Criteria or specific requirement: Control: Per 2 CFR section 200.303(a), 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 Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply 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). Condition: Schools was unable to provide evidence of timesheet approval for 2 of 40 payroll samples tested. Context: Forty timesheets were selected for testing and the following exceptions were noted: • For 2 of 40 timesheets selected for testing, Schools was unable to provide documentation evidencing the timesheets were properly approved. Questioned costs: Not applicable. Cause: Schools’ procedures and controls were not sufficient to ensure that time and effort reporting was accurately performed and documented, nor that employee time was properly allocated and approved. Effect: There is an increased risk of charging unallowed payroll costs to the program. Recommendation: Schools should reevaluate its current process, implement proper controls, and perform additional training over time and effort reporting. Schools should not seek federal reimbursement unless it can substantiate that the time and effort was dedicated to the federal program. Documentation should be readily available for audit.
Inadequate Internal Controls Over Compliance Related to Identification and Reporting of Assistance Listing Numbers (ALNs) in Schedule of Expenditures of Federal Awards Federal Program State Energy Program ALN 81.141 Energy Efficiency and Conservation Block Grant ALN 81.128 Name of Federal Agency U.S. Department of Energy Compliance Requirement Reporting Type of Finding Internal control over compliance/non-compliance Category Significant deficiency on internal controls over compliance and Other Matter. Criteria Title 2 CFR §200.303 requires non-Federal entities to establish and maintain effective internal control over Federal awards that provides reasonable assurance that the entity is managing the awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Additionally, 2 CFR §200.510(b) requires the Schedule of Expenditures of Federal Awards (SEFA) to include the correct Assistance Listing Number (ALN) for each Federal program. Proper identification of ALNs is essential, as different ALNs may be subject to different compliance requirements under the Uniform Guidance and program-specific terms and conditions. Condition During our review of the Schedule of Expenditures of Federal Awards (SEFA), we noted that Federal funds received under the U.S. Department of Energy were not consistently identified and documented under the correct Assistance Listing Numbers. Specifically, expenditures related to ALNs 81.141 and 81.128 were not clearly distinguished or were incorrectly classified. The entity did not have sufficient internal controls in place to ensure that Federal awards were properly identified by ALN at the time funds were received and subsequently recorded and reported on the SEFA. Cause The condition resulted from inadequate internal controls over compliance related to: •The identification of Federal awards upon receipt of funds; •The documentation and tracking of ALNs throughout the grant lifecycle; and •The preparation and review of the SEFA to ensure accurate classification by ALN. Management relied on informal processes and did not implement a formal review or reconciliation procedure to verify that Federal expenditures were recorded under the correct Assistance Listing Numbers. Effect Failure to correctly identify and document the applicable ALN may result in noncompliance with Federal requirements, as different ALNs can carry different compliance requirements, including but not limited to: •Allowable costs and activities. •Period of performance •Reporting requirements •Special tests and provisions; and •Subrecipient monitoring requirements. Misclassification of expenditures by ALN increases the risk that the entity may apply incorrect compliance requirements to a Federal award, potentially leading to unrecognized instances of noncompliance and inaccurate reporting on the SEFA. Additionally, incorrect ALN reporting may affect the determination of major programs and the scope of Single Audit testing. Context Two (2) out of a total of fifteen (15) Federal programs were not consistently identified and documented under the correct Assistance Listing Numbers. Questioned Costs None. Identification as a Repeated Finding This is not a repeat finding from the immediate previous audit. Recommendation We recommend that management strengthen internal controls over compliance by: 1. Implementing formal procedures to identify and document the correct ALN at the time Federal funds are received. 2. Maintaining detailed grant tracking records that clearly link expenditures to the appropriate ALN. 3. Establishing a supervisory review process over the preparation of the SEFA to verify the accuracy and completeness of ALN classifications prior to submission. Views of responsible officials and planned corrective actions Management of the Department agrees with this finding. Refer to the corrective action plan on pages 114-119.
Criteria: Health centers receiving federal funding under the Health Center Program (93.224) and Ryan White Part C (93.918) are required to maintain and consistently apply a sliding fee discount program in accordance with federal regulations and program guidance. Specifically, 42 CFR §51c.303(f) requires health centers to have a schedule of fees and discounts based on patients’ ability to pay and to apply the schedule consistently. The HRSA Health Center Program Compliance Manual, Chapter 9, mandates documented eligibility determinations, defined timeframes for eligibility reassessment, proper application of the sliding fee scale, and retention of documentation. Similarly, the Ryan White HIV/AIDS Program Part C Manual requires eligibility determinations and fee assessments consistent with approved policies and program requirements. Additionally, federal standards under 2 CFR §200.303 require non-federal entities to establish and maintain effective internal controls over federal awards, 2 CFR §200.302(b) requires financial management systems to adequately identify and document eligibility determinations, and 2 CFR §200.328 requires accurate programmatic reporting and monitoring. Condition: During testing of the sliding fee discount program for the fiscal year ended June 30, 2025, we identified multiple instances of noncompliance with established policies and federal program requirements. Specifically, patient financial information was updated over prior evaluations, which eliminated historical tracking and resulted in files not being properly closed in accordance with the health center’s policies. Effect: As a result of these deficiencies, NeoMed Center Inc. is at increased risk of improper fee discounts being applied to patients who may not meet eligibility requirements, noncompliance with federal and program-specific requirements, inaccurate financial reporting related to patient service revenue, lack of proper and accurate collection of services provided and potential loss of federal funds awards. Cause: The noncompliance is caused by inadequate implementation of internal controls policies and procedures designed over the sliding fee program. Also, it caused by lack of appropriate staff training and missing standardized monitoring policies and procedures, as well as inadequate supervisory review of eligibility determinations and documentation. Recommendations: We recommend that the Institution implement the following corrective actions: 1. Review current policies and procedures to improve and establish robust internal controls to ensure that patient financial information is updated without overwriting prior evaluations, preserving historical tracking and maintaining properly closed files. 2. Provide training to staff responsible for eligibility determinations and fee assessments to ensure consistent application of the sliding fee scale and compliance with federal program requirements. 3. Implement standardized monitoring and supervisory review procedures to verify that eligibility determinations, fee assessments, and documentation are accurate, complete, and retained in accordance with program requirements. 4. Implement and perform, on a recurrent basis, audit and/or review of patient files to ensure ongoing compliance, timely reassessment, and proper application of the sliding fee discount program. 5. Maintain clear records and documentation to support all eligibility determinations and fee discounts, ensuring the entity can demonstrate compliance during internal reviews or external audit
Federal Agency: 84 – Department of Education Federal Program Title: Higher Education Institutional Aid Assistance Listing Number: 84.031 Award Period: July 1, 2024, through June 30, 2025 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or Specific Requirement: In accordance with 2 CFR §200.328, non‑Federal entities must submit required performance reports in accordance with the terms and conditions of the Federal award and include all information required by the Federal awarding agency. Performance reports must be submitted in the form, manner, and frequency prescribed in the award agreement. Additionally, 2 CFR §200.303 requires non‑Federal entities to establish and maintain effective internal control over Federal awards, including controls to ensure required reports are reviewed, approved, documented, and submitted in accordance with award requirements. Condition/Context: During our testing of Reporting, we selected a sample of 5 Higher Education Institutional Aid performance reports. This major program includes 5 award agreements, of which 2 agreements have quarterly reporting requirements, 2 agreements have semi‑annual reporting requirements, and 4 agreements have annual reporting requirements. The following exceptions were noted: • For 2 of the 5 reports tested, the reports were prepared; however, evidence supporting submission was not provided, and documentation could not be provided to demonstrate that the reports were reviewed and approved prior to submission. As a result, evidence of management review and report submission could not be verified. Questioned Costs: None. Effect: Failure to retain documentation supporting report submission and management review limits the UEC’s ability to demonstrate compliance with Federal reporting requirements and increases the risk that required reports are not reviewed or submitted in accordance with award terms. Cause: The UEC’s internal controls were not designed or implemented to consistently ensure that required performance reports are reviewed, approved, and submitted in accordance with Federal award requirements, and that documentation is retained to support evidence of review and submission. Repeat Finding: No. Recommendation: We recommend the UEC strengthen its reporting procedures to ensure required performance reports are reviewed and approved prior to submission and that documentation is retained to support evidence of management review and report submission in accordance with Federal award requirements. Views of Responsible Officials: Management agrees with the finding and has developed a plan to correct the finding.
Federal Agency: 11 – Department of Commerce, 12 – Department of Defense, 15 – Department of the Interior, 16 – Department of Justice, 43 – National Aeronautics and Space Administration, 47 – National Science Foundation, 81 – Department of Energy, 84 – Department of Education, 93 – Department of Health and Human Services Federal Program Title: R&D Cluster and TRIO Cluster Assistance Listing Number: R&D and 84.TRIO Award Period: July 1, 2024, through June 30, 2025 Type of Finding: • Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: In accordance with 2 CFR §200.403(a), costs charged to Federal awards must be necessary, reasonable, and allocable to the Federal award. Additionally, 2 CFR §200.309 requires costs to be incurred during the approved period of performance of the Federal award. Further, 2 CFR §200.302(a) requires non‑Federal entities to maintain financial management systems that provide for accurate, current, and complete disclosure of the financial results of each Federal award, and 2 CFR §200.303 requires non‑Federal entities to establish and maintain effective internal control over Federal awards. Condition/Context: The population sizes below are presented only for programs in which exceptions were identified for the applicable compliance test. Cash Disbursement Testing – TRIO Cluster (Control Finding Only): • For 2 of the 40 TRIO samples tested, the related expenses were allowable and incurred within the awards’ approved periods of performance; however, the expenses were improperly recorded in fiscal year 2025. Specifically, 1 expense related to fiscal year 2024, and 1 expense represented a prepayment for a fiscal year 2026 cost. The resulting misstatement to the Schedule of Expenditures of Federal Awards (SEFA) totaled $5,260, which is less than program materiality. Payroll Testing – R&D Cluster (Control Finding Only): • For 10 of the 40 R&D samples tested, timesheets were not submitted timely, resulting in variances between the payroll register and the recalculated gross wages for the applicable pay periods. No unallowable payroll costs were identified; however, controls over timely payroll documentation and reconciliation did not operate effectively. • For 1 of the 40 R&D samples tested, the timesheet was not signed by the supervisor, indicating that payroll review controls were not consistently applied. Questioned Costs: None. Effect: Although the costs tested were allowable and incurred within the approved periods of performance, improper period recognition and untimely or incomplete payroll documentation increase the risk that Federal expenditures are not recorded in the proper fiscal period and that Federal financial reporting is not accurate. Cause: The UEC’s internal controls were not designed or implemented to consistently ensure that expenditures are recorded in the proper fiscal period and that payroll documentation is submitted, reviewed, and approved timely. Repeat Finding: No. Recommendation: We recommend the UEC strengthen its controls over expenditure recognition to ensure costs are recorded in the appropriate fiscal period and enhance payroll review procedures to ensure timesheets are submitted and reviewed timely to support accurate payroll reporting. Views of Responsible Officials: Management agrees with the finding and has developed a plan to correct the finding.
Federal Agency: 11 – Department of Commerce, 12 – Department of Defense, 15 – Department of the Interior, 16 – Department of Justice, 43 – National Aeronautics and Space Administration, 47 – National Science Foundation, 81 – Department of Energy, 84 – Department of Education, 93 – Department of Health and Human Services Federal Program Title: R&D Cluster, Child Care Access Means Parents in School, TRIO Cluster, and Higher Education Institutional Aid Assistance Listing Number: R&D, 84.335, 84.TRIO, and 84.031 Award Period: July 1, 2024, through June 30, 2025 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or Specific Requirement: In accordance with 2 CFR §200.305(b), when using the reimbursement method, Federal drawdowns must be limited to allowable costs that have been incurred and supported. Additionally, 2 CFR §200.302(a) requires non Federal entities to maintain financial management systems that provide for accurate, current, and complete disclosure of the financial results of each Federal award. Condition/Context: During our testing of Cash Management, we selected a sample of 85 reimbursement requests, consisting of 40 R&D Cluster samples, 12 Child Care Access Means Parents in School samples, 23 TRIO Cluster samples, and 10 Higher Education Institutional Aid. The following exceptions were noted: R&D Cluster, TRIO Cluster, and Higher Education Institutional Aid: For 4 of the 40 R&D samples tested, 9 of the 23 TRIO samples tested, and 1 of the 10 Higher Education Institutional Aid samples tested, instances of noncompliance were identified. • For 4 of the 4 R&D samples, 8 of the 9 TRIO samples, and 1 of the 1 Higher Education Institutional Aid samples with instances of noncompliance noted, a portion of the reimbursement drawn down during fiscal year 2025 related to expenses incurred outside to the current fiscal year. Additionally, 1 of the 4 R&D samples included expenses incurred as far back as October 2020. • For 1 of the 9 TRIO samples with instances of noncompliance noted, supporting documentation (such as invoice support, indirect cost recalculations, or payroll registers) was not provided for a portion of the expenses included in the reimbursement requests. As a result, we were unable to determine the period to which the funds drawn down related. Child Care Access Means Parents in School (Control Finding Only): • For 1 of the 12 samples tested, the UEC was ultimately in compliance with cash management requirements; however, internal controls did not operate effectively. Specifically, there was an approximate six‑month delay between the incurrence of program costs and the submission of the reimbursement request. Questioned Costs: $68,759 Effect: Reimbursement requests that include costs incurred outside the applicable fiscal period or costs that are not supported increase the risk that Federal expenditures are not recorded in the proper accounting period and that Federal financial reporting is not accurate. Additionally, delays in submitting reimbursement requests increase the risk that expenditures are not timely reported in accordance with Federal requirements. Cause: The UEC’s internal controls were not designed or implemented to consistently ensure that costs included in reimbursement requests are recorded in the appropriate fiscal period, supported by adequate documentation, and submitted timely in accordance with Federal cash management and financial reporting requirements. Repeat Finding: No. Recommendation: We recommend the UEC strengthen its cash management and financial reporting procedures to ensure reimbursement requests include only costs incurred in the appropriate fiscal period, are supported by adequate documentation, and are submitted timely. The UEC should also enhance review controls to verify proper period recognition of costs prior to submission of reimbursement requests. Views of Responsible Officials: Management agrees with the finding and has developed a plan to correct the finding. Further, 2 CFR §200.303 requires non Federal entities to establish and maintain effective internal control over Federal awards to ensure transactions are recorded in the proper accounting period and in accordance with applicable Federal requirements.
