FINDING 2023-004 Subject: COVID-19 - Education Stabilization Fund - Reporting Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013 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. During the audit period the School Corporation was required to submit two ESSER I reports, two ESSER II reports, and two ESSER III reports, for a total of six reports. However, the School Corporation failed to submit all six required 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). . . ." 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." 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, reports were not submitted to the IDOE. 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 reports are submitted timely and accurately. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-005 Subject: COVID-19 - Education Stabilization Fund - Special Tests and Provisions - Wage Rate Requirements Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425U Federal Award Number and Year (or Other Identifying Number): S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Tests and Provisions - Wage Rate Requirements Audit Findings: Material Weakness, Modified Opinion Condition and Context 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. Construction contracts in excess of $2,000 financed by federal assistance funds must pay wages not less than those established for the locality of the project (prevailing wage rates) by the Department of Labor (DOL) to their laborers and mechanics. Nonfederal entities are to include in their construction contracts subject to the Wage Rate Requirements a provision that the contractor or subcontractor comply with these requirements and the DOL regulations. This would include a requirement to submit a copy of the payroll and statement of compliance to the entity for each week in which contract work was performed. The School Corporation paid two different vendors for construction services totaling $1,198,350 during the audit period. The School Corporation's contracts with the vendors did not include the required prevailing wage rate clause. In addition, a copy of the payroll and a statement of compliance for each week in which contract work was performed was not received. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 29 CFR 5.5 states in part: "(a) The Agency head shall cause or require the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part from Federal funds or in accordance with guarantees of a Federal agency or financed from funds obtained by pledge of any contract of a Federal agency to make a loan, grant or annual contribution (except where a different meaning is expressly indicated), and which is subject to the labor standards provisions of any of the acts listed in § 5.1, the following clauses . . . (1) Minimum wages. (i) All laborers and mechanics employed or working upon the site of the work (or under the United States Housing Act of 1937 or under the Housing Act of 1949 in the construction or development of the project), will be paid unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account (except such payroll deductions as are permitted by regulations issued by the Secretary of Labor under the Copeland Act (29 CFR part 3)), the full amount of wages and bona fide fringe benefits (or cash equivalents thereof) due at time of payment computed at rates not less than those contained in the wage determination of the Secretary of Labor which is attached hereto and made a part hereof, regardless of any contractual relationship which may be alleged to exist between the contractor and such laborers and mechanics. . . . (3) Payrolls and basic records. . . . (ii) (A) The contractor shall submit weekly for each week in which any contract work is performed a copy of all payrolls to the (write in name of appropriate federal agency) if the agency is a party to the contract, but if the agency is not such a party, the contractor will submit the payrolls to the applicant, sponsor, or owner, as the case may be, for transmission to the (write in name of agency). . . ." 2 CFR 200 Appendix II states in part: "In addition to other provisions required by the Federal agency or non-Federal entity; all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following, as applicable. . . . (D) Davis-Bacon Act, as amended (40 U.S.C. 3141-3148). When required by Federal program legislation, all prime construction contracts in excess of $2,000 awarded by non- Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, and 3146-3148) as supplemented by Department of Labor regulations (29 CFR Part 5, 'Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction'). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor. In addition, contractors must be required to pay wages not less than once a week. . . ." Cause 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, contracts did not contain the appropriate language for the prevailing wage requirements and payrolls were not obtained to ensure proper payment of those wages. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no known questioned costs. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure contracts have language including prevailing wage rates and obtain payroll records to ensure wages are paid properly. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-005 Subject: COVID-19 - Education Stabilization Fund - Special Tests and Provisions - Wage Rate Requirements Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425U Federal Award Number and Year (or Other Identifying Number): S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Tests and Provisions - Wage Rate Requirements Audit Findings: Material Weakness, Modified Opinion Condition and Context 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. Construction contracts in excess of $2,000 financed by federal assistance funds must pay wages not less than those established for the locality of the project (prevailing wage rates) by the Department of Labor (DOL) to their laborers and mechanics. Nonfederal entities are to include in their construction contracts subject to the Wage Rate Requirements a provision that the contractor or subcontractor comply with these requirements and the DOL regulations. This would include a requirement to submit a copy of the payroll and statement of compliance to the entity for each week in which contract work was performed. The School Corporation paid two different vendors for construction services totaling $1,198,350 during the audit period. The School Corporation's contracts with the vendors did not include the required prevailing wage rate clause. In addition, a copy of the payroll and a statement of compliance for each week in which contract work was performed was not received. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 29 CFR 5.5 states in part: "(a) The Agency head shall cause or require the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part from Federal funds or in accordance with guarantees of a Federal agency or financed from funds obtained by pledge of any contract of a Federal agency to make a loan, grant or annual contribution (except where a different meaning is expressly indicated), and which is subject to the labor standards provisions of any of the acts listed in § 5.1, the following clauses . . . (1) Minimum wages. (i) All laborers and mechanics employed or working upon the site of the work (or under the United States Housing Act of 1937 or under the Housing Act of 1949 in the construction or development of the project), will be paid unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account (except such payroll deductions as are permitted by regulations issued by the Secretary of Labor under the Copeland Act (29 CFR part 3)), the full amount of wages and bona fide fringe benefits (or cash equivalents thereof) due at time of payment computed at rates not less than those contained in the wage determination of the Secretary of Labor which is attached hereto and made a part hereof, regardless of any contractual relationship which may be alleged to exist between the contractor and such laborers and mechanics. . . . (3) Payrolls and basic records. . . . (ii) (A) The contractor shall submit weekly for each week in which any contract work is performed a copy of all payrolls to the (write in name of appropriate federal agency) if the agency is a party to the contract, but if the agency is not such a party, the contractor will submit the payrolls to the applicant, sponsor, or owner, as the case may be, for transmission to the (write in name of agency). . . ." 2 CFR 200 Appendix II states in part: "In addition to other provisions required by the Federal agency or non-Federal entity; all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following, as applicable. . . . (D) Davis-Bacon Act, as amended (40 U.S.C. 3141-3148). When required by Federal program legislation, all prime construction contracts in excess of $2,000 awarded by non- Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, and 3146-3148) as supplemented by Department of Labor regulations (29 CFR Part 5, 'Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction'). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor. In addition, contractors must be required to pay wages not less than once a week. . . ." Cause 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, contracts did not contain the appropriate language for the prevailing wage requirements and payrolls were not obtained to ensure proper payment of those wages. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no known questioned costs. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure contracts have language including prevailing wage rates and obtain payroll records to ensure wages are paid properly. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FA 2022-001 Improve Controls over Employee Compensation Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of 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 (Year: 2022) Questioned Costs: $41,310 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over the employee compensation process as it relates to the Child Nutrition Cluster. Background Information: 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 schools and encourages the domestic consumption of nutritious agricultural commodities. CNC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture. GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the various CNC programs. CNC funds totaling $987,385.00 were expended and reported on the Hancock County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented…” Furthermore, provisions included in the Uniform Guidance, Section 200.430 – Compensation-Personal Services prescribe standards for documentation of personnel expenses and state, in part, that “(a) … Costs for compensation are allowable to the extent that they satisfy… specific requirements…, and that the total compensation for individual employees: (1) is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i)…, [as follows:] (i) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity…” Condition: Auditors reviewed salaries for a randomly selected sample of employees and those employees who were paid over the individually significant item threshold for CNC. These employees were reviewed to determine if internal controls were properly functioning and applicable compliance requirements were met. Testing of these salaries revealed that the former School Food Service Director’s salary was paid from Child Nutrition Cluster funds while the employee had moved to another position within the School District and did not perform Child Nutrition Cluster services. Questioned Costs: Known questioned costs of $41,310 were identified for salaries charged to the Child Nutrition Cluster in error. These known questioned costs related to expenditures that were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs. The following Assistance Listing Numbers were affected by known and likely questioned costs: 10.553 and 10.555. Cause: The former Child Nutrition Director changed to a different position and was not correctly removed from the Child Nutrition Cluster payroll for the year under review. Effect: The School District is not in compliance with the Uniform Guidance and GaDOE guidance. Failure to pay employees associated with the Child Nutrition Cluster the appropriate amount and/or maintain documentation supporting these payments could result in the expenditure of funds for unallowable purposes. This may also expose the School District to unnecessary financial strains and shortages within the Child Nutrition Cluster fund as ED or GaDOE may require the School District to return funds associated with improperly documented expenditures. Recommendation: The School District should evaluate their internal control processes regarding the retention of documentation to support employee compensation payments. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that expenditures are appropriately documented and to ensure that Child Nutrition Cluster employees are paid appropriately. Furthermore, management should develop and implement a monitoring process to ensure that these procedures are functioning properly. Views of Responsible Officials: We concur with this finding.
