHS’s State budget reports for the LIHEAP programs). Specifically, revenue was recorded in excess of expenditures for the LIHEAP programs. 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), which is consistent with our audit findings for the year ended June 30, 2020. The systemic cause appears to be a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of accounting controls, monitoring and policies and procedures not followed consistently. 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: 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. 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 Authority has a chief financial officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. The workload on the CFO is overwhelming. New staff hired should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. We believe that the CFO with the grant accountant 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. We further recommend that training be provided to all staff engaged in the financial reporting, allocation and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. New policies and procedures should be established that conforms to the Uniform Guidance requirements. Views of Responsible Officials and Planned Corrective Actions: The management of Clayton County Community Services Authority, Inc. has reviewed the above referenced finding and fully agrees with the need for improved internal controls over financial statement preparation. Management believes that the proper approval of disbursements was adhered to during the reporting period with minimal deviation and continues to ensure proper policies are followed. Federal reports (SF425’s, LIHEAP) were filed during this period and may not have been properly reviewed during the course of this audit. For example, the LIHEAP reports were reconciled with the assistance of the State Program Specialist to ensure proper return of funds as requested by the funding agency. Management reserves the right to discuss this further as needed for the purpose of this finding. Adequate fiscal personnel staff has continued to be a challenge for the agency as management has done an exhaustive search for additional fiscal personnel and made job offers to qualified individuals only to have them decline the offer at the last moment. We have just offered the position of General Ledger Accountant to an individual and they are expected to start in two weeks. This will assist the CFO in the area of financial controls and reporting. It should also be noted that all bank reconciliations are current and being completed in a timely manner as dictated by our policies and procedures. Management continues to ensure all federal, state, and local and local regulatory reports and completed and submitted in a timely manner. As stated previously, the CFO worked directly with the State LIHEAP Program Staff to ensure proper reporting and reconciliation before returning unused funds.
CLAYTON COUNTY COMMUNITY SERVICES AUTHORITY, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS Financial Statement Findings and Questioned Costs June 30, 2021 Comment #2021-001 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, PROPER APPROVAL OF DISBURSEMENTS, GRANT CLOSE-OUT PROCEDURES AND REQUIRED REGULATORY REPORTING POLICIES AND PROCEDURES SHOULD IMPROVED GENERAL (Repeat Finding) 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 Authority. 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 closeout process is designed to help 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 of the current staff does not allow for adequate analysis of grants and contracts, other internal shared costs and support services provided, grantor receivables, deferred revenue, allocation of indirect costs and the reconciliation of bank accounts accurately and in a timely manner. Various regulatory reports were not filed accurately and in a timely manner (i.e., SF-425's for the Head Start Programs and DHS’s State budget reports for the LIHEAP programs). Specifically, revenue was recorded in excess of expenditures for the LIHEAP programs. 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), which is consistent with our audit findings for the year ended June 30, 2020. The systemic cause appears to be a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of accounting controls, monitoring and policies and procedures not followed consistently. 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: 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. 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 Authority has a chief financial officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. The workload on the CFO is overwhelming. New staff hired should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. We believe that the CFO with the grant accountant 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. We further recommend that training be provided to all staff engaged in the financial reporting, allocation and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. New policies and procedures should be established that conforms to the Uniform Guidance requirements. Views of Responsible Officials and Planned Corrective Actions: The management of Clayton County Community Services Authority, Inc. has reviewed the above referenced finding and fully agrees with the need for improved internal controls over financial statement preparation. Management believes that the proper approval of disbursements was adhered to during the reporting period with minimal deviation and continues to ensure proper policies are followed. Federal reports (SF425’s, LIHEAP) were filed during this period and may not have been properly reviewed during the course of this audit. For example, the LIHEAP reports were reconciled with the assistance of the State Program Specialist to ensure proper return of funds as requested by the funding agency. Management reserves the right to discuss this further as needed for the purpose of this finding. Adequate fiscal personnel staff has continued to be a challenge for the agency as management has done an exhaustive search for additional fiscal personnel and made job offers to qualified individuals only to have them decline the offer at the last moment. We have just offered the position of General Ledger Accountant to an individual and they are expected to start in two weeks. This will assist the CFO in the area of financial controls and reporting. It should also be noted that all bank reconciliations are current and being completed in a timely manner as dictated by our policies and procedures. Management continues to ensure all federal, state, and local and local regulatory reports and completed and submitted in a timely manner. As stated previously, the CFO worked directly with the State LIHEAP Program Staff to ensure proper reporting and reconciliation before returning unused funds.
CLAYTON COUNTY COMMUNITY SERVICES AUTHORITY, INC. SCHEDULE OF FINDINGS AND QUESTIONED COSTS Financial Statement Findings and Questioned Costs June 30, 2021 Comment #2021-001 INTERNAL CONTROLS OVER FINANCIAL STATEMENT PREPARATION, PROPER APPROVAL OF DISBURSEMENTS, GRANT CLOSE-OUT PROCEDURES AND REQUIRED REGULATORY REPORTING POLICIES AND PROCEDURES SHOULD IMPROVED GENERAL (Repeat Finding) 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 Authority. 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 closeout process is designed to help 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 of the current staff does not allow for adequate analysis of grants and contracts, other internal shared costs and support services provided, grantor receivables, deferred revenue, allocation of indirect costs and the reconciliation of bank accounts accurately and in a timely manner. Various regulatory reports were not filed accurately and in a timely manner (i.e., SF-425's for the Head Start Programs and DHS’s State budget reports for the LIHEAP programs). Specifically, revenue was recorded in excess of expenditures for the LIHEAP programs. 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), which is consistent with our audit findings for the year ended June 30, 2020. The systemic cause appears to be a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of accounting controls, monitoring and policies and procedures not followed consistently. 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: 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. 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 Authority has a chief financial officer (CFO) and should hire additional staff (grant accountant and a general ledger accountant) to assist the new fiscal officer. The workload on the CFO is overwhelming. New staff hired should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. We believe that the CFO with the grant accountant 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. We further recommend that training be provided to all staff engaged in the financial reporting, allocation and reconciliation functions to ensure that a complete and accurate financial statements close-out process is achieved each month and annually. New policies and procedures should be established that conforms to the Uniform Guidance requirements. Views of Responsible Officials and Planned Corrective Actions: The management of Clayton County Community Services Authority, Inc. has reviewed the above referenced finding and fully agrees with the need for improved internal controls over financial statement preparation. Management believes that the proper approval of disbursements was adhered to during the reporting period with minimal deviation and continues to ensure proper policies are followed. Federal reports (SF425’s, LIHEAP) were filed during this period and may not have been properly reviewed during the course of this audit. For example, the LIHEAP reports were reconciled with the assistance of the State Program Specialist to ensure proper return of funds as requested by the funding agency. Management reserves the right to discuss this further as needed for the purpose of this finding. Adequate fiscal personnel staff has continued to be a challenge for the agency as management has done an exhaustive search for additional fiscal personnel and made job offers to qualified individuals only to have them decline the offer at the last moment. We have just offered the position of General Ledger Accountant to an individual and they are expected to start in two weeks. This will assist the CFO in the area of financial controls and reporting. It should also be noted that all bank reconciliations are current and being completed in a timely manner as dictated by our policies and procedures. Management continues to ensure all federal, state, and local and local regulatory reports and completed and submitted in a timely manner. As stated previously, the CFO worked directly with the State LIHEAP Program Staff to ensure proper reporting and reconciliation before returning unused funds.
2021-006 - Cash Management Federal Program Information: ALN - 66.458 - Clean Water State Revolving Funds Criteria: The following CFR(s) apply to this finding: 2 CFR section 200.302(b)(6)) & 2 CFR section 200.305(b) (3). Condition: During audit procedures, it was identified that the Town did not have a cash management policy in place. Cause: The Town has experienced turnover in the Treasurer’s position over the past few years, which has delayed the policy implementation. Effect: The Town may not have adequate policy and procedures in place to safeguard its most liquid assets. Identification of Questioned Costs: None identified. Context: The population consisted of 4 out of 10 pay requisites deposit of reimbursements from the fiscal year were examined. Out of the 4 selections only 1 deposit had backup documentation. The other 3 were lacking prove that deposits were recorded properly. Repeat Finding: This is not a repeat finding. Recommendation: It is recommended that the Unit adopt a cash management policy that follows the Uniform Guidance, and that the Unit implements internal control processes and procedures to ensure that the adopted policy is followed. Views of Responsible Officials and Corrective Action Plan: Client agrees with finding, and a version of their response can be found in the Corrective Action Plan. Please see the Corrective Action Plan issued by the Town of Livermore Falls.
