2022-048: U.S. Department of Health and Human Services Low-Income Home Energy Assistance, 93.568 Eligibility Material Weakness in Internal Control over Compliance Grant Award Number: Affects all grant awards included under assistance listing 93.568 on the Schedule of Expenditures of Federal Awards. Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) section 200.303 provides that non-federal entities must establish and maintain effective internal control that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. The Low-Income Home Energy Assistance State Plan (State Plan) provides for internal controls related to beneficiary case reviews, in part, as follows: Supervisors are required to complete a set number of case reviews per worker per month to monitor staff performance. Trainees and staff with performance issues are subject to 100% review prior to the posting of benefits. The Program Manager reviews a subset of the review completed by the supervisors to ensure they are adequately identifying and addressing performance issues. Condition: Supervisor case reviews were not performed in accordance with the State Plan. Cause: The Nevada Division of Welfare and Supportive Services (DWSS) did not have adequate internal controls to ensure beneficiary case review policies were followed due to supervisory retirements in which the positions were not refilled in a timely manner. Effect: Inaccurate eligibility or benefit determinations may be established and not detected by DWSS. Questioned Costs: None Context/Sampling: We examined a listing of beneficiary case reviews performed for the entire year. A total of 20 non trainee reviews were performed out of approximately 396, and only two months out of the year were performed for trainee reviews that were required to be performed in accordance with the State Plan. Repeat Finding from Prior Year: Yes – prior year finding 2021-047. Recommendation: We recommend DWSS enhance internal controls to ensure beneficiary case review policies are followed. Views of Responsible Officials: The Nevada Division of Welfare and Supportive Services agrees with this finding.
2022-047: U.S. Department of Health and Human Services Low-Income Home Energy Assistance, 93.568 Cash Management Significant Deficiency in Internal Control over Compliance Grant Award Number: Affects all grant awards included under assistance listing 93.568 on the Schedule of Expenditures of Federal Awards. Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) section 200.303 provides that non-federal entities must establish and maintain effective internal control 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: A reimbursement request was not reviewed and approved by an individual independent of the preparation of the request. Cause: The Nevada Division of Welfare and Supportive Services (DWSS) did not have adequate internal controls to ensure all reimbursement requests were reviewed and approved in accordance with the Division’s internal control policy. Effect: Inaccurate reimbursement requests may occur and not detected by DWSS timely. Questioned Costs: None Context/Sampling: A nonstatistical sample of 14 reimbursement requests out of a population of 68 was selected for testing. One reimbursement request did not have the evidence of review and approval in accordance with DWSS’s internal control policy. Repeat Finding from Prior Year: No Recommendation: We recommend DWSS enhance internal controls to ensure all reimbursement requests are reviewed and approved in accordance with the Division’s internal control policy. Views of Responsible Officials: The Nevada Division of Welfare and Supportive agrees with this finding.
2022-048: U.S. Department of Health and Human Services Low-Income Home Energy Assistance, 93.568 Eligibility Material Weakness in Internal Control over Compliance Grant Award Number: Affects all grant awards included under assistance listing 93.568 on the Schedule of Expenditures of Federal Awards. Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) section 200.303 provides that non-federal entities must establish and maintain effective internal control that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. The Low-Income Home Energy Assistance State Plan (State Plan) provides for internal controls related to beneficiary case reviews, in part, as follows: Supervisors are required to complete a set number of case reviews per worker per month to monitor staff performance. Trainees and staff with performance issues are subject to 100% review prior to the posting of benefits. The Program Manager reviews a subset of the review completed by the supervisors to ensure they are adequately identifying and addressing performance issues. Condition: Supervisor case reviews were not performed in accordance with the State Plan. Cause: The Nevada Division of Welfare and Supportive Services (DWSS) did not have adequate internal controls to ensure beneficiary case review policies were followed due to supervisory retirements in which the positions were not refilled in a timely manner. Effect: Inaccurate eligibility or benefit determinations may be established and not detected by DWSS. Questioned Costs: None Context/Sampling: We examined a listing of beneficiary case reviews performed for the entire year. A total of 20 non trainee reviews were performed out of approximately 396, and only two months out of the year were performed for trainee reviews that were required to be performed in accordance with the State Plan. Repeat Finding from Prior Year: Yes – prior year finding 2021-047. Recommendation: We recommend DWSS enhance internal controls to ensure beneficiary case review policies are followed. Views of Responsible Officials: The Nevada Division of Welfare and Supportive Services agrees with this finding.
2022-063: U.S. Department of Health and Human Services Opioid STR, 93.788 Earmarking Significant Deficiency in Internal Control over Compliance Grant Award Number: Affects all grant awards included under assistance listing 93.788 on the Schedule of Expenditures of Federal Awards. Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) section 200.303 provides that non-federal entities must establish and maintain effective internal control that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. The grant agreements provide that no more than five percent of the total grant award may be used for administrative and infrastructure development costs. In addition, no more than two percent of the total grant award may be used for data collection and reporting. Condition: The Nevada Division of Public and Behavioral Health (DPBH) did not have evidence of monitoring administrative, infrastructure development, data collection, and reporting costs to ensure they did not exceed the maximum allowable. Cause: DPBH did not have internal controls to provide for the monitoring of earmarking requirements. Effect: Costs may be expended above the maximum allowable. Questioned Costs: None Context/Sampling: No sampling was performed; earmarking requirements were tested in total. DPBH did not exceed the maximum allowable spending; however, there was no evidence that the earmarking requirement was actively monitored. Repeat Finding from Prior Year: No Recommendation: We recommend DPBH implement internal controls to provide for the monitoring of earmarking requirements. Views of Responsible Officials: The Nevada Division of Public and Behavioral Health agrees with this finding.
2022-065: U.S. Department of Health and Human Services Opioid STR, 93.788 Reporting Material Weakness in Internal Control over Compliance and Material Noncompliance Grant Award Number: Affects all grant awards included under assistance listings 93.788 on the Schedule of Expenditures of Federal Awards. Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) section 200.303 provides that non-federal entities must establish and maintain effective internal control that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. The grant agreements require that award recipients submit an annual and a midyear Performance Progress Report (PPR). Condition: The Nevada Division of Public and Behavioral Health (DPBH) did not maintain underlying documentation to support the amounts reported in annual and midyear PPRs. Cause: DPBH did not have internal controls to maintain adequate document retention to support compliance with the reporting requirements. Effect: Inaccurate information may have been reported to the federal awarding agency. Questioned Costs: None Context/Sampling: The annual performance report and the mid-year performance report submitted during the audit period were selected for testing. Support was not maintained to reconcile or verify the accuracy of the amounts reported to the federal awarding agency for either report. Repeat Finding from Prior Year: No Recommendation: We recommend DPBH implement internal controls to maintain adequate document retention to support compliance with the reporting requirements. Views of Responsible Officials: The Nevada Division of Public and Behavioral Health agrees with this finding.
MUNICIPALITY OF MAUNABO, PUERTO RICO SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2022 SECTION III – Federal Award Finding and Questioned Costs FINDING 2022-006 FEDERAL PROGRAM CORONAVIRUS RELIEF FUND 21.019 CATEGORY INTERNAL CONTROL- MATERIAL WEAKNESS NONCOMPLIANCE ALLOWABLE ACTIVITIES AND COST PRINCIPLE CONDITIONS The Municipality could not provide the supporting documentation on the following program transaction: Check Num. Date Amount 208 12/22/21 $530.00 223 3/30/22 $14,150.00 35 6/22/22 $320.00 CRITERIA 2 CFR 200.303 (a) internal control establishes that 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. CAUSE The Municipality does not have proper internal control over the filling of vouchers for payments. EFFECT Due to the lack of internal controls and supporting information, we could not validate that the disbursement was in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. This situation could result in questioned costs and noncompliance with required regulations. RECOMMENDATION The Municipality should establish adequate procedures and controls, which shall consider, among others, an adequate filling procedure of documentation to support the allowability of its expenditures. The Municipality shall improve its internal controls over the filing and safeguarding of documents in order to easily identify and retrieve payment vouchers and all related supporting documentation. MUNICIPALITY OF MAUNABO, PUERTO RICO SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2022 SECTION III – Federal Award Finding and Questioned Costs (continued) FINDING 2022-006 (continued) QUESTIONED COST: None PRIOR YEAR Not Applicable MANAGEMENT RESPONSE We concur with the finding RESPONSIBLE OFFICIALS Mrs. María Ortiz Martinez, Finance Department Director
2022-003 Department of Agriculture Federal Assistance Listing/CFDA #10.766 Community Facilities Loans and Grants Special Tests and Provisions 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 During our testing, there was no formal review of the reserve fund reconciliation for the federal program. Cause The Authority did not have an adequate internal control policy in place to ensure review and approval over the reserve fund. Effect The lack of adequate policies governing review increases the risk that employees participating in the federal award administration may not be able to detect and correct noncompliance in a timely manner. Questioned Costs None reported. Context/Sampling Sampling was not used. The Authority has one reserve account that was tested. Repeat Finding from Prior Years No Recommendation We recommend that the Authority enhance internal control policies to ensure that formal documentation of reviews is present. Views of Responsible Officials Management agrees with the finding.