2025-003 Special Tests and Provisions Federal Agency: U.S. Department of Education Federal Program Title: Student Financial Assistance Cluster Assistance Listing No. 84.063, 84.268 Federal Award Identification Number and Year: P063P248567 – 2025, P268K258567 – 2025, P268K256514 - 2025 Award Periods: July 1, 2024 through June 30, 2025 Type of Finding: Significant Deficiency in Internal Control Over Compliance Other Matters Criteria or specific requirement: Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. The Code of Federal Regulations, 34 CFR 682.610, states that institutions must report accurately the enrollment status of all students regardless of if they receive aid from the institution or not. Changes to said status are required to be reported within 30 days of becoming aware of the status change, or with the next scheduled transmission of statuses if the scheduled transmission is within 60 days. The Code of Federal Regulations, 34 CFR 685.309(b), states the school is required to report changes in the student’s enrollment status, the effective date of the status, and an anticipated completion date. Condition: The University did not properly report student enrollment changes for students who received federal student aid to the National Student Loan Data System (NSLDS). Questioned Costs: None Context: During our testing of 17 students, we identified 1 student whose enrollment status change was not reported, 2 students with incorrect status changes reported for program-level reporting, 2 students with an incorrect effective date reported, and 9 students whose status changes were not reported in a timely manner. We also identified that for all 17 of the selected students, enrollment status was not certified every 60 days. Additionally. the University did not document any evidence of review over enrollment reporting. Cause: The University did not have the appropriate resources and staffing in place to verify they were in compliance with all requirements. Effect: The University was not in compliance with the requirements to properly report student enrollment data correctly. Incorrect dates submitted to NSLDS may be used to determine the grace period for the repayment and interest of outstanding Title IV student loans. Repeat findings: 2024-004 Recommendation: We recommend the University review current processes for reporting to NSLDS and implement procedures to ensure submissions are reported timely and accurately. Views of Responsible Officials: There is no disagreement with the audit finding.
2025-004 Special Tests and Provisions Federal Agency: U.S. Department of Education Federal Program Title: Student Financial Assistance Cluster Assistance Listing No. 84.063, 84.268 Federal Award Identification Number and Year: P063P248567 – 2025, P268K258567 – 2025, P268K256514 - 2025 Award Periods: July 1, 2024 through June 30, 2025 Type of Finding: Significant Deficiency in Internal Control Over Compliance Other Matters Criteria or specific requirement: 34 CFR 668.21(a) states that the institution must return all title IV, HEA program funds that were credited to the student's account at the institution or disbursed directly to the student for the payment period. The institution must return those funds no later than 30 days after the date that the institution becomes aware that the student will not or has not begun attendance. Per 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Condition: The University did not properly evaluate students in need of Return of Title IV (R2T4) calculations. Questioned Costs: None Context: During our testing of 5 R2T4 calculations, we identified 2 students with no R2T4 calculation performed. These students attended more than 60% of the term and did not require returned funds. Additionally, we identified 3 R2T4 calculations that did not have documentation of review. Cause: The University did not have the appropriate resources and staffing in place to verify they were in compliance with all requirements. Effect: The University could return incorrect amounts based off of their calculations and incorrect calculations could effect student repayment amounts based off of amount earned. Repeat findings: 2024-005 Recommendation: We recommend that the University review policies and procedures related to R2T4 calculations to ensure calculations are performed accurately. Views of Responsible Officials: There is no disagreement with the audit finding.
2025-005 Special Tests and Provisions Federal Agency: U.S. Department of Education Federal Program Title: Student Financial Assistance Cluster Assistance Listing No. 84.063, 84.268 Federal Award Identification Number and Year: P063P248567 – 2025, P268K258567 – 2025, P268K256514 - 2025 Award Periods: July 1, 2024 through June 30, 2025 Type of Finding: Significant Deficiency in Internal Control Over Compliance Other Matters Criteria or specific requirement: The Gramm-Leach-Bliley Act (GLBA) requires financial institutions to explain their information-sharing practices to their customers and to safeguard sensitive data (16 CFR 314). The regulation states that the college must designate a qualified individual responsible for overseeing and implementing your information security program and enforcing your information security program. (16 CFR 314.4(a)). The entity shall have a Written Information Security Program (WISP) that outlines the design and implementation of the risk assessment procedures. (16 CFR 314.4(b)). At a minimum, the institution's written information security program must address the implementation of the minimum safeguards identified in 16 CFR 314.4(c)(1) through (8) including: Assess apps developed by the institution. In addition, the written security program provides for the institution to regularly test or otherwise monitor the effectiveness of the safeguards it has implemented (16 CFR 314.4(d)). Per 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Condition: The University has a Written Information Security Program; however, the University did not meet the minimum requirements stated in the Gramm-Leach-Bliley Act. Additionally, we were unable to observe evidence that the WISP was formally reviewed and approved. Questioned Costs: None Context: The WISP was missing the element discussing the secure disposal of customer information. Additionally, there was not an observable formal review or authorization.. Cause: The University did not have the appropriate resources and staffing in place to verify they were in compliance with all requirements. Effect: There is a risk the University’s information and systems could be vulnerable to attacks or intrusions, and these attacks may not be detected in a timely manner. Repeat findings: 2024-006 Recommendation: We recommend that the University review the GLBA requirements and ensure their WISP includes all required elements. Views of Responsible Officials: There is no disagreement with the audit finding.
2025-006 Eligibility Federal Agency: U.S. Department of Education Federal Program Title: Student Financial Assistance Cluster Assistance Listing No. 84.063, 84.268 Federal Award Identification Number and Year: P063P248567 – 2025, P268K258567 – 2025, P268K256514 - 2025 Award Periods: July 1, 2024 through June 30, 2025 Type of Finding: Significant Deficiency in Internal Control Over Compliance Other Matters Criteria or specific requirement: Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Per 34 CFR 690.62 states the Pell grant for an academic year is based upon the payment and disbursement schedule published by the Secretary for each award year. 34 CFR 690.80(b)(1)) states if the student’s enrollment status changes from one academic term to another within the same award year, the institution shall recalculate the Federal Pell Grant award for the new payment period taking into account any changes in the cost of attendance. Condition: The University used a third-party servicer to perform key controls, but did not have documented review of the work performed by their third-party servicer. Additionally, the University incorrectly disbursed Pell funds for 10 students. Questioned Costs: $12,949 Context: During our eligibility testing of 60 students, we identified that the University did not document evidence of review for controls over award packaging performed by their third party servicer. Additionally, out of 43 students receiving Pell, 10 were under awarded. Cause: The University did not have the appropriate resources and staffing in place to verify they were in compliance with all requirements. Effect: Without proper controls the University risks being out of compliance with federal laws and regulations, as well as program compliance requirements. Repeat findings: 2024-007 Recommendation: We recommend the University review its current procedures for awarding Title IV funds and implement any changes necessary to ensure federal funds are awarded and disbursed in accordance with federal regulations. Views of Responsible Officials: There is no disagreement with the audit finding.
2025-007 Special Tests and Provisions Federal Agency: U.S. Department of Education Federal Program Title: Student Financial Assistance Cluster Assistance Listing No. 84.063, 84.268 Federal Award Identification Number and Year: P063P248567 – 2025, P268K258567 – 2025, P268K256514 - 2025 Award Periods: July 1, 2024 through June 30, 2025 Type of Finding: Significant Deficiency in Internal Control Over Compliance Other Matters Criteria or specific requirement: Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Condition: The University was unable to provide documentation of review for controls surrounding credit balance disbursements. Questioned Costs: None Context: The University did not have documented review of controls to ensure credit balance funds that were not successfully disbursed to the student were returned to the Department of Education after 240 days. Cause: The University did not have the appropriate resources and staffing in place to verify they were in compliance with all requirements. Effect: Without proper controls the University risks being out of compliance with federal laws and regulations, as well as program compliance requirements. Repeat findings: No Recommendation: We recommend the University design controls to ensure an adequate review process is in place to ensure compliance over stale checks that need to be returned to the Department of Education after 240 days. Views of Responsible Officials: There is no disagreement with the audit finding.
2025-008 Cash Management Federal Agency: U.S. Department of Education Federal Program Title: Student Financial Assistance Cluster Assistance Listing No. 84.063, 84.268 Federal Award Identification Number and Year: P063P248567 – 2025, P268K258567 – 2025, P268K256514 - 2025 Award Periods: July 1, 2024 through June 30, 2025 Type of Finding: Significant Deficiency in Internal Control Over Compliance Other Matters Criteria or specific requirement: Per 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Condition: The University did not have documentation that Direct Loan Reconciliations or Pell Reconciliations prepared by third-party servicer were reviewed. Additionally, we were unable to observe evidence that the University reviewed cash drawdowns prepared by the third party processor. Questioned Costs: None Context: During our testing, we reviewed 4 months of direct loan reconciliations that the University's third party servicer prepares; however, Urshan was unable to provide documentation of review for these reconciliations. Additionally, during our testing of 5 draws, we identified that all 5 draws did not have documented evidence of review. Cause: The University did not have the appropriate resources and staffing in place to verify they were in compliance with all requirements. Effect: Without proper controls the University risks being out of compliance with federal laws and regulations, as well as program compliance requirements. Repeat findings: 2024-009 Recommendation: We recommend that the University should implement formal review procedures to document that the Cash Management reconciliation and drawdown reviews are being performed to correct errors in a timely manner and to minimize the likelihood of errors going undetected. Views of Responsible Officials: There is no disagreement with the audit finding.
2025-009 Reporting Federal Agency: U.S. Department of Education Federal Program Title: Student Financial Assistance Cluster Assistance Listing No. 84.063, 84.268 Federal Award Identification Number and Year: P063P248567 – 2025, P268K258567 – 2025, P268K256514 - 2025 Award Periods: July 1, 2024 through June 30, 2025 Type of Finding: Significant Deficiency in Internal Control Over Compliance Other Matters Criteria or specific requirement: Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Condition: The University used a third-party servicer to perform key controls, but did not have documented review of the work performed by their third-party servicer. Additionally, 1 disbursement was incorrectly reported to COD. Questioned Costs: None Context: During our testing of 60 COD disbursements, we noted 1 disbursement that was incorrectly reported. We also noted that the University did not have documentation of review for COD disbursements. Cause: This discrepancy resulted from the student being initially packaged by Campus Ivy using the 01 ISIR transaction, which reflected an SAI of -1500. Subsequent ISIR transactions that significantly impacted eligibility were not identified prior to packaging. These discrepancies were later identified during the University’s internal HCM2 reconciliation process in collaboration with FA Solutions, resulting in a mismatch between awarded aid and COD records. Effect: Without proper controls the University risks being out of compliance with federal laws and regulations, as well as program compliance requirements. Repeat findings: No Recommendation: We recommend the University design controls to ensure an adequate review process is in place to ensure compliance with reporting requirements. Views of Responsible Officials: There is no disagreement with the audit finding.
Finding 2025-001: Disbursement Documentation - Significant Deficiency. Program name: Substance Abuse and Mental Health Services Projects of Regional and National Significance. Assistance Listing: 93.243. Federal award number: 45CBB04530. Federal award year: 7/1/2024 - 6/30/2025. Federal awarding agency: U.S. Department of Health and Human Services. Criteria - The Organization is required to follow the Uniform Guidance requirements 2 CFR Part 200.303, which requires the Organization to establish, document and maintain effective internal controls over federal awards. The Organization verbally approved expenses but lacked the documentation to support the approval. Condition - A sample of expenses were selected to test internal control over compliance and compliance with allowable costs/cost principles. Out of the items selected for testing, we noted insufficient documentation to support approval on 2 out of 40 expenses selected for testing. The exceptions noted occurred prior to the full implementation of the corrective action plan on January 1, 2025. Cause - The Organization's fiscal policies and procedures did not require written approval, leading to reliance on verbal approvals which were not documented. Effect - The failure to document approvals for expenses could lead to unallowable costs to be disbursed on grant awards. Questioned costs - None identified. Identification of Repeat Findings - This is a repeat finding from the prior year (Finding 2024-002). As a result of the 2024 audit report, issued in March 2025, the Organization began the process of developing updated policies for compliance. In 2025, the Organization formally adopted new policies and procedures that align with the internal control standards per 2 CFR Part 200. Recommendation - We recommend that management update their fiscal policies and procedures to align with what is required by the Uniform Guidance. Management response - See corrective action plan.
Program: Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) Assistance Listing No.: 10.557 Federal Grantor: U.S. Department of Agriculture Passed-through: California Department of Public Health Award No.: 22-10307 Award Year: 2022 Compliance Requirement: Procurement and Suspension and Debarment Type of Finding: Material Weakness in Internal Control over Compliance and Instance of Non-Compliance Criteria: 2 CFR section 200.303(a), Internal Controls, states that the 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 Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.327 Contract provisions. The recipient's or subrecipient's contracts must contain the applicable provisions described in Appendix II to Part 200—Contract Provisions for Non-Federal Entity Contracts Under Federal Awards. Condition: During our testing of the County’s provisions for procurement requirements, we noted the following: 1.For three (3) out of three (3) contracts selected for testing, the County did not include theapplicable provisions described in 2 CFR 200 Appendix II. 2.For one (1) out of three (3) contracts selected for testing, the County could not provide acopy of the approved contract. 3.For three (3) out of three (3) contracts tested, we noted that there was no evidence theCounty verified that the contracted entities were not suspended or debarred or otherwiseexcluded from participating in federal programs prior to entering into the contract. Cause: The County did not follow their policy documenting the approval of the procurement. The County did not follow their policy to verify the information described in the condition prior to entering the transactions. The County’s policy does not include the requirement to include each of the applicable provisions identified in 2 CFR 200 Appendix II in its contracts or purchase orders. Effect: Failure to implement and maintain a proper control process could result in payments to vendors that are suspended or debarred or improper awarding of contracts under the procurement guidance. Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: A nonstatistical sample of three (3) out of ten (10) procurement contracts were tested. This represented a total of $184,840 in contracted services under the grant. Repeat Finding from Prior Years: Yes. Finding 2024-002 Recommendation: We recommend the County strengthen its policies and procedures to ensure that the verification of the debarment and suspension is documented and retained, the history of procurement transactions is documented and retained in its official records, and that contracts include all applicable provisions of 2 CFR 200 Appendix II. Views of Responsible Officials: Management agrees. See separately issued Corrective Action Plan.