2021-006 - Cash Management Federal Program Information: ALN - 66.458 - Clean Water State Revolving Funds Criteria: The following CFR(s) apply to this finding: 2 CFR section 200.302(b)(6)) & 2 CFR section 200.305(b) (3). Condition: During audit procedures, it was identified that the Town did not have a cash management policy in place. Cause: The Town has experienced turnover in the Treasurer’s position over the past few years, which has delayed the policy implementation. Effect: The Town may not have adequate policy and procedures in place to safeguard its most liquid assets. Identification of Questioned Costs: None identified. Context: The population consisted of 4 out of 10 pay requisites deposit of reimbursements from the fiscal year were examined. Out of the 4 selections only 1 deposit had backup documentation. The other 3 were lacking prove that deposits were recorded properly. Repeat Finding: This is not a repeat finding. Recommendation: It is recommended that the Unit adopt a cash management policy that follows the Uniform Guidance, and that the Unit implements internal control processes and procedures to ensure that the adopted policy is followed. Views of Responsible Officials and Corrective Action Plan: Client agrees with finding, and a version of their response can be found in the Corrective Action Plan. Please see the Corrective Action Plan issued by the Town of Livermore Falls.
CONTROLS OVER FINANCIAL STATEMENT PREPARATION AND RECONCILIATION PROCEDURES SHOULD BE IMPROVED HIGHER EDUCATION EMERGENCY RELIEF FUND STUDENT FINANCIAL AID CLUSTER PROGRAM (Questioned Costs-Undetermined) Condition: Management is responsible for the preparation and fair presentation of its financial statements in accordance with generally accepted accounting principles (GAAP) and the schedule of expenditures of federal awards (SEFA). However, we provided assistance to management in the preparation of the financial statements, SEFA, and related disclosures of the University. Effective for the year ended June 30, 2019, the University was charged with the responsibility of implementing FASB ASU No. 2016-14 - Presentation of Financial Statements of Not-For-Profit Entities. The objective of the FASB is to improve the current net asset classification requirements and the information presented in financial statements and notes about a not-for-profit entity’s liquidity, financial performance, and cash flows . FASB ASU No. 2018-08 , Not-for-Profit Entities (Topic 958): Clarifying the Scope and Accounting Guidance for Contributions Received and Contributions Made and FASB ASU 2016-18 (Topic 230) Statement of Cash Flows, were also required to be implemented beginning 2019. While management demonstrated efforts to comply with the new standards and in its accounting processes, there was still a need for significant adjustments proposed and enhanced disclosures during the audit process to properly state various assets, liabilities, revenue and expense accounts and to the related disclosures. We also noted that there were significant weaknesses in the internal control over reconciliation procedures in the area of student accounts receivables, posting of various transactions to student accounts, bad debt, financial aid, recording HEERF funds and disbursing HEERF funds (student portion) to eligible students. The general ledger and subsidiary accounts were not reconciled between systems (CAM vs Microsoft Dynamics vs EDExpress) During the year, the University received new funding from the Coronavirus Aid Relief and Economic Security Act (CARES Act) authorized under the Higher Education and Emergency Relief Fund. We noticed that funding drawn under these grants could not be traced in their entirety to cost centers where disbursements were made for relevant expenditures. The HEERF annual reporting requirement was not complete and accurately reported nor available during the audit. Context: Review of the internal controls related to financial statement preparation 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 must prepare financial statements that reflects its financial positions, results of operations or changes in net assets, and where appropriate, cash flows for the fiscal year ended. [2 CFR §200.510(a)]. The financial management system of each non-Federal entity must provide for, comparison of expenditures with budget amounts for each Federal award. [2 CFR §200.302(b)(5)]. 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 on a timely basis. Lack of effective budgeting can lead to budget overruns or inefficient use of grant funds. Cause: Continual change in accounting function in recent years and turn-over in various departments Recommendation: The degree to which assistance in the preparation of the financial statements and the related disclosures by independent auditor is a control deficiency is determined by the knowledge and expertise of those in the University who are charged with the responsibility of financial reporting. As a result, it is our recommendation that key personnel that have a role in the financial reporting process continue to review the functionality of their financial accounting system to see if grant reporting capabilities can be enhanced. We also recommend that the accounting department and the financial aid department enhance its procedures to improve communications and reconciliation procedures in order to complete the required reconciliation procedure when federal funds are drawn and recorded in the various accounting modules. Views of Responsible Officials and Planned Corrective Actions: The University engaged an external consultant in June 2023, hired a new staff accountant in September 2023 and a CFO in November 2023. The University has begun to restructure all accounting and reconciliation functions, including implementation of new accounting software. The University is implementing financial internal controls to improve the financial statements preparation and preparation of the schedule of expenditures and federal awards.
CONTROLS OVER FINANCIAL STATEMENT PREPARATION AND RECONCILIATION PROCEDURES SHOULD BE IMPROVED HIGHER EDUCATION EMERGENCY RELIEF FUND STUDENT FINANCIAL AID CLUSTER PROGRAM (Questioned Costs-Undetermined) Condition: Management is responsible for the preparation and fair presentation of its financial statements in accordance with generally accepted accounting principles (GAAP) and the schedule of expenditures of federal awards (SEFA). However, we provided assistance to management in the preparation of the financial statements, SEFA, and related disclosures of the University. Effective for the year ended June 30, 2019, the University was charged with the responsibility of implementing FASB ASU No. 2016-14 - Presentation of Financial Statements of Not-For-Profit Entities. The objective of the FASB is to improve the current net asset classification requirements and the information presented in financial statements and notes about a not-for-profit entity’s liquidity, financial performance, and cash flows . FASB ASU No. 2018-08 , Not-for-Profit Entities (Topic 958): Clarifying the Scope and Accounting Guidance for Contributions Received and Contributions Made and FASB ASU 2016-18 (Topic 230) Statement of Cash Flows, were also required to be implemented beginning 2019. While management demonstrated efforts to comply with the new standards and in its accounting processes, there was still a need for significant adjustments proposed and enhanced disclosures during the audit process to properly state various assets, liabilities, revenue and expense accounts and to the related disclosures. We also noted that there were significant weaknesses in the internal control over reconciliation procedures in the area of student accounts receivables, posting of various transactions to student accounts, bad debt, financial aid, recording HEERF funds and disbursing HEERF funds (student portion) to eligible students. The general ledger and subsidiary accounts were not reconciled between systems (CAM vs Microsoft Dynamics vs EDExpress) During the year, the University received new funding from the Coronavirus Aid Relief and Economic Security Act (CARES Act) authorized under the Higher Education and Emergency Relief Fund. We noticed that funding drawn under these grants could not be traced in their entirety to cost centers where disbursements were made for relevant expenditures. The HEERF annual reporting requirement was not complete and accurately reported nor available during the audit. Context: Review of the internal controls related to financial statement preparation 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 must prepare financial statements that reflects its financial positions, results of operations or changes in net assets, and where appropriate, cash flows for the fiscal year ended. [2 CFR §200.510(a)]. The financial management system of each non-Federal entity must provide for, comparison of expenditures with budget amounts for each Federal award. [2 CFR §200.302(b)(5)]. 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 on a timely basis. Lack of effective budgeting can lead to budget overruns or inefficient use of grant funds. Cause: Continual change in accounting function in recent years and turn-over in various departments Recommendation: The degree to which assistance in the preparation of the financial statements and the related disclosures by independent auditor is a control deficiency is determined by the knowledge and expertise of those in the University who are charged with the responsibility of financial reporting. As a result, it is our recommendation that key personnel that have a role in the financial reporting process continue to review the functionality of their financial accounting system to see if grant reporting capabilities can be enhanced. We also recommend that the accounting department and the financial aid department enhance its procedures to improve communications and reconciliation procedures in order to complete the required reconciliation procedure when federal funds are drawn and recorded in the various accounting modules. Views of Responsible Officials and Planned Corrective Actions: The University engaged an external consultant in June 2023, hired a new staff accountant in September 2023 and a CFO in November 2023. The University has begun to restructure all accounting and reconciliation functions, including implementation of new accounting software. The University is implementing financial internal controls to improve the financial statements preparation and preparation of the schedule of expenditures and federal awards.
