Finding 2022-002: Internal Controls (Material Weakness) Criteria A-102 Common Rule, OMB Circular A-110 and 2 CFR section 200.303 require that non-Federal entities receiving Federal awards establish and maintain internal controls designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR section 200.514 requires auditors to obtain an understanding of the non-Federal entity's internal control over Federal programs sufficient to plan the audit to support a low assessed level of control risk of noncompliance for major programs, and, unless internal control is likely to be ineffective, plan the testing of internal control over major programs to support a low assessed level of control risk for the assertions relevant to the compliance requirements for each major program and perform testing of internal control as planned. Condition As noted in finding 2022-001, we noted a lack of evidence to support the operation of internal controls for the fiscal year. Cause The Organization has experienced growth over the past couple of years, however has not evaluated and updated internal controls. Effect The Organization lacked internal controls to support a low assessed level of control risk for the assertions relevant to compliance requirements for the major program tested. Recommendation We recommend that the Organization institute a program to methodically identify and document its significant operational and accounting processes as they relate to Federal grants and compliance. Documenting a process involves identifying and gaining an understanding of the required compliance requirements, the automated or manual procedures used in performing the required process, the person(s) or position(s) responsible for performing the procedures, the source documents used or generated, the procedures for approval and review and correction of any errors detected, and the financial or operational entries or reports summarizing the result of the process. Views of Responsible Officials The Organization agrees with the auditor's findings. We have already begun to make adjustments to record all grants ahead of time in Quickbooks and deduct funding as we spend from these areas to directly show grant balances and that the restricted funding is spent in compliance with the funding received. We will also provide these findings to a certified public accountant to make sure they are adhered to correctly and meet the requirements of both state and federal funding.
2022-002 Entity: KIPP North Philadelphia Charter School Federal agency: U.S. Department of Education Federal program: Education Stabilization Fund: Elementary and Secondary School Emergency Relief (ESSER) Fund Assistance Listing Number: 84.425D ESSER Federal Award Identification Number and Year: S425D210028, 2021 ESSER Federal Award Identification Number and Year: S425D210028, 2021 ESSER Pass-Through Agencies: Pennsylvania Department of Education Pass-Through Number: 200-21-1167 ESSER Award Period: 03/13/2020 - 09/30/2023 ESSER Type of Finding: ? Other Matter ? Significant Deficiency in Internal Control over Compliance Criteria: 2 CFR 200, Cost Principles for Nonprofit Organizations requires compliance with the provisions of reporting. 2 CFR 200.303 states, 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 or the ?Internal Control Integrated Framework?, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Organization is responsible for having internal controls designed to ensure compliance with this provision. The Reconciliation of Cash on Hand ? Quarterly Report is a required filing for projects that received payments in a previous quarter. The report must be filed no later than the 10th working day following the quarter just ended. Condition: During our testing of reporting submissions through the Pennsylvania Department of Education?s Financial Accounting Information website, we noted there were two Reconciliation of Cash on Hand ? Quarterly Reports required for the funding due to be filed during the fiscal year. The report for the quarter ended June 30, 2022, was not completed, or submitted and the other report was submitted late to the Pennsylvania Department of Education. Questioned Cost: None Cause: Prior to the pandemic, the finance team consisted of three roles ? a Managing Director of Finance, a Director of Financial Planning and Analysis, and an Accounting Manager. Additionally, the operational accounting work was outsourced to a third-party vendor, EdOps. With the significant influx of ESSER dollars and the corresponding spending, the team did not have the capacity to meet the additional grant tracking and reporting deadlines. Effect: Noncompliance to the reporting requirements as described in both the grant awards and 2 CFR 200, Subpart E, Cost Principles for Nonprofit Organizations could ultimately lead to the scheduled monthly payments be suspended due to the delinquent submission of the Reconciliation of Cash on Hand ? Quarterly Report. Recommendation: To ensure accountability with the required reporting to the Pennsylvania Department of Education, we recommend management review and update to procedure to establish consistent preparation, review, and submission of all program reports to ensure reporting requirements are being met. Such controls would ensure timely and accurate reporting being produced and optimum cash flow management. Views of Responsible Officials: Management agrees to the finding.
2022-002 Department of Health and Human Services Federal Financial Assistance Listing/CFDA #93.332 Cooperative Agreement to Support Navigators in Federally-facilitated Exchanges Reporting Significant Deficiency in Internal Control Over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Condition: There was no evidence retained that the Medical Center?s compliance and financial reports submitted to the Department of Health and Human Services were reviewed and approved prior to submission. Cause: The Medical Center did not have an internal control policy in place to ensure documented review and approval of the compliance and financial reports. Effect: The lack of adequate policies governing review and approval increases the risk that employees participating in the federal awards administration may not be able to detect and correct noncompliance in a timely manner. Questioned Costs: None reported. Context: A nonstatistical sample of 13 out of 72 reports were selected for detail testing and did not include evidence of a review by someone other than the preparer. Repeat Finding from Prior Years: No Recommendation: We recommend that the Medical Center enhance internal control policies to ensure that formal documentation of review and approval is obtained and retained. Views of Responsible Officials: Management agrees with the finding.
Subject: Child Nutrition Cluster - Allowable Costs/Cost Principles Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): SY 2020-2021, SY 2021-2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Condition and Context An effective system of internal controls was not in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the Allowable Costs/Cost Principles compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 19 SCHOOL TOWN OF MUNSTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) During the audit period, four employees tested were assigned both Child Nutrition Cluster grant activities and other nonfederal duties. The four employees did not maintain documentation of time spent on federal program and nonfederal program activities. The total paid to the four employees from the School Lunch Fund 800 without proper documentation was $34,827 which was considered questioned costs. The lack of internal controls and noncompliance were isolated to the payments noted above. 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). . . ." 7 CFR 220.7(e) states in part: ". . . the School Food Authority shall, with respect to participating schools under its jurisdiction: (1) (i) Maintain a nonprofit school food service; (ii) . . . use all revenues received by such food service only for the operation or improvement of that food service . . ." 7 CFR 210.14(a) states in part: "Nonprofit school food service. School food authorities shall maintain a nonprofit school food service. Revenues received by the nonprofit school food service are to be used only for the operation or improvement of such food service, except that, such revenues shall not be used to purchase land or buildings, unless otherwise approved by FNS, or to construct buildings. . . ." 7 CFR 225.15(a)(1) states: "Sponsors shall operate the food service in accordance with: the provisions of this part; any instructions and handbooks issued by FNS under this part; and any instructions and handbooks issued by the State agency which are not inconsistent with the provisions of this part." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. INDIANA STATE BOARD OF ACCOUNTS 20 SCHOOL TOWN OF MUNSTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." Cause Management had not developed a system of internal controls that would have ensured compliance with the grant agreement and the Allowable Costs/Cost Principles compliance requirement. Effect The failure to establish an effective system of internal controls, as well as adequately document costs, enabled noncompliance to go undetected. Noncompliance with the grant agreement and the Allowable Costs/Cost Principles compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs Known questioned costs of $34,827 were identified as detailed in the Condition and Context. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure that documentation will be maintained and made available for audit and comply with the grant agreement and the Allowable Costs/Cost Principles compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Subject: Child Nutrition Cluster - Reporting Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): SY 2020-2021, SY 2021-2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Condition and Context An effective system of internal controls was not in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the Reporting compliance requirement. Monthly Sponsor Claims for Reimbursement (Claims) were submitted to the Indiana Department of Education based upon meals served for the month. For two of the five Claims tested, there were differences between the Claims submitted and the School Corporation's summary meal count reports. The two Claims over reported meals by 1 and 50 meals, respectively. INDIANA STATE BOARD OF ACCOUNTS 21 SCHOOL TOWN OF MUNSTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) (Uniform Guidance) 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 ?? 200.327 Financial reporting and 200.328 Monitoring and reporting program performance. . . ." 2 CFR 200.302(b) (Revised Uniform Guidance) states in part: "The financial management system of each non-Federal entity must provide for the following: . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in ?? 200.328 and 200.329. . . ." Cause Management had not developed a system of internal controls that would have ensured compliance with the grant agreement and the Reporting compliance requirement. Effect The failure to establish an effective system of internal controls enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Reporting compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the Reporting compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 22 SCHOOL TOWN OF MUNSTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, COVID-19 National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): SY 2020-2021, SY 2021-2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective system of internal controls was not in place 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 require formal procurement methods when the value of the procurement for property or services exceeds the simplified acquisition threshold (SAT), which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 and provides that the proper purchasing method for supplies over $150,000 would be the bidding process, unless the purchase meets certain other qualifications. Indiana Code also states that purchase requirements may not be artificially divided to qualify as a purchase under $150,000. Sealed bids or competitive proposals were not obtained from an adequate number of sources for one of two vendors that exceeded the simplified acquisition threshold. Additionally, the School Corporation did not verify that two of four vendors were neither suspended nor debarred, or otherwise excluded or disqualified from participating in federal assistance programs. 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). . . ." SCHOOL TOWN OF MUNSTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320(b) states in part: "Formal procurement methods. When the value of the procurement for property or services under the Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with ? 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. . . . (ii) If sealed bids are used the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources . . . (2) Proposals. . . . (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number qualified offerors. . . ." 2 CFR 200.320(c) states: "Noncompetitive procurement. There are specific circumstances in which noncompetitive pro-curement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncom-petitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." SCHOOL TOWN OF MUNSTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Indiana Code 5-22-8-1 states: "(a) This chapter applies only to a purchase expected by the purchasing agent to be less than one hundred fifty thousand dollars ($150,000). (b) Purchase requirements may not be artificially divided so as to constitute a small purchase under this chapter." Cause Management had not developed a system of internal controls 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 system of internal controls 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 funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the Procurement and Suspension and Debarment compli-ance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report. Auditor's Response When the acquisition of the supplies or services, in the aggregate, are less than the simplified acquisition threshold, set at $150,000, informal procurement methods are allowable. One check was issued to a vendor in the amount of $232,761 for equipment purchased by the School Corporation and installed in a number of school buildings. As the amount spent with the vendor in question was over the simplified acquisition threshold, formal procurement methods should have been utilized. Formal procurement methods would have entailed obtaining sealed bids for the equipment and installation and the awarding of a contract. The award of a contract over $25,000 would have also required the vendor to be verified to ensure that the vendor itself was not excluded or disqualified from participating in federal assistance programs. If the vendor had been excluded or disqualified, federal funds should not have been used to pay the vendor.
Subject: Child Nutrition Cluster - Allowable Costs/Cost Principles Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): SY 2020-2021, SY 2021-2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Condition and Context An effective system of internal controls was not in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the Allowable Costs/Cost Principles compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 19 SCHOOL TOWN OF MUNSTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) During the audit period, four employees tested were assigned both Child Nutrition Cluster grant activities and other nonfederal duties. The four employees did not maintain documentation of time spent on federal program and nonfederal program activities. The total paid to the four employees from the School Lunch Fund 800 without proper documentation was $34,827 which was considered questioned costs. The lack of internal controls and noncompliance were isolated to the payments noted above. 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). . . ." 7 CFR 220.7(e) states in part: ". . . the School Food Authority shall, with respect to participating schools under its jurisdiction: (1) (i) Maintain a nonprofit school food service; (ii) . . . use all revenues received by such food service only for the operation or improvement of that food service . . ." 7 CFR 210.14(a) states in part: "Nonprofit school food service. School food authorities shall maintain a nonprofit school food service. Revenues received by the nonprofit school food service are to be used only for the operation or improvement of such food service, except that, such revenues shall not be used to purchase land or buildings, unless otherwise approved by FNS, or to construct buildings. . . ." 7 CFR 225.15(a)(1) states: "Sponsors shall operate the food service in accordance with: the provisions of this part; any instructions and handbooks issued by FNS under this part; and any instructions and handbooks issued by the State agency which are not inconsistent with the provisions of this part." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. INDIANA STATE BOARD OF ACCOUNTS 20 SCHOOL TOWN OF MUNSTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." Cause Management had not developed a system of internal controls that would have ensured compliance with the grant agreement and the Allowable Costs/Cost Principles compliance requirement. Effect The failure to establish an effective system of internal controls, as well as adequately document costs, enabled noncompliance to go undetected. Noncompliance with the grant agreement and the Allowable Costs/Cost Principles compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs Known questioned costs of $34,827 were identified as detailed in the Condition and Context. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure that documentation will be maintained and made available for audit and comply with the grant agreement and the Allowable Costs/Cost Principles compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Subject: Child Nutrition Cluster - Reporting Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): SY 2020-2021, SY 2021-2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Condition and Context An effective system of internal controls was not in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the Reporting compliance requirement. Monthly Sponsor Claims for Reimbursement (Claims) were submitted to the Indiana Department of Education based upon meals served for the month. For two of the five Claims tested, there were differences between the Claims submitted and the School Corporation's summary meal count reports. The two Claims over reported meals by 1 and 50 meals, respectively. INDIANA STATE BOARD OF ACCOUNTS 21 SCHOOL TOWN OF MUNSTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) (Uniform Guidance) 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 ?? 200.327 Financial reporting and 200.328 Monitoring and reporting program performance. . . ." 2 CFR 200.302(b) (Revised Uniform Guidance) states in part: "The financial management system of each non-Federal entity must provide for the following: . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in ?? 200.328 and 200.329. . . ." Cause Management had not developed a system of internal controls that would have ensured compliance with the grant agreement and the Reporting compliance requirement. Effect The failure to establish an effective system of internal controls enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Reporting compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the Reporting compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 22 SCHOOL TOWN OF MUNSTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, COVID-19 National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): SY 2020-2021, SY 2021-2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective system of internal controls was not in place 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 require formal procurement methods when the value of the procurement for property or services exceeds the simplified acquisition threshold (SAT), which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 and provides that the proper purchasing method for supplies over $150,000 would be the bidding process, unless the purchase meets certain other qualifications. Indiana Code also states that purchase requirements may not be artificially divided to qualify as a purchase under $150,000. Sealed bids or competitive proposals were not obtained from an adequate number of sources for one of two vendors that exceeded the simplified acquisition threshold. Additionally, the School Corporation did not verify that two of four vendors were neither suspended nor debarred, or otherwise excluded or disqualified from participating in federal assistance programs. 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). . . ." SCHOOL TOWN OF MUNSTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320(b) states in part: "Formal procurement methods. When the value of the procurement for property or services under the Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with ? 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. . . . (ii) If sealed bids are used the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources . . . (2) Proposals. . . . (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number qualified offerors. . . ." 2 CFR 200.320(c) states: "Noncompetitive procurement. There are specific circumstances in which noncompetitive pro-curement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncom-petitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." SCHOOL TOWN OF MUNSTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Indiana Code 5-22-8-1 states: "(a) This chapter applies only to a purchase expected by the purchasing agent to be less than one hundred fifty thousand dollars ($150,000). (b) Purchase requirements may not be artificially divided so as to constitute a small purchase under this chapter." Cause Management had not developed a system of internal controls 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 system of internal controls 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 funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the Procurement and Suspension and Debarment compli-ance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report. Auditor's Response When the acquisition of the supplies or services, in the aggregate, are less than the simplified acquisition threshold, set at $150,000, informal procurement methods are allowable. One check was issued to a vendor in the amount of $232,761 for equipment purchased by the School Corporation and installed in a number of school buildings. As the amount spent with the vendor in question was over the simplified acquisition threshold, formal procurement methods should have been utilized. Formal procurement methods would have entailed obtaining sealed bids for the equipment and installation and the awarding of a contract. The award of a contract over $25,000 would have also required the vendor to be verified to ensure that the vendor itself was not excluded or disqualified from participating in federal assistance programs. If the vendor had been excluded or disqualified, federal funds should not have been used to pay the vendor.
