2025 - 002: Suspension and Debarment Federal Agency: U.S. Department of Education Federal Program Title: Special Education Cluster ALN: 84.027 and 84.173 Federal Award Identification Numbers and Year: H027A240087 & H173A240086, 2025 Pass-Through Agency: Minnesota Department of Education Pass-Through Numbers: H027A230087 & H173A230086 Award Period: July 1, 2024 – June 30, 2025 Type of Finding: Material Weakness in Internal Control Over Compliance Criteria or Specific Requirement: The District should have controls in place to ensure compliance with suspension and debarment requirements of the Special Education Cluster, per the requirements of 2 CFR §200.303. The Uniform Guidance requires that 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 either checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA), collecting a certification from the entity, or adding a clause to the covered transaction with the entity. Condition: The District did not retain formal documentation of a control to ensure timely completion of suspension and debarment requirements. Questioned Costs: None Context: The one covered transaction selected for testing lacked formal control documentation showing that the District completed the required suspension and debarment verification before entering into the contract. The verification was instead performed and documented at a later date. Cause: The District’s policies and procedures did not include formal documentation of a control to ensure vendors are checked for suspension and debarment prior to entering covered transactions. Effect: The District could have entered into a covered transaction with an entity which was suspended or debarred without realizing it. Repeat Finding: Yes – 2024-005 Recommendation: We recommend that the District follow its procurement policies as well as requirements within the Uniform Guidance to perform the proper verification procedures on all covered transactions entered into with federal funds. Also, the District should ensure there is a formally documented control to ensure all vendors are checked for suspension and debarment prior to entering into a covered transaction. View of Responsible Official: There is no disagreement with the audit finding.
Federal Agency: Department of Education Federal Program Title: Student Financial Assistance Cluster Assistance Listing Number: 84.268, 84.063, 84.007, 84.033, 84.379 Federal Award Identification Number and Year: P268K252058-2025, P063P242058-2025, P007A253479-2025, P033A253479-2025, P379T262058-2025 Award Period: July 1, 2024 to June 30, 2025 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Compliance, Other Matter Criteria or specific requirement: 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. In addition, per the Uniform Guidance 2 CRF 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to ensure reasonable compliance with federal laws, regulations, and program compliance requirements. Condition: There were instances in which the University did not report the effective date and enrollment status correctly or timely. In addition, the University did not have a control in place to ensure timely and accurate reporting to NSLDS. Questioned costs: None Reported. Context: During our testing, we noted that the enrollment effective date of 6 of the 60 students tested was not reported correctly to NSLDS. We also noted that the change in enrollment status of 3 of the 60 students tested was not reported timely to NSLDS. We also noted the program enrollment effective date of 2 of the 60 students tested did not match the enrollment effective date. Additionally, we did not note evidence of a key control occurring for enrollment reporting. Cause: The University did not have proper controls or procedures in place to verify students' status in NSLDS matched the institution’s records in a timely manner. Effect: Failure to properly report enrollment status changes on NSLDS could affect the timing of the grace period for repayment of Title IV loans. Additionally, the University was not in compliance with the requirements to properly report student enrollment data correctly or timely to NSLDS. Repeat Finding: Yes, 2024-002. Recommendation: We recommend that the University implement a key control to ensure that enrollment data, changes in status, and effective dates within NSLDS match the records of the institution and are reported timely, and to store evidence of the key control having occurred. View of Responsible Official: There is no disagreement with the audit finding.
Federal Agency: Department of Education Federal Program Title: Student Financial Assistance Cluster Assistance Listing Number: 84.268, 84.063 Federal Award Identification Number and Year: P268K252058-2025, P063P242058-2025 Award Period: July 1, 2024 to June 30, 2025 Type of Finding: • Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: 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. Condition: During our testing, we noted that the University was unable to provide documentation evidencing the performance of a key control over the timeliness and accuracy of Common Origination and Disbursement (COD) disbursements reporting. Questioned costs: None reported. Context: The University could not provide evidence that the key control review was performed for any of the 60 disbursements selected for testing. Cause: The University does not maintain documentation to evidence their review to ensure disbursements are reported to COD timely and accurately. Effect: The absence of documented review increases the risk that disbursement data reported to COD may be inaccurate or untimely, which could result in inaccurate student records and may contribute to improper or excess student aid awards. Repeat Finding: Yes, 2024-004. Recommendation: We recommend the University retain evidence that key controls over COD reporting were performed. View of Responsible Official: There is no disagreement with the audit finding.
Federal Agency: Department of Education Federal Program Title: Student Financial Assistance Cluster Assistance Listing Number: 84.268, 84.063, 84.007, 84.033, 84.379 Federal Award Identification Number and Year: P268K252058-2025, P063P242058-2025, P007A253479-2025, P033A253479-2025, P379T262058-2025 Award Period: July 1, 2024 to June 30, 2025 Type of Finding: • Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: 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. Condition: During eligibility testing, we noted that the University did not provide documentation evidencing that a review of a professional judgment decision had been performed. Questioned costs: None reported. Context: Of the 40 student files selected for eligibility testing, one student had a professional judgment determination. While supporting documentation for the professional judgement decision was available, the University was unable to provide evidence that the decision had been reviewed. Cause: The University does not maintain documentation to demonstrate that professional judgment decisions are subject to an independent review in accordance with established procedures. Effect: The lack of documentation of review of professional judgment decisions increases the risk that such determinations may not be appropriately evaluated, which could result in student financial need not being accurately assessed and students being improperly awarded or underserved. Repeat Finding: Yes, 2024-003. Recommendation: We recommend the University enhance its procedures for reviewing professional judgement decisions to ensure that evidence of review is documented and retained. View of Responsible Official: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of the Treasury Federal Program Title: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: 181701 Award Period: July 1, 2024 to June 30, 2025 Type of Finding: • Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Condition: During our testing, we noted that the University was unable to provide evidence that a key control to verify the accuracy and timeliness of payments to program participants had been performed. Questioned costs: None reported. Context: The University was unable to provide documentation evidencing that the key control was performed for any of the 40 disbursements selected for testing. Cause: The University’s procedures for reviewing payments to program participants did not include documentation to provide evidence that the review had occurred. Effect: The lack of documented review increases the risk that errors in payments to program participants may not be identified or corrected in a timely manner. Repeat Finding: No. Recommendation: We recommend the University implement procedures to ensure evidence of the key control review over payments to program participants is documented and retained. View of Responsible Official: There is no disagreement with the audit finding.
Criteria or specific requirement: 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. Per 2 CFR Part 170, “subaward” has the meaning given in 2 CFR 200.1 and means an award provided by a pass-through entity to a subrecipient for the subrecipient to carry out part of a federal award received by the pass-through entity. It does not include payments to a contractor or payments to an individual that is a beneficiary of a federal program. 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.) 2 CFR 200.303 requires that non-federal entities receiving federal awards 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: During testing of the Federal Funding Accountability and Transparency Act (FFATA) report, it was noted that the Kansas Division of Emergency Management (KDEM) did not timely report certain subawards to FSRS for the fiscal year. Questioned costs: None. Context: Twenty-eight subawards were selected for testing, totaling $39,668,267. Eighteen of the twenty-eight subawards (64%), totaling $39,594,211, were not submitted timely and reviewed timely prior to being submitted to FSRS as summarized below. While the reports were not filed timely, the supporting documentation that was needed to file the reports was gathered by KDEM and the filing was completed before SFYE 6/30/2025. Transactions Tested Report not timely 28 18 Dollar Amount of Tested Transactions Report not timely $39,668,267 $39,594,211 Cause: KDEM was understaffed during the current and prior fiscal years and had not fully implemented its corrective action plan from the prior year audit during SFY 2025 to ensure that the subawards were reported timely and reviewed timely prior to submitted to FSRS. Effect: Management is not in compliance with FFATA reporting requirements. Repeat Finding: Yes, Finding 2024-010. Recommendation: We recommend that KDEM continue to implement its corrective action plan from the prior year. Management should continue to enhance its procedures and internal controls to ensure that subawards are accurate, reported timely and reviewed timely to FSRS. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: Per 2 CFR 200.332, all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information listed in 2 CFR 200.332(a)(1) 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. Per 2 CFR 200.332(b), all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes required award information. A pass-through entity must provide the best available information when some of the information below is unavailable. A pass-through entity must provide the unavailable information when it is obtained. Required information includes: Subrecipient's name, Subrecipient's unique entity identifier, Federal Award Identification Number (FAIN), Federal Award Date, Subaward Period of Performance Start and End Date, Subaward Budget Period Start and End Date, Amount of Federal Funds Obligated in the subaward, Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity, including the current financial obligation, Total Amount of the Federal Award committed to the subrecipient by the pass-through entity, Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA), Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity, Assistance Listings title and number, Identification of whether the Federal award is for research and development, Indirect cost rate for the Federal award (including if the de minimis rate is used. Per 2 CFR 200.303, non-federal entities receiving federal awards are required to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 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: During our testing of subrecipient monitoring, we noted that for certain subawards the Kansas Division of Emergency Management (KDEM) did not timely issue the subaward letter to the subrecipients, which should have been communicated within 30 days of subaward being obligated or before subaward payments were made. Questioned costs: None. Context: For eleven of twenty-eight subrecipients selected for testing, KDEM did not issue subaward letters to the subrecipient timely when the funds were approved and obligated. Further for six of the eleven subrecipients tested, KDEM did not maintain documentation from a previously utilized portal that they no longer have access to. Cause: 2 CFR 200.332(a) requires subawards to include certain required information to be communicated to subrecipients at the time of the subaward being awarded. The subawards were made prior to KDEM fully implementing their corrective action plan. For six of the transactions, KDEM no longer has access to the portal in which the subaward documentation is maintained. Effect: Failure to issue subawards timely and to include required federal award information could result in subrecipients not properly administering the federal program in accordance with federal regulations. Repeat Finding: Yes, Finding 2024-011. Recommendation: We recommend that KDEM continues to implement its corrective action plan from prior year and continue to enhance its internal controls and procedures to ensure that the subaward letter is issued to subrecipients timely to ensure all required federal award information is communicated to the subrecipient at the time of the subaward. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: 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. Per 2 CFR Part 170, “subaward” has the meaning given in 2 CFR 200.1 and means an award provided by a pass-through entity to a subrecipient for the subrecipient to carry out part of a federal award received by the pass-through entity. It does not include payments to a contractor or payments to an individual that is a beneficiary of a federal program. 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.) Per 2 CFR 200.303, requires that non-federal entities receiving federal awards 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: During the audit period, the entity did not submit required FFATA reports for certain first‑tier subawards subject to FFATA reporting requirements. As a result, required information was not reported in SAM.gov by the last day of the month following the month in which the subaward obligation occurred. Questioned costs: None. Context: Fourteen of the fourteen new subawards tested during the current year were not reported to the FSRS to comply with the Federal Funding and Accountability Act (FFATA). Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 14 14 14 14 14 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $ 651,008 $651,008 $651,008 $651,008 $651,008 Cause: The noncompliance occurred because the entity did not have adequate internal controls in place to identify federal awards and subawards subject to FFATA reporting requirements. Specifically, management did not maintain a formal process to track FFATA‑reportable awards, monitor reporting deadlines, or ensure staff responsible for grant administration were sufficiently trained on FFATA reporting requirements. Effect: As a result of this noncompliance, required FFATA information related to federal subawards was not publicly reported in a timely and complete manner, reducing transparency over the use of federal funds. Failure to comply with FFATA reporting requirements may result in increased oversight by federal awarding agencies and could impact the entity’s ability to receive future federal funding. Repeat Finding: No Recommendation: We recommend that management implement policies and procedures to ensure compliance with FFATA reporting requirements. This should include identifying all federal awards and subawards subject to FFATA, establishing a process to track reporting deadlines, and providing training to personnel responsible for grant administration to ensure FFATA reports are submitted timely and accurately in SAM.gov. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: Per 2 CFR 200.332, all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information listed in 2 CFR 200.332(a)(1) 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. Required information includes: Subrecipient's name, Subrecipient's unique entity identifier, Federal Award Identification Number (FAIN), Federal Award Date, Subaward Period of Performance Start and End Date, Subaward Budget Period Start and End Date, Amount of Federal Funds Obligated in the subaward, Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity, including the current financial obligation, Total Amount of the Federal Award committed to the subrecipient by the pass-through entity, Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA), Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity, Assistance Listings title and number, Identification of whether the Federal award is for research and development, Indirect cost rate for the Federal award (including if the de minimis rate is used). Per 2 CFR 200.303, non-federal entities receiving federal awards are required to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 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). Per 2 CFR 200.332(f) pass-through entities must verify that every subrecipient is audited as required by Subpart F of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in 2 CFR 200.501. Per 2 CFR 200.332(e)(2), a pass-through entity must following-up and ensure that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. Single Audit findings referenced above are those resulting from audits required under 2 CFR 200.501. Condition: Subawards issued by the Kansas Department of Health and Environment (Department) did not include all required subaward information and failed to obtain the Unique Identity ID for all subawards. The Department did not obtain the required audit information (Single Audit or another applicable audit) from its subrecipient during the audit period. Questioned costs: None. Context: Twenty-five of thirty-four subawards selected for testing, totaling $11,685,599, did not include all required federal award information. Specifically, the following was omitted: • Subrecipient’s Unique Identifier - (Twenty-five of Thirty-four subawards) • Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity, including the current financial obligation – (Twenty-five of thirty-four subawards) • Identification of whether the award is research and development - (Twenty-five of Thirty-four subawards) • Indirect cost rate for federal award - (twenty-five of Thirty-four subawards) For two of the thirty-four subawards the Department failed to provide evidence that the Unique Entity ID was obtained. We were not provided with an audit report for one of the thirty-four subawards tested, totaling $680,010. Cause: The Department’s procedures were not sufficient to ensure that subawards included all required federal award information and obtain the required Unique Entity ID. Internal controls did not prevent or detect the errors. The Department did not have adequate procedures in place, or did not consistently implement existing procedures, to request, obtain, and track required subrecipient audit reports as part of its subrecipient monitoring process. Effect: Excluding the required federal award information at the time of subaward issuance could result in subrecipients not properly administering the federal programs in accordance with federal regulations. There is also the potential for subrecipients to have incomplete Schedules of Expenditures of Federal Awards (SEFA) in their Single Audit reports when all federal award information is not provided to them. Failure to obtain the subrecipient’s UEI resulted in incomplete subaward identification and increases the risk of ineffective subrecipient monitoring. Without obtaining and reviewing the subrecipient’s audit, the Department lacked reasonable assurance that audit findings, questioned costs, or instances of noncompliance affecting the subaward were identified and addressed. This increased the risk that Federal funds were not administered in accordance with applicable requirements. Repeat Finding: Yes, finding 2024-006. Recommendation: We recommend that the Department revise the subaward templates to include all required federal award information and update its procedures and internal controls to ensure that all required federal award information is included in subawards at the time of issuance. The Department should establish and implement formal subrecipient monitoring procedures to ensure required audit reports are requested, obtained, and reviewed in a timely manner. The Department should document its review of audit results and perform appropriate follow‑up on any identified deficiencies to ensure compliance with Federal requirements. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: 2 CFR 200.214 Suspension and Debarment restricts 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. 2 CFR 180.300 states that an entity may determine suspension and debarment status by: (a) Checking SAM (System for Award Management) Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person 2 CFR 200.303 requires that non-federal entities receiving federal awards 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: Kansas Department of Health and Environment (Department) was unable to provide supporting documentation that it had performed suspension and debarment verification procedures before the start of procurement contracts. Questioned costs: None. Context: Sixty transactions were selected for testing which included twenty-five contracts and thirty-five subawards. For twenty-five of twenty-five contracts (100%), the Department was unable to provide documentation supporting when it had verified the contractors’ suspension and debarment status. The Department provided auditors with documentation that the contractors were not suspended or debarred, however, auditors were not able to verify that the status was documented prior to the start of the contracts. No exceptions were noted for the thirty-five subawards tested. Cause: The Department’s procedures and internal controls are not sufficient to ensure that it verifies and properly documents contractors’ suspension and debarment status prior to the execution of contracts. Effect: Failure to perform suspension and debarment verification procedures before the procurement of good or services could result in the payment of federal funds to contractors that are ineligible to participate in federal assistance programs. Repeat Finding: Yes, Finding 2024 - 007 Recommendation: We recommend that the Department enhances its procedures and internal controls to ensure that it verifies and maintains documentation of its contractors’ suspension and debarment status prior to the execution of all contracts. Verification can be performed by either checking SAM exclusions and maintaining documentation when the verification occurred, collecting a signed certification from the contractor prior to contract execution, or adding a clause or condition to the contract. We further recommend that documentation is readily available for audit. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: Per 42 CFR part 442, providers must meet the prescribed health and safety standards for hospitals, nursing facilities, and ICF/IID. 2 CFR 200.303 requires that non-federal entities receiving federal awards 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: Kansas Department of Health and Environment (Department) was unable to provide supporting documentation that it had performed recertification surveys within the required timeframe which is used to meet the provider health and safety standards. Questioned costs: Unable to determine. Context: Out of sixty providers selected for testing, the Department was unable to provide the recertification surveys for 26 providers. As such, we were unable to ensure that those 26 providers met the prescribed health and safety standards prior to the Department making payments to those providers. These exceptions resulted in an error rate of 43%. Cause: The Department’s procedures and internal controls were not operating effectively to ensure that recertification surveys were maintained by the Department. The Department had not completed implementation of its corrective action plan from the prior year. Effect: Compliance with the prescribed health and safety standards for this program is not being met. Providers who are not meeting the health and safety standards are still able to receive payments. Repeat Finding: Yes, Finding 2024-009. Recommendation: We recommend the Department complete implementation of its corrective action plan from the prior year. We recommend the Department train all staff members to properly verify providers are meeting the prescribed health and safety standards before making payments to those providers and maintain all records of these verifications. Views of responsible officials: There is no disagreement with the audit finding. KDHE/Bureau of Facilities and Licensing (BFL) recognizes that documentation for twenty-six of the sixty providers was not provided. KDHE BFL operates as the State Survey Agency (SSA) under agreement with the Centers for Medicare and Medicaid Services pursuant to Section 1864 of the Social Security Act. Survey frequency and workload prioritization are governed by the annual CMS Mission and Priority Document (MPD), not by Medicaid payment cycles. KDHE BFL does not authorize, approve, or suspend Medicaid payments and does not function as a pre-payment verification entity. Health and safety oversight is accomplished through federally directed recertification surveys, complaint investigations, and CMS approved accreditation processes, consistent with the MPD and federal survey requirements. The MPD establishes a mandatory prioritization framework requiring SSA to complete Tier 1 and Tier 2 workload before initiating Tier 3 and Tier 4 activities. During the award period in question, the SSA allocated available survey resources in accordance with MPD directives, prioritizing Immediate Jeopardy investigations, high-priority complaints, enforcement follow-up, and other time-sensitive certification actions. Recertification surveys fall lower within lower-tier workload categories and may be deferred when higher-tier federally mandated priorities require resource allocations. The SSA’s survey scheduling decisions during the audit period were consistent with CMS directed workload prioritization requirements. During a recent internal review, the SSA identified several historical recertification surveys that remain in open status with the ASPEN/ACO system. In some instances, the surveys were completed and follow-up actions addressed; however, final administrative closure steps do not appear to have been fully finalized in the system. Other findings included revisit linkage or enforcement tracking was not fully reconciled or provider terminations or Change of Ownership (CHOW) process were not fully reconciled.
Criteria or specific requirement: Per 2 CFR 200.332, all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information listed in 2 CFR 200.332(a)(1) 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. Per 2 CFR 200.332(b), all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes required award information. A pass-through entity must provide the best available information when some of the information below is unavailable. A pass-through entity must provide the unavailable information when it is obtained. Required information includes: Subrecipient's name, Subrecipient's unique entity identifier, Federal Award Identification Number (FAIN), Federal Award Date, Subaward Period of Performance Start and End Date, Subaward Budget Period Start and End Date, Amount of Federal Funds Obligated in the subaward, Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity, including the current financial obligation, Total Amount of the Federal Award committed to the subrecipient by the pass-through entity, Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA), Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity, Assistance Listings title and number, Identification of whether the Federal award is for research and development, Indirect cost rate for the Federal award (including if the de minimis rate is used. Per 2 CFR 200.332(a), a pass-through entity must verify that the subrecipient is not excluded or disqualified in accordance with § 180.300. Verification methods are provided in § 180.300, which include confirming in SAM.gov that a potential subrecipient is not suspended, debarred, or otherwise excluded from receiving Federal funds. Per 2 CFR 200.303, non-federal entities receiving federal awards are required to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 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: Subawards issued by the Kansas Department of Education and Kansas Department of Children and Families (Departments) did not include all required subaward information. Subawards underwent suspension and debarment verification from sam.gov but this process was not formally documented. Questioned costs: None. Context: Eleven of nineteen subawards selected for testing, totaling $991,788, did not include all required federal award information. Specifically, the following was omitted: • Federal Award Identification Number (FAIN) • Name of the Federal agency and contact information for awarding official of the pass-through entity • Assistance Listing 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 • Identification of whether the award is research and development • In addition, for eleven of the eleven subawards tested, the Department did not maintain documentation evidencing that suspension and debarment verification was performed prior to issuing the subawards. Cause: The Department’s procedures were not sufficient to ensure that subawards included all required federal award information and that suspension and debarment verification was documented. Internal controls did not prevent or detect the errors. Effect: Excluding the required federal award information at the time of subaward issuance could result in subrecipients not properly administering the federal programs in accordance with federal regulations. There is also the potential for subrecipients to have incomplete Schedules of Expenditures of Federal Awards (SEFA) in their Single Audit reports when all federal award information is not provided to them. As a result of this condition, the federal awarding agency lacks full assurance that program funds were administered in compliance with federal requirements, including requirements related to vendor suspension and debarment. This condition limits the government’s ability to ensure proper oversight and stewardship of federal funds. Repeat Finding: No Recommendation: We recommend that the Departments develop a subaward template that includes all required federal award information and update its procedures and internal controls to ensure that all required federal award information is included in subawards at the time of issuance. We recommend that management enhance its procurement procedures to require and retain documented evidence that vendors are verified as not suspended or debarred prior to the award of contracts or payment of federal funds. Maintaining this documentation will help ensure compliance with federal requirements and support the government’s assurance that federal funds are expended only with eligible vendors. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: 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. Per 2 CFR Part 170, “subaward” has the meaning given in 2 CFR 200.1 and means an award provided by a pass-through entity to a subrecipient for the subrecipient to carry out part of a federal award received by the pass-through entity. It does not include payments to a contractor or payments to an individual that is a beneficiary of a federal program. 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.) Per 2 CFR 200.303, requires that non-federal entities receiving federal awards 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: Kansas Department of Children and Families (Department) was unable to provide FFATA reports for various subawards. Questioned costs: None. Context: During Reporting – FFATA testing the Department was unable to provide submitted FFATA reports for four of the 12 subaward transactions tested. Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 12 4 4 4 4 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $ 377,770 $377,770 $377,770 $377,770 $377,770 Cause: The Kansas Department of Children and Families (DCF) passed a portion of the award to the Kansas Department of Education (KSDE). The Kansas Department of Education (KSDE) passed the awards to other subrecipients located outside of the State of Kansas. At the time these subawards were issued, DCF was not aware that the subawards were subject to the Federal Funding Accountability and Transparency Act (FFATA) reporting requirements. As a result, DCF did not submit the required FFATA reports for the subawards passed through to these subrecipients. Effect: As a result of not submitting the required FFATA reports for subawards passed through to the Kansas Department of Education and other subrecipients located outside of the State of Kansas, the federal awarding agency did not receive complete and timely information regarding the use of federal funds. This resulted in noncompliance with FFATA reporting requirements and reduced transparency over federal subaward activity, which could limit federal oversight and monitoring of the program. Repeat Finding: No Recommendation: We recommend that the Kansas Department of Children and Families implement procedures to identify all subawards subject to Federal Funding Accountability and Transparency Act (FFATA) reporting requirements, including subawards passed through to both in‑state and out‑of‑state subrecipients. DCF should provide training to relevant staff on FFATA requirements and establish a review process to ensure required FFATA reports are submitted accurately and timely for all applicable subaward. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: Per 2 CFR 200.303, requires that non-federal entities receiving federal awards 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: The entity did not have a documented control in place to evidence an independent review of the ACF‑199 TANF Data Report for accuracy and completeness prior to submission to the federal awarding agency. The report was generated from system data and submitted without documented supervisory review or approval before transmission. Questioned costs: None. Context: For two of the four ACF‑199 reports tested, the auditors were unable to obtain evidence that a documented review or approval of the report occurred prior to submission. No errors were identified in the reports tested, and the reports were system‑generated; however, the absence of documented review for a portion of the population tested indicates that the review control was not consistently applied. Cause: Management relied on the fact that the ACF‑199 report is generated from system‑based data extracts and did not implement a formalized review or approval process prior to submission. As a result, a specific control to review and approve the report before submission was not designed or documented. Effect: Without a documented pre‑submission review, there is an increased risk that errors or omissions in the ACF‑199 TANF Data Report may not be detected timely, which could result in the submission of inaccurate or incomplete information to the federal awarding agency. Repeat Finding: No Recommendation: We recommend that management design and implement a documented review and approval control over the ACF‑199 TANF Data Report prior to submission to the federal awarding agency. The control should include evidence of review to verify the accuracy and completeness of the report, such as documented supervisory sign‑off, electronic approval, or retention of review documentation. Implementing a consistent pre‑submission review process will strengthen internal controls over federal reporting and provide reasonable assurance of compliance with reporting requirements. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: Per 2 CFR 200.303, requires that non-federal entities receiving federal awards 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: During test work of Activities Allowed or Unallowed & Allowable Costs/Cost Principles, one transaction was identified that lacked evidence that the transaction was reviewed. Questioned costs: None. Context: One of the forty transactions selected for testing, totaling $7,300, lacked evidence that the transaction was properly reviewed and approved. Cause: The Department was under a transition period between the legacy UI system and newly implemented system when this transaction occurred. The process of reviewing at the time had not been fully implemented within the new system. Effect: Not reviewing a transaction related to a federal expenditure increases the risk that the entity may be unaware of noncompliance with federal program requirements, such as unallowable costs or improper use of funds. This can result in questioned costs, the need to repay federal funds, or increased scrutiny from oversight agencies. Additionally, unresolved issues may affect the entity’s eligibility for future federal funding and require additional time and resources to address corrective actions, monitoring, or remediation efforts. Repeat Finding: No Recommendation: We recommend that the Department strengthen its review and monitoring procedures over federal expenditures to ensure that all transactions are appropriately reviewed for compliance with applicable federal program requirements. Management should implement controls to ensure transactions are adequately supported, reviewed in a timely manner, and documented, including supervisory review of expenditures charged to federal programs. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: Per 2 CFR 200.303, requires that non-federal entities receiving federal awards 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: During our testing of ETA – 191, Financial Status of UCFE/UCX one of the two reports tested lacked documentation that the report was reviewed prior to submission. Questioned costs: None. Context: One of the two ETA – 191, Financial Status of ECFE/UCX reports tested lacked documentation that the report was reviewed prior to submission. Cause: The Department lacked proper controls around the report to ensure that documentation was maintained to support that the report was reviewed for accuracy prior to submission. Effect: When evidence of review is not maintained, the Department lacks support that key oversight and approval controls were effectively performed. This increases the risk that errors, omissions, or noncompliance issues are not identified or addressed in a timely manner. In the absence of documented review, the Department may be unable to demonstrate compliance with internal control expectations to oversight agencies, which could result in increased scrutiny, additional monitoring requirements, or the need for corrective action. Repeat Finding: No Recommendation: We recommend that the Department formalize its review procedures by maintaining documented evidence of reviews for key reports related to federal programs. Management should establish clear documentation standards, such as reviewer sign‑off, date of review, and evidence of follow‑up on identified issues, to demonstrate that oversight controls are consistently performed. Views of responsible officials: There is no disagreement with the finding.
Criteria or specific requirement: Per 2 CFR 200.303, requires that non-federal entities receiving federal awards 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). States are required to submit periodic reporting to evaluate the performance of the state UI program. This includes the following reports: ETA 9050 – Time Lapse of All First Payments Except Workshare, ETA 9052 – Nonmonetary Determination Time Lapse Detections and the ETA 9055 – Appeals Case Aging – Lower and Higher Authority Appeals. Condition: During the audit period, the Department did not submit the ETA 9050, ETA 9052, and ETA 9055 reports accurately. Testing identified discrepancies between the data reported to the U.S. Department of Labor and the supporting underlying records, including variances within validation samples used to support reported figures. As a result, the reported information did not fully and accurately reflect program activity for the audit period. Questioned costs: None. Context: The U.S. Department of Labor requires states to submit accurate and complete Unemployment Insurance (UI) reports, including ETA 9050, ETA 9052, and ETA 9055. As part of the audit, eight ETA reports were tested, and discrepancies were identified in all eight reports tested. Cause: The condition occurred because the Department was in the process of implementing a new information system during the current year, which required the migration of historical and current‑year data. Management is continuing to identify and resolve data integrity issues associated with the system conversion, including differences within validation samples used to prepare the ETA reports. As a result, the Department is still working through data reconciliation and validation challenges related to the new system environment. Effect: As a result of the inaccurate submission of the ETA 9050, ETA 9052, and ETA 9055 reports, the U.S. Department of Labor may not have reliable information to assess the Department’s compliance with federal UI program requirements, including the timeliness and quality of nonmonetary determinations. Continued inaccuracies in required reporting could result in increased federal oversight and may impact future program evaluations or funding decisions. Repeat Finding: No Recommendation: We recommend that the Department continue efforts to strengthen controls over the preparation and review of ETA reports, including completing data reconciliation procedures related to the new system implementation. This should include validating migrated data, resolving discrepancies identified within validation samples, and implementing review procedures to ensure reported information is accurate, complete, and supported prior to submission to the U.S. Department of Labor. Views of responsible officials: There is no disagreement with the finding.
Criteria or specific requirement: Per 2 CFR 200.303, requires that non-federal entities receiving federal awards 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: The Kansas Department of Health and Environment (Department) submits quarterly workplan milestone progress reports; however, the reports provided are cumulative in nature and prior quarterly versions are not retained. As a result, auditors were unable to review progress and supporting information for each individual quarter, as only the most recent cumulative report was available. We were also unable to verify the dates that the quarterly performance reports were submitted. The Department prepares and submits quarterly workplan milestone progress reports and annual performance reports; however, documented evidence of supervisory or management review and approval of these reports prior to submission was not consistently maintained. As a result, the Department was unable to provide documentation demonstrating that the reports were reviewed for accuracy, completeness, or compliance with reporting requirements. Questioned costs: None. Context: During the audit, twenty-one quarterly workplan milestone progress reports were selected for testing; however, because the reports provided were cumulative and prior quarterly versions were not retained, we were able to test only four of the twenty-one reports and were unable to test the remaining twenty‑one reports. During the audit, twenty-one quarterly workplan milestone progress reports were selected for testing, and none included documentation evidencing review prior to submission. Additionally, five annual performance reports were tested; although the reports were available and appeared complete, the Department was unable to provide documentation demonstrating that they were formally reviewed prior to submission. Cause: The Department does not save or retain copies of the quarterly progress reports at the time they are submitted. Instead, reports are updated cumulatively each quarter, resulting in the loss of historical quarterly information. The Department does not have formalized procedures requiring documentation of supervisory or management review and approval for quarterly workplan milestone progress reports or annual performance reports. Although reports may be reviewed informally, the absence of standardized review and documentation procedures resulted in a lack of verifiable evidence that reports were reviewed prior to submission. Effect: Because individual quarterly reports were not retained, we were unable to verify progress, milestones, and reported information on a quarterly basis, which limits the ability to demonstrate compliance with reporting requirements and increases the risk that errors, omissions, or delays in milestone completion may not be detected timely. We were unable to verify whether the quarterly performance reports were submitted timely. Additionally, the absence of documented supervisory or management review for quarterly and annual performance reports limits the Department’s ability to demonstrate appropriate oversight and effective internal controls over performance reporting. Repeat Finding: No Recommendation: We recommend that the Department implement procedures to retain copies of each quarterly workplan milestone progress report at the time of submission. Maintaining discrete quarterly reports will improve documentation, support compliance with program requirements, and allow for effective monitoring and audit review of progress throughout the reporting period. In addition, we recommend that the Department implement formal procedures to document the review and approval of the quarterly and annual performance reports prior to submission. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: In accordance with 2 CFR §200.303, non-Federal entities must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the entity is complying with Federal statutes, regulations, and the terms and conditions of Federal awards. In addition, the Adoption Assistance Title IV‑E program allows payment of nonrecurring adoption expenses on behalf of an eligible child. Program records must include adequate supporting documentation to substantiate the allowability and eligibility of such costs. Condition: During testing of eligibility requirements, it was noted that three participants out of forty tested did not have supporting documentation in their case files for nonrecurring adoption expenses paid on their behalf. Questioned costs: None. Context: The participants tested were determined to be eligible for the program; however, their case files did not contain complete documentation supporting the nonrecurring expenses component. Cause: Internal controls were not sufficient to identify and correct missing documentation for nonrecurring expenses prior to payment. Effect: Without adequate supporting documentation, nonrecurring expenses paid may have included costs that were not eligible under program requirements. Repeat Finding: No. Recommendation: We recommend that KDCF strengthen internal controls to ensure that supporting documentation for nonrecurring adoption expenses is obtained, reviewed, and retained prior to payment to mitigate the risk of noncompliance in the future. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or Specific Requirement: Per 2 CFR 200.303 - Internal Controls and the OMB Compliance Supplement: Child Nutrition Cluster, Reporting - The District is required to have internal controls, including segregation of duties, over reporting of monthly reimbursement claims. Conditon: The same individual is responsible for preparing and submitting monthly reimbursement claims for the Child Nutrition Program without an independent review or approval prior to submission. Questioned Costs: This condition resulted in no identified questioned costs. Context: Currently one individual is responsible for preparing and submitting the monthly reimbursement claims. Effect: Meal claims could be submitted to the Illinois State Board of Education that do not accurately reflect the number of meals served. Consequently, the District could be over- or under-reimbursed by this grant program. Cause: Absense of formal internal control procedures resulted in one person performing all reporting functions. Recommendation: Implement segregation of duties by requiring one person to prepare the monthly claim and a second person (e.g., supervisor) to review and approve the claim before submission. The review should be supported with signatures or electronic approval logs. Management's response: A corrective action plan will be developed and implemented. A secondary review of the meal claim to the supporting documents will be performed before the meal claim is submitted.
2025 – 003: Reporting Federal Agency: U.S. Department Education Federal Program Name: Education Stabilization Fund Assistance Listing Number: 84.425 Pass-Through Agency: Indiana Department of Education Pass-Through Numbers: 7000S425U210013 Award Period: July 1, 2024 – June 30, 2025 Type of Finding: • Material Weakness in Internal Control Over Compliance • Other Matters Criteria or specific requirement: Grantees must submit an annual performance report with data on expenditures, planned expenditures, subrecipients, and uses of funds, including for mandatory reservations. Amounts reports must be supported by the unit's records. Per 2 CFR 200.303, The non-Federal entity must: (a) Establish and maintain effective internal control over 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 of the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: While performing audit procedures, it was noted that the School did not file the required annual report that was due during the audit period. Questioned costs: None. Context: During audit testing, it was noted that the annual reporting was not completed by the School as required during the audit period. Cause: The reporting requirement was missed due to management’s oversight. Effect: The School has not fully followed compliance attributes with the reporting requirements set forth by the Compliance Supplement. Personnel need to reinforce policies to ensure control procedures are in place to ensure all required grant compliance items are reviewed, approved, and completed in accordance with grant requirements. Repeat finding: No. Recommendation: We recommend that the School implement procedures and controls to ensure the required reports are accurate and completed timely. Views of responsible officials: There is no disagreement with the audit finding.