CONTROLS OVER FINANCIAL STATEMENT PREPARATION AND RECONCILIATION PROCEDURES SHOULD BE IMPROVED HIGHER EDUCATION EMERGENCY RELIEF FUND STUDENT FINANCIAL AID CLUSTER PROGRAM (Questioned Costs-Undetermined) Condition: Management is responsible for the preparation and fair presentation of its financial statements in accordance with generally accepted accounting principles (GAAP) and the schedule of expenditures of federal awards (SEFA). However, we provided assistance to management in the preparation of the financial statements, SEFA, and related disclosures of the University. Effective for the year ended June 30, 2019, the University was charged with the responsibility of implementing FASB ASU No. 2016-14 - Presentation of Financial Statements of Not-For-Profit Entities. The objective of the FASB is to improve the current net asset classification requirements and the information presented in financial statements and notes about a not-for-profit entity’s liquidity, financial performance, and cash flows . FASB ASU No. 2018-08 , Not-for-Profit Entities (Topic 958): Clarifying the Scope and Accounting Guidance for Contributions Received and Contributions Made and FASB ASU 2016-18 (Topic 230) Statement of Cash Flows, were also required to be implemented beginning 2019. While management demonstrated efforts to comply with the new standards and in its accounting processes, there was still a need for significant adjustments proposed and enhanced disclosures during the audit process to properly state various assets, liabilities, revenue and expense accounts and to the related disclosures. We also noted that there were significant weaknesses in the internal control over reconciliation procedures in the area of student accounts receivables, posting of various transactions to student accounts, bad debt, financial aid, recording HEERF funds and disbursing HEERF funds (student portion) to eligible students. The general ledger and subsidiary accounts were not reconciled between systems (CAM vs Microsoft Dynamics vs EDExpress) During the year, the University received new funding from the Coronavirus Aid Relief and Economic Security Act (CARES Act) authorized under the Higher Education and Emergency Relief Fund. We noticed that funding drawn under these grants could not be traced in their entirety to cost centers where disbursements were made for relevant expenditures. The HEERF annual reporting requirement was not complete and accurately reported nor available during the audit. Context: Review of the internal controls related to financial statement preparation 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 must prepare financial statements that reflects its financial positions, results of operations or changes in net assets, and where appropriate, cash flows for the fiscal year ended. [2 CFR §200.510(a)]. The financial management system of each non-Federal entity must provide for, comparison of expenditures with budget amounts for each Federal award. [2 CFR §200.302(b)(5)]. 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 on a timely basis. Lack of effective budgeting can lead to budget overruns or inefficient use of grant funds. Cause: Continual change in accounting function in recent years and turn-over in various departments Recommendation: The degree to which assistance in the preparation of the financial statements and the related disclosures by independent auditor is a control deficiency is determined by the knowledge and expertise of those in the University who are charged with the responsibility of financial reporting. As a result, it is our recommendation that key personnel that have a role in the financial reporting process continue to review the functionality of their financial accounting system to see if grant reporting capabilities can be enhanced. We also recommend that the accounting department and the financial aid department enhance its procedures to improve communications and reconciliation procedures in order to complete the required reconciliation procedure when federal funds are drawn and recorded in the various accounting modules. Views of Responsible Officials and Planned Corrective Actions: The University engaged an external consultant in June 2023, hired a new staff accountant in September 2023 and a CFO in November 2023. The University has begun to restructure all accounting and reconciliation functions, including implementation of new accounting software. The University is implementing financial internal controls to improve the financial statements preparation and preparation of the schedule of expenditures and federal awards.
CONTROLS OVER FINANCIAL STATEMENT PREPARATION AND RECONCILIATION PROCEDURES SHOULD BE IMPROVED HIGHER EDUCATION EMERGENCY RELIEF FUND STUDENT FINANCIAL AID CLUSTER PROGRAM (Questioned Costs-Undetermined) Condition: Management is responsible for the preparation and fair presentation of its financial statements in accordance with generally accepted accounting principles (GAAP) and the schedule of expenditures of federal awards (SEFA). However, we provided assistance to management in the preparation of the financial statements, SEFA, and related disclosures of the University. Effective for the year ended June 30, 2019, the University was charged with the responsibility of implementing FASB ASU No. 2016-14 - Presentation of Financial Statements of Not-For-Profit Entities. The objective of the FASB is to improve the current net asset classification requirements and the information presented in financial statements and notes about a not-for-profit entity’s liquidity, financial performance, and cash flows . FASB ASU No. 2018-08 , Not-for-Profit Entities (Topic 958): Clarifying the Scope and Accounting Guidance for Contributions Received and Contributions Made and FASB ASU 2016-18 (Topic 230) Statement of Cash Flows, were also required to be implemented beginning 2019. While management demonstrated efforts to comply with the new standards and in its accounting processes, there was still a need for significant adjustments proposed and enhanced disclosures during the audit process to properly state various assets, liabilities, revenue and expense accounts and to the related disclosures. We also noted that there were significant weaknesses in the internal control over reconciliation procedures in the area of student accounts receivables, posting of various transactions to student accounts, bad debt, financial aid, recording HEERF funds and disbursing HEERF funds (student portion) to eligible students. The general ledger and subsidiary accounts were not reconciled between systems (CAM vs Microsoft Dynamics vs EDExpress) During the year, the University received new funding from the Coronavirus Aid Relief and Economic Security Act (CARES Act) authorized under the Higher Education and Emergency Relief Fund. We noticed that funding drawn under these grants could not be traced in their entirety to cost centers where disbursements were made for relevant expenditures. The HEERF annual reporting requirement was not complete and accurately reported nor available during the audit. Context: Review of the internal controls related to financial statement preparation 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 must prepare financial statements that reflects its financial positions, results of operations or changes in net assets, and where appropriate, cash flows for the fiscal year ended. [2 CFR §200.510(a)]. The financial management system of each non-Federal entity must provide for, comparison of expenditures with budget amounts for each Federal award. [2 CFR §200.302(b)(5)]. 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 on a timely basis. Lack of effective budgeting can lead to budget overruns or inefficient use of grant funds. Cause: Continual change in accounting function in recent years and turn-over in various departments Recommendation: The degree to which assistance in the preparation of the financial statements and the related disclosures by independent auditor is a control deficiency is determined by the knowledge and expertise of those in the University who are charged with the responsibility of financial reporting. As a result, it is our recommendation that key personnel that have a role in the financial reporting process continue to review the functionality of their financial accounting system to see if grant reporting capabilities can be enhanced. We also recommend that the accounting department and the financial aid department enhance its procedures to improve communications and reconciliation procedures in order to complete the required reconciliation procedure when federal funds are drawn and recorded in the various accounting modules. Views of Responsible Officials and Planned Corrective Actions: The University engaged an external consultant in June 2023, hired a new staff accountant in September 2023 and a CFO in November 2023. The University has begun to restructure all accounting and reconciliation functions, including implementation of new accounting software. The University is implementing financial internal controls to improve the financial statements preparation and preparation of the schedule of expenditures and federal awards.
CONTROLS OVER FINANCIAL STATEMENT PREPARATION AND RECONCILIATION PROCEDURES SHOULD BE IMPROVED HIGHER EDUCATION EMERGENCY RELIEF FUND STUDENT FINANCIAL AID CLUSTER PROGRAM (Questioned Costs-Undetermined) Condition: Management is responsible for the preparation and fair presentation of its financial statements in accordance with generally accepted accounting principles (GAAP) and the schedule of expenditures of federal awards (SEFA). However, we provided assistance to management in the preparation of the financial statements, SEFA, and related disclosures of the University. Effective for the year ended June 30, 2019, the University was charged with the responsibility of implementing FASB ASU No. 2016-14 - Presentation of Financial Statements of Not-For-Profit Entities. The objective of the FASB is to improve the current net asset classification requirements and the information presented in financial statements and notes about a not-for-profit entity’s liquidity, financial performance, and cash flows . FASB ASU No. 2018-08 , Not-for-Profit Entities (Topic 958): Clarifying the Scope and Accounting Guidance for Contributions Received and Contributions Made and FASB ASU 2016-18 (Topic 230) Statement of Cash Flows, were also required to be implemented beginning 2019. While management demonstrated efforts to comply with the new standards and in its accounting processes, there was still a need for significant adjustments proposed and enhanced disclosures during the audit process to properly state various assets, liabilities, revenue and expense accounts and to the related disclosures. We also noted that there were significant weaknesses in the internal control over reconciliation procedures in the area of student accounts receivables, posting of various transactions to student accounts, bad debt, financial aid, recording HEERF funds and disbursing HEERF funds (student portion) to eligible students. The general ledger and subsidiary accounts were not reconciled between systems (CAM vs Microsoft Dynamics vs EDExpress) During the year, the University received new funding from the Coronavirus Aid Relief and Economic Security Act (CARES Act) authorized under the Higher Education and Emergency Relief Fund. We noticed that funding drawn under these grants could not be traced in their entirety to cost centers where disbursements were made for relevant expenditures. The HEERF annual reporting requirement was not complete and accurately reported nor available during the audit. Context: Review of the internal controls related to financial statement preparation 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 must prepare financial statements that reflects its financial positions, results of operations or changes in net assets, and where appropriate, cash flows for the fiscal year ended. [2 CFR §200.510(a)]. The financial management system of each non-Federal entity must provide for, comparison of expenditures with budget amounts for each Federal award. [2 CFR §200.302(b)(5)]. 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 on a timely basis. Lack of effective budgeting can lead to budget overruns or inefficient use of grant funds. Cause: Continual change in accounting function in recent years and turn-over in various departments Recommendation: The degree to which assistance in the preparation of the financial statements and the related disclosures by independent auditor is a control deficiency is determined by the knowledge and expertise of those in the University who are charged with the responsibility of financial reporting. As a result, it is our recommendation that key personnel that have a role in the financial reporting process continue to review the functionality of their financial accounting system to see if grant reporting capabilities can be enhanced. We also recommend that the accounting department and the financial aid department enhance its procedures to improve communications and reconciliation procedures in order to complete the required reconciliation procedure when federal funds are drawn and recorded in the various accounting modules. Views of Responsible Officials and Planned Corrective Actions: The University engaged an external consultant in June 2023, hired a new staff accountant in September 2023 and a CFO in November 2023. The University has begun to restructure all accounting and reconciliation functions, including implementation of new accounting software. The University is implementing financial internal controls to improve the financial statements preparation and preparation of the schedule of expenditures and federal awards.