FINDING 2022-002 Subject: Special Education Cluster (IDEA) - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Program: Special Education Grants to States Assistance Listings Number: 84.027 Federal Award Numbers and Years (or Other Identifying Numbers): 21611-034-PN01, 22611-034-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2021-003. Condition and Context The School Corporation had not designed or implemented adequate policies or procedures to ensure that proper procurement procedures for small purchases and simplified acquisitions were followed. There was no documented oversight, review, or approval process in place at the School Corporation to ensure proper procedures were followed and price or rate quotations were obtained, or documentation to support limited procurement procedures were conducted and maintained. Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. INDIANA STATE BOARD OF ACCOUNTS 22 METROPOLITAN SCHOOL DISTRICT OF LAWRENCE TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The School Corporation did not obtain price or rate quotes for the five vendors tested that were less than the simplified acquisition threshold of $150,000 but exceeded the $10,000 micro-purchase threshold. Documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit. The School Corporation also did not follow procurement requirements for contracted services which exceeded the simplified acquisition threshold of $150,000. The School Corporation did not correctly procure a contract for the one vendor that exceeded the simplified acquisition threshold. Additionally, the School Corporation did not adequately maintain documentation detailing the history of the procurement or the rationale to limit competition. Finally, the School Corporation did not verify that this vendor was not excluded or disqualified from participation in federal assistance programs or activities. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. INDIANA STATE BOARD OF ACCOUNTS 23 METROPOLITAN SCHOOL DISTRICT OF LAWRENCE TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. (ii) Simplified acquisition thresholds. The non-Federal entity is responsible for determining an appropriate simplified acquisition threshold based on internal controls, an evaluation of risk and its documented procurement procedures which must not exceed the threshold established in the FAR. When applicable, a lower simplified acquisition threshold used by the non-Federal entity must be authorized or not prohibited under State, local, or tribal laws or regulations. (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: INDIANA STATE BOARD OF ACCOUNTS 24 METROPOLITAN SCHOOL DISTRICT OF LAWRENCE TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; (D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause A proper system of internal controls was not designed by management of the School Corporation, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, procurement procedures for goods and services were not adhered to and vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 25 METROPOLITAN SCHOOL DISTRICT OF LAWRENCE TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure there are appropriate procurement procedures for goods and services and contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-003 Subject: COVID-19 - Education Stabilization Fund - Reporting Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425D Federal Award Numbers and Years (or Other Identifying Numbers): S425D200-013, S425D210-013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties that would likely be effective in preventing, or detecting and correcting, noncompliance. The School Corporation was required to submit an annual data report to the Indiana Department of Education (IDOE) via JotForm, a form/report builder. Data to be submitted included, but was not limited to, current period expenditures, prior period expenditures, and expenditures per activity. The annual data reports were compiled, prepared, and submitted by three different staff members; however, this process did not allow for the prevention, or detection and correction, of errors. During the audit period, the School Corporation completed and submitted three reports. For two of the three reports tested, ESSER I, Year 2 and ESSER II, Year 1, the reports were not supported by the School Corporation's records. The financial information provided did not agree to the data submitted in the reports; therefore, we could not determine the accuracy or completeness of the reports. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 26 METROPOLITAN SCHOOL DISTRICT OF LAWRENCE TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following: . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." 2 CFR 200.334 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." 34 CFR 76.731 states: "A State and a subgrantee shall keep records to show its compliance with program requirements." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, the amounts reported to the IDOE in the annual data reports could not be reconciled to the School Corporation's underlying accounting records. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure supporting documentation is used and retained for all required reports submitted on behalf of the COVID-19 - Education Stabilization Fund program funds. INDIANA STATE BOARD OF ACCOUNTS 27 METROPOLITAN SCHOOL DISTRICT OF LAWRENCE TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-003 Subject: COVID-19 - Education Stabilization Fund - Reporting Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425D Federal Award Numbers and Years (or Other Identifying Numbers): S425D200-013, S425D210-013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties that would likely be effective in preventing, or detecting and correcting, noncompliance. The School Corporation was required to submit an annual data report to the Indiana Department of Education (IDOE) via JotForm, a form/report builder. Data to be submitted included, but was not limited to, current period expenditures, prior period expenditures, and expenditures per activity. The annual data reports were compiled, prepared, and submitted by three different staff members; however, this process did not allow for the prevention, or detection and correction, of errors. During the audit period, the School Corporation completed and submitted three reports. For two of the three reports tested, ESSER I, Year 2 and ESSER II, Year 1, the reports were not supported by the School Corporation's records. The financial information provided did not agree to the data submitted in the reports; therefore, we could not determine the accuracy or completeness of the reports. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 26 METROPOLITAN SCHOOL DISTRICT OF LAWRENCE TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following: . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." 2 CFR 200.334 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." 34 CFR 76.731 states: "A State and a subgrantee shall keep records to show its compliance with program requirements." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, the amounts reported to the IDOE in the annual data reports could not be reconciled to the School Corporation's underlying accounting records. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure supporting documentation is used and retained for all required reports submitted on behalf of the COVID-19 - Education Stabilization Fund program funds. INDIANA STATE BOARD OF ACCOUNTS 27 METROPOLITAN SCHOOL DISTRICT OF LAWRENCE TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-003 Subject: COVID-19 - Education Stabilization Fund - Reporting Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425D Federal Award Numbers and Years (or Other Identifying Numbers): S425D200-013, S425D210-013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties that would likely be effective in preventing, or detecting and correcting, noncompliance. The School Corporation was required to submit an annual data report to the Indiana Department of Education (IDOE) via JotForm, a form/report builder. Data to be submitted included, but was not limited to, current period expenditures, prior period expenditures, and expenditures per activity. The annual data reports were compiled, prepared, and submitted by three different staff members; however, this process did not allow for the prevention, or detection and correction, of errors. During the audit period, the School Corporation completed and submitted three reports. For two of the three reports tested, ESSER I, Year 2 and ESSER II, Year 1, the reports were not supported by the School Corporation's records. The financial information provided did not agree to the data submitted in the reports; therefore, we could not determine the accuracy or completeness of the reports. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 26 METROPOLITAN SCHOOL DISTRICT OF LAWRENCE TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following: . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." 2 CFR 200.334 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." 34 CFR 76.731 states: "A State and a subgrantee shall keep records to show its compliance with program requirements." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, the amounts reported to the IDOE in the annual data reports could not be reconciled to the School Corporation's underlying accounting records. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure supporting documentation is used and retained for all required reports submitted on behalf of the COVID-19 - Education Stabilization Fund program funds. INDIANA STATE BOARD OF ACCOUNTS 27 METROPOLITAN SCHOOL DISTRICT OF LAWRENCE TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-004 Subject: COVID-19 - Education Stabilization Fund - Special Tests and Provisions - Wage Rate Requirements Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425U Federal Award Number and Year (or Other Identifying Number): S425U210-013 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 All laborers and mechanics employed by contractors or subcontractors to work on construction contracts in excess of $2,000 financed by federal assistance funds must be paid wages not less than those established for the locality of the project (prevailing wage rates) by the Department of Labor (DOL) to their laborers and mechanics. Nonfederal entities are to include in the entities 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 follow its policies or procedures to ensure that construction contracts in excess of $2,000 paid from federal grant funds included a prevailing wage rate clause. Two construction contracts were paid from the COVID-19 - Education Stabilization Fund grant funds, totaling $1,711,535, during the audit period. The provision that addresses the wage rate requirements was included in both contracts; however, the contractor did not comply with the requirement to submit a copy of the payroll and statement of compliance to the entity for each week in which contract work was performed. As such, no certified payrolls were provided to the School Corporation throughout the course of the project. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 28 METROPOLITAN SCHOOL DISTRICT OF LAWRENCE TOWNSHIP 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) Payrolls and basic records. . . . (i) (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 29 METROPOLITAN SCHOOL DISTRICT OF LAWRENCE TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, certified payrolls were not submitted to the School Corporation as required. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure certified payrolls for construction contracts are received and maintained. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-004 Subject: COVID-19 - Education Stabilization Fund - Special Tests and Provisions - Wage Rate Requirements Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425U Federal Award Number and Year (or Other Identifying Number): S425U210-013 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 All laborers and mechanics employed by contractors or subcontractors to work on construction contracts in excess of $2,000 financed by federal assistance funds must be paid wages not less than those established for the locality of the project (prevailing wage rates) by the Department of Labor (DOL) to their laborers and mechanics. Nonfederal entities are to include in the entities 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 follow its policies or procedures to ensure that construction contracts in excess of $2,000 paid from federal grant funds included a prevailing wage rate clause. Two construction contracts were paid from the COVID-19 - Education Stabilization Fund grant funds, totaling $1,711,535, during the audit period. The provision that addresses the wage rate requirements was included in both contracts; however, the contractor did not comply with the requirement to submit a copy of the payroll and statement of compliance to the entity for each week in which contract work was performed. As such, no certified payrolls were provided to the School Corporation throughout the course of the project. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 28 METROPOLITAN SCHOOL DISTRICT OF LAWRENCE TOWNSHIP 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) Payrolls and basic records. . . . (i) (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 29 METROPOLITAN SCHOOL DISTRICT OF LAWRENCE TOWNSHIP SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, certified payrolls were not submitted to the School Corporation as required. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure certified payrolls for construction contracts are received and maintained. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
2022-003 - Allowable Costs/Cost Principles Federal Program Information: ALN - 10.760 - Water and Waste Disposal Systems for Rural Communities Criteria: The following CFR(s) apply to this finding: 2 CRF 200.303 Condition: During audit procedures, it was identified that the Town does not have invoices and board warrants approved before issuing checks. Cause: The Town does not have the necessary internal controls over compliance. Effect: Expenses may not be properly allocated to the grant; this could result in unallowable expenses being charged and subsequently improperly reimbursed by federal funds Identification of Questioned Costs: None identified. Context: The sample selection consisted of 5 out of 9 transactions. Of the 5 samples, 5 did not have consistent documented approval of invoices and board warrants to ensure that only allowable costs were being charged to the program and 2 out of 5 invoices were paid over 30 days late. Repeat Finding: This is a repeat finding of 2021-003 Recommendation: It is recommended that the Town develop and implement policies and procedures for documented approval process to ensure that only allowable costs are charged to the program. Views of Responsible Officials and Corrective Action Plan: Client agrees with finding, and a version of their response can be found in the Corrective Action Plan. Please see the Corrective Action Plan issued by the Town of Livermore Falls.
2022-005 - Allowable Costs/Cost Principles Federal Program Information: ALN - 21.027 - Coronavirus State & Local Fiscal Recovery Funds Criteria: The following CFR(s) apply to this finding: 2 CRF 200.303 Condition: During audit procedures, it was identified that the Town does not have invoices and board warrants approved before issuing checks. Cause: The Town does not have the necessary internal controls over compliance. Lack of supervisory oversight. Effect: Expenses may not be properly allocated to the grant; this could result in unallowable expenses being charged and subsequently improperly reimbursed by federal funds Identification of Questioned Costs: None identified. Context: The population consisted of 2 out of 2 transactions. The Town did not have consistent documented approval of invoices and board warrants to ensure that only allowable costs were being charged to the program. Repeat Finding: This is not a repeat finding. Recommendation: It is recommended that the Town develop and implement policies and procedures for documented approval process to ensure that only allowable costs are charged to the program. Views of Responsible Officials and Corrective Action Plan: Client agrees with finding, and a version of their response can be found in the Corrective Action Plan. Please see the Corrective Action Plan issued by the Town of Livermore Falls.
2022-006 - Allowable Costs/Cost Principles Federal Program Information: ALN - 66.458 - Clean Water State Revolving Funds Criteria: The following CFR(s) apply to this finding: 2 CRF 200.303 Condition: During audit procedures, it was identified that the Town does not have invoices and board warrants approved before issuing checks. Cause: The Town does not have the necessary internal controls over compliance. Lack of supervisory oversight. Effect: Expenses may not be properly allocated to the grant; this could result in unallowable expenses being charged and subsequently improperly reimbursed by federal funds. Identification of Questioned Costs: None identified. Context: The population consisted of 13 out of 39 transactions. The Town did not have consistent documented approval of invoices and board warrants to ensure that only allowable costs were being charged to the program. 2 out of 13 invoices were paid over 30 days late. Repeat Finding: This is a repeat finding of 2021-005. Recommendation: It is recommended that the Town develop and implement policies and procedures for documented approval process to ensure that only allowable costs are charged to the program. Views of Responsible Officials and Corrective Action Plan: Client agrees with finding, and a version of their response can be found in the Corrective Action Plan. Please see the Corrective Action Plan issued by the Town of Livermore Falls.
2022-006 - Allowable Costs/Cost Principles Federal Program Information: ALN - 66.458 - Clean Water State Revolving Funds Criteria: The following CFR(s) apply to this finding: 2 CRF 200.303 Condition: During audit procedures, it was identified that the Town does not have invoices and board warrants approved before issuing checks. Cause: The Town does not have the necessary internal controls over compliance. Lack of supervisory oversight. Effect: Expenses may not be properly allocated to the grant; this could result in unallowable expenses being charged and subsequently improperly reimbursed by federal funds. Identification of Questioned Costs: None identified. Context: The population consisted of 13 out of 39 transactions. The Town did not have consistent documented approval of invoices and board warrants to ensure that only allowable costs were being charged to the program. 2 out of 13 invoices were paid over 30 days late. Repeat Finding: This is a repeat finding of 2021-005. Recommendation: It is recommended that the Town develop and implement policies and procedures for documented approval process to ensure that only allowable costs are charged to the program. Views of Responsible Officials and Corrective Action Plan: Client agrees with finding, and a version of their response can be found in the Corrective Action Plan. Please see the Corrective Action Plan issued by the Town of Livermore Falls.
2022-006 - Allowable Costs/Cost Principles Federal Program Information: ALN - 66.458 - Clean Water State Revolving Funds Criteria: The following CFR(s) apply to this finding: 2 CRF 200.303 Condition: During audit procedures, it was identified that the Town does not have invoices and board warrants approved before issuing checks. Cause: The Town does not have the necessary internal controls over compliance. Lack of supervisory oversight. Effect: Expenses may not be properly allocated to the grant; this could result in unallowable expenses being charged and subsequently improperly reimbursed by federal funds. Identification of Questioned Costs: None identified. Context: The population consisted of 13 out of 39 transactions. The Town did not have consistent documented approval of invoices and board warrants to ensure that only allowable costs were being charged to the program. 2 out of 13 invoices were paid over 30 days late. Repeat Finding: This is a repeat finding of 2021-005. Recommendation: It is recommended that the Town develop and implement policies and procedures for documented approval process to ensure that only allowable costs are charged to the program. Views of Responsible Officials and Corrective Action Plan: Client agrees with finding, and a version of their response can be found in the Corrective Action Plan. Please see the Corrective Action Plan issued by the Town of Livermore Falls.
Finding 2022-007 – Lack of Internal Controls Over Major Federal Program Coronavirus State and Local Fiscal Recovery Funds PASS-THROUGH GRANTOR: Direct Grant FEDERAL AGENCY: U.S. Department of Treasury ASSISTANCE LISTING: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Procurement and Suspension and Debarment; Reporting; Subrecipient Monitoring QUESTIONED COSTS: $-0- Condition: During the process of documenting the County’s internal controls regarding federal disbursements, we noted that the County has not established procedures to ensure compliance with the following compliance requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Procurement and Suspension and Debarment; Reporting; Subrecipient Monitoring. Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal expenditures are made in accordance with federal compliance requirements. Effect of Condition: This condition attributed to the noncompliance with grant requirements and could result in a loss of federal funds to the County. Recommendation: OSAI recommends the County gain an understanding of requirements for this program and implement internal control procedures to ensure compliance with requirements. Management Response: Chairman of the Board of County Commissioners: The Board of County Commissioners will work with all County Officials to go over all grants and federal monies that the County receives to ensure that proper internal controls are implemented. Criteria: OMB 2 CFR 200, Subpart D. §_ .303(a) reads as follows: Subpart D-Post Federal Award Requirements §200.303 Internal Controls 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). Further, accountability and stewardship should be overall goals in management's accounting of federal funds. Internal controls should be designed to monitor compliance with laws and regulations pertaining to grant contracts.