FA 2022-001 Improve Controls over Employee Compensation Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of 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 (Year: 2022) Questioned Costs: $41,310 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over the employee compensation process as it relates to the Child Nutrition Cluster. Background Information: 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 schools and encourages the domestic consumption of nutritious agricultural commodities. CNC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture. GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the various CNC programs. CNC funds totaling $987,385.00 were expended and reported on the Hancock County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented…” Furthermore, provisions included in the Uniform Guidance, Section 200.430 – Compensation-Personal Services prescribe standards for documentation of personnel expenses and state, in part, that “(a) … Costs for compensation are allowable to the extent that they satisfy… specific requirements…, and that the total compensation for individual employees: (1) is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i)…, [as follows:] (i) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity…” Condition: Auditors reviewed salaries for a randomly selected sample of employees and those employees who were paid over the individually significant item threshold for CNC. These employees were reviewed to determine if internal controls were properly functioning and applicable compliance requirements were met. Testing of these salaries revealed that the former School Food Service Director’s salary was paid from Child Nutrition Cluster funds while the employee had moved to another position within the School District and did not perform Child Nutrition Cluster services. Questioned Costs: Known questioned costs of $41,310 were identified for salaries charged to the Child Nutrition Cluster in error. These known questioned costs related to expenditures that were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs. The following Assistance Listing Numbers were affected by known and likely questioned costs: 10.553 and 10.555. Cause: The former Child Nutrition Director changed to a different position and was not correctly removed from the Child Nutrition Cluster payroll for the year under review. Effect: The School District is not in compliance with the Uniform Guidance and GaDOE guidance. Failure to pay employees associated with the Child Nutrition Cluster the appropriate amount and/or maintain documentation supporting these payments could result in the expenditure of funds for unallowable purposes. This may also expose the School District to unnecessary financial strains and shortages within the Child Nutrition Cluster fund as ED or GaDOE may require the School District to return funds associated with improperly documented expenditures. Recommendation: The School District should evaluate their internal control processes regarding the retention of documentation to support employee compensation payments. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that expenditures are appropriately documented and to ensure that Child Nutrition Cluster employees are paid appropriately. Furthermore, management should develop and implement a monitoring process to ensure that these procedures are functioning properly. Views of Responsible Officials: We concur with this finding.
FA 2022-001 Improve Controls over Employee Compensation Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of 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 (Year: 2022) Questioned Costs: $41,310 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over the employee compensation process as it relates to the Child Nutrition Cluster. Background Information: 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 schools and encourages the domestic consumption of nutritious agricultural commodities. CNC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture. GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the various CNC programs. CNC funds totaling $987,385.00 were expended and reported on the Hancock County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented…” Furthermore, provisions included in the Uniform Guidance, Section 200.430 – Compensation-Personal Services prescribe standards for documentation of personnel expenses and state, in part, that “(a) … Costs for compensation are allowable to the extent that they satisfy… specific requirements…, and that the total compensation for individual employees: (1) is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i)…, [as follows:] (i) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity…” Condition: Auditors reviewed salaries for a randomly selected sample of employees and those employees who were paid over the individually significant item threshold for CNC. These employees were reviewed to determine if internal controls were properly functioning and applicable compliance requirements were met. Testing of these salaries revealed that the former School Food Service Director’s salary was paid from Child Nutrition Cluster funds while the employee had moved to another position within the School District and did not perform Child Nutrition Cluster services. Questioned Costs: Known questioned costs of $41,310 were identified for salaries charged to the Child Nutrition Cluster in error. These known questioned costs related to expenditures that were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs. The following Assistance Listing Numbers were affected by known and likely questioned costs: 10.553 and 10.555. Cause: The former Child Nutrition Director changed to a different position and was not correctly removed from the Child Nutrition Cluster payroll for the year under review. Effect: The School District is not in compliance with the Uniform Guidance and GaDOE guidance. Failure to pay employees associated with the Child Nutrition Cluster the appropriate amount and/or maintain documentation supporting these payments could result in the expenditure of funds for unallowable purposes. This may also expose the School District to unnecessary financial strains and shortages within the Child Nutrition Cluster fund as ED or GaDOE may require the School District to return funds associated with improperly documented expenditures. Recommendation: The School District should evaluate their internal control processes regarding the retention of documentation to support employee compensation payments. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that expenditures are appropriately documented and to ensure that Child Nutrition Cluster employees are paid appropriately. Furthermore, management should develop and implement a monitoring process to ensure that these procedures are functioning properly. Views of Responsible Officials: We concur with this finding.
FA 2022-001 Improve Controls over Employee Compensation Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of 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 (Year: 2022) Questioned Costs: $41,310 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over the employee compensation process as it relates to the Child Nutrition Cluster. Background Information: 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 schools and encourages the domestic consumption of nutritious agricultural commodities. CNC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture. GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the various CNC programs. CNC funds totaling $987,385.00 were expended and reported on the Hancock County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2022. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented…” Furthermore, provisions included in the Uniform Guidance, Section 200.430 – Compensation-Personal Services prescribe standards for documentation of personnel expenses and state, in part, that “(a) … Costs for compensation are allowable to the extent that they satisfy… specific requirements…, and that the total compensation for individual employees: (1) is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i)…, [as follows:] (i) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity…” Condition: Auditors reviewed salaries for a randomly selected sample of employees and those employees who were paid over the individually significant item threshold for CNC. These employees were reviewed to determine if internal controls were properly functioning and applicable compliance requirements were met. Testing of these salaries revealed that the former School Food Service Director’s salary was paid from Child Nutrition Cluster funds while the employee had moved to another position within the School District and did not perform Child Nutrition Cluster services. Questioned Costs: Known questioned costs of $41,310 were identified for salaries charged to the Child Nutrition Cluster in error. These known questioned costs related to expenditures that were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs. The following Assistance Listing Numbers were affected by known and likely questioned costs: 10.553 and 10.555. Cause: The former Child Nutrition Director changed to a different position and was not correctly removed from the Child Nutrition Cluster payroll for the year under review. Effect: The School District is not in compliance with the Uniform Guidance and GaDOE guidance. Failure to pay employees associated with the Child Nutrition Cluster the appropriate amount and/or maintain documentation supporting these payments could result in the expenditure of funds for unallowable purposes. This may also expose the School District to unnecessary financial strains and shortages within the Child Nutrition Cluster fund as ED or GaDOE may require the School District to return funds associated with improperly documented expenditures. Recommendation: The School District should evaluate their internal control processes regarding the retention of documentation to support employee compensation payments. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that expenditures are appropriately documented and to ensure that Child Nutrition Cluster employees are paid appropriately. Furthermore, management should develop and implement a monitoring process to ensure that these procedures are functioning properly. Views of Responsible Officials: We concur with this finding.