CONTROLS OVER FINANCIAL STATEMENT PREPARATION AND RECONCILIATION PROCEDURES SHOULD BE IMPROVED HIGHER EDUCATION EMERGENCY RELIEF FUND STUDENT FINANCIAL AID CLUSTER PROGRAM (Questioned Costs-Undetermined) Condition: Management is responsible for the preparation and fair presentation of its financial statements in accordance with generally accepted accounting principles (GAAP) and the schedule of expenditures of federal awards (SEFA). However, we provided assistance to management in the preparation of the financial statements, SEFA, and related disclosures of the University. Effective for the year ended June 30, 2019, the University was charged with the responsibility of implementing FASB ASU No. 2016-14 - Presentation of Financial Statements of Not-For-Profit Entities. The objective of the FASB is to improve the current net asset classification requirements and the information presented in financial statements and notes about a not-for-profit entity’s liquidity, financial performance, and cash flows . FASB ASU No. 2018-08 , Not-for-Profit Entities (Topic 958): Clarifying the Scope and Accounting Guidance for Contributions Received and Contributions Made and FASB ASU 2016-18 (Topic 230) Statement of Cash Flows, were also required to be implemented beginning 2019. While management demonstrated efforts to comply with the new standards and in its accounting processes, there was still a need for significant adjustments proposed and enhanced disclosures during the audit process to properly state various assets, liabilities, revenue and expense accounts and to the related disclosures. We also noted that there were significant weaknesses in the internal control over reconciliation procedures in the area of student accounts receivables, posting of various transactions to student accounts, bad debt, financial aid, recording HEERF funds and disbursing HEERF funds (student portion) to eligible students. The general ledger and subsidiary accounts were not reconciled between systems (CAM vs Microsoft Dynamics vs EDExpress) During the year, the University received new funding from the Coronavirus Aid Relief and Economic Security Act (CARES Act) authorized under the Higher Education and Emergency Relief Fund. We noticed that funding drawn under these grants could not be traced in their entirety to cost centers where disbursements were made for relevant expenditures. The HEERF annual reporting requirement was not complete and accurately reported nor available during the audit. Context: Review of the internal controls related to financial statement preparation 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 must prepare financial statements that reflects its financial positions, results of operations or changes in net assets, and where appropriate, cash flows for the fiscal year ended. [2 CFR §200.510(a)]. The financial management system of each non-Federal entity must provide for, comparison of expenditures with budget amounts for each Federal award. [2 CFR §200.302(b)(5)]. 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 on a timely basis. Lack of effective budgeting can lead to budget overruns or inefficient use of grant funds. Cause: Continual change in accounting function in recent years and turn-over in various departments Recommendation: The degree to which assistance in the preparation of the financial statements and the related disclosures by independent auditor is a control deficiency is determined by the knowledge and expertise of those in the University who are charged with the responsibility of financial reporting. As a result, it is our recommendation that key personnel that have a role in the financial reporting process continue to review the functionality of their financial accounting system to see if grant reporting capabilities can be enhanced. We also recommend that the accounting department and the financial aid department enhance its procedures to improve communications and reconciliation procedures in order to complete the required reconciliation procedure when federal funds are drawn and recorded in the various accounting modules. Views of Responsible Officials and Planned Corrective Actions: The University engaged an external consultant in June 2023, hired a new staff accountant in September 2023 and a CFO in November 2023. The University has begun to restructure all accounting and reconciliation functions, including implementation of new accounting software. The University is implementing financial internal controls to improve the financial statements preparation and preparation of the schedule of expenditures and federal awards.
CONTROLS OVER FINANCIAL STATEMENT PREPARATION AND RECONCILIATION PROCEDURES SHOULD BE IMPROVED HIGHER EDUCATION EMERGENCY RELIEF FUND STUDENT FINANCIAL AID CLUSTER PROGRAM (Questioned Costs-Undetermined) Condition: Management is responsible for the preparation and fair presentation of its financial statements in accordance with generally accepted accounting principles (GAAP) and the schedule of expenditures of federal awards (SEFA). However, we provided assistance to management in the preparation of the financial statements, SEFA, and related disclosures of the University. Effective for the year ended June 30, 2019, the University was charged with the responsibility of implementing FASB ASU No. 2016-14 - Presentation of Financial Statements of Not-For-Profit Entities. The objective of the FASB is to improve the current net asset classification requirements and the information presented in financial statements and notes about a not-for-profit entity’s liquidity, financial performance, and cash flows . FASB ASU No. 2018-08 , Not-for-Profit Entities (Topic 958): Clarifying the Scope and Accounting Guidance for Contributions Received and Contributions Made and FASB ASU 2016-18 (Topic 230) Statement of Cash Flows, were also required to be implemented beginning 2019. While management demonstrated efforts to comply with the new standards and in its accounting processes, there was still a need for significant adjustments proposed and enhanced disclosures during the audit process to properly state various assets, liabilities, revenue and expense accounts and to the related disclosures. We also noted that there were significant weaknesses in the internal control over reconciliation procedures in the area of student accounts receivables, posting of various transactions to student accounts, bad debt, financial aid, recording HEERF funds and disbursing HEERF funds (student portion) to eligible students. The general ledger and subsidiary accounts were not reconciled between systems (CAM vs Microsoft Dynamics vs EDExpress) During the year, the University received new funding from the Coronavirus Aid Relief and Economic Security Act (CARES Act) authorized under the Higher Education and Emergency Relief Fund. We noticed that funding drawn under these grants could not be traced in their entirety to cost centers where disbursements were made for relevant expenditures. The HEERF annual reporting requirement was not complete and accurately reported nor available during the audit. Context: Review of the internal controls related to financial statement preparation 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 must prepare financial statements that reflects its financial positions, results of operations or changes in net assets, and where appropriate, cash flows for the fiscal year ended. [2 CFR §200.510(a)]. The financial management system of each non-Federal entity must provide for, comparison of expenditures with budget amounts for each Federal award. [2 CFR §200.302(b)(5)]. 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 on a timely basis. Lack of effective budgeting can lead to budget overruns or inefficient use of grant funds. Cause: Continual change in accounting function in recent years and turn-over in various departments Recommendation: The degree to which assistance in the preparation of the financial statements and the related disclosures by independent auditor is a control deficiency is determined by the knowledge and expertise of those in the University who are charged with the responsibility of financial reporting. As a result, it is our recommendation that key personnel that have a role in the financial reporting process continue to review the functionality of their financial accounting system to see if grant reporting capabilities can be enhanced. We also recommend that the accounting department and the financial aid department enhance its procedures to improve communications and reconciliation procedures in order to complete the required reconciliation procedure when federal funds are drawn and recorded in the various accounting modules. Views of Responsible Officials and Planned Corrective Actions: The University engaged an external consultant in June 2023, hired a new staff accountant in September 2023 and a CFO in November 2023. The University has begun to restructure all accounting and reconciliation functions, including implementation of new accounting software. The University is implementing financial internal controls to improve the financial statements preparation and preparation of the schedule of expenditures and federal awards.