Subject: Child Nutrition Cluster - Allowable Costs/Cost Principles Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): SY 2020-2021, SY 2021-2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Condition and Context An effective system of internal controls was not in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the Allowable Costs/Cost Principles compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 19 SCHOOL TOWN OF MUNSTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) During the audit period, four employees tested were assigned both Child Nutrition Cluster grant activities and other nonfederal duties. The four employees did not maintain documentation of time spent on federal program and nonfederal program activities. The total paid to the four employees from the School Lunch Fund 800 without proper documentation was $34,827 which was considered questioned costs. The lack of internal controls and noncompliance were isolated to the payments noted above. 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). . . ." 7 CFR 220.7(e) states in part: ". . . the School Food Authority shall, with respect to participating schools under its jurisdiction: (1) (i) Maintain a nonprofit school food service; (ii) . . . use all revenues received by such food service only for the operation or improvement of that food service . . ." 7 CFR 210.14(a) states in part: "Nonprofit school food service. School food authorities shall maintain a nonprofit school food service. Revenues received by the nonprofit school food service are to be used only for the operation or improvement of such food service, except that, such revenues shall not be used to purchase land or buildings, unless otherwise approved by FNS, or to construct buildings. . . ." 7 CFR 225.15(a)(1) states: "Sponsors shall operate the food service in accordance with: the provisions of this part; any instructions and handbooks issued by FNS under this part; and any instructions and handbooks issued by the State agency which are not inconsistent with the provisions of this part." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. INDIANA STATE BOARD OF ACCOUNTS 20 SCHOOL TOWN OF MUNSTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." Cause Management had not developed a system of internal controls that would have ensured compliance with the grant agreement and the Allowable Costs/Cost Principles compliance requirement. Effect The failure to establish an effective system of internal controls, as well as adequately document costs, enabled noncompliance to go undetected. Noncompliance with the grant agreement and the Allowable Costs/Cost Principles compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs Known questioned costs of $34,827 were identified as detailed in the Condition and Context. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure that documentation will be maintained and made available for audit and comply with the grant agreement and the Allowable Costs/Cost Principles compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Subject: Child Nutrition Cluster - Reporting Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): SY 2020-2021, SY 2021-2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Condition and Context An effective system of internal controls was not in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the Reporting compliance requirement. Monthly Sponsor Claims for Reimbursement (Claims) were submitted to the Indiana Department of Education based upon meals served for the month. For two of the five Claims tested, there were differences between the Claims submitted and the School Corporation's summary meal count reports. The two Claims over reported meals by 1 and 50 meals, respectively. INDIANA STATE BOARD OF ACCOUNTS 21 SCHOOL TOWN OF MUNSTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) (Uniform Guidance) 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 ?? 200.327 Financial reporting and 200.328 Monitoring and reporting program performance. . . ." 2 CFR 200.302(b) (Revised Uniform Guidance) states in part: "The financial management system of each non-Federal entity must provide for the following: . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in ?? 200.328 and 200.329. . . ." Cause Management had not developed a system of internal controls that would have ensured compliance with the grant agreement and the Reporting compliance requirement. Effect The failure to establish an effective system of internal controls enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Reporting compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the Reporting compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 22 SCHOOL TOWN OF MUNSTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, COVID-19 National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): SY 2020-2021, SY 2021-2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective system of internal controls was not in place 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 require formal procurement methods when the value of the procurement for property or services exceeds the simplified acquisition threshold (SAT), which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 and provides that the proper purchasing method for supplies over $150,000 would be the bidding process, unless the purchase meets certain other qualifications. Indiana Code also states that purchase requirements may not be artificially divided to qualify as a purchase under $150,000. Sealed bids or competitive proposals were not obtained from an adequate number of sources for one of two vendors that exceeded the simplified acquisition threshold. Additionally, the School Corporation did not verify that two of four vendors were neither suspended nor debarred, or otherwise excluded or disqualified from participating in federal assistance programs. 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). . . ." SCHOOL TOWN OF MUNSTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320(b) states in part: "Formal procurement methods. When the value of the procurement for property or services under the Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with ? 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. . . . (ii) If sealed bids are used the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources . . . (2) Proposals. . . . (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number qualified offerors. . . ." 2 CFR 200.320(c) states: "Noncompetitive procurement. There are specific circumstances in which noncompetitive pro-curement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncom-petitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." SCHOOL TOWN OF MUNSTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Indiana Code 5-22-8-1 states: "(a) This chapter applies only to a purchase expected by the purchasing agent to be less than one hundred fifty thousand dollars ($150,000). (b) Purchase requirements may not be artificially divided so as to constitute a small purchase under this chapter." Cause Management had not developed a system of internal controls 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 system of internal controls 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 funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the Procurement and Suspension and Debarment compli-ance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report. Auditor's Response When the acquisition of the supplies or services, in the aggregate, are less than the simplified acquisition threshold, set at $150,000, informal procurement methods are allowable. One check was issued to a vendor in the amount of $232,761 for equipment purchased by the School Corporation and installed in a number of school buildings. As the amount spent with the vendor in question was over the simplified acquisition threshold, formal procurement methods should have been utilized. Formal procurement methods would have entailed obtaining sealed bids for the equipment and installation and the awarding of a contract. The award of a contract over $25,000 would have also required the vendor to be verified to ensure that the vendor itself was not excluded or disqualified from participating in federal assistance programs. If the vendor had been excluded or disqualified, federal funds should not have been used to pay the vendor.
Subject: Child Nutrition Cluster - Allowable Costs/Cost Principles Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): SY 2020-2021, SY 2021-2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Condition and Context An effective system of internal controls was not in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the Allowable Costs/Cost Principles compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 19 SCHOOL TOWN OF MUNSTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) During the audit period, four employees tested were assigned both Child Nutrition Cluster grant activities and other nonfederal duties. The four employees did not maintain documentation of time spent on federal program and nonfederal program activities. The total paid to the four employees from the School Lunch Fund 800 without proper documentation was $34,827 which was considered questioned costs. The lack of internal controls and noncompliance were isolated to the payments noted above. 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). . . ." 7 CFR 220.7(e) states in part: ". . . the School Food Authority shall, with respect to participating schools under its jurisdiction: (1) (i) Maintain a nonprofit school food service; (ii) . . . use all revenues received by such food service only for the operation or improvement of that food service . . ." 7 CFR 210.14(a) states in part: "Nonprofit school food service. School food authorities shall maintain a nonprofit school food service. Revenues received by the nonprofit school food service are to be used only for the operation or improvement of such food service, except that, such revenues shall not be used to purchase land or buildings, unless otherwise approved by FNS, or to construct buildings. . . ." 7 CFR 225.15(a)(1) states: "Sponsors shall operate the food service in accordance with: the provisions of this part; any instructions and handbooks issued by FNS under this part; and any instructions and handbooks issued by the State agency which are not inconsistent with the provisions of this part." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. INDIANA STATE BOARD OF ACCOUNTS 20 SCHOOL TOWN OF MUNSTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." Cause Management had not developed a system of internal controls that would have ensured compliance with the grant agreement and the Allowable Costs/Cost Principles compliance requirement. Effect The failure to establish an effective system of internal controls, as well as adequately document costs, enabled noncompliance to go undetected. Noncompliance with the grant agreement and the Allowable Costs/Cost Principles compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs Known questioned costs of $34,827 were identified as detailed in the Condition and Context. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure that documentation will be maintained and made available for audit and comply with the grant agreement and the Allowable Costs/Cost Principles compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Subject: Child Nutrition Cluster - Reporting Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): SY 2020-2021, SY 2021-2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Condition and Context An effective system of internal controls was not in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the Reporting compliance requirement. Monthly Sponsor Claims for Reimbursement (Claims) were submitted to the Indiana Department of Education based upon meals served for the month. For two of the five Claims tested, there were differences between the Claims submitted and the School Corporation's summary meal count reports. The two Claims over reported meals by 1 and 50 meals, respectively. INDIANA STATE BOARD OF ACCOUNTS 21 SCHOOL TOWN OF MUNSTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) (Uniform Guidance) 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 ?? 200.327 Financial reporting and 200.328 Monitoring and reporting program performance. . . ." 2 CFR 200.302(b) (Revised Uniform Guidance) states in part: "The financial management system of each non-Federal entity must provide for the following: . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in ?? 200.328 and 200.329. . . ." Cause Management had not developed a system of internal controls that would have ensured compliance with the grant agreement and the Reporting compliance requirement. Effect The failure to establish an effective system of internal controls enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Reporting compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the Reporting compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 22 SCHOOL TOWN OF MUNSTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, COVID-19 National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): SY 2020-2021, SY 2021-2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective system of internal controls was not in place 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 require formal procurement methods when the value of the procurement for property or services exceeds the simplified acquisition threshold (SAT), which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 and provides that the proper purchasing method for supplies over $150,000 would be the bidding process, unless the purchase meets certain other qualifications. Indiana Code also states that purchase requirements may not be artificially divided to qualify as a purchase under $150,000. Sealed bids or competitive proposals were not obtained from an adequate number of sources for one of two vendors that exceeded the simplified acquisition threshold. Additionally, the School Corporation did not verify that two of four vendors were neither suspended nor debarred, or otherwise excluded or disqualified from participating in federal assistance programs. 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). . . ." SCHOOL TOWN OF MUNSTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320(b) states in part: "Formal procurement methods. When the value of the procurement for property or services under the Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with ? 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. . . . (ii) If sealed bids are used the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources . . . (2) Proposals. . . . (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number qualified offerors. . . ." 2 CFR 200.320(c) states: "Noncompetitive procurement. There are specific circumstances in which noncompetitive pro-curement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncom-petitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." SCHOOL TOWN OF MUNSTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Indiana Code 5-22-8-1 states: "(a) This chapter applies only to a purchase expected by the purchasing agent to be less than one hundred fifty thousand dollars ($150,000). (b) Purchase requirements may not be artificially divided so as to constitute a small purchase under this chapter." Cause Management had not developed a system of internal controls 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 system of internal controls 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 funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the Procurement and Suspension and Debarment compli-ance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report. Auditor's Response When the acquisition of the supplies or services, in the aggregate, are less than the simplified acquisition threshold, set at $150,000, informal procurement methods are allowable. One check was issued to a vendor in the amount of $232,761 for equipment purchased by the School Corporation and installed in a number of school buildings. As the amount spent with the vendor in question was over the simplified acquisition threshold, formal procurement methods should have been utilized. Formal procurement methods would have entailed obtaining sealed bids for the equipment and installation and the awarding of a contract. The award of a contract over $25,000 would have also required the vendor to be verified to ensure that the vendor itself was not excluded or disqualified from participating in federal assistance programs. If the vendor had been excluded or disqualified, federal funds should not have been used to pay the vendor.
Subject: Child Nutrition Cluster - Allowable Costs/Cost Principles Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): SY 2020-2021, SY 2021-2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Condition and Context An effective system of internal controls was not in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the Allowable Costs/Cost Principles compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 19 SCHOOL TOWN OF MUNSTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) During the audit period, four employees tested were assigned both Child Nutrition Cluster grant activities and other nonfederal duties. The four employees did not maintain documentation of time spent on federal program and nonfederal program activities. The total paid to the four employees from the School Lunch Fund 800 without proper documentation was $34,827 which was considered questioned costs. The lack of internal controls and noncompliance were isolated to the payments noted above. 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). . . ." 7 CFR 220.7(e) states in part: ". . . the School Food Authority shall, with respect to participating schools under its jurisdiction: (1) (i) Maintain a nonprofit school food service; (ii) . . . use all revenues received by such food service only for the operation or improvement of that food service . . ." 7 CFR 210.14(a) states in part: "Nonprofit school food service. School food authorities shall maintain a nonprofit school food service. Revenues received by the nonprofit school food service are to be used only for the operation or improvement of such food service, except that, such revenues shall not be used to purchase land or buildings, unless otherwise approved by FNS, or to construct buildings. . . ." 7 CFR 225.15(a)(1) states: "Sponsors shall operate the food service in accordance with: the provisions of this part; any instructions and handbooks issued by FNS under this part; and any instructions and handbooks issued by the State agency which are not inconsistent with the provisions of this part." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. INDIANA STATE BOARD OF ACCOUNTS 20 SCHOOL TOWN OF MUNSTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." Cause Management had not developed a system of internal controls that would have ensured compliance with the grant agreement and the Allowable Costs/Cost Principles compliance requirement. Effect The failure to establish an effective system of internal controls, as well as adequately document costs, enabled noncompliance to go undetected. Noncompliance with the grant agreement and the Allowable Costs/Cost Principles compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs Known questioned costs of $34,827 were identified as detailed in the Condition and Context. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure that documentation will be maintained and made available for audit and comply with the grant agreement and the Allowable Costs/Cost Principles compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Subject: Child Nutrition Cluster - Reporting Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): SY 2020-2021, SY 2021-2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Condition and Context An effective system of internal controls was not in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the Reporting compliance requirement. Monthly Sponsor Claims for Reimbursement (Claims) were submitted to the Indiana Department of Education based upon meals served for the month. For two of the five Claims tested, there were differences between the Claims submitted and the School Corporation's summary meal count reports. The two Claims over reported meals by 1 and 50 meals, respectively. INDIANA STATE BOARD OF ACCOUNTS 21 SCHOOL TOWN OF MUNSTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) (Uniform Guidance) 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 ?? 200.327 Financial reporting and 200.328 Monitoring and reporting program performance. . . ." 2 CFR 200.302(b) (Revised Uniform Guidance) states in part: "The financial management system of each non-Federal entity must provide for the following: . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in ?? 200.328 and 200.329. . . ." Cause Management had not developed a system of internal controls that would have ensured compliance with the grant agreement and the Reporting compliance requirement. Effect The failure to establish an effective system of internal controls enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Reporting compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the Reporting compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 22 SCHOOL TOWN OF MUNSTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, COVID-19 National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): SY 2020-2021, SY 2021-2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective system of internal controls was not in place 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 require formal procurement methods when the value of the procurement for property or services exceeds the simplified acquisition threshold (SAT), which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 and provides that the proper purchasing method for supplies over $150,000 would be the bidding process, unless the purchase meets certain other qualifications. Indiana Code also states that purchase requirements may not be artificially divided to qualify as a purchase under $150,000. Sealed bids or competitive proposals were not obtained from an adequate number of sources for one of two vendors that exceeded the simplified acquisition threshold. Additionally, the School Corporation did not verify that two of four vendors were neither suspended nor debarred, or otherwise excluded or disqualified from participating in federal assistance programs. 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). . . ." SCHOOL TOWN OF MUNSTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320(b) states in part: "Formal procurement methods. When the value of the procurement for property or services under the Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with ? 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. . . . (ii) If sealed bids are used the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources . . . (2) Proposals. . . . (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number qualified offerors. . . ." 2 CFR 200.320(c) states: "Noncompetitive procurement. There are specific circumstances in which noncompetitive pro-curement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncom-petitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." SCHOOL TOWN OF MUNSTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Indiana Code 5-22-8-1 states: "(a) This chapter applies only to a purchase expected by the purchasing agent to be less than one hundred fifty thousand dollars ($150,000). (b) Purchase requirements may not be artificially divided so as to constitute a small purchase under this chapter." Cause Management had not developed a system of internal controls 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 system of internal controls 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 funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the Procurement and Suspension and Debarment compli-ance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report. Auditor's Response When the acquisition of the supplies or services, in the aggregate, are less than the simplified acquisition threshold, set at $150,000, informal procurement methods are allowable. One check was issued to a vendor in the amount of $232,761 for equipment purchased by the School Corporation and installed in a number of school buildings. As the amount spent with the vendor in question was over the simplified acquisition threshold, formal procurement methods should have been utilized. Formal procurement methods would have entailed obtaining sealed bids for the equipment and installation and the awarding of a contract. The award of a contract over $25,000 would have also required the vendor to be verified to ensure that the vendor itself was not excluded or disqualified from participating in federal assistance programs. If the vendor had been excluded or disqualified, federal funds should not have been used to pay the vendor.
Subject: Child Nutrition Cluster - Allowable Costs/Cost Principles Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): SY 2020-2021, SY 2021-2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Condition and Context An effective system of internal controls was not in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the Allowable Costs/Cost Principles compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 19 SCHOOL TOWN OF MUNSTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) During the audit period, four employees tested were assigned both Child Nutrition Cluster grant activities and other nonfederal duties. The four employees did not maintain documentation of time spent on federal program and nonfederal program activities. The total paid to the four employees from the School Lunch Fund 800 without proper documentation was $34,827 which was considered questioned costs. The lack of internal controls and noncompliance were isolated to the payments noted above. 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). . . ." 7 CFR 220.7(e) states in part: ". . . the School Food Authority shall, with respect to participating schools under its jurisdiction: (1) (i) Maintain a nonprofit school food service; (ii) . . . use all revenues received by such food service only for the operation or improvement of that food service . . ." 7 CFR 210.14(a) states in part: "Nonprofit school food service. School food authorities shall maintain a nonprofit school food service. Revenues received by the nonprofit school food service are to be used only for the operation or improvement of such food service, except that, such revenues shall not be used to purchase land or buildings, unless otherwise approved by FNS, or to construct buildings. . . ." 7 CFR 225.15(a)(1) states: "Sponsors shall operate the food service in accordance with: the provisions of this part; any instructions and handbooks issued by FNS under this part; and any instructions and handbooks issued by the State agency which are not inconsistent with the provisions of this part." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. INDIANA STATE BOARD OF ACCOUNTS 20 SCHOOL TOWN OF MUNSTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." Cause Management had not developed a system of internal controls that would have ensured compliance with the grant agreement and the Allowable Costs/Cost Principles compliance requirement. Effect The failure to establish an effective system of internal controls, as well as adequately document costs, enabled noncompliance to go undetected. Noncompliance with the grant agreement and the Allowable Costs/Cost Principles compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs Known questioned costs of $34,827 were identified as detailed in the Condition and Context. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure that documentation will be maintained and made available for audit and comply with the grant agreement and the Allowable Costs/Cost Principles compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Subject: Child Nutrition Cluster - Reporting Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): SY 2020-2021, SY 2021-2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Condition and Context An effective system of internal controls was not in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the Reporting compliance requirement. Monthly Sponsor Claims for Reimbursement (Claims) were submitted to the Indiana Department of Education based upon meals served for the month. For two of the five Claims tested, there were differences between the Claims submitted and the School Corporation's summary meal count reports. The two Claims over reported meals by 1 and 50 meals, respectively. INDIANA STATE BOARD OF ACCOUNTS 21 SCHOOL TOWN OF MUNSTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) (Uniform Guidance) 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 ?? 200.327 Financial reporting and 200.328 Monitoring and reporting program performance. . . ." 2 CFR 200.302(b) (Revised Uniform Guidance) states in part: "The financial management system of each non-Federal entity must provide for the following: . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in ?? 200.328 and 200.329. . . ." Cause Management had not developed a system of internal controls that would have ensured compliance with the grant agreement and the Reporting compliance requirement. Effect The failure to establish an effective system of internal controls enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Reporting compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the Reporting compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 22 SCHOOL TOWN OF MUNSTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Subject: Child Nutrition Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, COVID-19 National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): SY 2020-2021, SY 2021-2022 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context An effective system of internal controls was not in place 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 require formal procurement methods when the value of the procurement for property or services exceeds the simplified acquisition threshold (SAT), which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 and provides that the proper purchasing method for supplies over $150,000 would be the bidding process, unless the purchase meets certain other qualifications. Indiana Code also states that purchase requirements may not be artificially divided to qualify as a purchase under $150,000. Sealed bids or competitive proposals were not obtained from an adequate number of sources for one of two vendors that exceeded the simplified acquisition threshold. Additionally, the School Corporation did not verify that two of four vendors were neither suspended nor debarred, or otherwise excluded or disqualified from participating in federal assistance programs. 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). . . ." SCHOOL TOWN OF MUNSTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.320(b) states in part: "Formal procurement methods. When the value of the procurement for property or services under the Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with ? 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. . . . (ii) If sealed bids are used the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources . . . (2) Proposals. . . . (i) Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Proposals must be solicited from an adequate number qualified offerors. . . ." 2 CFR 200.320(c) states: "Noncompetitive procurement. There are specific circumstances in which noncompetitive pro-curement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncom-petitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." SCHOOL TOWN OF MUNSTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Indiana Code 5-22-8-1 states: "(a) This chapter applies only to a purchase expected by the purchasing agent to be less than one hundred fifty thousand dollars ($150,000). (b) Purchase requirements may not be artificially divided so as to constitute a small purchase under this chapter." Cause Management had not developed a system of internal controls 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 system of internal controls 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 funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure compliance and comply with the Procurement and Suspension and Debarment compli-ance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report. Auditor's Response When the acquisition of the supplies or services, in the aggregate, are less than the simplified acquisition threshold, set at $150,000, informal procurement methods are allowable. One check was issued to a vendor in the amount of $232,761 for equipment purchased by the School Corporation and installed in a number of school buildings. As the amount spent with the vendor in question was over the simplified acquisition threshold, formal procurement methods should have been utilized. Formal procurement methods would have entailed obtaining sealed bids for the equipment and installation and the awarding of a contract. The award of a contract over $25,000 would have also required the vendor to be verified to ensure that the vendor itself was not excluded or disqualified from participating in federal assistance programs. If the vendor had been excluded or disqualified, federal funds should not have been used to pay the vendor.