FA 2022-002 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 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 Numbers: 225GA324N1199 (Year: 2022) Questioned Costs: None Identified Description: A review of expenditures charged to the Child Nutrition 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 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 schools and encourages the domestic consumption of nutritious agricultural commodities. CNC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture. GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the various CNC programs. CNC funds totaling $987,385.00 were expended and reported on the Hancock 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.” Condition: A sample of 60 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 deficiencies were noted: • The School District could not provide evidence that an adequate number of rate or price quotations were obtained from qualified sources for 21 small purchase transactions reviewed. • The School District could not provide evidence that bids or proposals were sought and received from an adequate number of qualified sources for 28 simplified acquisition transactions reviewed. Cause: The School District did not obtain updated quotes from vendors associated with small purchase transactions. For simplified acquisition transactions, the School District stated that when invitations to bid were sent in fiscal years 2019 and 2020, the vendors selected were either the only ones that submitted a bid or submitted the lowest bid; however, no documentation was maintained to evidence that additional bids were sought or received. Further, based on these vendors’ performance, the School District extended the contracts without issuing new invitations to bid in the current fiscal year. 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 2022-002 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 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 Numbers: 225GA324N1199 (Year: 2022) Questioned Costs: None Identified Description: A review of expenditures charged to the Child Nutrition 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 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 schools and encourages the domestic consumption of nutritious agricultural commodities. CNC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture. GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the various CNC programs. CNC funds totaling $987,385.00 were expended and reported on the Hancock 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.” Condition: A sample of 60 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 deficiencies were noted: • The School District could not provide evidence that an adequate number of rate or price quotations were obtained from qualified sources for 21 small purchase transactions reviewed. • The School District could not provide evidence that bids or proposals were sought and received from an adequate number of qualified sources for 28 simplified acquisition transactions reviewed. Cause: The School District did not obtain updated quotes from vendors associated with small purchase transactions. For simplified acquisition transactions, the School District stated that when invitations to bid were sent in fiscal years 2019 and 2020, the vendors selected were either the only ones that submitted a bid or submitted the lowest bid; however, no documentation was maintained to evidence that additional bids were sought or received. Further, based on these vendors’ performance, the School District extended the contracts without issuing new invitations to bid in the current fiscal year. 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 2022-002 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 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 Numbers: 225GA324N1199 (Year: 2022) Questioned Costs: None Identified Description: A review of expenditures charged to the Child Nutrition 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 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 schools and encourages the domestic consumption of nutritious agricultural commodities. CNC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture. GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the various CNC programs. CNC funds totaling $987,385.00 were expended and reported on the Hancock 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.” Condition: A sample of 60 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 deficiencies were noted: • The School District could not provide evidence that an adequate number of rate or price quotations were obtained from qualified sources for 21 small purchase transactions reviewed. • The School District could not provide evidence that bids or proposals were sought and received from an adequate number of qualified sources for 28 simplified acquisition transactions reviewed. Cause: The School District did not obtain updated quotes from vendors associated with small purchase transactions. For simplified acquisition transactions, the School District stated that when invitations to bid were sent in fiscal years 2019 and 2020, the vendors selected were either the only ones that submitted a bid or submitted the lowest bid; however, no documentation was maintained to evidence that additional bids were sought or received. Further, based on these vendors’ performance, the School District extended the contracts without issuing new invitations to bid in the current fiscal year. 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 2022-002 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 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 Numbers: 225GA324N1199 (Year: 2022) Questioned Costs: None Identified Description: A review of expenditures charged to the Child Nutrition 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 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 schools and encourages the domestic consumption of nutritious agricultural commodities. CNC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture. GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the various CNC programs. CNC funds totaling $987,385.00 were expended and reported on the Hancock 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.” Condition: A sample of 60 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 deficiencies were noted: • The School District could not provide evidence that an adequate number of rate or price quotations were obtained from qualified sources for 21 small purchase transactions reviewed. • The School District could not provide evidence that bids or proposals were sought and received from an adequate number of qualified sources for 28 simplified acquisition transactions reviewed. Cause: The School District did not obtain updated quotes from vendors associated with small purchase transactions. For simplified acquisition transactions, the School District stated that when invitations to bid were sent in fiscal years 2019 and 2020, the vendors selected were either the only ones that submitted a bid or submitted the lowest bid; however, no documentation was maintained to evidence that additional bids were sought or received. Further, based on these vendors’ performance, the School District extended the contracts without issuing new invitations to bid in the current fiscal year. 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.
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 ASSSITANCE 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; Procurement and Suspension and Debarment; Reporting; and Subrecipient Monitoring QUESTIONED COSTS: $0 Condition: During the process of documenting the County’s internal controls regarding federal disbursements, we noted that Comanche County has not established procedures to ensure compliance with the following compliance requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Procurement and Suspension and Debarment; Reporting; and 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 these programs 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 Comanche County receives to ensure that proper internal controls are implemented. Criteria: 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 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.
FA 2022-001 Strengthen Controls over Expenditures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Procurement and Suspension and Debarment 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 (Year: 2022) Questioned Costs: $21,440 Description: A review of expenditures charged to the Child Nutrition 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: 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. CNC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture. GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the various CNC programs. CNC funds totaling $2,662,705 were expended and reported on the Harris 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.” Condition: A sample of 28 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 deficiencies were noted: • For three expenditures, evidence of review and approval was not reflected within the voucher package. • The appropriate procurement method was not used for the dollar amount and conditions associated with one procurement transaction that should have been considered a simplified acquisition transaction. Therefore, the School District could not provide evidence that an adequate number of sealed bids were sought and obtained from qualified sources. Questioned Costs: Upon testing a sample of $130,284 in procurement transactions, known questioned costs of $21,440 were identified for expenditures that did not follow the School District’s procurement procedures. Using the total sample population of $518,395 in procurement transactions, we project the likely questioned costs to be approximately $85,310. The following Assistance Listing Numbers were affected by known and likely questioned costs: 10.553 and 10.555. Cause: The School District did not follow its policies and procedures that govern the procurement process for federal programs. Effect: The School District is not in compliance with the Uniform Guidance and GaDOE 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 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 the finding.
FA 2022-001 Strengthen Controls over Expenditures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Procurement and Suspension and Debarment 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 (Year: 2022) Questioned Costs: $21,440 Description: A review of expenditures charged to the Child Nutrition 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: 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. CNC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture. GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the various CNC programs. CNC funds totaling $2,662,705 were expended and reported on the Harris 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.” Condition: A sample of 28 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 deficiencies were noted: • For three expenditures, evidence of review and approval was not reflected within the voucher package. • The appropriate procurement method was not used for the dollar amount and conditions associated with one procurement transaction that should have been considered a simplified acquisition transaction. Therefore, the School District could not provide evidence that an adequate number of sealed bids were sought and obtained from qualified sources. Questioned Costs: Upon testing a sample of $130,284 in procurement transactions, known questioned costs of $21,440 were identified for expenditures that did not follow the School District’s procurement procedures. Using the total sample population of $518,395 in procurement transactions, we project the likely questioned costs to be approximately $85,310. The following Assistance Listing Numbers were affected by known and likely questioned costs: 10.553 and 10.555. Cause: The School District did not follow its policies and procedures that govern the procurement process for federal programs. Effect: The School District is not in compliance with the Uniform Guidance and GaDOE 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 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 the finding.