CONTROLS OVER FINANCIAL STATEMENT PREPARATION AND RECONCILIATION PROCEDURES SHOULD BE IMPROVED HIGHER EDUCATION EMERGENCY RELIEF FUND STUDENT FINANCIAL AID CLUSTER PROGRAM (Questioned Costs-Undetermined) Condition: Management is responsible for the preparation and fair presentation of its financial statements in accordance with generally accepted accounting principles (GAAP) and the schedule of expenditures of federal awards (SEFA). However, we provided assistance to management in the preparation of the financial statements, SEFA, and related disclosures of the University. Effective for the year ended June 30, 2019, the University was charged with the responsibility of implementing FASB ASU No. 2016-14 - Presentation of Financial Statements of Not-For-Profit Entities. The objective of the FASB is to improve the current net asset classification requirements and the information presented in financial statements and notes about a not-for-profit entity’s liquidity, financial performance, and cash flows . FASB ASU No. 2018-08 , Not-for-Profit Entities (Topic 958): Clarifying the Scope and Accounting Guidance for Contributions Received and Contributions Made and FASB ASU 2016-18 (Topic 230) Statement of Cash Flows, were also required to be implemented beginning 2019. While management demonstrated efforts to comply with the new standards and in its accounting processes, there was still a need for significant adjustments proposed and enhanced disclosures during the audit process to properly state various assets, liabilities, revenue and expense accounts and to the related disclosures. We also noted that there were significant weaknesses in the internal control over reconciliation procedures in the area of student accounts receivables, posting of various transactions to student accounts, bad debt, financial aid, recording HEERF funds and disbursing HEERF funds (student portion) to eligible students. The general ledger and subsidiary accounts were not reconciled between systems (CAM vs Microsoft Dynamics vs EDExpress) During the year, the University received new funding from the Coronavirus Aid Relief and Economic Security Act (CARES Act) authorized under the Higher Education and Emergency Relief Fund. We noticed that funding drawn under these grants could not be traced in their entirety to cost centers where disbursements were made for relevant expenditures. The HEERF annual reporting requirement was not complete and accurately reported nor available during the audit. Context: Review of the internal controls related to financial statement preparation 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 must prepare financial statements that reflects its financial positions, results of operations or changes in net assets, and where appropriate, cash flows for the fiscal year ended. [2 CFR §200.510(a)]. The financial management system of each non-Federal entity must provide for, comparison of expenditures with budget amounts for each Federal award. [2 CFR §200.302(b)(5)]. 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 on a timely basis. Lack of effective budgeting can lead to budget overruns or inefficient use of grant funds. Cause: Continual change in accounting function in recent years and turn-over in various departments Recommendation: The degree to which assistance in the preparation of the financial statements and the related disclosures by independent auditor is a control deficiency is determined by the knowledge and expertise of those in the University who are charged with the responsibility of financial reporting. As a result, it is our recommendation that key personnel that have a role in the financial reporting process continue to review the functionality of their financial accounting system to see if grant reporting capabilities can be enhanced. We also recommend that the accounting department and the financial aid department enhance its procedures to improve communications and reconciliation procedures in order to complete the required reconciliation procedure when federal funds are drawn and recorded in the various accounting modules. Views of Responsible Officials and Planned Corrective Actions: The University engaged an external consultant in June 2023, hired a new staff accountant in September 2023 and a CFO in November 2023. The University has begun to restructure all accounting and reconciliation functions, including implementation of new accounting software. The University is implementing financial internal controls to improve the financial statements preparation and preparation of the schedule of expenditures and federal awards.
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 of the related transactions prepared by the Municipality’s consultants for financial statements and Schedule of Expenditures of Federal Awards purposes for the fiscal year ended June 30, 2021, $1,082,613 has been expended or transferred to the general fund to cover eligible expenses under the terms allowed by the CDL grant. As a consequence of these conditions, compliance with reporting requirements established by the grantor entity, and related internal controls, could not be verified. Criteria - Code of Federal Regulations, 44 CFR Section 206, establishes, among other requirements, that the borrower must maintain complete and accurate accounts and other records for the program in accordance with the CDL requirements and regulations. 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 - The Municipality has not properly established a formal recording system to identify and itemize the transactions that must be reported as eligible expenditures under the expense / cost category allowed by the provisions of the CDL. Also, 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 Municipality is exposed to the Grantor questioning the use of funds and affecting aspects and amounts associated with the qualification for the Loan Cancellation, if eligible at the end of the term to request this cancellation. Recommendation - We recommended management to prepare the necessary analyses, according to the requirements of the CDL, to identify and detail the expenditures that have been charged against the CDL funds. 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 of the related transactions prepared by the Municipality’s consultants for financial statements and Schedule of Expenditures of Federal Awards purposes for the fiscal year ended June 30, 2021, $907,650 has been expended under the terms allowed by the Disaster Grants. As a consequence of these conditions, compliance with reporting requirements established by the grantor entity, and related internal controls, could not be verified. Criteria - Code of Federal Regulations, 44 CFR Section 206, establishes, among other requirements, that the borrower must maintain complete and accurate accounts and other records for the program in accordance with the Disaster Grants requirements and regulations. 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 - The Municipality has not properly established a formal recording system to identify and itemize the transactions that must be reported as eligible expenditures under the expense / cost category allowed by the provisions of the Disaster Grant. Also, 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 recommended management to prepare the necessary analyses, according to the requirements of the Grant, to identify and detail the expenditures that have been charged against the grant allowable expenditures. 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.
Financial Management System- (Material Weakness) Cluster: Not applicable Sponsoring Agency U.S. Department of Housing and Urban Development Award Name Home Investment Partnerships Program Award Number Not applicable Assisting Listing Number 14.239 Award Year FY 2002 Pass-through entity Not applicable Criteria: According to 2 CFR 200.302, the financial management system of each non-Federal entity must provide records that identify adequately the source and application of funds for federally-funded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. Condition: Statement of financial position transactions were not allocated properly to programs/properties funded with federal funds. Cause: Due to a human error of individuals who were handling the accounting entries, some of transactions were not accurately allocated to the correct programs/properties. Effect: Improper allocation of transactions among various programs/properties could lead to comingling of funds from different projects. This could result in unallowable cost or in allowable cost charged simultaneously to two different programs/properties. Questioned Cost: None noted Recommendation: Establish an internal control procedures in place that provide for separate accountability for projects by allocating transactions properly and producing accurate financial reports for each federally funded programs/properties. Management's Views and Corrective Action Plan Management's response is included in "Management's View and Corrective Action Plan" at the end of this report after the schedule of findings and questioned cost.
CONDITION: The District did not properly record its federal program expenditures for the GEER, ESSER, and ARP ESSER federal grant programs using the various federal funding source expenditure codes as prescribed by the Chart of Accounts for PA Local Educational Agencies maintained by the PA Office of the Budget, Office of Comptroller Operations. CRITERIA: The Pennsylvania Department of Education (PDE), through the PA Office of the Budget, Office of Comptroller Operations Chart of Accounts requires School Districts to utilize specific funding source codes for federal program expenditures. In addition, Section 2 CFR 200.302(a) and 302(b) of the Uniform Guidance requires non-federal organizations such as the School District to maintain financial records which account for federal funds in such a manner as to be able to properly track the identification and use of federal funds. EFFECT: By not using federal source codes to properly track its federal program expenditures for the GEER, ESSER, and ARP ESSER federal grant programs, the School District did not comply with the financial reporting standards for federal program expenditures as prescribed by the Pennsylvania Department of Education, through the PA Office of the Budget, Office of Comptroller Operations Chart of Accounts and Section 2 CFR 200.302(a) and 302(b) of the Uniform Guidance. This situation significantly reduced the District’s internal controls over the ability to properly manage and account for these federal program expenditures in accordance with the compliance requirements of PDE and the Uniform Guidance. CAUSE: Management used proper funding source codes for the revenues received under the GEER, ESSER, and ARP ESSER federal grant programs, but erroneously did not realize the federal funding source coding applied to expenditures as well. QUESTIONED COSTS: None RECOMMENDATION: I am recommending that the School District properly follow the guidance contained within the PA Office of the Budget, Office of Comptroller Operations Chart of Accounts for recording all expenditures of the School District, most specifically, federal program grant expenditures to 1) enhance internal controls for tracking and monitoring federal program expenditures and 2) comply with the recordkeeping requirements for federal funds as specified in Section 2 CFR Part 200.302(a) and 302(b) of the Uniform Guidance and PDE regulations. VIEWS OF RESPONSIBLE OFFICIALS: The School District concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