Finding 2022-013 – Lack of Internal Controls and Noncompliance with Reporting Requirements Over Federal Grant Coronavirus State and Local Fiscal Recovery Funds PASS-THROUGH GRANTOR: Direct Grant FEDERAL AGENCY: U.S. Department of Treasury ASSISTANCE LISTING: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Reporting QUESTIONED COSTS: $-0- Condition: The County has not established internal controls to ensure the correct expenditure category is used for reporting payments to the grant administrative contractor. The quarterly reports improperly classified payments totaling $147,883 to a contractor as a Revenue Replacement expense instead of using the Administrative expense category. Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal expenditures are made in accordance with federal compliance requirements. Effect of Condition: This condition could result in noncompliance to grant requirements. Recommendation: OSAI recommends the County gain an understanding of the requirements for this program and implement internal controls to ensure compliance with these requirements. Management Response: Chairman of the Board of County Commissioners: The Board of County Commissioners will take measures to ensure future compliance with all requirements of federal grants. Criteria: Accountability and stewardship should be overall goals in management’s accounting of federal funds. Internal controls should be designed to monitor compliance with laws and regulations pertaining to grant contracts. Title 2 CFR § 200.303 Internal Controls (a) reads as follows: 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 theUnited States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Compliance and Reporting Guidance, State and Local Fiscal Recovery Funds (10. Reporting.) reads as follows: All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. In addition, where appropriate, you organization needs to establish controls to ensure completion and timely submission of all mandatory performance and/or compliance reporting. Further, 2 CFR § 200.329 Monitoring and Reporting Program Performance (c)(1) reads as follows: The non-Federal entity must submit performance reports at the interval required by the Federal awarding agency or pass-through entity to best inform improvements in program outcomes and productivity. Intervals must be no less frequent than annually nor more frequent than quarterly except in unusual circumstances, for example where more frequent reporting is necessary for the effective monitoring of the Federal award or could significantly affect program outcomes. Reports submitted annually by the non-Federal entity and/or pass-through entity must be due no later than 90 calendar days after the reporting period. Reports submitted quarterly or semiannually must be due no later than 30 calendar days after the reporting period. Alternatively, the Federal awarding agency or pass-through entity may require annual reports before the anniversary dates of multiple year Federal awards. The final performance report submitted by the non-Federal entity and/or pass-through entity must be due no later than 120 calendar days after the period of performance end date. A subrecipient must submit to the pass-through entity, no later than 90 calendar days after the period of performance end date, all final performance reports as required by the terms and conditions of the Federal award. See also § 200.344. If a justified request is submitted by a non-Federal entity, the Federal agency may extend the due date for any performance report.
FA 2022-001 Improve Controls over Equipment Compliance Requirements: Equipment and Real Property Management Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 – 84.425D – Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425U – American Rescue Plan Elementary and Secondary School Emergency Relief Fund Federal Award Numbers: S425D200012 (Year: 2021), S425U2100012 (Year: 2021) Questioned Costs: None Identified Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over equipment and real property management as it relates to the Elementary and Secondary School Emergency Relief Fund program. Background Information: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $9,339,507.81 were expended and reported on the Burke County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.313(d)(1) state, “Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property.” In addition, the Uniform Guidance, Section 200.313(d)(2) states, “A physical inventory of the property must be taken, and the results reconciled with the property records at least once every two years.” Condition: The following deficiencies were noted when reviewing the ESSER program equipment listing and physically locating equipment items: • Property records were not maintained by Federal program personnel. Capital asset records did not include the following required components for all items: the source of funding for the property (including the FAIN). • There was no evidence that a physical inventory had been performed in either the current year or the previous year. Cause: Federal program personnel did not include the FAIN number for all items due to oversight. Program personnel for the ESSER program did not keep an equipment listing or take a physical inventory because they considered it a duplication of effort due to the items being listed on the overall capital asset listing and were not aware that a physical inventory was not done. Effect or Potential Effect: The School District is not in compliance with the Uniform Guidance or GaDOE guidance related to the ESSER program. Failure to maintain a complete and accurate equipment listing and reconcile results of the physical inventory performed to the property records exposes the School District to unnecessary risk of error and misuse of equipment and/or federal funds. Recommendation: The School District should develop and maintain an equipment listing that reflects all required information, including a description, an identifying number, the source of funding, the title holder, the acquisition date, the cost, the percentage of federal participation in the project costs, the location, the use and condition, and any ultimate disposal data for each piece of equipment. In addition, management should implement controls to ensure that a complete physical inventory of equipment is performed, and the results are reconciled back to the equipment listing at least once every two years. Views of Responsible Officials: We concur with this finding.
FA 2022-001 Improve Controls over Equipment Compliance Requirements: Equipment and Real Property Management Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 – 84.425D – Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425U – American Rescue Plan Elementary and Secondary School Emergency Relief Fund Federal Award Numbers: S425D200012 (Year: 2021), S425U2100012 (Year: 2021) Questioned Costs: None Identified Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over equipment and real property management as it relates to the Elementary and Secondary School Emergency Relief Fund program. Background Information: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $9,339,507.81 were expended and reported on the Burke County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.313(d)(1) state, “Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property.” In addition, the Uniform Guidance, Section 200.313(d)(2) states, “A physical inventory of the property must be taken, and the results reconciled with the property records at least once every two years.” Condition: The following deficiencies were noted when reviewing the ESSER program equipment listing and physically locating equipment items: • Property records were not maintained by Federal program personnel. Capital asset records did not include the following required components for all items: the source of funding for the property (including the FAIN). • There was no evidence that a physical inventory had been performed in either the current year or the previous year. Cause: Federal program personnel did not include the FAIN number for all items due to oversight. Program personnel for the ESSER program did not keep an equipment listing or take a physical inventory because they considered it a duplication of effort due to the items being listed on the overall capital asset listing and were not aware that a physical inventory was not done. Effect or Potential Effect: The School District is not in compliance with the Uniform Guidance or GaDOE guidance related to the ESSER program. Failure to maintain a complete and accurate equipment listing and reconcile results of the physical inventory performed to the property records exposes the School District to unnecessary risk of error and misuse of equipment and/or federal funds. Recommendation: The School District should develop and maintain an equipment listing that reflects all required information, including a description, an identifying number, the source of funding, the title holder, the acquisition date, the cost, the percentage of federal participation in the project costs, the location, the use and condition, and any ultimate disposal data for each piece of equipment. In addition, management should implement controls to ensure that a complete physical inventory of equipment is performed, and the results are reconciled back to the equipment listing at least once every two years. Views of Responsible Officials: We concur with this finding.
FA 2022-001 Improve Controls over Equipment Compliance Requirements: Equipment and Real Property Management Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 – 84.425D – Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425U – American Rescue Plan Elementary and Secondary School Emergency Relief Fund Federal Award Numbers: S425D200012 (Year: 2021), S425U2100012 (Year: 2021) Questioned Costs: None Identified Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over equipment and real property management as it relates to the Elementary and Secondary School Emergency Relief Fund program. Background Information: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $9,339,507.81 were expended and reported on the Burke County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.313(d)(1) state, “Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property.” In addition, the Uniform Guidance, Section 200.313(d)(2) states, “A physical inventory of the property must be taken, and the results reconciled with the property records at least once every two years.” Condition: The following deficiencies were noted when reviewing the ESSER program equipment listing and physically locating equipment items: • Property records were not maintained by Federal program personnel. Capital asset records did not include the following required components for all items: the source of funding for the property (including the FAIN). • There was no evidence that a physical inventory had been performed in either the current year or the previous year. Cause: Federal program personnel did not include the FAIN number for all items due to oversight. Program personnel for the ESSER program did not keep an equipment listing or take a physical inventory because they considered it a duplication of effort due to the items being listed on the overall capital asset listing and were not aware that a physical inventory was not done. Effect or Potential Effect: The School District is not in compliance with the Uniform Guidance or GaDOE guidance related to the ESSER program. Failure to maintain a complete and accurate equipment listing and reconcile results of the physical inventory performed to the property records exposes the School District to unnecessary risk of error and misuse of equipment and/or federal funds. Recommendation: The School District should develop and maintain an equipment listing that reflects all required information, including a description, an identifying number, the source of funding, the title holder, the acquisition date, the cost, the percentage of federal participation in the project costs, the location, the use and condition, and any ultimate disposal data for each piece of equipment. In addition, management should implement controls to ensure that a complete physical inventory of equipment is performed, and the results are reconciled back to the equipment listing at least once every two years. Views of Responsible Officials: We concur with this finding.
FA 2022-001 Improve Controls over Equipment Compliance Requirements: Equipment and Real Property Management Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 – 84.425D – Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425U – American Rescue Plan Elementary and Secondary School Emergency Relief Fund Federal Award Numbers: S425D200012 (Year: 2021), S425U2100012 (Year: 2021) Questioned Costs: None Identified Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over equipment and real property management as it relates to the Elementary and Secondary School Emergency Relief Fund program. Background Information: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $9,339,507.81 were expended and reported on the Burke County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.313(d)(1) state, “Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property.” In addition, the Uniform Guidance, Section 200.313(d)(2) states, “A physical inventory of the property must be taken, and the results reconciled with the property records at least once every two years.” Condition: The following deficiencies were noted when reviewing the ESSER program equipment listing and physically locating equipment items: • Property records were not maintained by Federal program personnel. Capital asset records did not include the following required components for all items: the source of funding for the property (including the FAIN). • There was no evidence that a physical inventory had been performed in either the current year or the previous year. Cause: Federal program personnel did not include the FAIN number for all items due to oversight. Program personnel for the ESSER program did not keep an equipment listing or take a physical inventory because they considered it a duplication of effort due to the items being listed on the overall capital asset listing and were not aware that a physical inventory was not done. Effect or Potential Effect: The School District is not in compliance with the Uniform Guidance or GaDOE guidance related to the ESSER program. Failure to maintain a complete and accurate equipment listing and reconcile results of the physical inventory performed to the property records exposes the School District to unnecessary risk of error and misuse of equipment and/or federal funds. Recommendation: The School District should develop and maintain an equipment listing that reflects all required information, including a description, an identifying number, the source of funding, the title holder, the acquisition date, the cost, the percentage of federal participation in the project costs, the location, the use and condition, and any ultimate disposal data for each piece of equipment. In addition, management should implement controls to ensure that a complete physical inventory of equipment is performed, and the results are reconciled back to the equipment listing at least once every two years. Views of Responsible Officials: We concur with this finding.
FA 2022-002 Improve Controls over Procurement Compliance Requirement: Procurement and Suspension and Debarment Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Number and Title: 84.371C – Comprehensive Literacy Development Federal Award Number: S371C190016-19A (Years: 2017-21) Questioned Costs: $177,213.73 Description: A review of expenditures charged to the Comprehensive Literacy Development program revealed that the School District’s internal control procedures were not operating appropriately to ensure that the School District’s procurement procedures were followed. Background Information: The Comprehensive Literacy Development Program (CLD) was authorized under Sections 2222-2225 of the Elementary and Secondary Education Act of 1965 to create a comprehensive literacy program to advance literacy skills, including pre-literacy skills, reading, and writing, for children from birth to grade 12, with an emphasis on disadvantaged children, including children living in poverty, English learners, and children with disabilities. CLD funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. CLD funds totaling $810,312.28 were expended and reported on the Burke County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.318 – General Procurement Standards state in part that “(a) the non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations and… (b) non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders.” In addition, provisions included in the Uniform Guidance, Section 200.320 – Methods of Procurement to Be Followed provide guidance for procurement through small purchase procedures and state “If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources.” Furthermore, Title 2 CFR Section 180.300 states in part that the non-federal entity must “verify that the entity with whom you intend to do business is not excluded or disqualified. You can do this by: (a) Checking System for Awards Management (SAM) exclusions; or (b) Collecting a certification from the entity; or (c) Adding a clause or condition to the covered transaction with the entity.” Condition: A sample of twenty-one procurement transactions was randomly selected for testing using a non-statistical sampling approach. These transactions were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. The following deficiency was noted: • The School District could not provide evidence that the procurement process provided full and open competition for seven simplified acquisition purchase expenditures reviewed. Questioned Costs: Upon testing a sample of $210,800.91 in procurement transactions, known questioned costs of $177,213.73 were identified for expenditures that did not follow the School District’s procurement procedures. Using the total population of $744,780.82 in procurement transactions, we project the likely questioned costs to be approximately $626,113.93. Cause: This issue was the result of a change in personnel in which the documentation was misplaced. Effect or Potential Effect: The School District is not in compliance with the Uniform Guidance and Georgia Department of Education guidance. Failure to appropriately implement procedures to address procurement compliance requirements exposes the School District to unnecessary risk of error and misuse of federal funds and could result in the expenditure of federal funds with unqualified vendors. In addition, this deficiency could lead to the return of grant funds associated with unallowable expenditures. Recommendation: The School District should evaluate and improve internal control procedures to ensure that required procurement methods are properly identified and followed and required procurement documentation is properly identified, safeguarded, and retained. In addition, management should develop a monitoring process to ensure that these procedures are operating appropriately. Views of Responsible Officials: We concur with this finding.