FINDING 2025-003 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): FY2024, FY2025 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Eligibility Audit Finding: Significant Deficiency Condition and Context The School Corporation had not properly implemented effective internal controls, which would include segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. Activities Allowed or Unallowed, Allowable Costs/Cost Principles During both the 2023-2024 and the 2024-2025 fiscal years, the School Corporation made payments to one vendor for E-Funds via wire transactions that were automatically debited from their account without review prior to payment. Additionally, these transactions were not included within the Allowance of Claims reports presented to and approved by the School Board. The lack of internal controls was isolated to these specific E-Fund transactions with this vendor. Eligibility For the 2023-2024 fiscal year, the School Corporation was unable to provide documentation that internal control activities were properly implemented over the initial Direct Certification CNP data abstract that was compiled at the beginning of the school year. Due to this, it could not be determined if internal controls were operating effectively. Additionally, subsequent reports generated only included students who had changes in status and did not include those pulled during the initial data abstract. The lack of internal controls was isolated to Direct Certifications during the 2023-2024 fiscal year. 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). . . ." INDIANA STATE BOARD OF ACCOUNTS 18 NORTHWESTERN SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause A proper system of internal controls was not implemented by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School 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 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. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish 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 2025-004 Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment 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): FY2024, FY2025 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Significant Deficiency, Other Matters Condition and Context Suspension & 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 or services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. Verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. INDIANA STATE BOARD OF ACCOUNTS 19 NORTHWESTERN SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The School Corporation had not properly implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. During the audit period, covered transactions in the amount of $63,597 were entered into with one vendor. The School Corporation had not checked the EPLS to verify the vendor was neither suspended nor debarred. The lack of internal controls and noncompliance were systemic throughout the audit period. Procurement During both the 2023-2024 and the 2024-2025 fiscal years, the School Corporation made payments to one vendor tested for micro-purchases for E-Funds via wire transactions that were automatically debited from their account without review prior to payment. Additionally, these transactions were not included within the Allowance of Claims reports presented to and approved by the School Board. The lack of internal controls is isolated to these specific E-Fund transactions with this vendor. 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 180.300 states: "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; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." 2 CFR 200.214 states: "Non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. 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." INDIANA STATE BOARD OF ACCOUNTS 20 NORTHWESTERN SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause Management had not implemented a system of internal controls that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. 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 designing and implementing an effective internal control system, material noncompliance was able to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could result in the loss of federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls, 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.
Assistance Listing, Federal Agency, and Program Name - 14.871, U.S. Department of Housing and Urban Development (HUD), Section 8 Housing Choice Vouchers Program Federal Award Identification Number and Year - Not applicable Pass-through Entity - Not applicable Finding Type - Material weakness Repeat Finding - No Criteria - Per 2 CFR 200.303, the 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 federal award. These internal controls should align with the 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 - The City did not have adequate controls in place around the salaries and wages charged to the program. Questioned Costs - Not applicable If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported - Not applicable Identification of How Questioned Costs Were Computed - Not applicable Context - During testing over the City's internal controls, PM identified the City did not have supporting documentation to show controls in place to review the salaries and wages charged to the program. Cause and Effect - The City was not able to provide sufficient documentation to support a review of salaries and wages. Although no instances of noncompliance were identified, the risk of noncompliance exists due to the fact no controls were in place to review expenditures for payroll applied to the program. Recommendation - We recommend the City implement controls surrounding the review of payroll-related expenditures. Views of Responsible Officials and Corrective Action Plan - The City acknowledges this finding and has updated our procedures to include the City Administrators’ review and approval, as evidenced by his signature, on all Section 8 employee timesheets. The City believes this finding will be corrected by June 30, 2026.
Federal Agency: U.S. Department of Education Federal Program Name: Student Financial Assistance Cluster Assistance Listing Number: 84.063 (Federal Pell Grant Program), 84.268 (Federal Direct Student Loans Program) Federal Award Identification Number and Year: N/A; 2024-2025 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: July 1, 2024 – June 30, 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance; Other Matters Criteria or specific requirement: Federal regulations and related guidance governing Title IV student aid programs requires institutions to accurately and timely report enrollment information to the National Student Loan Data System (NSLDS). Institutions must ensure that the reported data is complete and accurate, reflecting the student's actual enrollment status at the campus and program levels, including full-time, half-time, graduated, withdrawn, or any other status changes. This requirement helps maintain the integrity of the federal student aid programs and ensures that students' loan repayment statuses are correctly managed (NSLDS Enrollment Reporting Guide, November 2022, Chapter 2). Changes in enrollment status must be reported within 60 days of determining the student's status has changed. In addition, institutions must certify enrollment status on an ongoing basis, at least every 60 days (NSLDS Enrollment Reporting Guide, November 2022, Chapter 5).The data reported, including the effective date of enrollment status, must match the institution's internal records and reflect the student's current enrollment status (NSLDS Enrollment Reporting Guide, November 2022, Chapter 4). Finally, if the institution uses a third-party servicer for reporting, it must ensure that the servicer complies with all federal reporting requirements (NSLDS Enrollment Reporting Guide, November 2022, Chapter 3, Section 3.3). According to 2 CFR 200.303, non-federal entities must establish and maintain effective internal control over the federal award that provides reasonable assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Section III – Federal Award Findings and Questioned Costs (Continued) 2025 – 001 (Continued) Condition: During our audit of the District's enrollment reporting to NSLDS, for 11 (28%) of 40 students tested, the District did not accurately and timely report enrollment status changes to NSLDS. Specifically: • 11 of these students did not have their enrollment status change reported within 60 days of the date the District determined the change in status; • 1 of these students did not have their enrollment status verified on an ongoing basis per the required 60-day timeframe during the fiscal year. Questioned costs: None Context: The District uses the services of the National Student Clearinghouse (NSC) to report status changes to NSLDS. Under this arrangement, the District reports all students enrolled and their status to NSC. NSC then identifies any changes in status and reports those changes to NSLDS when required. Although the District uses the services of NSC, the District still has the primary responsibility to report any changes in student enrollment status accurately and in a timely manner. Cause: A control system to prevent and detect errors in the reporting process was not created to ensure all required reporting compliance was filed timely. Effect: Failure to comply with these reporting requirements can result in administrative actions, including fines and penalties, and can affect the institution's eligibility to participate in federal student aid programs. Non-compliance may also lead to inaccurate loan repayment statuses for students, potentially causing financial hardship. Repeat finding: Yes Recommendation: We recommend that the District enhance its oversight and monitoring of the third-party service provider responsible for reporting enrollment status changes to NSLDS. Views of responsible officials: The College acknowledges that a submission error occurred in Spring 2023, resulting in several students not being included in the routine semester enrollment submissions to the National Student Clearinghouse (NSC). Beginning in Spring 2024, our Institutional Research department initiated a comprehensive process to resubmit corrected enrollment files to the NSC, covering Spring 2023, Summer 2023, and Fall 2023. In collaboration with NSC, we followed their established process to rectify the error, which required reloading each submission one at a time in succession from the original submission with the error. This process caused delays in our subsequent submissions until the corrections were fully completed. To prevent recurrence, we have implemented enhanced checks and controls prior to each submission to review the file and file size to ensure the correct number of students are submitted to NSC. Additionally, all submissions post-Spring 2023 have been reviewed, and we have confirmed that this was an isolated incident. Due to the timing of when the College was notified by NSC, this item carried forward into audit year 2025.
2025-003 – GRANT AWARD POLICIES AND PROCEDURES Criteria: 2 CFR 200.303 requires that a 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 and the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 2 CFR 200.318 requires that the non-federal entity “must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services. These documented procurement procedures must be consistent with State, local, and tribal laws and regulations and the standards identified in §§ 200.317 through 200.327.” Condition: There was a lack of adequate documentation to support control activities were present. Specifically, the Municipality had no policies and procedures related to the administration of federal awards. Questioned Costs: None. Context: There were approximately 15 total disbursements totaling $1,031,467. Cause: The Municipality lacks formal internal controls and procedures related to the administration of federal awards. Effect: There is an increased risk that noncompliance with a federal award could occur and not be detected in a timely fashion. Recommendation: Management should establish proper policies and procedures which ensure that federal awards are adequately administered in accordance with program requirements. Management’s Response: Management concurs with the finding and has developed a plan to correct the issue. See corrective action plan. Status: This finding was not present in the prior audit year.