CONDITION: During my sample review of the District’s completion of its federal grant program ‘Quarterly Cash On Hand Reconciliations’ for the 3rd and 4th fiscal quarters for the GEER grant and the 4th fiscal quarter for the ESSER II grant, I noted that the amounts reported to date for ‘total disbursements’ could not be ascertained from the coding of these expenditures in the District’s general ledger (See Finding 2021-005) and did not reconcile to the separate spreadsheets maintained by the School District. CRITERIA: Section 2 CFR 200.302(a) and 302(b) of the Uniform Guidance requires non-federal organizations such as the School District to maintain financial records which account for federal funds in such a manner as to be able to properly track the identification and use of federal funds. EFFECT: The School District did not comply with Section 2 CFR 200.302(a) and 302(b) of the Uniform Guidance which prescribes the proper financial management system for the tracking of federal program expenditures. CAUSE: The School District did not utilize the federal source code tracking system as prescribed by the PA Office of the Budget, Office of Comptroller Operations Chart of Accounts, which would have enabled the District to print reports from the accounting software system, by federal source program, to properly prepare the quarterly reconciliations. It was not readily determinable as to why the ‘total disbursements’ line on the quarterly cash on hand reconciliations did not match the separate spreadsheets the School District utilized for tracking federal program expenditures. QUESTIONED COSTS: None RECOMMENDATION: I am recommending that the School District properly follow the guidance contained within the PA Office of the Budget, Office of Comptroller Operations Chart of Accounts for recording all expenditures of the School District, most specifically, federal program grant expenditures to comply with the recordkeeping requirements for federal funds as specified in Section 2 CFR Part 200.302(a) and 302(b) of the Uniform Guidance, to allow for the proper completion of the ‘quarterly cash on hand reconciliations’. VIEWS OF RESPONSIBLE OFFICIALS: The School District concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
CONDITION: The District did not properly record its federal program expenditures for the GEER, ESSER, and ARP ESSER federal grant programs using the various federal funding source expenditure codes as prescribed by the Chart of Accounts for PA Local Educational Agencies maintained by the PA Office of the Budget, Office of Comptroller Operations. CRITERIA: The Pennsylvania Department of Education (PDE), through the PA Office of the Budget, Office of Comptroller Operations Chart of Accounts requires School Districts to utilize specific funding source codes for federal program expenditures. In addition, Section 2 CFR 200.302(a) and 302(b) of the Uniform Guidance requires non-federal organizations such as the School District to maintain financial records which account for federal funds in such a manner as to be able to properly track the identification and use of federal funds. EFFECT: By not using federal source codes to properly track its federal program expenditures for the GEER, ESSER, and ARP ESSER federal grant programs, the School District did not comply with the financial reporting standards for federal program expenditures as prescribed by the Pennsylvania Department of Education, through the PA Office of the Budget, Office of Comptroller Operations Chart of Accounts and Section 2 CFR 200.302(a) and 302(b) of the Uniform Guidance. This situation significantly reduced the District’s internal controls over the ability to properly manage and account for these federal program expenditures in accordance with the compliance requirements of PDE and the Uniform Guidance. CAUSE: Management used proper funding source codes for the revenues received under the GEER, ESSER, and ARP ESSER federal grant programs, but erroneously did not realize the federal funding source coding applied to expenditures as well. QUESTIONED COSTS: None RECOMMENDATION: I am recommending that the School District properly follow the guidance contained within the PA Office of the Budget, Office of Comptroller Operations Chart of Accounts for recording all expenditures of the School District, most specifically, federal program grant expenditures to 1) enhance internal controls for tracking and monitoring federal program expenditures and 2) comply with the recordkeeping requirements for federal funds as specified in Section 2 CFR Part 200.302(a) and 302(b) of the Uniform Guidance and PDE regulations. VIEWS OF RESPONSIBLE OFFICIALS: The School District concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
CONDITION: During my sample review of the District’s completion of its federal grant program ‘Quarterly Cash On Hand Reconciliations’ for the 3rd and 4th fiscal quarters for the GEER grant and the 4th fiscal quarter for the ESSER II grant, I noted that the amounts reported to date for ‘total disbursements’ could not be ascertained from the coding of these expenditures in the District’s general ledger (See Finding 2021-005) and did not reconcile to the separate spreadsheets maintained by the School District. CRITERIA: Section 2 CFR 200.302(a) and 302(b) of the Uniform Guidance requires non-federal organizations such as the School District to maintain financial records which account for federal funds in such a manner as to be able to properly track the identification and use of federal funds. EFFECT: The School District did not comply with Section 2 CFR 200.302(a) and 302(b) of the Uniform Guidance which prescribes the proper financial management system for the tracking of federal program expenditures. CAUSE: The School District did not utilize the federal source code tracking system as prescribed by the PA Office of the Budget, Office of Comptroller Operations Chart of Accounts, which would have enabled the District to print reports from the accounting software system, by federal source program, to properly prepare the quarterly reconciliations. It was not readily determinable as to why the ‘total disbursements’ line on the quarterly cash on hand reconciliations did not match the separate spreadsheets the School District utilized for tracking federal program expenditures. QUESTIONED COSTS: None RECOMMENDATION: I am recommending that the School District properly follow the guidance contained within the PA Office of the Budget, Office of Comptroller Operations Chart of Accounts for recording all expenditures of the School District, most specifically, federal program grant expenditures to comply with the recordkeeping requirements for federal funds as specified in Section 2 CFR Part 200.302(a) and 302(b) of the Uniform Guidance, to allow for the proper completion of the ‘quarterly cash on hand reconciliations’. VIEWS OF RESPONSIBLE OFFICIALS: The School District concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
CONDITION: The District did not properly record its federal program expenditures for the GEER, ESSER, and ARP ESSER federal grant programs using the various federal funding source expenditure codes as prescribed by the Chart of Accounts for PA Local Educational Agencies maintained by the PA Office of the Budget, Office of Comptroller Operations. CRITERIA: The Pennsylvania Department of Education (PDE), through the PA Office of the Budget, Office of Comptroller Operations Chart of Accounts requires School Districts to utilize specific funding source codes for federal program expenditures. In addition, Section 2 CFR 200.302(a) and 302(b) of the Uniform Guidance requires non-federal organizations such as the School District to maintain financial records which account for federal funds in such a manner as to be able to properly track the identification and use of federal funds. EFFECT: By not using federal source codes to properly track its federal program expenditures for the GEER, ESSER, and ARP ESSER federal grant programs, the School District did not comply with the financial reporting standards for federal program expenditures as prescribed by the Pennsylvania Department of Education, through the PA Office of the Budget, Office of Comptroller Operations Chart of Accounts and Section 2 CFR 200.302(a) and 302(b) of the Uniform Guidance. This situation significantly reduced the District’s internal controls over the ability to properly manage and account for these federal program expenditures in accordance with the compliance requirements of PDE and the Uniform Guidance. CAUSE: Management used proper funding source codes for the revenues received under the GEER, ESSER, and ARP ESSER federal grant programs, but erroneously did not realize the federal funding source coding applied to expenditures as well. QUESTIONED COSTS: None RECOMMENDATION: I am recommending that the School District properly follow the guidance contained within the PA Office of the Budget, Office of Comptroller Operations Chart of Accounts for recording all expenditures of the School District, most specifically, federal program grant expenditures to 1) enhance internal controls for tracking and monitoring federal program expenditures and 2) comply with the recordkeeping requirements for federal funds as specified in Section 2 CFR Part 200.302(a) and 302(b) of the Uniform Guidance and PDE regulations. VIEWS OF RESPONSIBLE OFFICIALS: The School District concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
CONDITION: During my sample review of the District’s completion of its federal grant program ‘Quarterly Cash On Hand Reconciliations’ for the 3rd and 4th fiscal quarters for the GEER grant and the 4th fiscal quarter for the ESSER II grant, I noted that the amounts reported to date for ‘total disbursements’ could not be ascertained from the coding of these expenditures in the District’s general ledger (See Finding 2021-005) and did not reconcile to the separate spreadsheets maintained by the School District. CRITERIA: Section 2 CFR 200.302(a) and 302(b) of the Uniform Guidance requires non-federal organizations such as the School District to maintain financial records which account for federal funds in such a manner as to be able to properly track the identification and use of federal funds. EFFECT: The School District did not comply with Section 2 CFR 200.302(a) and 302(b) of the Uniform Guidance which prescribes the proper financial management system for the tracking of federal program expenditures. CAUSE: The School District did not utilize the federal source code tracking system as prescribed by the PA Office of the Budget, Office of Comptroller Operations Chart of Accounts, which would have enabled the District to print reports from the accounting software system, by federal source program, to properly prepare the quarterly reconciliations. It was not readily determinable as to why the ‘total disbursements’ line on the quarterly cash on hand reconciliations did not match the separate spreadsheets the School District utilized for tracking federal program expenditures. QUESTIONED COSTS: None RECOMMENDATION: I am recommending that the School District properly follow the guidance contained within the PA Office of the Budget, Office of Comptroller Operations Chart of Accounts for recording all expenditures of the School District, most specifically, federal program grant expenditures to comply with the recordkeeping requirements for federal funds as specified in Section 2 CFR Part 200.302(a) and 302(b) of the Uniform Guidance, to allow for the proper completion of the ‘quarterly cash on hand reconciliations’. VIEWS OF RESPONSIBLE OFFICIALS: The School District concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
CONDITION: The District did not properly record its federal program expenditures for the GEER, ESSER, and ARP ESSER federal grant programs using the various federal funding source expenditure codes as prescribed by the Chart of Accounts for PA Local Educational Agencies maintained by the PA Office of the Budget, Office of Comptroller Operations. CRITERIA: The Pennsylvania Department of Education (PDE), through the PA Office of the Budget, Office of Comptroller Operations Chart of Accounts requires School Districts to utilize specific funding source codes for federal program expenditures. In addition, Section 2 CFR 200.302(a) and 302(b) of the Uniform Guidance requires non-federal organizations such as the School District to maintain financial records which account for federal funds in such a manner as to be able to properly track the identification and use of federal funds. EFFECT: By not using federal source codes to properly track its federal program expenditures for the GEER, ESSER, and ARP ESSER federal grant programs, the School District did not comply with the financial reporting standards for federal program expenditures as prescribed by the Pennsylvania Department of Education, through the PA Office of the Budget, Office of Comptroller Operations Chart of Accounts and Section 2 CFR 200.302(a) and 302(b) of the Uniform Guidance. This situation significantly reduced the District’s internal controls over the ability to properly manage and account for these federal program expenditures in accordance with the compliance requirements of PDE and the Uniform Guidance. CAUSE: Management used proper funding source codes for the revenues received under the GEER, ESSER, and ARP ESSER federal grant programs, but erroneously did not realize the federal funding source coding applied to expenditures as well. QUESTIONED COSTS: None RECOMMENDATION: I am recommending that the School District properly follow the guidance contained within the PA Office of the Budget, Office of Comptroller Operations Chart of Accounts for recording all expenditures of the School District, most specifically, federal program grant expenditures to 1) enhance internal controls for tracking and monitoring federal program expenditures and 2) comply with the recordkeeping requirements for federal funds as specified in Section 2 CFR Part 200.302(a) and 302(b) of the Uniform Guidance and PDE regulations. VIEWS OF RESPONSIBLE OFFICIALS: The School District concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