Program: Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) Assistance Listing No.: 10.557 Federal Grantor: U.S. Department of Agriculture Passed-through: California Department of Public Health Award No.: 22-10307 Award Year: 2022 Compliance Requirement: Activities Allowable or Unallowed and Allowable Costs/Cost Principles Type of Finding: Significant Deficiency in Internal Control Over Compliance Criteria: 2 CFR Section 200.303(a), Internal Controls, states that the 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 Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR Section 200.430, Compensation – Personal Services, states that charges to Federal awardsfor salaries and wages must be based on records that accurately reflect the work performed. These records must be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable and properly allocated. Condition: For one (1) of sixty-five (65) expenditures tested, we noted one timecard where the employee’s timecard was not approved by a supervisor. Cause: The County’s procedures did not consistently ensure that the review of timecards was documented. Effect: Lack of review for personnel hours could lead to unallowable activities and costs to be charged to the Federal program. Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: A nonstatistical sample of sixty-five (65) out of one thousand ninety-two (1,092) expenditures were tested, totaling $164,654 out of $4,553,367 of the federal program expenditures. Repeat Finding from Prior Years: Yes. Finding 2024-003. Recommendation: We recommend that the County modify and/or strengthen its current policies and procedures to ensure that all timecards consistently document evidence of supervisor approval. The procedures should also address the compensating controls for circumstances where obtaining the supervisor’s approval is not possible. Views of Responsible Officials: Management agrees. See separately issued Corrective Action Plan.
Program: CDBG-Entitlement/Special Purpose Grants Cluster Assistance Listing No.: 14.218 Federal Grantor: U.S. Department of Housing and Urban Development Passed-through: Direct Award Award No.: B-20-UC-06-0507, B-20-UW-06-0507, B-21-UC-06-0507, B-22-UC-06-0507, B-23-UC-06-0507, B-24-UC-06-0507 Award Year: 2024 Compliance Requirements: Reporting Type of Finding: Significant Deficiency in Internal Control Over Compliance Criteria: 2 CFR Section 200.303(a), Internal Controls, states that the 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 Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: For two (2) out of four (4) CDBG Cash on Hand PR29 and CDBG-CV Cash on Hand PR29 reports, the County did not retain evidence to document the individual who reviewed and approved the required reports. For three (3) out of three (3) Federal Funding Accountability and Transparency Act (FFATA) report submissions, we noted the County did not retain evidence to document the individual who reviewed and approved the required reports. Cause: The County’s procedures did not include documenting the review and approval of the reports prior to submission. Effect: Ineffective controls over this area of compliance could result in reports that are inaccurate or incomplete being submitted or disclosed to the granting agency. Questioned Costs: No questioned costs were identified as a result of our audit procedures. Context/Sampling: A non-statistical sample of two (2) out of four (4) CDBG Cash on Hand reports were selected for testing. We tested the entire population of three (3) subawards obligations during the year. Repeat Finding from Prior Years: Yes. Finding 2024-007 and 2024-008. Recommendation: We recommend the County revise its procedures to include evidence to document the individual who reviewed and approved required reports prior to submission. Views of Responsible Officials: Management agrees. See separately issued Corrective Action Plan.
Program: CDBG-Entitlement/Special Purpose Grants Cluster Assistance Listing No.: 14.218 Federal Grantor: U.S. Department of Housing and Urban Development Passed-through: Direct Award Award No.: B-20-UC-06-0507, B-20-UW-06-0507, B-21-UC-06-0507, B-22-UC-06-0507, B-23-UC-06-0507, B-24-UC-06-0507 Award Year: 2024 Compliance Requirement: Special Tests and Provisions - Wage Rate Requirements Type of Finding: Significant Deficiency in Internal Control Over Compliance and Instance of Noncompliance Criteria: All laborers and mechanics employed by contractors or subcontractors to work on construction contracts in excess of $2,000 financed by federal assistance funds must be paid wages not less than those established for the locality of the project (prevailing wage rates) by the Department of Labor (DOL) 40 USC 3141–3144, 3146, and 3147. Nonfederal entities shall include in their construction contracts subject to the Wage Rate Requirements a provision that the contractor or subcontractor comply with those requirements and the DOL regulations (29 CFR Part 5, Labor Standards Provisions Applicable to Contacts Governing Federally Financed and Assisted Construction). This includes a requirement for the contractor or subcontractor to submit to the nonfederal entity weekly, for each week in which any contract work is performed, a copy of the payroll and a statement of compliance (certified payrolls) (29 CFR sections 5.5 and 5.6; the A-102 Common Rule (section 36(i)(5)); OMB Circular A-110 (2 CFR Part 215, Appendix A, Contract Provisions); 2 CFR Part 176, Subpart C; and 2 CFR section 200.326. 2 CFR 200.303, the 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 Federal statutes, regulations, and the terms and conditions of the Federal award. This includes internal controls over maintaining records of the receipt and review of certified payrolls. Condition: For one (1) of three (3) construction contracts selected for testing, we noted that the County did not obtain and review the contractors’ certified payroll submissions. Cause: The County’s procedures did not include verifying all weekly certified payrolls were obtained. Effect: Ineffective controls over this area of compliance could result in noncompliance with the wage rate compliance requirements. Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: A non-statistical sample of three (3) out of three (25) certified payrolls were selected for testing. Repeat Finding from Prior Years: No. Recommendation: We recommend that the County strengthen its internal controls to ensure that timely reviews of certified payroll submissions are being performed and documented by the County. Views of Responsible Officials: Management agrees. See separately issued Corrective Action Plan.
Program: Community Development Block Grants/State’s Program and Non-Entitlement Grants in Hawaii Assistance Listing No.: 14.228 Federal Grantor: U.S. Department of Housing and Urban Development Passed-through: Pass-Through California Department of Housing and Community Development Award No.: 17-MITPPS-21029, 18-DRWD-23003, 21-CDBG-HK-0010 Award Year: 2022, 2024 Compliance Requirements: Reporting Type of Finding: Significant Deficiency in Internal Control Over Compliance Criteria: 2 CFR Section 200.303(a), Internal Controls, states that the 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 Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: For two (2) out of five (5) CDBG-CV2, four (4) out of six (6) CDBG-MIT, and four (4) out of eight (8) VC Heal Activity reports, the County did not retain evidence to document the individual who reviewed and approved the required reports. Cause: The County’s procedures did not include documenting the review and approval of the reports prior to submission. Effect: Ineffective controls over this area of compliance could result in reports that are inaccurate or incomplete being submitted or disclosed to the granting agency. Questioned Costs: No questioned costs were identified as a result of our audit procedures. Context/Sampling: A non-statistical sample of nineteen (19) out of thirty-one (31) reports were selected for testing. Repeat Finding from Prior Years: No. Recommendation: We recommend the County revise its procedures to include evidence to document the individual who reviewed and approved required reports prior to submission. Views of Responsible Officials: Management agrees. See separately issued Corrective Action Plan.
Program: Health Center Program Cluster Assistance Listing No.: 93.224 Federal Grantor: U.S. Department of Health and Human Services Passed-through: N/A Award No.: 5 H80CS00247-22-00 Award Year: 2024 Compliance Requirement: Special Tests and Provisions - Sliding Fee Discounts Type of Finding: Material Weakness in Internal Control over Compliance and Material Non-Compliance Criteria: 2 CFR section 200.303(a), Internal Controls, states that the 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 Federal statutes, regulations, and the terms and conditions of the Federal award. Per Title 42 USC 254b(k)(3)(F), the Center has made or will make and will continue to make every reasonable effort to collect appropriate reimbursement for its costs in providing health services to persons who are entitled to insurance benefits under title XVIII of the Social Security Act [42 U.S.C. 1395 et seq.], to medical assistance under a State plan approved under title XIX of such Act [42 U.S.C. 1396 et seq.], or to assistance for medical expenses under any other public assistance program or private health insurance program; (G) the center—(i) has prepared a schedule of fees or payments for the provision of its services consistent with locally prevailing rates or charges and designed to cover its reasonable costs of operation and has prepared a corresponding schedule of discounts to be applied to the payment of such fees or payments, which discounts are adjusted on the basis of the patient’s ability to pay; (ii) has made and will continue to make every reasonable effort—(I) to secure from patients payment for services in accordance with such schedules. Condition: We noted three (3) out of sixty (60) where the County did not appropriately adjust patient charges based on the Health Center’s sliding fee discount program schedules in accordance with 42 USC 254b(k)(3)(F). We also noted there was no review of the sliding fee discount by the County for two (2) out of sixty (60) sliding fee samples. Cause: The condition is primarily caused by the County not following the policies and procedures in place to ensure the sliding fee discounts to patient charges were applied consistent with its sliding fee discount program schedules. Effect: Discounts applied to patient charges were inconsistent with its sliding fee discount program schedules. Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: A nonstatistical sample of sixty (60) out of three thousand seven hundred forty-eight (3,748) participants were tested. Repeat Finding from Prior Years: No. Recommendation: We recommend that the County strengthen its established policies and procedures to ensure the sliding fee discount program schedules are applied to patient charges consistent with its sliding fee discount schedules, ensure that policies and procedures are strictly adhered to by County personnel and the County’s review is performed and documented. Views of Responsible Officials: Management agrees. See separately issued Corrective Action Plan.
Program: COVID-19 - Epidemiology and Laboratory Capacity for Infectious Disease (ELC) Assistance Listing No.: 93.323 Federal Grantor: U.S. Department of Health and Human Services Passed-through: California Department of Public Health Award No.: COVID-19ELC114 Award Year: 2021 Compliance Requirement: Other - Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) §200.510(b) - Schedule of Expenditures of Federal Awards Type of Finding: Material Weakness in Internal Control Over Compliance Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) §200.510(b) states that the auditee (the County) must prepare a Schedule of Expenditures of Federal Awards (SEFA) for the period covered by the auditee’s financial statements, which must include the total federal awards expended (including amounts provided to subrecipients) as determined in accordance with §200.502. In addition, section 200.303 of the Uniform Guidance states that recipients and subrecipients must establish effective internal control over the federal awards, including controls over the accuracy of program information and expenditure amounts. Condition: During our audit procedures performed over the SEFA and expenditures reported for the ELC program, we noted the County initially reported expenditures totaling $408,471 that should have been reported on the FY 2024 SEFA, as the County incurred the expenditures prior to June 30, 2024. The June 30, 2025 SEFA was corrected for this reporting error. Cause: The County did not have adequate internal controls to ensure the Schedule was prepared completely and accurately. Effect: Prior to the correction, expenditures for the ELC program were overstated by $408,471. We noted the FY 2024 expenditures incorrectly reported on the FY 2025 SEFA did not have a direct and material effect on the FY 2024 SEFA. Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: No sampling was used; all program expenditures on the SEFA were reconciled to supporting records. Repeat Finding from Prior Years: No. Recommendation: We the recommend the County enhance internal controls to ensure federal expenditures are reported accurately and completely on the SEFA in accordance with the Uniform Guidance. Views of Responsible Officials: Management agrees. See separately issued Corrective Action Plan.
Program: COVID-19 - Epidemiology and Laboratory Capacity for Infectious Disease (ELC) Assistance Listing No.: 93.323 Federal Grantor: U.S. Department of Health and Human Services Passed-through: California Department of Public Health Award No.: COVID-19ELC114 Award Year: 2021 Compliance Requirements: Reporting Type of Finding: Significant Deficiency in Internal Control Over Compliance Criteria: 2 CFR Section 200.303(a), Internal Controls, states that the 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 Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: For one (1) out of three (3) Quarterly Progress reports, the County did not retain evidence to document the individual who reviewed and approved the required reports. Cause: The County’s procedures did not include documenting the review and approval of the reports prior to submission. Effect: Ineffective controls over this area of compliance could result in reports that are inaccurate or incomplete being submitted or disclosed to the granting agency. Questioned Costs: No questioned costs were identified as a result of our audit procedures. Context/Sampling: A non-statistical sample of three (3) out of four (4) Quarterly Progress reports were selected for testing. The condition above was identified during our procedures over reporting testing. Repeat Finding from Prior Years: No. Recommendation: We recommend the County revise its procedures to include evidence to document the individual who reviewed and approved required reports prior to submission. Views of Responsible Officials: Management agrees. See separately issued Corrective Action Plan.
Program: COVID-19 - Epidemiology and Laboratory Capacity for Infectious Disease (ELC) Assistance Listing No.: 93.323 Federal Grantor: U.S. Department of Health and Human Services Passed-through: California Department of Public Health Award No.: COVID-19ELC114 Award Year: 2021 Compliance Requirement: Procurement, Suspension, and Debarment Type of Finding: Material Weakness and Instance of Noncompliance Criteria: 2 CFR section 200.303(a), Internal Controls, states that the 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 Federal statutes, regulations, and the terms and conditions of the Federal award. Title 2 CFR Section 200.214 of the Uniform Guidance states that the County must comply with 2 CFR part 180, which implements Executive Orders 12549 and 12689. The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. Per 2 CFR Section 180.300, when a non-Federal entity enters into a covered transaction with an entity at a lower tier, the non-Federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA) and available at https://www.sam.gov/SAM/, (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity. Condition: For three (3) out of three (3) contracts tested, we noted that there was no evidence the County verified that the contracted entities were not suspended or debarred or otherwise excluded from participating in federal programs prior to entering into the contract. Cause: The County did not have adequate internal controls in place to ensure vendor eligibility was verified and documented prior to contract execution, resulting in a lack of evidence supporting compliance with suspension and debarment requirements. Effect: As a result of this condition, the County was not able to demonstrate compliance with Uniform Guidance procurement requirements, increasing the risk that federal funds could be awarded to ineligible vendors. Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: A nonstatistical sample of three (3) out of twelve (12) contracts were tested. Repeat Finding from Prior Years: No. Recommendation: We recommend the County enhance internal controls over procurement to ensure verification and documentation of vendor eligibility related to suspension and debarment are performed prior to contract execution, in accordance with Uniform Guidance requirements. Views of Responsible Officials: Management agrees. See separately issued Corrective Action Plan.
The District did not timely report required student information to the federal agency, risking students not being asked to repay financial assistance Cluster name: Student Financial Assistance Cluster Assistance Listings number(s) and name(s): 84.007 Federal Supplemental Educational Opportunity Grants 84.033 Federal Work-Study Program 84.063 Federal Pell Grant Program Award year(s): July 1, 2024 through June 30, 2025 Federal agency: U.S. Department of Education Compliance requirement: Special tests and provisions Questioned costs: None Condition Contrary to federal regulations and District policies and procedures, the District’s Financial Aid and Veteran Services Department (Department) did not timely report enrollment status changes to the National Student Loan Data System (NSLDS) as required. Specifically, the Department reported student enrollment status changes between 4 to 237 days later than the required 60 days for 19 of 35 students we tested participating in the Federal Pell Grant (Pell) program. Effect The District’s students may not be asked to repay student financial assistance grants or loans if or when required if the NSLDS does not accurately reflect students’ enrollment status. Also, the District is at risk that student enrollment status changes may be reported late for its over 1,000 students receiving federal Pell grants. Cause The District’s management reported that they transitioned to a new student information system in February 2025 and had issues syncing registrar information to the students receiving financial assistance to submit timely student enrollment status changes to the NSLDS. Further, the District did not update its policies to describe process changes due to the system’s implementation and did not assign a designated individual to verify that data was properly processed and reported to the NSLDS. Criteria Federal regulations and District policies and procedures require reporting to the NSLDS all applicable students’ enrollment statuses and any enrollment status changes for the Pell program within 60 days of the students’ change. Student enrollment status changes include reductions or increases in attendance levels, withdrawals, graduations, or approved leaves of absence (34 Code of Federal Regulations [CFR] §690.83[b][2] and District’s Enrollment Reporting Process). Further, federal guidelines require establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations to the District Report accurate student enrollment statuses and changes to the NSLDS within 60 days of the students’ change for all students receiving Pell. Update its enrollment reporting policies and procedures and train employees on new processes due to the implementation of the new student information system, including properly syncing registrar information to the students receiving financial assistance to submit timely student enrollment status changes to the NSLDS. Designate an individual to verify that data was properly processed and reported to the NSLDS. Views of responsible officials District management concurs with this finding. The District’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials regarding these recommendations. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.