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 Numbers: 84.425D, 84.425U Federal Award Numbers or Years (or Other Identifying Numbers): S425D200013, S425D210013, 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 or 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 construction contracts in excess of $2,000 paid from federal grant funds included a prevailing wage rate clause. One construction contract during the audit period was subject to the 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 throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 26 SCHOOL TOWN OF MUNSTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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) Payroll 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). . . ." 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. . . ." INDIANA STATE BOARD OF ACCOUNTS 27 SCHOOL TOWN OF MUNSTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause Management had not established a system of internal controls that would have ensured compliance or that the required clause was included in the contracts for the Special Tests and Provisions - Wage Rate Requirements compliance requirement. Effect The failure to establish an effective system of internal controls and include the required clause in contracts prevented the determination of the School Corporation's compliance with the Special Tests and Provisions - Wage Rate Requirements compliance requirement. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish internal controls to ensure compliance 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. Auditor's Response The School Corporation did not directly pay payroll with federal funds; however, federal funds were used to pay a construction contract subject to the wage rate requirements. The wage rate requirements are used to ensure that the contractor paid the prevailing wage rate to individuals performing work in relation to the construction contract. As the prevailing wage rate clause was not included in the contract and certified payrolls were not submitted, we could not determine if the wage rate requirements were met.
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 Numbers: 84.425D, 84.425U Federal Award Numbers or Years (or Other Identifying Numbers): S425D200013, S425D210013, 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 or 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 construction contracts in excess of $2,000 paid from federal grant funds included a prevailing wage rate clause. One construction contract during the audit period was subject to the 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 throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 26 SCHOOL TOWN OF MUNSTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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) Payroll 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). . . ." 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. . . ." INDIANA STATE BOARD OF ACCOUNTS 27 SCHOOL TOWN OF MUNSTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause Management had not established a system of internal controls that would have ensured compliance or that the required clause was included in the contracts for the Special Tests and Provisions - Wage Rate Requirements compliance requirement. Effect The failure to establish an effective system of internal controls and include the required clause in contracts prevented the determination of the School Corporation's compliance with the Special Tests and Provisions - Wage Rate Requirements compliance requirement. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish internal controls to ensure compliance 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. Auditor's Response The School Corporation did not directly pay payroll with federal funds; however, federal funds were used to pay a construction contract subject to the wage rate requirements. The wage rate requirements are used to ensure that the contractor paid the prevailing wage rate to individuals performing work in relation to the construction contract. As the prevailing wage rate clause was not included in the contract and certified payrolls were not submitted, we could not determine if the wage rate requirements were met.
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 Numbers: 84.425D, 84.425U Federal Award Numbers or Years (or Other Identifying Numbers): S425D200013, S425D210013, 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 or 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 construction contracts in excess of $2,000 paid from federal grant funds included a prevailing wage rate clause. One construction contract during the audit period was subject to the 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 throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 26 SCHOOL TOWN OF MUNSTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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) Payroll 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). . . ." 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. . . ." INDIANA STATE BOARD OF ACCOUNTS 27 SCHOOL TOWN OF MUNSTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause Management had not established a system of internal controls that would have ensured compliance or that the required clause was included in the contracts for the Special Tests and Provisions - Wage Rate Requirements compliance requirement. Effect The failure to establish an effective system of internal controls and include the required clause in contracts prevented the determination of the School Corporation's compliance with the Special Tests and Provisions - Wage Rate Requirements compliance requirement. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish internal controls to ensure compliance 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. Auditor's Response The School Corporation did not directly pay payroll with federal funds; however, federal funds were used to pay a construction contract subject to the wage rate requirements. The wage rate requirements are used to ensure that the contractor paid the prevailing wage rate to individuals performing work in relation to the construction contract. As the prevailing wage rate clause was not included in the contract and certified payrolls were not submitted, we could not determine if the wage rate requirements were met.
Subject: COVID-19 - Education Stabilization Fund - Equipment and Real Property Management Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers or Years (or Other Identifying Numbers): S425D210013, 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 in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the Equipment and Real Property Management compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 28 SCHOOL TOWN OF MUNSTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) During the fiscal year 2021-2022, the School Corporation paid $20,650 out of ESSER III Funds for an improvement which exceeded the School Corporation's capitalization threshold. The improvement was not added to the property record or capital asset listing. The School Corporation's capital asset listing provided did not include all required information, which would include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, 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. Additionally, the School Corporation did not complete a capital asset inventory every two years. The lack of internal controls and noncompliance were isolated to SY 2021-2022. 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 states in part: "(d) . . . (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, 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. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. . . " Cause Management had not developed a system of internal controls that would have ensured compliance with the Equipment and Real Property Management compliance requirement. Effect The failure to establish an effective internal controls system enabled noncompliance to go undetected. Noncompliance with the grant agreement and the Equipment and Real Property Management compliance requirement could have resulted in the loss of federal funds to the School Corporation. INDIANA STATE BOARD OF ACCOUNTS 29 SCHOOL TOWN OF MUNSTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish 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.
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 Numbers: 84.425D, 84.425U Federal Award Numbers or Years (or Other Identifying Numbers): S425D200013, S425D210013, 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 or 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 construction contracts in excess of $2,000 paid from federal grant funds included a prevailing wage rate clause. One construction contract during the audit period was subject to the 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 throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 26 SCHOOL TOWN OF MUNSTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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) Payroll 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). . . ." 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. . . ." INDIANA STATE BOARD OF ACCOUNTS 27 SCHOOL TOWN OF MUNSTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause Management had not established a system of internal controls that would have ensured compliance or that the required clause was included in the contracts for the Special Tests and Provisions - Wage Rate Requirements compliance requirement. Effect The failure to establish an effective system of internal controls and include the required clause in contracts prevented the determination of the School Corporation's compliance with the Special Tests and Provisions - Wage Rate Requirements compliance requirement. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish internal controls to ensure compliance 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. Auditor's Response The School Corporation did not directly pay payroll with federal funds; however, federal funds were used to pay a construction contract subject to the wage rate requirements. The wage rate requirements are used to ensure that the contractor paid the prevailing wage rate to individuals performing work in relation to the construction contract. As the prevailing wage rate clause was not included in the contract and certified payrolls were not submitted, we could not determine if the wage rate requirements were met.
Subject: COVID-19 - Education Stabilization Fund - Equipment and Real Property Management Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers or Years (or Other Identifying Numbers): S425D210013, 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 in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the Equipment and Real Property Management compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 28 SCHOOL TOWN OF MUNSTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) During the fiscal year 2021-2022, the School Corporation paid $20,650 out of ESSER III Funds for an improvement which exceeded the School Corporation's capitalization threshold. The improvement was not added to the property record or capital asset listing. The School Corporation's capital asset listing provided did not include all required information, which would include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, 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. Additionally, the School Corporation did not complete a capital asset inventory every two years. The lack of internal controls and noncompliance were isolated to SY 2021-2022. 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 states in part: "(d) . . . (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, 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. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. . . " Cause Management had not developed a system of internal controls that would have ensured compliance with the Equipment and Real Property Management compliance requirement. Effect The failure to establish an effective internal controls system enabled noncompliance to go undetected. Noncompliance with the grant agreement and the Equipment and Real Property Management compliance requirement could have resulted in the loss of federal funds to the School Corporation. INDIANA STATE BOARD OF ACCOUNTS 29 SCHOOL TOWN OF MUNSTER SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish 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 Program - AL #21.016 ? Equitable Sharing Program - Suspension & Debarment Grant Number & Year - NB0800000, FFY 2022 Federal Grantor Agency - U.S. Department of the Treasury Criteria - Title 2 of the U.S. Code of Federal Regulations (CFR) ? 200.303 (January 1, 2022) states the following, in relevant 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) . . . . The U.S. Department of the Treasury adopted the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards in 2 CFR ? 1000.10 (January 1, 2022), which states the following: Except for the deviations set forth elsewhere in this Part, the Department of the Treasury adopts the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, set forth at 2 CFR part 200. 2 CFR ? 180.300 (January 1, 2022) requires non-Federal entities to verify that an entity is not excluded or disqualified prior to entering into a covered transaction by: ?(a) Checking SAM Exclusions; or (b) Collecting a certification from that . . . [entity]; or (c) Adding a clause or condition to the covered transaction with that . . . [entity].? The U.S. Department of Justice released a memo titled ?Equitable Sharing Wire,? dated September 30, 2021, which states, in relevant part, the following regarding the Equitable Sharing Program: When procuring goods or services from a vendor using equitable sharing funds, state and local law enforcement agencies participating in the Department of Justice and the Department of the Treasury Equitable Sharing Programs must verify that vendors are registered in the System for Award Management (SAM) and are in good standing. A vendor in good standing means the vendor is not suspended or debarred from receiving federal funds. This requirement applies to all qualifying purchases. A qualifying purchase is one single payment or multiple payments to a vendor that exceeds $25,000 annually. A good internal control plan requires the County to have proper procedures in place to verify that contractors paid with grant funds are not suspended, debarred, or otherwise excluded from or ineligible for participation in Federal programs or activities. Condition - Seward County could not provide documentation to support the County implemented effective internal controls to ensure that the suspension and debarment requirements of the Equitable Sharing Program were followed and adequately documented. We noted that three of the seven vendors that were paid $25,000 or more during the fiscal year 2022 were not registered on SAM.gov. We did note that none of the seven vendors were suspended, debarred, or otherwise excluded from participation in Federal programs or activities as of the date testing was performed. Repeat Finding - No Questioned Costs - None Statistical Sample - No Context - The County paid seven vendors each $25,000 or more during the fiscal year 2022. Of these seven vendors, three were not registered on SAM.gov prior to being paid with Equitable Sharing Program funds. These three vendors were paid $123,134 during the fiscal year 2022. However, one of the vendors was paid $25,000 prior to the date of the ?Equitable Sharing Wire? memo. The County Sheriff was unable to provide documentation to support the following: 1) the vendors were not excluded or disqualified prior to entering into the covered transactions; and 2) the vendor was verified as having registered in SAM.gov prior to the County paying the vendor with Equitable Sharing Program funds. For two vendors, the County Sheriff?s office contacted the vendor to inform them to register with SAM.gov; however, these two vendors still received Equitable Sharing Program funds prior to being registered in SAM.gov. Cause - Lack of procedures and knowledge of the Equitable Sharing Program suspension and debarment requirements. Effect - Without adequate procedures to ensure contractors are not suspended, debarred, or otherwise excluded from or ineligible for participation in Federal programs or activities, there is an increased risk for the misuse of Federal funds and noncompliance with Federal regulations. Recommendation - We recommend the County implement procedures to ensure, prior to entering into a covered transaction, that a contractor is not suspended, debarred, or otherwise excluded from or ineligible for participation in Federal programs or activities, and those procedures are adequately documented. View of Officials - The County Sheriff has implemented a procedure to verify any entity is not excluded or disqualified prior to paying said entity, and such verification will be adequately documented in the entity?s file. The change in procedures is effective immediately.