FINDING 2022-002 Information on the federal program: Subject: Head Start Cluster - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Health and Human Services Federal Program: Head Start Cluster Assistance Listing Number: 93.600 Federal Award Numbers and Years (or Other Identifying Numbers): 05CH011249, 05HP000285 Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Finding: Material Weakness, Noncompliance, Other Matters Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Condition: An effective internal control system was not in place at the Unit to ensure compliance with requirements related to the grant agreement and the activities allowed or unallowed and allowable costs/cost principle compliance requirements. The Unit did not have adequate documentation to support expenditures. Cause: The Unit's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system placed the Unit at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: $35,110. Section III – Federal Award Findings and Questioned Costs (Continued) Context: During testing, we noted the following issues in a sample of sixty head start cluster account payable and payroll claims: • Two sample selections were not approved by a secondary individual. • One sample selection was not supported by appropriate documentation. The selection was for the purchase of gift cards for teachers to buy books for professional development and supplies for the classroom. However, there was no backup or support showing what the gift cards were used to purchase. The total of this purchase was $35,000. • The amount paid to one employee did not agree to the employee’s approved contract. The amount charged to the grant as $110 more than what the employee’s approved personnel file stated. Identification as a repeat finding, if applicable: This is a repeat finding from the immediately prior audit. The prior audit finding number was 2021-002. Recommendation: We recommend that the Unit establish a documented, primary review of all head start cluster account payable claims before they are paid. Additionally, we recommend the Unit maintain all supporting documentation to show what the gift cards were used to purchase to ensure they are used for allowable purposes. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2022-002 Information on the federal program: Subject: Head Start Cluster - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Health and Human Services Federal Program: Head Start Cluster Assistance Listing Number: 93.600 Federal Award Numbers and Years (or Other Identifying Numbers): 05CH011249, 05HP000285 Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Finding: Material Weakness, Noncompliance, Other Matters Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Condition: An effective internal control system was not in place at the Unit to ensure compliance with requirements related to the grant agreement and the activities allowed or unallowed and allowable costs/cost principle compliance requirements. The Unit did not have adequate documentation to support expenditures. Cause: The Unit's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system placed the Unit at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: $35,110. Section III – Federal Award Findings and Questioned Costs (Continued) Context: During testing, we noted the following issues in a sample of sixty head start cluster account payable and payroll claims: • Two sample selections were not approved by a secondary individual. • One sample selection was not supported by appropriate documentation. The selection was for the purchase of gift cards for teachers to buy books for professional development and supplies for the classroom. However, there was no backup or support showing what the gift cards were used to purchase. The total of this purchase was $35,000. • The amount paid to one employee did not agree to the employee’s approved contract. The amount charged to the grant as $110 more than what the employee’s approved personnel file stated. Identification as a repeat finding, if applicable: This is a repeat finding from the immediately prior audit. The prior audit finding number was 2021-002. Recommendation: We recommend that the Unit establish a documented, primary review of all head start cluster account payable claims before they are paid. Additionally, we recommend the Unit maintain all supporting documentation to show what the gift cards were used to purchase to ensure they are used for allowable purposes. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2022-004 Information on the federal program: Subject: Head Start Cluster - Internal Controls Federal Agency: Department of Health and Human Services Federal Program: Head Start Cluster Assistance Listing Number: 93.600 Federal Award Numbers and Years (or Other Identifying Numbers): 05CH011249, 05HP000285 Compliance Requirement: Reporting Audit Finding: Significant Deficiency Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . . Condition: An effective internal control system was not in place at the Unit in order to ensure compliance with requirements related to the grant agreement and the reporting compliance requirement. Cause: The Unit's management had not developed a system of internal controls to ensure compliance with the reporting requirements. Effect: The failure to establish an effective internal control system placed the Unit at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: None. Context: We noted that for the three federal financial reports in a sample of three reports, the Supervisor prepared the report without a secondary, documented review before the submission of the report to ensure the accuracy of the report. The amounts reported agreed to the supporting records without error. Identification as a repeat finding, if applicable: This is a repeat finding from the immediately prior audit. The prior audit finding number was 2021-004. Recommendation: We recommended that the Unit implement a documented, formal review of the reports before they are submitted. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2022-004 Information on the federal program: Subject: Head Start Cluster - Internal Controls Federal Agency: Department of Health and Human Services Federal Program: Head Start Cluster Assistance Listing Number: 93.600 Federal Award Numbers and Years (or Other Identifying Numbers): 05CH011249, 05HP000285 Compliance Requirement: Reporting Audit Finding: Significant Deficiency Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . . Condition: An effective internal control system was not in place at the Unit in order to ensure compliance with requirements related to the grant agreement and the reporting compliance requirement. Cause: The Unit's management had not developed a system of internal controls to ensure compliance with the reporting requirements. Effect: The failure to establish an effective internal control system placed the Unit at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: None. Context: We noted that for the three federal financial reports in a sample of three reports, the Supervisor prepared the report without a secondary, documented review before the submission of the report to ensure the accuracy of the report. The amounts reported agreed to the supporting records without error. Identification as a repeat finding, if applicable: This is a repeat finding from the immediately prior audit. The prior audit finding number was 2021-004. Recommendation: We recommended that the Unit implement a documented, formal review of the reports before they are submitted. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
2022-002 ACTIVITIES ALLOWED OR UNALLOWED Federal Program Information: Federal Agency and Program Name Federal Assistance Listing Number U.S. Department of Labor, WIOA Cluster, 17.258/17.259/17.278 Criteria: 2 CFR 200.303 requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.403(g) states that costs must “Be adequately documented.” Condition: During our testing of activities allowed or unallowed, it was noted that for six of the 60 items tested, management could not provide adequate supporting documentation for the items selected for testing. Additionally, for 20 of the 60 items tested, management could not provide adequate support that the charges were properly reviewed and approved prior to payment. Questioned Costs: $202,486 – Assistance Listing #17.258/#17.259/#17.278 Context: Total federal expenditures for the WIOA Cluster were $3,927,799 for the year ended June 30, 2022. Cause: The Board did not retain adequate documentation to support the charges to the federal program, and did not demonstrate that proper internal controls are in place and operating effectively to ensure that unallowable charges to the federal program do not occur. Effect: The Board is not in compliance with the federal statutes, regulations, and terms and conditions of the federal award. Additionally, unallowable payments to the federal program may have occurred due to the lack of effective internal controls in place. Recommendation: We recommend that the Board design and implement controls to ensure that all charges to federal programs are adequately reviewed and approved prior to payment, and that adequate supporting documentation for all federal program charges is maintained. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.