Finding No: 2025-001 Cash Management Federal Agency: U.S. Department of Health and Human Services Pass-Through Entities: N/A Assistance Listing Number: 93.493 Federal Program: Congressional Directives Federal Award Year: September 30, 2023 – September 29, 2026 Per section 2 CFR 200.305, non-federal entities must minimize the time elapsing between the transfer of funds from the US Treasury and disbursement by the non-federal entity for direct program or project costs. Interest earned on Federal funds must be returned annually to the Department of Health and Human Services Payment Management System (PMS). Expenditures must be incurred prior to the date of the reimbursement request. Per section 2 CFR 200.303, non-Federal entities must establish, document and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition Found The System entity did not minimize the time elapsing between the transfer of funds and disbursement and did not remit interest earned on advances to the designated federal agency. The System requested reimbursement of federal grant funds of $1,042,278 over 350 days in advance of incurring the related expenditures for the St. Francis Medical Center Community Project Funding Congressionally Directed Spending – Construction award (ALN 93.493) and did not perform the required interest calculation or remit interest timely, representing a departure from the Uniform Guidance cash management requirements. We tested 100% of the expenditures and related cash draw activity for this award during the audit period; therefore, no sampling was used and no extrapolation was necessary. Possible Cause and Asserted Effect The System's internal controls did not ensure the federal funds requested for the program were either already expended or encumbered to be expended timely and did not implement the process steps and control to periodically identify and calculate the resulting accumulated interest earned on federal cash balances drawn in advance related to this program. Failing to minimize the time between the transfer and disbursement of funds, as well as failing to remit interest earned on advances, constitutes noncompliance with the Uniform Guidance.Questioned Cost Interest earned of $44,750 Statistical Validity The sample was not intended to be, and was not, a statistically valid sample. Identification of Whether the Audit Finding is a Repeat of a Finding in the Immediately Prior Audit No. Recommendation We recommend that the System strengthen its internal controls over cash management controls to ensure that all federal fund drawdowns are based on incurred expenditures and documented immediate cash needs, and that a process is implemented to periodically calculate and remit any interest earned on advance balances as required by the Uniform Guidance. View of Responsible Officials Management concurs with this finding. The System is implementing a management review control through periodic inquiry and review of advance fundings to ensure drawdowns are supported by incurred expenditures or are for immediate cash needs and any interest calculations to ensure timely compliance with the Uniform Guidance. Corrective Action Plan In the event that the System receives federal cash advances prior to the cash expenditures, the System will perform an additional financial review of any advanced payments compared to the related expenditures. Should accounting identify advances not yet spent, they will inquire with the grant administrator responsible for the grant to review their advance fundings, any potential resulting interest calculations. Anticipated Completion Date June 30, 2026 Name of Contact Person for Corrective Action Amanda Hymel, Corporate Controller
Federal Assistance Listing Number: 20.205, 20.513 Federal Program Name: Highway Planning and Construction, Transit Services Programs Cluster Federal Agency: U.S. Department of Transportation Pass-through Agency: State of California Department of Transportation, Los Angeles County Metropolitan Transportation Authority (LACMTA) Federal Award Number: N/A for ALN 20.205, CA-2023-236-00 for ALN 20.513 Criteria: Per 2 CFR 200.510(b), Financial statements, the auditee is required to prepare a complete and accurate SEFA that reflects actual federal expenditures incurred during the reporting period. In addition, 2 CFR 200.303, Internal controls, requires the auditee to establish and maintain effective internal control over compliance to provide reasonable assurance that federal program information, including SEFA reporting, is accurate, reliable, and free from material misstatement. Condition: During our audit, we identified that the expenditures reported for the Highway Planning and Construction Program in the SEFA included $431,605 in state-funded expenditures that were incorrectly reported as federal expenditures. This resulted in a material overstatement of federal expenditures for the program. A correction was subsequently made to remove the state-funded portion, materially reducing the total federal expenditures reported on the SEFA. We also identified an error within the Transit Services Programs Cluster involving an incorrect federal award identification number. One program was initially reported under federal award number CA-2020-167, which did not correspond to the related federal grant. The correct federal award number is CA-2023-236-00. The City has since updated the SEFA to reflect the accurate award number. Cause: The overstatement and incorrect reporting occurred because internal controls over the SEFA preparation and review process did not provide adequate assurance that expenditures and award information were accurately classified and reported. Review procedures were not designed or executed at a level sufficient to detect that state-funded costs had been commingled with federally reimbursable expenditures prior to SEFA compilation. The controls also did not ensure that grant identification details were verified against current federal award agreements, which allowed one program to be reported with an incorrect federal award identification number. Effect: Because non-federal expenditures were included in the SEFA, the federal expenditures reported for the Highway Planning and Construction Program were materially overstated. The incorrect federal award identification number in the Transit Services Programs Cluster also reduced the accuracy and clarity of the SEFA and created a risk of misidentifying the applicable federal grant award, which could affect federal monitoring or audit oversight. Taken together, these issues increase the likelihood of inaccurate reporting to federal and pass-through agencies, may influence the determination of major programs, and could affect the City’s compliance with federal reporting requirements. Questioned Costs: None. Recommendation: The City should strengthen its internal review procedures for preparing the SEFA to ensure that only federally eligible expenditures are reported and that all program information aligns with current federal award documents. This should include a more detailed reconciliation of project expenditures and award data to their underlying funding sources before amounts are compiled, along with a documented supervisory review to confirm accuracy. Staff responsible for SEFA preparation should receive additional guidance on distinguishing federal from non-federal costs and on verifying federal award identification numbers. Implementing a standardized SEFA preparation checklist and requiring formal sign-off at key review stages would help ensure that errors are identified and corrected before the SEFA is finalized. Views of Responsible Officials and Planned Corrective Action: The City is taking corrective action in response to this finding by strengthening its grant management procedures. The Director of Community Development and Public Works is responsible for overseeing these improvements, which include enhancing coordination among the Public Works Analyst, Grants Coordinator, and the City's contracted engineering firm to clearly distinguish between federally and state-funded Highway Safety Improvement Program (HSIP) activities and ensure that program information aligns with current federal award documents. Key measures include requiring identification of funding sources in Staff Reports submitted to City Council prior to grant application submission, assigning unique project numbers and classifications within the City's financial system (Incode), implementing a reconciliation process to accurately align project expenditures with their funding sources before inclusion in the Schedule of Expenditures of Federal Awards (SEFA), and providing targeted staff training along with a standardized SEFA preparation checklist. All corrective actions are set for implementation effective March 18, 2026. Personnel responsible for implementation: Gerardo Marquez Position of personnel responsible: Director of Community Development and Public Works Expected date of implementation: March 18, 2026
Finding #SA2025-001 Cash Management and Accuracy of Federal Financial Reports Assistance Listing Number: 20.507, 20.526 Assistance Listing Title: COVID-19 – Federal Transit Cluster Name of Federal Agency: Department of Transportation Federal Award Identification Number: CA-2022-083-00, 2020-206, 2020-212 Criteria: The 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards establish and maintain internal control designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Related to these requirements, the City should submit drawdown requests to the Department of Transportation throughout the fiscal year as costs are incurred and Federal Financial Reports should agree with those drawdown requests and supporting accounting records. Drawdown requests should be completed at least quarterly, depending on the volume of program activity, to improve the cash management for the program and to match expenditures with associated revenues throughout the fiscal year. In addition, since the grant is on a reimbursement basis, expenditures should generally be incurred prior to requesting reimbursement from the Department of Transportation unless specifically authorized by the grantor, and costs included in the Federal Financial Reports should be the same as those included in requests for reimbursement. Condition: During our review of the Federal Financial Reports related to grant CA-2022-083-00, we noted that for the first quarter of fiscal year 2025, the report included expenditures in the amount of $515,988, but the City requested reimbursement in the amount of $110,408, during that same time period. In addition, the reports for the third and fourth quarters of fiscal year 2025 included expenditures of $430,210 and $1,944,112, but the City requested reimbursement in the amounts of $1,898,135 and $744,817, respectively during that same time period. In addition to our review of the Federal Financial Reports, we also reviewed the timing of expenditures in relation to the associated reimbursement requests and noted that for the grants listed above, the City did not file for and receive reimbursement for the associated grant expenditures until four months after the activity took place for the first and third quarters. The grant drawdowns took place as follows: Cause: We understand that the City fell behind on drawing down grant funds on a timely basis due to employee turnover and this in turn caused the inaccuracies in the Federal Financial Reports. Effect: The City is not in compliance with the internal control requirements of 2 CFR Section 200.303. The City is not matching expenditures with associated grant revenues throughout the fiscal year by filing timely reimbursement requests as expenditures are incurred and is at risk of filing a reimbursement request after the filing deadlines of the grant. In addition, the late filing of reimbursement requests resulted in inaccurate Federal Financial Reporting to the grantor. Identification as a Repeat Finding: Yes, see prior year finding 2024-001. Recommendation: The City must develop procedures to ensure grant reports are accurate and agree with supporting accounting records prior to being submitted to the grantor. The City must also develop procedures to ensure that all grant-funded expenditures are included on drawdown requests and those requests should be prepared at least quarterly throughout the fiscal year. View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.
Finding No: 2025-003– Internal control deficiencies over accounting and identification of federal funds received from the Federal Emergency Management Agency (FEMA) that should be included on SEFA Federal Programs ALN 97.036, Disaster Grants - Public Assistance (Presidentially Declared Disasters) Name of Federal Agency U.S. Department of Homeland Security (Pass-through program from The Central Office of Recovery, Reconstruction and Resiliency) Category Internal Control; Compliance. Compliance Requirement Activities Allowed/Unallowed, Allowable Costs/Cost Principles, Period of Performance, Project Accounting. Criteria 2 CFR Part 200 Subpart D Subsection 200.302 states the following: The recipient's and subrecipient's financial management system must provide for the following: 1. Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity. 2. Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand. 3. Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. 4. Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes. See § 200.303. 5. Comparison of expenditures with budget amounts for each Federal award. 6. Written procedures to implement the requirements of § 200.305. 7. Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award. Condition During our procedures concerning the Administration’s funds received from FEMA we noticed that the reimbursement funds received from FEMA were not recognized as income during the year ended June 30, 2025. Cause The Administration recognized the reimbursement as an accrual and not as income during the year ended June 30, 2025. They have recognized only the amount that they disbursed during the year at their discretion. This accounting is correct when the funds received are capital advances. Effect This can result in amounts not to be included in the Schedule of Expenditures and Federal Awards in the correct period and understate SEFA. Also, the Administration could be subject to penalties or sanctions from the Federal Grantor. Context The Administration identified $6,543 as federal expenditures from prior years capital advances of FEMA awards but did not identify as expended the amount of $11,063 from advances. In addition, the Administration received reimbursements of $1,413,451 in the fiscal year, however management did not identify this amount as federal expenditures until the audit procedures was performed. Identification of repeat finding None. Questioned costs None, as adjustments were made during the audit to correct the misstatement. Recommendation We recommend validating, with the staff in charge of Engineering, the type of funds received from FEMA, if they are reimbursements or capital advances. When the funds received are reimbursements they should be recognized as income in the year received. If the funds are capital advances they should be recognized as unearned revenue and as income in the year in which they are disbursed. Views of responsible officials and planned corrective actions We agreed with the auditors’ finding and recommendation. See further details regarding this matter within the Corrective Action Plan.