FINDING 2022-003 Subject: COVID-19 - Education Stabilization Fund - Equipment and Real Property Management Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425 Federal Award Number and Year (or Other Identifying Number): S425U210013 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 in place at the School Corporation to ensure compliance with requirements related to the grant agreement and the Equipment and Real Property Management compliance requirement. During fiscal year 2021-2022, the School Corporation purchased $62,769 of equipment with ESSER III funds which exceeded the School Corporation's capitalization threshold. The equipment was not added to the property record or capital asset listing which would include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number (FAIN)), who holds title, the acquisition date, 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. The lack of internal controls and noncompliance were isolated to the property record or capital asset listing for 2021-2022. 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, cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property." Cause Management had not developed a system of internal control that would have ensured compliance with 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 have resulted in the loss of 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 Reference Number: 2022-003 NH Department of Health and Human Services SNAP Cluster and COVID-19 SNAP (Assistance Listing #10.551 and #10.561) Federal Award Numbers 202020S51444, 204NH403S514, 214NH403S2514, 214NH403S2519 Federal Award Year: 2020, 2021 U.S. Department of Agriculture Compliance Requirement: Special Tests and Provisions: EBT Card Security Type of Finding: Significant Deficiency and Material Noncompliance Prior Year Finding: 2021-004 Statistically Valid Sample: No Criteria The state is required to maintain adequate security over, and documentation/records for, EBT cards, to prevent their theft, embezzlement, loss, damage, destruction, unauthorized transfer, negotiation, or use (7 CFR section 274.8(b)(3)). Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards 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 The New Hampshire Department of Health and Human Services (the Department) contracts with a third party to process all daily EBT transactions associated with the SNAP program. The Department transmits data to the third-party service provider that contains information concerning participants that need a new EBT card issued. The third-party service provider generates the EBT cards based on this request and express mails the EBT cards to the Department. The Department reviews the listing of EBT cards that were delivered to ensure that there are no missing EBT cards and then subsequently mails the EBT cards to the individual participant. During our testwork over the daily reconciliation performed over the EBT cards issued, we were unable to obtain documented evidence that the Department had performed daily reconciliations to ensure that only authorized EBT cards that were issued prior to May 5, 2022. As such, we were unable to test compliance with this requirement for the period of July 1, 2021 to May 5, 2022. Cause The cause of the condition found is that the Department only maintained the support for the daily reconciliation process for a 6-month period. After 6 months, the daily reconciliation was destroyed. The Department implemented a corrective action plan that went into effect on May 5, 2022 to address the condition found. As a result, for all 15 sample items selected that were after May 5, 2022, all sample items were found to be properly supported and no instances of noncompliance were identified. Effect The effect of the condition found is that prior to May 5, 2022, EBT cards could have been generated that were not authorized and the Department may not have been able to identify the error timely. Questioned Costs None. Recommendation We recommend that the Department continue to implement its corrective action plan to ensure that daily EBT reconciliations are appropriately maintained. View of Responsible Officials We concur. The Department has been saving and scanning the inventory sheets that are accompanied with the daily EBT card delivery since May 2022. We believe this current control in place allows us to remain in compliance with all requirements. We currently save the inventory sheets in a folder with the daily date as the title and save them in the correct monthly folder. Those monthly folders will then be kept in a yearly folder. Anticipated Completion Date 02/23/2023 Contact Person Frank Beck, EBT Administrator
Finding Reference Number: 2022-003 NH Department of Health and Human Services SNAP Cluster and COVID-19 SNAP (Assistance Listing #10.551 and #10.561) Federal Award Numbers 202020S51444, 204NH403S514, 214NH403S2514, 214NH403S2519 Federal Award Year: 2020, 2021 U.S. Department of Agriculture Compliance Requirement: Special Tests and Provisions: EBT Card Security Type of Finding: Significant Deficiency and Material Noncompliance Prior Year Finding: 2021-004 Statistically Valid Sample: No Criteria The state is required to maintain adequate security over, and documentation/records for, EBT cards, to prevent their theft, embezzlement, loss, damage, destruction, unauthorized transfer, negotiation, or use (7 CFR section 274.8(b)(3)). Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards 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 The New Hampshire Department of Health and Human Services (the Department) contracts with a third party to process all daily EBT transactions associated with the SNAP program. The Department transmits data to the third-party service provider that contains information concerning participants that need a new EBT card issued. The third-party service provider generates the EBT cards based on this request and express mails the EBT cards to the Department. The Department reviews the listing of EBT cards that were delivered to ensure that there are no missing EBT cards and then subsequently mails the EBT cards to the individual participant. During our testwork over the daily reconciliation performed over the EBT cards issued, we were unable to obtain documented evidence that the Department had performed daily reconciliations to ensure that only authorized EBT cards that were issued prior to May 5, 2022. As such, we were unable to test compliance with this requirement for the period of July 1, 2021 to May 5, 2022. Cause The cause of the condition found is that the Department only maintained the support for the daily reconciliation process for a 6-month period. After 6 months, the daily reconciliation was destroyed. The Department implemented a corrective action plan that went into effect on May 5, 2022 to address the condition found. As a result, for all 15 sample items selected that were after May 5, 2022, all sample items were found to be properly supported and no instances of noncompliance were identified. Effect The effect of the condition found is that prior to May 5, 2022, EBT cards could have been generated that were not authorized and the Department may not have been able to identify the error timely. Questioned Costs None. Recommendation We recommend that the Department continue to implement its corrective action plan to ensure that daily EBT reconciliations are appropriately maintained. View of Responsible Officials We concur. The Department has been saving and scanning the inventory sheets that are accompanied with the daily EBT card delivery since May 2022. We believe this current control in place allows us to remain in compliance with all requirements. We currently save the inventory sheets in a folder with the daily date as the title and save them in the correct monthly folder. Those monthly folders will then be kept in a yearly folder. Anticipated Completion Date 02/23/2023 Contact Person Frank Beck, EBT Administrator
Finding Reference Number: 2022-003 NH Department of Health and Human Services SNAP Cluster and COVID-19 SNAP (Assistance Listing #10.551 and #10.561) Federal Award Numbers 202020S51444, 204NH403S514, 214NH403S2514, 214NH403S2519 Federal Award Year: 2020, 2021 U.S. Department of Agriculture Compliance Requirement: Special Tests and Provisions: EBT Card Security Type of Finding: Significant Deficiency and Material Noncompliance Prior Year Finding: 2021-004 Statistically Valid Sample: No Criteria The state is required to maintain adequate security over, and documentation/records for, EBT cards, to prevent their theft, embezzlement, loss, damage, destruction, unauthorized transfer, negotiation, or use (7 CFR section 274.8(b)(3)). Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards 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 The New Hampshire Department of Health and Human Services (the Department) contracts with a third party to process all daily EBT transactions associated with the SNAP program. The Department transmits data to the third-party service provider that contains information concerning participants that need a new EBT card issued. The third-party service provider generates the EBT cards based on this request and express mails the EBT cards to the Department. The Department reviews the listing of EBT cards that were delivered to ensure that there are no missing EBT cards and then subsequently mails the EBT cards to the individual participant. During our testwork over the daily reconciliation performed over the EBT cards issued, we were unable to obtain documented evidence that the Department had performed daily reconciliations to ensure that only authorized EBT cards that were issued prior to May 5, 2022. As such, we were unable to test compliance with this requirement for the period of July 1, 2021 to May 5, 2022. Cause The cause of the condition found is that the Department only maintained the support for the daily reconciliation process for a 6-month period. After 6 months, the daily reconciliation was destroyed. The Department implemented a corrective action plan that went into effect on May 5, 2022 to address the condition found. As a result, for all 15 sample items selected that were after May 5, 2022, all sample items were found to be properly supported and no instances of noncompliance were identified. Effect The effect of the condition found is that prior to May 5, 2022, EBT cards could have been generated that were not authorized and the Department may not have been able to identify the error timely. Questioned Costs None. Recommendation We recommend that the Department continue to implement its corrective action plan to ensure that daily EBT reconciliations are appropriately maintained. View of Responsible Officials We concur. The Department has been saving and scanning the inventory sheets that are accompanied with the daily EBT card delivery since May 2022. We believe this current control in place allows us to remain in compliance with all requirements. We currently save the inventory sheets in a folder with the daily date as the title and save them in the correct monthly folder. Those monthly folders will then be kept in a yearly folder. Anticipated Completion Date 02/23/2023 Contact Person Frank Beck, EBT Administrator
Finding Reference Number: 2022-003 NH Department of Health and Human Services SNAP Cluster and COVID-19 SNAP (Assistance Listing #10.551 and #10.561) Federal Award Numbers 202020S51444, 204NH403S514, 214NH403S2514, 214NH403S2519 Federal Award Year: 2020, 2021 U.S. Department of Agriculture Compliance Requirement: Special Tests and Provisions: EBT Card Security Type of Finding: Significant Deficiency and Material Noncompliance Prior Year Finding: 2021-004 Statistically Valid Sample: No Criteria The state is required to maintain adequate security over, and documentation/records for, EBT cards, to prevent their theft, embezzlement, loss, damage, destruction, unauthorized transfer, negotiation, or use (7 CFR section 274.8(b)(3)). Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards 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 The New Hampshire Department of Health and Human Services (the Department) contracts with a third party to process all daily EBT transactions associated with the SNAP program. The Department transmits data to the third-party service provider that contains information concerning participants that need a new EBT card issued. The third-party service provider generates the EBT cards based on this request and express mails the EBT cards to the Department. The Department reviews the listing of EBT cards that were delivered to ensure that there are no missing EBT cards and then subsequently mails the EBT cards to the individual participant. During our testwork over the daily reconciliation performed over the EBT cards issued, we were unable to obtain documented evidence that the Department had performed daily reconciliations to ensure that only authorized EBT cards that were issued prior to May 5, 2022. As such, we were unable to test compliance with this requirement for the period of July 1, 2021 to May 5, 2022. Cause The cause of the condition found is that the Department only maintained the support for the daily reconciliation process for a 6-month period. After 6 months, the daily reconciliation was destroyed. The Department implemented a corrective action plan that went into effect on May 5, 2022 to address the condition found. As a result, for all 15 sample items selected that were after May 5, 2022, all sample items were found to be properly supported and no instances of noncompliance were identified. Effect The effect of the condition found is that prior to May 5, 2022, EBT cards could have been generated that were not authorized and the Department may not have been able to identify the error timely. Questioned Costs None. Recommendation We recommend that the Department continue to implement its corrective action plan to ensure that daily EBT reconciliations are appropriately maintained. View of Responsible Officials We concur. The Department has been saving and scanning the inventory sheets that are accompanied with the daily EBT card delivery since May 2022. We believe this current control in place allows us to remain in compliance with all requirements. We currently save the inventory sheets in a folder with the daily date as the title and save them in the correct monthly folder. Those monthly folders will then be kept in a yearly folder. Anticipated Completion Date 02/23/2023 Contact Person Frank Beck, EBT Administrator
Finding Reference Number: 2022-002 NH Department of Administrative Services Federal Transit Cluster and COVID-19 Federal Transit Cluster (Assistance Listing #20.507and #20.526) Airport Improvement Program and COVID-19 Airport Improvement Program (Assistance Listing #20.106) COVID-19 Coronavirus State and Local Fiscal Recovery Funds (Assistance Listing #21.027) Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) and COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (Assistance Listing #93.323) Temporary Assistance for Needy Families and COVID-19 Temporary Assistance for Needy Families (Assistance Listing #93.558) Federal Award Numbers 2020G996115, 2021G996115, SLFRP0145, NUK50CK000522, 2001NHLEA, 2001NHLIE4, 2001NH5C3, 2101NHLIEA, 2101NHE5C6, 2201NHLIEA, 2101NHLIE4, 2021G996115, 2021G990228, 2022G996115 Federal Award Year: 2019, 2020, 2021 U.S. Department of Transportation, U.S. Department of Treasury, U.S. Department of Health and Human Services Type of Finding: Significant Deficiency Prior Year Finding: None Statistically Valid Sample: No Criteria Title 2 U.S. Code of Federal Regulations Part 200 (2 CFR section 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements, section 200.510(b) states the auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with ? 200.502. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards 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 The State of New Hampshire (the State) entered into contracts and subrecipient grant agreements to assist with the administration of its federal awards. As part of the Schedule of Expenditures of Federal Awards (SEFA) preparation process, the Department of Administrative Services requested information from each Department related to federal expenditures made by federal program and the portion of those expenditures that were passed through to subrecipients. For the year ended June 30, 2022, the State reported approximately $3.5 billion in federal expenditures on the SEFA. Of the total expenditures reported, approximately $783 million was reported as amounts passed through to subrecipients. During our audit, we identified several instances where the State inaccurately reported the value of the amounts passed through to subrecipients for certain federal programs. Specifically, we noted the following: A. Federal Transit Cluster - The State reported subrecipient expenditures in the amount of $4,038,163 on the draft SEFA within the amounts provided to subrecipients column. During our testwork over procurement, we noted that 1 of 4 contracts selected for testwork was incorrectly identified as a contract. Upon further review and inquiry of management, the actual subrecipient expenditures for the year ended June 30, 2022 were $375,302, resulting in an overstatement of $3,662,861. This error was subsequently corrected on the final SEFA. B. Airport Improvement Program - The State reported subrecipient expenditures in the amount of $8,275,240 on the draft SEFA within the amounts provided to subrecipients column. Upon further review and inquiry of management, management determined the actual subrecipient expenditures for the year ended June 30, 2022 were $8,168,301, resulting in an overstatement of $106,939. This error was subsequently corrected on the final SEFA. C. Coronavirus State and Local Fiscal Recovery Funds ? The State reported subrecipient expenditures in the amount of $7,435,217 on the draft SEFA within the amounts provided to subrecipients column. During our testwork over subrecipient monitoring, we noted that for 5 of 10 subrecipients selected for testwork that the sample selection had been incorrectly identified as a subrecipient, resulting in an overstatement of $5,326,620. We further noted as part of our testwork over procurement, that 18 of 48 contracts selected for testwork had incorrectly been identified as a contract and instead of a subrecipient grant agreement. There were no expenditures associated with these agreements, and as a result, there was no impact on the amount reported on the SEFA within the amounts provided to subrecipients column. The error was subsequently corrected on the final SEFA to properly present $2,108,597 as passed through to subrecipient. D. Epidemiology and Laboratory Capacity for Infectious Diseases - The State reported subrecipient expenditures in the amount of $4,879,473 on the draft SEFA within the amounts provided to subrecipients column. During our testwork related to FFATA reporting, we noted that 1 of 4 items selected for testwork did not represent a tier-one award but instead was a contract. The impact on the amount reported on the SEFA within the amounts provided to subrecipients column was an overstatement of $8,400. The error was subsequently corrected on the final SEFA to properly present $4,871,073 as passed through to subrecipient. E. Temporary Assistance for Needy Families - The State did not report any subrecipient expenditures on the draft SEFA within the amounts provided to subrecipients column. Upon further review and inquiry of management, management determined the actual subrecipient expenditures for the year ended June 30, 2022 were $3,307,974, resulting in an understatement of $3,307,974. This error was subsequently corrected on the final SEFA. Cause The cause of the condition found is primarily due to insufficient controls related to the determination of vendor versus subrecipient to ensure the proper identification of subrecipients. Effect The effect of the condition found is that subrecipient expenditures were not accurately presented on the SEFA. Questioned Costs None. Recommendation We recommend that the State review its existing statewide internal controls over vendor versus subrecipient determination to ensure they are operating effectively to properly identify a vendor versus a subrecipient. This will ensure that the amounts presented as pass through as subrecipient expenditures on the SEFA are complete and accurate. Views of Responsible Officials The Department of Administrative Services (DAS) concurs. Financial management of individual federal awards is decentralized throughout state agencies which centralizes annually in the culmination of the State?s SEFA. During this process, each agency is required to complete a standardized SEFA analysis and reconciliation tool for review by the DAS prior to the incorporation of the data into the State?s SEFA. This process also includes an annual Single Audit training and update session organized by the DAS. Additionally, the DAS notes all contracts, including subawards, entered by state agencies over a designated threshold are required to be authorized by the State?s Legislative Fiscal Committee and the Governor and Executive Council. The DAS will examine each of these processes to identify additional control activities to improve the accuracy and completeness of the pass through element of the SEFA. Anticipated Completion Date: April 30, 2024 Contact: Steven Giovinelli, Federal Grants and Cost Allocation Administrator, Department of Administrative Services