2022-003 EARMARKING Federal Program Information:, Federal Agency and Program Name Federal Assistance Listing Number U.S. Department of Labor, WIOA Cluster 17.258/17.259/17.278 Criteria: 2 CFR 200.303 requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Per the provisions stated in the Uniform Guidance under the WIOA Cluster for Local Areas: (1) A local area may expend no more than 10 percent of the Adult, Dislocated Worker, and Youth Activities funds allocated to the local area under Sections 128(b) (WIOA, 128 Stat. 1502) and 133(b) (WIOA, 128 Stat. 1516) for within state allocations. The funds provided for administrative costs by one of the three fund sources (Adult, Dislocated Worker, Youth Activities) can be used for administrative costs of the other two sources. (2) The amount that may be spent on incumbent worker training may not exceed 20 percent of the amount of the combined total of federal funds allocated to local areas to carry out the Adult and Dislocated Worker programs for a program year (20 CFR section 680.800; Section 134(d)(4), WIOA, 128 Stat. 1535). (3) WIOA authorizes workforce investment areas, with the approval of the governor, to transfer up to 100 percent of the Adult Activities funds to Dislocated Workers Activities, and up to 100 percent of Dislocated Workers Activities funds to Adult Activities (Section 133(b)(4), WIOA, 128 Stat. 1518). (4) At the discretion of the local board, not more than 10 percent of the total funds allocated to the local area under section 128(b) and under section 133(b)(2)-(3) may be used to implement a pay-for-performance contract strategy as defined in WIOA Section 3(47) (WIOA Section 129(c)(1)(D) and 134(d)(1)(A)(iii)). (5) As no state has received prior approval for implementation of a PFP contract strategy, no funds from the program years prior to PY 2019 are available for PFP contract strategies or for the accompanying extended disbursement. However, these funds could still be used for other types of performance-based contracting, but the life of those funds remains the normal two-year limit for local WIOA grant funds. Per the provisions stated in the Uniform Guidance under the WIOA Cluster for Youth Activities: (1) A minimum of 75 percent of the Youth Activity funds allocated to states and local areas, except for the local area expenditures for administration, must be used to provide services to out-of-school youth (Section 129(a)(4)(A), WIOA, 128 Stat. 1506). (2) Not less than 20 percent of Youth Activity funds allocated to the local area, except for the local area expenditures for administration, must be used to provide paid and unpaid work experiences (Section 129(c)(4)), WIOA, 128 Stat. 1510). Condition: Upon inquiry of management, it was noted that the Board did not perform procedures to ensure that the expenditures of the WIOA Cluster were within the earmarking requirements noted in the Uniform Guidance during the fiscal year ended June 30, 2022. Questioned Costs: Unknown Context: Total federal expenditures for the WIOA Cluster were $3,927,799 for the year ended June 30, 2022. Cause: The Board did not perform the appropriate procedures to verify that the expenditures of the WIOA Cluster were within the earmarking requirements noted within the Uniform Guidance. Effect: The Board is not in compliance with the federal statutes, regulations, and terms and conditions of the federal award. Recommendation: We recommend that the Board implement controls and procedures to ensure that all requirements for earmarking within the Uniform Guidance are properly followed. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.
2022-004 PERIOD OF PERFORMANCE Federal Program Information: Federal Agency and Program Name, Federal Assistance Listing Number U.S. Department of Labor, WIOA Cluster 17.258/17.259/17.278 Criteria: 2 CFR 200.303 requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.309 states that “a non-Federal entity may charge to the Federal award only allowable costs incurred during the period of performance.” Condition: During our testing of period of performance, it was noted that for 13 of 25 transactions tested, proper supporting documentation could not be provided. Additionally, for 16 of 25 transactions tested, there was no evidence of proper review and approval of the transactions. Questioned Costs: $15,158 – Assistance Listing #17.258/#17.259/#17.278 Context: Total federal expenditures for the WIOA Cluster were $3,927,799 for the year ended June 30, 2022. Cause: The Board did not have proper internal controls in place to ensure that proper supporting documentation was maintained for all transactions, and that all transactions were properly reviewed and approved prior to payment. Effect: The Board could have had expenditures that were outside the proper period of performance of the grant. Recommendation: We recommend that the Board implement internal controls and policies to ensure that supporting documentation is maintained for all transactions, and that a member of management who is knowledgeable of the period of performance is reviewing and approving all transactions prior to payment. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.
2022-005 REPORTING Federal Program Information: Federal Agency and Program Name, Federal Assistance Listing Number U.S. Department of Labor, WIOA Cluster 17.258/17.259/17.278 Criteria: 2 CFR 200.303 requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” ETA-9130, Financial Report (OMB No. 1205-0461) – All ETA grantees are required to submit quarterly financial reports for each grant award they receive. Reports are required to be prepared using the specific format and instructions for the applicable program(s); in this case, Workforce Innovation and Opportunity Act instructions for the following: Statewide Adult; Workforce Statewide Youth; Statewide Dislocated Worker; Local Adult; Local Youth; and Local Dislocated Worker. Reports are due 45 days after the end of the reporting quarter. Financial data is required to be reported cumulatively from grant inception through the end of each reporting period. WIOA Participant Individual Record Layout (PIRL) (OMB No. 1205-0526) - The report is used to report services, activities, and outcomes of service for all job seekers and veterans. The WIOA Adult, Dislocated Worker, and Youth Programs are responsible for reporting common WIOA performance indicators. 2 CFR 170 Appendix A, as it relates to reporting for the Federal Funding Accountability and Transparency Act, “unless the auditee is exempt as provided in paragraph d. of this award term, the auditee must report each action that equals or exceeds $30,000 in Federal funds for a subaward to a non-Federal entity or Federal agency as noted in paragraph e. no later than the end of the month following the month in which the obligation was made.” Condition: Upon inquiry of management, no supporting documentation could be provided that the ETA-9130, Financial Reports (OMB No. 1205-0461) and the WIOA Participant Individual Record Layout (OMB No. 1205-0526) performance reports required by the WIOA Cluster were prepared and submitted. Additionally, the entity made first tier subawards of greater than $30,000, but could not provide supporting documentation that the necessary reports were filed to satisfy the requirements of the Federal Funding Accountability and Transparency Act (FFATA). Questioned Costs: Unknown Context: Total federal expenditures for the WIOA Cluster were $3,927,799 for the year ended June 30, 2022. Cause: The Board did not have adequate policies and internal controls in place to ensure that all required reports for the WIOA Cluster and FFATA were submitted accurately and in a timely fashion. Effect: The Board is not in compliance with the federal statutes, regulations, and terms and conditions of the federal award. Recommendation: We recommend that the Board design and implement controls to ensure that all required reporting is submitted accurately and in a timely fashion. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.
2022-006 SUBRECIPIENT MONITORING Federal Program Information: Federal Agency and Program Name, Federal Assistance Listing Number U.S. Department of Labor, WIOA Cluster 17.258/17.259/17.278 Criteria: 2 CFR 200.303 requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Recipients must ensure that commercial organizations that are subrecipients under WIOA Title I and expend more than the minimum level specified in 2 CFR Part 200, Subpart F, have either an organization-wide audit conducted in accordance with 2 CFR Part 200 or a program-specific financial and compliance audit (20 CFR section 683.210). 2 CFR 200.332(b) requires that all pass-through entities must: Evaluate each subrecipient’s risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in paragraphs (d) and (e) of this section. Condition: Upon inquiry of management, the Board did not perform any subrecipient monitoring procedures related to the Board’s grant agreement with its subrecipient for the fiscal year ended June 30, 2022. Questioned Costs: Unknown Context: Total federal expenditures for the WIOA Cluster were $3,927,799 for the year ended June 30, 2022, which included $1,390,746 of expenditures to subrecipients. Cause: Although the Board has policies and procedures in place surrounding the subrecipient monitoring compliance requirements, due to staffing issues during the fiscal year and lack of knowledge of all the federal compliance requirements, no subrecipient monitoring was completed. Effect: The Board is not in compliance with the federal statutes, regulations, and terms and conditions of the federal award. Recommendation: We recommend that the Board review its policies and procedures for sufficiency and commit the appropriate personnel to subrecipient monitoring to ensure that the Board is in compliance with all federal requirements. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.