Finding 2025-001 Internal control deficiency and noncompliance over procurement and suspension and debarment. Identification of the federal program: Assistance Listing Number 93.493: • Congressional Directives • U.S. Department of Health and Human Services • Federal award identification number – CE146487 • Federal award year – 7/1/2024 – 6/30/2025 • Pass-through entity – The Board of Regents of the University of Oklahoma Health Sciences Center • Pass-through entity identifying numbers: H79FG000747 and H79FG001034 Criteria or specific requirement (including statutory, regulatory, or other citation): Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.303, Internal controls: The non-Federal entity must (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government,” issued by the Comptroller General of the United States, or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318, General procurement standards: (a) the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity’s documented procurement procedures must conform to the procurement standards identified in 200.317 through 200.327; (b) non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders; (c) (1) the non-Federal entity must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award, and administration of contracts. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318, General procurement standards: (i) the non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.319, Competition: (a) All procurement transactions for the acquisition of property or services required under a Federal award must be conducted in a manner providing full and open competition consistent with the standards of this section and 200.320. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.320, Methods of procurement to be followed: The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: (a) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity; (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the simplified acquisition threshold, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate –(1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price; (2) Proposals. A procurement method in which either a fixed price or cost-reimbursement type contract is awarded. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.320, Methods of procurement to be followed: (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.324, Contract cost and price: (a) The non-Federal entity must perform a cost or price analysis in connection with every procurement action in excess of the Simplified Acquisition Threshold, including contract modifications. The method and degree of analysis is dependent on the facts surrounding the particular procurement situation, but, as a starting point, the non-Federal entity must make independent estimates before receiving bids or proposals. Title 2, Subtitle A, Chapter II, Part 200, Subpart C 200.214, Suspension and debarment: Non-Federal entities are subject to the non-procurement debarment and suspension regulations that restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. Title 2, Subtitle A, Chapter I, Part 180, Subpart C 180.300: What must I do before I enter into a covered transaction with another person at the next lower tier? When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by (a) checking SAM Exclusions; (b) Collecting a certification from that person; or (c) adding a clause or condition to the covered transaction with that person. Condition: During our testing over procurement, we observed management did not have documented procurement procedures that conformed to the procurement standards identified in 2 CFR section 200.318 to 200.327 and written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award, and administration of contracts. Management did not have internal controls in place over procurements to ensure price or rate quotations were obtained from an adequate number of qualified sources, formal procurements to ensure sealed bids or proposals were obtained through public advertising, and completion of a cost or price analysis in connection with all procurement actions exceeding the simplified acquisition threshold. Management did not maintain records for procurements to document the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. In addition, during our testing over suspension and debarment, we observed management did not retain support for internal control documentation for all vendors, evidencing that the vendors were searched for suspension and debarment upon entering into a contract supported with federal funds. Cause: Management did not have internal controls in place over the compliance requirements as stated in the criteria or specific requirement section above. Effect or potential effect: Procurements were not supported by internal controls and could potentially include unreasonable prices or rates. In addition, if a search for suspension and debarment is not conducted, the entity could contract with vendors that are suspended or debarred. Questioned costs: $1,385,165 – Assistance Listing Number 93.493 Federal award identification number – CE146487 Pass-through entity identifying numbers: H79FG000747 and H79FG001034 Questioned costs were computed as all procurements selected for testing. Questioned costs for each award are as follows: • CE146487: $60,874 • H79FG000747: $119,479 • H79FG001034: $1,204,812 Questioned costs means an amount, expended or received from a Federal award, that (1) is noncompliant or suspected noncompliant with Federal statutes, regulations, or the terms and conditions of the Federal award or (2) at the time of the audit, lacked adequate documentation to support compliance. Context: During our testing over procurements, we selected five vendors for testing with total expenditures of $1,385,165 from a population of procurements totaling $1,425,361, subject to formal procurement procedures. We observed management did not have internal controls in place to ensure the compliance requirements as stated in the criteria or specific requirement section above were performed for any of the five procurements selected for testing. For suspension and debarment, we selected five vendors for testing totaling $1,385,165. Management was unable to provide documentation that internal controls were executed for any of the vendors selected for testing. Identification as a repeat finding, if applicable: No. Recommendation: Management should create documented procurement procedures that conform to the procurement standards identified in 2 CFR section 200.318 through 200.327 and written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award, and administration of contracts. Management should develop and implement internal controls over procurements to ensure price or rate quotations are obtained from an adequate number of qualified sources, formal procurements to ensure sealed bids or proposals are obtained through public advertising, and completion of a cost or price analysis in connection with all procurement actions exceeding the simplified acquisition threshold. Management should maintain records for procurements to document the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Management should create documented suspension and debarment procedures and develop and implement internal controls to ensure vendors were searched for suspension and debarment at the time of awarding a contract supported by federal funding and retain evidence supporting such procedures. Management should review the procurements identified as questioned costs to identify if any improper payments were made to the entity. Views of responsible officials: We agree with the finding that internal controls were not sufficient to maintain compliance with federal procurement standards under Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318 to 200.327 for a non-federal entity. However, the funds were expended for the intended purpose of the federal award. The Company is committed to implementing internal controls to ensure procurement related to federal awards follow 2 CFR section 200.318 to 200.327. The Company will update the procurement policy to ensure it complies with the requirements of 2 CFR section 200.318 through 200.327, which includes the written standards of conduct covering conflicts of interest, governing the actions of its employees who select, award, and administer procurement contracts. This policy will include procedures to ensure proper procurement for purchases to ensure sufficient price quotations are obtained from the required number of qualified sources, proper sealed bids or proposals are obtained through public advertising, an appropriate cost or price analysis is performed for procurement actions exceeding the simplified acquisition threshold, documentation is retained, and proper oversight is exercised to demonstrate compliance with 2 CFR section 200.318 through 200.327.
2025-001 - Reporting (Special Reporting under FFATA) Significant Deficiency in Internal Controls Over Compliance and Instance of Noncompliance Assistance Listing Number: 93.591 Federal Agency/Pass-through Entity - Program Name: Department of Health and Human Services - COVID-19 Family Violence Prevention Services/State Domestic Violence Coalitions Award Number(s):2201WYSTC6 & 2101WYSDC6 Award Year(s): 2020-2025 Criteria or specific requirement: The Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-Federal entities receiving Federal awards (i.e. auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. The Federal Funding Accountability and Transparency Act (FFATA) and 2 CFR Part 170 require prime recipients of federal awards to report certain information for subawards. Specifically, 2 CFR 170.220(a) requires prime recipients to report information on subawards equal to or greater than $30,000 in the Subaward Reporting System available through SAM.gov (formerly the Federal Subaward Reporting System - FSRS). The information must generally be reported by the end of the month following the month in which the subaward obligation was made. Condition: During our testing of FFATA subaward reporting requirements, we noted that the Coalition issued one subaward during the audit period to the Eastern Shoshone Business Council totaling $115,993. The subaward exceeded the $30,000 FFATA reporting threshold and therefore required reporting in the Subaward Reporting System within SAM.gov. However, the Coalition did not report the subaward in SAM.gov as required. Questioned costs: None. The issue relates to reporting compliance, and no questioned costs were identified. Context: The population consisted of one subaward, which was tested in its entirety. Cause: The Coalition did not have formal procedures or controls in place to identify subawards subject to FFATA reporting requirements and ensure they were reported in the Subaward Reporting System within SAM.gov. Management indicated they were unaware that the agreement met the definition of a reportable subaward under FFATA. As a result, the subaward was not evaluated for reporting requirements at the time the agreement was executed. Effect or potential effect: Failure to report required subaward information results in noncompliance with FFATA transparency reporting requirements and reduces the availability of public information regarding the use of federal funds. Additionally, the absence of established controls increases the risk that future reportable subawards may not be properly reported. Repeat finding: No Recommendation: We recommend the Coalition strengthen internal controls over federal award reporting by: • Implementing procedures to identify subawards subject to FFATA reporting requirements when agreements are executed. • Assigning responsibility for timely submission of required subaward reports through the Subaward Reporting System within SAM.gov. • Providing training to grant management and finance personnel on FFATA reporting requirements. • Implementing a monitoring or review control to ensure required reports are submitted timely. Views of responsible officials: Management agrees with the finding and will implement procedures to ensure compliance with FFATA reporting requirements, including timely filing of all subgrant awards exceeding $30,000 with SAM.gov within one week of the finalized award agreement.
Finding Type: Immaterial noncompliance with major program requirements Title and ALN of Federal Program: 10.870 – United States Department of Agriculture Rural Microentrepreneur Assistance Program (USDA RMAP) Finding Resolution Status: In review. Information on Universe and Population Size: Loans disbursed during the period July 1, 2024 to June 30, 2025 from USDA RMAP loan fund. There were 8 unique loans disbursed totaling $227,000. Sample Size Information: All 8 loans were selected for testing eligibility compliance. Identification of Repeat Finding and Finding Reference Number: N/A Criteria: USDA RMAP is governed by 7 CFR part 4280, subpart D, which requires that loans made from the RMAP revolving loan fund be provided to eligible microentrepreneurs located in rural areas as defined in the regulations and the approved work plan for the award. These regulations, together with the Organization’s USDA RMAP agreement and approved work plan, require that loans be made only within the approved rural service area. In addition, 2 CFR 200.303 requires the auditee to establish and maintain effective internal control over compliance with federal statutes, regulations, and the terms and conditions of federal awards, including eligibility requirements for RMAP loan recipients. Statement of Condition: During eligibility testing of loan disbursements under the RMAP program, one of eight disbursements tested was made to a borrower located outside of the eligible area. The loan was disbursed in fiscal year 2025 for $10,000. Cause: Management did not verify the borrower’s business address against the approved rural service area map prior to disbursement. Effect or Potential Effect: Disbursement of RMAP loan funds to an ineligible borrower constitutes noncompliance with program eligibility requirements and may result in questioned costs of $10,000. Auditor Noncompliance Code: E – Eligibility Reporting Views of Responsible Officials: Management agrees with the noncompliance with no sanctions imposed conclusion. Context: No additional context identified by the Organization which is not otherwise presented herein. Recommendation: The Organization should strengthen eligibility review controls over RMAP loan disbursements by implementing procedures to verify and document that each borrower’s business location is within the approved service area prior to loan approval and disbursement. Auditor’s Summary of the Auditee’s Comments on the Findings and Recommendations: The Organization concurs with the finding and states that it will enhance its RMAP loan review procedures to ensure borrower locations are verified and documented as being within the approved rural service area prior to loan approval and disbursement. Response Indicator: Agree Completion Date: In process. Response: Management acknowledges noncompliance in the current fiscal year and is reviewing its internal controls over loan disbursements. Questioned Costs: $10,000
Finding 2025-001 – Special Tests— NSLDS Reporting (Significant Deficiency) Department of Education Student Financial Assistance Cluster Assistance Listing No. 84.268 (Federal Direct Student Loans) and No. 84.063 (Federal Pell Grant Program) Federal award year 2024-2025 Criteria: CFR Section 685.309 and 690.83(b)(2) requires the University to notify the National Student Loan Data System (NSLDS) within 30 days of a change in student status or include the change in status in a response to an enrollment reporting rosters within 60 days of the student’s date of determination of withdrawal. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure that enrollment status changes are reported timely. Condition: For sixteen out of forty students tested who had enrollment changes at the University, the student’s status effective dates at the campus level and program level were not reported to the NSLDS timely. Cause: The University had turnover in the registrar’s office during the Fall of 2024 resulting in delays in submitting information to NSLDS. Effect or potential effect: The effect of the noncompliance is that NSLDS does not have timely and accurate enrollment information. Questioned costs: None Context: We selected forty students to evaluate reporting of status changes to NSLDS. Out of forty students selected, sixteen student status changes were not reported timely. Identification as a repeat finding, if applicable: This is not a repeat finding. Recommendation: RSM recommends that the University implement a process to review information provided to NSLDS for accuracy in a timely manner such that the NSLDS receives timely information within 60 days of status changes. View of responsible officials: Management agrees with this finding. See corrective action plan.
Finding Number - 2025-003 Cash Management; Allowable Costs Federal Agency Department of Health & Human Services Federal Program Epidemiology and Laboratory Capacity for Infectious Diseases ALN 93.323 Grant Number Various Compliance Requirement Cash Management / Unallowable Costs Type of Findings Internal Control over Compliance / Compliance Category Significant Deficiency Criteria 2 CFR 200.302 states that each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state's own funds. In accordance with 2 CFR §200.303, non-federal entities are required to establish and maintain effective internal control over federal awards to ensure compliance with federal statutes, regulations, and the terms and conditions of the award. Such controls should include procedures to ensure expenditures are timely identified and included in reimbursement requests. Section III- Findings and Questioned Costs Relating to Federal Awards – (continued) Finding Number - 2025-003 Cash Management; Allowable Costs – (continued) Condition During our testing of expenditures charged to the Epidemiology and Laboratory Capacity (ELC) program, we identified instances in which expenditures incurred and paid during fiscal year 2022 were included in reimbursement requests submitted during 2025. Although the expenditures appear to relate to allowable program activities, the significant lapse of time between the payment date and the reimbursement request indicates weaknesses in the monitoring and tracking of expenditures pending reimbursement. Also, because the expenditures were originally incurred and paid in 2022, and supporting documentation for prior reimbursement requests was not readily available for the period under audit, we were unable to determine whether these costs had been previously requested for reimbursement. Drawdown No. Type Receipt Date Document No. Check Issuance Date Amount 1525250884 Reimbursement 11-Apr-25 426878 7/21/2022 $ 491,400 428005 8/25/2022 249,960 428049 8/25/2022 558,600 433231 10/11/2022 525,000 440140 11/7/2022 211,803 440145 11/7/2022 248,660 440156 11/7/2022 204,941 429703 6/24/2022 767,102 435438 8/12/2022 745,039 447617 12/8/2022 211,312 $ 4,213,817 Cause Management explained that, in prior periods, drawdown requests were processed manually and on an advanced basis. Subsequently, the Department implemented an electronic system to submit drawdown requests and transitioned the process to a reimbursement method. As part of this transition, certain advance requests that had been processed manually were not properly cleared in the new system and remained recorded as if they had not been requested. Because these requests appeared as pending in the system, they were later submitted again through the new reimbursement process, resulting in duplicate requests in the system records. Section III- Findings and Questioned Costs Relating to Federal Awards – (continued) Finding Number - 2025-003 Cash Management; Allowable Costs – (continued) Effect As a result, these requests appeared as outstanding in the electronic system and were later submitted again through the reimbursement process. This situation created duplicate drawdown requests in the system records and increased the risk of misstated drawdown activity and potential over-requesting of federal funds if not properly identified and reconciled. Questioned Costs None Perspective Information During our procedures, management explained that prior to the implementation of the current electronic drawdown system, requests for federal funds were submitted manually on an advanced basis. Subsequently, the Department implemented an electronic system to process drawdown requests and transitioned the funding methodology from advances to a reimbursement basis. As part of this transition, certain drawdown requests that had already been submitted manually were not properly cleared or recorded in the new system and remained reflected as pending. Prior Year Audit Finding This is not a repeat finding. Recommendation We recommend that management implement procedures to reconcile manual drawdown requests processed prior to the implementation of the electronic system with the transactions recorded in the system. In addition, management should conduct a comprehensive and detailed review of all legacy transactions that originated before the system transition to ensure that any requests previously processed manually are properly identified, cleared, and supported by adequate documentation. This review should be performed with heightened scrutiny to detect any duplicate or unreconciled drawdown requests. Furthermore, management should establish ongoing controls to periodically review outstanding balances in the system and ensure that all drawdown records are accurate, complete, and appropriately supported. Section III- Findings and Questioned Costs Relating to Federal Awards – (continued) Finding Number - 2025-003 Cash Management; Allowable Costs – (continued) Views of Responsible Officials and Planned Corrective Actions The PRDH’s management agrees with this finding. Please refer to the corrective action on pages 57-60.