Finding Reference Number: 2022-002 NH Department of Administrative Services Federal Transit Cluster and COVID-19 Federal Transit Cluster (Assistance Listing #20.507and #20.526) Airport Improvement Program and COVID-19 Airport Improvement Program (Assistance Listing #20.106) COVID-19 Coronavirus State and Local Fiscal Recovery Funds (Assistance Listing #21.027) Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) and COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (Assistance Listing #93.323) Temporary Assistance for Needy Families and COVID-19 Temporary Assistance for Needy Families (Assistance Listing #93.558) Federal Award Numbers 2020G996115, 2021G996115, SLFRP0145, NUK50CK000522, 2001NHLEA, 2001NHLIE4, 2001NH5C3, 2101NHLIEA, 2101NHE5C6, 2201NHLIEA, 2101NHLIE4, 2021G996115, 2021G990228, 2022G996115 Federal Award Year: 2019, 2020, 2021 U.S. Department of Transportation, U.S. Department of Treasury, U.S. Department of Health and Human Services Type of Finding: Significant Deficiency Prior Year Finding: None Statistically Valid Sample: No Criteria Title 2 U.S. Code of Federal Regulations Part 200 (2 CFR section 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements, section 200.510(b) states the auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with ? 200.502. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards 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 The State of New Hampshire (the State) entered into contracts and subrecipient grant agreements to assist with the administration of its federal awards. As part of the Schedule of Expenditures of Federal Awards (SEFA) preparation process, the Department of Administrative Services requested information from each Department related to federal expenditures made by federal program and the portion of those expenditures that were passed through to subrecipients. For the year ended June 30, 2022, the State reported approximately $3.5 billion in federal expenditures on the SEFA. Of the total expenditures reported, approximately $783 million was reported as amounts passed through to subrecipients. During our audit, we identified several instances where the State inaccurately reported the value of the amounts passed through to subrecipients for certain federal programs. Specifically, we noted the following: A. Federal Transit Cluster - The State reported subrecipient expenditures in the amount of $4,038,163 on the draft SEFA within the amounts provided to subrecipients column. During our testwork over procurement, we noted that 1 of 4 contracts selected for testwork was incorrectly identified as a contract. Upon further review and inquiry of management, the actual subrecipient expenditures for the year ended June 30, 2022 were $375,302, resulting in an overstatement of $3,662,861. This error was subsequently corrected on the final SEFA. B. Airport Improvement Program - The State reported subrecipient expenditures in the amount of $8,275,240 on the draft SEFA within the amounts provided to subrecipients column. Upon further review and inquiry of management, management determined the actual subrecipient expenditures for the year ended June 30, 2022 were $8,168,301, resulting in an overstatement of $106,939. This error was subsequently corrected on the final SEFA. C. Coronavirus State and Local Fiscal Recovery Funds ? The State reported subrecipient expenditures in the amount of $7,435,217 on the draft SEFA within the amounts provided to subrecipients column. During our testwork over subrecipient monitoring, we noted that for 5 of 10 subrecipients selected for testwork that the sample selection had been incorrectly identified as a subrecipient, resulting in an overstatement of $5,326,620. We further noted as part of our testwork over procurement, that 18 of 48 contracts selected for testwork had incorrectly been identified as a contract and instead of a subrecipient grant agreement. There were no expenditures associated with these agreements, and as a result, there was no impact on the amount reported on the SEFA within the amounts provided to subrecipients column. The error was subsequently corrected on the final SEFA to properly present $2,108,597 as passed through to subrecipient. D. Epidemiology and Laboratory Capacity for Infectious Diseases - The State reported subrecipient expenditures in the amount of $4,879,473 on the draft SEFA within the amounts provided to subrecipients column. During our testwork related to FFATA reporting, we noted that 1 of 4 items selected for testwork did not represent a tier-one award but instead was a contract. The impact on the amount reported on the SEFA within the amounts provided to subrecipients column was an overstatement of $8,400. The error was subsequently corrected on the final SEFA to properly present $4,871,073 as passed through to subrecipient. E. Temporary Assistance for Needy Families - The State did not report any subrecipient expenditures on the draft SEFA within the amounts provided to subrecipients column. Upon further review and inquiry of management, management determined the actual subrecipient expenditures for the year ended June 30, 2022 were $3,307,974, resulting in an understatement of $3,307,974. This error was subsequently corrected on the final SEFA. Cause The cause of the condition found is primarily due to insufficient controls related to the determination of vendor versus subrecipient to ensure the proper identification of subrecipients. Effect The effect of the condition found is that subrecipient expenditures were not accurately presented on the SEFA. Questioned Costs None. Recommendation We recommend that the State review its existing statewide internal controls over vendor versus subrecipient determination to ensure they are operating effectively to properly identify a vendor versus a subrecipient. This will ensure that the amounts presented as pass through as subrecipient expenditures on the SEFA are complete and accurate. Views of Responsible Officials The Department of Administrative Services (DAS) concurs. Financial management of individual federal awards is decentralized throughout state agencies which centralizes annually in the culmination of the State?s SEFA. During this process, each agency is required to complete a standardized SEFA analysis and reconciliation tool for review by the DAS prior to the incorporation of the data into the State?s SEFA. This process also includes an annual Single Audit training and update session organized by the DAS. Additionally, the DAS notes all contracts, including subawards, entered by state agencies over a designated threshold are required to be authorized by the State?s Legislative Fiscal Committee and the Governor and Executive Council. The DAS will examine each of these processes to identify additional control activities to improve the accuracy and completeness of the pass through element of the SEFA. Anticipated Completion Date: April 30, 2024 Contact: Steven Giovinelli, Federal Grants and Cost Allocation Administrator, Department of Administrative Services
Finding Reference Number: 2022-002 NH Department of Administrative Services Federal Transit Cluster and COVID-19 Federal Transit Cluster (Assistance Listing #20.507and #20.526) Airport Improvement Program and COVID-19 Airport Improvement Program (Assistance Listing #20.106) COVID-19 Coronavirus State and Local Fiscal Recovery Funds (Assistance Listing #21.027) Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) and COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (Assistance Listing #93.323) Temporary Assistance for Needy Families and COVID-19 Temporary Assistance for Needy Families (Assistance Listing #93.558) Federal Award Numbers 2020G996115, 2021G996115, SLFRP0145, NUK50CK000522, 2001NHLEA, 2001NHLIE4, 2001NH5C3, 2101NHLIEA, 2101NHE5C6, 2201NHLIEA, 2101NHLIE4, 2021G996115, 2021G990228, 2022G996115 Federal Award Year: 2019, 2020, 2021 U.S. Department of Transportation, U.S. Department of Treasury, U.S. Department of Health and Human Services Type of Finding: Significant Deficiency Prior Year Finding: None Statistically Valid Sample: No Criteria Title 2 U.S. Code of Federal Regulations Part 200 (2 CFR section 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements, section 200.510(b) states the auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with ? 200.502. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards 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 The State of New Hampshire (the State) entered into contracts and subrecipient grant agreements to assist with the administration of its federal awards. As part of the Schedule of Expenditures of Federal Awards (SEFA) preparation process, the Department of Administrative Services requested information from each Department related to federal expenditures made by federal program and the portion of those expenditures that were passed through to subrecipients. For the year ended June 30, 2022, the State reported approximately $3.5 billion in federal expenditures on the SEFA. Of the total expenditures reported, approximately $783 million was reported as amounts passed through to subrecipients. During our audit, we identified several instances where the State inaccurately reported the value of the amounts passed through to subrecipients for certain federal programs. Specifically, we noted the following: A. Federal Transit Cluster - The State reported subrecipient expenditures in the amount of $4,038,163 on the draft SEFA within the amounts provided to subrecipients column. During our testwork over procurement, we noted that 1 of 4 contracts selected for testwork was incorrectly identified as a contract. Upon further review and inquiry of management, the actual subrecipient expenditures for the year ended June 30, 2022 were $375,302, resulting in an overstatement of $3,662,861. This error was subsequently corrected on the final SEFA. B. Airport Improvement Program - The State reported subrecipient expenditures in the amount of $8,275,240 on the draft SEFA within the amounts provided to subrecipients column. Upon further review and inquiry of management, management determined the actual subrecipient expenditures for the year ended June 30, 2022 were $8,168,301, resulting in an overstatement of $106,939. This error was subsequently corrected on the final SEFA. C. Coronavirus State and Local Fiscal Recovery Funds ? The State reported subrecipient expenditures in the amount of $7,435,217 on the draft SEFA within the amounts provided to subrecipients column. During our testwork over subrecipient monitoring, we noted that for 5 of 10 subrecipients selected for testwork that the sample selection had been incorrectly identified as a subrecipient, resulting in an overstatement of $5,326,620. We further noted as part of our testwork over procurement, that 18 of 48 contracts selected for testwork had incorrectly been identified as a contract and instead of a subrecipient grant agreement. There were no expenditures associated with these agreements, and as a result, there was no impact on the amount reported on the SEFA within the amounts provided to subrecipients column. The error was subsequently corrected on the final SEFA to properly present $2,108,597 as passed through to subrecipient. D. Epidemiology and Laboratory Capacity for Infectious Diseases - The State reported subrecipient expenditures in the amount of $4,879,473 on the draft SEFA within the amounts provided to subrecipients column. During our testwork related to FFATA reporting, we noted that 1 of 4 items selected for testwork did not represent a tier-one award but instead was a contract. The impact on the amount reported on the SEFA within the amounts provided to subrecipients column was an overstatement of $8,400. The error was subsequently corrected on the final SEFA to properly present $4,871,073 as passed through to subrecipient. E. Temporary Assistance for Needy Families - The State did not report any subrecipient expenditures on the draft SEFA within the amounts provided to subrecipients column. Upon further review and inquiry of management, management determined the actual subrecipient expenditures for the year ended June 30, 2022 were $3,307,974, resulting in an understatement of $3,307,974. This error was subsequently corrected on the final SEFA. Cause The cause of the condition found is primarily due to insufficient controls related to the determination of vendor versus subrecipient to ensure the proper identification of subrecipients. Effect The effect of the condition found is that subrecipient expenditures were not accurately presented on the SEFA. Questioned Costs None. Recommendation We recommend that the State review its existing statewide internal controls over vendor versus subrecipient determination to ensure they are operating effectively to properly identify a vendor versus a subrecipient. This will ensure that the amounts presented as pass through as subrecipient expenditures on the SEFA are complete and accurate. Views of Responsible Officials The Department of Administrative Services (DAS) concurs. Financial management of individual federal awards is decentralized throughout state agencies which centralizes annually in the culmination of the State?s SEFA. During this process, each agency is required to complete a standardized SEFA analysis and reconciliation tool for review by the DAS prior to the incorporation of the data into the State?s SEFA. This process also includes an annual Single Audit training and update session organized by the DAS. Additionally, the DAS notes all contracts, including subawards, entered by state agencies over a designated threshold are required to be authorized by the State?s Legislative Fiscal Committee and the Governor and Executive Council. The DAS will examine each of these processes to identify additional control activities to improve the accuracy and completeness of the pass through element of the SEFA. Anticipated Completion Date: April 30, 2024 Contact: Steven Giovinelli, Federal Grants and Cost Allocation Administrator, Department of Administrative Services
Finding Reference Number: 2022-002 NH Department of Administrative Services Federal Transit Cluster and COVID-19 Federal Transit Cluster (Assistance Listing #20.507and #20.526) Airport Improvement Program and COVID-19 Airport Improvement Program (Assistance Listing #20.106) COVID-19 Coronavirus State and Local Fiscal Recovery Funds (Assistance Listing #21.027) Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) and COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (Assistance Listing #93.323) Temporary Assistance for Needy Families and COVID-19 Temporary Assistance for Needy Families (Assistance Listing #93.558) Federal Award Numbers 2020G996115, 2021G996115, SLFRP0145, NUK50CK000522, 2001NHLEA, 2001NHLIE4, 2001NH5C3, 2101NHLIEA, 2101NHE5C6, 2201NHLIEA, 2101NHLIE4, 2021G996115, 2021G990228, 2022G996115 Federal Award Year: 2019, 2020, 2021 U.S. Department of Transportation, U.S. Department of Treasury, U.S. Department of Health and Human Services Type of Finding: Significant Deficiency Prior Year Finding: None Statistically Valid Sample: No Criteria Title 2 U.S. Code of Federal Regulations Part 200 (2 CFR section 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements, section 200.510(b) states the auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with ? 200.502. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards 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 The State of New Hampshire (the State) entered into contracts and subrecipient grant agreements to assist with the administration of its federal awards. As part of the Schedule of Expenditures of Federal Awards (SEFA) preparation process, the Department of Administrative Services requested information from each Department related to federal expenditures made by federal program and the portion of those expenditures that were passed through to subrecipients. For the year ended June 30, 2022, the State reported approximately $3.5 billion in federal expenditures on the SEFA. Of the total expenditures reported, approximately $783 million was reported as amounts passed through to subrecipients. During our audit, we identified several instances where the State inaccurately reported the value of the amounts passed through to subrecipients for certain federal programs. Specifically, we noted the following: A. Federal Transit Cluster - The State reported subrecipient expenditures in the amount of $4,038,163 on the draft SEFA within the amounts provided to subrecipients column. During our testwork over procurement, we noted that 1 of 4 contracts selected for testwork was incorrectly identified as a contract. Upon further review and inquiry of management, the actual subrecipient expenditures for the year ended June 30, 2022 were $375,302, resulting in an overstatement of $3,662,861. This error was subsequently corrected on the final SEFA. B. Airport Improvement Program - The State reported subrecipient expenditures in the amount of $8,275,240 on the draft SEFA within the amounts provided to subrecipients column. Upon further review and inquiry of management, management determined the actual subrecipient expenditures for the year ended June 30, 2022 were $8,168,301, resulting in an overstatement of $106,939. This error was subsequently corrected on the final SEFA. C. Coronavirus State and Local Fiscal Recovery Funds ? The State reported subrecipient expenditures in the amount of $7,435,217 on the draft SEFA within the amounts provided to subrecipients column. During our testwork over subrecipient monitoring, we noted that for 5 of 10 subrecipients selected for testwork that the sample selection had been incorrectly identified as a subrecipient, resulting in an overstatement of $5,326,620. We further noted as part of our testwork over procurement, that 18 of 48 contracts selected for testwork had incorrectly been identified as a contract and instead of a subrecipient grant agreement. There were no expenditures associated with these agreements, and as a result, there was no impact on the amount reported on the SEFA within the amounts provided to subrecipients column. The error was subsequently corrected on the final SEFA to properly present $2,108,597 as passed through to subrecipient. D. Epidemiology and Laboratory Capacity for Infectious Diseases - The State reported subrecipient expenditures in the amount of $4,879,473 on the draft SEFA within the amounts provided to subrecipients column. During our testwork related to FFATA reporting, we noted that 1 of 4 items selected for testwork did not represent a tier-one award but instead was a contract. The impact on the amount reported on the SEFA within the amounts provided to subrecipients column was an overstatement of $8,400. The error was subsequently corrected on the final SEFA to properly present $4,871,073 as passed through to subrecipient. E. Temporary Assistance for Needy Families - The State did not report any subrecipient expenditures on the draft SEFA within the amounts provided to subrecipients column. Upon further review and inquiry of management, management determined the actual subrecipient expenditures for the year ended June 30, 2022 were $3,307,974, resulting in an understatement of $3,307,974. This error was subsequently corrected on the final SEFA. Cause The cause of the condition found is primarily due to insufficient controls related to the determination of vendor versus subrecipient to ensure the proper identification of subrecipients. Effect The effect of the condition found is that subrecipient expenditures were not accurately presented on the SEFA. Questioned Costs None. Recommendation We recommend that the State review its existing statewide internal controls over vendor versus subrecipient determination to ensure they are operating effectively to properly identify a vendor versus a subrecipient. This will ensure that the amounts presented as pass through as subrecipient expenditures on the SEFA are complete and accurate. Views of Responsible Officials The Department of Administrative Services (DAS) concurs. Financial management of individual federal awards is decentralized throughout state agencies which centralizes annually in the culmination of the State?s SEFA. During this process, each agency is required to complete a standardized SEFA analysis and reconciliation tool for review by the DAS prior to the incorporation of the data into the State?s SEFA. This process also includes an annual Single Audit training and update session organized by the DAS. Additionally, the DAS notes all contracts, including subawards, entered by state agencies over a designated threshold are required to be authorized by the State?s Legislative Fiscal Committee and the Governor and Executive Council. The DAS will examine each of these processes to identify additional control activities to improve the accuracy and completeness of the pass through element of the SEFA. Anticipated Completion Date: April 30, 2024 Contact: Steven Giovinelli, Federal Grants and Cost Allocation Administrator, Department of Administrative Services
Finding Reference Number: 2022-002 NH Department of Administrative Services Federal Transit Cluster and COVID-19 Federal Transit Cluster (Assistance Listing #20.507and #20.526) Airport Improvement Program and COVID-19 Airport Improvement Program (Assistance Listing #20.106) COVID-19 Coronavirus State and Local Fiscal Recovery Funds (Assistance Listing #21.027) Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) and COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (Assistance Listing #93.323) Temporary Assistance for Needy Families and COVID-19 Temporary Assistance for Needy Families (Assistance Listing #93.558) Federal Award Numbers 2020G996115, 2021G996115, SLFRP0145, NUK50CK000522, 2001NHLEA, 2001NHLIE4, 2001NH5C3, 2101NHLIEA, 2101NHE5C6, 2201NHLIEA, 2101NHLIE4, 2021G996115, 2021G990228, 2022G996115 Federal Award Year: 2019, 2020, 2021 U.S. Department of Transportation, U.S. Department of Treasury, U.S. Department of Health and Human Services Type of Finding: Significant Deficiency Prior Year Finding: None Statistically Valid Sample: No Criteria Title 2 U.S. Code of Federal Regulations Part 200 (2 CFR section 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements, section 200.510(b) states the auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with ? 200.502. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards 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 The State of New Hampshire (the State) entered into contracts and subrecipient grant agreements to assist with the administration of its federal awards. As part of the Schedule of Expenditures of Federal Awards (SEFA) preparation process, the Department of Administrative Services requested information from each Department related to federal expenditures made by federal program and the portion of those expenditures that were passed through to subrecipients. For the year ended June 30, 2022, the State reported approximately $3.5 billion in federal expenditures on the SEFA. Of the total expenditures reported, approximately $783 million was reported as amounts passed through to subrecipients. During our audit, we identified several instances where the State inaccurately reported the value of the amounts passed through to subrecipients for certain federal programs. Specifically, we noted the following: A. Federal Transit Cluster - The State reported subrecipient expenditures in the amount of $4,038,163 on the draft SEFA within the amounts provided to subrecipients column. During our testwork over procurement, we noted that 1 of 4 contracts selected for testwork was incorrectly identified as a contract. Upon further review and inquiry of management, the actual subrecipient expenditures for the year ended June 30, 2022 were $375,302, resulting in an overstatement of $3,662,861. This error was subsequently corrected on the final SEFA. B. Airport Improvement Program - The State reported subrecipient expenditures in the amount of $8,275,240 on the draft SEFA within the amounts provided to subrecipients column. Upon further review and inquiry of management, management determined the actual subrecipient expenditures for the year ended June 30, 2022 were $8,168,301, resulting in an overstatement of $106,939. This error was subsequently corrected on the final SEFA. C. Coronavirus State and Local Fiscal Recovery Funds ? The State reported subrecipient expenditures in the amount of $7,435,217 on the draft SEFA within the amounts provided to subrecipients column. During our testwork over subrecipient monitoring, we noted that for 5 of 10 subrecipients selected for testwork that the sample selection had been incorrectly identified as a subrecipient, resulting in an overstatement of $5,326,620. We further noted as part of our testwork over procurement, that 18 of 48 contracts selected for testwork had incorrectly been identified as a contract and instead of a subrecipient grant agreement. There were no expenditures associated with these agreements, and as a result, there was no impact on the amount reported on the SEFA within the amounts provided to subrecipients column. The error was subsequently corrected on the final SEFA to properly present $2,108,597 as passed through to subrecipient. D. Epidemiology and Laboratory Capacity for Infectious Diseases - The State reported subrecipient expenditures in the amount of $4,879,473 on the draft SEFA within the amounts provided to subrecipients column. During our testwork related to FFATA reporting, we noted that 1 of 4 items selected for testwork did not represent a tier-one award but instead was a contract. The impact on the amount reported on the SEFA within the amounts provided to subrecipients column was an overstatement of $8,400. The error was subsequently corrected on the final SEFA to properly present $4,871,073 as passed through to subrecipient. E. Temporary Assistance for Needy Families - The State did not report any subrecipient expenditures on the draft SEFA within the amounts provided to subrecipients column. Upon further review and inquiry of management, management determined the actual subrecipient expenditures for the year ended June 30, 2022 were $3,307,974, resulting in an understatement of $3,307,974. This error was subsequently corrected on the final SEFA. Cause The cause of the condition found is primarily due to insufficient controls related to the determination of vendor versus subrecipient to ensure the proper identification of subrecipients. Effect The effect of the condition found is that subrecipient expenditures were not accurately presented on the SEFA. Questioned Costs None. Recommendation We recommend that the State review its existing statewide internal controls over vendor versus subrecipient determination to ensure they are operating effectively to properly identify a vendor versus a subrecipient. This will ensure that the amounts presented as pass through as subrecipient expenditures on the SEFA are complete and accurate. Views of Responsible Officials The Department of Administrative Services (DAS) concurs. Financial management of individual federal awards is decentralized throughout state agencies which centralizes annually in the culmination of the State?s SEFA. During this process, each agency is required to complete a standardized SEFA analysis and reconciliation tool for review by the DAS prior to the incorporation of the data into the State?s SEFA. This process also includes an annual Single Audit training and update session organized by the DAS. Additionally, the DAS notes all contracts, including subawards, entered by state agencies over a designated threshold are required to be authorized by the State?s Legislative Fiscal Committee and the Governor and Executive Council. The DAS will examine each of these processes to identify additional control activities to improve the accuracy and completeness of the pass through element of the SEFA. Anticipated Completion Date: April 30, 2024 Contact: Steven Giovinelli, Federal Grants and Cost Allocation Administrator, Department of Administrative Services