2022-007 ELIGIBILITY Federal Program Information: Federal Agency and Program Name, Federal Assistance Listing Number U.S. Department of Labor, WIOA Cluster 17.258/17.259/17.278 Criteria: 2 CFR 200.303 requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Per the provisions of the Workforce Innovation and Opportunity Act (WIOA), “A person is eligible to receive services under Youth Activities if they are an out-of-school youth or an in-school youth (Section 129(a)(1), WIOA, 128 Stat. 1504)”, and meet the definition of such as defined in the Uniform Guidance. Condition: During our testing of WIOA participants, it was noted by management that the eligibility determination for Youth Activities is maintained and conducted by the Board’s subrecipient. According to management, there are no procedures performed at the Board to verify the eligibility of Youth Activities participants to ensure that all federal compliance requirements are being adhered to. Questioned Costs: Unknown Context: Total federal expenditures for the WIOA Cluster were $3,927,799 for the year ended June 30, 2022. Cause: The Board does not perform any procedures to ensure that the Youth Activities participants meet all the federal compliance requirements for participation in the program. Effect: A Youth Activities participant(s) may be granted access to the Board’s program when they do not meet the prescribed eligibility requirements. Recommendation: We recommend that the Board implement policies and procedures to ensure that the necessary controls are in place to properly verify the eligibility of all Youth Activities participants. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.
2022-008 ALLOCATION OF GRANT EXPENSES Federal Program Information: Federal Agency and Program Name, Federal Assistance Listing Number U.S. Department of Labor, WIOA Cluster, 17.258/17.259/17.278 Criteria: 2 CFR 200.303 requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Condition: During our testing of WIOA Cluster expenditures, it was noted that the Board did not regularly reconcile expenditures to the appropriate assistance listing numbers within the WIOA Cluster during the year. Questioned Costs: Unknown Context: Total federal expenditures for the WIOA Cluster were $3,927,799 for the year ended June 30, 2022. Cause: The former Fiscal Manager estimated expenses for reimbursement requests and allocated expenses to the grants of the WIOA Cluster Assistance Listing numbers. When the reimbursements were received, the estimated expenses were not reconciled to the actual expenses. Effect: Expenses were not properly allocated to the correct Assistance Listing number within the WIOA cluster. Recommendation: We recommend that the Board implement policies and procedures to ensure that all expenses are for actual expenses incurred, and that timely reconciliations are performed to ensure the expenses are properly charged to the correct assistance listing number and grant. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.
2022-002 ACTIVITIES ALLOWED OR UNALLOWED Federal Program Information: Federal Agency and Program Name Federal Assistance Listing Number U.S. Department of Labor, WIOA Cluster, 17.258/17.259/17.278 Criteria: 2 CFR 200.303 requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.403(g) states that costs must “Be adequately documented.” Condition: During our testing of activities allowed or unallowed, it was noted that for six of the 60 items tested, management could not provide adequate supporting documentation for the items selected for testing. Additionally, for 20 of the 60 items tested, management could not provide adequate support that the charges were properly reviewed and approved prior to payment. Questioned Costs: $202,486 – Assistance Listing #17.258/#17.259/#17.278 Context: Total federal expenditures for the WIOA Cluster were $3,927,799 for the year ended June 30, 2022. Cause: The Board did not retain adequate documentation to support the charges to the federal program, and did not demonstrate that proper internal controls are in place and operating effectively to ensure that unallowable charges to the federal program do not occur. Effect: The Board is not in compliance with the federal statutes, regulations, and terms and conditions of the federal award. Additionally, unallowable payments to the federal program may have occurred due to the lack of effective internal controls in place. Recommendation: We recommend that the Board design and implement controls to ensure that all charges to federal programs are adequately reviewed and approved prior to payment, and that adequate supporting documentation for all federal program charges is maintained. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.
2022-003 EARMARKING Federal Program Information:, Federal Agency and Program Name Federal Assistance Listing Number U.S. Department of Labor, WIOA Cluster 17.258/17.259/17.278 Criteria: 2 CFR 200.303 requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Per the provisions stated in the Uniform Guidance under the WIOA Cluster for Local Areas: (1) A local area may expend no more than 10 percent of the Adult, Dislocated Worker, and Youth Activities funds allocated to the local area under Sections 128(b) (WIOA, 128 Stat. 1502) and 133(b) (WIOA, 128 Stat. 1516) for within state allocations. The funds provided for administrative costs by one of the three fund sources (Adult, Dislocated Worker, Youth Activities) can be used for administrative costs of the other two sources. (2) The amount that may be spent on incumbent worker training may not exceed 20 percent of the amount of the combined total of federal funds allocated to local areas to carry out the Adult and Dislocated Worker programs for a program year (20 CFR section 680.800; Section 134(d)(4), WIOA, 128 Stat. 1535). (3) WIOA authorizes workforce investment areas, with the approval of the governor, to transfer up to 100 percent of the Adult Activities funds to Dislocated Workers Activities, and up to 100 percent of Dislocated Workers Activities funds to Adult Activities (Section 133(b)(4), WIOA, 128 Stat. 1518). (4) At the discretion of the local board, not more than 10 percent of the total funds allocated to the local area under section 128(b) and under section 133(b)(2)-(3) may be used to implement a pay-for-performance contract strategy as defined in WIOA Section 3(47) (WIOA Section 129(c)(1)(D) and 134(d)(1)(A)(iii)). (5) As no state has received prior approval for implementation of a PFP contract strategy, no funds from the program years prior to PY 2019 are available for PFP contract strategies or for the accompanying extended disbursement. However, these funds could still be used for other types of performance-based contracting, but the life of those funds remains the normal two-year limit for local WIOA grant funds. Per the provisions stated in the Uniform Guidance under the WIOA Cluster for Youth Activities: (1) A minimum of 75 percent of the Youth Activity funds allocated to states and local areas, except for the local area expenditures for administration, must be used to provide services to out-of-school youth (Section 129(a)(4)(A), WIOA, 128 Stat. 1506). (2) Not less than 20 percent of Youth Activity funds allocated to the local area, except for the local area expenditures for administration, must be used to provide paid and unpaid work experiences (Section 129(c)(4)), WIOA, 128 Stat. 1510). Condition: Upon inquiry of management, it was noted that the Board did not perform procedures to ensure that the expenditures of the WIOA Cluster were within the earmarking requirements noted in the Uniform Guidance during the fiscal year ended June 30, 2022. Questioned Costs: Unknown Context: Total federal expenditures for the WIOA Cluster were $3,927,799 for the year ended June 30, 2022. Cause: The Board did not perform the appropriate procedures to verify that the expenditures of the WIOA Cluster were within the earmarking requirements noted within the Uniform Guidance. Effect: The Board is not in compliance with the federal statutes, regulations, and terms and conditions of the federal award. Recommendation: We recommend that the Board implement controls and procedures to ensure that all requirements for earmarking within the Uniform Guidance are properly followed. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.
2022-004 PERIOD OF PERFORMANCE Federal Program Information: Federal Agency and Program Name, Federal Assistance Listing Number U.S. Department of Labor, WIOA Cluster 17.258/17.259/17.278 Criteria: 2 CFR 200.303 requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.309 states that “a non-Federal entity may charge to the Federal award only allowable costs incurred during the period of performance.” Condition: During our testing of period of performance, it was noted that for 13 of 25 transactions tested, proper supporting documentation could not be provided. Additionally, for 16 of 25 transactions tested, there was no evidence of proper review and approval of the transactions. Questioned Costs: $15,158 – Assistance Listing #17.258/#17.259/#17.278 Context: Total federal expenditures for the WIOA Cluster were $3,927,799 for the year ended June 30, 2022. Cause: The Board did not have proper internal controls in place to ensure that proper supporting documentation was maintained for all transactions, and that all transactions were properly reviewed and approved prior to payment. Effect: The Board could have had expenditures that were outside the proper period of performance of the grant. Recommendation: We recommend that the Board implement internal controls and policies to ensure that supporting documentation is maintained for all transactions, and that a member of management who is knowledgeable of the period of performance is reviewing and approving all transactions prior to payment. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.