Finding Number: 2025-005 State/Educational Agency(s): Arkansas Department of Human Services Pass-Through Entity: Not Applicable AL Number(s) and Program Title(s): 10.646 - Summer Electronic Benefit Transfer Program for Children Federal Awarding Agency: U.S. Department of Agriculture Federal Award Number(s): 246AR303N1175 Federal Award Year(s): 2024 Compliance Requirement(s) Affected: Reporting Type of Finding: Material Noncompliance and Material Weakness Repeat Finding: Not applicable Criteria: In accordance with 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 federal statues, regulations, and the terms and conditions of the award. Per U.S. Department of Agriculture, Food and Nutrition Service (FNS) guidance for the Summer Electronic Benefit Transfer Program for Children (Summer EBT/S-EBT), issued on June 13, 2024, in Memo SEBT 04-2024, the Form SF-425 S-EBT report will provide FNS with the financial data necessary to monitor and closeout the Summer EBT benefit grant. The overarching concept of this financial status report is to document the approved total grant level and the value of Summer EBT benefit issuances as they move from issuances (unliquidated obligations) to redemptions (outlays), net of expungements and other de-obligations. Summer EBT benefit expungements should be reported within the bounds of the fiscal year of the summer operational period for which the benefits were intended. If S-EBT benefits are expunged after September 2024, the benefit expungement should be reported as a reduction of the federal share of expenditures on the September 2024 SF-425 S-EBT report. Condition and Context: The Agency’s Division of Managerial Accounting staff prepare the required federal financial reports for the Summer EBT program. ALA reviewed the annual SF-425 S-EBT report for federal fiscal year 2024 to ensure the Agency completed the form based on the federal awarding agency instructions and that the annual report included cumulative expenditures through September 30, 2024. The amount reported on row 10e of the annual report should represent the sum of cash disbursements for direct charges, net any decreases due to Summer EBT benefit expungements and de-obligations. The Agency failed to reduce the report amount by Summer EBT benefit expungements. As a result, the total federal share of expenditures was overstated by $5,006,175. Statistically Valid Sample: Not applicable Questioned Costs: None Cause: Agency staff did not adequately review instructions published by the federal awarding agency detailing reporting requirements or receive proper training on how to complete the required federal financial reports. Effect: Inaccurate data was submitted on the FNS-425 S-EBT annual financial report. Recommendation: ALA staff recommend the Agency adequately train staff completing the federal reports to ensure correct information is reported. ALA staff also recommend the Agency strengthen controls over reporting to ensure that amounts reported are accurate, complete, and in compliance with federal reporting requirements. Views of Responsible Officials and Planned Corrective Action: DHS concurs with this finding. The agency has updated its internal procedures to comply with FNS guidance on completion of the FNS-425 S-EBT annual financial report. Staff have been trained on the updated procedures. Anticipated Completion Date: Complete Contact Person: Renee Ikard Chief Financial Officer Department of Human Services 700 Main Street Little Rock, AR 72201 (501) 681-8985 Renee.Ikard@dhs.arkansas.gov
Finding Number: 2025-006 State/Educational Agency(s): Arkansas Department of Human Services Pass-Through Entity: Not Applicable AL Number(s) and Program Title(s): 10.646 - Summer Electronic Benefit Transfer Program for Children Federal Awarding Agency: U.S. Department of Agriculture Federal Award Number(s): 246AR303N1175 Federal Award Year(s): 2024 Compliance Requirement(s) Affected: Reporting Type of Finding: Noncompliance and Material Weakness Repeat Finding: Not applicable Criteria: In accordance with 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 federal statues, regulations, and the terms and conditions of the award. Additionally, in accordance with 7 CFR § 292.23, Summer Electronic Benefit Transfer Program for Children (Summer EBT/S-EBT) agencies must report participation and issuance monthly. These reports include the FNS-46 S-EBT Issuance Reconciliation Report and the FNS-388 S-EBT State Issuance and Participation Estimates Report. Per the U.S. Department of Agriculture (USDA) Food and Nutrition Service (FNS), the Form FNS-46 S-EBT report is an issuance reconciliation report used to account for benefits issued during a report month. The report is also used to identify and report card expungements. An expungement is defined as the removal of Summer-EBT benefits from the EBT account to which they were issued. The funds loaded on the EBT card for the Summer EBT program are available for 122 days, as allowed by 7 CFR § 292.15(h). Per FNS guidance issued June 13, 2024, in Memo SEBT 04-2024, to ensure the fiscal year integrity of the FY 2024 S-EBT benefit grant, Summer EBT benefits intended for the FY 2024 summer operational period, but issued after September 30, 2024, should be reported as September data on the FNS-46 S-EBT. In addition, Summer EBT benefit expungements should be reported within the bounds of the fiscal year of the summer operational period for which the benefits were intended. The S-EBT Agency should provide the final amount of federal fiscal year 2024 benefits issued (including benefit expungements) in September and any month after September within the September 2024 FNS-46 S-EBT Report. This approach will allow FNS to capture all financial activity related to FY 2024 S-EBT benefits within FY 2024 reports. Condition and Context: The Agency’s Division of Managerial Accounting staff prepare the required federal financial reports for Summer EBT. The FNS-46 S-EBT Issuance Reconciliation Report is used to account for benefits issued during a report month. ALA completed a reconciliation between the monthly FNS-46 S-EBT Financial Reports submitted for June 2024 – November 2024 and the benefit data obtained from DHS ARIES (Arkansas Integrated Eligibility System) relating to the 2024 Summer EBT program. Testing revealed the following discrepancies: • The Agency failed to report correct monthly issuance totals for Summer 2024 issuances. Amounts reported on the FNS-46 S-EBT for June, July, August, September, October, and November 2024 do not trace to the ARIES Issuance file submitted to the third-party vendor for card upload. Additionally, the Agency failed to accurately identify and report card expungements on FNS-46 S-EBT reports submitted to the federal awarding agency for Summer 2024. • Before the ARIES Issuance file was generated, the Agency manually accumulated information to complete the FNS-46 report. Total issuances reflected on the FNS-46 reports do not match the Agency’s supporting documentation for five months (June, July, August, October, and November 2004). • The Agency failed to combine activity after September 2024 in the September 2024 report, as instructed by USDA FNS. Instead, separate FNS-46 S-EBT reports were completed by the Agency for October and November 2024. The total Summer EBT issuances reported on the form FNS-46 S-EBT report for Summer 2024 were overstated by $1,848,000, and the total Summer EBT expungements reported on the form FNS-46 S-EBT report for Summer 2024 were understated by $5,003,859. ALA reviewed documentation to determine that the FNS-46 S-EBT and FNS-388 reports were properly reviewed and approved prior to submission to the federal awarding agency for the six monthly reports submitted during state fiscal year 2025. In two instances (August 2024 and September 2024), the FNS-46 S-EBT report was completed, reviewed, and submitted by the same individual. Additionally, in one instance (June 2024), the Agency was not able to provide evidence of review of the FNS-388 report prior to submission. Statistically Valid Sample: Not Applicable Questioned Costs: None Cause: Agency staff did not receive proper training on how to complete the required federal financial reports. Additionally, the Agency failed to properly review the federal financial reports prior to submission. Effect: Inaccurate data was submitted on the FNS-46 S-EBT monthly federal financial reports for Summer 2024 issuances and Summer 2024 expungements. Recommendation: ALA staff recommend the Agency strengthen controls over reporting to ensure that amounts reported are accurate, complete, and properly supported by appropriate records to ensure compliance with federal laws and regulations. ALA staff also recommend the Agency continue to strengthen controls to ensure the monthly FNS-46 S-EBT and FNS-388 S-EBT reports are properly completed and reviewed prior to submission. Views of Responsible Officials and Planned Corrective Action: DHS concurs with this finding. The agency has updated its internal procedures to comply with FNS guidance on completion of the FNS-46 S-EBT and FNS-388 S-EBT reports. All noted reports have been revised, if necessary, reviewed, and certified. Staff have been trained on the updated procedures. Anticipated Completion Date: Complete Contact Person: Renee Ikard Chief Financial Officer Department of Human Services 700 Main Street Little Rock, AR 72201 (501) 681-8985 Renee.Ikard@dhs.arkansas.gov
Finding Number: 2025-007 State/Educational Agency(s): Arkansas Department of Commerce – Arkansas Economic Development Commission Pass-Through Entity: N/A AL Number(s) and Program Title(s): 14.228 – Community Development Block Grants Federal Awarding Agency: Department of Housing and Urban Development Federal Award Number(s): B18DC050001, B20DC050001, BC21DC050001, B22DC050001, and B23DC050001 Federal Award Year(s): 2018, 2020, 2021, 2022, and 2023 Compliance Requirement(s) Affected: Reporting Type of Finding: Noncompliance and Significant Deficiency Repeat Finding: Not applicable Criteria: In accordance with Appendix A of 2 CFR Part 170, direct recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System. In addition, 2 CFR § 200.303 requires that a recipient must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the award. Condition and Context: During state fiscal year 2025, reimbursements were made to subrecipients represented by approximately 125 subaward agreements. ALA staff performed testing of 28 subawards, made by the Arkansas Economic Development Commission (AEDC), to confirm submission of subawards in accordance with FFATA. ALA’s review revealed nine subawards were not reported to SAM.gov (previously the Federal Subaward Reporting System) at the beginning of audit field work. Additionally, the Agency records the date subawards are submitted on internal data collection sheets. Submission dates were not recorded on the data collection sheets for seven subawards even though four had been reported timely. Conversely, submission dates were inaccurately recorded for six subawards that were not reported, as required by FFATA, at the beginning of audit field work. Statistically Valid Sample: Not a statistically valid sample Questioned Costs: None Cause: The failure of Agency controls was caused by employee turnover. Effect: The Agency was not in compliance with Appendix A of 2 CFR § 170. Failure to file Federal Funding Accountability and Transparency Act Subaward reports could result in the reduction or termination of future funding. Recommendation: ALA staff recommend the Agency strengthen controls over financial reporting compliance to ensure reports are submitted timely and in accordance with federal laws and regulations. Views of Responsible Officials and Planned Corrective Action: The AEDC Grants Division has established internal controls and procedures to ensure compliance with the Federal Funding Accountability and Transparency Act (FFATA), primarily focused on AEDC’s responsibility for accurate and timely reporting of CDBG subawards of $30,000 or more. AEDC’s established compliance controls for FFATA include, as reported to ALA staff at the beginning of their field work in this area, are: • Grants Coordinator and/or Division Director checks SAM.gov at the beginning of the grant funding year (after HUD Grant Awards have been signed) or upon the need to report on the first subaward to ensure HUD’s award to the State of Arkansas is entered as a Prime Contract. • All CDBG applicants are required to submit application Exhibit K, FFATA (Federal Funding Accountability & Transparency Act) Reporting Form. This form and ACEDP Policies & Procedures require subrecipients to have an active registration in the System for Award Management (SAM.gov) and obtain a Unique Entity Identifier and AEDC verifying the accuracy of this information before issuing a subaward. • If funding is awarded, completed FFATA Reporting Form is included in the grant agreement packet, prepared by the Grants Manager and approved by the Division Director. A Grant Review Form checklist includes a check that this form is included. • Once a Grant Agreement is executed and the packet returned to the Grants Coordinator for processing, the Grants Coordinator will use the FFATA Reporting Form and information from the Grant Agreement to enter the subaward in SAM.gov, as a subaward associated with the applicable Prime Award (annual allocation). Also included in the packet is a copy of the subawardee’s active Registration and UEI, as well as a Data Collection Sheet which includes a space for the Grants Coordinator to write the date the subaward was entered in SAM.gov. • A timely submission procedure ensures that subaward information is entered into the FSRS at SAM.gov no later than the end of the month following the month in which the subaward obligation was made. To ensure AEDC meets this timely submission requirement, subawards are entered upon return of the AEDC executed grant agreement from the Deputy Director to the Grants Coordinator, who enters the date of the Deputy Director’s signature as the Award Date. • In the ACEDP Grant Agreement the subawardee agrees to comply with The Federal Funding Accountability and Transparency Act, and related federal requirements. • Project closeout procedures include a File Composition Checklist which lists the FFATA Form and the Data Collection Sheet (with subaward reporting date). By the Anticipated Completion Date, the Grants Coordinator and/or the Division Director will ensure each previously awarded subaward has been reported to SAM.gov, and will follow the above controls going forward to ensure compliance. Anticipated Completion Date: 06/30/2026 Contact Person: Jean Noble Director, Grants Division Arkansas Economic Development Commission 1 Commerce Way, Ste. 601 Little Rock, AR 72201 (501) 682-7389 jnoble@arkansasedc.com
Finding Number: 2025-033 State/Educational Agency(s): Arkansas Department of Public Safety – Division of Emergency Management Pass-Through Entity: Not Applicable AL Number(s) and Program Title(s): 97.036 – Disaster Grants (Public Assistance) Federal Awarding Agency: U.S. Department of Homeland Security – Federal Emergency Management Agency Federal Award Number(s): Various Federal Award Year(s): 2025 Compliance Requirement(s) Affected: Reporting Type of Finding: Noncompliance and Significant Deficiency Repeat Finding: Not applicable Criteria: In accordance with Appendix A of 2 CFR § 170, direct recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System. In addition, 2 CFR § 200.303 requires that a recipient must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the award. Condition and Context: ALA staff searched information on the USAspending.gov website to determine whether the Agency is reporting subawards as required and discovered no subaward/contractor information is reported for Disaster Grants (Public Assistance) by the Arkansas Division of Emergency Management (ADEM). ADEM staff confirmed that no awards had been reported to FFATA system. Statistically Valid Sample: Not applicable Questioned Costs: None Cause: The Agency did not follow internal policies and procedures to ensure that first-tier subawards of $30,000 or more are reported to the FSRS or the System for Award Management (SAM). Effect: The Agency is not in compliance with Appendix A of 2 CFR § 170 and did not report first-tier subawards. Failure to file Federal Funding Accountability and Transparency Act (FFATA) subaward reports could result in the reduction or termination of future funding. Recommendation: ALA staff recommend the Agency strengthen controls by providing training on FFATA reporting requirements to ensure first-tier subawards are reported as required. Views of Responsible Officials and Planned Corrective Action: Arkansas Division of Emergency Management (ADEM) Public Assistance (PA) staff will receive training on FFATA reporting requirements and will follow established Department of Public Safety guidelines to ensure first-tier subawards are reported as required. ADEM PA staff will also establish internal Standard Operating Procedures to ensure that consistent FFATA reporting is accomplished as required. Anticipated Completion Date: 4/30/26 Contact Person: Jodi Lee Deputy Director, Recovery and Mitigation Arkansas Division of Emergency Management Building 9501 Camp Joseph T Robinson North Little Rock, AR 72199 (501) 683-6700 Jodi.Lee@adem.arkansas.gov
Federal Agency: U.S. Department of the Treasury; U.S. Department of Homeland Security Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds; Assistance to Firefighters Grant Assistance Listing Number: 21.027; 97.044 Federal Award Identification Number and Year: SLFRP0136-2021, EMW-2021-FG-00409 Pass-through Agency: State of Rhode Island's Pandemic Recovery Office (CSLFRF) Award Period: 3/3/21- 12/31/26, 2/28/23 - 2/27/25 Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Repeat Finding: No Criteria or specific requirement The Town must comply with procurement standards set out at 2 CFR sections 200.303 and 200.318 through 200.326 within Uniform Guidance. Condition The Town's purchasing policies do not include all elements as outlined in 2 CFR sections 200.303 and 200.318 through 200.326 noted above. Questioned Costs None Context Although the Town's purchasing policies do not include all elements as outlined in 2CFR sections 200.303 and 200.318 through 200.326, we did not identify transactions where contracts were awarded without proper justification in 7 of 7 procurement transactions tested. Cause The Town's has not updated its purchasing policy to fully incorporate all procurement requirements under Uniform Guidance. Effect The Town is at risk for noncompliance with Federal grants as it relates to procurement. Recommendation We recommend that the Town updates its procurement policy to include all elements identified in 2 CFR sections 200.303 and 200.318 through 200.326. Views of Responsible Officials Management agrees with this finding.