Finding Reference Number: 2022-004 NH Governor?s Office of Emergency Relief and Recovery COVID-19 Coronavirus Relief Fund (Assistance Listing #21.019) Federal Award Numbers: Not Applicable Federal Award Year: 2020 U.S. Department of Treasury Compliance Requirement: Subrecipient Monitoring Type of Finding: Significant Deficiency Prior Year Finding: 2021-011 Statistically Valid Sample: No Criteria A pass-through entity must: 1. Clearly identify to the subrecipient required award information and applicable requirements described in 2 CFR section 200.331(a); 2. Evaluate each subrecipient?s risk of noncompliance for the purposes of determining the appropriate subrecipient monitoring related to the subaward (2 CFR section 300.331(b)); and 3. Issuing a management decision for audit findings pertaining to federal award provided to the subrecipient from the subrecipient as required by 2 CFR section 200.521. Additionally, 2 CFR section 200.303(a) states that non-federal entities must establish and maintain effective internal control over federal awards 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 Under the Coronavirus Relief Fund Program (CRF), the State of New Hampshire (the State) entered into various grant agreements with a third parties to provide program services under the CRF program. As part of our testwork over the subrecipient monitoring process, we noted the following breakdown of internal controls: A. The State communicates award information to the subrecipient through the approved grant agreement. During our testwork over the communication of award information, we noted instances where the State did not communicate all the required award information as outlined in 2 CFR section 200.331. Specifically, we noted the following: a. The indirect cost rate for the federal award, including if the de minimis rate is charged, was not included in each of the 7 grant agreements selected for testwork. b. Identification of whether the award is R&D was not included in 2 of 7 grant agreements selected for testwork. B. For 5 of 7 subrecipients selected for testwork, there was no evidence provided that a risk assessment had been performed for the subrecipient. While a risk assessment was not performed, we noted that for all 7 subrecipients selected for testwork that the State performed during the award monitoring procedures. C. The State did not appear to have policies and procedures over internal controls in place to determine if a subrecipient had a Uniform Guidance report if the amount awarded to the subrecipient under the CRF program was under the audit threshold of $750,000. Based on our independent review of uniform guidance submissions within the Federal Audit Clearinghouse, none of the 7 subrecipients selected for testwork had a submitted uniform guidance report, and as such, a management decision letter would not have been required to be submitted for the each of the 7 subrecipients. Cause The cause of the condition found is due to insufficient policies and internal controls to ensure that grant agreements contain the appropriate award notification information, that documented risk assessments are performed and that a comprehensive review to determine if subrecipients had a uniform guidance submitted regardless of the amount awarded under this federal award. Effect The effect of the condition found is that the State did not have sufficient internal controls in place in accordance with 2 CFR section 200.303(a)) and 200.332.(a). In addition, subrecipients could have had a uniform guidance report issued in which a management decision letter needed to be issued but as the Department does not evaluate this for subrecipient?s that were not granted more than $750,000, they would not be able to recognize the need for a management decision letter timely. Questioned Costs None. Recommendation We recommend that the State review its existing internal controls, policies, and procedures to ensure that the State complies with the provisions of 2 CFR section 200.332(a), 2 CFR section 200.332(b), and 2 CFR section 200.251. This would include ensuring that: 1. All required award information is communicated to subrecipients; 2. Documented risk assessments are performed over all subrecipients; and 3. All subrecipients are reviewed regardless of amount awarded to determine if a uniform guidance report was issued and if a management decision letter should be issued. View of Responsible Officials The State concurs in part with the findings and concurs in part with the recommendations. Given that CARES Act CRF is a funding source that is no longer eligible for use because program obligations were required to be entered into by December 31, 2021, and program expenditures complete by September 30, 2022, there are no ongoing CRF funded projects or programs. As a result, any corrective actions would relate to ensuring any other federal funding sources are achieving compliance requirements. With regard to condition A, the State partially concurs. Federal guidance concerning CARES Act CRF did not allow for charging indirect costs. That guidance indicated ?Payments from the Fund are not administered as part of a traditional grant program and the provisions of the Uniform Guidance, 2 CFR part 200, that are applicable to indirect costs do not apply. Recipients may not apply their indirect costs rates to payments received from the Fund.? Thus, awardees and recipients of funds were not permitted to charge indirect costs against CARES Act CRF. However, the state acknowledges inclusion of language specifically acknowledging the disallowance of indirect costs could have been included in the agreements. With regard to condition B, the State concurs. The four identified subrecipients were awardees of a program that was facilitated at the very end of CARES Act CRF eligibility for the period of performance. This program was run due to updated guidance by U.S. Treasury on December 14, 2021, that extended the deadline for expenditure of funds so long as obligations were entered into by December 31, 2021. That program largely resulted in direct beneficiary awards, but due to the nature of some expenditures awarded some entities received a subaward. Those subawards identified a brief timeline for project completion, between December 2021 and September 2022. Most projects were completed in February and March, with two of the subrecipients finalizing projects in September. Given the nature and timing of the program, those subawardees were closely monitored and regularly interacted with the State in order to receive reimbursement for eligible expenses and complete projects. The State can provide documentation of that monitoring and expense review. However, formal risk assessments were not initially done for those entities. Since then, the State has implemented policies and procedures that help ensure risk assessments are completed for all subrecipients, regardless of the nature of the program. With regard to condition C, the State concurs and has already implemented corrective actions to ensure procedures and policies are in place concerning Uniform Guidance Report review and the issuance of any necessary management decision letters to the extent required and where this deficiency could impact any other sources of federal funding. It is worth noting that the State in most cases has timely conducted risk assessments of subrecipients and reviewed relevant Uniform Guidance Reports, but its corrective action will result in better documentation of that process and protocol. Anticipated Completion Date: The corrective actions indicated above have already been implemented as of the date of this response. Contact Person: Steve Giovinelli and Chase Hagaman
Finding Reference Number: 2022-005 NH Governor?s Office of Emergency Relief and Recovery COVID-19 Emergency Rental Assistance Program (Assistance Listing #21.023) Federal Award Numbers ERA0012-ERA0435, ERAE0119 Federal Award Year: 2020 U.S. Department of Treasury Compliance Requirement: Reporting and Special Tests and Provisions ? ERA 1 Funds Redirection Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: None Statistically Valid Sample: No Criteria 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. ERA 2 expenditures and obligations reported in quarterly reports by the grantee are inputs to Treasury?s ERA 2 reallocation expenditure and obligation ratios. The reallocation expenditure ratio determines whether the grantee is subject to involuntary reallocation due to an insufficient ratio and the amount of excess funds subject to recapture by Treasury. Auditors should confirm the amounts reported as expended and obligated accurately capture the grantee?s housing activity at the time of submission, as reflected in a grantee?s award and/or financial systems, and that grantees receiving reallocated funds met the Treasury criteria. All ERA grantees must submit quarterly reports with reporting periods of one calendar quarter and several cumulative fields covering all activity from the date of award through the quarter close. These reports provide financial and performance data regarding grantee administration of their ERA projects and capture program design in addition to program status data elements. Quarterly reports are intended to capture standard financial and performance data, as well as detailed information on qualifying direct and indirect expenditures pursuant to the government-wide Federal Funding Accountability and Transparency Act (FFATA) reporting requirements and in accordance with Section 15011 of the CARES Act, as amended and interpreted in Treasury?s reporting and compliance guidance on Treasury.gov. 2 CFR section 334 required financial records, statistical records and all other non-federal entity records pertinent to a federal award to be retained for a period of 3 years from the date of submission of the final expenditure report. The two Monthly Reporting questions are included in the information collection for the Interim Quarterly Reports. Beginning with the monthly report for the April 1 through April 30, 2021, period of performance for ERA 1 generally due to Treasury by May 15, 2021, state, local and territorial grantees receiving ERA 1 awards submit monthly reports. For ERA 2, monthly reporting began with the June 1 through June 30, 2021 period of performance and reports were due to Treasury by July 15, 2021, or where otherwise extended in an approved authorization from EmergencyRentalAssistance@Treasury.gov. Grantees receiving ERA 1 and ERA 2 allocations later in the award cycle as evidenced by award or reallocation dates are not required to submit reports for periods not covered by the assistance agreement. Additionally, 2 CFR section 200.303(a) states 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 During our testwork over reporting and special tests and provisions, we noted the following: A. On a quarterly basis the New Hampshire Governor?s Office of Emergency Relief and Recovery (the Office) submits the required 1505-0266 quarterly federal reporting through the U.S. Treasury (Treasury) reporting portal. During our testwork over the quarterly reporting process, for 2 of 4 quarterly reports selected for testwork, we were unable to review a copy of the report submitted or the related supporting documentation and evidence of review and approval of the reports. As a result, we were unable to verify if the federal reports were complete and accurately submitted and properly approved in accordance with management?s internal control policies. B. On a monthly basis, the Office submits required federal reports to Treasury that are used by Treasury as part of its reallocation process. To compile the federal report, the Office obtains from its subrecipient the number of participating households that receive ERA assistance of any kind and the total amount of ERA funds expended by the ERA grantee to or for participating households on behalf of eligible households. During our review over the compilation of the monthly report, we noted that the Office does not perform any documented review procedures over the data submitted by the subrecipient to ensure the data is complete and accurate before the reports are submitted. As a result, while the monthly reports agreed to the data provided by the subrecipient, we are not able to determine if the data provided by the subrecipient was complete and accurate. Cause The cause of the condition found related to the quarterly reports was due to the Office not having policies and procedures to ensure that a copy of the federal report submitted is maintained along with the documentation to support the amounts reported and evidence that the report was reviewed and approved prior to submission. The Office anticipated being able to access the information directly from the US Treasury reporting portal however, changes were subsequently made to the portal that no longer allows the Office to download and view the report and related report data for prior quarters. The US Treasury did make changes to its portal in late March of 2023 which allowed the Office to access its prior issued reports but there was insufficient time for the auditor to test the accuracy of these reports. The cause of the condition found related to the monthly reports was due to the Office does not having formal procedures to document at a precision level evidence of review of the data, including the key line items, provided by the subrecipient. Per inquiry of management, we noted that the Office meets weekly with the subrecipient and as part of these meetings, the related data used for reporting purposes is discussed. However, there is no evidence such as meeting minutes or agendas maintained to validate that this review occurred at an appropriate precision level. Effect The effect of the condition found is that the Office submit quarterly and monthly reports that are used in the reallocation process that may not be complete and accurate. Data included within the quarterly reports include cumulative amount obligated by the grantee and the cumulative amount expended by the grantee may not be complete and accurate. Data included within the monthly reports include key line items as the Treasury?s guidance to qualify for receiving a reallocation payment for ERA 1 and grantees are subject to returning funds under reallocation where their expenditure for ERA 1 is less than the requirement in effect at the time, as detailed in the Treasury?s reallocation guidance. Questioned Costs None. Recommendation We recommend that the Office develop and implement written policies and procedures over the federal reporting process that includes: 1. Instructions on how to maintain and store filed reports and supporting documentation so that it is retained for its records. In addition to the retention of the report, the Office should also maintain written documentation of its process over reviewing the report for completeness and accuracy prior to submission to the federal government. 2. Written policies and procedures over its review of data submitted by the subrecipient that is utilized as the basis of federal reports to ensure that the data utilized is complete and accurate. The Office should ensure that its policies and procedures include guidelines that describe how the review is to be performed and documented to provide evidence that the review of the data has been completed. View of Responsible Officials Quarterly Reporting The State concurs in part with the condition and recommendation. A unique challenge with ERA reporting has been changes in the U.S. Treasury portal for that program, which have impacted the State?s ability to download and provide copies of past reports that have been submitted. In addition, this issue in the reporting portal has been inconsistent, as some previously submitted reports were made accessible by Treasury, while others were not, which resulted in the State being able to access some requisite materials but not others. The State did not have documented procedures to ?pull down? copies of reports it had submitted to Treasury because the State has otherwise been able to rely on access to its previously submitted reports within reporting portals in order to enable the testing required during audit for the relevant periods. Meaning, in the State?s experience with COVID-19 related federal funds reporting, it has been able to access and download past reports for purposes of audit. However, also noted above is that the Treasury portal was recently revised and updated to allow for accessing previously submitted ERA reports that were not otherwise available (the communication from Treasury acknowledging this change was provided by the State). However, the reporting portal change did not take place in time for the State?s auditors to reasonably conduct the necessary testing. The State did provide the data and materials it reported to Treasury for the relevant periods, but auditors were unable to test and validate that data because the State could not access and provide a copy of what was actually uploaded into the portal. Nevertheless, to avoid any such potential issues in the future, the State has already implemented a procedure that involves downloading copies of reports as soon as they are submitted and taking screenshots of portions of the portal where perceived necessary to support what the State has submitted to Treasury. This updated procedure will be memorialized in the program?s transaction processing memo during its next update. Monthly Reporting The State concurs in part but has already implemented related corrective action in line with the recommendation above. The State would also like to note that as part of the ERA reallocation process U.S. Treasury has relied on both quarterly and monthly reporting, and that the State has continued to engage in thorough monitoring of its subrecipient and receives regular reports from that subrecipient, including weekly, biweekly, and quarterly data, which also includes quality control reports. This is inclusive of the monthly reports that were required by U.S. Treasury at one time but no longer are. The State reviews and then discusses reports received at standing, calendared, weekly meetings with the subrecipient and often engages in e-mail correspondence concerning those reports, especially if any questions concerning the data provided arise. However, the State has acknowledged that its documentation of those weekly conversations needed to be more formally memorialized. During the current fiscal year, the State began providing agendas and summaries of topics discussed during the weekly check-ins and will ensure that the program?s transaction processing memo adequately documents this requirement and procedure. The very nature of this program and U.S. Treasury?s facilitation of it has required the State and its subrecipient to stay in close contact, make regular decisions on strategies and policies within the program, and closely consider data relative to it. Anticipated Completion Date Quarterly reporting - Corrective action relative to acquisition of submitted federal reports has already been implemented and this revised procedure will be memorialized in the transaction processing memo for the program during its next update in Q1 2023. Monthly Repotting - Corrective action relative to documentation of weekly meetings was already complete as of the State?s response to this finding, and the State will ensure that the transaction processing memo for the program reflects these measures during its next update in Q1 2023. Contact Person Chase Hagaman, Lisa Cota-Robles, and Emily Larson