2022-005 REPORTING Federal Program Information: Federal Agency and Program Name, Federal Assistance Listing Number U.S. Department of Labor, WIOA Cluster 17.258/17.259/17.278 Criteria: 2 CFR 200.303 requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” ETA-9130, Financial Report (OMB No. 1205-0461) – All ETA grantees are required to submit quarterly financial reports for each grant award they receive. Reports are required to be prepared using the specific format and instructions for the applicable program(s); in this case, Workforce Innovation and Opportunity Act instructions for the following: Statewide Adult; Workforce Statewide Youth; Statewide Dislocated Worker; Local Adult; Local Youth; and Local Dislocated Worker. Reports are due 45 days after the end of the reporting quarter. Financial data is required to be reported cumulatively from grant inception through the end of each reporting period. WIOA Participant Individual Record Layout (PIRL) (OMB No. 1205-0526) - The report is used to report services, activities, and outcomes of service for all job seekers and veterans. The WIOA Adult, Dislocated Worker, and Youth Programs are responsible for reporting common WIOA performance indicators. 2 CFR 170 Appendix A, as it relates to reporting for the Federal Funding Accountability and Transparency Act, “unless the auditee is exempt as provided in paragraph d. of this award term, the auditee must report each action that equals or exceeds $30,000 in Federal funds for a subaward to a non-Federal entity or Federal agency as noted in paragraph e. no later than the end of the month following the month in which the obligation was made.” Condition: Upon inquiry of management, no supporting documentation could be provided that the ETA-9130, Financial Reports (OMB No. 1205-0461) and the WIOA Participant Individual Record Layout (OMB No. 1205-0526) performance reports required by the WIOA Cluster were prepared and submitted. Additionally, the entity made first tier subawards of greater than $30,000, but could not provide supporting documentation that the necessary reports were filed to satisfy the requirements of the Federal Funding Accountability and Transparency Act (FFATA). Questioned Costs: Unknown Context: Total federal expenditures for the WIOA Cluster were $3,927,799 for the year ended June 30, 2022. Cause: The Board did not have adequate policies and internal controls in place to ensure that all required reports for the WIOA Cluster and FFATA were submitted accurately and in a timely fashion. Effect: The Board is not in compliance with the federal statutes, regulations, and terms and conditions of the federal award. Recommendation: We recommend that the Board design and implement controls to ensure that all required reporting is submitted accurately and in a timely fashion. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.
2022-006 SUBRECIPIENT MONITORING Federal Program Information: Federal Agency and Program Name, Federal Assistance Listing Number U.S. Department of Labor, WIOA Cluster 17.258/17.259/17.278 Criteria: 2 CFR 200.303 requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Recipients must ensure that commercial organizations that are subrecipients under WIOA Title I and expend more than the minimum level specified in 2 CFR Part 200, Subpart F, have either an organization-wide audit conducted in accordance with 2 CFR Part 200 or a program-specific financial and compliance audit (20 CFR section 683.210). 2 CFR 200.332(b) requires that all pass-through entities must: Evaluate each subrecipient’s risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in paragraphs (d) and (e) of this section. Condition: Upon inquiry of management, the Board did not perform any subrecipient monitoring procedures related to the Board’s grant agreement with its subrecipient for the fiscal year ended June 30, 2022. Questioned Costs: Unknown Context: Total federal expenditures for the WIOA Cluster were $3,927,799 for the year ended June 30, 2022, which included $1,390,746 of expenditures to subrecipients. Cause: Although the Board has policies and procedures in place surrounding the subrecipient monitoring compliance requirements, due to staffing issues during the fiscal year and lack of knowledge of all the federal compliance requirements, no subrecipient monitoring was completed. Effect: The Board is not in compliance with the federal statutes, regulations, and terms and conditions of the federal award. Recommendation: We recommend that the Board review its policies and procedures for sufficiency and commit the appropriate personnel to subrecipient monitoring to ensure that the Board is in compliance with all federal requirements. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.
2022-007 ELIGIBILITY Federal Program Information: Federal Agency and Program Name, Federal Assistance Listing Number U.S. Department of Labor, WIOA Cluster 17.258/17.259/17.278 Criteria: 2 CFR 200.303 requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Per the provisions of the Workforce Innovation and Opportunity Act (WIOA), “A person is eligible to receive services under Youth Activities if they are an out-of-school youth or an in-school youth (Section 129(a)(1), WIOA, 128 Stat. 1504)”, and meet the definition of such as defined in the Uniform Guidance. Condition: During our testing of WIOA participants, it was noted by management that the eligibility determination for Youth Activities is maintained and conducted by the Board’s subrecipient. According to management, there are no procedures performed at the Board to verify the eligibility of Youth Activities participants to ensure that all federal compliance requirements are being adhered to. Questioned Costs: Unknown Context: Total federal expenditures for the WIOA Cluster were $3,927,799 for the year ended June 30, 2022. Cause: The Board does not perform any procedures to ensure that the Youth Activities participants meet all the federal compliance requirements for participation in the program. Effect: A Youth Activities participant(s) may be granted access to the Board’s program when they do not meet the prescribed eligibility requirements. Recommendation: We recommend that the Board implement policies and procedures to ensure that the necessary controls are in place to properly verify the eligibility of all Youth Activities participants. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.
2022-008 ALLOCATION OF GRANT EXPENSES Federal Program Information: Federal Agency and Program Name, Federal Assistance Listing Number U.S. Department of Labor, WIOA Cluster, 17.258/17.259/17.278 Criteria: 2 CFR 200.303 requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Condition: During our testing of WIOA Cluster expenditures, it was noted that the Board did not regularly reconcile expenditures to the appropriate assistance listing numbers within the WIOA Cluster during the year. Questioned Costs: Unknown Context: Total federal expenditures for the WIOA Cluster were $3,927,799 for the year ended June 30, 2022. Cause: The former Fiscal Manager estimated expenses for reimbursement requests and allocated expenses to the grants of the WIOA Cluster Assistance Listing numbers. When the reimbursements were received, the estimated expenses were not reconciled to the actual expenses. Effect: Expenses were not properly allocated to the correct Assistance Listing number within the WIOA cluster. Recommendation: We recommend that the Board implement policies and procedures to ensure that all expenses are for actual expenses incurred, and that timely reconciliations are performed to ensure the expenses are properly charged to the correct assistance listing number and grant. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.
2022-002 ACTIVITIES ALLOWED OR UNALLOWED Federal Program Information: Federal Agency and Program Name Federal Assistance Listing Number U.S. Department of Labor, WIOA Cluster, 17.258/17.259/17.278 Criteria: 2 CFR 200.303 requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.403(g) states that costs must “Be adequately documented.” Condition: During our testing of activities allowed or unallowed, it was noted that for six of the 60 items tested, management could not provide adequate supporting documentation for the items selected for testing. Additionally, for 20 of the 60 items tested, management could not provide adequate support that the charges were properly reviewed and approved prior to payment. Questioned Costs: $202,486 – Assistance Listing #17.258/#17.259/#17.278 Context: Total federal expenditures for the WIOA Cluster were $3,927,799 for the year ended June 30, 2022. Cause: The Board did not retain adequate documentation to support the charges to the federal program, and did not demonstrate that proper internal controls are in place and operating effectively to ensure that unallowable charges to the federal program do not occur. Effect: The Board is not in compliance with the federal statutes, regulations, and terms and conditions of the federal award. Additionally, unallowable payments to the federal program may have occurred due to the lack of effective internal controls in place. Recommendation: We recommend that the Board design and implement controls to ensure that all charges to federal programs are adequately reviewed and approved prior to payment, and that adequate supporting documentation for all federal program charges is maintained. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.