FA 2022-003 Strengthen Controls over Procurement Compliance Requirement: Procurement and Suspension and Debarment Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 84.027 – Special Education Grants to States 84.173 – Special Education Preschool Grants Federal Award Numbers: HO27A200073(Year: 2021), HO27A210073 (Year: 2022), HO27X210073 (Year: 2022) Questioned Costs: None Identified Description: A review of expenditures charged to the Special Education Cluster revealed that the School District’s internal control procedures were not operating appropriately to ensure that the School District’s procurement procedures were followed. Background Information: The Special Education Cluster (SEC), which is comprised of the Special Education Grants to States (IDEA, Part B) and Special Education Preschool Grants (IDEA Preschool) programs, was authorized under the Individuals with Disabilities Education Act (IDEA). Special Education Cluster funding is available to ensure that all children with disabilities have available to them a free appropriate public education that emphasizes special education and related services designed to meet their unique needs and prepares them for further education, employment, and independent living; ensure that the rights of children with disabilities and their parents are protected; assist states, localities, educational service agencies, and federal agencies to provide for the education of all children with disabilities; and assess and ensure the effectiveness of efforts to educate children with disabilities. SEC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. SEC funds totaling $1,053,381.74 were expended and reported on the Burke County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.318 – General Procurement Standards state in part that “(a) the non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations and… (b) non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders.” In addition, provisions included in the Uniform Guidance, Section 200.320 – Methods of Procurement to Be Followed provide guidance for procurement through small purchase procedures and state “If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources.” Furthermore, Title 2 CFR Section 180.300 states in part that the non-federal entity must “verify that the entity with whom you intend to do business is not excluded or disqualified. You can do this by: (a) Checking System for Awards Management (SAM) exclusions; or (b) Collecting a certification from the entity; or (c) Adding a clause or condition to the covered transaction with the entity.” Condition: A sample of 32 procurement transactions was randomly selected for testing using a non-statistical sampling approach. These transactions were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. The following deficiency was noted: • The School District could not provide evidence that an adequate number of rate or price quotations were obtained from qualified sources for 2 small purchase expenditures reviewed. Cause: The School District did not obtain price or rate quotations for expenditures from an adequate number of qualified sources because they considered themselves to be in a remote location and assumed there would be no competition. Effect or Potential Effect: The School District is not in compliance with the Uniform Guidance and Georgia Department of Education guidance. Failure to appropriately implement procedures to address procurement compliance requirements exposes the School District to unnecessary risk of error and misuse of federal funds and could result in the expenditure of federal funds with unqualified vendors. In addition, this deficiency could lead to the return of grant funds associated with unallowable expenditures. Recommendation: The School District should evaluate and improve internal control procedures to ensure that required procurement methods are properly identified and followed and required procurement documentation is properly identified, safeguarded, and retained. In addition, management should develop a monitoring process to ensure that these procedures are operating appropriately. Views of Responsible Officials: We concur with this finding.
FA 2022-003 Strengthen Controls over Procurement Compliance Requirement: Procurement and Suspension and Debarment Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 84.027 – Special Education Grants to States 84.173 – Special Education Preschool Grants Federal Award Numbers: HO27A200073(Year: 2021), HO27A210073 (Year: 2022), HO27X210073 (Year: 2022) Questioned Costs: None Identified Description: A review of expenditures charged to the Special Education Cluster revealed that the School District’s internal control procedures were not operating appropriately to ensure that the School District’s procurement procedures were followed. Background Information: The Special Education Cluster (SEC), which is comprised of the Special Education Grants to States (IDEA, Part B) and Special Education Preschool Grants (IDEA Preschool) programs, was authorized under the Individuals with Disabilities Education Act (IDEA). Special Education Cluster funding is available to ensure that all children with disabilities have available to them a free appropriate public education that emphasizes special education and related services designed to meet their unique needs and prepares them for further education, employment, and independent living; ensure that the rights of children with disabilities and their parents are protected; assist states, localities, educational service agencies, and federal agencies to provide for the education of all children with disabilities; and assess and ensure the effectiveness of efforts to educate children with disabilities. SEC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. SEC funds totaling $1,053,381.74 were expended and reported on the Burke County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.318 – General Procurement Standards state in part that “(a) the non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations and… (b) non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders.” In addition, provisions included in the Uniform Guidance, Section 200.320 – Methods of Procurement to Be Followed provide guidance for procurement through small purchase procedures and state “If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources.” Furthermore, Title 2 CFR Section 180.300 states in part that the non-federal entity must “verify that the entity with whom you intend to do business is not excluded or disqualified. You can do this by: (a) Checking System for Awards Management (SAM) exclusions; or (b) Collecting a certification from the entity; or (c) Adding a clause or condition to the covered transaction with the entity.” Condition: A sample of 32 procurement transactions was randomly selected for testing using a non-statistical sampling approach. These transactions were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. The following deficiency was noted: • The School District could not provide evidence that an adequate number of rate or price quotations were obtained from qualified sources for 2 small purchase expenditures reviewed. Cause: The School District did not obtain price or rate quotations for expenditures from an adequate number of qualified sources because they considered themselves to be in a remote location and assumed there would be no competition. Effect or Potential Effect: The School District is not in compliance with the Uniform Guidance and Georgia Department of Education guidance. Failure to appropriately implement procedures to address procurement compliance requirements exposes the School District to unnecessary risk of error and misuse of federal funds and could result in the expenditure of federal funds with unqualified vendors. In addition, this deficiency could lead to the return of grant funds associated with unallowable expenditures. Recommendation: The School District should evaluate and improve internal control procedures to ensure that required procurement methods are properly identified and followed and required procurement documentation is properly identified, safeguarded, and retained. In addition, management should develop a monitoring process to ensure that these procedures are operating appropriately. Views of Responsible Officials: We concur with this finding.
FA 2022-003 Strengthen Controls over Procurement Compliance Requirement: Procurement and Suspension and Debarment Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 84.027 – Special Education Grants to States 84.173 – Special Education Preschool Grants Federal Award Numbers: HO27A200073(Year: 2021), HO27A210073 (Year: 2022), HO27X210073 (Year: 2022) Questioned Costs: None Identified Description: A review of expenditures charged to the Special Education Cluster revealed that the School District’s internal control procedures were not operating appropriately to ensure that the School District’s procurement procedures were followed. Background Information: The Special Education Cluster (SEC), which is comprised of the Special Education Grants to States (IDEA, Part B) and Special Education Preschool Grants (IDEA Preschool) programs, was authorized under the Individuals with Disabilities Education Act (IDEA). Special Education Cluster funding is available to ensure that all children with disabilities have available to them a free appropriate public education that emphasizes special education and related services designed to meet their unique needs and prepares them for further education, employment, and independent living; ensure that the rights of children with disabilities and their parents are protected; assist states, localities, educational service agencies, and federal agencies to provide for the education of all children with disabilities; and assess and ensure the effectiveness of efforts to educate children with disabilities. SEC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. SEC funds totaling $1,053,381.74 were expended and reported on the Burke County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.318 – General Procurement Standards state in part that “(a) the non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations and… (b) non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders.” In addition, provisions included in the Uniform Guidance, Section 200.320 – Methods of Procurement to Be Followed provide guidance for procurement through small purchase procedures and state “If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources.” Furthermore, Title 2 CFR Section 180.300 states in part that the non-federal entity must “verify that the entity with whom you intend to do business is not excluded or disqualified. You can do this by: (a) Checking System for Awards Management (SAM) exclusions; or (b) Collecting a certification from the entity; or (c) Adding a clause or condition to the covered transaction with the entity.” Condition: A sample of 32 procurement transactions was randomly selected for testing using a non-statistical sampling approach. These transactions were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. The following deficiency was noted: • The School District could not provide evidence that an adequate number of rate or price quotations were obtained from qualified sources for 2 small purchase expenditures reviewed. Cause: The School District did not obtain price or rate quotations for expenditures from an adequate number of qualified sources because they considered themselves to be in a remote location and assumed there would be no competition. Effect or Potential Effect: The School District is not in compliance with the Uniform Guidance and Georgia Department of Education guidance. Failure to appropriately implement procedures to address procurement compliance requirements exposes the School District to unnecessary risk of error and misuse of federal funds and could result in the expenditure of federal funds with unqualified vendors. In addition, this deficiency could lead to the return of grant funds associated with unallowable expenditures. Recommendation: The School District should evaluate and improve internal control procedures to ensure that required procurement methods are properly identified and followed and required procurement documentation is properly identified, safeguarded, and retained. In addition, management should develop a monitoring process to ensure that these procedures are operating appropriately. Views of Responsible Officials: We concur with this finding.
FA 2022-001 Improve Controls over Equipment Compliance Requirement: Equipment and Real Property Management Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Agriculture Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 10.553 – School Breakfast Program 10.555 – National School Lunch Program Federal Award Number: 225GA324N1199 Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 – 84.425D – Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425U – American Rescue Plan Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425W – American Rescue Plan Elementary and Secondary School Emergency Relief Fund – Homeless Children and Youth Federal Award Numbers: S425D200012 (Year: 2020), S425D210012 (Year: 2021) S425U210012 (Year: 2021), S425W210011 (Year: 2021) Questioned Costs: None Identified Repeat of Prior Year Finding: FA 2021-001, FA 2020-001, FA 2019-003, FA 2018-002, FA 2017-004 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over equipment and real property management as it relates to the Child Nutrition Cluster and Elementary and Secondary School Emergency Relief Fund programs. Background: The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential child care institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and secondary schools and encourages the domestic consumption of nutritious agricultural commodities. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. CNC and ESSER funding was granted to the Georgia Department of Education (GDOE) by the U.S. Department of Agriculture and U.S. Department of Education (ED), respectively. GDOE is responsible for distributing funds to LEAs and overseeing the programs. CNC funds totaling $1,113,376.14 and ESSER funds totaling $3,586,443.78 were expended and reported on the Dooly County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.313(d)(1) state, "Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property." In addition, the Uniform Guidance, Section 200.313(d)(2) states, "A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years." Condition: The following deficiencies were noted when reviewing the CNC and ESSER equipment listings and physically locating equipment items: • Property records did not include the following required components for CNC equipment items: (1) Percentage of Federal participation in the project costs for the Federal award under which the property was acquired, (2) the source of funding for the property (including the FAIN), and (3) who holds title. • Property records did not include the following required components for Elementary and Secondary School Emergency Relief Fund equipment items: (1) Percentage of Federal participation in the project costs for the Federal award under which the property was acquired, (2) who holds title, and (3) use and condition of the property. • An equipment item totaling $501,596.61 purchased using ESSER funds was included on the financial statement capital asset listing but was excluded from the program equipment listing. Cause: In discussing this deficiency with the School District, they stated these issues were a result of turnover within the Central Office. In addition, the ESSER equipment item was overlooked when preparing the program equipment listing. Effect: Failure to maintain a complete and accurate equipment listing and reconcile results of the physical inventory performed to the property records exposes the School District to unnecessary risk of error and misuse of equipment and/or Federal funds. Additionally, the School District is not in compliance with the Uniform Guidance and Georgia Department of Education guidance. Recommendation: The School District should develop and maintain equipment listings that reflect all required information, including a description, an identifying number, the source of funding, the title holder, the acquisition date, the cost, the percentage of Federal participation in the project costs, the location, the use and condition, and any ultimate disposal data for each piece of equipment. In addition, management should implement controls to ensure that a complete physical inventory of equipment is performed for every Federal program, and the results are reconciled back to the equipment listings at least once every two years. Views of Responsible Officials: We concur with this finding.