Finding Reference Number: 2022-006 NH Governor?s Office of Emergency Relief and Recovery COVID-19 Homeowners Assistance Fund Program (Assistance Listing #21.026) Federal Award Numbers: HAFP-0190 Federal Award Year: 2021 U.S. Department of Treasury Compliance Requirement: Cash Management Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: None Statistically Valid Sample: No Criteria Pass-through entities must monitor cash drawdowns by their subrecipients to ensure that the time elapsing between the transfer of federal funds to the subrecipient and their disbursement for program purposes is minimized as required by the applicable cash management requirements in the federal award to the recipient (2 CFR section 200.305(b)(1)). Additionally, 2 CFR section 200.303(a) states 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 The State of New Hampshire Governor?s Office of Emergency Relief and Recovery (the Office) entered into a subrecipient grant agreement whereby the subrecipient is responsible for determining benefit eligibility as well as calculating the benefit amount that the participant is eligible to receive. During the year ended June 30, 2022, the Department passed through $49,250,000 to its subrecipient. Funds paid under this program were authorized to be paid in advance through a series of executive orders by the Governor?s Office to the subrecipient. While the Office properly advanced the funds, they did not monitor or assess at the time of payment what the subrecipient?s cash needs were to ensure that the Office sufficiently minimized the time elapsing between the transfer of federal funds to the subrecipient and their disbursement for program purposes for each of the 2 transactions selected for testwork. Cause The cause of the condition found is that the Office was authorized through executive orders to issue the advance payments to the subrecipient. Given this authorization, the Office management do not consider minimizing the time elapsing between the transfer of federal funds to the subrecipient and their disbursement compliance. Per inquiry of management, we noted that the Office meets weekly with the subrecipient and as part of these meetings, cash on hand at the subrecipient level is discussed. However, there is no evidence such as meeting minutes or agendas maintained to validate that this review occurred at an appropriate precision level. Effect The effect of the condition found is that the subrecipient could have excess cash on hand as the Office did not minimize the time elapsing between the transfer of federal funds to the subrecipient and their disbursement of funds for program purposes. Questioned Costs None. Recommendation We recommend that the Office develop and implement written policies and procedures relating to advancing funds to subrecipients to ensure that excess cash on hand at the subrecipient does not exceed 30 days and that its review over excess cash on hand is properly documented to provide evidence that it has been reviewed. View of Responsible Officials The State concurs in part with the premise of the findings identified, but it does not concur with the characterization of the Governor?s Office for Emergency Relief and Recovery (GOFERR), the process for authorizing the relevant subaward and relevant amendments, the nature of the subaward and amendments, or the recommended corrective action. Moreover, the full $49,250,000 identified in the finding was not provided to the subrecipient in one lump sum. The State was allocated $50,000,000 from U.S. Treasury for the purposes of designing and facilitating the State?s HAF program. The State received $5,000,000 from U.S. Treasury up front and received the remainder after approval of the State?s planned program. As a result, the State?s subrecipient received an initial subaward for administrative and planning purposes from within the initial $5,000,000 delivered to the State. The subrecipient was advanced only a portion of those initial funds and then was provided the remainder upon request and justification. A subsequent amendment to that subaward provided additional funds to the subrecipient as needed for the same purpose and as part of the U.S. Treasury required process of designing and then attaining approval for the State?s HAF program. The State ultimately received approval from U.S. Treasury for the State?s HAF program plan, which is a complex multi-faceted program that provides various forms of assistance to homeowners, and then received approval from State officials to launch the program. The State?s program is run entirely through a single subrecipient, New Hampshire Housing Finance Authority, which is the only entity of its kind as a statewide housing authority. This subrecipient facilitates a variety of larger-scale, federally funded housing programs. While developing the State?s HAF program and as it neared the launch date, the State began receiving preapplications through its subrecipient. Additionally, during this time, the State was facilitating its Emergency Rental Assistance (ERA) program, which has provided assistance to renters as opposed to homeowners and is facilitated by the same subrecipient of the State. Within the context of having received nearly 200 preapplications for the HAF program and witnessing a heavy and increasing demand in the rental assistance program, the decision was made to advance the remainder of the State?s HAF allocation ($45,000,000) to its subrecipient in order to provide prompt and adequate assistance, believing the program would experience high demand at the outset and funding shortfalls would be problematic for its success. Moreover, the amount of funds provided to the subrecipient was consistent with past advances to the same subrecipient under the ERA program, and as with prior delivery of funds, the subrecipient placed the funds in an appropriate account. However, demand for assistance did not unfold as anticipated due to the features of the program and the areas of need ultimately demonstrated by applicants after review and processing of initial applications. As part of the State?s monitoring protocols, and in part because of a lower initial expenditure rate than expected, the subrecipient began providing biweekly reports on the usage of funds, which the State has used as a measure of cash on hand. Moreover, the State also engages in standing, calendared, weekly calls with the subrecipient to discuss these reports. The State has provided documentation to support the process outlined above as well. Finally, as a result of the State?s remaining HAF allocation having already been provided to the subrecipient, the recommended corrective action is not feasible. However, the State acknowledges the need to more formally memorialize its review of the subrecipient?s cash on hand. As a result, the biweekly reports received and reviewed by the State will now include a specific section providing such information; review and discussion of that data will be incorporated into the weekly calls with the subrecipient, and the process and protocols will be documented in the State?s transaction processing memo for the program. Corrective Action Incorporation of cash on hand related data in biweekly reports received and reviewed by the State, documentation of that review as part of the weekly calls with subrecipient, and memorialization of the process and protocols in the State?s transaction processing memo for its HAF program. Anticipated Completion Date: Cash on hand data into biweekly reports and documentation of review said data as part of weekly calls with the subrecipient is being is actively being incorporated as of this response. The State will ensure that the transaction processing memo is updated with the requisite processes and protocols during the next update before the end of Q1 2023. Contact Persons: Chase Hagman, Lisa Cota-Robles, and Michele Zangri-Crean
Finding Reference Number: 2022-007 NH Governor?s Office of Emergency Relief and Recovery COVID-19 Homeowners Assistance Fund Program (Assistance Listing #21.026) Federal Award Numbers: HAFP-0190 Federal Award Year: 2021 U.S. Department of Treasury Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: None Statistically Valid Sample: No Criteria A pass-through entity must: 1. Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals (2 CFR sections 200.332(d) through (f). In addition to procedures identified as necessary based upon the evaluation of subrecipient risk or specifically required through the terms and conditions of the award, subaward monitoring must include following up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and other means; and 2. Issuing a management decision for audit findings pertaining to federal award provided to the subrecipient from the subrecipient as required by 2 CFR section 200.521. Additionally, 2 CFR section 200.303(a) states 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 The New Hampshire Governor?s Office of Emergency Relief and Recovery (the Office) entered into a subrecipient grant agreement whereby the subrecipient is responsible for determining benefit eligibility as well as calculating the benefit amount that the participant is eligible to receive. During the year ended June 30, 2022, the Department passed through $49,250,000 to its subrecipient. As part of our testwork over the subrecipient monitoring process, we noted the following: A. The Office obtains bi-weekly reports from the subrecipient that provides information related to cumulative cases, status of the case as well as geographic data surrounding the counties assisted. We selected 1 of the 3 bi-weekly reports received by the Office and noted that while the report was received, there was no documented evidence to support that the Office had reviewed the report as part of its monitoring procedures. B. The subrecipient has a quality control process in place whereby it selects samples of cases to ensure that the eligibility determination for the case was appropriate and there is appropriate documentation to substantiate the amount paid to the participant. The subrecipient submits a QC report to the Office summarizing the results of the review, including any items that require corrective action. We selected 2 of the 4 QC reports received by the Office during the audit period and noted that while the QC reports were received by the Office, there was no documented evidence to support that the Office had reviewed the QC report as part of its monitoring process. C. The Office obtains and reviews the subrecipients uniform guidance report on an annual basis. The Office currently does not have a process in place to track the date in which the audit report was reviewed. As such, we were unable to determine if the Office reviewed the uniform guidance report timely. Per review of the subrecipient uniform guidance report, there were no matters identified within the audit report that would require the Office to issue a management decision letter. D. As part of the Office?s federal reporting requirements, the Office obtains information directly from the subrecipient that is used to compile federal reports. The Department does not perform any documented monitoring procedures over the data submitted by the subrecipient to ensure that the following data used is by the Office within the report is complete and accurate: a. the number of unique homeowners that received assistance and subset that are classified as socially disadvantaged and 100 percent are median income or less b. the number homeowners and the amount of funding homeowners received, disaggregated by program design element are complete and accurate. Cause The cause of the condition found is due to insufficient procedures for ensuring monitoring activities performed are documented. Per inquiry of management, we noted that the Office meets weekly with the subrecipient and as part of these meetings, the bi-weekly reports, the QC reports and the data collected that is used as the basis for federal reporting are discussed. However, there is no evidence such as meeting minutes or agendas maintained to validate that this review occurred at an appropriate precision level. In addition, the review of the subrecipient?s uniform guidance report is documented along with its risk assessment process, which may not correspond with the actual receipt and review of the uniform guidance report. Effect The effect of the condition found is that the Office did not comply with 2 CFR section 200.332(d) through (f) and may not issue a management decision timely as required in accordance with 2 CFR section 200.521. Questioned Costs None. Recommendation We recommend that the Office formalize policies and procedures and implement the necessary internal controls to ensure that the Office complies with the provisions of CFR section 200.332(d) through (f) and 2 CFR section 200.251. This would include ensuring that: 1. During the award monitoring procedures are documented and any items requiring follow up or a corrective action are resolved timely and 2. Ensure that all uniform guidance reports are collected and reviewed timely so that a management decision letter can be issued within the time period required by federal regulations. 3. Data collected from the subrecipient used to compile federal reports is monitored to ensure that the data is complete and accurate. View of Responsible Officials The State concurs in part with the findings and recommended action. The State?s HAF program fully launched in March 2022 of the Fiscal Year under review, which ended June 30, 2022. On the whole, a more robust subrecipient monitoring framework and process is being implemented during the current Fiscal Year for this program. However, the State has engaged in thorough monitoring of its subrecipient, receiving and reviewing recurring biweekly and quarterly reports. As noted, discussion of those reports takes place during weekly conversations with the subrecipient. However, the State has acknowledged that it needs to more formally memorialize the substance of such conversations to demonstrate such review. This change in protocol and procedure has already been implemented during this Fiscal Year. The State has also engaged in a subrecipient risk assessment and review of audited financials for the purposes of uniform guidance report review. However, its process and protocols will be revised to better demonstrate when such reviews/assessments take place moving forward. Moreover, the State relies on its subrecipient to facilitate the State?s HAF program, which includes collecting and processing data, as outlined in the program?s policy guide manual. A key feature of that process is a detailed quality control protocol. Additionally, during this Fiscal Year, the State engaged in a robust, on-site review of the subrecipient?s quality control protocols and methods, including applicant file review, and found them satisfactory and reliable. The State also works closely with its subrecipient during the quarterly and annual U.S. Treasury reporting processes, which involves reviewing and analyzing data provided by the subrecipient for reporting purposes. This review and the resulting communications can result in corrections to data prior to submission to U.S. Treasury. Corrective Action and Anticipated Completion Date: As of this response, the State has already implemented several corrective actions that align with the recommendations above, including documentation of report review during weekly calls with the subrecipient, timestamping procedures for uniform guidance report review, and on site, detailed review of quality control protocols that involved applicant file review. The State will further ensure that such updated protocols and procedures are memorialized in the Programs? transaction processing memo during its Q1 2023 update, including any protocols necessary to ensure timely issuance of any required management decisions relative to the subrecipient. Contact Person: Chase Hagaman, Lisa Cota-Robles, and Michele Zangri-Crean
Finding Reference Number: 2022-002 NH Department of Administrative Services Federal Transit Cluster and COVID-19 Federal Transit Cluster (Assistance Listing #20.507and #20.526) Airport Improvement Program and COVID-19 Airport Improvement Program (Assistance Listing #20.106) COVID-19 Coronavirus State and Local Fiscal Recovery Funds (Assistance Listing #21.027) Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) and COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (Assistance Listing #93.323) Temporary Assistance for Needy Families and COVID-19 Temporary Assistance for Needy Families (Assistance Listing #93.558) Federal Award Numbers 2020G996115, 2021G996115, SLFRP0145, NUK50CK000522, 2001NHLEA, 2001NHLIE4, 2001NH5C3, 2101NHLIEA, 2101NHE5C6, 2201NHLIEA, 2101NHLIE4, 2021G996115, 2021G990228, 2022G996115 Federal Award Year: 2019, 2020, 2021 U.S. Department of Transportation, U.S. Department of Treasury, U.S. Department of Health and Human Services Type of Finding: Significant Deficiency Prior Year Finding: None Statistically Valid Sample: No Criteria Title 2 U.S. Code of Federal Regulations Part 200 (2 CFR section 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements, section 200.510(b) states the auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with ? 200.502. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards 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 The State of New Hampshire (the State) entered into contracts and subrecipient grant agreements to assist with the administration of its federal awards. As part of the Schedule of Expenditures of Federal Awards (SEFA) preparation process, the Department of Administrative Services requested information from each Department related to federal expenditures made by federal program and the portion of those expenditures that were passed through to subrecipients. For the year ended June 30, 2022, the State reported approximately $3.5 billion in federal expenditures on the SEFA. Of the total expenditures reported, approximately $783 million was reported as amounts passed through to subrecipients. During our audit, we identified several instances where the State inaccurately reported the value of the amounts passed through to subrecipients for certain federal programs. Specifically, we noted the following: A. Federal Transit Cluster - The State reported subrecipient expenditures in the amount of $4,038,163 on the draft SEFA within the amounts provided to subrecipients column. During our testwork over procurement, we noted that 1 of 4 contracts selected for testwork was incorrectly identified as a contract. Upon further review and inquiry of management, the actual subrecipient expenditures for the year ended June 30, 2022 were $375,302, resulting in an overstatement of $3,662,861. This error was subsequently corrected on the final SEFA. B. Airport Improvement Program - The State reported subrecipient expenditures in the amount of $8,275,240 on the draft SEFA within the amounts provided to subrecipients column. Upon further review and inquiry of management, management determined the actual subrecipient expenditures for the year ended June 30, 2022 were $8,168,301, resulting in an overstatement of $106,939. This error was subsequently corrected on the final SEFA. C. Coronavirus State and Local Fiscal Recovery Funds ? The State reported subrecipient expenditures in the amount of $7,435,217 on the draft SEFA within the amounts provided to subrecipients column. During our testwork over subrecipient monitoring, we noted that for 5 of 10 subrecipients selected for testwork that the sample selection had been incorrectly identified as a subrecipient, resulting in an overstatement of $5,326,620. We further noted as part of our testwork over procurement, that 18 of 48 contracts selected for testwork had incorrectly been identified as a contract and instead of a subrecipient grant agreement. There were no expenditures associated with these agreements, and as a result, there was no impact on the amount reported on the SEFA within the amounts provided to subrecipients column. The error was subsequently corrected on the final SEFA to properly present $2,108,597 as passed through to subrecipient. D. Epidemiology and Laboratory Capacity for Infectious Diseases - The State reported subrecipient expenditures in the amount of $4,879,473 on the draft SEFA within the amounts provided to subrecipients column. During our testwork related to FFATA reporting, we noted that 1 of 4 items selected for testwork did not represent a tier-one award but instead was a contract. The impact on the amount reported on the SEFA within the amounts provided to subrecipients column was an overstatement of $8,400. The error was subsequently corrected on the final SEFA to properly present $4,871,073 as passed through to subrecipient. E. Temporary Assistance for Needy Families - The State did not report any subrecipient expenditures on the draft SEFA within the amounts provided to subrecipients column. Upon further review and inquiry of management, management determined the actual subrecipient expenditures for the year ended June 30, 2022 were $3,307,974, resulting in an understatement of $3,307,974. This error was subsequently corrected on the final SEFA. Cause The cause of the condition found is primarily due to insufficient controls related to the determination of vendor versus subrecipient to ensure the proper identification of subrecipients. Effect The effect of the condition found is that subrecipient expenditures were not accurately presented on the SEFA. Questioned Costs None. Recommendation We recommend that the State review its existing statewide internal controls over vendor versus subrecipient determination to ensure they are operating effectively to properly identify a vendor versus a subrecipient. This will ensure that the amounts presented as pass through as subrecipient expenditures on the SEFA are complete and accurate. Views of Responsible Officials The Department of Administrative Services (DAS) concurs. Financial management of individual federal awards is decentralized throughout state agencies which centralizes annually in the culmination of the State?s SEFA. During this process, each agency is required to complete a standardized SEFA analysis and reconciliation tool for review by the DAS prior to the incorporation of the data into the State?s SEFA. This process also includes an annual Single Audit training and update session organized by the DAS. Additionally, the DAS notes all contracts, including subawards, entered by state agencies over a designated threshold are required to be authorized by the State?s Legislative Fiscal Committee and the Governor and Executive Council. The DAS will examine each of these processes to identify additional control activities to improve the accuracy and completeness of the pass through element of the SEFA. Anticipated Completion Date: April 30, 2024 Contact: Steven Giovinelli, Federal Grants and Cost Allocation Administrator, Department of Administrative Services