FINDING 2025-003 Subject: Child Nutrition Cluster - Internal Controls Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Special Milk Program for Children, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.556, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2024, FY2025 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Eligibility Audit Finding: Material Weakness Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-009. Condition and Context Any child enrolled in a participating school or summer camp, or attending a SFSP meal service site, who meets the applicable program's definition of "child," may receive meals under the applicable program. In the case of the National School Lunch Program and the School Breakfast Program, children belonging to households meeting nationwide income eligibility requirements may receive meals at no charge or at reduced price. Children who have been determined ineligible for free or reduced-price school meals pay the full price, set by the School Food Authority, for their meals. Children attending SFSP meal service sites receive their meals at no charge. INDIANA STATE BOARD OF ACCOUNTS 18 RUSH COUNTY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) As a general rule, a child's eligibility for free or reduced-price meals under a Child Nutrition Cluster program may be established by the submission of an annual application or statement which furnishes such information as family income and family size. Local educational agencies, institutions, and sponsors then determine eligibility by comparing the data reported by the child's household to published income eligibility guidelines. Additionally, a child may be direct certified. For a direct certification, annual eligibility determinations are based on the child's household receiving benefits under SNAP, FDPIR, the Head Start Program (ALN 93.600), or, under most circumstances, the TANF program (ALN 93.558). A household may furnish documentation of its participation in one of these programs; or the school, institution, or sponsor may obtain the information directly from the state or local agency that administers these 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. There was no documented evidence of the Food Service Director reviewing the eligibility determinations for free and reduced lunches that were made by the Cafeteria Secretary during the audit period. In addition, there was no documented review by the School Corporation to ensure accuracy of the income eligibility parameters that were entered by the software vendor. The lack of internal controls was a systemic issue 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 Due to staff turnover, including a change in the Food Service Director during the audit period, the required reviews were not always performed due to vacancies within this department. Also, the most recently hired Food Service Director started duties late in the audit period and thus was in the early stages of gaining familiarity with this compliance requirement and the processes necessary to meet those. Effect The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the Eligibility compliance requirement. A lack of an effective internal control system could also allow noncompliance with compliance requirements and allow the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the program. INDIANA STATE BOARD OF ACCOUNTS 19 RUSH COUNTY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a proper system of internal controls to ensure that students receive the correct benefits and that only eligible students receive benefits. 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: Child Nutrition Cluster - Internal Controls Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Special Milk Program for Children, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.556, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY2024, FY2025 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-007. Condition and Context An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Prior to entering into subawards and covered transactions with program 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 exclusion, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. The School Corporation engaged with an Education Service Center that was an approved School Food Authority (SFA) cooperative for three of its four covered transactions totaling $1,705,141 that were subject to federal suspension and debarment requirements during the audit period. All three of these transactions were tested and found to be compliant with suspension and debarment requirements for the Child Nutrition Cluster grant requirements during the 2024-2025 audit period. In addition, the School Corporation obtained goods and services from an equipment vendor that was not a part of the cooperative's procurement processes for vendor selections and use. This covered transaction totaling $110,749, that equaled or exceeded $25,000, was identified and tested for compliance with suspension and debarment grant requirements. INDIANA STATE BOARD OF ACCOUNTS 20 RUSH COUNTY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The School Corporation had a process in place to verify on Sam.gov whether this equipment vendor was suspended or debarred from receiving payment from federal funds. However, there was no documentation of a second employee confirming the status of this vendor with regards to being suspended or debarred from receiving federal funds during 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 control was not designed by management of the School Corporation. The School Corporation had a process involving the verification of a vendor's status with regards to being suspended or debarred from receipt of federal funds. However, there was no documentation that a second employee was involved in reviewing the determination made as to the suspended or debarred status of vendors involved in food service procurement during the audit period. 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, vendors to whom payments equal or exceed $25,000 were verified to be not suspended, debarred, or otherwise excluded, but no internal control was in place to ensure that the determinations made in regards to vendor status for receiving federal funds was correct. 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 the School Corporation's management strengthen its system of internal controls to ensure that all contractors paid $25,000 or more, all or in part with federal funds, are not suspended, debarred, or otherwise excluded from participation in federal program and ensure appropriate documentation for federal program is retained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-005 Subject: Title I Grants to Local Educational Agencies - Internal Controls 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 Tests and Provisions - Assessment System Security Audit Finding: Material Weakness Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-004. Condition and Context An effective internal control system, which would include segregation of duties, was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Special Tests and Provisions - Assessment System Security compliance requirement. State educational agencies (SEA), in consultation with local educational agencies (LEA), are required to establish and maintain an assessment security system that is valid, reliable, and consistent with relevant professional and technical standards. Within their assessment system, the SEAs must have policies and procedures to maintain test security measures and ensure that the LEAs implement those polices and procedures. As such the Indiana Department of Education created and published the Indiana Assessments Policy Manual. As a part of the assessment security, any individual who administers, handles, or has access to secure test materials at the school or school corporation shall complete assessment training and sign a testing security and integrity statement that remains on file in the appropriate building-level office each year. Each individual required to sign the testing integrity agreement shall sign the form by an established date. The School Corporation had a process to provide assessment system security training and to ensure each employee that attended training signed the agreement indicating training was received. However, there was no documentation of a review process to confirm that all appropriate staff completed assessment system security training as required. The lack of internal controls was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 22 RUSH COUNTY SCHOOLS 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). . . ." Cause While the School Corporation was aware of the requirement to provide the required testing, officials involved with the grant had a lack of familiarity with the need to develop internal controls to ensure that all required staff received this training in accordance with the grant agreement and the compliance requirement. Effect The failure to establish an effective internal control system places the School Corporation at risk of noncompliance with the grant agreement and the Special Tests and Provisions - Assessment System Security compliance requirement. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation establish a proper system of internal controls to ensure that all personnel receive the proper training and retain the documentation to support that all personnel received the proper training. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-006 Subject: Title I Grants to Local Educational Agencies - Eligibility 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: Eligibility Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-003. INDIANA STATE BOARD OF ACCOUNTS 23 RUSH COUNTY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the Eligibility compliance requirement. Eligibility for Title I is determined on the Eligible School Summary of the Title I application. Enrollment and Poverty numbers are automatically pulled from the Indiana Department of Education's (IDOE) Official Pupil Enrollment (PE) count for each school into the Eligible School Summary page of the Tile I application. These counts that are prepopulated should be based on the School Corporation's records as of October of the prior fiscal year. Data from the School Corporation's student software system (Real Time data reports) was uploaded to the IDOE's Data Exchange System. Enrollment information for the School Corporation was then abstracted by the IDOE from the Data Exchange System and prepopulated into the Title I application for the School Corporation. The poverty counts in the Title I application are prepopulated from the direct certifications listings by the IDOE. The School Corporation also downloads the direct certification listings into its student management software to support the poverty counts. The October 1, 2022 and 2023 Real Time data reports, which were used to prepopulate the School Corporation's enrollment numbers for the 2023-2024 and 2024-2025 Title I applications, were tested for accuracy. Students were selected from the Real Time reports. One employee compiled and uploaded enrollment data, including poverty status for Real Time reports into the Title I application, without a documented oversight or review process to ensure that the information was accurate. In addition, there was no review by the School Corporation of the enrollment and poverty counts that were prepopulated into the School Corporation's Title I grant application. Of the 40 students tested for accuracy of the 2023-2024 and 2024-2025 Title I grant application student enrollment data, the reported socioeconomic status of 2 students did not agree to supporting documentation. The lack of internal controls and the 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). . . ." INDIANA STATE BOARD OF ACCOUNTS 24 RUSH COUNTY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 34 CFR 200.78(a)(1) states: "After reserving funds, as applicable, under § 200.77, including funds for equitable services for private school students, their teachers, and their families, an LEA must allocate funds under this subpart to school attendance areas and schools, identified as eligible and selected to participate under section 1113(a) or (b) of the ESEA, in rank order on the basis of the total number of public school children from low-income families in each area or school." Cause There has been turnover in the Grant Coordinator position for this School Corporation, and the new employee hired for this position is working to become familiar with specific requirements for this grant, including the design and implementation of specific internal control processes to ensure compliance with the grant agreement. 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. 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 the School Corporation's management establish a system of internal controls and develop policies and procedures over the Title I application enrollment and poverty information and that appropriate reviews, approval, and oversight are taking place to ensure compliance with the grant agreement. Additionally, management should develop policies and procedures to ensure the accuracy of students' enrollment and poverty counts information in the application. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-007 Subject: Special Education Cluster (IDEA) - Suspension and Debarment Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.027X, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 22611-117-PN01, 22611-117-ARP, 23611-117-PN01, 24611-117-PN01, 25611-117-PN01, 22619-117-PN01, 23619-117-PN01, 24619-117-PN01, 25619-117-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-005. Condition and Context Suspension and Debarment An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Prior to entering into subawards and covered transactions with program 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 exclusion, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Three covered transactions that equaled or exceeded $25,000 were identified. All three of these transactions were tested for compliance with suspension and debarment requirements for the Special Education Cluster (IDEA) grants during the 2024-2025 audit period. From testing, it was noted that the School Corporation had a process in place to verify on Sam.gov whether these vendors were suspended or debarred from receiving payment from federal funds. However, there was no documentation that a review of this verification had been performed. The lack of effective internal controls was a systemic issue throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 26 RUSH COUNTY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 The School Corporation had a process in place to check the suspension and debarment status of vendors being paid with special education grant funds. However, no documentation of a review to ensure the accuracy of determinations made with regards to the suspension and debarment status of potential vendors was provided for audit. 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, vendors to whom payments equal or exceed $25,000 were verified to be not suspended, debarred, or otherwise excluded, but no internal control was in place to ensure that the determinations made in regards to vendor status for receiving federal funds was correct. 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 known questioned costs identified. Recommendation We recommended that the School Corporation's management establish a proper system of internal controls and develop policies and procedures to ensure expenditures made from federal awards are in compliance with the procurement and suspension and debarment compliance requirements. The School Corporation's system of internal controls should be designed to ensure that the appropriate procurement method is utilized and that documentation is retained to support the procurement methods used in order to ensure compliance with the terms and conditions of the federal award. Additionally, the system should be designed to ensure that vendors are not suspended or debarred, or otherwise excluded, prior to the School Corporation entering into a covered transaction and that internal controls are in place to ensure that any determinations made for vendor status are correct. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-008 Subject: COVID-19 - Education Stabilization Fund - Special Tests and Provisions - Wage Rate Requirements Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425U Federal Award Number and Year (or Other Identifying Number): S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Tests and Provisions - Wage Rate Requirements Audit Findings: Material Weakness, Modified Opinion Condition and Context Construction contracts in excess of $2,000 financed by federal assistance funds must pay wages not less than those established for the locality of the project (prevailing wage rates) by the Department of Labor (DOL) to its laborers and mechanics. Nonfederal entities are to include in its construction contracts subject to the Wage Rate Requirements a provision that the contractor or subcontractor comply with these requirements and the DOL regulations. This would include a requirement to submit a copy of the payroll and statement of compliance to the entity for each week in which contract work was performed. The School Corporation had not designed nor implemented a system of internal controls to ensure that construction contracts in excess of $2,000 paid from federal grant funds included a prevailing wage rate clause. There were also no internal controls in place to ensure that the School Corporation received certified weekly payrolls from vendors required to provide these as a part of the grant requirements during the audit period. The School Corporation was not aware of the wage rate requirements when it entered into an agreement with a contractor providing services on renovations and additions to school facilities and opted to pay for these obligations with federal grant funds. One construction contract with expenditures totaling $124,069 was paid from COVID-19 - Education Stabilization Fund (ESSER III - Fund 7923) grant awards during the audit period. The contract tested for compliance with this requirement did not contain the required prevailing wage rate clause. Additionally, no certified weekly payrolls were obtained for this construction project performed and completed in accordance with the contract. The lack of internal controls and noncompliance were isolated to the ESSER III grant in 2023-2024. 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). . . ." INDIANA STATE BOARD OF ACCOUNTS 28 RUSH COUNTY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 29 CFR 5.5 states in part: "(a) Required contract clauses. The Agency head will cause or require the contracting officer to require the contracting officer to [sic] insert in full, or (for contracts covered by the Federal Acquisition Regulation (48 CFR chapter 1)) by reference, in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part from Federal funds or in accordance with guarantees of a Federal agency or financed from funds obtained by pledge of any contract of a Federal agency to make a loan, grant or annual contribution (except where a different meaning is expressly indicated), and which is subject to the labor standards provisions of any of the laws referenced by § 5.1, the following clauses . . . (1) Minimum wages - (i) Wage rates and fringe benefits. All laborers and mechanics employed or working upon the site of the work (or otherwise working in construction or development of the project under a development statute), will be paid unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account (except such payroll deductions as are permitted by regulations issued by the Secretary of Labor under the Copeland Act (29 CFR part 3)), the full amount of basic hourly wages and bona fide fringe benefits (or cash equivalents thereof) due at time of payment computed at rates not less than those contained in the wage determination of the Secretary of Labor which is attached hereto and made a part hereof, regardless of any contractual relationship which may be alleged to exist between the contractor and such laborers and mechanics. . . . (3) Records and certified payrolls - . . . (ii) Certified payroll requirements - (A) Frequency and method of submission. The contractor or subcontractor must submit weekly, for each week in which any DBA- or Related Acts-covered work is performed, certified payrolls to the [write in name of appropriate Federal agency] if the agency is a party to the contract, but if the agency is not such a party, the contractor will submit the certified payrolls to the applicant, sponsor, owner, or other entity, as the case may be, that maintains such records, for transmission to the [write in name of agency]. . . ." 2 CFR 200 Appendix II states in part: "In addition to other provisions required by the Federal agency or non-Federal entity; all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following, as applicable. . . . INDIANA STATE BOARD OF ACCOUNTS 29 RUSH COUNTY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (D) Davis-Bacon Act, as amended (40 U.S.C. 3141-3148). When required by Federal program legislation, all prime construction contracts in excess of $2,000 awarded by non- Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, and 3146-3148) as supplemented by Department of Labor regulations (29 CFR Part 5, 'Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction'). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor. In addition, contractors must be required to pay wages not less than once a week. . . ." Cause The School Corporation was unaware of the requirement to include the appropriate wage rate clause in applicable contracts and obtain certified payrolls from vendors set to receive grant funds per contractual agreements. These requirements were in effect once the payments from COVID-19 - Education Stabilization Fund sources were used to pay towards obligations incurred for construction contracts during the audit period. 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, construction contracts entered into and paid with federal grant funds during the audit that were subject to wage rate requirements did not contain the required information nor were certified payrolls obtained by the School Corporation. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls and include the wage rate requirement clause in construction contracts. In addition, certified payrolls should be obtained as required in a timely manner. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Federal Agency: US Department of Education Federal Program Name: Student Financial Assistance Cluster Assistance Listing Number: 84.063, 84.007, 84.033, 84.268 Federal Award Identification Number and Year: P063P242037 - 2025, P007A243429 - 2025, P033A243429 - 2025, P268K252037 - 2025 Award Period: July 1, 2024 to June 30, 2025 Type of Finding: • Compliance, Other Matter • Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: 34 CFR 682.604, states that a school must ensure that exit counseling is conducted with each Stafford Loan borrower and graduate or professional student PLUS Loan borrower either in person, by audiovisual presentation, or by interactive electronic means. In each case, the school must ensure that this counseling is conducted shortly before the student borrower ceases at least half-time study at the school. 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 College did not properly have documentation of exit counseling notification. Questioned costs: None. Context: During our testing of 40 students, we identified 7 students that did not have documentation of exit counseling notification. Cause: The College did not have proper procedures in place to ensure that notification of required exit counseling was sent to applicable students. Effect: Exit counseling helps federal student loan borrowers understand how to repay their loans and reviews deferment and repayment plans options. If students are not notified of exit counseling, they could be at risk of not understanding their rights and responsibilities regarding loan repayment. Repeat Finding: No Recommendation: We recommend the College review reporting processes to ensure all students that require exit counseling receive it in a timely manner. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.