FA 2022-001 Improve Controls over Equipment Compliance Requirement: Equipment and Real Property Management Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Agriculture Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 10.553 – School Breakfast Program 10.555 – National School Lunch Program Federal Award Number: 225GA324N1199 Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 – 84.425D – Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425U – American Rescue Plan Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425W – American Rescue Plan Elementary and Secondary School Emergency Relief Fund – Homeless Children and Youth Federal Award Numbers: S425D200012 (Year: 2020), S425D210012 (Year: 2021) S425U210012 (Year: 2021), S425W210011 (Year: 2021) Questioned Costs: None Identified Repeat of Prior Year Finding: FA 2021-001, FA 2020-001, FA 2019-003, FA 2018-002, FA 2017-004 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over equipment and real property management as it relates to the Child Nutrition Cluster and Elementary and Secondary School Emergency Relief Fund programs. Background: The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential child care institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and secondary schools and encourages the domestic consumption of nutritious agricultural commodities. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. CNC and ESSER funding was granted to the Georgia Department of Education (GDOE) by the U.S. Department of Agriculture and U.S. Department of Education (ED), respectively. GDOE is responsible for distributing funds to LEAs and overseeing the programs. CNC funds totaling $1,113,376.14 and ESSER funds totaling $3,586,443.78 were expended and reported on the Dooly County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.313(d)(1) state, "Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property." In addition, the Uniform Guidance, Section 200.313(d)(2) states, "A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years." Condition: The following deficiencies were noted when reviewing the CNC and ESSER equipment listings and physically locating equipment items: • Property records did not include the following required components for CNC equipment items: (1) Percentage of Federal participation in the project costs for the Federal award under which the property was acquired, (2) the source of funding for the property (including the FAIN), and (3) who holds title. • Property records did not include the following required components for Elementary and Secondary School Emergency Relief Fund equipment items: (1) Percentage of Federal participation in the project costs for the Federal award under which the property was acquired, (2) who holds title, and (3) use and condition of the property. • An equipment item totaling $501,596.61 purchased using ESSER funds was included on the financial statement capital asset listing but was excluded from the program equipment listing. Cause: In discussing this deficiency with the School District, they stated these issues were a result of turnover within the Central Office. In addition, the ESSER equipment item was overlooked when preparing the program equipment listing. Effect: Failure to maintain a complete and accurate equipment listing and reconcile results of the physical inventory performed to the property records exposes the School District to unnecessary risk of error and misuse of equipment and/or Federal funds. Additionally, the School District is not in compliance with the Uniform Guidance and Georgia Department of Education guidance. Recommendation: The School District should develop and maintain equipment listings that reflect all required information, including a description, an identifying number, the source of funding, the title holder, the acquisition date, the cost, the percentage of Federal participation in the project costs, the location, the use and condition, and any ultimate disposal data for each piece of equipment. In addition, management should implement controls to ensure that a complete physical inventory of equipment is performed for every Federal program, and the results are reconciled back to the equipment listings at least once every two years. Views of Responsible Officials: We concur with this finding.
FA 2022-001 Improve Controls over Equipment Compliance Requirement: Equipment and Real Property Management Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Agriculture Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 10.553 – School Breakfast Program 10.555 – National School Lunch Program Federal Award Number: 225GA324N1199 Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 – 84.425D – Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425U – American Rescue Plan Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425W – American Rescue Plan Elementary and Secondary School Emergency Relief Fund – Homeless Children and Youth Federal Award Numbers: S425D200012 (Year: 2020), S425D210012 (Year: 2021) S425U210012 (Year: 2021), S425W210011 (Year: 2021) Questioned Costs: None Identified Repeat of Prior Year Finding: FA 2021-001, FA 2020-001, FA 2019-003, FA 2018-002, FA 2017-004 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over equipment and real property management as it relates to the Child Nutrition Cluster and Elementary and Secondary School Emergency Relief Fund programs. Background: The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential child care institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and secondary schools and encourages the domestic consumption of nutritious agricultural commodities. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. CNC and ESSER funding was granted to the Georgia Department of Education (GDOE) by the U.S. Department of Agriculture and U.S. Department of Education (ED), respectively. GDOE is responsible for distributing funds to LEAs and overseeing the programs. CNC funds totaling $1,113,376.14 and ESSER funds totaling $3,586,443.78 were expended and reported on the Dooly County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.313(d)(1) state, "Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property." In addition, the Uniform Guidance, Section 200.313(d)(2) states, "A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years." Condition: The following deficiencies were noted when reviewing the CNC and ESSER equipment listings and physically locating equipment items: • Property records did not include the following required components for CNC equipment items: (1) Percentage of Federal participation in the project costs for the Federal award under which the property was acquired, (2) the source of funding for the property (including the FAIN), and (3) who holds title. • Property records did not include the following required components for Elementary and Secondary School Emergency Relief Fund equipment items: (1) Percentage of Federal participation in the project costs for the Federal award under which the property was acquired, (2) who holds title, and (3) use and condition of the property. • An equipment item totaling $501,596.61 purchased using ESSER funds was included on the financial statement capital asset listing but was excluded from the program equipment listing. Cause: In discussing this deficiency with the School District, they stated these issues were a result of turnover within the Central Office. In addition, the ESSER equipment item was overlooked when preparing the program equipment listing. Effect: Failure to maintain a complete and accurate equipment listing and reconcile results of the physical inventory performed to the property records exposes the School District to unnecessary risk of error and misuse of equipment and/or Federal funds. Additionally, the School District is not in compliance with the Uniform Guidance and Georgia Department of Education guidance. Recommendation: The School District should develop and maintain equipment listings that reflect all required information, including a description, an identifying number, the source of funding, the title holder, the acquisition date, the cost, the percentage of Federal participation in the project costs, the location, the use and condition, and any ultimate disposal data for each piece of equipment. In addition, management should implement controls to ensure that a complete physical inventory of equipment is performed for every Federal program, and the results are reconciled back to the equipment listings at least once every two years. Views of Responsible Officials: We concur with this finding.
FA 2022-001 Improve Controls over Equipment Compliance Requirement: Equipment and Real Property Management Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Agriculture Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 10.553 – School Breakfast Program 10.555 – National School Lunch Program Federal Award Number: 225GA324N1199 Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 – 84.425D – Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425U – American Rescue Plan Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425W – American Rescue Plan Elementary and Secondary School Emergency Relief Fund – Homeless Children and Youth Federal Award Numbers: S425D200012 (Year: 2020), S425D210012 (Year: 2021) S425U210012 (Year: 2021), S425W210011 (Year: 2021) Questioned Costs: None Identified Repeat of Prior Year Finding: FA 2021-001, FA 2020-001, FA 2019-003, FA 2018-002, FA 2017-004 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over equipment and real property management as it relates to the Child Nutrition Cluster and Elementary and Secondary School Emergency Relief Fund programs. Background: The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential child care institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and secondary schools and encourages the domestic consumption of nutritious agricultural commodities. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. CNC and ESSER funding was granted to the Georgia Department of Education (GDOE) by the U.S. Department of Agriculture and U.S. Department of Education (ED), respectively. GDOE is responsible for distributing funds to LEAs and overseeing the programs. CNC funds totaling $1,113,376.14 and ESSER funds totaling $3,586,443.78 were expended and reported on the Dooly County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.313(d)(1) state, "Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property." In addition, the Uniform Guidance, Section 200.313(d)(2) states, "A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years." Condition: The following deficiencies were noted when reviewing the CNC and ESSER equipment listings and physically locating equipment items: • Property records did not include the following required components for CNC equipment items: (1) Percentage of Federal participation in the project costs for the Federal award under which the property was acquired, (2) the source of funding for the property (including the FAIN), and (3) who holds title. • Property records did not include the following required components for Elementary and Secondary School Emergency Relief Fund equipment items: (1) Percentage of Federal participation in the project costs for the Federal award under which the property was acquired, (2) who holds title, and (3) use and condition of the property. • An equipment item totaling $501,596.61 purchased using ESSER funds was included on the financial statement capital asset listing but was excluded from the program equipment listing. Cause: In discussing this deficiency with the School District, they stated these issues were a result of turnover within the Central Office. In addition, the ESSER equipment item was overlooked when preparing the program equipment listing. Effect: Failure to maintain a complete and accurate equipment listing and reconcile results of the physical inventory performed to the property records exposes the School District to unnecessary risk of error and misuse of equipment and/or Federal funds. Additionally, the School District is not in compliance with the Uniform Guidance and Georgia Department of Education guidance. Recommendation: The School District should develop and maintain equipment listings that reflect all required information, including a description, an identifying number, the source of funding, the title holder, the acquisition date, the cost, the percentage of Federal participation in the project costs, the location, the use and condition, and any ultimate disposal data for each piece of equipment. In addition, management should implement controls to ensure that a complete physical inventory of equipment is performed for every Federal program, and the results are reconciled back to the equipment listings at least once every two years. Views of Responsible Officials: We concur with this finding.
FA 2022-001 Improve Controls over Equipment Compliance Requirement: Equipment and Real Property Management Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Agriculture Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 10.553 – School Breakfast Program 10.555 – National School Lunch Program Federal Award Number: 225GA324N1199 Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 – 84.425D – Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425U – American Rescue Plan Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425W – American Rescue Plan Elementary and Secondary School Emergency Relief Fund – Homeless Children and Youth Federal Award Numbers: S425D200012 (Year: 2020), S425D210012 (Year: 2021) S425U210012 (Year: 2021), S425W210011 (Year: 2021) Questioned Costs: None Identified Repeat of Prior Year Finding: FA 2021-001, FA 2020-001, FA 2019-003, FA 2018-002, FA 2017-004 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over equipment and real property management as it relates to the Child Nutrition Cluster and Elementary and Secondary School Emergency Relief Fund programs. Background: The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential child care institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and secondary schools and encourages the domestic consumption of nutritious agricultural commodities. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. CNC and ESSER funding was granted to the Georgia Department of Education (GDOE) by the U.S. Department of Agriculture and U.S. Department of Education (ED), respectively. GDOE is responsible for distributing funds to LEAs and overseeing the programs. CNC funds totaling $1,113,376.14 and ESSER funds totaling $3,586,443.78 were expended and reported on the Dooly County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.313(d)(1) state, "Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property." In addition, the Uniform Guidance, Section 200.313(d)(2) states, "A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years." Condition: The following deficiencies were noted when reviewing the CNC and ESSER equipment listings and physically locating equipment items: • Property records did not include the following required components for CNC equipment items: (1) Percentage of Federal participation in the project costs for the Federal award under which the property was acquired, (2) the source of funding for the property (including the FAIN), and (3) who holds title. • Property records did not include the following required components for Elementary and Secondary School Emergency Relief Fund equipment items: (1) Percentage of Federal participation in the project costs for the Federal award under which the property was acquired, (2) who holds title, and (3) use and condition of the property. • An equipment item totaling $501,596.61 purchased using ESSER funds was included on the financial statement capital asset listing but was excluded from the program equipment listing. Cause: In discussing this deficiency with the School District, they stated these issues were a result of turnover within the Central Office. In addition, the ESSER equipment item was overlooked when preparing the program equipment listing. Effect: Failure to maintain a complete and accurate equipment listing and reconcile results of the physical inventory performed to the property records exposes the School District to unnecessary risk of error and misuse of equipment and/or Federal funds. Additionally, the School District is not in compliance with the Uniform Guidance and Georgia Department of Education guidance. Recommendation: The School District should develop and maintain equipment listings that reflect all required information, including a description, an identifying number, the source of funding, the title holder, the acquisition date, the cost, the percentage of Federal participation in the project costs, the location, the use and condition, and any ultimate disposal data for each piece of equipment. In addition, management should implement controls to ensure that a complete physical inventory of equipment is performed for every Federal program, and the results are reconciled back to the equipment listings at least once every two years. Views of Responsible Officials: We concur with this finding.