Finding Reference Number: 2022-008 NH Governor?s Office of Emergency Relief and Recovery COVID-19 Coronavirus State and Local Fiscal Recovery Funds (Assistance Listing #21.027) Federal Award Numbers: SLFRP0145 Federal Award Year: 2021 U.S. Department of Treasury Compliance Requirement: Subrecipient Monitoring Type of Finding: Significant Deficiency Prior Year Finding: None Statistically Valid Sample: No Criteria A pass-through entity must: 1. Clearly identify to the subrecipient required award information and applicable requirements described in 2 CFR section 200.332(a); 2. Evaluate each subrecipient?s risk of noncompliance for the purposes of determining the appropriate subrecipient monitoring related to the subaward (2 CFR section 300.332(b)); 3. Issuing a management decision for audit findings pertaining to federal award provided to the subrecipient from the subrecipient as required by 2 CFR section 200.521. Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards 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 As part of the Coronavirus State and Local Fiscal Recovery Funds program, the State of New Hampshire (the State) entered into grant agreements with local entities to support allowable activities under the federal program. During the year ended June 30, 2022, the State passed through $2,108,597 to subrecipients. As part of our testwork over the subrecipient monitoring process, we noted the following breakdown of internal controls: A. The State communicates award information to subrecipients through the approved grant agreement. Per review of the grant agreement, for 5 of the 10 subrecipients selected for testwork, the State did not communicate all the required award information as outlined in 2 CFR section 200.332. Specifically, the following elements were not communicated: a. Indirect cost rate for federal awards (including if the deminimus rate is charged per 2 CFR section 200.414) was not communicated for 5 of 10 subrecipients selected for testwork. b. Identification of whether the award is R&D was not communicated for 3 of 10 subrecipients selected for testwork. A. For 2 of 10 subrecipients selected for testwork, there was no documented risk assessment performed over the subrecipient. The State indicated that they had previous experience with these 2 subrecipients and based upon the previous relationship a formal risk assessment was not necessary. As part of our audit, we inquired as to whether a risk assessment was performed in connection with other federal awards that were granted to these entities, but a risk assessment was not able to be provided. While a risk assessment was not performed, we noted that for all each of these 2 subrecipients that the State performed during the award monitoring procedures. B. The State did not appear to have policies and procedures in place to determine if a subrecipient had a Uniform Guidance report if the amount awarded to the subrecipient under this program was under the audit threshold of $750,000. Based on our independent review of uniform guidance submissions within the Federal Audit Clearinghouse, none of the 10 subrecipients selected for testwork had a submitted uniform guidance report, and as such, a management decision letter would not have been required to be submitted for the each of the 10 subrecipients. Cause The cause of the condition found is primarily due to insufficient internal controls and procedures to ensure that award identification information is properly communicated, that risk assessments are performed to ensure sufficient during the awarded monitoring is performed and that all subrecipients are reviewed to determine if a uniform guidance audit was issued regardless of amount awarded to the subrecipient. Given the nature of this program, several Departments within the State entered into subrecipient grants resulting in a decentralized process. Not all Departments within the State are experienced with subrecipient relationships and may not have had developed policies to comply with subrecipient monitoring requirements. Effect The effect of the condition found is that the State did not have sufficient internal controls in place in accordance with 2 CFR section 200.303(a)) and 200.332.(a). In addition, subrecipients could have had a uniform guidance report issued in which a management decision letter needed to be issued but as the Department does not evaluate this for subrecipient?s that were not granted more than $750,000, they would not be able to recognize the need for a management decision letter timely. Questioned Costs None. Recommendation We recommend that the State review its existing internal controls, policies, and procedures to ensure that the State complies with the provisions of 2 CFR section 200.332(a), 2 CFR section 200.332(b), and 2 CFR section 200.251. This would include ensuring that: 1. All required award information is communicated to subrecipients; 2. Documented risk assessments are performed over all subrecipients; and 3. All subrecipients are reviewed regardless of amount awarded to determine if a uniform guidance report was issued and if a management decision letter should be issued. View of Responsible Officials The State largely concurs with the findings and recommendations and has either implemented procedures to address the identified conditions already or will do so. With regard to condition A(a) and (b), although the State illustrated that it includes clauses related to allowed costs in its subawards, including direct and indirect costs, it will work to ensure that agencies entering into such agreements clearly indicate the terms required by Uniform Guidance, including permitted indirect cost rates and whether the award is for R&D. With regard to condition B, the State agrees that risk assessments should have been completed and has since implemented a framework to help ensure that agencies are more consistently conducting and documenting subrecipient risk assessments. With regard to condition C, the State concurs and has already implemented an agency-wide framework to help ensure procedures and policies are in place concerning Uniform Guidance Report review and the issuance of any necessary management decision letters, to the extent required. It is worth noting that the State in most cases has timely conducted risk assessments of subrecipients and reviewed relevant Uniform Guidance Reports, but its corrective actions will result in better documentation and more consistent and timelier follow through. Anticipated Completion Date: The corrective actions indicated above relative to conditions B and C have already been implemented as of the date of this response. The State will work to address Condition A before the end of the current Fiscal Year. Contact Person: Chase Hagaman and Steve Giovinelli
Finding Reference Number: 2022-009 NH Governor?s Office of Emergency Relief and Recovery COVID-19 Coronavirus State and Local Fiscal Recovery Funds (Assistance Listing #21.027) Federal Award Numbers: SLFRP0145 Federal Award Year: 2021 U.S. Department of Treasury Compliance Requirement: Suspension and Debarment Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: None Statistically Valid Sample: No Criteria Prior to entering into subawards and contracts with award funds, recipients must verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded pursuant to 31 CFR section 19.300. Non-federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. ?Covered transactions? include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220. All non-procurement transactions entered into by a pass-through entity (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR section 180.215. Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards 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 During our testwork over suspension and debarment, we noted the following as of the year ending June 30, 2022: A. For 9 of 48 items selected for testwork we associated with statewide consulting contracts. Based on discussions with the New Hampshire Department of Administrative Services, they were unaware of any disbarment provisions for Professional Engineers, Registered Architects, or their consulting firms. As a result, we found no evidence that a suspension and debarment certification had been obtained from the contractor or that an independent search of SAM.gov was performed. B. For 10 of 48 items selected for testwork, the State entered into a grant agreement with municipalities that provided funds for the purchase of equipment. The State indicated that these agreements represented direct beneficiary awards as part of the Locality Equipment Purchase Program and as the municipality was a direct beneficiary, suspension and debarment checks were not required. In reviewing 31 CFR section 19.300 we were unable to validate that these subrecipients were exempt from suspension and debarment requirements. C. For 2 of 48 items selected for testwork, the contract did not include a suspension and debarment certification and the entity was not included in SAM.gov. As a result, it is unclear if these entities were suspended or debarred from receiving federal funds. Cause The cause of the condition found is primarily due to insufficient internal controls and procedures to ensure that for all covered transactions the State determines if the entity covered has been suspended or debarred. Effect The effect of the condition found is that the funds could be paid to an entity that has been suspended or debarred and costs paid to the entity would be unallowable. Questioned Costs Not determinable. Recommendation We recommend that the State review its existing policies and procedures related to suspension and debarment and ensure that all covered transactions with entities are properly reviewed to ensure that the entity has not been suspended and debarred. View of Responsible Officials The State concurs. The State will review and strengthen existing policies and procedures related to suspension and debarment to improve compliance. Anticipated Completion Date: December 2023 Contact Person: Chase Hagaman and Steven Giovinelli
Finding Reference Number: 2022-010 NH Department of Business and Economic Affairs COVID-19 State Small Business Credit Initiative Technical Assistance Grant Program (Assistance Listing #21.031) Federal Award Numbers: NOI-0000178 Federal Award Year: 2022 U.S. Department of Treasury Compliance Requirement: Procurement and Suspension and Debarment Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: None Statistically Valid Sample: No Criteria Non-Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. ?Covered transactions? include those procurement contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220. All non-procurement transactions entered into by a recipient (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR section 180.215. When a non-Federal entity enters into a covered transaction with an entity at a lower tier, the non-Federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the Excluded Parties List System (EPLS) maintained by the General Services Administration (GSA) and available at https://www.sam.gov/portal/public/SAM/ (Note: EPLS is no longer a separate system; however, the OMB guidance and agency implementing regulations still refer to it as EPLS), (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR section 180.300). Additionally, 2 CFR section 200.303(a) states 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 During the year ended June 30, 2022, we noted that the New Hampshire Department of Business and Economic Affairs (the Department) passed through funds to a subrecipient in the amount of $19,661,597. As part of our testwork over suspension and debarment, we noted the Department was unable to provide documentation to support it had verified whether the single subrecipient it had entered into a grant agreement with was suspended or debarred. Based on our review of the System for Award Management (SAM) Exclusion?s website, the subrecipient was not included within the exclusion list indicating that they had been suspended or debarred. Cause The cause of the condition found was the result of the Department being unaware that the agreement they entered into was a subrecipient relationship and that they were required to document that they verified the subrecipient was not suspended or debarred. Effect The effect of the condition found is that the Department could have entered into an agreement with a subrecipient that had been suspended or debarred from receiving federal funds and would not have the necessary internal controls and procedures to identify the suspended or debarred vendor timely. Additionally, the Department was not in compliance with 2 CFR section 180.300. Questioned Costs None. Recommendation We recommend that the Department review its existing policies, procedures, and related internal controls to ensure signed suspension and debarment certifications are in place or the excluded parties listing is reviewed prior to entering a covered transaction with vendors. The Department should also consider whether procedures should be implemented to independently review the System for Award Management Exclusions website to verify if a vendor has been suspended or debarred. View of Responsible Officials The Department acknowledges the misinterpretation of the agreement as a subaward has led to a failure to comply with 2 CFR section 180. Underlying this misinterpretation was the Department?s failure to differentiate between entering into agreements with other state agencies and entities recognized as component units of state government such as the NH Business Finance Authority; noting suspension and debarment policies and procedures do not apply to agreements between state agencies. Accordingly, the Department will review existing policies and procedures related to suspension and debarment certifications to ensure agreements with component units of state government are properly considered. Anticipated Completion Date: June 30, 2023 Contact Person: Taylor Caswell
Finding Reference Number: 2022-011 NH Department of Business and Economic Affairs COVID-19 State Small Business Credit Initiative Technical Assistance Grant Program (Assistance Listing #21.031) Federal Award Numbers: NOI-0000178 Federal Award Year:2022 U.S. Department of Treasury U.S. Department of Health and Human Services Compliance Requirement: Reporting Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: None Statistically Valid Sample: No Criteria Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252, hereafter referred as the ?Transparency Act? that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards 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 As part of the State Small Business Credit Initiative Technical Assistance Grant Program (SSBCI), the New Hampshire Department of Business and Economic Affairs (the Department) entered into a Memorandum of Understanding with a subrecipient that met the requirements of a first tier subaward under the Transparency Act and as such a FFATA report was required to be filed. During the period ending June 30, 2022, the Department did not file the required FFATA report. Cause The cause of the condition found was the result of the Department being unaware that the agreement they entered was a subrecipient relationship and that they were required to submit a FFATA report. Effect The effect of the condition found is that the Department did not comply with the reporting provisions of the Transparency Act. Questioned Costs None. Recommendation We recommend that the Department implement internal controls, policies, and procedures to ensure that all required FFATA reports are filed and filed timely for all subrecipient grant agreements that meet the definition of a first tier subaward. View of Responsible Officials The Department acknowledges the misinterpretation of the agreement as a subaward has led to a failure to comply with 2 CFR 170. Underlying this misinterpretation was the Department?s failure to differentiate between entering into agreements with other state agencies and entities recognized as component units of state government such as the NH Business Finance Authority; noting FFATA reporting would not apply to agreements between state agencies. Accordingly, the Department will review existing policies and procedures related to FFATA reporting to ensure agreements with component units of state government are properly considered and reported. Anticipated Completion Date: June 30, 2023 Contact Person: Taylor Caswell
Finding Reference Number: 2022-012 NH Department of Business and Economic Affairs COVID-19 State Small Business Credit Initiative Technical Assistance Grant Program (Assistance Listing #21.031) Federal Award Numbers: NOI-0000178 Federal Award Year: 2022 U.S. Department of Treasury Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: None Statistically Valid Sample: No Criteria In accordance with 2 CFR section 200.1, a subrecipient is an entity, usually but not limited to non-federal entities, that receives a subaward from a pass-through entity to carry out part of a federal award; but does not include an individual that is a beneficiary of such award. A pass-through entity must clearly identify to the subrecipient required award information and applicable requirements described in 2 CFR section 200.332(a). The following items are required to be communicated: a. Subrecipient name (which must match the name associated with its unique entity identifier); b. Subrecipient's unique entity identifier; c. Federal Award Identification Number (FAIN); d. Federal Award Date (see ? 200.39 Federal award date) of award to the recipient by the Federal agency; e. Subaward Period of Performance Start and End Date; f. Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; g. Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity including the current obligation; h. Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; i. Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); j. Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; k. CFDA Number and Name; the pass-through entity must identify the dollar amount made available under each Federal award and the CFDA number at time of disbursement; l. Identification of whether the award is R&D; and m. Indirect cost rate for the Federal award (including if the de minimis rate is charged per ? 200.414 Indirect (F&A) costs). Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards 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 As part of the State Small Business Credit Initiative Technical Assistance Grant Program (SSBCI), the New Hampshire Department of Business and Economic Affairs (the Department) entered into a Memorandum of Understanding (MOU) with a subrecipient that passed through all programmatic and financial responsibilities of the federal award to the subrecipient. The total amount of funds passed through during the period ending June 30, 2022 was $19,661,597. During our review of the MOU, the Department did not communicate any of the required award information outlined within 2 CFR 200.332(a). Cause The cause of the condition found was the result of the Department being unaware that the agreement they entered was a subrecipient relationship and that they were required to communicate the required award information contained within 2 CFR 200.332(a). Effect The effect of the condition found is that the Department did not comply with 2 CFR section 200.332(a). Questioned Costs None. Recommendation We recommend that the Department review its existing internal controls, policies, and procedures to ensure that the Department complies with the provisions of 2 CFR section 200.332(a) by ensuring that all required award information is communicated to subrecipients. View of Responsible Officials The Department acknowledges the misinterpretation of the agreement as a subaward has led to a failure to comply with 2 CFR section 200.332(a). Underlying this misinterpretation was the Department?s failure to differentiate between entering into agreements with other state agencies and entities recognized as component units of state government such as the NH Business Finance Authority; noting agreements between state agencies would not require such compliance. Accordingly, the Department will review existing policies and procedures related to subawarding and subrecipient monitoring to ensure agreements with component units of state government are properly considered. Additionally, the Department will amend the existing agreement to ensure required award information is communicated and ensure all other subrecipient monitoring protocols are applied to the subaward. Anticipated Completion Date: June 30, 2023 Contact Person: Taylor Caswell
Finding Reference Number: 2022-013 NH Department of Education Title I Grants to Local Educational Agencies (Title I, Part A of ESEA (Assistance Listing #84.010)) Federal Award Numbers: S010A200029, S010A210029 Federal Award Year: 2021, 2022 U.S. Department of Education Compliance Requirement: Reporting Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: 2021-013 Statistically Valid Sample: No Criteria Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252, hereafter referred as the ?Transparency Act? that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards 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 During the year ended June 30, 2022, we noted the New Hampshire Department of Education (the Department) passed through $42,672,742 in Title I Grants to Local Educational Agencies funds to subrecipients (LEAs). During our testwork over FFATA reporting at the Department for Title I Grants, we selected 60 FFATA reports for testing and noted none were reported. Specifically, we noted the following: See Schedule of Findings and Questioned Costs for Chart/Table Cause The cause of the condition found is due to a lack of policies and procedures, including internal controls, in place to ensure timely and accurate FFATA reporting. Effect The effect of the condition found is that the Department did not comply with the Transparency Act. Questioned Costs None. Recommendation We recommend that the Department implement policies and procedures which include internal controls across the Department programs to which FFATA reporting is applicable, to ensure timely and accurate reporting to the FSRS system to ensure compliance with the Transparency Act reporting requirements. View of Responsible Officials DLS has implemented a procedure across all ESF and ESEA programs to ensure timely and accurate reporting. DLS has also partnered with GSA to resolve issues within the FSRS (FFATA) system, however, there seems to be many technical issues on their end that their developers are currently working through. At the time of this finding, the technical issue on GSA?s side hasn?t been resolved. The procedure includes a flow chart, PowerPoint presentation, FAQ document, and process. Additionally, there have been numerous training opportunities both in person and online across the Division to train as many stakeholders as possible in the reporting and monitoring of FFATA to ensure timeliness and accuracy. In-person and online trainings were held on 01/04/23, 01/26/23, and 02/06/23. The United States Department of Education also recently held a FFATA webinar on 01/18/2023, which all ESF and ESEA program personnel involved in FFATA reporting where required to attend. Anticipated Completion Date: 02/06/2023 Contact Person: Jessica Lescarbeau, Bureau Administrator and Lindsey Labonville, Compliance Administrator
Finding Reference Number: 2022-014 NH Department of Education Special Education Cluster (Assistance Listing #84.027 and #84.173) Federal Award Numbers: H027A210103, H173A210109, H027A180103, H173A180109 Federal Award Year: 2021, 2022 U.S. Department of Education Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: None Statistically Valid Sample: No Criteria A pass-through entity must clearly identify to the subrecipient required award information and applicable requirements described in 2 CFR section 200.332(a); Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards 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 During the year ended June 30, 2022, the New Hampshire Department of Education (the Department) passed through $50,310,796 of federal funding to 174 subrecipients. As part of our testing related subrecipient monitoring, we noted that the Department communicates to subrecipients through the Grant Award Notifications (GANs). Per review of the GAN, we noted the following: A. For 44 of 44 subrecipients selected for testwork, the Department did not communicate the federal award identification number. B. For 15 of 44 subrecipients selected for testwork, the Department did not communicate the full award amount. Instead, the Department only communicated the subrecipients first installment amount entered into Grant Management System (GMS) which is a portion of the subrecipient?s total federal funding allocation. Cause The cause of the condition found was primarily due to breakdown of internal controls to ensure that the Grant Award Notification sent to subrecipients includes all required award data elements, including federal award identification number and full award amount. Effect The effect of the condition found is that the Department may not be in compliance with 2 CFR section 200.332(a)(1). Questioned Costs Not determinable. Recommendation We recommend that the Department review its existing policies and procedures over subrecipient monitoring award identification requirements and revise procedures and internal controls to ensure that information described in 2 CFR section 200.332(a)(1) is clearly identified to the subrecipient at the time of subaward (or subsequent subaward modification). View of Responsible Officials NHED concurs with the finding identified in section A. This was an oversight on the part of NHED, and a process has been implemented to ensure that when the GAN template is generated, there is a review by 2 separate staff members to ensure all required elements on the GAN are complete. NHED concurs with the finding identified in Section B. The previous Division Director of Learner Support, without understanding the unintended consequences, required that the IDEA allocations be uploaded in separate installments instead of including the full year award amount. This led to a GAN generation that included only the first installment. This procedure has since been corrected and NHED is now uploading the full year allocation amount in GMS, this will then generate a GAN that reflects the full year grant amount. If a reallocation does occur, there is a review by 2 separate staff members to ensure that the amount is verified and that a new GAN is manually generated to include that verified amount, and then the GAN is reissued to the recipient. Anticipated Completion Date: Already completed Contact Person: Lindsey Labonville