2025 001 Eligibility, Reporting (Financial) and Special Tests (Disbursements to or on Behalf of Students) Student Financial Assistance Cluster: U.S. Department of Education Federal Supplemental Educational Opportunity Grants (ALN 84.007) Federal Work Study Program (ALN 84.033) Federal Perkins Loans (ALN 84.038) Federal Pell Grant Program (ALN 84.063) Federal Direct Student Loans (ALN 84.268) U.S. Department of Health and Human Services (DHHS) Nurse Faculty Loan Program (ALN 93.264) Health Professions Student Loans, Including Primary Care Loans and Loans for Disadvantaged Students (ALN 93.342) Nursing Student Loans (ALN 93.364) DHHS Health Resources and Services Administration Scholarships for Health Professions Students from Disadvantaged Backgrounds (ALN 93.925) Federal Grant Numbers: E P007A252602 (7/1/2024 – 6/30/2025), E P033A252602 (7/1/2024 – 6/30/2025), E P038A132602 (7/1/2024 – 6/30/2025), E P063P250272 (7/1/2024 – 6/30/2025), P268K260272 (7/1/2024 – 6/30/2025), E-01HP28821-02-02, E-01HP31830-01-00,(7/1/2024 – 6/30/2025), E4CHP42498-01-00 (7/1/2024 – 6/30/2025), E26HP25750, E36HP25751, E11HP27284, E36HP26092, E36HP25751, E26HP25748 (7/1/2024 – 6/30/2025) Statistically valid sample: The sample was not intended to be, and was not, a statistically valid sample. Repeat finding: Yes (2023-001 and 2024-001) Finding Type: Material weakness Criteria: 2 CFR section 200.303 requires that non-federal entities receiving federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure federal expenditures are accurately reported on the Schedule and information provided for audit purposes is complete and accurate. Condition and Context: During fiscal year 2023, the University implemented a new system called Oracle Student Financial Planning (OSFP) which is used to package the students’ financial aid. The system performs the following functions: • Determines eligibility of students using various inputs, including information obtained from the Federal Student Aid Record and student enrollment and demographic information. This information is also used to calculate the cost of attendance, calculated need and the federal award amounts. • Disburses student financial assistance to students. • Reports disbursement information to the Common Origination and Disbursement system. The internal controls over these functions are considered automated controls for the applicable compliance requirements. In order to gain comfort over the automated application controls, we tested the design of the applicable information technology general controls particularly in the areas of logical access and program changes. During our testwork, it was noted that the University’s standard policies and procedures to monitor appropriate user access and program changes were not followed. Related to user access, in fiscal year 2025, the University created a provisioning and deprovisioning process for all access changes to OSFP during fiscal year 2025. The University also implemented a policy to perform an access review and certification for the OSFP system annually. Evidence of the review was documented, however the review did not include all individuals with access to OSFP, certain roles within the system were not recertified and certain users were recertifying their own access. In addition, there was no user log to document that a person who should be removed from the system, was removed. Related to program changes, certain individuals have privileged access to OSFP, however, the roles were not defined. A review was not performed to determine if the access is necessary, access is commensurate with the individual’s job responsibilities and to ensure that a user does not hold multiple roles within the system. In addition, the change management process was not consistently followed for all changes to the OSFP system. Cause: The system was new in fiscal year 2023 and the University’s standard policies and procedures were not followed for the system upon implementation. In fiscal year 2024 and continuing through fiscal year 2025, the University began to implement the standard policies and procedures, however, they were not in effect for the entire current fiscal year. Effect: As the general information technology controls over the OSFP system were determined to be ineffective, the related downstream key application controls could not be relied upon or tested. Such key application controls include: calculation of a student’s need, calculation and application of cost of attendance, determination of a student’s eligibility to receive federal and state awards and calculation of awards based on a student’s need and cost of attendance. Additionally, there were no manual controls over these key compliance areas to mitigate the inability to rely upon the application controls. Questioned Costs: No questioned costs were noted as a result of the audit procedures performed as the finding was related only to internal controls and not to noncompliance. Recommendation: We recommend that the University continue to implement all standard policies and procedures for general information technology controls for this system, including those related to logical access and program changes. Related to user access, we recommend that the University enhance the user access review policy to ensure that all individuals and roles are recertified, users are not recertifying their own access, and to create a user log to document that a person who should be removed from the system was removed. Related to change management, we recommend that the University review these roles and their related definitions to determine if they are necessary, if the related user’s access is commensurate with the user’s job responsibilities and ensure that a user does not hold multiple roles within the system. The University should also ensure that the change management process is consistently followed for all changes to the OSFP system and that users cannot create, approve, and close tickets related to OSFP. Views of Responsible Official: Management agrees with the finding. Since the audit period, the University has strengthened governance and oversight over OSFP by formalizing access controls and reinforcing monitoring practices. Management has established and documented OSFP system roles and responsibilities. A review of user access was performed to ensure alignment with job responsibilities, and users holding multiple or incompatible roles were corrected. In addition, the University implemented an audit log to track user provisioning and deprovisioning activity, providing documented evidence of access changes and removals. The University has also enhanced its change management process to ensure that all updates to OSFP follow the documented change management procedures. These measures collectively strengthen logical access and change management controls and support effective internal control over system operations. Management will continue to monitor the effectiveness of these controls.
FINDING 2025-002 Subject: Child Nutrition Cluster - Internal Controls Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program Assistance Listings Numbers: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY24, FY25 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Eligibility, Procurement and Suspension and Debarment Audit Finding: Material Weakness Repeat Finding This is a repeat finding from the prior audit report for Eligibility, finding number 2023-005, and a partial repeat finding from the prior audit report for Procurement and Suspension and Debarment, finding number 2023-006. Condition and Context The School Corporation had not properly designed or implemented an effective system of internal controls, which would include segregation of duties, that would likely be effective in preventing, or detecting and correcting, material noncompliance. Eligibility Any child enrolled in a participating school or summer camp, who meets the applicable program's definition of "child," may receive meals under applicable programs. A child belonging to households meeting nationwide income eligibility requirements may receive meals at no charge or at a reduced price. Children that have been determined ineligible for free or reduced-price meals pay the full price for their meals. A child's eligibility for free and reducedpriced meals under a Child Nutrition Cluster program may be established by the submission of an annual application or statement which furnished such information as family income and family size. The School Corporation determines eligibility by comparing the data reported by the child's household to published income eligibility guidelines. Annual eligibility determinations may also be based on the child's household receiving benefits under SNAP, FDPIR, the Head Start Program, or, under most circumstances, the TANF program. A household may furnish documentation of its participation in one of those programs, or the School Corporation may obtain the information directly from the state or local agency that administers those programs. Certain foster, runaway, homeless, and migrant children are categorically eligible for free school lunches and breakfasts. Direct certified households do not need to complete an application. INDIANA STATE BOARD OF ACCOUNTS 18 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) One employee uploaded the Direct Certification reports from the state into the software system without a documented oversight or review process in place to ensure directly certified students were properly processed. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. The School Corporation did not have internal controls in place over suspension and debarment. The Food Service Director verified that vendors were not suspended or debarred, but there was no evidence of a second review. The lack of internal controls over eligibility and suspension and debarment were systemic throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause A proper system of internal controls was not designed or implemented by management of the School Corporation, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper design or implementation of the components of a system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. INDIANA STATE BOARD OF ACCOUNTS 19 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-003 Subject: Title I Grants to Local Educational Agencies - Earmarking Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listings Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A220014, S010A230014, S010A240014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Other Matters Condition and Context A portion of the School Corporation's Title I allocation was required to be set aside for homeless reservation. The required amount to be set aside is indicated in the Title I grant application. The School Corporation is responsible for monitoring each required set-aside throughout the life of the grant to ensure the obligation is met. There was no oversight or review process in place to ensure the monitoring of each required setaside. The School Corporation did not provide documentation to show that the obligation was met or not met to service all the homeless students in the School Corporation, and we could not verify the unused funds were transferred to the next grant award. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 20 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 20 USC 6313(c)(3)(A) states: "A local educational agency shall reserve such funds as are necessary under this part, determined in accordance with subparagraphs (B) and (C), to provide services comparable to those provided to children in schools funded under this part to serve - (i) homeless children and youths, including providing educationally related support services to children in shelters and other locations where children may live; (ii) children in local institutions for neglected children; and (iii) if appropriate, children in local institutions for delinquent children, and neglected or delinquent children in community day programs." Cause The School Corporation was unable to provide proper documentation that the obligated funds were spent or that unspent obligated funds were carried over to a subsequent grant award. The School Corporation was unable to provide other records supporting that the Earmarking compliance requirement was met. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, homeless set-asides could not be verified. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure homeless set asides are spent as required. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-004 Subject: Title I Grants to Local Educational Agencies - Special Tests and Provisions - Participation of Private School Children Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listings Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A220014, S010A230014, S010A240014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Test and Provisions - Participation of Private School Children Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation did not provide supporting documentation for the amounts disbursed for Participation of Private School Children. No time sheets or logs were provided to support the hours paid to employees for working with the private school children. The lack of effective internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following . . . INDIANA STATE BOARD OF ACCOUNTS 22 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . ." Cause The School Corporation had not developed a system of internal controls that would have ensured that records were maintained and made available for audit related to the Special Tests and Provisions - Participation of Private School Children compliance requirement. Effect The lack of appropriate documentation prevented the determination of the School Corporation's compliance with the Special Tests and Provisions - Participation of Private School Children compliance requirement. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish internal controls to ensure compliance and comply with the Special Test and Provisions - Participation of Private School Children compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding 2025-002 – Internal Controls over Compliance and Compliance with Reporting Requirement (Current and Prior Period Finding) Federal Agency: U.S. Department of Health and Human Services Federal program title: Healthy Marriage and Responsible Fatherhood Assistance Listing Number: 93.086 Type of Finding: Significant Deficiency over Internal Control over Compliance and Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal controls over the federal awards that provides assurance that the entity is managing the federal awards in compliance with federal statues, regulation and conditions of the federal awards. Condition and Context: During the audit, it was noted the Organization submitted required SF-425 reports past their due date according to the grant agreements. The Organization also does not have a process of reviewing the required reporting before submitting to the grantor. Questioned Costs: None noted Effect: Without adequate internal controls in place to ensure reports are submitted and reviewed timely, the Organization could be noncompliant with the reporting requirement. Cause: The delays and absence of a review process were attributed to a lack of adequate staffing within the Organization’s finance function that caused delays in compiling and submitting the required reporting as well as the lack of review over the reporting. Recommendation: We recommend that the Organization implement a procedure to track reporting due dates and implement a process in place to ensure reporting is reviewed and submitted within the due dates prescribed by the grants. Grantee Comment: Management agrees with the finding and has prepared a corrective action plan.
Material Weakness Finding Number: 2025-001 ALN # 84.063: Federal Program: Federal Pell Grant Program Federal Agency: U.S. Department of Education Contract Number and Year: P063P245378 and P063P242749, 2025 Compliance Requirement: Special Tests and Provisions – NSLDS Reporting Questioned Costs: N/A Criteria: Pursuant to 34 CFR §§ 685.309 and 690.83(b)(2), institutions are required to report student enrollment status changes to the National Student Loan Data System (NSLDS) within 30 days of the change or, alternatively, within 60 days through the submission of an enrollment reporting roster. At a minimum, institutions must certify enrollment data at least every 60 days. Reportable changes include, but are not limited to, adjustments in enrollment status, graduation, withdrawal, dropout, or failure to attend. In addition, institutions are required to review, correct, and return enrollment reporting rosters, including any necessary updates, within 15 days of receipt. Further, 2 CFR § 200.303 requires entities receiving federal awards to establish and maintain effective internal controls to ensure compliance with applicable laws and regulations. Condition: Testing of 80 Pell Grant recipients with enrollment status changes identified that the District did not accurately report 13 status changes (7 withdrawals and 6 graduations) to NSLDS. Additionally, for two of the four reporting periods tested, the District did not review, correct, and submit enrollment reporting rosters within the required 15-day timeframe. The District also did not consistently certify enrollment data at least every 60 days. These deficiencies occurred across multiple reporting periods. Cause: The deficiencies were attributable to staff turnover and training gaps, data transmission issues between the District’s third-party servicer (FAME) and NSLDS, and inconsistent processes for updating and certifying enrollment changes. As a result, controls over enrollment reporting were not consistently implemented or operating effectively. Effect: Failure to accurately and timely report enrollment status changes resulted in noncompliance with NSLDS reporting requirements and may impact the accuracy of student aid records maintained by the U.S. Department of Education. Recommendation: The District should strengthen internal controls over enrollment reporting by implementing procedures to ensure all enrollment status changes are accurately recorded, reconciled between internal systems and third-party servicer reports, and submitted to NSLDS within required timeframes. Additionally, the District should provide training to staff and establish monitoring controls to ensure timely review, correction, and certification of enrollment reporting rosters. Response: See attached Corrective Action Plan.
2025 – 002: Internal Controls and Segregation of Duties Federal Agency: U.S. Department of Education Federal Program Title: Student Financial Aid Cluster ALN Number: 84.063, 84.007, 84.033, 84.038, 84.268, 93.364 Award Period: July 1, 2024 – June 30, 2025 Type of Finding: Material Weakness in Internal Control over Compliance Criteria or specific requirement: Internal Control – Per 2 CFR section 200.303(a), 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 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). Condition: Internal controls are not designed and operating effectively with no appropriate segregation of duties in the following areas: 1. Drawdowns for All Federal Awards – There was no control in place specifically designating the appropriate personnel who is responsible to perform the review of all drawdowns to ensure the information and amount are accurate. 2. Reconciliations of Pell Grants, Supplemental Educational Opportunity Grants (SEOG), Federal Work-Study, and Direct Loans between COD, Bank Accounts, and G5 – Reconciliations are prepared by the Associate Director of Financial Aid and reviewed by the Director of Financial Aid. There was no documentation of the review to verify that these controls are operating effectively. 3. Federal Aid Packages – The Director of Financial Aid prepares and reviews all Federal aid packages. There was no adequate and proper segregation of duties. 4. Professional Judgement Determinations – There was not proper documentation of review or approval. 5. R2T4 Calculations - The Director of Financial Aid prepares and reviews the R2T4 calculations. There was no adequate and proper segregation of duties. 6. Credit Balances - There is no control in place over the review of payment of credit balances to the student within 14 days. 7. Incentive Compensation – We were unable to verify whether the control to ensure that no incentive compensation is made to employees in the student recruiting and admission, and financial aid departments, is designed and operating effectively. 8. Eligibility – We identified instances in which the Cost of Attendance (COA) used to calculate financial need was inaccurate due to insufficient review and oversight over COA calculations. Questioned costs: None Context: This condition occurred in our various testing all throughout the audit of the Student Financial Aid cluster. Cause: Internal controls are not adequately and properly designed to address the risks. Additionally, some controls in place are not operating effectively. Effect: 1. Internal Control deficiencies can lead to non-compliance with laws and regulations, operational inefficiencies and inaccuracies in financial reporting. 2. Improper or lack of segregation of duties can lead to increased risk of errors, fraud, and inefficiencies, as there is insufficient oversight and control. Repeat Finding: Yes Recommendation: We recommend the University review its internal controls over compliance as these are crucial in protecting the University’s assets, ensuring the accuracy of financial reporting, promoting operational efficiency, and ensuring compliance with laws and regulations. Views of responsible officials: There is no disagreement with the audit finding.