FA 2022-001 Improve Controls over Equipment Compliance Requirement: Equipment and Real Property Management Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Agriculture Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 10.553 – School Breakfast Program 10.555 – National School Lunch Program Federal Award Number: 225GA324N1199 Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 – 84.425D – Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425U – American Rescue Plan Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425W – American Rescue Plan Elementary and Secondary School Emergency Relief Fund – Homeless Children and Youth Federal Award Numbers: S425D200012 (Year: 2020), S425D210012 (Year: 2021) S425U210012 (Year: 2021), S425W210011 (Year: 2021) Questioned Costs: None Identified Repeat of Prior Year Finding: FA 2021-001, FA 2020-001, FA 2019-003, FA 2018-002, FA 2017-004 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over equipment and real property management as it relates to the Child Nutrition Cluster and Elementary and Secondary School Emergency Relief Fund programs. Background: The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential child care institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and secondary schools and encourages the domestic consumption of nutritious agricultural commodities. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. CNC and ESSER funding was granted to the Georgia Department of Education (GDOE) by the U.S. Department of Agriculture and U.S. Department of Education (ED), respectively. GDOE is responsible for distributing funds to LEAs and overseeing the programs. CNC funds totaling $1,113,376.14 and ESSER funds totaling $3,586,443.78 were expended and reported on the Dooly County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.313(d)(1) state, "Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property." In addition, the Uniform Guidance, Section 200.313(d)(2) states, "A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years." Condition: The following deficiencies were noted when reviewing the CNC and ESSER equipment listings and physically locating equipment items: • Property records did not include the following required components for CNC equipment items: (1) Percentage of Federal participation in the project costs for the Federal award under which the property was acquired, (2) the source of funding for the property (including the FAIN), and (3) who holds title. • Property records did not include the following required components for Elementary and Secondary School Emergency Relief Fund equipment items: (1) Percentage of Federal participation in the project costs for the Federal award under which the property was acquired, (2) who holds title, and (3) use and condition of the property. • An equipment item totaling $501,596.61 purchased using ESSER funds was included on the financial statement capital asset listing but was excluded from the program equipment listing. Cause: In discussing this deficiency with the School District, they stated these issues were a result of turnover within the Central Office. In addition, the ESSER equipment item was overlooked when preparing the program equipment listing. Effect: Failure to maintain a complete and accurate equipment listing and reconcile results of the physical inventory performed to the property records exposes the School District to unnecessary risk of error and misuse of equipment and/or Federal funds. Additionally, the School District is not in compliance with the Uniform Guidance and Georgia Department of Education guidance. Recommendation: The School District should develop and maintain equipment listings that reflect all required information, including a description, an identifying number, the source of funding, the title holder, the acquisition date, the cost, the percentage of Federal participation in the project costs, the location, the use and condition, and any ultimate disposal data for each piece of equipment. In addition, management should implement controls to ensure that a complete physical inventory of equipment is performed for every Federal program, and the results are reconciled back to the equipment listings at least once every two years. Views of Responsible Officials: We concur with this finding.
Finding Number 2022-001: Payrate Approval Letters (Significant Deficiency over Internal Control and Instances of Noncompliance over Major Federal Program – Allowable costs/Cost Principles) FALN Number 93.498 Provider Relief Fund Criteria: 2022 Compliance Supplement and 2 CFR 200.303(a) stated that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and terms and conditions of the federal award. Condition/Context: As a result of our audit procedures, we noted management did not retain 15 of 20 COVID-related leave approval forms for payroll expenditures tested. Repeat Finding from Prior Year(s): No Cause and Effect: The Health System did not have proper controls in place to ensure retention of COVID-related leave forms to support payroll leave expensed, which could lead to unauthorized payroll leave expenses being charged to the program. Questioned Cost: None Recommendation: We recommend management implement policies and procedures to ensure that approval of leave forms are retained to support related expenditures. Views of Responsible Officials and Planned Corrective Action: Management agrees with finding. The Health System will review and modify policies and procedures over the program to ensure management implements policies, procedures, and processes to make sure that leave approval forms are retained and are prepared and reviewed by separate individuals with evidence of review documented.
Finding Number 2022-002: Approval of Non-Payroll Expenditures (Significant Deficiency over Internal Control and Instances of Noncompliance over Major Federal Program – Allowable costs/Cost Principles) FALN Number 93.498 Provider Relief Fund Criteria: 2022 Compliance Supplement and 2 CFR 200.303(a) stated that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and terms and conditions of the federal award. Condition/Context: As a result of our audit procedures, we noted 16 of 40 samples of nonpayroll expenditures tested that the Health System did not have internal controls in place to ensure expenditures charged to the program have documentation of management’s review/approval. Repeat Finding from Prior Year(s): No Cause and Effect: The Health System did not have proper controls in place to ensure all invoices are reviewed and approved by management prior to disbursements, which could lead to noncompliance with program requirements. Questioned Cost: None Recommendation: We recommend management implement policies and procedures to ensure all invoices are reviewed and approved prior to disbursements. Views of Responsible Officials and Planned Corrective Action: Management agrees with finding. The Health System will review and modify policies and procedures for non-payroll expenditures to ensure management’s review/approval is documented.
Finding Number 2022-004: Duplicate Charges (Significant Deficiency over Internal Control and Instances of Noncompliance – Allowable Costs/Cost Principles) FALN Number 16.575 U.S. Department of Justice, Office of Victims of Crime – Crime Victim Assistance Criteria: 2022 Compliance Supplement and 2 CFR 200.303(a) stated that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and terms and conditions of the federal award. Condition/Context: As a result of our audit procedures to evaluate the summary schedule of prior audit findings, we noted 1 sample of a $4,855 non-payroll expenditure had been duplicated on invoices remitted to the grantor. Repeat Finding from Prior Year(s): Yes, Finding Number 2021-002 Cause and Effect: The Health System did not have proper controls in place to prevent duplicate transactions from being entered into the system and charged to the program, which resulted in duplicate costs being charged to the program. Questioned Cost: None Recommendation: We recommend management implement policies and procedures to prevent duplicate transactions from being charged to the program. Views of Responsible Officials and Planned Corrective Action: Management agrees with finding. The Health System will review and modify policies and procedures over the program to ensure management implements policies, procedures, and processes to prevent duplicate transactions from being charged to the program.
Finding Number 2022-005: Gift Card Tracking (Significant Deficiency over Internal Control and Instance of Noncompliance – Allowable Costs/Cost Principles) FALN Number 16.575 U.S. Department of Justice, Office of Victims of Crime – Crime Victim Assistance Criteria: 2022 Compliance Supplement and 2 CFR 200.303(a) stated that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and terms and conditions of the federal award. Condition/Context: As a result of our audit procedures to evaluate the summary schedule of prior audit findings, we noted 1 sample of a $5,008 gift card purchase with multiple gift cards was not tracked with an inventory system to allow for the expenditure to the grantor to be invoiced after gift cards are distributed. We also noted the Health System did not have policies and procedures related to gift card tracking. Repeat Finding from Prior Year(s): Yes, Finding Number 2021-003 Cause and Effect: The Health System did not have proper controls in place to ensure proper tracking of the gift cards, which could lead to noncompliance with program compliance requirements. Questioned Cost: None Recommendation: We recommend management implement policies and procedures to ensure proper tracking of gift card distributions for victims of crime. Views of Responsible Officials and Planned Corrective Action: Management agrees with finding. The Health System will review and modify policies and procedures over the program to ensure management implements policies, procedures, and processes to properly track the distribution of gift cards for victims of crime.
Finding Number 2022-006: Charges Not Specified in Grant Contracts (Significant Deficiency over Internal Control and Instances of Noncompliance – Allowable Costs/Cost Principles) FALN Number 16.575 U.S. Department of Justice, Office of Victims of Crime – Crime Victim Assistance Criteria: 2022 Compliance Supplement and 2 CFR 200.303(a) stated that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and terms and conditions of the federal award. Condition/Context: As a result of our audit procedures to evaluate the summary schedule of prior audit findings, we noted 1 sample of a $4,265 non-payroll expenditure for purchased service that was not outlined in the grant contract. Repeat Finding from Prior Year(s): Yes, Finding Number 2021-004 Cause and Effect: The Health System did not have proper controls in place to ensure expenditures being charged to the program are specifically identified in the grant contract. In addition, the Health System did not have proper controls in place to ensure all invoices are reviewed and approved by management prior to disbursements. The results could lead to noncompliance with compliance requirements of the program. Questioned Cost: None Recommendation: We recommend management implement policies and procedures to ensure expenditures charged to the program are in accordance with the grant contracts and that all invoices are reviewed and approved prior to disbursements. Views of Responsible Officials and Planned Corrective Action: Management agrees with finding. The Health System will review and modify policies and procedures over the program to ensure management implement policies, procedures, and processes to make sure that expenditures are charged to the program in accordance with the grant contracts and that all invoices are reviewed and approved prior to disbursements.
Finding Number 2022-008: Reporting (Significant Deficiency over Internal Control and Instances of Noncompliance – Reporting) FALN Number 16.575 U.S. Department of Justice, Office of Victims of Crime – Crime Victim Assistance Criteria: 2022 Compliance Supplement and 2 CFR 200.303(a) stated that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations and terms and conditions of the federal award. Condition/Context: As a result of our audit procedures to evaluate the summary schedule of prior audit findings, we noted 1 sample of untimely financial reporting submitting to the grantor. The financial report was for the quarter ended 3/31/2022 with a due date of 30 days after the reporting period; however, the report was submitted on 6/13/2022. We also noted 1 sample of performance report for the quarter ended 12/31/2021 that did not have clear evidence of preparer and reviewer of the report. Repeat Finding from Prior Year(s): Yes, Finding Number 2021-006 Cause and Effect: The Health System did not have proper controls in place to ensure the performance reports are prepared and reviewed by separate individuals with evidence of review documented and retained, which could lead to inaccurate information being reported. In addition, the Health System did not have proper controls in place to ensure financial reports are submitted timely with underlying support properly documented, which resulted in untimely reporting filing. Questioned Cost: None Recommendation: We recommend management implement policies and procedures to ensure performance reports are prepared and reviewed by separate individuals with evidence of review documented and that financial reports are submitted timely with underlying support properly documented. Views of Responsible Officials and Planned Corrective Action: Management agrees with finding. The Health System will review and modify policies and procedures over the program to ensure management implement policies and procedures to ensure performance reports are prepared and reviewed by separate individuals with evidence of review documented and that financial reports are submitted timely.
Federal Program Information: Funding Agency: Department of the Treasury Title: Coronavirus State and Local Fiscal Recovery Fund Program Assistance Listing Number: 21.027 Compliance Requirement: Allowable Activities/Allowable Costs Award Year: July 1, 2021 to June 30, 2022 Condition: During our audit, we noted that the following circumstances in our testwork over disbursements for the Coronavirus State and Local Fiscal Recovery Fund program: During our examination of disbursements, there were three transactions totaling $18,287 that the City had no supporting documentation to substantiate that the transactions had gone through the proper internal controls of the City and were allowable activities and were for allowable costs. During our examination of disbursements, there were three transactions for $12,958 where the City did not go through the City’s internal control process for disbursements of having purchase requisitions created and approved prior to the creation of approved purchase orders. These transactions went through a direct pay voucher without having the proper approvals, which is not in compliance with the City’s approved policies and procedures over disbursements. Criteria: The City must establish internal controls over compliance with allowable activities, allowable costs (2 CFR 200.303). Effect: The City did not follow its properly designed internal control system to ensure expenditures complied with the allowable activities/allowable costs requirements for the Coronavirus State and Local Fiscal Recovery Fund program. Questioned Costs: $18,287 Cause: The City did not follow its system of internal control for some of its purchases and there were some transactions that the City could not locate because they were not properly filed. Auditors’ Recommendation: We recommend that the City ensure that it follows its internal controls for all transactions to ensure proper review of all costs associated with the Coronavirus State and Local Fiscal Recovery Fund expenditures. Agency’s Response: The Finance Department will immediately implement processes and procedures for grant requirements to ensure: Staff follow processes and procedures Implement controls for expending the funds Retain proper documentation for processing reimbursements Maintain those documents for future audit The responsible party for this finding is the finance director.
FA 2022-001 Improve Controls over Expenditures Compliance Requirement: Activities Allowed/Unallowed Allowable Costs/Cost Principles Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 – 84.425D – Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425U – American Rescue Plan Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425W – Elementary and Secondary School Emergency Relief Fund Federal Award Number: S4250200012 (Year: 2020), S4250210012 (Year 2021), S425U210012 (Year: 2021), S425W210011 (Year 2021) Questioned Costs: $279,314 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over expenditures as it relates to the Elementary and Secondary School Emergency Relief Fund program. Background: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. lll FEDERAL AWARD FINDINGS AND QUESTIONED COSTS ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $3,718,412.45 were expended and reported on the City of Thomasville Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented…” In addition, provisions included in the Uniform Guidance, Section 202.403 – Reasonable Costs state that “a cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to: (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm’s-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award… (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award’s cost.” Furthermore, provisions included in the Uniform Guidance, Section 200.318 – General Procurement Standards state that “the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations… for the acquisition of property or services required under a Federal award or subaward…” Condition: Auditors performed a review of expenditure activity associated with the ESSER program to determine if appropriate internal controls were implemented and applicable compliance requirements were met. This testing revealed that “retention” bonuses were paid to individuals who were not employees of the School District. These individuals were hired to perform specific functions as detailed within the associated contracts and were paid amounts in excess of the stated rate noted within these contracts. Furthermore, the School District does not have the authority or ability to retain these individuals as lll FEDERAL AWARD FINDINGS AND QUESTIONED COSTS they were not employees of the School District and contract provisions requiring the individuals to remain employed by the companies and in the service of the School District for a stated period of time were not reflected within the associated contract. Therefore, expenditures totaling $60,315.00 were not considered to be reasonable and necessary for the performance of the ESSER program and deemed unallowable. Questioned Costs: Known questioned costs of $60,315.00 were identified for expenditures that were not incurred for a necessary and reasonable purpose and did not follow the School District’s policies and procedures. Using the population being sampled, which totaled $329,101.23, we project the likely questioned costs to be approximately $279,314.22. Cause: Per discussion with management, the School District believed that the expenditures were allowable as the expenditures were approved by GaDOE through the Consolidated Application process and approved by the local Board of Education; however, they were not aware that contract amendments should be initiated prior to the expenditure of funds in this manner. Effect: The School District is not in compliance with the Uniform Guidance or GaDOE guidance related to the ESSER program. Failure to ensure that appropriate policies and procedures are followed when expending federal funds may expose the School District to unnecessary financial strain and shortages and GaDOE may require the School District to return funds associated with unallowable expenditures. Recommendation: The School District should review current internal control procedures related to ESSER program expenditures. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that expenditures are in line with provisions reflected within the associated contract and/or contract amendments. In addition, the School District should implement a monitoring process to ensure that all expenditures are compliant with the School District’s purchasing policies and procedures. Views of Responsible Officials: We concur with this finding.