CONDITION: The District did not properly record its federal program expenditures for the GEER, ESSER, and ARP ESSER federal grant programs using the various federal funding source expenditure codes as prescribed by the Chart of Accounts for PA Local Educational Agencies maintained by the PA Office of the Budget, Office of Comptroller Operations. CRITERIA: The Pennsylvania Department of Education (PDE), through the PA Office of the Budget, Office of Comptroller Operations Chart of Accounts requires School Districts to utilize specific funding source codes for federal program expenditures. In addition, Section 2 CFR 200.302(a) and 302(b) of the Uniform Guidance requires non-federal organizations such as the School District to maintain financial records which account for federal funds in such a manner as to be able to properly track the identification and use of federal funds. EFFECT: By not using federal source codes to properly track its federal program expenditures for the GEER, ESSER, and ARP ESSER federal grant programs, the School District did not comply with the financial reporting standards for federal program expenditures as prescribed by the Pennsylvania Department of Education, through the PA Office of the Budget, Office of Comptroller Operations Chart of Accounts and Section 2 CFR 200.302(a) and 302(b) of the Uniform Guidance. This situation significantly reduced the District’s internal controls over the ability to properly manage and account for these federal program expenditures in accordance with the compliance requirements of PDE and the Uniform Guidance. CAUSE: Management used proper funding source codes for the revenues received under the GEER, ESSER, and ARP ESSER federal grant programs, but erroneously did not realize the federal funding source coding applied to expenditures as well. QUESTIONED COSTS: None RECOMMENDATION: I am recommending that the School District properly follow the guidance contained within the PA Office of the Budget, Office of Comptroller Operations Chart of Accounts for recording all expenditures of the School District, most specifically, federal program grant expenditures to 1) enhance internal controls for tracking and monitoring federal program expenditures and 2) comply with the recordkeeping requirements for federal funds as specified in Section 2 CFR Part 200.302(a) and 302(b) of the Uniform Guidance and PDE regulations. VIEWS OF RESPONSIBLE OFFICIALS: The School District concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
CONDITION: The District did not properly record its federal program expenditures for the GEER, ESSER, and ARP ESSER federal grant programs using the various federal funding source expenditure codes as prescribed by the Chart of Accounts for PA Local Educational Agencies maintained by the PA Office of the Budget, Office of Comptroller Operations. CRITERIA: The Pennsylvania Department of Education (PDE), through the PA Office of the Budget, Office of Comptroller Operations Chart of Accounts requires School Districts to utilize specific funding source codes for federal program expenditures. In addition, Section 2 CFR 200.302(a) and 302(b) of the Uniform Guidance requires non-federal organizations such as the School District to maintain financial records which account for federal funds in such a manner as to be able to properly track the identification and use of federal funds. EFFECT: By not using federal source codes to properly track its federal program expenditures for the GEER, ESSER, and ARP ESSER federal grant programs, the School District did not comply with the financial reporting standards for federal program expenditures as prescribed by the Pennsylvania Department of Education, through the PA Office of the Budget, Office of Comptroller Operations Chart of Accounts and Section 2 CFR 200.302(a) and 302(b) of the Uniform Guidance. This situation significantly reduced the District’s internal controls over the ability to properly manage and account for these federal program expenditures in accordance with the compliance requirements of PDE and the Uniform Guidance. CAUSE: Management used proper funding source codes for the revenues received under the GEER, ESSER, and ARP ESSER federal grant programs, but erroneously did not realize the federal funding source coding applied to expenditures as well. QUESTIONED COSTS: None RECOMMENDATION: I am recommending that the School District properly follow the guidance contained within the PA Office of the Budget, Office of Comptroller Operations Chart of Accounts for recording all expenditures of the School District, most specifically, federal program grant expenditures to 1) enhance internal controls for tracking and monitoring federal program expenditures and 2) comply with the recordkeeping requirements for federal funds as specified in Section 2 CFR Part 200.302(a) and 302(b) of the Uniform Guidance and PDE regulations. VIEWS OF RESPONSIBLE OFFICIALS: The School District concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
CONDITION: The District did not properly record its federal program expenditures for the GEER, ESSER, and ARP ESSER federal grant programs using the various federal funding source expenditure codes as prescribed by the Chart of Accounts for PA Local Educational Agencies maintained by the PA Office of the Budget, Office of Comptroller Operations. CRITERIA: The Pennsylvania Department of Education (PDE), through the PA Office of the Budget, Office of Comptroller Operations Chart of Accounts requires School Districts to utilize specific funding source codes for federal program expenditures. In addition, Section 2 CFR 200.302(a) and 302(b) of the Uniform Guidance requires non-federal organizations such as the School District to maintain financial records which account for federal funds in such a manner as to be able to properly track the identification and use of federal funds. EFFECT: By not using federal source codes to properly track its federal program expenditures for the GEER, ESSER, and ARP ESSER federal grant programs, the School District did not comply with the financial reporting standards for federal program expenditures as prescribed by the Pennsylvania Department of Education, through the PA Office of the Budget, Office of Comptroller Operations Chart of Accounts and Section 2 CFR 200.302(a) and 302(b) of the Uniform Guidance. This situation significantly reduced the District’s internal controls over the ability to properly manage and account for these federal program expenditures in accordance with the compliance requirements of PDE and the Uniform Guidance. CAUSE: Management used proper funding source codes for the revenues received under the GEER, ESSER, and ARP ESSER federal grant programs, but erroneously did not realize the federal funding source coding applied to expenditures as well. QUESTIONED COSTS: None RECOMMENDATION: I am recommending that the School District properly follow the guidance contained within the PA Office of the Budget, Office of Comptroller Operations Chart of Accounts for recording all expenditures of the School District, most specifically, federal program grant expenditures to 1) enhance internal controls for tracking and monitoring federal program expenditures and 2) comply with the recordkeeping requirements for federal funds as specified in Section 2 CFR Part 200.302(a) and 302(b) of the Uniform Guidance and PDE regulations. VIEWS OF RESPONSIBLE OFFICIALS: The School District concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
CONDITION: The District did not properly record its federal program expenditures for the GEER, ESSER, and ARP ESSER federal grant programs using the various federal funding source expenditure codes as prescribed by the Chart of Accounts for PA Local Educational Agencies maintained by the PA Office of the Budget, Office of Comptroller Operations. CRITERIA: The Pennsylvania Department of Education (PDE), through the PA Office of the Budget, Office of Comptroller Operations Chart of Accounts requires School Districts to utilize specific funding source codes for federal program expenditures. In addition, Section 2 CFR 200.302(a) and 302(b) of the Uniform Guidance requires non-federal organizations such as the School District to maintain financial records which account for federal funds in such a manner as to be able to properly track the identification and use of federal funds. EFFECT: By not using federal source codes to properly track its federal program expenditures for the GEER, ESSER, and ARP ESSER federal grant programs, the School District did not comply with the financial reporting standards for federal program expenditures as prescribed by the Pennsylvania Department of Education, through the PA Office of the Budget, Office of Comptroller Operations Chart of Accounts and Section 2 CFR 200.302(a) and 302(b) of the Uniform Guidance. This situation significantly reduced the District’s internal controls over the ability to properly manage and account for these federal program expenditures in accordance with the compliance requirements of PDE and the Uniform Guidance. CAUSE: Management used proper funding source codes for the revenues received under the GEER, ESSER, and ARP ESSER federal grant programs, but erroneously did not realize the federal funding source coding applied to expenditures as well. QUESTIONED COSTS: None RECOMMENDATION: I am recommending that the School District properly follow the guidance contained within the PA Office of the Budget, Office of Comptroller Operations Chart of Accounts for recording all expenditures of the School District, most specifically, federal program grant expenditures to 1) enhance internal controls for tracking and monitoring federal program expenditures and 2) comply with the recordkeeping requirements for federal funds as specified in Section 2 CFR Part 200.302(a) and 302(b) of the Uniform Guidance and PDE regulations. VIEWS OF RESPONSIBLE OFFICIALS: The School District concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
CONDITION: During my sample review of the District’s completion of its federal grant program ‘Quarterly Cash On Hand Reconciliations’ for the 3rd and 4th fiscal quarters for the GEER grant and the 4th fiscal quarter for the ESSER II grant, I noted that the amounts reported to date for ‘total disbursements’ could not be ascertained from the coding of these expenditures in the District’s general ledger (See Finding 2021-005) and did not reconcile to the separate spreadsheets maintained by the School District. CRITERIA: Section 2 CFR 200.302(a) and 302(b) of the Uniform Guidance requires non-federal organizations such as the School District to maintain financial records which account for federal funds in such a manner as to be able to properly track the identification and use of federal funds. EFFECT: The School District did not comply with Section 2 CFR 200.302(a) and 302(b) of the Uniform Guidance which prescribes the proper financial management system for the tracking of federal program expenditures. CAUSE: The School District did not utilize the federal source code tracking system as prescribed by the PA Office of the Budget, Office of Comptroller Operations Chart of Accounts, which would have enabled the District to print reports from the accounting software system, by federal source program, to properly prepare the quarterly reconciliations. It was not readily determinable as to why the ‘total disbursements’ line on the quarterly cash on hand reconciliations did not match the separate spreadsheets the School District utilized for tracking federal program expenditures. QUESTIONED COSTS: None RECOMMENDATION: I am recommending that the School District properly follow the guidance contained within the PA Office of the Budget, Office of Comptroller Operations Chart of Accounts for recording all expenditures of the School District, most specifically, federal program grant expenditures to comply with the recordkeeping requirements for federal funds as specified in Section 2 CFR Part 200.302(a) and 302(b) of the Uniform Guidance, to allow for the proper completion of the ‘quarterly cash on hand reconciliations’. VIEWS OF RESPONSIBLE OFFICIALS: The School District concurs with the above noted finding and addresses this issue in the ‘Corrective Action Plan’ included within this report.