Federal Agency: US Department of Education Federal Program Name: Student Financial Assistance Cluster Assistance Listing Number: 84.063, 84.007, 84.033, 84.268 Federal Award Identification Number and Year: P063P242037 - 2025, P007A243429 - 2025, P033A243429 - 2025, P268K252037 - 2025 Award Period: July 1, 2024 to June 30, 2025 Type of Finding: • Compliance, Other Matter • Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Per 34 CFR 668.22(f)(2)(i), the total number of calendar days in a payment period or period of enrollment includes all days within the period that the student was scheduled to complete, except that scheduled breaks of at least five consecutive days are excluded from the total number of calendar days in a payment period or period of enrollment and the number of calendar days completed in that period. The Code of Federal Regulations, 34 CFR 668.22(j)(1), states that an institution must return the amount of title IV funds for which it is responsible as soon as possible but no later than 45 days after the date of the institution's determination that the student withdrew. 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 College incorrectly calculated Return to Title IV (R2T4) calculations and did not return Title IV funds within 45-days. Questioned costs: None. Context: During our testing of 40 R2T4 calculations, we identified that 15 had mechanically incorrect calculations by using the incorrect number of scheduled break days in the Spring term. Additionally, we identified 1 student with Title IV refund that was not returned within the 45-day requirement. Cause: The College was using the incorrect number of scheduled break days for Spring Term. Effect: The College could return incorrect amounts based off of their calculations, which could effect student repayment amounts based off of amount earned. Repeat Finding: Yes, 2024-003 Recommendation: We recommend that the College review policies and procedures related to R2T4 calculations to ensure calculations are performed correctly and timely. We also recommend the College implement formal review procedures to document the Return of Title IV calculations are being performed to minimize the likelihood that errors may go undetected and not be corrected in a timely manner. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.
Federal Agency: US Department of Education Federal Program Name: Student Financial Assistance Cluster Assistance Listing Number: 84.063, 84.007, 84.033, 84.268 Federal Award Identification Number and Year: P063P242037 - 2025, P007A243429 - 2025, P033A243429 - 2025, P268K252037 - 2025 Award Period: July 1, 2024 to June 30, 2025 Type of Finding: • Compliance, Other Matter • Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: 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. 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 College 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 40 students, we identified 7 students with an effective date reported to NSLDS that did not align with institutional records and 6 students that were reported after the 60 day requirement. Cause: The College did not have proper procedures in place to verify students' status in NSLDS matched the institutions records accurately and reported timely. Effect: The College 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 Finding: Yes, 2024-002 Recommendation: We recommend the College review current processes for reporting to NSLDS and implement procedures to ensure submissions are reported accurately and timely. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.
FINDING 2025-003 Subject: Child Nutrition Cluster - Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Special Tests and Provisions - Non-Profit School Food Service Accounts Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023-2024, FY 2024-2025 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Special Tests and Provisions - Non-Profit School Food Service Accounts Audit Finding: Material Weakness Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-003. Condition and Context The School Corporation entered into a cost reimbursement contract with a food service management company (FSMC) during the audit period. Per the contract with the FSMC, detailed cost documentation must be submitted monthly to support what the School Corporation was charged for each cost, charge, or expense. An oversight or review process was not in place to ensure the FSMC expenditures were supported by proper detail documentation, were allowable, and only for the operation of the food service program. The FSMC provided summary level invoices with support for vendor invoices and a detailed ledger reports of expenses. However, the Food Service Director only reviewed the summary level invoice. INDIANA STATE BOARD OF ACCOUNTS 23 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Had the Food Service Director reviewed the detailed records provided, the School Corporation would have noted the detailed ledger reports provided did not agree to the summary level amount invoiced and that detailed payroll records were not provided. When requested for audit, the FSMC did provide detailed ledger reports of expenses that materially agreed to the total invoiced for the audit period and provided detailed payroll records as requested. The lack of internal controls 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). . . ." Cause Management had not developed an adequate system of internal controls to ensure complete and accurate detailed cost documentation was provided to support monthly invoices. Effect Without an effective review of the detailed records, federal expenditures could be unallowable, which the funding agency could potentially recover. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a proper system of internal controls to ensure complete and accurate detailed cost documentation was provided to support monthly invoices prior to payment. 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: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023-2024, FY 2024-2025 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-004. Condition and Context An effective internal control system was not designed or implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement When the value of goods or services exceeds the simplified acquisition threshold, the proper purchasing method would be the bidding process, unless the purchase meets certain other qualifications. Federal regulations allow for informal procurement methods when the value of the procurement for goods or services does not exceed the simplified acquisition threshold, which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. If it is determined a single source provider can be used for a small purchase, documentation must be retained supporting the determination. The School Corporation procured goods and services totaling $5,967,079 from three vendors that exceeded the simplified acquisition threshold during the audit period. The School Corporation did not follow procurement requirements for one of the three vendors. Multiple quotes were obtained for the purchase of cafeteria equipment totaling $361,575; however, the procurement method used should have been the bidding process. Additionally, the School Corporation did not obtain a contract for the purchase. The School Corporation made three small purchases totaling $35,045 that were selected for testing. The School Corporation did not obtain price or rate quotes as required. Documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit. INDIANA STATE BOARD OF ACCOUNTS 25 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Suspension and Debarment Prior to entering into subawards and covered transactions, recipients are required to verify that 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 (e.g., grant agreement) that are expected to equal or exceed $25,000 and all subawards. The verification is to be done by checking the SAM exclusions list, collection of a certification from that person or entity, or adding a clause or condition to the covered transaction with that person or entity. There were three covered transactions over $25,000 during the audit period, which totaled $5,967,079. The School Corporation did not verify that one of the three covered transactions, totaling $361,575, was not suspended, debarred, or otherwise excluded from participation in federal assistance programs. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(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. . . . (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. . . ." Indiana Code 5-22-8-3(d) states: "If the purchasing agent receives a satisfactory quote, the purchasing agent shall award a contract to the lowest responsible and responsive offeror for each line or class of supplies required." 2 CFR 200.320 states in part: "The non-Federal entity must have and use document 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. INDIANA STATE BOARD OF ACCOUNTS 26 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (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 SAT, 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. The sealed bids method is the preferred method for procuring construction. . . ." 2 CFR 180.300 states: "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; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management had not designed or implemented a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect Material noncompliance with the grant agreement and compliance requirements could cause federal expenditures to be unallowable which the funding agency could potentially recover. INDIANA STATE BOARD OF ACCOUNTS 27 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a proper system of internal controls to ensure compliance with requirements related to procurement and suspension and debarment. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-005 Subject: Child Nutrition Cluster - Reporting Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023-2024, FY 2024-2025 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Condition and Context Monthly Sponsor Claims for Reimbursement (Claims) were submitted to the Indiana Department of Education based upon the number of meals served for the month. The Claims were prepared by the School Corporation's Food Service Director and a food service management company (FSMC) employee. The School Corporation maintained manual meal count records. A point-of-sale system (POS) was used to summarize the manual counts. For all four Claims tested, there were differences between the Claims submitted and the School Corporation's detail meal count reports, resulting in over and under reporting and reimbursement. The Claims tested contained the following errors: The October 2023 claim reported 27 less meals served (11 breakfast and 16 lunch) than the eligible meals per the School Corporation's detail meal count reports, which resulted in an underclaimed reimbursement totaling $100. The School Corporation also overclaimed snacks by 5, which resulted in over reimbursement of $6. The November 2023 claim reported 2 less lunch meals served than the eligible meals per the School Corporation's detail meal count reports, which resulted in an underclaimed reimbursement totaling $9. The June 2024 claim reported 666 more breakfast meals served than the eligible meals per the School Corporation's detail meal count reports, which resulted in an overclaimed reimbursement totaling $1,946. The claim also reported 527 less lunch meals served than the eligible meals per the School Corporation's detail meal count reports, which resulted in an underclaimed reimbursement totaling $2,704. The net of the errors was $758 underclaimed. INDIANA STATE BOARD OF ACCOUNTS 28 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The May 2025 claim reported 10 less meals served (5 breakfast and 5 lunch) than the eligible meals per the School Corporation's detail meal count reports, which resulted in an underclaimed reimbursement totaling $37. The School Corporation also overclaimed snacks by 10, which resulted in over reimbursement of $12. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . ." Cause The School Corporation did not have effective internal control procedures in place over the Claims submitted. The Claims contained evidence of an oversight or review process in place; however, they did not prevent, or detect and correct, errors. The Claims were prepared based upon summary sheets prepared by the FSMC employees and were not verified back to the source records. Effect The lack of effective internal controls caused a total of $894 not to be claimed for reimbursement, which projected to a loss of funding of $6,272. Noncompliance with the grant agreement and the compliance requirement could result in the loss or repayment of federal funds. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a proper system of internal controls to ensure compliance with requirements related to reporting. INDIANA STATE BOARD OF ACCOUNTS 29 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-006 Subject: Title I Grants to Local Educational Agencies - Special Tests and Provisions - Annual Report Card, High School Graduation Rate 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 Tests and Provisions - Annual Report Card, High School Graduation Rate Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-006. Condition and Context The School Corporation must report graduation rate data for all public high schools within the School Corporation using the four-year adjusted cohort rate. To remove a student from the cohort, the School Corporation must confirm the reason for removal in writing. Additionally, required documentation for each removal type must be retained by the School Corporation. For 4 of the 13 students tested, proper supporting documentation was not maintained to support the removal from the graduation cohort. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 30 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 20 USC 7801(23)(B) states: "To remove a student from a cohort, a school or local educational agency shall require documentation, or obtain documentation from the State educational agency, to confirm that the student has transferred out, emigrated to another country, or transferred to a prison or juvenile facility, or is deceased." Cause The School Corporation did not have effective internal controls to ensure required documentation to support the reason for a student's removal from the high school graduation cohort for mobility reasons was prepared and retained. Effect Noncompliance with the grant agreement and the compliance requirement could result in the repayment of federal funds. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a proper system of internal controls and develop policies and procedures to ensure appropriate documentation is retained to support the removal of students from the cohort. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-007 Subject: Title I Grants to Local Educational Agencies - Eligibility 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: Eligibility Audit Findings: Material Weakness, Modified Opinion Condition and Context Eligibility for Title I is determined on the Eligible School Summary of the Title I application. Enrollment and poverty numbers for the public school district are automatically pulled from Indiana Department of Education's Official Pupil Enrollment count for each school into the Eligible School Summary page of the Title I application. Enrollment and poverty numbers for any nonpublic schools are manually entered into the Title I application by the School Corporation. The School Corporation was to obtain a list of students and their poverty status from the non-public schools to enter into the Title I application. INDIANA STATE BOARD OF ACCOUNTS 31 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) However, supporting documentation was not provided to verify the nonpublic schools' enrollment and poverty numbers included in the fiscal year 2023-2024 Title I application. In addition, supporting documentation was not provided to verify the nonpublic schools' poverty numbers and the total enrollment number was 42 students greater than the support provided for the 2024-2025 Title I application. The lack of internal controls and supporting documentation was 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). . . ." 2 CFR 200.334 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for the Federal awards that are renewed quarterly or annual, from the date of submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." 34 CFR 200.78(a)(1) states: "After reserving funds, as applicable, under § 200.77, including funds for equitable services for private school students, their teachers, and their families, an LEA must allocate funds under this subpart to school attendance areas and schools, identified as eligible and selected to participate under section 1113(a) or (b) of the ESEA, in rank order on the basis of the total number of public school children from low-income families in each area or school." Cause Due to a turnover in Title I Directors, supporting documentation for the enrollment and poverty numbers included in the Title I applications could not be located. Effect Noncompliance with the grant agreement and the compliance requirement could result in the repayment of federal funds. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 32 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that the School Corporation's management develop policies and procedures over the retention of the Title I application enrollment and poverty information for nonpublic schools. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-008 Subject: COVID-19 - Education Stabilization Fund - Condition of Records Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U, 84.425W Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013, S425W210015 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Equipment and Real Property Management; Matching, Level of Effort, Earmarking; Special Tests and Provisions - Wage Rate Requirements Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding numbers were 2023-007 and 2023-009 over the compliance requirements Equipment and Real Property Management and Special Tests and Provisions - Wage Rate Requirements, respectively. Condition and Context The School Corporation received reimbursements totaling $30,316,384 from the COVID-19 - Education Stabilization Fund (ESF) federal awards during the audit period. The reimbursements were associated with three separate federal awards, each of which was required to be accounted for in a separate fund within the School Corporation's financial management system. Expenditures were to be made in accordance with the approved grant applications and budgets, with reimbursement requests subsequently submitted to the Indiana Department of Education (IDOE). The School Corporation was responsible for maintaining detailed disbursement ledgers for each grant fund to support the amounts claimed for reimbursement. As is typical with reimbursement-based grants, the ending cash and investment balances of each grant fund were expected to reflect overdrawn balances until the subsequent reimbursements were received from the IDOE. The $30,316,384 received in ESF funds during the audit period was based on 28 reimbursement requests for expenditures incurred between June 1, 2023 through December 13, 2024. Based on our review of grant fund records and inquiry with management, we identified the following deficiencies: The detailed disbursement ledger for the period of June 1, 2023 through December 13, 2024, excluding June 2024 for Grant #S425U210013 as no reimbursement request was submitted, reflected total expenditures of $23,051,334. This resulted in $7,265,050 in reimbursements that were not adequately supported by detailed records. INDIANA STATE BOARD OF ACCOUNTS 33 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) A review of the submitted reimbursement requests indicated that $1,069,865 was reimbursed for indirect costs; however, a disbursement from the grant funds to other operating funds was not recorded within the School Corporations records. Of the 28 reimbursement requests submitted, only 5 were supported by detailed disbursement ledgers that agreed with the dates and amounts claimed. The remaining 23 reimbursement requests could not be directly reconciled to the supporting documentation provided. Upon further inquiry with management, additional records were provided; however, these records lacked sufficient detail, such as fund number, fund name, check numbers, dates, and vendor names to be useable. Reimbursements received were not posted to each grant fund properly. This resulted in the ARP EESER III fund receipts to be understated by $4,297,935 and the ESSER II and GEER PD funds receipts to be overstated by $4,174,376 and $123,560, respectively. Since this is a reimbursement-based grant, the ending cash and investment balances of each grant fund should either be zero or overdrawn while awaiting reimbursement. However, as of June 30, 2025, the ESSER II and Geer PD funds reported positive cash and investment balances of $5,047,932 and $404,653, respectively. Due to the deficiencies noted above, the School Corporation was unable to provide sufficient appropriate evidence for us to determine populations, and, therefore, audit and base an opinion on the compliance requirements subject to audit that were determined to have a direct and material effect on the program. As a result, the $30,316,384 in reimbursements received during the audit period were considered questioned costs. The lack of internal controls and noncompliance were material and 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). . . ." 2 CFR 200.302 states in part: "(a) . . . the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. See also § 200.450. INDIANA STATE BOARD OF ACCOUNTS 34 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) The financial management system of each non-Federal entity must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337): (1) Identification, in its accounts, 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 and year, name of the Federal agency, and name of the pass-through entity, if any. (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. . . . (3) Records that identify adequately the source and application of funds for federallyfunded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income, and interest and be supported by source documentation. (4) Effective control over, and accountability, for all funds, property, and assets. The non- Federal entity must adequately safeguard all assets and ensure that 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 of this part and the terms and conditions of the Federal award." 2 CFR 200.1 states in part: ". . . Questioned cost means a cost that is questioned by the auditor because of an audit finding: (1) Which resulted from a violation or possible violation of a statute, regulation, or the terms and conditions of a Federal award, including for funds used to match Federal funds; (2) Where the costs, at the time of the audit, are not supported by adequate documentation; or (3) Where the costs incurred appear unreasonable and do not reflect the actions a prudent person would take in the circumstances. (4) Questioned costs are not an improper payment until reviewed and confirmed to be improper as defined in OMB Circular A-123 appendix C. (See also the definition of Improper payment in this section)." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. INDIANA STATE BOARD OF ACCOUNTS 35 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." 2 CFR 200.313(d) states in part: ". . . (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. . . ." 29 CFR 5.5 states in part: "(a) Required contract clauses. The Agency head will cause or require the contracting officer to require the contracting officer to [sic] insert in full, or (for contracts covered by the Federal Acquisition Regulation (48 CFR chapter 1)) by reference, in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part from Federal funds or in accordance with guarantees of a Federal agency or financed from funds obtained by pledge of any contract of a Federal agency to make a loan, grant or annual contribution (except where a different meaning is expressly indicated), and which is subject to the labor standards provisions of any of the laws referenced by § 5.1, the following clauses . . . (1) Minimum wages— (i) Wage rates and fringe benefits. All laborers and mechanics employed or working upon the site of the work (or otherwise working in construction or development of the project under a development statute), will be paid unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account (except such payroll deductions as are permitted by regulations issued by the Secretary of Labor under the Copeland Act (29 CFR part 3)), the full amount of basic hourly wages and bona fide fringe benefits (or cash equivalents thereof) due at time of payment computed at rates not less than those contained in the wage determination of the Secretary of Labor which is attached hereto and made a part hereof, regardless of any contractual relationship which may be alleged to exist between the contractor and such laborers and mechanics. . . . (3) Records and certified payrolls— (ii) Certified payroll requirements— INDIANA STATE BOARD OF ACCOUNTS 36 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (A) Frequency and method of submission. The contractor or subcontractor must submit weekly, for each week in which any DBA- or Related Acts-covered work is performed, certified payrolls to the [write in name of appropriate Federal agency] if the agency is a party to the contract, but if the agency is not such a party, the contractor will submit the certified payrolls to the applicant, sponsor, owner, or other entity, as the case may be, that maintains such records, for transmission to the [write in name of agency]. . . ." 2 CFR 200 Appendix II to Part 200 states in part: "In addition to other provisions required by the Federal agency or non-Federal entity; all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following, as applicable. . . . (D) Davis-Bacon Act, as amended (40 U.S.C. 3141-3148). When required by Federal program legislation, all prime construction contracts in excess of $2,000 awarded by non- Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, and 3146-3148) as supplemented by Department of Labor regulations (29 CFR Part 5, 'Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction'). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor. In addition, contractors must be required to pay wages not less than once a week. . . ." Cause The School Corporation experienced turnover in key personnel over the federal program, which contributed to the lack of appropriate supporting records. A proper system of internal controls was not designed to ensure continuity of policies, procedures, and records when personnel transitions occurred. Effect Noncompliance with the grant agreement and the compliance requirements could result in the repayment of federal funds. Questioned Costs We identified $30,316,384 in known questioned costs as noted in the Condition and Context. Recommendation We recommended that the School Corporation's management develop policies and procedures to ensure continuity of school records during a personnel change and that all reimbursement requests are properly supported by detail records. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Program: Nationally Significant Freight and Highway Projects Financial Assistance Listing Number: 20.934 Federal Agency: U.S. Department of Transportation Pass-through: California Department of Transportation Award Year: 2019 Grant Award Number: INFRALUL-5459(031) Compliance Requirements: Special Tests and Provisions – Wage Rate Requirements Type of Finding: Material Weakness in Internal Control over Compliance and Material 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 Contracts 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 fifty-seven (57) out of sixty (60) weeks of certified payroll submissions selected, we noted that the City did not have appropriate internal controls in place to review the contractors’ statement of compliance of certified payroll to determine they were prepared and submitted in a timely manner. For thirty-four (34) out of sixty (60) weeks of certified payroll submissions selected, we noted that the contractor or subcontractor had not submitted on a timely basis the certified payroll weekly for each week in which the contract work was performed. Cause: The City’s procedures did not include documenting the review of the certified payroll received. In addition, the City did not have the necessary internal controls in place to ensure the contractor’s and subcontractor’s certified payroll were submitted weekly. The City’s monitoring was done on a monthly basis through April 2025 and was changed to weekly in May 2025. Effect: Ineffective controls over this area of compliance resulted in noncompliance with the wage rate compliance requirements. Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: A nonstatistical sample of sixty (60) contractor work weeks out of greater than two hundred and fifty (250) were selected for testwork. Repeat Finding from the Prior Year(s): Yes, prior year finding 2024-003 Recommendation: We recommend that the City strengthen its internal controls to ensure that timely reviews of certified payroll submissions are being performed by the City. View of Responsible Officials Management agrees. See separate Corrective Action Plan.
Criteria or specific requirement: 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. This includes the enrollment effective date and related enrollment status, which must be reported for both the Campus-Level and the Program-Level, as well as the program begin date. 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. In addition, Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Condition: There were instances in which the status changes were not always reported timely, the program enrollment effective date did not match institutions records, and the program enrollment status did not match institutions records. In addition, the College did not have a control in place to ensure timely and accurate reporting to NSLDS. Questioned costs: None. Context: In our sample of sixty student's selected for National student's Loan Data System (NSLDS) enrollment reporting testing, we identified one student's enrollment status did not match the enrollment status reported in NSLDS, twelve student's enrollment effective dates did not match those reported in NSLDS, fifteen student's enrollments were not reported to NSLDS in a timely manner, seven student's program enrollment effective dates did not match institutional records and, three student's program enrollment statuses that did not match institutional records. Additionally, there was no control in place to ensure timely and accurate reporting to NSLDS. Cause: The College did not have proper controls or procedures in place to verify students' status in NSLDS matched the institution’s records in a timely manner. Effect: Failure to properly report enrollment status changes on NSLDS could affect the timing of the grace period for repayment of Title IV loans. Additionally, the College was not in compliance with the requirements to properly report student enrollment data correctly or timely to NSLDS. Repeat Finding: Yes, 2024-003. Recommendation: We recommend the College implement changes in process and procedures for NSLDS enrollment reporting and implement an internal control that ensures reporting is both timely and accurate. Views of responsible officials: There is no disagreement with the audit finding.
Criteria or specific requirement: The Department of Education requires the College to report the disbursement dates and amounts to the Common Origination and Disbursement (COD) system within 15 days of disbursing Pell (34 CFR 690.83(b)(2) and Direct Loan (34 CFR 685.309) funds to a student. In addition, per the Uniform Guidance 2 CRF 200.303, non-federal 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: During our testing of COD reporting, we were not able to test a control that ensures timely and accurate reporting to COD. Questioned costs: None. Context: We did not note evidence of a key control occurring for COD disbursement reporting. Cause: The College did not maintain documentation of a control in place to ensure timely and accurate reporting to COD. Effect: A lack of timely reporting may prevent the College and other schools from having the most accurate student information which may lead to over awards. Repeat Finding: Yes, 2024-005. Recommendation: We recommend the College evaluate its policies and procedures around reporting to COD to ensure that information is reported accurately and timely and to retain evidence of the key control having occurred. Views of responsible officials: There is no disagreement with the audit finding.
Reference Number: 2025-003 Prior Year Finding: 2024-003 Federal Agency: U.S. Department of Agriculture State Agency: Agency of Agriculture Federal Program: Dairy Business Innovation Initiatives Assistance Listing Number: 10.176 Award Number and Year: 21DBIVT1004 (10/31/2021 – 10/30/2024), AM22DBIVT1015 (9/30/2022 – 9/29/2025), AM21DBIVT1011 (9/30/2022 – 9/29/2026), Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: 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. On March 8, 2025, FSRS.gov was retired, and all subaward reporting data and functionality transitioned to SAM.gov after that date. 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 $30,000,000 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.) 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: Subawards issued by the Agency of Agriculture (Agency) were not reported in accordance with FFATA requirements. Context: Sixteen subaward transactions were selected for testing, and the following exceptions were noted: • Two of sixteen subawards selected for testing were not reported to SAM.gov until after they were selected for testing by auditors. The subawards were issued in January 2022 and May 2024 but were not reported to SAM.gov until February 2026. • Six of sixteen subawards selected for testing were not reported timely. The subawards were issued from September 2024 through January 2025 but were not reported to SAM.gov until March 2025 and September 2025, or from 71 to 212 days late. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Agency had not completed implementation of its corrective action plan from the prior audit year. The Agency’s procedures and controls are not sufficient to ensure that subawards are reported to SAM.gov in accordance with FFATA reporting requirements. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Agency complete implementation of its corrective action plan from the prior year. It should review its procedures and internal controls to ensure that all required subawards and subaward modifications are reported timely to SAM.gov in accordance with FFATA requirements and that all previously issued subawards are reported. Views of responsible officials: Management agrees with the finding.
Reference Number: 2025-004 Prior Year Finding: 2024-004 Federal Agency: U.S. Department of Agriculture State Agency: Agency of Human Services Federal Program: SNAP Cluster Assistance Listing Number: 10.551, 10.561 Award Number and Year: 4VT402513 (10/1/2023 – 9/30/2024) 4VT433933 (10/1/2023 – 9/30/2026) 4VT437533 (10/1/2023 – 9/30/2025) Compliance Requirement: Special Tests and Provisions – ADP System for SNAP Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: State agencies are required to automate their SNAP operations and computerize their systems for obtaining, maintaining, utilizing, and transmitting information concerning SNAP (7 CFR sections 272.10 and 277.18). This includes: (1) processing and storing all case file information necessary for eligibility determination and benefit calculation, identifying specific elements that affect eligibility, and notifying the certification unit of cases requiring notices of case disposition, adverse action and mass change, and expiration; (2) providing an automatic cutoff of participation for households that have not been recertified at the end of their certification period by reapplying and being determined eligible for a new period (7 CFR sections 272.10(b)(1)(iii) and 273.10(f) and (g)); and (3) generating data necessary to meet federal issuance and reconciliation reporting requirements. 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: Eligibility case reviews performed by the Agency of Human Services (Agency) were untimely and lacked proper documentation. Context: The Agency has implemented an Automated Data Processing (ADP) system referred to as the ACCESS system that is utilized in the eligibility determination process of many programs, including SNAP. ACCESS is used to process and store all case file information for eligibility determination and benefit calculations, it automatically terminates household eligibility at the end of their certification period unless recertified and provides data necessary to meet Federal issuance and reconciliation reporting requirements. Sixty participants were selected for testing and the following exceptions were noted: • 6 of 60 participants selected for testing were not reviewed timely. A minimum of four case reviews must be performed by each district in the month in which the applicant is determined eligible in ACCESS. • For 9 of 60 participants selected for testing, supervisory review and verification of the applicants’ eligibility was not dated by the supervisor. • For 2 of 60 participants selected for testing, the reviewer did not check to see if edits were made after the review was performed. Reviewers are required to check to verify that corrective actions were taken. Cause: The Agency’s procedures were not sufficient to ensure that eligibility case reviews were performed timely and were properly documented. Internal controls did not detect or prevent the errors. Effect The failure to perform eligibility case reviews timely and accurately could result in an ineligible applicant receiving benefits. Questioned costs: Undetermined. Recommendation: We recommend that the Agency review and enhance procedures and controls to ensure that eligibility case reviews are performed timely, accurately, and are properly documented. Views of responsible officials: Management agrees with the finding.
Reference Number: 2025-005 Prior Year Finding: No Federal Agency: U.S. Department of Housing and Urban Development State Agency: Agency of Commerce and Community Development Federal Program: Community Development Block Grants/State's Program and Non-Entitlement Grants in Hawaii Assistance Listing Number: 14.228 Award Number and Year: B-20-RH-50-0001 (1/17/2022 - 2/1/2029) B-22-RH-50-0001 (3/27/2023 - 9/1/2029) B-23-RH-50-0001 (7/1/2023 - 9/1/2030) B-22-DC-50-0001 (7/1/2022 - 9/1/2029) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: 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. On March 8, 2025, FSRS.gov was retired, and all subaward reporting data and functionality transitioned to SAM.gov after that date. 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 $30,000,000 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.) 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: The Agency of Commerce and Community Development (Agency) did not report subaward dates in accordance with FFATA requirements. Context: Two of eight subawards selected for testing were not reported accurately in accordance with FFATA requirements. The subawards with incorrect subaward action dates totaled $615,195. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Agency’s procedures and controls are not sufficient to ensure that subawards are reported to SAM.gov in accordance with FFATA reporting requirements. Effect: Subawards were not reported in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend the Agency review its procedures and internal controls to ensure that all required subawards and subaward modifications are reported in accordance with FFATA requirements. Views of responsible officials: Management agrees with the finding.
Reference Number: 2025-006 Prior Year Finding: 2024-008 Federal Agency: Department of Labor State Agency: Vermont Department of Labor Federal Program: Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: 25A55UI000119 (10/1/2024 – 12/31/2027) 24A55UI000063 (10/1/2023 – 12/31/2026) UI370952155A50 (9/1/2021 – 5/22/2025) 23A60UB000019 (8/3/2023 – 5/22/2025) 23A60UB000024 (4/1/2023 – 5/22/2025) 24A60UD000052 (8/20/2024 – 8/20/2027) UI347462055A50 (8/20/2024 – 8/20/2027) 23A60UD000013 (7/14/2023 – 7/14/2026) 25A60UD000067 (10/1/2024 – 9/30/2027) Compliance Requirement: Reporting Type of Finding: Material Weakness in Internal Control over Compliance Criteria or specific requirement: Compliance: ETA 9050, Time Lapse of All First Payments except Workshare – The ETA 9050 report contains monthly information on first payment time lapse. This report concerns the time it takes states to pay benefits to claimants for the first compensable week of unemployment. That data addressed first payment time lapse for total unemployment only. The report is submitted electronically to the ETA National Office on the 20th of the month following the month to which the data relates. ETA 9052, Nonmonetary Determination Time Lapse Detection - The ETA 9052 report contains monthly information on the time it takes states to issue nonmonetary determinations from the date the issues are first detected by the agency. Single-claimant and multi-claimant nonmonetary determinations are included in the report. Nonmonetary determinations made by organizational units such as Benefits Accuracy Measurement (BAM) and Benefit Payment Control (BPC) are also included in the report. Note: Overpayment notices on uncontested earnings detected by any method (e.g., crossmatch) should not be included. The report is submitted electronically to the ETA National Office on the 20th of the month following the month to which the data relates. ETA 9055, Appeals Case Aging - The ETA 9055 report gathers monthly information on the inventory of lower authority and higher authority single claimant appeals cases that have been filed but not decided. Appeals case aging provides information about the number of days from the date an appeal was filed through the end of the month covered by the report. Also included are the average and median ages of the pending single claimant appeals cases. The report is submitted electronically to the ETA National Office on the 20th of the month following the month to which the data relates. 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 the 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: The Department of Labor (the Department) was not able to provide support that reports had been reviewed and approved by an authorized State official prior to submission. Context: We selected for testing monthly reports for October 2024, November 2024, January 2025 and May 2025 and the following exceptions were noted: ETA 9050: Support could not be provided that 4 of 4 reports selected for testing had been reviewed and approved prior to submission. ETA 9052: Support could not be provided that 4 of 4 reports selected for testing had been reviewed and approved prior to submission. ETA 9055: Support could not be provided that 4 of 4 reports selected for testing had been reviewed and approved prior to submission. Cause: The Department does not have sufficient internal controls to ensure that reports were reviewed and approved prior to submission. Effect: A lack of review and approval of reports could allow incorrect data to be reported which could misrepresent the State’s financial and programmatic performance in the program. Questioned costs: Undetermined. Recommendation: We recommend that policies and procedures be implemented to ensure that all reports are reviewed by an authorized State official prior to submission and that supporting documentation providing evidence of supervisory review is maintained and available for audit. Views of responsible officials: Management agrees with the finding.
Reference Number: 2025-007 Prior Year Finding: 2024-010 Federal Agency: U.S. Department of Labor State Agency: Vermont Department of Labor Federal Program: Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: 25A55UI000119 (10/1/2024 – 12/31/2027) Compliance Requirement: Period of Performance Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). A period of performance may contain one or more budget periods. 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: The Department of Labor (Department) charged costs to the federal grant prior to the allowable start of the period of performance and expenditures were missing evidence of approval prior to issuance of payment. Context: Nine of sixty transactions selected for testing were charged to the award before the allowable period of performance. The grant award start date was October 1, 2024, but costs were incurred in August and September 2024. Two of sixty transactions selected for testing were missing evidence of review and approval prior to issuance of the payment. Cause: The Department’s procedures and internal controls were not operating sufficiently to ensure that expenditures charged to the program were incurred within the award’s period of performance nor that payments were reviewed and approved prior to issuance. Effect: Unallowable costs were charged to the program. Questioned costs: $2,267, which represents the total incurred before the allowable period of performance. Recommendation: We recommend the Department review and enhance its procedures and controls to ensure that, prior to charging costs to the program, they are incurred within an award’s allowable period of performance and that payments are reviewed and approved by a supervisor who has knowledge of costs that are allowable under the program. Views of responsible officials: Management agrees with the finding.
Reference Number: 2025-008 Prior Year Finding: No Federal Agency: U.S. Department of Labor State Agency: Department of Labor Federal Program: Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: 23A60UI038010 (1/1/2022 – 9/30/2024) 23A60UR000010 (1/1/2023 – 9/30/2025) 24A60UR000093 (1/1/2024 – 9/30/2026) Compliance Requirement: Special Tests and Provisions: UI Reemployment Programs: RESEA Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per 42 U.S. Code § 506 (a) The Secretary of Labor (in this section referred to as the “Secretary”) shall award grants under this section for a fiscal year to eligible States to conduct a program of reemployment services and eligibility assessments for individuals referred to reemployment services as described in section 503(j) of this title for weeks in such fiscal year for which such individuals receive unemployment compensation. Further, per 42 U.S. Code § 506 (c) (1), In carrying out a State program of reemployment services and eligibility assessments using grant funds awarded to the State under this section, a State shall use such funds only for interventions demonstrated to reduce the number of weeks for which program participants receive unemployment compensation by improving employment outcomes for program participants. The UI program serves as one of the principal “gateways” to the workforce system. It is often the first workforce program accessed by individuals who need workforce services. The Worker Profiling and Reemployment Services (WPRS) and Reemployment Services and Eligibility Assessments (RESEA) programs serve as UI’s primary programs that facilitate the reemployment needs of UI claimants. RESEA is authorized by Section 306 of the Social Security Act and builds on the success of RESEA’s predecessor, the former UI Reemployment and Eligibility Assessment (REA) program. RESEA uses an evidence-based integrated approach that combines an eligibility assessment for continuing UI eligibility and the provision of reemployment services. State administration of the RESEA is voluntary and under certain circumstances may be designed to also satisfy WPRS requirements. Operating guidance for the RESEA program is updated annually. UIPL 10-22 provides RESEA operating Guidance for FY 2022. RESEA-related performance reports are due on the 20th day of the second month following the end of the reporting quarter. A state UI staff member must review these reports for accuracy each calendar quarter and prior to submission, in addition to being reviewed by the RESEA program lead (if a different staff member). 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: The Department of Labor (Department) did not follow proper procedures nor did it thoroughly document RESEA cases. Context: For two of forty cases selected for testing, the Department did not follow proper procedures. The cases were both identified as “Failed to Report” and the Department did not properly document the cases, it did not send the cases to adjudication, nor were eligibility review forms completed. Questioned costs: Undetermined. Cause: The Department’s internal controls were not sufficient to ensure it followed procedures and met RESEA program requirements. Effect: Failure to properly document or follow-up on RESEA cases in accordance with its own procedures and program requirements could delay the participants’ reentry into the workforce and prolong their receipt of unemployment benefits. Recommendation: The Department should update its internal controls to ensure that RESEA procedures are followed, that cases are properly documented and appropriate actions are taken when participants fail to meet program requirements. Views of responsible officials: Management agrees with the finding.