FA 2022-001 Improve Controls over Expenditures Compliance Requirement: Activities Allowed/Unallowed Allowable Costs/Cost Principles Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 – 84.425D – Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425U – American Rescue Plan Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425W – Elementary and Secondary School Emergency Relief Fund Federal Award Number: S4250200012 (Year: 2020), S4250210012 (Year 2021), S425U210012 (Year: 2021), S425W210011 (Year 2021) Questioned Costs: $279,314 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over expenditures as it relates to the Elementary and Secondary School Emergency Relief Fund program. Background: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. lll FEDERAL AWARD FINDINGS AND QUESTIONED COSTS ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $3,718,412.45 were expended and reported on the City of Thomasville Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented…” In addition, provisions included in the Uniform Guidance, Section 202.403 – Reasonable Costs state that “a cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to: (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm’s-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award… (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award’s cost.” Furthermore, provisions included in the Uniform Guidance, Section 200.318 – General Procurement Standards state that “the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations… for the acquisition of property or services required under a Federal award or subaward…” Condition: Auditors performed a review of expenditure activity associated with the ESSER program to determine if appropriate internal controls were implemented and applicable compliance requirements were met. This testing revealed that “retention” bonuses were paid to individuals who were not employees of the School District. These individuals were hired to perform specific functions as detailed within the associated contracts and were paid amounts in excess of the stated rate noted within these contracts. Furthermore, the School District does not have the authority or ability to retain these individuals as lll FEDERAL AWARD FINDINGS AND QUESTIONED COSTS they were not employees of the School District and contract provisions requiring the individuals to remain employed by the companies and in the service of the School District for a stated period of time were not reflected within the associated contract. Therefore, expenditures totaling $60,315.00 were not considered to be reasonable and necessary for the performance of the ESSER program and deemed unallowable. Questioned Costs: Known questioned costs of $60,315.00 were identified for expenditures that were not incurred for a necessary and reasonable purpose and did not follow the School District’s policies and procedures. Using the population being sampled, which totaled $329,101.23, we project the likely questioned costs to be approximately $279,314.22. Cause: Per discussion with management, the School District believed that the expenditures were allowable as the expenditures were approved by GaDOE through the Consolidated Application process and approved by the local Board of Education; however, they were not aware that contract amendments should be initiated prior to the expenditure of funds in this manner. Effect: The School District is not in compliance with the Uniform Guidance or GaDOE guidance related to the ESSER program. Failure to ensure that appropriate policies and procedures are followed when expending federal funds may expose the School District to unnecessary financial strain and shortages and GaDOE may require the School District to return funds associated with unallowable expenditures. Recommendation: The School District should review current internal control procedures related to ESSER program expenditures. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that expenditures are in line with provisions reflected within the associated contract and/or contract amendments. In addition, the School District should implement a monitoring process to ensure that all expenditures are compliant with the School District’s purchasing policies and procedures. Views of Responsible Officials: We concur with this finding.
FA 2022-001 Improve Controls over Expenditures Compliance Requirement: Activities Allowed/Unallowed Allowable Costs/Cost Principles Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 – 84.425D – Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425U – American Rescue Plan Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425W – Elementary and Secondary School Emergency Relief Fund Federal Award Number: S4250200012 (Year: 2020), S4250210012 (Year 2021), S425U210012 (Year: 2021), S425W210011 (Year 2021) Questioned Costs: $279,314 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over expenditures as it relates to the Elementary and Secondary School Emergency Relief Fund program. Background: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. lll FEDERAL AWARD FINDINGS AND QUESTIONED COSTS ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $3,718,412.45 were expended and reported on the City of Thomasville Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented…” In addition, provisions included in the Uniform Guidance, Section 202.403 – Reasonable Costs state that “a cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to: (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm’s-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award… (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award’s cost.” Furthermore, provisions included in the Uniform Guidance, Section 200.318 – General Procurement Standards state that “the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations… for the acquisition of property or services required under a Federal award or subaward…” Condition: Auditors performed a review of expenditure activity associated with the ESSER program to determine if appropriate internal controls were implemented and applicable compliance requirements were met. This testing revealed that “retention” bonuses were paid to individuals who were not employees of the School District. These individuals were hired to perform specific functions as detailed within the associated contracts and were paid amounts in excess of the stated rate noted within these contracts. Furthermore, the School District does not have the authority or ability to retain these individuals as lll FEDERAL AWARD FINDINGS AND QUESTIONED COSTS they were not employees of the School District and contract provisions requiring the individuals to remain employed by the companies and in the service of the School District for a stated period of time were not reflected within the associated contract. Therefore, expenditures totaling $60,315.00 were not considered to be reasonable and necessary for the performance of the ESSER program and deemed unallowable. Questioned Costs: Known questioned costs of $60,315.00 were identified for expenditures that were not incurred for a necessary and reasonable purpose and did not follow the School District’s policies and procedures. Using the population being sampled, which totaled $329,101.23, we project the likely questioned costs to be approximately $279,314.22. Cause: Per discussion with management, the School District believed that the expenditures were allowable as the expenditures were approved by GaDOE through the Consolidated Application process and approved by the local Board of Education; however, they were not aware that contract amendments should be initiated prior to the expenditure of funds in this manner. Effect: The School District is not in compliance with the Uniform Guidance or GaDOE guidance related to the ESSER program. Failure to ensure that appropriate policies and procedures are followed when expending federal funds may expose the School District to unnecessary financial strain and shortages and GaDOE may require the School District to return funds associated with unallowable expenditures. Recommendation: The School District should review current internal control procedures related to ESSER program expenditures. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that expenditures are in line with provisions reflected within the associated contract and/or contract amendments. In addition, the School District should implement a monitoring process to ensure that all expenditures are compliant with the School District’s purchasing policies and procedures. Views of Responsible Officials: We concur with this finding.
FA 2022-001 Improve Controls over Expenditures Compliance Requirement: Activities Allowed/Unallowed Allowable Costs/Cost Principles Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: COVID-19 – 84.425D – Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425U – American Rescue Plan Elementary and Secondary School Emergency Relief Fund COVID-19 – 84.425W – Elementary and Secondary School Emergency Relief Fund Federal Award Number: S4250200012 (Year: 2020), S4250210012 (Year 2021), S425U210012 (Year: 2021), S425W210011 (Year 2021) Questioned Costs: $279,314 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over expenditures as it relates to the Elementary and Secondary School Emergency Relief Fund program. Background: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. lll FEDERAL AWARD FINDINGS AND QUESTIONED COSTS ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $3,718,412.45 were expended and reported on the City of Thomasville Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented…” In addition, provisions included in the Uniform Guidance, Section 202.403 – Reasonable Costs state that “a cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to: (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm’s-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award… (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award’s cost.” Furthermore, provisions included in the Uniform Guidance, Section 200.318 – General Procurement Standards state that “the non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations… for the acquisition of property or services required under a Federal award or subaward…” Condition: Auditors performed a review of expenditure activity associated with the ESSER program to determine if appropriate internal controls were implemented and applicable compliance requirements were met. This testing revealed that “retention” bonuses were paid to individuals who were not employees of the School District. These individuals were hired to perform specific functions as detailed within the associated contracts and were paid amounts in excess of the stated rate noted within these contracts. Furthermore, the School District does not have the authority or ability to retain these individuals as lll FEDERAL AWARD FINDINGS AND QUESTIONED COSTS they were not employees of the School District and contract provisions requiring the individuals to remain employed by the companies and in the service of the School District for a stated period of time were not reflected within the associated contract. Therefore, expenditures totaling $60,315.00 were not considered to be reasonable and necessary for the performance of the ESSER program and deemed unallowable. Questioned Costs: Known questioned costs of $60,315.00 were identified for expenditures that were not incurred for a necessary and reasonable purpose and did not follow the School District’s policies and procedures. Using the population being sampled, which totaled $329,101.23, we project the likely questioned costs to be approximately $279,314.22. Cause: Per discussion with management, the School District believed that the expenditures were allowable as the expenditures were approved by GaDOE through the Consolidated Application process and approved by the local Board of Education; however, they were not aware that contract amendments should be initiated prior to the expenditure of funds in this manner. Effect: The School District is not in compliance with the Uniform Guidance or GaDOE guidance related to the ESSER program. Failure to ensure that appropriate policies and procedures are followed when expending federal funds may expose the School District to unnecessary financial strain and shortages and GaDOE may require the School District to return funds associated with unallowable expenditures. Recommendation: The School District should review current internal control procedures related to ESSER program expenditures. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that expenditures are in line with provisions reflected within the associated contract and/or contract amendments. In addition, the School District should implement a monitoring process to ensure that all expenditures are compliant with the School District’s purchasing policies and procedures. Views of Responsible Officials: We concur with this finding.
Finding number: 2022-001 Type of finding: Material weakness in internal control and noncompliance Federal program: Research and Development Cluster – various Assistance Listing numbers Federal agency: Various Pass-through entity: Various Federal award year: July 1, 2021 to June 30, 2022 Compliance Requirement: Cash management Criteria The requirements for cash management are contained in Section 200.305 of Title 2 U.S. Code of Federal Regulations Part 200 (2 CFR 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the Uniform Guidance), the A-102 Common Rule (§_.21), 0MB Circular A-110 (2 CFR section 215.22), Treasury regulations at 31 CFR part 205, program legislation, Federal awarding agency regulations, and the terms and conditions of the award. When entities are funded on a reimbursement basis, program costs must be paid for by entity funds before reimbursement is requested from the Federal Government. Additionally, Section 200.303 of the Uniform Guidance indicates that the nonfederal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. The Uniform Guidance also indicates that these internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” (Green Book) 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 Office of Management and Budget (OMB) has clarified that the references to the Green Book and COSO were only provided as best practices and not requirements. Condition During our test work over the Research and Development Cluster, we selected a sample of expenditures and cash draws/issued invoices to sponsors to verify the expenditures were paid prior to the date of the reimbursement request. We also verified the cash draw was supported by a detail of expenditures that reconciled. For the Research and Development Cluster, we noted 7 expenditures that totaled $4,061 of our sample of 40 expenditures that totaled $95,703 were not paid prior to the reimbursement request. Additionally, we noted 7 draws of our sample of 25 where the draw was over drawn. The total overdraw was $20,298 of the total cash draws tested of $601,919. Additionally, we noted 3 draws were not supported by a detail of expenditures that reconciled. The variance difference was $466. Cause UAMS did not maintain adequate support for cash draws causing unreconciled variances in the draw request detail. Additionally, cash draws were not appropriately reviewed to ensure that the expenditures were paid prior to the reimbursement requests. Effect Failure to properly complete cash draws may prevent UAMS from being in compliance with the requirements set forth by the Uniform Guidance. Questioned costs $463 related to interest on the over draw $466 related to unreconciled variances between the cash draw and the expenditure detail $929 total questioned costs Questioned costs related to the instances where the expenditure was not paid prior to the reimbursement request are not determinable. Statistical Sample The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding A similar finding was reported in prior year audit. Recommendation We recommend that management design and implement internal controls that will ensure that program costs are paid before a request for reimbursement is made. Additionally, we recommend that management keep records of what expenditures make up each draw. View of responsible officials We concur with the finding. The instances where expenditures were not paid prior to the reimbursement request was noted in the prior year audit and was corrected as soon as the finding was communicated to management. The exceptions identified in the current year audit were prior to the control process changes made by management to ensure all expenses are paid before reimbursement is requested. There were no exceptions noted after the date of the change from the prior year audit. During the fiscal year, the grants accounting office experienced a significant turnover in staff and leadership in addition to implementing a new financial system. With the new director and staff in place and completing the implementation of the financial system, we believe adequate controls have been established and are working properly to ensure compliance with cash management regulations.