Criteria Per 2 CFR 200.302 (b)(7) a non-federal entity must establish written procedures for determining the allowability of costs in accordance with Subpart E – Cost Principles and the terms and conditions of the Federal award. Per 2 CFR 200.303, a non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with the 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). Article 12 of the Act 83 of May 2, 1941, as amended, establishes that the Authority must have an accounting system that provides for adequate control and statistical records of all income and expenses from, administered or controlled by the Authority. Condition and Context During our review of the internal controls over compliance, we noted that the following: • Authority did not have written procedures or formal policies to ensure compliance over the Allowable Costs and Cost Principles, Period of Performance, Matching and Reporting requirements.• During our test work over internal controls over compliance for activities allowed and cost principles requirements, we noted that the Authority implemented a system of compiling the relevant data elements, including allowed expenditures for all projects. However, there was no control addressing the completeness and accuracy of the allowed expenditures. Cause and Possible Asserted Effect Management did not establish proper internal controls to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards. Absence of formal policies and procedures could cause the Authority to fall in noncompliance with federal awards. Also, the Authority’s processes and controls are not designed to ensure proper review of supporting documentation to meet the compliance requirements of the Federal Grant. Not having formal processes and controls caused that in multiple occasions the Grantor returned claims submitted due to lack of support documentation. Questioned Cost There were no questioned costs associated with the finding. Whether the Sampling was a Statistically Valid Sample The sample was not intended to be, and was not, a statistically valid sample. Prior Year Repeat Finding A similar finding was reported in the prior year’s audit as finding 2020-008. Recommendation Management must establish written procedures and formal policies to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards. View of Responsible Officials Management acknowledges the findings and has implemented a corrective action plan to enhance compliance with Federal awards. This plan includes developing Standard Operating Procedures (SOPs) for grant management activities, identifying, and documenting existing internal controls, and maintaining constant communication with stakeholders to prevent material non-compliance. Additionally, PREPA will provide training to staff on the new SOPs and establish a monitoring mechanism to continuously assess and improve the effectiveness of these controls. The corrective action plan, supervised by Mr. Ezequiel Nieves from the PREPA Disaster Funding Management Office, is expected to be completed by July 2025. Management is committed to addressing deficiencies, ensuring that processes and controls are robust and effective, and that Federal awards are managed transparently and in full compliance with all regulatory requirements. The estimated date of completion is expected to be in July 2025. Responsible Party - Mr. Ezequiel Nieves - PREPA Disaster Funding Management Office, Finance Department. Effective June 1, 2021, the Authority transitioned the management and operation of its transmission and distribution network as well as certain back-office functions, including billing, collections and accounting, to a third party. The third-party operator is reviewing operating procedures and controls within its responsibilities to make the necessary improvements. Management will work to address these findings with the assistance of the third-party operators, where applicable. Also, effective July 1, 2023, the Authority transitioned the management and operation of its generation assets as well as certain back- office functions to a third party. The third-party operator is reviewing operating procedures and controls within its responsibilities to make the necessary improvements. In addition, the Authority will also be implementing and monitoring corrective actions taken by the new generation segment operator.
FINDING 2021-002 – Lack of Written Policies for Federal Grants (Repeated from Prior Year Findings 20-003, 19-004, 18-003 and 17-002) Federal Program: Individuals with Disabilities Education Act (IDEA) Improvement Grant - Part D Project No: 20-4631-RN and 21-4631-RN Federal Assistance Listing Number: 84.323A Passed Through: Illinois State Board of Education Federal Agency: U.S. Department of Education Criteria/Specific Requirement: The Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), contained in 2 CFR Part 200, became effective for all federal award programs administered by the Regional Office of Education #47 that were issued on or after December 26, 2014. Specifically, the Uniform Guidance (2 CFR 200.302(b)(7)) requires the Regional Office to have written procedures related to cash management and for determining the allowability of costs in accordance with Subpart E – Cost Principles of the Uniform Guidance and the terms and conditions of the federal award. Condition: As of April 2021, Regional Office developed, but did not implement written procedures concerning cash management, the determination of allowability of costs in accordance with Subpart E – Cost Principles of the Uniform Guidance and the terms and conditions of the federal award. For the period of July 2020 through March 2021 the Regional Office utilized informal procedures in which each purchase made or cost allocated to the IDEA – Improvement Grant - Part D was reviewed for allowability by an individual with knowledge of the budget, allowable costs and activities, and the cash management requirements. The allowability determinations were based on the amounts included in the budgets for the IDEA – Improvement Grant - Part D approved by, and the grant periods set by, the Illinois State Board of Education. Questioned Costs: None Context: The Regional Office of Education #47 expended $1,919,044 of federal awards in total during fiscal year 2021, including $978,533 for the IDEA –Improvement Grant - Part D. Effect: Not having written procedures for the full period under review concerning cash management and cost principles increases the risk that grant payments will not be requested on the reimbursement basis and unallowable costs will be allocated to federal award programs. Cause: Regional Office management indicated they developed the written procedures late into the fiscal year, and were unable to fully implement the Uniform Guidance during the full fiscal year. Recommendation: We recommend the Regional Office implement written procedures to comply with the requirements related to cash management for determining the allowability of costs in accordance with Subpart E –Cost Principles of the Uniform Guidance and the terms and conditions of the federal award. Management’s Response: Effective April 2021, the Regional Office has developed written policies and procedures related to the Uniform Guidance.
Finding 2021-006: Cash Management - Material Weakness Grantor: U.S. Department of Health and Human Services Federal Program Names: Health Center Program Cluster: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) COVID-19 Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) Grants for New and Expanded Services under the Health Center Program Federal Assistance Listing Numbers: 93.224 and 93.527 Federal Award Identification Number and Year: H80CS26638 - 2020 and 2021, H8DCS35487 - 2020, H8CCS34364 - 2020, H8ECS38373 - 2020, and H8F40829 - 2021 Criteria In accordance with §200.305, Federal payment, grantees and subgrantees that receive grant funds are responsible for maintaining controls regarding the management of federal program funds under the Uniform Guidance in 2 CFR 200.302 and 200.303. Condition The Center's drawdowns did not illustrate review and approval by management. Cause The Center did not have adequate controls to ensure drawdowns were properly approved and such approval is documented. Effect The condition may lead to inaccurate or improper drawdowns. Questioned Costs None. Context We selected seven drawdowns for testing of cash management. We noted there was no formal approval or evidence of review for these drawdowns. Identification of Repeat Finding Yes, see finding 2020-006. Recommendation The Center should develop written procedures to review all drawdowns that occur in order to ensure accuracy. Views of Responsible Officials Management and the Board of Directors agree with the finding and will implement additional controls to ensure there is formal evidence of review being performed.