2025 – 004: Enrollment Reporting Federal Agency: U.S. Department of Education Federal Program Title: Student Financial Aid Cluster ALN Numbers: 84.063, 84.268 Award Period: July 1, 2024 – June 30, 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or Specific Requirement: Internal Control – Per 2 CFR section 200.303(a), 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 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). Compliance – The Code of Federal Regulations, 34 CFR 685.309 requires that enrollment status changes for students be reported to NSLDS within 30 days or within 60 days if the student with the status change will be reported on a scheduled transmission within 60 days of the change in status. Condition: During testing of NSLDS enrollment reporting, we identified multiple instances of noncompliance related to timely and accurate enrollment reporting and certification. Specifically, the following issues were noted: 1. Enrollment date discrepancies The enrollment date per campus level institutional records does not match the enrollment date per NSLDS. 2. Program start date discrepancies The program start date per institutional records does not match program start date per NSLDS. 3. Untimely reporting of enrollment status changes The enrollment status change was not timely reported to NSLDS. 4. Missed enrollment certification One student was not certified within the required 60‑day period. 5. Enrollment status discrepancies The enrollment status change per institutional records does not match the status per NSLDS. Section III –Findings and Questions Costs – Major Federal Programs (Continued) 2025 – 004: Enrollment Reporting (Continued) 6. Inaccurate institutional records Institutional records did not accurately reflect the student’s enrollment status, despite NSLDS and email communication reflecting the withdrawal. Questioned costs: None Context: 1. This condition occurred in 4 out of 26 students tested. 2. This condition occurred in 9 out of 26 students tested. 3. This condition occurred in 2 out of 26 students tested. 4-6 This condition occurred in 1 out of 26 students tested. Cause: The University did not have sufficient controls in place to ensure enrollment information submitted to NSLDS was complete, accurate, and reviewed for consistency with institutional records, nor adequate monitoring procedures to ensure enrollment status changes and required certifications were submitted timely. Effect: Failure to accurately and timely report enrollment information to NSLDS may result in inaccurate federal student aid records, which could impact student loan repayment status, deferment eligibility, and other Title IV determinations made by the Department of Education. Repeat Finding: Yes Recommendation: We recommend the institution strengthen internal controls over NSLDS enrollment reporting by implementing formal review and reconciliation procedures to ensure: 1. Enrollment dates, program start dates, and enrollment statuses reported to NSLDS agree with institutional records; 2. Enrollment status changes are identified and reported timely; and 3. Enrollment certifications are completed at least every 60 days in accordance with federal requirements. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: Department of Health and Human Services Federal Program Name: HeadStart Assistance Listing Number: 93.600 Federal Award Identification Number and Year: 03CH011220-05-00, 2024 03CH012856-01-00, 2025 Award Period: 9/1/2023 to 8/31/2024 9/1/2024 to 8/31/2025 Compliance Requirement: Reporting: Federal Funding Accountability and Transparency Act Type of Finding: Significant Deficiency in Internal Control, Other Matter Criteria or Specific Requirement: Internal Control: Per 2 CFR section 200.303(a), 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 Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply 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). Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Condition: The Department of Community and Human Services (DCHS) did not report subaward information to the FFATA Subaward Reporting System (FSRS) in accordance with the Federal Funding Accountability and Transparency Act (FFATA) requirements. As the prime award recipient DCHS is responsible for ensuring that all reporting requirements are met within the required timeframe. Questioned costs: None. Context: The fiscal year 2025 subaward issued by DCHS was not reported within the required time period. The subaward was dated 9/1/2024 which would require the department to submit for FFATA requirements by 10/30/2024. The award was not submitted until 2/26/2025. Transactions Subaward Report not Subaward Subaward Tested not reported timely amount missing key incorrect elements 1 0 1 0 0 Dollar Amount Subaward Report not Subaward Subaward of Tested not reported timely amount missing key incorrect elements $2,918,630 $0 $2,918,630 $0 $0 Cause: DCHS’ procedures and internal controls were not sufficient to ensure that the subaward reporting requirement was performed within the required time frame. Effect: DCHS is not in compliance with the FFATA reporting requirement. Repeat Finding: Yes, 2024-004 Recommendation: We recommend that DCHS review procedures and internal controls to ensure that the required subawards are reported timely and accurately to FSRS no later than the end of the month following the month of issuance of each subaward. Documentation of supporting compliance should be readily available for review. Views of Responsible Officials: There is no disagreement with this finding. The reporting has been completed. New employees will be trained in the procedures and internal controls to ensure that the required subawards are reported timely and accurately to FSRS no later than the end of the month following the month of issuance of each subaward. Documentation will be available for review during the audit period.
Federal Agency: U.S. Department of Transportation Federal Program Name: Highway Planning and Construction Assistance Listing Number: 20.205 Pass-through Agency: Virigina Department of Transportation Pass-through Entity Number: State Allocation Federal Award Identification Number and Year: UPC 106807, 2020 UPC 106474, 2024 Award Period: 7/1/2024 to 6/30/2025 Compliance Requirement: Suspension and Debarment Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: Internal Control: Per 2 CFR section 200.303(a), 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 Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply 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). Compliance: Recipients and subrecipients are prohibited from contracting with or making subawards under covered transactions to parties that are suspended, or debarred. “Covered transactions” include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220. All non-procurement transactions entered into by a pass-through entity (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR section 180.215. When a recipient or subrecipient enters into a covered transaction with an entity at a lower tier, the recipient or subrecipient must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by: (1) checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA) and available at SAM.gov (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR section 180.300). Condition: The City was unable to provide documentation that the suspension and debarment verification was performed. Questioned Costs: None Context: One of the five vendors selected for testing did not have evidence of the vendor’s suspension and debarment status prior to the contract date. Cause: The City did not maintain documentation. Effect: The City is unable to document compliance with suspension and debarment status prior to contracting with the vendor. Repeat Finding: No Recommendation: We recommend that the City review and enhance current procedures to ensure that the vendor’s suspension and debarment status is documented prior to contracting with the vendor. Views of Responsible Officials: There is no disagreement with the audit finding and the City will conduct additional training in this area for prime award recipients and for Purchasing staff. The City will also check for suspensions and debarment even if riding contracts from other jurisdictions.
Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Home Investment Partnerships Program Assistance Listing Number: 14.239 Federal Award Identification Number and Year: M24-MC-51-0001, 2024 Award Period: 10/1/2023 to 9/30/2033 Compliance Requirement: Subrecipient Monitoring Type of Finding: Significant Deficiency in Internal Control, Other Matter Criteria or Specific Requirement: Internal Control: Per 2 CFR Section 200.303(a), a non-Federal entity must: Establish and maintaineffective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and theterms and conditions of the Federal award. These internal controls should comply with guidance in“Standards for Internal Control in the Federal Government” issued by the Comptroller General of theUnited States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Compliance: 2 CFR §200.332(a) - Requirements for Pass-Through Entities states, in part, that all passthrough entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward: (i) Subrecipient's name (must match the name associated with its unique entity identifier); (ii) Subrecipient's unique entity identifier; (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date; (v) Subaward Period of Performance Start and End Date; (vi) Subaward Budget Period Start and End Date; (vii) Amount of Federal Funds Obligated in the subaward; (viii) Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity, including the current financial obligation; (ix) Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; (x) Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA); (xi) Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity; (xii) Assistance Listings title and number; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at the time of disbursement; (xiii) Identification of whether the Federal award is for research and development; and (xiv) Indirect cost rate for the Federal award (including if the de minimis rate is used in accordance with § 200.414). Condition: The City did not furnish the information below to subrecipients at the time the subawards were issued: a. Federal Award Identification Number (FAIN) b. Subaward Budget Period Start and End Date c. Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA) d. Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity e. Assistance Listings title and number f. the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at the time of disbursement g. Identification of whether the Federal award is for research and development. Questioned Costs: None Context: The City failed to include the required information as noted above in the subrecipient agreements. Cause: The City failed to include all required information in the subrecipient agreements. Effect: Excluding required federal grant award information at the time of the subaward may cause subrecipients and their auditors to be uninformed about program-specific regulations that apply to the funds they receive. There is also the potential for subrecipients to have incomplete Schedules of Expenditures of Federal Awards (SEFA) in subrecipients’ Single Audit reports, and federal funds may not be properly audited at the subrecipient level in accordance with the Uniform Guidance. Repeat Finding: No Recommendation: The City should review and enhance its internal controls and procedures to ensure that all required information is included in subawards at the time of issuance and maintained in subsequent modifications. Views of Responsible Officials: There is no disagreement with the audit finding and the City will undertake additional training for departments in FY 2026, to include providing departments with a grants responsibility checklist.
The County did not perform eligibility certification requirements, resulting in an increased risk of program participants receiving benefits they are not eligible to receive Assistance Listings number(s) and name(s): 10.557 WIC Special Supplemental Nutrition Program for Women, Infants, and Children Award number(s) and year(s): CTR067930 October 1, 2023 through September 30, 2028 Federal agency: U.S. Department of Agriculture Pass-through grantor(s): Arizona Department of Health Services Compliance requirement(s): Eligibility Questioned costs: Unknown Condition Contrary to federal regulations and State policies, the County’s Health and Social Services Department (Department) issued program benefits without requiring each program participant to complete and sign a rights and obligations form during the eligibility certification process agreeing to provide current and truthful information, abide by program rules, and not share WIC benefits cards or other benefits. Specifically, for 17 of 60 participants tested, the Department did not require the participants to complete and sign a rights and obligations form for 9 participants’ initial certifications and 8 participants’ recertification for ongoing benefits. In addition, for 5 of 60 participants tested, the Department did not properly separate duties and allowed the same employee to determine eligibility and issue benefits to participants. Further, we found that 2 of 13 WIC employees responsible for determining a participant’s eligibility did not complete mandatory annual training. Effect The Department’s not requiring program participants to acknowledge their rights and obligations increases the risk of participants providing inaccurate information required for eligibility determinations, such as erroneous residency and income data that could allow program participants to receive benefits they are not eligible to receive. Further, there is an increased risk of misuse of program benefits received as the participants may not be aware of the program’s rules and could allow others to use their WIC benefits cards or inappropriately sell, trade, or give away benefits received, such as food, formula, or breast pumps. Finally, the Department’s not properly separating duties or providing mandatory annual training increases the risk of fraud and awarding benefits to ineligible participants. Cause Department management reported that there was misdirection by the previous WIC director who communicated to staff that only the participation consent form, not the rights and obligations form, was required to be signed. In addition, Department management reported that for part of the fiscal year when 2 employees were updating a participant’s information at the same time, the employees did not properly save who completed a participant’s eligibility determination and who approved it in the State’s eligibility system. Further, the Department did not perform periodic monitoring to ensure (1) Department clinic site staff required participants to sign the rights and obligations form prior to issuing benefits and that the forms were maintained in the State’s eligibility system, (2) separation of duties was properly documented in the State’s eligibility system, or (3) WIC employees responsible for determining a participant’s eligibility completed mandatory annual training. Criteria Federal regulation and State policies require participants to sign a rights and obligations statement as part of the eligibility-certification process (7 CFR §246.7[i][10]). Specifically, State eligibility-certification policies require the Department’s staff who are responsible for the eligibility-certification process to inform participants of their rights and obligations prior to issuing benefits during the participant’s initial certification and recertifications for ongoing benefits. Also, the participants must complete and sign the form acknowledging their rights and obligations, including: Providing the most current and truthful information that WIC staff may verify. Following the WIC program’s rules to avoid being prosecuted, disqualified, and/or asked to repay the program. Allowing only the approved authorized recipient or proxy to use the WIC benefits card and reporting lost or stolen WIC benefits cards. Being honest and not selling, trading, or giving away WIC benefits cards, food, formula, or breast pumps, and acknowledging that doing so will disqualify the recipient from benefits. In addition, policies and procedures over WIC certifications completed at a local agency should prohibit 1 employee from determining eligibility for all certification criteria and issuing benefits to participants or provide effective alternative policies and procedures when separation of duties is not possible (7 CFR §246.4[a][27][iii]). Further, State pass-through entity grant award requires the Department to provide training to all WIC employees responsible for determining a participant’s eligibility. Finally, federal guidelines require establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations to the Department Follow the State’s eligibility certification policies that require program participants to complete and sign a rights and obligations form prior to the Department issuing benefits during initial certifications and recertifications for ongoing benefits. Train Department staff, who are responsible for the eligibility certification process, as required by the State pass-through, regarding the following requirements: Participants must be informed of their rights and obligations prior to issuing benefits during the participant’s initial certification and recertifications for ongoing benefits. Participants must sign the rights and obligations form during the eligibility certification process agreeing to provide current and truthful information, abide by program rules, and not share WIC benefits cards or other benefits. Department staff must maintain the forms in its eligibility system. Separate job responsibilities in policies and procedures to prohibit 1 employee from determining eligibility for all certification criteria and issuing benefits to participants or provide effective alternative policies and procedures when separation of duties is not possible. Perform periodic monitoring at its clinic sites to ensure: Department clinic site staff require participants to sign the rights and obligations form prior to issuing benefits and that the forms are maintained in the State’s eligibility system. Separation of duties is properly documented in the State’s eligibility system. WIC employees responsible for determining a participant’s eligibility complete mandatory training. This finding is similar to prior-year finding 2024-101 and was initially reported in fiscal year 2024. Views of responsible officials County management concurs with this finding. The County’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials regarding these recommendations. We are not required to audit and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy.