Finding 2022-003 Information on the federal program: Subject: Education Stabilization Fund ? Internal Controls Federal Agency: Department of Education Federal Program: COVID-19 ? Education Stabilization Fund Assistance Listing Number: 84.425C, 84.425D, 84.425U Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Finding: Significant Deficiency Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal 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 Financial reporting . . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." Condition: 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 Reporting compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The Annual Data Reports required to be submitted during the audit period could have incomplete or inaccurate without a secondary, documented review in place. Questioned Costs: There were no questioned costs identified. Context: The School Corporation was required to submit two Annual Data Reports to the Indiana Department of Education (IDOE) to meet federal reporting requirements for ESSER grant awards and the GEER grant award. The first report was for the period of March 13, 2020 to September 30, 2020 and was due by January 21, 2021. The second report was for the period of October 1, 2020 to June 30, 2021 and was due by May 13, 2022. We noted for both reports that were submitted, there was no documented review by someone other than the preparer of the report to ensure the information submitted was complete and accurate. Identification as a repeat finding: No. Recommendation: We recommend someone other than the preparer of the report perform a documented, secondary review prior to submission to validate the accuracy and completeness of the data submitted. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Department of Human Services Finding 2022 ? 007: ALN 21.023 ? COVID 19 ? Emergency Rental Assistance Program A Significant Deficiency and Noncompliance Exist at the Department of Human Services Related to Submission of Emergency Rental Assistance Monthly and Quarterly Reporting and Special Tests and Provisions Related to ERA Funds Reallocation (A Similar Condition Was Noted in Prior Year Finding 2021-006) Federal Grant Number(s) and Year(s): G019649899 (3/13/2020 ? 9/30/2025), G017649899 (3/13/2020 ? 9/30/2025) Type of Finding: Significant Deficiency, Noncompliance Compliance Requirements: Reporting and Special Tests and Provisions related to ERA Funds Reallocation Condition: Emergency Rental Assistance (ERA) 1 and ERA 2 state, local, and territorial recipients were required to submit monthly and quarterly reports to the United States Department of the Treasury (US Treasury). The monthly reports are brief two-question updates through which ERA recipients provide US Treasury with very high-level counts of the numbers of households receiving assistance and the amounts of ERA funds distributed. The quarterly reports are in-depth reports with data on an array of programmatic and financial information to provide transparency in the use and progress of ERA funds. Monthly reports were required for each month of the fiscal year ended June 30, 2022 and were due 15 days after the end of the month. Quarterly reports were required for each quarter of the fiscal year ended June 30, 2022 and were due October 29, 2021, February 1, 2022, April 15, 2022, and July 15, 2022. As the direct recipient of ERA funds, the Department of Human Services (DHS) is responsible for ensuring the timeliness and accuracy of the report submissions. DHS obtained report information from subrecipients which was compiled and included in the submitted reports. The reports contained all required data elements, however, DHS did not implement policies and procedures to ensure the accuracy of the information reported by the counties. Therefore, DHS was unable to provide supporting documentation for amounts reported by county subrecipients on the reports or to demonstrate that they had reviewed and verified the accuracy of this information. In addition, DHS was unable to provide support for timely submission of monthly reports. Criteria: The Emergency Rental Assistance Program Reporting Guidance published by the US Treasury identifies several steps in the reporting process: ? Recipients gather and maintain required information such as counts of applicants and participants; amounts paid directly or indirectly to tenants, landlords, and utility/home energy providers; amounts paid to subrecipients and contractors; and administrative expenses. ? Recipients will need to communicate with and gather required information from their subrecipients and contractors, if applicable. ? After manually entering or uploading the report information, Recipients must review the information entered or submitted to the online reporting forms for any errors and completeness. Following completion of the report in Treasury?s portal, the Recipient?s designated Authorized Representative for Reporting must certify to the authenticity and accuracy of the information provided and formally submit the report to Treasury. Finding 2022 ? 007: (continued) The 2022 OMB Uniform Guidance Compliance Supplement, Part 4 ? Agency Program Requirements for the Emergency Rental Assistance Program, Special Tests and Provisions ? N. ERA Funds Reallocations, states in part: ? Financial information certified by grantees used by Treasury to make reallocation determinations must be accurate and excess funds that are subject to involuntary recapture must be returned to Treasury in accordance with Treasury?s confirmation letter. ? The financial information certified as part of reallocation includes monthly expenditure and cumulative obligations levels, as described in the Treasury reallocation guidance. ERA 1 expenditures reported monthly by the grantee are inputs to Treasury?s reallocation expenditure ratio. ERA1 obligations certified in the Request for Reallocated Funds form (1505-0266), including in the Request for Voluntarily Reallocated Funds, are inputs into determining eligibility to receive reallocated funds. ? Pursuant to section 501(d) of the Consolidated Appropriations Act, 2021, Treasury is required to reallocate ?excess? ERA 1 award funds. Treasury?s objective in reallocations is to ensure ERA 1 award funds remain available to grantees in accordance with their jurisdictional needs and demonstrated capacity to deliver assistance while the ERA appropriations remain available. 2 CFR Section 200.303, Internal controls, states: 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 the Sponsoring Organizations of the Treadway Commission (COSO). Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: DHS did not implement policies and procedures to ensure the accuracy of information reported by counties which was included on the reports. DHS also did not implement policies and procedures to ensure that it maintained documentation of timely submission. Effect: Without review and validation of the detail supporting the summary information reported by counties, the reports may have contained inaccurate information. Inaccurate and/or untimely submission of monthly reports could impact the US Treasury?s ability to reallocate ERA 1 award funds pursuant to section 501(d) of the 2021 Consolidated Appropriations Act. Recommendation: We recommend that DHS implement formal policies and procedures to verify the information reported by counties to be included on the reports. Reported amounts should be reviewed for accuracy before reports are submitted to US Treasury to ensure that reports filed are complete and accurate. We further recommend that DHS retains documentation supporting when reports are submitted, and that this documentation is available for audit. Finding 2022 ? 007: (continued) Agency Response: DHS agrees with this finding. Pennsylvania legislation directed DHS funds to all 67 counties including 18 counties that received direct federal funds. Each subgrantee reported information regarding metrics outlined by the 10th of the month for the prior month. DHS reconciles various metrics in order to comply with US Treasury?s deadline to report monthly on the 15th of the month for the prior month. Similar to other DHS programs, DHS has implemented an after-action review of information submitted, using a contracted vendor. DHS faced challenges implementing a program with 67 counties and no central eligibility determination system. DHS has learned that standing up the supportive services and multi-sector partnerships was challenging in the context of the global pandemic workforce shortages. This made DHS dependent on local county reports to maintain program oversight and compile statewide data for submission to US Treasury. DHS will strengthen this control as we plan for future emergency or pandemic programs related to rental assistance. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Department of Education Finding 2022 ? 004: ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER A Significant Deficiency and Noncompliance Exist at the Department of Education Related to Submission of GEER, ESSER, and CRRSA EANS Annual Reporting (A Similar Condition Was Noted in Prior Year Finding 2021-003) Federal Grant Number(s) and Year(s): S425D200028 (3/13/2020 ? 9/30/2024), S425D210028 (3/13/2020 ? 9/30/2024), S425U210028 (3/13/2020 ? 9/30/2024) Type of Finding: Significant Deficiency, Noncompliance Compliance Requirement: Reporting Condition: As the State Educational Agency (SEA), the Pennsylvania Department of Education (PDE) is required to submit annual data reports to the United States Department of Education (USDE) for the components of the Education Stabilization Fund (ESF) program. These reports support the annual collection of data pertaining to the uses of funds under the Governor?s Emergency Education Relief (GEER) Fund, Elementary and Secondary School Emergency Relief (ESSER) Fund, Coronavirus Response and Relief Supplemental Appropriations Act, 2021 ? Emergency Assistance to Non-Public Schools (CRRSA EANS) Program, and the American Rescue Plan ? Elementary and Secondary School Emergency Relief (ARP ESSER). USDE awards ESF grants to SEAs for the purpose of providing local educational agencies (LEAs), including charter schools that are LEAs, with emergency relief funds to address the impact of the Novel Coronavirus Disease 2019 (COVID-19) on elementary and secondary schools across the nation. LEAs must provide equitable services to students and teachers in non-public schools as required under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). During the fiscal year ended June 30, 2022, PDE was required to submit the ESSER and ARP ESSER annual report for the period October 1, 2020 through June 30, 2021 and the GEER and CRRSA EANS annual reports for the period July 1, 2020 through June 30, 2021. As the direct recipient of ESSER, ARP ESSER, GEER, and CRRSA EANS funds, PDE is responsible for ensuring the timeliness and accuracy of the annual report submissions. PDE obtained summary information from the LEAs to compile and submit the reports which contained all required data elements. However, PDE did not implement policies and procedures to ensure the accuracy of the information reported by the LEAs. Therefore, PDE was unable to provide supporting documentation for amounts reported by LEAs on the annual reports or to demonstrate that they had reviewed and verified the accuracy of this information. Criteria: The 2022 OMB Uniform Guidance Compliance Supplement, Part 4 ? Agency Program Requirements for the Education Stabilization Fund, Section L.3.a, Reporting ? Special Reporting ? Annual Reporting ? SEA/Governor, states in part: ESSER, GEER, and [CRRSA] EANS grantees must submit an annual performance report (OMB No. 1810-0749 for ESSER; 1810-0748 for GEER; and 1810-0765 for EANS) with data on expenditures, planned expenditures, subrecipients, and uses of funds, including for mandatory reservations. Finding 2022 ? 004: (continued) 2 CFR Section 200.303, Internal controls, states: 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 the Sponsoring Organizations of the Treadway Commission (COSO). Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: PDE did not implement policies and procedures to ensure the accuracy of information reported by LEAs which was included on the Annual Reports. Effect: Without review and validation of the detail supporting the summary information reported by LEAs, the Annual Reports may have contained inaccurate information. Recommendation: We recommend that PDE implement formal policies and procedures to verify the information reported by LEAs to be included on the Annual Reports. Reported amounts should be reviewed for accuracy before reports are submitted to USDE to ensure that reports filed are complete and accurate. Agency Response: PDE agrees with this finding. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Department of Education Finding 2022 ? 004: ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER A Significant Deficiency and Noncompliance Exist at the Department of Education Related to Submission of GEER, ESSER, and CRRSA EANS Annual Reporting (A Similar Condition Was Noted in Prior Year Finding 2021-003) Federal Grant Number(s) and Year(s): S425D200028 (3/13/2020 ? 9/30/2024), S425D210028 (3/13/2020 ? 9/30/2024), S425U210028 (3/13/2020 ? 9/30/2024) Type of Finding: Significant Deficiency, Noncompliance Compliance Requirement: Reporting Condition: As the State Educational Agency (SEA), the Pennsylvania Department of Education (PDE) is required to submit annual data reports to the United States Department of Education (USDE) for the components of the Education Stabilization Fund (ESF) program. These reports support the annual collection of data pertaining to the uses of funds under the Governor?s Emergency Education Relief (GEER) Fund, Elementary and Secondary School Emergency Relief (ESSER) Fund, Coronavirus Response and Relief Supplemental Appropriations Act, 2021 ? Emergency Assistance to Non-Public Schools (CRRSA EANS) Program, and the American Rescue Plan ? Elementary and Secondary School Emergency Relief (ARP ESSER). USDE awards ESF grants to SEAs for the purpose of providing local educational agencies (LEAs), including charter schools that are LEAs, with emergency relief funds to address the impact of the Novel Coronavirus Disease 2019 (COVID-19) on elementary and secondary schools across the nation. LEAs must provide equitable services to students and teachers in non-public schools as required under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). During the fiscal year ended June 30, 2022, PDE was required to submit the ESSER and ARP ESSER annual report for the period October 1, 2020 through June 30, 2021 and the GEER and CRRSA EANS annual reports for the period July 1, 2020 through June 30, 2021. As the direct recipient of ESSER, ARP ESSER, GEER, and CRRSA EANS funds, PDE is responsible for ensuring the timeliness and accuracy of the annual report submissions. PDE obtained summary information from the LEAs to compile and submit the reports which contained all required data elements. However, PDE did not implement policies and procedures to ensure the accuracy of the information reported by the LEAs. Therefore, PDE was unable to provide supporting documentation for amounts reported by LEAs on the annual reports or to demonstrate that they had reviewed and verified the accuracy of this information. Criteria: The 2022 OMB Uniform Guidance Compliance Supplement, Part 4 ? Agency Program Requirements for the Education Stabilization Fund, Section L.3.a, Reporting ? Special Reporting ? Annual Reporting ? SEA/Governor, states in part: ESSER, GEER, and [CRRSA] EANS grantees must submit an annual performance report (OMB No. 1810-0749 for ESSER; 1810-0748 for GEER; and 1810-0765 for EANS) with data on expenditures, planned expenditures, subrecipients, and uses of funds, including for mandatory reservations. Finding 2022 ? 004: (continued) 2 CFR Section 200.303, Internal controls, states: 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 the Sponsoring Organizations of the Treadway Commission (COSO). Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: PDE did not implement policies and procedures to ensure the accuracy of information reported by LEAs which was included on the Annual Reports. Effect: Without review and validation of the detail supporting the summary information reported by LEAs, the Annual Reports may have contained inaccurate information. Recommendation: We recommend that PDE implement formal policies and procedures to verify the information reported by LEAs to be included on the Annual Reports. Reported amounts should be reviewed for accuracy before reports are submitted to USDE to ensure that reports filed are complete and accurate. Agency Response: PDE agrees with this finding. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Department of Education Finding 2022 ? 004: ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER A Significant Deficiency and Noncompliance Exist at the Department of Education Related to Submission of GEER, ESSER, and CRRSA EANS Annual Reporting (A Similar Condition Was Noted in Prior Year Finding 2021-003) Federal Grant Number(s) and Year(s): S425D200028 (3/13/2020 ? 9/30/2024), S425D210028 (3/13/2020 ? 9/30/2024), S425U210028 (3/13/2020 ? 9/30/2024) Type of Finding: Significant Deficiency, Noncompliance Compliance Requirement: Reporting Condition: As the State Educational Agency (SEA), the Pennsylvania Department of Education (PDE) is required to submit annual data reports to the United States Department of Education (USDE) for the components of the Education Stabilization Fund (ESF) program. These reports support the annual collection of data pertaining to the uses of funds under the Governor?s Emergency Education Relief (GEER) Fund, Elementary and Secondary School Emergency Relief (ESSER) Fund, Coronavirus Response and Relief Supplemental Appropriations Act, 2021 ? Emergency Assistance to Non-Public Schools (CRRSA EANS) Program, and the American Rescue Plan ? Elementary and Secondary School Emergency Relief (ARP ESSER). USDE awards ESF grants to SEAs for the purpose of providing local educational agencies (LEAs), including charter schools that are LEAs, with emergency relief funds to address the impact of the Novel Coronavirus Disease 2019 (COVID-19) on elementary and secondary schools across the nation. LEAs must provide equitable services to students and teachers in non-public schools as required under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). During the fiscal year ended June 30, 2022, PDE was required to submit the ESSER and ARP ESSER annual report for the period October 1, 2020 through June 30, 2021 and the GEER and CRRSA EANS annual reports for the period July 1, 2020 through June 30, 2021. As the direct recipient of ESSER, ARP ESSER, GEER, and CRRSA EANS funds, PDE is responsible for ensuring the timeliness and accuracy of the annual report submissions. PDE obtained summary information from the LEAs to compile and submit the reports which contained all required data elements. However, PDE did not implement policies and procedures to ensure the accuracy of the information reported by the LEAs. Therefore, PDE was unable to provide supporting documentation for amounts reported by LEAs on the annual reports or to demonstrate that they had reviewed and verified the accuracy of this information. Criteria: The 2022 OMB Uniform Guidance Compliance Supplement, Part 4 ? Agency Program Requirements for the Education Stabilization Fund, Section L.3.a, Reporting ? Special Reporting ? Annual Reporting ? SEA/Governor, states in part: ESSER, GEER, and [CRRSA] EANS grantees must submit an annual performance report (OMB No. 1810-0749 for ESSER; 1810-0748 for GEER; and 1810-0765 for EANS) with data on expenditures, planned expenditures, subrecipients, and uses of funds, including for mandatory reservations. Finding 2022 ? 004: (continued) 2 CFR Section 200.303, Internal controls, states: 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 the Sponsoring Organizations of the Treadway Commission (COSO). Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: PDE did not implement policies and procedures to ensure the accuracy of information reported by LEAs which was included on the Annual Reports. Effect: Without review and validation of the detail supporting the summary information reported by LEAs, the Annual Reports may have contained inaccurate information. Recommendation: We recommend that PDE implement formal policies and procedures to verify the information reported by LEAs to be included on the Annual Reports. Reported amounts should be reviewed for accuracy before reports are submitted to USDE to ensure that reports filed are complete and accurate. Agency Response: PDE agrees with this finding. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
Department of Education Finding 2022 ? 004: ALN 84.425C ? COVID 19 ? Education Stabilization Fund - GEER Fund ALN 84.425D ? COVID 19 ? Education Stabilization Fund - ESSER Fund ALN 84.425R ? COVID 19 ? Education Stabilization Fund - CRRSA EANS ALN 84.425U ? COVID 19 ? Education Stabilization Fund - ARP ESSER A Significant Deficiency and Noncompliance Exist at the Department of Education Related to Submission of GEER, ESSER, and CRRSA EANS Annual Reporting (A Similar Condition Was Noted in Prior Year Finding 2021-003) Federal Grant Number(s) and Year(s): S425D200028 (3/13/2020 ? 9/30/2024), S425D210028 (3/13/2020 ? 9/30/2024), S425U210028 (3/13/2020 ? 9/30/2024) Type of Finding: Significant Deficiency, Noncompliance Compliance Requirement: Reporting Condition: As the State Educational Agency (SEA), the Pennsylvania Department of Education (PDE) is required to submit annual data reports to the United States Department of Education (USDE) for the components of the Education Stabilization Fund (ESF) program. These reports support the annual collection of data pertaining to the uses of funds under the Governor?s Emergency Education Relief (GEER) Fund, Elementary and Secondary School Emergency Relief (ESSER) Fund, Coronavirus Response and Relief Supplemental Appropriations Act, 2021 ? Emergency Assistance to Non-Public Schools (CRRSA EANS) Program, and the American Rescue Plan ? Elementary and Secondary School Emergency Relief (ARP ESSER). USDE awards ESF grants to SEAs for the purpose of providing local educational agencies (LEAs), including charter schools that are LEAs, with emergency relief funds to address the impact of the Novel Coronavirus Disease 2019 (COVID-19) on elementary and secondary schools across the nation. LEAs must provide equitable services to students and teachers in non-public schools as required under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). During the fiscal year ended June 30, 2022, PDE was required to submit the ESSER and ARP ESSER annual report for the period October 1, 2020 through June 30, 2021 and the GEER and CRRSA EANS annual reports for the period July 1, 2020 through June 30, 2021. As the direct recipient of ESSER, ARP ESSER, GEER, and CRRSA EANS funds, PDE is responsible for ensuring the timeliness and accuracy of the annual report submissions. PDE obtained summary information from the LEAs to compile and submit the reports which contained all required data elements. However, PDE did not implement policies and procedures to ensure the accuracy of the information reported by the LEAs. Therefore, PDE was unable to provide supporting documentation for amounts reported by LEAs on the annual reports or to demonstrate that they had reviewed and verified the accuracy of this information. Criteria: The 2022 OMB Uniform Guidance Compliance Supplement, Part 4 ? Agency Program Requirements for the Education Stabilization Fund, Section L.3.a, Reporting ? Special Reporting ? Annual Reporting ? SEA/Governor, states in part: ESSER, GEER, and [CRRSA] EANS grantees must submit an annual performance report (OMB No. 1810-0749 for ESSER; 1810-0748 for GEER; and 1810-0765 for EANS) with data on expenditures, planned expenditures, subrecipients, and uses of funds, including for mandatory reservations. Finding 2022 ? 004: (continued) 2 CFR Section 200.303, Internal controls, states: 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 the Sponsoring Organizations of the Treadway Commission (COSO). Management Directive 325.12, Amended ? Standards for Enterprise Risk Management in Commonwealth Agencies, adopted the internal control framework outlined in the United States Government Accountability Office?s Standards for Internal Control in the Federal Government (Green Book). The Green Book states in part: Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results. Management should remediate identified internal control deficiencies on a timely basis. Cause: PDE did not implement policies and procedures to ensure the accuracy of information reported by LEAs which was included on the Annual Reports. Effect: Without review and validation of the detail supporting the summary information reported by LEAs, the Annual Reports may have contained inaccurate information. Recommendation: We recommend that PDE implement formal policies and procedures to verify the information reported by LEAs to be included on the Annual Reports. Reported amounts should be reviewed for accuracy before reports are submitted to USDE to ensure that reports filed are complete and accurate. Agency Response: PDE agrees with this finding. Questioned Costs: The amount of questioned costs cannot be determined. The corrective action plan for this finding, if any, has not been reviewed by the auditors. See Corrective Action Plans located elsewhere in this Report.
FA 2022-001 Strengthen Controls over Expenditures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education Assistance Listing Number and Title: COVID-19 ? 84.425D ? Elementary and Secondary School Emergency Relief Fund Federal Award Numbers: S425D200012 (Year: 2020), S425D210012 (Year: 2021) Questioned Costs: $187,246 Description: A review of expenditures charged to the Elementary and Secondary School Emergency Relief Fund program (Assistance Listing Number 84.425D) revealed that the School District?s internal control procedures were not operating appropriately to ensure that expenditures were allowable. Background Information: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE was responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $4,249,034 were expended and reported on the Bryan County Board of Education?s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 ? Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.403 ? Factors Affecting Allowability of Costs state that ?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, (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, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity? (f) Not be included as a cost or used to meet the cost sharing or matching requirements of any other federally-financed program in either the current or a prior period, (g) Be adequately documented?? Lastly, as a condition of receiving federal subawards from the GaDOE, LEAs are required to prepare an annual budget that reflects how funding will be expended. This budget is submitted in the Consolidated Application system and is required to be reviewed and approved by the GaDOE program and grants management prior to expending federal program funds. LEA personnel must also provide program-specific assurances related to the ESSER program within the Consolidated Application system. These assurances are reflected in the Uniform Guidance, Section 200.415 ? Required Certifications, and include provisions that require LEAs ?to assure that expenditures are proper and in accordance with the terms and conditions of the Federal award and approved project budgets...? Condition: A sample of 45 nonpersonal services expenditures was randomly selected for testing using a non-statistical sampling approach. Nine individually significant items were also selected for testing. These expenditures were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. It was noted that one expenditure totaling $187,246 was not appropriately approved by GaDOE through the Consolidated Application process. Further, the expenditure was ineligible for reimbursement under the ESSER program as the expenditure had previously been approved for funding through the Emergency Connectivity Fund (ECF) program. Upon further review, it was noted that reimbursement was requested and received from both the ESSER program and the ECF program after year-end and a refund of such funding had not been processed for either of the programs as of the end of audit fieldwork. Questioned Costs: Known questioned costs of $187,246 were identified for expenditures that were not reflected within the approved project budget for the ESSER program and were approved for reimbursement under another federal program. These known questioned costs related to expenditures that were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs. Cause: In discussing these deficiencies with management, they stated that the School District management did not update the ESSER Consolidated Application system prior to expending the funds. Additionally, the Finance Department thought the expenditures were not allowable under the Emergency Connectivity Fund program; therefore, they charged the expenditures to the ESSER program. However, the Director of the Emergency Connectivity Fund Program also requested reimbursement for the expenditures. Effect: The School District is not in compliance with the Uniform Guidance, ED, or GaDOE guidance related to the ESSER program. Failure to ensure that appropriate documentation, including an approved budget, exists to support the allowability of payments from the ESSER fund may expose the School District to unnecessary financial strains and shortages as GaDOE should require the School District to return funds associated with the unapproved and unallowable expenditures. Recommendation: The School District should review current internal control procedures related to ESSER program expenditures. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that expenditures are appropriately approved through the Consolidated Application process prior to the expending of federal program funds. Additionally, the School District should initiate a refund in the amount of $187,246 to GaDOE. Views of Responsible Officials: We concur with this finding.
FA 2022-001 Strengthen Controls over Expenditures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education Assistance Listing Number and Title: COVID-19 ? 84.425D ? Elementary and Secondary School Emergency Relief Fund Federal Award Numbers: S425D200012 (Year: 2020), S425D210012 (Year: 2021) Questioned Costs: $187,246 Description: A review of expenditures charged to the Elementary and Secondary School Emergency Relief Fund program (Assistance Listing Number 84.425D) revealed that the School District?s internal control procedures were not operating appropriately to ensure that expenditures were allowable. Background Information: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE was responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $4,249,034 were expended and reported on the Bryan County Board of Education?s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 ? Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.403 ? Factors Affecting Allowability of Costs state that ?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, (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, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity? (f) Not be included as a cost or used to meet the cost sharing or matching requirements of any other federally-financed program in either the current or a prior period, (g) Be adequately documented?? Lastly, as a condition of receiving federal subawards from the GaDOE, LEAs are required to prepare an annual budget that reflects how funding will be expended. This budget is submitted in the Consolidated Application system and is required to be reviewed and approved by the GaDOE program and grants management prior to expending federal program funds. LEA personnel must also provide program-specific assurances related to the ESSER program within the Consolidated Application system. These assurances are reflected in the Uniform Guidance, Section 200.415 ? Required Certifications, and include provisions that require LEAs ?to assure that expenditures are proper and in accordance with the terms and conditions of the Federal award and approved project budgets...? Condition: A sample of 45 nonpersonal services expenditures was randomly selected for testing using a non-statistical sampling approach. Nine individually significant items were also selected for testing. These expenditures were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. It was noted that one expenditure totaling $187,246 was not appropriately approved by GaDOE through the Consolidated Application process. Further, the expenditure was ineligible for reimbursement under the ESSER program as the expenditure had previously been approved for funding through the Emergency Connectivity Fund (ECF) program. Upon further review, it was noted that reimbursement was requested and received from both the ESSER program and the ECF program after year-end and a refund of such funding had not been processed for either of the programs as of the end of audit fieldwork. Questioned Costs: Known questioned costs of $187,246 were identified for expenditures that were not reflected within the approved project budget for the ESSER program and were approved for reimbursement under another federal program. These known questioned costs related to expenditures that were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs. Cause: In discussing these deficiencies with management, they stated that the School District management did not update the ESSER Consolidated Application system prior to expending the funds. Additionally, the Finance Department thought the expenditures were not allowable under the Emergency Connectivity Fund program; therefore, they charged the expenditures to the ESSER program. However, the Director of the Emergency Connectivity Fund Program also requested reimbursement for the expenditures. Effect: The School District is not in compliance with the Uniform Guidance, ED, or GaDOE guidance related to the ESSER program. Failure to ensure that appropriate documentation, including an approved budget, exists to support the allowability of payments from the ESSER fund may expose the School District to unnecessary financial strains and shortages as GaDOE should require the School District to return funds associated with the unapproved and unallowable expenditures. Recommendation: The School District should review current internal control procedures related to ESSER program expenditures. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that expenditures are appropriately approved through the Consolidated Application process prior to the expending of federal program funds. Additionally, the School District should initiate a refund in the amount of $187,246 to GaDOE. Views of Responsible Officials: We concur with this finding.
2022-003: Written Internal Control Policies and Federal Grant Award Procedures Finding Prior Year Findings: None Department Agency: Department of Interior State Department: Wyoming State Loan & Investment Board Office of State Lands & Investments Assistance Listing Number: ALN # 15.252 Type of Finding: Significant Deficiency Questioned Costs: None Criteria: Federal regulations 2 CFR 200.303 states non-Federal entity establish and maintain effective internal control over the Federal awards. Internal controls is generally defined as a process effected by an entity's oversight body, management, and other personnel that provides reasonable assurance that the objectives of an entity will be achieved. Internal control is not one event or circumstance, but a dynamic and iterative process-actions that permeate an entity's activities and are an integral part of the way auditee management runs the entity. Condition: The Town did not have written internal controls and Federal grant award policies in place. Cause and Effect: The Town is not dependent on Federal revenues, and had significant staff turnover of key positions. Repeat Finding: No Recommendation: We recommend that the Town of Dayton develop and adopt written internal controls and Federal grant award procedures. These policies and procedures need to be reviewed annually based on Federal agencies awarding the Federal funds. Response: Please see the last page of this report for the Town's response to this finding.
?See Schedule of Findings and Questioned Costs for chart/table? CONDITION The 67th Legislative Assembly in 2021 Session Law, Senate Bill 2018, Section 8, appropriated $434,568 from the Coronavirus Relief Fund to the Department of Commerce for the tourism transportation improvement grant program for a grant to be provided to an organization dedicated to preserving and promoting a historic, tourism destination North Dakota city. We reviewed supporting documentation that showed the organization used the grant to defray the costs of adding a high-capacity elevator at an amphitheater. Such a capital improvement project is not considered a necessary expenditure incurred due to the COVID-19 public health emergency. In addition, the Department was unable to provide documentation the organization was impacted by the public health emergency and eligible for the CRF funds. This $434,568 grant is considered the total known questioned costs. This error was considered an isolated instance and was not projected to the sampled population. CRITERIA Per the Coronavirus Aid, Relief, and Economic Security (CARES) Act, Title VI, Sec. 601 (d), payments from the Fund may only be used to cover costs that: 1. are necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019 (COVID?19); 2. were not accounted for in the budget most recently approved as of March 27, 2020 (the date of enactment of the CARES Act) for the State or government; and 3. were incurred during the period that begins on March 1, 2020, and ends on December 31, 2021. The Federal Register dated January 15, 2021 (Vol. 86, No.10), states that if capital improvement projects are not necessary expenditures incurred due to the COVID-19 public health emergency, then Fund payments may not be used for such projects. However, payment for expenses associated with the provision of economic support in connection with the COVID-19 public health emergency, such as expenditures related to the provision of grants to small businesses to reimburse the costs of business interruption caused by required closures, would be allowable. There was no documentation supporting any costs of business interruption. In addition, the Federal Register states the prime recipient is responsible for determining the level and detail of documentation needed from the subrecipient of small business assistance to satisfy the requirements of section 601 (d) of the Social Security Act, however, there would need to be some proof that the small business was impacted by the public health emergency and was thus eligible for the CRF funds. Federal regulation, 2 CFR 200.303, requires non-Federal entities 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. The "Standards for Internal Control in the Federal Government" published by the United States Government Accountability Office states that management obtains relevant data from reliable internal and external sources in a timely manner based on the identified information requirements. (GAO-14-704G para.13.04). CAUSE While the Department of Commerce complied with legislative intent by providing a grant to an organization dedicated to preserving and promoting a historic, tourism destination North Dakota city, the Department did not review available guidelines published by the U.S. Treasury Department for allowable costs under the Coronavirus Relief Fund. EFFECT The Department of Commerce is not in compliance with Federal regulations. The funded capital improvement project was not a necessary expenditure incurred due to the COVID-19 public health emergency. CONTEXT The Department of Commerce utilized Coronavirus Relief Funds to provide approximately $81.7 million in grants beginning July 1, 2020, and ending December 31, 2021. This $434,568 grant was the only grant identified at this location earmarked to a specific organization by the ND Legislative Assembly. The Department of Commerce processed payments through the state's accounting system (Peoplesoft) accounts payable and general ledger payment methods. The error was identified within the accounts payable payment population of $9,274,447 (77 payments) where individually significant payments totaled $4,295,314 (2 payments) and sampled payments totaled $4,973,554 (57 payments). The error was not projected within the sampled payments. Where sampling was performed, the audit used a non-statistical sampling method. IDENTIFICATION AS A REPEAT FINDING Not a repeat finding. RECOMMENDATION We recommend the Department of Commerce: A) Review available guidelines published by the U.S. Treasury Department for allowable costs under the Coronavirus Relief Fund, B) Obtain some proof that the organization was impacted by the public health emergency, and C) Request support from the organization for allowable expenditures incurred during the period beginning March 1, 2020, and ending on December 31, 2021, to offset the questioned costs; OR D) Recoup the money from the organization and refund the Department of the Treasury. DEPARTMENT OF COMMERCE RESPONSE The Department of Commerce utilized the funds made available to it by the 67th Legislative Assembly to accomplish the intent of said legislative body. See ?Management?s Response and Corrective Action? section of this report.
?See Schedule of Findings and Questioned Costs for chart/table? CONDITION We identified Coronavirus Relief Fund (CRF) quarterly financial progress reports were incomplete, inaccurate and did not reconcile to the state's accounting system. CRITERIA Federal regulation, 2 CFR 200.303, requires non-Federal entities, in part, 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. Office of Management and Budget, 2 CFR Part 200, Appendix XI, 2021 and 2022 Compliance Supplements, for Assistance Listing 21.019 Coronavirus Relief Fund, states in part: Each prime recipient of the Fund shall provide a quarterly Financial Progress Report that contains COVID-19 related costs incurred during the covered period (the period beginning on March 1, 2020; and ending on December 31, 2021) to Treasury OIG. Each prime recipient shall report this quarterly information mentioned above into the Grant Solutions portal. The prime recipient?s quarterly Financial Progress Report submissions should be supported by the data in the prime recipient?s accounting system. Key Line Items ? The following line items from the reporting contain critical information: (1) The total amount of payments from the Fund received from Treasury. (2) The amount of funds received that were expended or obligated for each project or activity. (3) A detailed list of all projects or activities for which funds were expended or obligated, including: a. The name of the project or activity b. A description of the project or activity (4) Detailed information on any loans issued; contracts and grants awarded; transfers made to other government entities; and direct payments made by the prime recipient that are greater than $50,000. For amounts less than $50,000, the prime recipient must report in the aggregate for these expenditure categories. For direct payments to individuals, aggregate reporting is required to be reported regardless of amount. Beginning September 21, 2020, prime recipients were required to submit via the Grant Solutions portal the first detailed quarterly Financial Progress Report, which cover the period March 1 through June 30, 2020 (with exception to the September 21 first quarter deadline and the October 13 second quarter reporting deadlines for those prime recipients using Grant Solutions? upload feature, which was available December 1, 2020). Thereafter, quarterly reporting will be due no later than ten days after each calendar quarter. If the 10th calendar day falls on a weekend or a Federal holiday, the due date will be the next working day. Reporting shall end with either the calendar quarter after the COVID-19 related costs and expenditures have been liquidated and paid or the calendar quarter ending September 30, 2022, whichever comes first. The prime recipient?s quarterly Financial Progress Report submission should be supported by the data in the prime recipient?s accounting system. Department of the Treasury Office of Inspector General Coronavirus Relief Frequently Asked Questions Related to Reporting and Recordkeeping (OIG-CA-20-028R), if an error is identified or a modification needs to be made after a report is already approved by the Treasury OIG, the prime recipient will need to make the modification or correction in the next quarterly reporting cycle. CAUSE There was a lack of understanding across state agencies of the detailed requirements of Coronavirus Relief Fund reporting. The North Dakota Office of Management and Budget (OMB) provided the CRF Report Template, Data Upload Service Data Dictionary, Coronavirus Relief Fund Frequently Asked Questions, and instructions to all state agencies. However, OMB?s procedures to review the information submitted by state agencies did not detect all material errors and omissions within the reporting cycle. In addition, the short turnaround time for reporting deadlines contributed to reporting errors and omissions. EFFECT Inaccurate Federal reporting reduces transparency and may impair the Federal oversight agency's ability to properly oversee the program. CONTEXT State agencies prepared and submitted CRF report templates to the ND Office of Management and Budget (OMB). OMB compiled the information into a master CRF report template for submission. We randomly selected the quarters ending December 30, 2020, and December 31, 2021, to test across 11 state agencies. One agency did not have expenditures in the quarter ending December 31, 2021; therefore, we judgmentally selected the quarter ending March 31, 2021, to test. Another agency did not have expenditures in either of the quarters randomly selected; therefore, we judgmentally selected the quarters ending September 30, 2021, and March 31, 2022, to test. In total, we attempted to reconcile the 22 agency prepared CRF report templates to data in the state?s accounting system. We also attempted to reconcile the agency prepared CRF report template information to OMB?s master CRF report template and/or final submission. Lastly, we randomly sampled CRF expenditures from the agency prepared CRF report templates to test the categorical breakdown. Based on our testing, we identified: ? Approximately $61.1 million of CRF expenditures were not reported by various agencies to OMB in the proper quarter. Because material errors and omissions impacted total expenditures reported, the amounts reported by category will also be misstated. Lastly, if an error was identified or a modification needed to be made after a report was already approved by the Treasury OIG, the prime recipient was allowed to make the modification or correction in the next quarterly reporting cycle. Where sampling was performed, the audit used a non-statistical sampling method. IDENTIFICATION AS A REPEAT FINDING Not a repeat finding. RECOMMENDATION We recommend the Office of Management and Budget strengthen procedures to ensure Federal reports are complete, accurate and reconcile to the state's accounting system. OFFICE OF MANAGEMENT AND BUDGET RESPONSE The Office of Management and Budget agrees with this finding and the auditor?s recommendation. We agree with the auditor?s finding that certain agency expenditures were not reported in the proper quarter and that quarterly reports did not reconcile to the state accounting system. However, the Federal report was required to be submitted ten days after the close of the period. The state accounting system was not closed by the time the Federal reports were required to be submitted. The U.S. Department of Treasury recognized this and directed reporting agencies to correct and revise prior submissions when each subsequent report was submitted. OMB made these revisions as required and all expenditures were reported appropriately as the final Coronavirus Relief Funds reports were submitted. See ?Management?s Response and Corrective Action? section of this report.
?See Schedule of Findings and Questioned Costs for chart/table? CONDITION We identified Coronavirus Relief Fund (CRF) quarterly financial progress reports were incomplete, inaccurate and did not reconcile to the state's accounting system. CRITERIA Federal regulation, 2 CFR 200.303, requires non-Federal entities, in part, 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. Office of Management and Budget, 2 CFR Part 200, Appendix XI, 2021 and 2022 Compliance Supplements, for Assistance Listing 21.019 Coronavirus Relief Fund, states in part: Each prime recipient of the Fund shall provide a quarterly Financial Progress Report that contains COVID-19 related costs incurred during the covered period (the period beginning on March 1, 2020; and ending on December 31, 2021) to Treasury OIG. Each prime recipient shall report this quarterly information mentioned above into the Grant Solutions portal. The prime recipient?s quarterly Financial Progress Report submissions should be supported by the data in the prime recipient?s accounting system. Key Line Items ? The following line items from the reporting contain critical information: (1) The total amount of payments from the Fund received from Treasury. (2) The amount of funds received that were expended or obligated for each project or activity. (3) A detailed list of all projects or activities for which funds were expended or obligated, including: a. The name of the project or activity b. A description of the project or activity (4) Detailed information on any loans issued; contracts and grants awarded; transfers made to other government entities; and direct payments made by the prime recipient that are greater than $50,000. For amounts less than $50,000, the prime recipient must report in the aggregate for these expenditure categories. For direct payments to individuals, aggregate reporting is required to be reported regardless of amount. Beginning September 21, 2020, prime recipients were required to submit via the Grant Solutions portal the first detailed quarterly Financial Progress Report, which cover the period March 1 through June 30, 2020 (with exception to the September 21 first quarter deadline and the October 13 second quarter reporting deadlines for those prime recipients using Grant Solutions? upload feature, which was available December 1, 2020). Thereafter, quarterly reporting will be due no later than ten days after each calendar quarter. If the 10th calendar day falls on a weekend or a Federal holiday, the due date will be the next working day. Reporting shall end with either the calendar quarter after the COVID-19 related costs and expenditures have been liquidated and paid or the calendar quarter ending September 30, 2022, whichever comes first. The prime recipient?s quarterly Financial Progress Report submission should be supported by the data in the prime recipient?s accounting system. Department of the Treasury Office of Inspector General Coronavirus Relief Frequently Asked Questions Related to Reporting and Recordkeeping (OIG-CA-20-028R), if an error is identified or a modification needs to be made after a report is already approved by the Treasury OIG, the prime recipient will need to make the modification or correction in the next quarterly reporting cycle. CAUSE There was a lack of understanding across state agencies of the detailed requirements of Coronavirus Relief Fund reporting. The North Dakota Office of Management and Budget (OMB) provided the CRF Report Template, Data Upload Service Data Dictionary, Coronavirus Relief Fund Frequently Asked Questions, and instructions to all state agencies. However, OMB?s procedures to review the information submitted by state agencies did not detect all material errors and omissions within the reporting cycle. In addition, the short turnaround time for reporting deadlines contributed to reporting errors and omissions. EFFECT Inaccurate Federal reporting reduces transparency and may impair the Federal oversight agency's ability to properly oversee the program. CONTEXT State agencies prepared and submitted CRF report templates to the ND Office of Management and Budget (OMB). OMB compiled the information into a master CRF report template for submission. We randomly selected the quarters ending December 30, 2020, and December 31, 2021, to test across 11 state agencies. One agency did not have expenditures in the quarter ending December 31, 2021; therefore, we judgmentally selected the quarter ending March 31, 2021, to test. Another agency did not have expenditures in either of the quarters randomly selected; therefore, we judgmentally selected the quarters ending September 30, 2021, and March 31, 2022, to test. In total, we attempted to reconcile the 22 agency prepared CRF report templates to data in the state?s accounting system. We also attempted to reconcile the agency prepared CRF report template information to OMB?s master CRF report template and/or final submission. Lastly, we randomly sampled CRF expenditures from the agency prepared CRF report templates to test the categorical breakdown. Based on our testing, we identified: ? Approximately $61.1 million of CRF expenditures were not reported by various agencies to OMB in the proper quarter. Because material errors and omissions impacted total expenditures reported, the amounts reported by category will also be misstated. Lastly, if an error was identified or a modification needed to be made after a report was already approved by the Treasury OIG, the prime recipient was allowed to make the modification or correction in the next quarterly reporting cycle. Where sampling was performed, the audit used a non-statistical sampling method. IDENTIFICATION AS A REPEAT FINDING Not a repeat finding. RECOMMENDATION We recommend the Office of Management and Budget strengthen procedures to ensure Federal reports are complete, accurate and reconcile to the state's accounting system. OFFICE OF MANAGEMENT AND BUDGET RESPONSE The Office of Management and Budget agrees with this finding and the auditor?s recommendation. We agree with the auditor?s finding that certain agency expenditures were not reported in the proper quarter and that quarterly reports did not reconcile to the state accounting system. However, the Federal report was required to be submitted ten days after the close of the period. The state accounting system was not closed by the time the Federal reports were required to be submitted. The U.S. Department of Treasury recognized this and directed reporting agencies to correct and revise prior submissions when each subsequent report was submitted. OMB made these revisions as required and all expenditures were reported appropriately as the final Coronavirus Relief Funds reports were submitted. See ?Management?s Response and Corrective Action? section of this report.
?See Schedule of Findings and Questioned Costs for chart/table? CONDITION The Office of Management and Budget underreported both current period and cumulative expenditures by at least $117,366,999 on the project and expenditure report to the Department of Treasury covering the period of January 2022-March 2022. These expenditures were subsequently reported in the period of April 2022-June 2022. CRITERIA The interim final rule, issued May 17, 2021, states "The quarterly Project and Expenditure reports will include financial data, information on contracts and subawards over $50,000, types of projects funded, and other information regarding a recipient?s utilization of the award funds..... Treasury will provide additional guidance and instructions on the reporting requirements outlined above for the Fiscal Recovery Funds at a later date." (Federal Register Vol. 96, No.93 pgs. 26814-26815). The final rule published January 27, 2022 which amended the interim rule also stated "Recipients are advised to also consult Treasury?s Reporting and Compliance Guidance for additional information on program administration processes and requirements, including applicability of the Uniform Guidance". Federal Register Vol. 87, No.18 pg. 4340). Per this guidance which was first published June 17, 2021, recipients were required to submit Project and Expenditure reports that included current period expenditures and cumulative expenditures for reporting periods covering March 2021-December 2021 and January 2022-March 2022. (Compliance and Reporting Guidance - State and Local Fiscal Recovery Funds, V5.0 pg.17-19). The FY 2022 compliance supplement also states that the SEFA should report all aggregate expenditures for all four eligible use categories, not just the results of the revenue loss calculation or standard allowance. 2 CFR 200.303(a) states that non-Federal entities 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. CAUSE Individual agencies paid SLFRF expenditures through the state's accounting system. OMB transferred reimbursement of expenditures to the individual agencies upon request. OMB reported information on the Federal project and expenditure reports based on OMB's transfers out to agencies. OMB tracked these transfers and reported the amount tracked as current period and cumulative period expenditures for their Project and Expenditure report. Expenditures may be reported on a cash or accrual basis. Some agencies did not request a transfer for paid expenditures or provide information relating to incurred expenditures to OMB prior to the reporting period end. The State Treasurer paid approximately $92 million and the Department of Human Services paid approximately $25 million during the period that was not transferred to these agencies until after the reporting period and not reported in the period January 2022-March 2022. EFFECT The timing of expenditures made using State and Local Fiscal Recovery Funds (SLFRF) was reported inaccurately to the Department of Treasury. CONTEXT In March 2021, the Federal Department of Treasury obligated funds to all 50 states under the State Local and Fiscal Recovery Fund to help states mitigate negative economic impacts caused by the COVID-19 pandemic. In November 2021, the special session of the 67th legislature obligated use of these funds to various agencies across the state. As the state was able to show that the revenue lost in years 2020 and 2021 exceeded the amount of the obligation from the Department of Treasury, the state was able to claim use of these funds under revenue replacement which allowed the state to utilize them for 'government operations' in addition to other specific uses and also allowing the state to report use of these funds under a single 'revenue replacement' project. The agencies began using the funds for purposes after they were obligated by the state legislature and began recording expenditures against the grant throughout our audit period. When these funds were initially disbursed to the state in March 2021, the funds were received by OMB and OMB then transferred reimbursement to agencies on request. North Dakota's project description on the reports was consistent and based on legislative appropriation. As reported, "Due to its extraordinary revenue loss during the pandemic, North Dakota?s entire SFRF allocation is dedicated to project expenditure category group 6 ? Revenue Replacement. Consequently, all expenditures will fall under project expenditure category 6.1 ? Provision of Government Services. Government services, as defined by the North Dakota legislature, includes economic development and workforce development initiatives, infrastructure and deferred maintenance initiatives, state service delivery and information technology improvements, and healthcare and emergency response initiatives." Where sampling was performed, the audit used a non-statistical sampling method. IDENTIFICATION AS A REPEAT FINDING Not a repeat finding. RECOMMENDATION We recommend the Office of Management and Budget develop corrective action and properly report the state's SLFRF current period expenditures and cumulative expenditures to the Department of Treasury as accumulated from each agency's records within the state's accounting system. OFFICE OF MANAGEMENT AND BUDGET RESPONSE The Office of Management and Budget agrees with this finding. The expenditures referenced in this audit finding were incurred by agencies prior to the period in which the Federal funds were included in the quarterly expenditure reports for the State and Local Fiscal Recovery Fund. Because OMB is responsible for the state reporting under this program, it is necessary to maintain some level of control over these funds. Consequently, OMB manages the funds centrally and developed a process to reimburse agencies for their eligible expenditures once expenditures were incurred and agencies requested reimbursement. As a result, reimbursement from the state?s allocation of SLFRF moneys always occurs after the agency expenditure. Funds are included in the Federal report for the period in which reimbursement from the SLFRF occurs. In some cases, this results in the agency expenditure occurring in a period prior to the period covered under the quarterly SLFRF report in which the reimbursement is reported. However, until reimbursement occurs, the expenditure is charged to a funding source other than SLFRF. All expenditures reimbursed through SLFRF are included in Federal reports for the period in which the reimbursement occurred. See ?Management?s Response and Corrective Action? section of this report. AUDITOR?S CONCLUDING COMMENTS While the Office of Management and Budget agrees with the finding, continuing Federal reporting based on the timing of reimbursed expenditures will likely cause further inaccurate SLFRF reporting. In addition, amounts transferred to agencies are not confirmed to not exceed incurred expenditures to ensure a reimbursement process is in place.
?See Schedule of Findings and Questioned Costs for chart/table? CONDITION We identified Coronavirus Relief Fund (CRF) quarterly financial progress reports were incomplete, inaccurate and did not reconcile to the state's accounting system. CRITERIA Federal regulation, 2 CFR 200.303, requires non-Federal entities, in part, 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. Office of Management and Budget, 2 CFR Part 200, Appendix XI, 2021 and 2022 Compliance Supplements, for Assistance Listing 21.019 Coronavirus Relief Fund, states in part: Each prime recipient of the Fund shall provide a quarterly Financial Progress Report that contains COVID-19 related costs incurred during the covered period (the period beginning on March 1, 2020; and ending on December 31, 2021) to Treasury OIG. Each prime recipient shall report this quarterly information mentioned above into the Grant Solutions portal. The prime recipient?s quarterly Financial Progress Report submissions should be supported by the data in the prime recipient?s accounting system. Key Line Items ? The following line items from the reporting contain critical information: (1) The total amount of payments from the Fund received from Treasury. (2) The amount of funds received that were expended or obligated for each project or activity. (3) A detailed list of all projects or activities for which funds were expended or obligated, including: a. The name of the project or activity b. A description of the project or activity (4) Detailed information on any loans issued; contracts and grants awarded; transfers made to other government entities; and direct payments made by the prime recipient that are greater than $50,000. For amounts less than $50,000, the prime recipient must report in the aggregate for these expenditure categories. For direct payments to individuals, aggregate reporting is required to be reported regardless of amount. Beginning September 21, 2020, prime recipients were required to submit via the Grant Solutions portal the first detailed quarterly Financial Progress Report, which cover the period March 1 through June 30, 2020 (with exception to the September 21 first quarter deadline and the October 13 second quarter reporting deadlines for those prime recipients using Grant Solutions? upload feature, which was available December 1, 2020). Thereafter, quarterly reporting will be due no later than ten days after each calendar quarter. If the 10th calendar day falls on a weekend or a Federal holiday, the due date will be the next working day. Reporting shall end with either the calendar quarter after the COVID-19 related costs and expenditures have been liquidated and paid or the calendar quarter ending September 30, 2022, whichever comes first. The prime recipient?s quarterly Financial Progress Report submission should be supported by the data in the prime recipient?s accounting system. Department of the Treasury Office of Inspector General Coronavirus Relief Frequently Asked Questions Related to Reporting and Recordkeeping (OIG-CA-20-028R), if an error is identified or a modification needs to be made after a report is already approved by the Treasury OIG, the prime recipient will need to make the modification or correction in the next quarterly reporting cycle. CAUSE There was a lack of understanding across state agencies of the detailed requirements of Coronavirus Relief Fund reporting. The North Dakota Office of Management and Budget (OMB) provided the CRF Report Template, Data Upload Service Data Dictionary, Coronavirus Relief Fund Frequently Asked Questions, and instructions to all state agencies. However, OMB?s procedures to review the information submitted by state agencies did not detect all material errors and omissions within the reporting cycle. In addition, the short turnaround time for reporting deadlines contributed to reporting errors and omissions. EFFECT Inaccurate Federal reporting reduces transparency and may impair the Federal oversight agency's ability to properly oversee the program. CONTEXT State agencies prepared and submitted CRF report templates to the ND Office of Management and Budget (OMB). OMB compiled the information into a master CRF report template for submission. We randomly selected the quarters ending December 30, 2020, and December 31, 2021, to test across 11 state agencies. One agency did not have expenditures in the quarter ending December 31, 2021; therefore, we judgmentally selected the quarter ending March 31, 2021, to test. Another agency did not have expenditures in either of the quarters randomly selected; therefore, we judgmentally selected the quarters ending September 30, 2021, and March 31, 2022, to test. In total, we attempted to reconcile the 22 agency prepared CRF report templates to data in the state?s accounting system. We also attempted to reconcile the agency prepared CRF report template information to OMB?s master CRF report template and/or final submission. Lastly, we randomly sampled CRF expenditures from the agency prepared CRF report templates to test the categorical breakdown. Based on our testing, we identified: ? Approximately $61.1 million of CRF expenditures were not reported by various agencies to OMB in the proper quarter. Because material errors and omissions impacted total expenditures reported, the amounts reported by category will also be misstated. Lastly, if an error was identified or a modification needed to be made after a report was already approved by the Treasury OIG, the prime recipient was allowed to make the modification or correction in the next quarterly reporting cycle. Where sampling was performed, the audit used a non-statistical sampling method. IDENTIFICATION AS A REPEAT FINDING Not a repeat finding. RECOMMENDATION We recommend the Office of Management and Budget strengthen procedures to ensure Federal reports are complete, accurate and reconcile to the state's accounting system. OFFICE OF MANAGEMENT AND BUDGET RESPONSE The Office of Management and Budget agrees with this finding and the auditor?s recommendation. We agree with the auditor?s finding that certain agency expenditures were not reported in the proper quarter and that quarterly reports did not reconcile to the state accounting system. However, the Federal report was required to be submitted ten days after the close of the period. The state accounting system was not closed by the time the Federal reports were required to be submitted. The U.S. Department of Treasury recognized this and directed reporting agencies to correct and revise prior submissions when each subsequent report was submitted. OMB made these revisions as required and all expenditures were reported appropriately as the final Coronavirus Relief Funds reports were submitted. See ?Management?s Response and Corrective Action? section of this report.
?See Schedule of Findings and Questioned Costs for chart/table? CONDITION We identified Coronavirus Relief Fund (CRF) quarterly financial progress reports were incomplete, inaccurate and did not reconcile to the state's accounting system. CRITERIA Federal regulation, 2 CFR 200.303, requires non-Federal entities, in part, 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. Office of Management and Budget, 2 CFR Part 200, Appendix XI, 2021 and 2022 Compliance Supplements, for Assistance Listing 21.019 Coronavirus Relief Fund, states in part: Each prime recipient of the Fund shall provide a quarterly Financial Progress Report that contains COVID-19 related costs incurred during the covered period (the period beginning on March 1, 2020; and ending on December 31, 2021) to Treasury OIG. Each prime recipient shall report this quarterly information mentioned above into the Grant Solutions portal. The prime recipient?s quarterly Financial Progress Report submissions should be supported by the data in the prime recipient?s accounting system. Key Line Items ? The following line items from the reporting contain critical information: (1) The total amount of payments from the Fund received from Treasury. (2) The amount of funds received that were expended or obligated for each project or activity. (3) A detailed list of all projects or activities for which funds were expended or obligated, including: a. The name of the project or activity b. A description of the project or activity (4) Detailed information on any loans issued; contracts and grants awarded; transfers made to other government entities; and direct payments made by the prime recipient that are greater than $50,000. For amounts less than $50,000, the prime recipient must report in the aggregate for these expenditure categories. For direct payments to individuals, aggregate reporting is required to be reported regardless of amount. Beginning September 21, 2020, prime recipients were required to submit via the Grant Solutions portal the first detailed quarterly Financial Progress Report, which cover the period March 1 through June 30, 2020 (with exception to the September 21 first quarter deadline and the October 13 second quarter reporting deadlines for those prime recipients using Grant Solutions? upload feature, which was available December 1, 2020). Thereafter, quarterly reporting will be due no later than ten days after each calendar quarter. If the 10th calendar day falls on a weekend or a Federal holiday, the due date will be the next working day. Reporting shall end with either the calendar quarter after the COVID-19 related costs and expenditures have been liquidated and paid or the calendar quarter ending September 30, 2022, whichever comes first. The prime recipient?s quarterly Financial Progress Report submission should be supported by the data in the prime recipient?s accounting system. Department of the Treasury Office of Inspector General Coronavirus Relief Frequently Asked Questions Related to Reporting and Recordkeeping (OIG-CA-20-028R), if an error is identified or a modification needs to be made after a report is already approved by the Treasury OIG, the prime recipient will need to make the modification or correction in the next quarterly reporting cycle. CAUSE There was a lack of understanding across state agencies of the detailed requirements of Coronavirus Relief Fund reporting. The North Dakota Office of Management and Budget (OMB) provided the CRF Report Template, Data Upload Service Data Dictionary, Coronavirus Relief Fund Frequently Asked Questions, and instructions to all state agencies. However, OMB?s procedures to review the information submitted by state agencies did not detect all material errors and omissions within the reporting cycle. In addition, the short turnaround time for reporting deadlines contributed to reporting errors and omissions. EFFECT Inaccurate Federal reporting reduces transparency and may impair the Federal oversight agency's ability to properly oversee the program. CONTEXT State agencies prepared and submitted CRF report templates to the ND Office of Management and Budget (OMB). OMB compiled the information into a master CRF report template for submission. We randomly selected the quarters ending December 30, 2020, and December 31, 2021, to test across 11 state agencies. One agency did not have expenditures in the quarter ending December 31, 2021; therefore, we judgmentally selected the quarter ending March 31, 2021, to test. Another agency did not have expenditures in either of the quarters randomly selected; therefore, we judgmentally selected the quarters ending September 30, 2021, and March 31, 2022, to test. In total, we attempted to reconcile the 22 agency prepared CRF report templates to data in the state?s accounting system. We also attempted to reconcile the agency prepared CRF report template information to OMB?s master CRF report template and/or final submission. Lastly, we randomly sampled CRF expenditures from the agency prepared CRF report templates to test the categorical breakdown. Based on our testing, we identified: ? Approximately $61.1 million of CRF expenditures were not reported by various agencies to OMB in the proper quarter. Because material errors and omissions impacted total expenditures reported, the amounts reported by category will also be misstated. Lastly, if an error was identified or a modification needed to be made after a report was already approved by the Treasury OIG, the prime recipient was allowed to make the modification or correction in the next quarterly reporting cycle. Where sampling was performed, the audit used a non-statistical sampling method. IDENTIFICATION AS A REPEAT FINDING Not a repeat finding. RECOMMENDATION We recommend the Office of Management and Budget strengthen procedures to ensure Federal reports are complete, accurate and reconcile to the state's accounting system. OFFICE OF MANAGEMENT AND BUDGET RESPONSE The Office of Management and Budget agrees with this finding and the auditor?s recommendation. We agree with the auditor?s finding that certain agency expenditures were not reported in the proper quarter and that quarterly reports did not reconcile to the state accounting system. However, the Federal report was required to be submitted ten days after the close of the period. The state accounting system was not closed by the time the Federal reports were required to be submitted. The U.S. Department of Treasury recognized this and directed reporting agencies to correct and revise prior submissions when each subsequent report was submitted. OMB made these revisions as required and all expenditures were reported appropriately as the final Coronavirus Relief Funds reports were submitted. See ?Management?s Response and Corrective Action? section of this report.
?See Schedule of Findings and Questioned Costs for chart/table? CONDITION We identified Coronavirus Relief Fund (CRF) quarterly financial progress reports were incomplete, inaccurate and did not reconcile to the state's accounting system. CRITERIA Federal regulation, 2 CFR 200.303, requires non-Federal entities, in part, 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. Office of Management and Budget, 2 CFR Part 200, Appendix XI, 2021 and 2022 Compliance Supplements, for Assistance Listing 21.019 Coronavirus Relief Fund, states in part: Each prime recipient of the Fund shall provide a quarterly Financial Progress Report that contains COVID-19 related costs incurred during the covered period (the period beginning on March 1, 2020; and ending on December 31, 2021) to Treasury OIG. Each prime recipient shall report this quarterly information mentioned above into the Grant Solutions portal. The prime recipient?s quarterly Financial Progress Report submissions should be supported by the data in the prime recipient?s accounting system. Key Line Items ? The following line items from the reporting contain critical information: (1) The total amount of payments from the Fund received from Treasury. (2) The amount of funds received that were expended or obligated for each project or activity. (3) A detailed list of all projects or activities for which funds were expended or obligated, including: a. The name of the project or activity b. A description of the project or activity (4) Detailed information on any loans issued; contracts and grants awarded; transfers made to other government entities; and direct payments made by the prime recipient that are greater than $50,000. For amounts less than $50,000, the prime recipient must report in the aggregate for these expenditure categories. For direct payments to individuals, aggregate reporting is required to be reported regardless of amount. Beginning September 21, 2020, prime recipients were required to submit via the Grant Solutions portal the first detailed quarterly Financial Progress Report, which cover the period March 1 through June 30, 2020 (with exception to the September 21 first quarter deadline and the October 13 second quarter reporting deadlines for those prime recipients using Grant Solutions? upload feature, which was available December 1, 2020). Thereafter, quarterly reporting will be due no later than ten days after each calendar quarter. If the 10th calendar day falls on a weekend or a Federal holiday, the due date will be the next working day. Reporting shall end with either the calendar quarter after the COVID-19 related costs and expenditures have been liquidated and paid or the calendar quarter ending September 30, 2022, whichever comes first. The prime recipient?s quarterly Financial Progress Report submission should be supported by the data in the prime recipient?s accounting system. Department of the Treasury Office of Inspector General Coronavirus Relief Frequently Asked Questions Related to Reporting and Recordkeeping (OIG-CA-20-028R), if an error is identified or a modification needs to be made after a report is already approved by the Treasury OIG, the prime recipient will need to make the modification or correction in the next quarterly reporting cycle. CAUSE There was a lack of understanding across state agencies of the detailed requirements of Coronavirus Relief Fund reporting. The North Dakota Office of Management and Budget (OMB) provided the CRF Report Template, Data Upload Service Data Dictionary, Coronavirus Relief Fund Frequently Asked Questions, and instructions to all state agencies. However, OMB?s procedures to review the information submitted by state agencies did not detect all material errors and omissions within the reporting cycle. In addition, the short turnaround time for reporting deadlines contributed to reporting errors and omissions. EFFECT Inaccurate Federal reporting reduces transparency and may impair the Federal oversight agency's ability to properly oversee the program. CONTEXT State agencies prepared and submitted CRF report templates to the ND Office of Management and Budget (OMB). OMB compiled the information into a master CRF report template for submission. We randomly selected the quarters ending December 30, 2020, and December 31, 2021, to test across 11 state agencies. One agency did not have expenditures in the quarter ending December 31, 2021; therefore, we judgmentally selected the quarter ending March 31, 2021, to test. Another agency did not have expenditures in either of the quarters randomly selected; therefore, we judgmentally selected the quarters ending September 30, 2021, and March 31, 2022, to test. In total, we attempted to reconcile the 22 agency prepared CRF report templates to data in the state?s accounting system. We also attempted to reconcile the agency prepared CRF report template information to OMB?s master CRF report template and/or final submission. Lastly, we randomly sampled CRF expenditures from the agency prepared CRF report templates to test the categorical breakdown. Based on our testing, we identified: ? Approximately $61.1 million of CRF expenditures were not reported by various agencies to OMB in the proper quarter. Because material errors and omissions impacted total expenditures reported, the amounts reported by category will also be misstated. Lastly, if an error was identified or a modification needed to be made after a report was already approved by the Treasury OIG, the prime recipient was allowed to make the modification or correction in the next quarterly reporting cycle. Where sampling was performed, the audit used a non-statistical sampling method. IDENTIFICATION AS A REPEAT FINDING Not a repeat finding. RECOMMENDATION We recommend the Office of Management and Budget strengthen procedures to ensure Federal reports are complete, accurate and reconcile to the state's accounting system. OFFICE OF MANAGEMENT AND BUDGET RESPONSE The Office of Management and Budget agrees with this finding and the auditor?s recommendation. We agree with the auditor?s finding that certain agency expenditures were not reported in the proper quarter and that quarterly reports did not reconcile to the state accounting system. However, the Federal report was required to be submitted ten days after the close of the period. The state accounting system was not closed by the time the Federal reports were required to be submitted. The U.S. Department of Treasury recognized this and directed reporting agencies to correct and revise prior submissions when each subsequent report was submitted. OMB made these revisions as required and all expenditures were reported appropriately as the final Coronavirus Relief Funds reports were submitted. See ?Management?s Response and Corrective Action? section of this report.
?See Schedule of Findings and Questioned Costs for chart/table? CONDITION The Department of Public Instruction did not report Child Nutrition Cluster subawards to the Federal Funding Accountability and Transparency Act (FFATA) correctly. After testing FFATA reporting for the Child Nutrition Cluster, it was discovered that there were FFATA errors in the following three areas: 1. The Department of Public Instruction did not report the subaward information for the Fresh Fruit and Vegetable program (Assistance Listing number 10.582) for the 2021 grant year which runs from October 2020-September 2021. After an analysis of grant awards for that grant year, it was discovered that 14 subawards should have been reported to FFATA, totaling $1,593,654. ?See Schedule of Findings and Questioned Costs for chart/table? 2. The Department of Public Instruction did not report the subaward information timely for the Fresh Fruit and Vegetable program (Assistance Listing number 10.582) for the 2022 grant year awards (October 2021-September 2022) awarded in October 2021. After an analysis of grant awards awarded in October 2021, we tested 5 of 13 awards and found all 5 were not submitted timely to FFATA. Four (4) of the tested awards should have been reported to FFATA by 1/31/2022. The fifth award should have been reported to FFATA by 2/28/2022. They were all reported to FFATA on 7/28/2022. Those grant awards totaled $623,000. ?See Schedule of Findings and Questioned Costs for chart/table? 3. FFATA isn't being submitted for the following Assistance Listing numbers: 10.553, 10.555, 10.556 and 10.559. Because these Assistance Listing numbers are all included in one grant award, therefore, one FAIN number, they would all be reported in one FFATA report. The Department of Public Instruction did not report the subaward information for FAIN 223ND309N1099. After an analysis of these grant awards, 206 sponsors receiving total Federal grant payments over $30,000 should have been reported. Those grant payments totaled $168,897,721. The $169 million is based on payments made from 7/1/2020 - 6/30/2022. ?See Schedule of Findings and Questioned Costs for chart/table? CRITERIA Federal regulation 2 CFR 170, Appendix A requires a Federal Financial Assistance Transparency Act (FFATA) report for each subaward that equals or exceeds $30,000 no later than the end of the month following the month in which the obligation was made. The subaward information is then available to the public on the USA Spending website for transparency. 2 CFR 200.303(a) states that non-Federal entities 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. CAUSE Based on discussion with staff, a lack of understanding of FFATA reporting requirements resulted in the FFATA reporting errors. The Department of Public Instruction is only reporting FFATA for the Fresh Fruit and Vegetable program because the amounts given to sponsors is predetermined and not reimbursement based. For the other programs in the Child Nutrition Cluster, DPI does not report FFATA because they are meal count grants and amounts are not predetermined. There is no waiver or statement in the grant terms and conditions for the meal count grants saying that FFATA doesn?t need to be completed for these programs. The Department also couldn?t find a waiver or any information from their USDA contact saying that FFATA doesn?t need to be completed. Therefore, the FFATA should have been completed for all programs in the Child Nutrition Cluster. Because the awards to sponsors are not predetermined, the auditor is reporting grant payments during the audit period instead of award amounts. EFFECT Not meeting the FFATA requirements increases the likelihood that the public will not have access to transparent and accurate information regarding expenditures of Federal awards. Additionally, Federal regulations address actions that Federal agencies may impose if a state entity does not comply with the U.S. Constitution, Federal statutes, regulations, or the terms and conditions of a Federal award. According to 2 CFR 200.208(c), ?Specific conditions,? these actions may include ? requiring reimbursement instead of advance payments; ? not allowing the agency to proceed to the next phase until it submits evidence of acceptable performance; ? requiring additional, more detailed financial reports or additional project monitoring; ? requiring the agency to obtain technical or management assistance; or ? establishing other prior approvals. If the Federal agency determines the state agency cannot remedy its noncompliance through the above actions, 2 CFR 200.339, ?Remedies for noncompliance,? outlines additional actions the Federal agency may take. Depending on the circumstances, these actions may include ? temporarily withholding payments until the noncompliance has been corrected, ? denying the use of funds, ? partly or fully suspending or terminating the Federal award, ? suspending or debarring the agency, ? withholding further awards for the project or program, or ? pursuing other available legal remedies. CONTEXT There were 539 sponsors receiving Federal grant awards during our audit period totaling $174,653,181. Of those 539 sponsors, 233 (43%) were over the $30,000 threshold and should have been reported to FFATA, for a total of $172,004,887 (98%). Of the 233 sponsors over the $30,000 threshold, only 13 sponsors (6%) were reported to FFATA, totaling $1,513,512 (1%). This results in 220 sponsors receiving Federal grant awards (94%) not reported to FFATA, totaling $170,491,375 (99%). Where sampling was performed, the audit used a non-statistical sampling method. IDENTIFICATION AS A REPEAT FINDING Not a repeat finding. RECOMMENDATION We recommend the Department of Public Instruction ensures timely and accurate submission of FFATA reports in accordance with Federal regulations and retain further instructions or waiver from the Federal agency. DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE We agree with the finding. See ?Management?s Response and Corrective Action? section of this report.
?See Schedule of Findings and Questioned Costs for chart/table? CONDITION The Department of Public Instruction did not ensure all subrecipients either submitted a Single Audit report or certification form identifying a Single Audit is not required. In addition, the Department did not issue management decisions on auditing findings within 6 months or ensure that timely and appropriate corrective action was taken in all applicable instances. We selected a sample of 60 subrecipients of the total 795 in our population for testing. During our testing, 6 of the 60 subrecipients did not submit a certification form identifying whether a Single Audit was required. The Department indicated that a Single Audit report was not received but we are unable to determine whether one was required. For 4 additional subrecipients, the Department did not receive a Single Audit, issue management decisions on auditing findings within 6 months, or ensure appropriate corrective action was taken. The Department did track all of their subrecipients in a spreadsheet that captured information relating to when their certified Federal expenditure information was received as well as if a single audit is required of them. However, due to the errors noted in receiving this information as well as following up with completed single audits in a timely manner in our sample tested, it was determined that this spreadsheet was not being fully utilized. CRITERIA 2 CFR 200.331(f) states that a pass-through entity must verify that every subrecipient is audited as required by 2 CFR 200 Subpart F. 2 CFR 200.331(d)(2) states that a pass-through entity must ensure subrecipients take timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity through audits, on-site reviews, and other means. 2 CFR 200.521(d) states that a pass-through entity must issue a management decision within six months of acceptance of the audit report by the Federal Audit Clearinghouse. 2 CFR 200.303(a) states that non-Federal entities 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. CAUSE The Department of Public Instruction maintains a spreadsheet to track all subrecipient audit report monitoring. However, they did not ensure that everyone on the spreadsheet provided a Single Audit report or certification of total federal expenditures. EFFECT Subrecipients spending more than $750,000 from all Federal sources may not be obtaining audits as required or implementing a corrective action plan in a timely manner if findings are noted in audits that were completed. CONTEXT The 4 subrecipients that did not provide a Single Audit report received approximately $9.9 million dollars in Federal expenditures. The additional 6 entities that did not provide certifications indicating their total Federal awards received approximately $1.5 million dollars. We did verify that the 6 entities that failed to provide certifications did not have Single Audit reports submitted to the clearing house. Where sampling was performed, the audit used a non-statistical sampling method. IDENTIFICATION AS A REPEAT FINDING Finding 2020-021 was reported in the immediate prior year. Finding 2018-041 was reported in a previous year. The prior audit finding was reported as implemented on the summary schedule of prior audit findings. This materially misrepresents the status of the finding. RECOMMENDATION We recommend the Department of Public Instruction: ? Ensure all subrecipients obtain audits in accordance with 2 CFR 200 Subpart F if they meet the requirements; ? Issue management decisions within a timely manner; ? Ensure subrecipients took timely corrective action on deficiencies identified in the audits. DEPARTMENT OF PUBLIC INSTRUCTION RESPONSE The Department of Public Instruction agrees with the finding. See ?Management?s Response and Corrective Action? section of this report.
2022 ? 002 Federal Agency: U.S. Department of Education Federal Program Title: COVID-19 Education Stabilization Fund Assistance Listing Number: 84.425F ? HEERF Institutional Portion Award Period: July 1, 2021 to June 30, 2022 Type of Finding: ? Compliance, Other Matter ? Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Condition and context: During the testing of the Northeastern Oklahoma A&M annual HEERF report CLA observed there was no formal review process of quarterly or annual reports which resulted in the annual report Institutional Expenditures in sections 8a and 9b of the Annual report to be overstated by $2,017,325. Questioned costs: None Cause: Northeastern Oklahoma A&M did not have a formal review process in place to review the accuracy of HEERF reports for the year ended June 30, 2022. Effect: Overstatement of institutional expenditures in the Annual Report for the year ended June 30, 2022. Repeat finding: No Recommendation: We recommend the Northeastern Oklahoma A&M implement a formal review process over the HEERF reports. Views of responsible officials: There is no disagreement with the audit finding.
FINDING 2022-003 Subject: School Safety National Activities - Procurement Federal Agency: Department of Education Federal Program: School Safety National Activities Assistance Listings Number: 84.184 Federal Award Number and Year (or Other Identifying Number): S184X190033 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context An effective internal control system was not designed, nor implemented, at the School Corporation to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. 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 micro-purchase 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. The School Corporation did not obtain price or rate quotes for two vendors that were tested during the audit period, that were less than the simplified acquisition threshold of $150,000 but exceeded the $10,000 micro-purchase threshold. The School Corporation did not provide documentation to support the rationale to limit competition. Additionally, documentation detailing the history of procurement, which must include the reason for the procurement method used, selection of the vendor, and the basis for the price, was not available for audit. 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(i) states: "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." 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. (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. . . ." Cause Management had not designed or implemented a system of internal control that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment 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 control to ensure compliance and comply with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-003 Subject: School Safety National Activities - Procurement Federal Agency: Department of Education Federal Program: School Safety National Activities Assistance Listings Number: 84.184 Federal Award Number and Year (or Other Identifying Number): S184X190033 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context An effective internal control system was not designed, nor implemented, at the School Corporation to ensure compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. 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 micro-purchase 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. The School Corporation did not obtain price or rate quotes for two vendors that were tested during the audit period, that were less than the simplified acquisition threshold of $150,000 but exceeded the $10,000 micro-purchase threshold. The School Corporation did not provide documentation to support the rationale to limit competition. Additionally, documentation detailing the history of procurement, which must include the reason for the procurement method used, selection of the vendor, and the basis for the price, was not available for audit. 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(i) states: "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." 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. (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. . . ." Cause Management had not designed or implemented a system of internal control that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment 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 control to ensure compliance and comply with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-001 Subject: COVID-19 - Education Stabilization Fund - Equipment Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425 Federal Award Numbers and Years (or Other Identifying Numbers): S425C200018, S425D200013, S425U200013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness, Other Matters Condition and Context An effective internal control system was not designed, nor implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Equipment and Real Property Management compliance requirement. The School Corporation used federal funds for equipment purchases related to an HVAC construction project. The School Corporation appropriately listed the purchase in its property records as required but failed to include a serial number or other identification number, the source of funding for the property (including the federal award identification number (FAIN)), who holds title, and the percentage of federal participation in the project costs for the federal award under which the property was acquired. 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 200.313(d)(1) states: "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 sales price of the property." Cause Management had not developed or implemented a system of internal control that would have ensured compliance with the grant agreement and the Equipment and Real Property Management compliance requirement. Effect The failure to establish an effective internal control system enabled noncompliance to go undetected. Noncompliance with the grant agreement and the Equipment and Real Property Management 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 internal controls to ensure compliance and comply with the grant agreement and the Equipment and Real Property Management compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-002 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: 84.425 Federal Award Numbers and Years (or Other Identifying Numbers): S425C200018, S425D200013, S425U200013 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 An effective internal control system was not designed, nor implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Special Tests and Provisions - Wage Rate Requirements compliance requirement. 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 their laborers and mechanics. Nonfederal entities are to include in their 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 did not have adequate policies or procedures to ensure that contracts in excess of $2,000 paid from federal grant funds included a prevailing wage rate clause. One contract during the audit period was subject to wage rate requirements; however, the contract did not have the required prevailing wage rate clause included in the contract nor were certified payrolls submitted by the contractor. 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). . . ." 29 CFR 5.5 states in part: "(a) The Agency head shall cause or require the contracting officer to insert in full 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 acts listed in ? 5.1, the following clauses . . . (1) Minimum wages. (i) All laborers and mechanics employed or working upon the site of the work (or under the United States Housing Act of 1937 or under the Housing Act of 1949 in the construction or development of the project), 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 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) Payrolls and basic records. . . . (ii) (A) The contractor shall submit weekly for each week in which any contract work is performed a copy of all 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 payrolls to the applicant, sponsor, or owner, as the case may be, for transmission to the (write in name of agency). The payrolls submitted shall set out accurately and completely all of the information required to be maintained under 29 CFR 5.5(a)(3)(i), except that full social security numbers and home addresses shall not be included on weekly transmittals. . . ." 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. . . . (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 Management had not developed or implemented a system of internal control that would have ensured compliance with the grant agreement and the Special Tests and Provisions - Wage Rate Requirements compliance requirement. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Special Tests and Provisions - Wage Rate Requirements 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 internal controls to ensure compliance and comply with the grant agreement and the Special Tests and Provisions - Wage Rate Requirements compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-001 Subject: COVID-19 - Education Stabilization Fund - Equipment Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425 Federal Award Numbers and Years (or Other Identifying Numbers): S425C200018, S425D200013, S425U200013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness, Other Matters Condition and Context An effective internal control system was not designed, nor implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Equipment and Real Property Management compliance requirement. The School Corporation used federal funds for equipment purchases related to an HVAC construction project. The School Corporation appropriately listed the purchase in its property records as required but failed to include a serial number or other identification number, the source of funding for the property (including the federal award identification number (FAIN)), who holds title, and the percentage of federal participation in the project costs for the federal award under which the property was acquired. 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 200.313(d)(1) states: "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 sales price of the property." Cause Management had not developed or implemented a system of internal control that would have ensured compliance with the grant agreement and the Equipment and Real Property Management compliance requirement. Effect The failure to establish an effective internal control system enabled noncompliance to go undetected. Noncompliance with the grant agreement and the Equipment and Real Property Management 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 internal controls to ensure compliance and comply with the grant agreement and the Equipment and Real Property Management compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-002 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: 84.425 Federal Award Numbers and Years (or Other Identifying Numbers): S425C200018, S425D200013, S425U200013 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 An effective internal control system was not designed, nor implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Special Tests and Provisions - Wage Rate Requirements compliance requirement. 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 their laborers and mechanics. Nonfederal entities are to include in their 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 did not have adequate policies or procedures to ensure that contracts in excess of $2,000 paid from federal grant funds included a prevailing wage rate clause. One contract during the audit period was subject to wage rate requirements; however, the contract did not have the required prevailing wage rate clause included in the contract nor were certified payrolls submitted by the contractor. 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). . . ." 29 CFR 5.5 states in part: "(a) The Agency head shall cause or require the contracting officer to insert in full 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 acts listed in ? 5.1, the following clauses . . . (1) Minimum wages. (i) All laborers and mechanics employed or working upon the site of the work (or under the United States Housing Act of 1937 or under the Housing Act of 1949 in the construction or development of the project), 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 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) Payrolls and basic records. . . . (ii) (A) The contractor shall submit weekly for each week in which any contract work is performed a copy of all 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 payrolls to the applicant, sponsor, or owner, as the case may be, for transmission to the (write in name of agency). The payrolls submitted shall set out accurately and completely all of the information required to be maintained under 29 CFR 5.5(a)(3)(i), except that full social security numbers and home addresses shall not be included on weekly transmittals. . . ." 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. . . . (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 Management had not developed or implemented a system of internal control that would have ensured compliance with the grant agreement and the Special Tests and Provisions - Wage Rate Requirements compliance requirement. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Special Tests and Provisions - Wage Rate Requirements 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 internal controls to ensure compliance and comply with the grant agreement and the Special Tests and Provisions - Wage Rate Requirements compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-001 Subject: COVID-19 - Education Stabilization Fund - Equipment Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425 Federal Award Numbers and Years (or Other Identifying Numbers): S425C200018, S425D200013, S425U200013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness, Other Matters Condition and Context An effective internal control system was not designed, nor implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Equipment and Real Property Management compliance requirement. The School Corporation used federal funds for equipment purchases related to an HVAC construction project. The School Corporation appropriately listed the purchase in its property records as required but failed to include a serial number or other identification number, the source of funding for the property (including the federal award identification number (FAIN)), who holds title, and the percentage of federal participation in the project costs for the federal award under which the property was acquired. 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 200.313(d)(1) states: "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 sales price of the property." Cause Management had not developed or implemented a system of internal control that would have ensured compliance with the grant agreement and the Equipment and Real Property Management compliance requirement. Effect The failure to establish an effective internal control system enabled noncompliance to go undetected. Noncompliance with the grant agreement and the Equipment and Real Property Management 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 internal controls to ensure compliance and comply with the grant agreement and the Equipment and Real Property Management compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-002 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: 84.425 Federal Award Numbers and Years (or Other Identifying Numbers): S425C200018, S425D200013, S425U200013 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 An effective internal control system was not designed, nor implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Special Tests and Provisions - Wage Rate Requirements compliance requirement. 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 their laborers and mechanics. Nonfederal entities are to include in their 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 did not have adequate policies or procedures to ensure that contracts in excess of $2,000 paid from federal grant funds included a prevailing wage rate clause. One contract during the audit period was subject to wage rate requirements; however, the contract did not have the required prevailing wage rate clause included in the contract nor were certified payrolls submitted by the contractor. 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). . . ." 29 CFR 5.5 states in part: "(a) The Agency head shall cause or require the contracting officer to insert in full 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 acts listed in ? 5.1, the following clauses . . . (1) Minimum wages. (i) All laborers and mechanics employed or working upon the site of the work (or under the United States Housing Act of 1937 or under the Housing Act of 1949 in the construction or development of the project), 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 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) Payrolls and basic records. . . . (ii) (A) The contractor shall submit weekly for each week in which any contract work is performed a copy of all 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 payrolls to the applicant, sponsor, or owner, as the case may be, for transmission to the (write in name of agency). The payrolls submitted shall set out accurately and completely all of the information required to be maintained under 29 CFR 5.5(a)(3)(i), except that full social security numbers and home addresses shall not be included on weekly transmittals. . . ." 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. . . . (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 Management had not developed or implemented a system of internal control that would have ensured compliance with the grant agreement and the Special Tests and Provisions - Wage Rate Requirements compliance requirement. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Special Tests and Provisions - Wage Rate Requirements 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 internal controls to ensure compliance and comply with the grant agreement and the Special Tests and Provisions - Wage Rate Requirements compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-001 Subject: COVID-19 - Education Stabilization Fund - Equipment Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425 Federal Award Numbers and Years (or Other Identifying Numbers): S425C200018, S425D200013, S425U200013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness, Other Matters Condition and Context An effective internal control system was not designed, nor implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Equipment and Real Property Management compliance requirement. The School Corporation used federal funds for equipment purchases related to an HVAC construction project. The School Corporation appropriately listed the purchase in its property records as required but failed to include a serial number or other identification number, the source of funding for the property (including the federal award identification number (FAIN)), who holds title, and the percentage of federal participation in the project costs for the federal award under which the property was acquired. 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 200.313(d)(1) states: "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 sales price of the property." Cause Management had not developed or implemented a system of internal control that would have ensured compliance with the grant agreement and the Equipment and Real Property Management compliance requirement. Effect The failure to establish an effective internal control system enabled noncompliance to go undetected. Noncompliance with the grant agreement and the Equipment and Real Property Management 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 internal controls to ensure compliance and comply with the grant agreement and the Equipment and Real Property Management compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-002 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: 84.425 Federal Award Numbers and Years (or Other Identifying Numbers): S425C200018, S425D200013, S425U200013 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 An effective internal control system was not designed, nor implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Special Tests and Provisions - Wage Rate Requirements compliance requirement. 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 their laborers and mechanics. Nonfederal entities are to include in their 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 did not have adequate policies or procedures to ensure that contracts in excess of $2,000 paid from federal grant funds included a prevailing wage rate clause. One contract during the audit period was subject to wage rate requirements; however, the contract did not have the required prevailing wage rate clause included in the contract nor were certified payrolls submitted by the contractor. 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). . . ." 29 CFR 5.5 states in part: "(a) The Agency head shall cause or require the contracting officer to insert in full 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 acts listed in ? 5.1, the following clauses . . . (1) Minimum wages. (i) All laborers and mechanics employed or working upon the site of the work (or under the United States Housing Act of 1937 or under the Housing Act of 1949 in the construction or development of the project), 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 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) Payrolls and basic records. . . . (ii) (A) The contractor shall submit weekly for each week in which any contract work is performed a copy of all 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 payrolls to the applicant, sponsor, or owner, as the case may be, for transmission to the (write in name of agency). The payrolls submitted shall set out accurately and completely all of the information required to be maintained under 29 CFR 5.5(a)(3)(i), except that full social security numbers and home addresses shall not be included on weekly transmittals. . . ." 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. . . . (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 Management had not developed or implemented a system of internal control that would have ensured compliance with the grant agreement and the Special Tests and Provisions - Wage Rate Requirements compliance requirement. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Special Tests and Provisions - Wage Rate Requirements 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 internal controls to ensure compliance and comply with the grant agreement and the Special Tests and Provisions - Wage Rate Requirements compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-001 Subject: COVID-19 - Education Stabilization Fund - Equipment Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425 Federal Award Numbers and Years (or Other Identifying Numbers): S425C200018, S425D200013, S425U200013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness, Other Matters Condition and Context An effective internal control system was not designed, nor implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Equipment and Real Property Management compliance requirement. The School Corporation used federal funds for equipment purchases related to an HVAC construction project. The School Corporation appropriately listed the purchase in its property records as required but failed to include a serial number or other identification number, the source of funding for the property (including the federal award identification number (FAIN)), who holds title, and the percentage of federal participation in the project costs for the federal award under which the property was acquired. 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 200.313(d)(1) states: "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 sales price of the property." Cause Management had not developed or implemented a system of internal control that would have ensured compliance with the grant agreement and the Equipment and Real Property Management compliance requirement. Effect The failure to establish an effective internal control system enabled noncompliance to go undetected. Noncompliance with the grant agreement and the Equipment and Real Property Management 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 internal controls to ensure compliance and comply with the grant agreement and the Equipment and Real Property Management compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-002 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: 84.425 Federal Award Numbers and Years (or Other Identifying Numbers): S425C200018, S425D200013, S425U200013 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 An effective internal control system was not designed, nor implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Special Tests and Provisions - Wage Rate Requirements compliance requirement. 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 their laborers and mechanics. Nonfederal entities are to include in their 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 did not have adequate policies or procedures to ensure that contracts in excess of $2,000 paid from federal grant funds included a prevailing wage rate clause. One contract during the audit period was subject to wage rate requirements; however, the contract did not have the required prevailing wage rate clause included in the contract nor were certified payrolls submitted by the contractor. 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). . . ." 29 CFR 5.5 states in part: "(a) The Agency head shall cause or require the contracting officer to insert in full 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 acts listed in ? 5.1, the following clauses . . . (1) Minimum wages. (i) All laborers and mechanics employed or working upon the site of the work (or under the United States Housing Act of 1937 or under the Housing Act of 1949 in the construction or development of the project), 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 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) Payrolls and basic records. . . . (ii) (A) The contractor shall submit weekly for each week in which any contract work is performed a copy of all 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 payrolls to the applicant, sponsor, or owner, as the case may be, for transmission to the (write in name of agency). The payrolls submitted shall set out accurately and completely all of the information required to be maintained under 29 CFR 5.5(a)(3)(i), except that full social security numbers and home addresses shall not be included on weekly transmittals. . . ." 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. . . . (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 Management had not developed or implemented a system of internal control that would have ensured compliance with the grant agreement and the Special Tests and Provisions - Wage Rate Requirements compliance requirement. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Special Tests and Provisions - Wage Rate Requirements 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 internal controls to ensure compliance and comply with the grant agreement and the Special Tests and Provisions - Wage Rate Requirements compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-001 Subject: COVID-19 - Education Stabilization Fund - Equipment Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425 Federal Award Numbers and Years (or Other Identifying Numbers): S425C200018, S425D200013, S425U200013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness, Other Matters Condition and Context An effective internal control system was not designed, nor implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Equipment and Real Property Management compliance requirement. The School Corporation used federal funds for equipment purchases related to an HVAC construction project. The School Corporation appropriately listed the purchase in its property records as required but failed to include a serial number or other identification number, the source of funding for the property (including the federal award identification number (FAIN)), who holds title, and the percentage of federal participation in the project costs for the federal award under which the property was acquired. 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 200.313(d)(1) states: "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 sales price of the property." Cause Management had not developed or implemented a system of internal control that would have ensured compliance with the grant agreement and the Equipment and Real Property Management compliance requirement. Effect The failure to establish an effective internal control system enabled noncompliance to go undetected. Noncompliance with the grant agreement and the Equipment and Real Property Management 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 internal controls to ensure compliance and comply with the grant agreement and the Equipment and Real Property Management compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-002 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: 84.425 Federal Award Numbers and Years (or Other Identifying Numbers): S425C200018, S425D200013, S425U200013 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 An effective internal control system was not designed, nor implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Special Tests and Provisions - Wage Rate Requirements compliance requirement. 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 their laborers and mechanics. Nonfederal entities are to include in their 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 did not have adequate policies or procedures to ensure that contracts in excess of $2,000 paid from federal grant funds included a prevailing wage rate clause. One contract during the audit period was subject to wage rate requirements; however, the contract did not have the required prevailing wage rate clause included in the contract nor were certified payrolls submitted by the contractor. 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). . . ." 29 CFR 5.5 states in part: "(a) The Agency head shall cause or require the contracting officer to insert in full 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 acts listed in ? 5.1, the following clauses . . . (1) Minimum wages. (i) All laborers and mechanics employed or working upon the site of the work (or under the United States Housing Act of 1937 or under the Housing Act of 1949 in the construction or development of the project), 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 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) Payrolls and basic records. . . . (ii) (A) The contractor shall submit weekly for each week in which any contract work is performed a copy of all 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 payrolls to the applicant, sponsor, or owner, as the case may be, for transmission to the (write in name of agency). The payrolls submitted shall set out accurately and completely all of the information required to be maintained under 29 CFR 5.5(a)(3)(i), except that full social security numbers and home addresses shall not be included on weekly transmittals. . . ." 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. . . . (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 Management had not developed or implemented a system of internal control that would have ensured compliance with the grant agreement and the Special Tests and Provisions - Wage Rate Requirements compliance requirement. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Special Tests and Provisions - Wage Rate Requirements 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 internal controls to ensure compliance and comply with the grant agreement and the Special Tests and Provisions - Wage Rate Requirements compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-001 Subject: Child Nutrition Cluster - Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Procurement Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program Assistance Listings Numbers: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): SY 2020-2021, SY 2021-2022 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Procurement and Suspension and Debarment Audit Finding: Material Weakness Condition and Context An effective internal control system was not designed nor implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Activities Allowed or Unallowed, the Allowable Costs/Cost Principles, and the Procurement and Suspension and Debarment compliance requirements. The School Corporation had not established an effective system of internal controls over vendor payments disbursed out of the School Lunch fund. The Director of Food Service was to receive invoices to be paid from the School Lunch Fund for review and approval. However, there was no consistent evidence of the Director of Food Service's review, or review by a person knowledgeable of the grant requirements. 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 Management had not developed nor implemented a system of internal controls that would have ensured compliance with the grant agreement and the Activities Allowed or Unallowed, the Allowable Costs/ Cost Principles, and the Procurement and Suspension and Debarment compliance requirements. INDIANA STATE BOARD OF ACCOUNTS 14 MIDDLEBURY COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect The failure to establish an effective system of internal controls placed the School Corporation at risk of noncompliance with the grant agreement and the Activities Allowed or Unallowed, the Allowable Costs/Cost Principles, and the Procurement and Suspension and Debarment compliance requirements. Questioned Costs There were no question costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls related to the grant agreement and the Activities Allowed or Unallowed, the Allowable Costs/Cost Principles, and the Procurement and Suspension and Debarment compliance requirements.
FINDING 2022-001 Subject: Child Nutrition Cluster - Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Procurement Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program Assistance Listings Numbers: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): SY 2020-2021, SY 2021-2022 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Procurement and Suspension and Debarment Audit Finding: Material Weakness Condition and Context An effective internal control system was not designed nor implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Activities Allowed or Unallowed, the Allowable Costs/Cost Principles, and the Procurement and Suspension and Debarment compliance requirements. The School Corporation had not established an effective system of internal controls over vendor payments disbursed out of the School Lunch fund. The Director of Food Service was to receive invoices to be paid from the School Lunch Fund for review and approval. However, there was no consistent evidence of the Director of Food Service's review, or review by a person knowledgeable of the grant requirements. 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 Management had not developed nor implemented a system of internal controls that would have ensured compliance with the grant agreement and the Activities Allowed or Unallowed, the Allowable Costs/ Cost Principles, and the Procurement and Suspension and Debarment compliance requirements. INDIANA STATE BOARD OF ACCOUNTS 14 MIDDLEBURY COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect The failure to establish an effective system of internal controls placed the School Corporation at risk of noncompliance with the grant agreement and the Activities Allowed or Unallowed, the Allowable Costs/Cost Principles, and the Procurement and Suspension and Debarment compliance requirements. Questioned Costs There were no question costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls related to the grant agreement and the Activities Allowed or Unallowed, the Allowable Costs/Cost Principles, and the Procurement and Suspension and Debarment compliance requirements.
FINDING 2022-001 Subject: Child Nutrition Cluster - Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Procurement Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program Assistance Listings Numbers: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): SY 2020-2021, SY 2021-2022 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Procurement and Suspension and Debarment Audit Finding: Material Weakness Condition and Context An effective internal control system was not designed nor implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Activities Allowed or Unallowed, the Allowable Costs/Cost Principles, and the Procurement and Suspension and Debarment compliance requirements. The School Corporation had not established an effective system of internal controls over vendor payments disbursed out of the School Lunch fund. The Director of Food Service was to receive invoices to be paid from the School Lunch Fund for review and approval. However, there was no consistent evidence of the Director of Food Service's review, or review by a person knowledgeable of the grant requirements. 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 Management had not developed nor implemented a system of internal controls that would have ensured compliance with the grant agreement and the Activities Allowed or Unallowed, the Allowable Costs/ Cost Principles, and the Procurement and Suspension and Debarment compliance requirements. INDIANA STATE BOARD OF ACCOUNTS 14 MIDDLEBURY COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect The failure to establish an effective system of internal controls placed the School Corporation at risk of noncompliance with the grant agreement and the Activities Allowed or Unallowed, the Allowable Costs/Cost Principles, and the Procurement and Suspension and Debarment compliance requirements. Questioned Costs There were no question costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls related to the grant agreement and the Activities Allowed or Unallowed, the Allowable Costs/Cost Principles, and the Procurement and Suspension and Debarment compliance requirements.
FINDING 2022-001 Subject: Child Nutrition Cluster - Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Procurement Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program Assistance Listings Numbers: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): SY 2020-2021, SY 2021-2022 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Procurement and Suspension and Debarment Audit Finding: Material Weakness Condition and Context An effective internal control system was not designed nor implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Activities Allowed or Unallowed, the Allowable Costs/Cost Principles, and the Procurement and Suspension and Debarment compliance requirements. The School Corporation had not established an effective system of internal controls over vendor payments disbursed out of the School Lunch fund. The Director of Food Service was to receive invoices to be paid from the School Lunch Fund for review and approval. However, there was no consistent evidence of the Director of Food Service's review, or review by a person knowledgeable of the grant requirements. 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 Management had not developed nor implemented a system of internal controls that would have ensured compliance with the grant agreement and the Activities Allowed or Unallowed, the Allowable Costs/ Cost Principles, and the Procurement and Suspension and Debarment compliance requirements. INDIANA STATE BOARD OF ACCOUNTS 14 MIDDLEBURY COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect The failure to establish an effective system of internal controls placed the School Corporation at risk of noncompliance with the grant agreement and the Activities Allowed or Unallowed, the Allowable Costs/Cost Principles, and the Procurement and Suspension and Debarment compliance requirements. Questioned Costs There were no question costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls related to the grant agreement and the Activities Allowed or Unallowed, the Allowable Costs/Cost Principles, and the Procurement and Suspension and Debarment compliance requirements.
FINDING 2022-001 Subject: Child Nutrition Cluster - Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Procurement Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program Assistance Listings Numbers: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): SY 2020-2021, SY 2021-2022 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Procurement and Suspension and Debarment Audit Finding: Material Weakness Condition and Context An effective internal control system was not designed nor implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Activities Allowed or Unallowed, the Allowable Costs/Cost Principles, and the Procurement and Suspension and Debarment compliance requirements. The School Corporation had not established an effective system of internal controls over vendor payments disbursed out of the School Lunch fund. The Director of Food Service was to receive invoices to be paid from the School Lunch Fund for review and approval. However, there was no consistent evidence of the Director of Food Service's review, or review by a person knowledgeable of the grant requirements. 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 Management had not developed nor implemented a system of internal controls that would have ensured compliance with the grant agreement and the Activities Allowed or Unallowed, the Allowable Costs/ Cost Principles, and the Procurement and Suspension and Debarment compliance requirements. INDIANA STATE BOARD OF ACCOUNTS 14 MIDDLEBURY COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect The failure to establish an effective system of internal controls placed the School Corporation at risk of noncompliance with the grant agreement and the Activities Allowed or Unallowed, the Allowable Costs/Cost Principles, and the Procurement and Suspension and Debarment compliance requirements. Questioned Costs There were no question costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls related to the grant agreement and the Activities Allowed or Unallowed, the Allowable Costs/Cost Principles, and the Procurement and Suspension and Debarment compliance requirements.
FINDING 2022-001 Subject: Child Nutrition Cluster - Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Procurement Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program Assistance Listings Numbers: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): SY 2020-2021, SY 2021-2022 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Procurement and Suspension and Debarment Audit Finding: Material Weakness Condition and Context An effective internal control system was not designed nor implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Activities Allowed or Unallowed, the Allowable Costs/Cost Principles, and the Procurement and Suspension and Debarment compliance requirements. The School Corporation had not established an effective system of internal controls over vendor payments disbursed out of the School Lunch fund. The Director of Food Service was to receive invoices to be paid from the School Lunch Fund for review and approval. However, there was no consistent evidence of the Director of Food Service's review, or review by a person knowledgeable of the grant requirements. 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 Management had not developed nor implemented a system of internal controls that would have ensured compliance with the grant agreement and the Activities Allowed or Unallowed, the Allowable Costs/ Cost Principles, and the Procurement and Suspension and Debarment compliance requirements. INDIANA STATE BOARD OF ACCOUNTS 14 MIDDLEBURY COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect The failure to establish an effective system of internal controls placed the School Corporation at risk of noncompliance with the grant agreement and the Activities Allowed or Unallowed, the Allowable Costs/Cost Principles, and the Procurement and Suspension and Debarment compliance requirements. Questioned Costs There were no question costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls related to the grant agreement and the Activities Allowed or Unallowed, the Allowable Costs/Cost Principles, and the Procurement and Suspension and Debarment compliance requirements.
FINDING 2022-001 Subject: Child Nutrition Cluster - Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Procurement Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, COVID-19 - School Breakfast Program, National School Lunch Program, COVID-19 - National School Lunch Program Assistance Listings Numbers: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): SY 2020-2021, SY 2021-2022 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Procurement and Suspension and Debarment Audit Finding: Material Weakness Condition and Context An effective internal control system was not designed nor implemented at the School Corporation to ensure compliance with requirements related to the grant agreement and the Activities Allowed or Unallowed, the Allowable Costs/Cost Principles, and the Procurement and Suspension and Debarment compliance requirements. The School Corporation had not established an effective system of internal controls over vendor payments disbursed out of the School Lunch fund. The Director of Food Service was to receive invoices to be paid from the School Lunch Fund for review and approval. However, there was no consistent evidence of the Director of Food Service's review, or review by a person knowledgeable of the grant requirements. 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 Management had not developed nor implemented a system of internal controls that would have ensured compliance with the grant agreement and the Activities Allowed or Unallowed, the Allowable Costs/ Cost Principles, and the Procurement and Suspension and Debarment compliance requirements. INDIANA STATE BOARD OF ACCOUNTS 14 MIDDLEBURY COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect The failure to establish an effective system of internal controls placed the School Corporation at risk of noncompliance with the grant agreement and the Activities Allowed or Unallowed, the Allowable Costs/Cost Principles, and the Procurement and Suspension and Debarment compliance requirements. Questioned Costs There were no question costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls related to the grant agreement and the Activities Allowed or Unallowed, the Allowable Costs/Cost Principles, and the Procurement and Suspension and Debarment compliance requirements.
SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Current Year Findings 2022-001: Material Weakness ? Davis-Bacon Wage Rate Requirements Federal Assistance Listing Number 84.425D/84.425U/84.425W ? COVID-19 Education Stabilization Fund Passed-through Tennessee Department of Education Award Number S425D210047/S425D200047/S425D2000047/S425U210047/S425W210044-21A Federal Assistance Listing Number 93.323 ? COVID-19 Epidemiology and Laboratory Capacity Grant Passed-through Tennessee Department of Health Award Number N/A 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). Non-Federal entities shall include in their construction contracts subject to the Wage Rate Requirements (which still may be referenced as the Davis-Bacon Act) a provision that the contractor or subcontractor comply with those requirements and the DOL regulations. This includes a requirement for the contractor or subcontractor to submit to the Non-Federal 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). In addition, according to 2 CFR Part 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. Condition and Context: The School did not have internal controls in place to identify that certified payrolls were obtained from contractors on a weekly basis and reviewed in a timely manner. Education Stabilization Fund Cluster - the School did not obtain certified payrolls on a weekly basis for two out of two contractors selected for testing. Additionally, we noted one contractor did not sign the payroll reports, which is required to complete the certification, prior to the audit. Epidemiology and Laboratory Capacity Grant - the School did not obtain certified payrolls on a weekly basis for three contractors under this grant. The School also did not include wage requirement clauses in the contract agreement (as specified in the above Criteria) for the one contract under this grant. Additionally, we noted two contractors did not sign the payroll reports, which is required to complete the certification, prior to the audit. Questioned Costs: Unknown. Effect: The School is not in compliance with Davis-Bacon requirements. Cause: The School was unaware of the requirements as it applied to the grants and as such, there was no assigned department or employee to monitor, review, and obtain certified payrolls and contracts during the year from contractors and subcontractors. Identification as a Repeat Finding: Not applicable. Recommendation: We recommend the School implement internal controls over wage rate requirements, including tracking certified payrolls or notification of no work performed and reviewing to help ensure wages are equal to or in excess of the prevailing wage rates. Views of Responsible Officials: Agree. See separate report for planned corrective actions. Prior Year Findings None reported
Federal Agency: Department of Health and Human Services and Department of Agriculture Federal Program Titles: Adoption Assistance and Child and Adult Care Food Program Assistance Listings: 93.659 and 10.558 Federal Grant ID Numbers: 2001SCADPT, 2101SCADPT, and 5SC300329 Pass-Through Entity: Not applicable Award Period: October 1, 2019, through September 30, 2021 Type of Finding: Significant deficiency in internal control over compliance, other matters Criteria: 2 CFR ? 200.303 requires that the non-federal entity establish and maintain effective internal controls over the federal award that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations and the terms and conditions of the federal award. Condition: Supporting documentation was not adequate to determine if federal reimbursements were properly reviewed and approved by a supervisor prior to requesting a drawdown as required by the Department?s policies and procedures. Questioned Costs: None Context: For two of five Adoption Assistance drawdowns and one of the five Child and Adult Care Food Program drawdowns selected for testing, supporting documentation was not adequate to demonstrate proper review and approval by a supervisor prior to the federal reimbursement request. Cause: The Department failed to retain documentation demonstrating performance of a supervisory review and approval. Effect: The Department may request improper drawdowns due to a lack of proper approval. Recommendation: We recommend that the Department follow their policies and procedures to ensure that proper documentation is maintained to support the review and approval of a drawdown of funds. Prior Year Single Audit Finding Number: Not applicable Views of Responsible Officials and Corrective Action Plan: Management agrees with the finding. See Corrective Action Plan at page 113.
Federal Agency: Department of Health and Human Services and Department of Agriculture Federal Program Titles: Adoption Assistance and Child and Adult Care Food Program Assistance Listings: 93.659 and 10.558 Federal Grant ID Numbers: 2001SCADPT, 2101SCADPT, and 5SC300329 Pass-Through Entity: Not applicable Award Period: October 1, 2019, through September 30, 2021 Type of Finding: Significant deficiency in internal control over compliance, other matters Criteria: 2 CFR ? 200.303 requires that the non-federal entity establish and maintain effective internal controls over the federal award that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations and the terms and conditions of the federal award. Condition: Supporting documentation was not adequate to determine if federal reimbursements were properly reviewed and approved by a supervisor prior to requesting a drawdown as required by the Department?s policies and procedures. Questioned Costs: None Context: For two of five Adoption Assistance drawdowns and one of the five Child and Adult Care Food Program drawdowns selected for testing, supporting documentation was not adequate to demonstrate proper review and approval by a supervisor prior to the federal reimbursement request. Cause: The Department failed to retain documentation demonstrating performance of a supervisory review and approval. Effect: The Department may request improper drawdowns due to a lack of proper approval. Recommendation: We recommend that the Department follow their policies and procedures to ensure that proper documentation is maintained to support the review and approval of a drawdown of funds. Prior Year Single Audit Finding Number: Not applicable Views of Responsible Officials and Corrective Action Plan: Management agrees with the finding. See Corrective Action Plan at page 113.
Federal Agency: Department of Defense Federal Program Title: National Guard Military Operations and Maintenance (O&M) Projects Assistance Listing: 12.401 Federal Grant ID Numbers: Various Pass-Through Entity: Not applicable Award Period: Various Type of Finding: Significant deficiency in internal control Criteria: 2 CFR ? 200.303 states that the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations and the terms and conditions of the federal award. Condition: Personnel expenditures for three employees were charged to the federal award without documented approval as required by the Office?s internal control procedure. Questioned Costs: None Context: Three of forty payroll transactions tested did not have a corresponding approved State Personnel Action form that documented each employee?s salary and the percentage of their salary covered by the grant program. Cause: Management did not document approval of payroll changes for grant employees to avoid errors in payroll processing. Effect: The Office could incorrectly charge the federal award for personnel costs. Recommendation: We recommend the Office consistently adhere to its internal controls including maintaining the approved State Personnel Action form to support the personnel charges and allocations to applicable funding sources. Prior Year Single Audit Finding Number: Not applicable. Views of Responsible Officials and Corrective Action Plan: Management agrees with the finding. See Corrective Action Plan at page 106.
Federal Agency: Department of Housing and Urban Development Federal Program Title: Community Development Block Grant Assistance Listing: 14.228 Federal Grant ID Numbers: B20DW450001, B21DC450001, B20DC450001, B19DC450001, and B18DC450001 Pass-Through Entity: Not applicable Award Period: July 24, 2018, through September 1, 2028 Type of Finding: Significant deficiency in internal control over compliance Criteria: Per 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. 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). Condition: Supervisory personnel did not review certain reports prior to submission. Questioned Costs: None Context: We tested the Department?s Consolidated Annual Performance and Evaluation Report (CAPER), which includes the annual Section 3 report, and five Federal Funding Accountability and Transparency Act (FFATA) reports submitted by the Department. None of the FFATA reports were reviewed by supervisory personnel prior to submission. Cause: Department controls failed to ensure that supervisory personnel reviewed the reports prior to submission. Effect: Without supervisory review, there is an increased risk of inaccurate reporting. Recommendation: We recommend that Department personnel consistently follow policies in place to ensure reports are properly reviewed by supervisory personnel prior to submission. Prior Year Single Audit Finding Number: Not applicable Views of Responsible Officials and Corrective Action Plan: Management agrees with the finding. See Corrective Action Plan at page 108.
Federal Agency: Department of Housing and Urban Development Federal Program Title: Community Development Block Grant Assistance Listing: 14.228 Federal Grant ID Number: B-18-DP-06-0002 Pass-Through Entity: Not applicable Award Period: August 20, 2020, through November 19, 2032 Type of Finding: Significant deficiency in internal control over compliance, other matters Criteria: 2 CFR ? 200.303 requires effective internal controls be established and maintained in order to provide reasonable assurance that the federal award is being managed in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: We determined expenditure transactions were incorrectly classified in the general ledger. Questioned Costs: None Context: For two of twenty-two transactions tested, the Office classified subrecipient payments as contractual services. Cause: Office controls failed to ensure transactions were recorded properly in the general ledger. Effect: Subrecipient expenditures of $51,853 were omitted from the Office?s Schedule of Federal Awards (SEFA). Recommendation: We recommend that the Office ensure staff preparing and entering transactions into the accounting system have a good working knowledge of account codes as defined by the South Carolina Comptroller General?s Office (CG). In addition, supervisory personnel should closely review transactions to ensure proper classification in the general ledger. Further, the Office should seek guidance from the CG if questions regarding coding of transactions arises. Prior Year Single Audit Finding Number: Not applicable Views of Responsible Officials and Corrective Action Plan: Management agrees with the finding. See Corrective Action Plan at page 109.
Federal Agency: Department of Housing and Urban Development Federal Program Title: Community Development Block Grant Assistance Listing: 14.228 Federal Grant ID Numbers: B20DW450001, B21DC450001, B20DC450001, B19DC450001, and B18DC450001 Pass-Through Entity: Not applicable Award Period: July 24, 2018, through September 1, 2028 Type of Finding: Significant deficiency in internal control over compliance Criteria: Per 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. 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). Condition: Supervisory personnel did not review certain reports prior to submission. Questioned Costs: None Context: We tested the Department?s Consolidated Annual Performance and Evaluation Report (CAPER), which includes the annual Section 3 report, and five Federal Funding Accountability and Transparency Act (FFATA) reports submitted by the Department. None of the FFATA reports were reviewed by supervisory personnel prior to submission. Cause: Department controls failed to ensure that supervisory personnel reviewed the reports prior to submission. Effect: Without supervisory review, there is an increased risk of inaccurate reporting. Recommendation: We recommend that Department personnel consistently follow policies in place to ensure reports are properly reviewed by supervisory personnel prior to submission. Prior Year Single Audit Finding Number: Not applicable Views of Responsible Officials and Corrective Action Plan: Management agrees with the finding. See Corrective Action Plan at page 108.
Federal Agency: Department of Housing and Urban Development Federal Program Title: Community Development Block Grant Assistance Listing: 14.228 Federal Grant ID Number: B-18-DP-06-0002 Pass-Through Entity: Not applicable Award Period: August 20, 2020, through November 19, 2032 Type of Finding: Significant deficiency in internal control over compliance, other matters Criteria: 2 CFR ? 200.303 requires effective internal controls be established and maintained in order to provide reasonable assurance that the federal award is being managed in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: We determined expenditure transactions were incorrectly classified in the general ledger. Questioned Costs: None Context: For two of twenty-two transactions tested, the Office classified subrecipient payments as contractual services. Cause: Office controls failed to ensure transactions were recorded properly in the general ledger. Effect: Subrecipient expenditures of $51,853 were omitted from the Office?s Schedule of Federal Awards (SEFA). Recommendation: We recommend that the Office ensure staff preparing and entering transactions into the accounting system have a good working knowledge of account codes as defined by the South Carolina Comptroller General?s Office (CG). In addition, supervisory personnel should closely review transactions to ensure proper classification in the general ledger. Further, the Office should seek guidance from the CG if questions regarding coding of transactions arises. Prior Year Single Audit Finding Number: Not applicable Views of Responsible Officials and Corrective Action Plan: Management agrees with the finding. See Corrective Action Plan at page 109.
Federal Agency: Department of Health and Human Services Federal Program Titles: Adoption Assistance and Child Care and Development Fund (CCDF) Cluster Assistance Listings: 93.659, 93.575, and 93.596 Federal Grant ID Numbers: Various Pass-Through Entity: Not applicable Award Period: Various Type of Finding: Significant deficiency in internal control over compliance, other matters Criteria: 45 CFR ? 95.509(a) requires that a state promptly submit an amended public assistance cost allocation plan for approval if the procedures shown in the existing cost allocation plan become outdated. Additionally, 2 CFR ? 200.303 requires that the entity establish and maintain effective internal controls over the federal award that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations and the terms and conditions of the federal award. Condition: Indirect cost allocations were not appropriately supported. Questioned Costs: Unknown Context: For one quarter tested, a substantial change was noted to one of the six allocation plan bases tested. The change was inconsistent with the public assistance cost allocation plan. Additionally, the journal entry for one quarter tested was incorrect due to a clerical error. Cause: For one of the six bases tested, the Department started using a new method to allocate costs; however, approval was not received before implementing the basis change. Additionally, a clerical error resulted in an incorrect allocation percentage for one of two tested quarterly journal entries. Effect: Indirect costs were not claimed in accordance with the approved cost allocation plan. Recommendation: We recommend that the Department regularly review their public assistance cost allocation plan and submit amendments for approval as necessary. Additionally, we recommend consolidating the support documentation for bases with multiple percentages. Prior Year Single Audit Finding Number: Not applicable Views of Responsible Officials and Corrective Action Plan: Management agrees with the finding. See Corrective Action Plan at page 117.
Federal Agency: Department of Health and Human Services Federal Program Titles: Adoption Assistance and Child Care and Development Fund (CCDF) Cluster Assistance Listings: 93.659, 93.575, and 93.596 Federal Grant ID Numbers: Various Pass-Through Entity: Not applicable Award Period: Various Type of Finding: Significant deficiency in internal control over compliance, other matters Criteria: 45 CFR ? 95.509(a) requires that a state promptly submit an amended public assistance cost allocation plan for approval if the procedures shown in the existing cost allocation plan become outdated. Additionally, 2 CFR ? 200.303 requires that the entity establish and maintain effective internal controls over the federal award that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations and the terms and conditions of the federal award. Condition: Indirect cost allocations were not appropriately supported. Questioned Costs: Unknown Context: For one quarter tested, a substantial change was noted to one of the six allocation plan bases tested. The change was inconsistent with the public assistance cost allocation plan. Additionally, the journal entry for one quarter tested was incorrect due to a clerical error. Cause: For one of the six bases tested, the Department started using a new method to allocate costs; however, approval was not received before implementing the basis change. Additionally, a clerical error resulted in an incorrect allocation percentage for one of two tested quarterly journal entries. Effect: Indirect costs were not claimed in accordance with the approved cost allocation plan. Recommendation: We recommend that the Department regularly review their public assistance cost allocation plan and submit amendments for approval as necessary. Additionally, we recommend consolidating the support documentation for bases with multiple percentages. Prior Year Single Audit Finding Number: Not applicable Views of Responsible Officials and Corrective Action Plan: Management agrees with the finding. See Corrective Action Plan at page 117.