Finding number: 2022-001 Type of finding: Material weakness in internal control and noncompliance Federal program: Research and Development Cluster – various Assistance Listing numbers Federal agency: Various Pass-through entity: Various Federal award year: July 1, 2021 to June 30, 2022 Compliance Requirement: Cash management Criteria The requirements for cash management are contained in Section 200.305 of Title 2 U.S. Code of Federal Regulations Part 200 (2 CFR 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the Uniform Guidance), the A-102 Common Rule (§_.21), 0MB Circular A-110 (2 CFR section 215.22), Treasury regulations at 31 CFR part 205, program legislation, Federal awarding agency regulations, and the terms and conditions of the award. When entities are funded on a reimbursement basis, program costs must be paid for by entity funds before reimbursement is requested from the Federal Government. Additionally, Section 200.303 of the Uniform Guidance indicates that the nonfederal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. The Uniform Guidance also indicates that these internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” (Green Book) 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 Office of Management and Budget (OMB) has clarified that the references to the Green Book and COSO were only provided as best practices and not requirements. Condition During our test work over the Research and Development Cluster, we selected a sample of expenditures and cash draws/issued invoices to sponsors to verify the expenditures were paid prior to the date of the reimbursement request. We also verified the cash draw was supported by a detail of expenditures that reconciled. For the Research and Development Cluster, we noted 7 expenditures that totaled $4,061 of our sample of 40 expenditures that totaled $95,703 were not paid prior to the reimbursement request. Additionally, we noted 7 draws of our sample of 25 where the draw was over drawn. The total overdraw was $20,298 of the total cash draws tested of $601,919. Additionally, we noted 3 draws were not supported by a detail of expenditures that reconciled. The variance difference was $466. Cause UAMS did not maintain adequate support for cash draws causing unreconciled variances in the draw request detail. Additionally, cash draws were not appropriately reviewed to ensure that the expenditures were paid prior to the reimbursement requests. Effect Failure to properly complete cash draws may prevent UAMS from being in compliance with the requirements set forth by the Uniform Guidance. Questioned costs $463 related to interest on the over draw $466 related to unreconciled variances between the cash draw and the expenditure detail $929 total questioned costs Questioned costs related to the instances where the expenditure was not paid prior to the reimbursement request are not determinable. Statistical Sample The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding A similar finding was reported in prior year audit. Recommendation We recommend that management design and implement internal controls that will ensure that program costs are paid before a request for reimbursement is made. Additionally, we recommend that management keep records of what expenditures make up each draw. View of responsible officials We concur with the finding. The instances where expenditures were not paid prior to the reimbursement request was noted in the prior year audit and was corrected as soon as the finding was communicated to management. The exceptions identified in the current year audit were prior to the control process changes made by management to ensure all expenses are paid before reimbursement is requested. There were no exceptions noted after the date of the change from the prior year audit. During the fiscal year, the grants accounting office experienced a significant turnover in staff and leadership in addition to implementing a new financial system. With the new director and staff in place and completing the implementation of the financial system, we believe adequate controls have been established and are working properly to ensure compliance with cash management regulations.
Finding number: 2022-001 Type of finding: Material weakness in internal control and noncompliance Federal program: Research and Development Cluster – various Assistance Listing numbers Federal agency: Various Pass-through entity: Various Federal award year: July 1, 2021 to June 30, 2022 Compliance Requirement: Cash management Criteria The requirements for cash management are contained in Section 200.305 of Title 2 U.S. Code of Federal Regulations Part 200 (2 CFR 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the Uniform Guidance), the A-102 Common Rule (§_.21), 0MB Circular A-110 (2 CFR section 215.22), Treasury regulations at 31 CFR part 205, program legislation, Federal awarding agency regulations, and the terms and conditions of the award. When entities are funded on a reimbursement basis, program costs must be paid for by entity funds before reimbursement is requested from the Federal Government. Additionally, Section 200.303 of the Uniform Guidance indicates that the nonfederal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. The Uniform Guidance also indicates that these internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” (Green Book) 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 Office of Management and Budget (OMB) has clarified that the references to the Green Book and COSO were only provided as best practices and not requirements. Condition During our test work over the Research and Development Cluster, we selected a sample of expenditures and cash draws/issued invoices to sponsors to verify the expenditures were paid prior to the date of the reimbursement request. We also verified the cash draw was supported by a detail of expenditures that reconciled. For the Research and Development Cluster, we noted 7 expenditures that totaled $4,061 of our sample of 40 expenditures that totaled $95,703 were not paid prior to the reimbursement request. Additionally, we noted 7 draws of our sample of 25 where the draw was over drawn. The total overdraw was $20,298 of the total cash draws tested of $601,919. Additionally, we noted 3 draws were not supported by a detail of expenditures that reconciled. The variance difference was $466. Cause UAMS did not maintain adequate support for cash draws causing unreconciled variances in the draw request detail. Additionally, cash draws were not appropriately reviewed to ensure that the expenditures were paid prior to the reimbursement requests. Effect Failure to properly complete cash draws may prevent UAMS from being in compliance with the requirements set forth by the Uniform Guidance. Questioned costs $463 related to interest on the over draw $466 related to unreconciled variances between the cash draw and the expenditure detail $929 total questioned costs Questioned costs related to the instances where the expenditure was not paid prior to the reimbursement request are not determinable. Statistical Sample The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding A similar finding was reported in prior year audit. Recommendation We recommend that management design and implement internal controls that will ensure that program costs are paid before a request for reimbursement is made. Additionally, we recommend that management keep records of what expenditures make up each draw. View of responsible officials We concur with the finding. The instances where expenditures were not paid prior to the reimbursement request was noted in the prior year audit and was corrected as soon as the finding was communicated to management. The exceptions identified in the current year audit were prior to the control process changes made by management to ensure all expenses are paid before reimbursement is requested. There were no exceptions noted after the date of the change from the prior year audit. During the fiscal year, the grants accounting office experienced a significant turnover in staff and leadership in addition to implementing a new financial system. With the new director and staff in place and completing the implementation of the financial system, we believe adequate controls have been established and are working properly to ensure compliance with cash management regulations.
Finding number: 2022-001 Type of finding: Material weakness in internal control and noncompliance Federal program: Research and Development Cluster – various Assistance Listing numbers Federal agency: Various Pass-through entity: Various Federal award year: July 1, 2021 to June 30, 2022 Compliance Requirement: Cash management Criteria The requirements for cash management are contained in Section 200.305 of Title 2 U.S. Code of Federal Regulations Part 200 (2 CFR 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the Uniform Guidance), the A-102 Common Rule (§_.21), 0MB Circular A-110 (2 CFR section 215.22), Treasury regulations at 31 CFR part 205, program legislation, Federal awarding agency regulations, and the terms and conditions of the award. When entities are funded on a reimbursement basis, program costs must be paid for by entity funds before reimbursement is requested from the Federal Government. Additionally, Section 200.303 of the Uniform Guidance indicates that the nonfederal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. The Uniform Guidance also indicates that these internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” (Green Book) 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 Office of Management and Budget (OMB) has clarified that the references to the Green Book and COSO were only provided as best practices and not requirements. Condition During our test work over the Research and Development Cluster, we selected a sample of expenditures and cash draws/issued invoices to sponsors to verify the expenditures were paid prior to the date of the reimbursement request. We also verified the cash draw was supported by a detail of expenditures that reconciled. For the Research and Development Cluster, we noted 7 expenditures that totaled $4,061 of our sample of 40 expenditures that totaled $95,703 were not paid prior to the reimbursement request. Additionally, we noted 7 draws of our sample of 25 where the draw was over drawn. The total overdraw was $20,298 of the total cash draws tested of $601,919. Additionally, we noted 3 draws were not supported by a detail of expenditures that reconciled. The variance difference was $466. Cause UAMS did not maintain adequate support for cash draws causing unreconciled variances in the draw request detail. Additionally, cash draws were not appropriately reviewed to ensure that the expenditures were paid prior to the reimbursement requests. Effect Failure to properly complete cash draws may prevent UAMS from being in compliance with the requirements set forth by the Uniform Guidance. Questioned costs $463 related to interest on the over draw $466 related to unreconciled variances between the cash draw and the expenditure detail $929 total questioned costs Questioned costs related to the instances where the expenditure was not paid prior to the reimbursement request are not determinable. Statistical Sample The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding A similar finding was reported in prior year audit. Recommendation We recommend that management design and implement internal controls that will ensure that program costs are paid before a request for reimbursement is made. Additionally, we recommend that management keep records of what expenditures make up each draw. View of responsible officials We concur with the finding. The instances where expenditures were not paid prior to the reimbursement request was noted in the prior year audit and was corrected as soon as the finding was communicated to management. The exceptions identified in the current year audit were prior to the control process changes made by management to ensure all expenses are paid before reimbursement is requested. There were no exceptions noted after the date of the change from the prior year audit. During the fiscal year, the grants accounting office experienced a significant turnover in staff and leadership in addition to implementing a new financial system. With the new director and staff in place and completing the implementation of the financial system, we believe adequate controls have been established and are working properly to ensure compliance with cash management regulations.
Finding number: 2022-001 Type of finding: Material weakness in internal control and noncompliance Federal program: Research and Development Cluster – various Assistance Listing numbers Federal agency: Various Pass-through entity: Various Federal award year: July 1, 2021 to June 30, 2022 Compliance Requirement: Cash management Criteria The requirements for cash management are contained in Section 200.305 of Title 2 U.S. Code of Federal Regulations Part 200 (2 CFR 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (the Uniform Guidance), the A-102 Common Rule (§_.21), 0MB Circular A-110 (2 CFR section 215.22), Treasury regulations at 31 CFR part 205, program legislation, Federal awarding agency regulations, and the terms and conditions of the award. When entities are funded on a reimbursement basis, program costs must be paid for by entity funds before reimbursement is requested from the Federal Government. Additionally, Section 200.303 of the Uniform Guidance indicates that the nonfederal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. The Uniform Guidance also indicates that these internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” (Green Book) 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 Office of Management and Budget (OMB) has clarified that the references to the Green Book and COSO were only provided as best practices and not requirements. Condition During our test work over the Research and Development Cluster, we selected a sample of expenditures and cash draws/issued invoices to sponsors to verify the expenditures were paid prior to the date of the reimbursement request. We also verified the cash draw was supported by a detail of expenditures that reconciled. For the Research and Development Cluster, we noted 7 expenditures that totaled $4,061 of our sample of 40 expenditures that totaled $95,703 were not paid prior to the reimbursement request. Additionally, we noted 7 draws of our sample of 25 where the draw was over drawn. The total overdraw was $20,298 of the total cash draws tested of $601,919. Additionally, we noted 3 draws were not supported by a detail of expenditures that reconciled. The variance difference was $466. Cause UAMS did not maintain adequate support for cash draws causing unreconciled variances in the draw request detail. Additionally, cash draws were not appropriately reviewed to ensure that the expenditures were paid prior to the reimbursement requests. Effect Failure to properly complete cash draws may prevent UAMS from being in compliance with the requirements set forth by the Uniform Guidance. Questioned costs $463 related to interest on the over draw $466 related to unreconciled variances between the cash draw and the expenditure detail $929 total questioned costs Questioned costs related to the instances where the expenditure was not paid prior to the reimbursement request are not determinable. Statistical Sample The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding A similar finding was reported in prior year audit. Recommendation We recommend that management design and implement internal controls that will ensure that program costs are paid before a request for reimbursement is made. Additionally, we recommend that management keep records of what expenditures make up each draw. View of responsible officials We concur with the finding. The instances where expenditures were not paid prior to the reimbursement request was noted in the prior year audit and was corrected as soon as the finding was communicated to management. The exceptions identified in the current year audit were prior to the control process changes made by management to ensure all expenses are paid before reimbursement is requested. There were no exceptions noted after the date of the change from the prior year audit. During the fiscal year, the grants accounting office experienced a significant turnover in staff and leadership in addition to implementing a new financial system. With the new director and staff in place and completing the implementation of the financial system, we believe adequate controls have been established and are working properly to ensure compliance with cash management regulations.