2022-003 EARMARKING Federal Program Information:, Federal Agency and Program Name Federal Assistance Listing Number U.S. Department of Labor, WIOA Cluster 17.258/17.259/17.278 Criteria: 2 CFR 200.303 requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Per the provisions stated in the Uniform Guidance under the WIOA Cluster for Local Areas: (1) A local area may expend no more than 10 percent of the Adult, Dislocated Worker, and Youth Activities funds allocated to the local area under Sections 128(b) (WIOA, 128 Stat. 1502) and 133(b) (WIOA, 128 Stat. 1516) for within state allocations. The funds provided for administrative costs by one of the three fund sources (Adult, Dislocated Worker, Youth Activities) can be used for administrative costs of the other two sources. (2) The amount that may be spent on incumbent worker training may not exceed 20 percent of the amount of the combined total of federal funds allocated to local areas to carry out the Adult and Dislocated Worker programs for a program year (20 CFR section 680.800; Section 134(d)(4), WIOA, 128 Stat. 1535). (3) WIOA authorizes workforce investment areas, with the approval of the governor, to transfer up to 100 percent of the Adult Activities funds to Dislocated Workers Activities, and up to 100 percent of Dislocated Workers Activities funds to Adult Activities (Section 133(b)(4), WIOA, 128 Stat. 1518). (4) At the discretion of the local board, not more than 10 percent of the total funds allocated to the local area under section 128(b) and under section 133(b)(2)-(3) may be used to implement a pay-for-performance contract strategy as defined in WIOA Section 3(47) (WIOA Section 129(c)(1)(D) and 134(d)(1)(A)(iii)). (5) As no state has received prior approval for implementation of a PFP contract strategy, no funds from the program years prior to PY 2019 are available for PFP contract strategies or for the accompanying extended disbursement. However, these funds could still be used for other types of performance-based contracting, but the life of those funds remains the normal two-year limit for local WIOA grant funds. Per the provisions stated in the Uniform Guidance under the WIOA Cluster for Youth Activities: (1) A minimum of 75 percent of the Youth Activity funds allocated to states and local areas, except for the local area expenditures for administration, must be used to provide services to out-of-school youth (Section 129(a)(4)(A), WIOA, 128 Stat. 1506). (2) Not less than 20 percent of Youth Activity funds allocated to the local area, except for the local area expenditures for administration, must be used to provide paid and unpaid work experiences (Section 129(c)(4)), WIOA, 128 Stat. 1510). Condition: Upon inquiry of management, it was noted that the Board did not perform procedures to ensure that the expenditures of the WIOA Cluster were within the earmarking requirements noted in the Uniform Guidance during the fiscal year ended June 30, 2022. Questioned Costs: Unknown Context: Total federal expenditures for the WIOA Cluster were $3,927,799 for the year ended June 30, 2022. Cause: The Board did not perform the appropriate procedures to verify that the expenditures of the WIOA Cluster were within the earmarking requirements noted within the Uniform Guidance. Effect: The Board is not in compliance with the federal statutes, regulations, and terms and conditions of the federal award. Recommendation: We recommend that the Board implement controls and procedures to ensure that all requirements for earmarking within the Uniform Guidance are properly followed. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.
2022-004 PERIOD OF PERFORMANCE Federal Program Information: Federal Agency and Program Name, Federal Assistance Listing Number U.S. Department of Labor, WIOA Cluster 17.258/17.259/17.278 Criteria: 2 CFR 200.303 requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.309 states that “a non-Federal entity may charge to the Federal award only allowable costs incurred during the period of performance.” Condition: During our testing of period of performance, it was noted that for 13 of 25 transactions tested, proper supporting documentation could not be provided. Additionally, for 16 of 25 transactions tested, there was no evidence of proper review and approval of the transactions. Questioned Costs: $15,158 – Assistance Listing #17.258/#17.259/#17.278 Context: Total federal expenditures for the WIOA Cluster were $3,927,799 for the year ended June 30, 2022. Cause: The Board did not have proper internal controls in place to ensure that proper supporting documentation was maintained for all transactions, and that all transactions were properly reviewed and approved prior to payment. Effect: The Board could have had expenditures that were outside the proper period of performance of the grant. Recommendation: We recommend that the Board implement internal controls and policies to ensure that supporting documentation is maintained for all transactions, and that a member of management who is knowledgeable of the period of performance is reviewing and approving all transactions prior to payment. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.
2022-005 REPORTING Federal Program Information: Federal Agency and Program Name, Federal Assistance Listing Number U.S. Department of Labor, WIOA Cluster 17.258/17.259/17.278 Criteria: 2 CFR 200.303 requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” ETA-9130, Financial Report (OMB No. 1205-0461) – All ETA grantees are required to submit quarterly financial reports for each grant award they receive. Reports are required to be prepared using the specific format and instructions for the applicable program(s); in this case, Workforce Innovation and Opportunity Act instructions for the following: Statewide Adult; Workforce Statewide Youth; Statewide Dislocated Worker; Local Adult; Local Youth; and Local Dislocated Worker. Reports are due 45 days after the end of the reporting quarter. Financial data is required to be reported cumulatively from grant inception through the end of each reporting period. WIOA Participant Individual Record Layout (PIRL) (OMB No. 1205-0526) - The report is used to report services, activities, and outcomes of service for all job seekers and veterans. The WIOA Adult, Dislocated Worker, and Youth Programs are responsible for reporting common WIOA performance indicators. 2 CFR 170 Appendix A, as it relates to reporting for the Federal Funding Accountability and Transparency Act, “unless the auditee is exempt as provided in paragraph d. of this award term, the auditee must report each action that equals or exceeds $30,000 in Federal funds for a subaward to a non-Federal entity or Federal agency as noted in paragraph e. no later than the end of the month following the month in which the obligation was made.” Condition: Upon inquiry of management, no supporting documentation could be provided that the ETA-9130, Financial Reports (OMB No. 1205-0461) and the WIOA Participant Individual Record Layout (OMB No. 1205-0526) performance reports required by the WIOA Cluster were prepared and submitted. Additionally, the entity made first tier subawards of greater than $30,000, but could not provide supporting documentation that the necessary reports were filed to satisfy the requirements of the Federal Funding Accountability and Transparency Act (FFATA). Questioned Costs: Unknown Context: Total federal expenditures for the WIOA Cluster were $3,927,799 for the year ended June 30, 2022. Cause: The Board did not have adequate policies and internal controls in place to ensure that all required reports for the WIOA Cluster and FFATA were submitted accurately and in a timely fashion. Effect: The Board is not in compliance with the federal statutes, regulations, and terms and conditions of the federal award. Recommendation: We recommend that the Board design and implement controls to ensure that all required reporting is submitted accurately and in a timely fashion. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.
2022-006 SUBRECIPIENT MONITORING Federal Program Information: Federal Agency and Program Name, Federal Assistance Listing Number U.S. Department of Labor, WIOA Cluster 17.258/17.259/17.278 Criteria: 2 CFR 200.303 requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Recipients must ensure that commercial organizations that are subrecipients under WIOA Title I and expend more than the minimum level specified in 2 CFR Part 200, Subpart F, have either an organization-wide audit conducted in accordance with 2 CFR Part 200 or a program-specific financial and compliance audit (20 CFR section 683.210). 2 CFR 200.332(b) requires that all pass-through entities must: Evaluate each subrecipient’s risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in paragraphs (d) and (e) of this section. Condition: Upon inquiry of management, the Board did not perform any subrecipient monitoring procedures related to the Board’s grant agreement with its subrecipient for the fiscal year ended June 30, 2022. Questioned Costs: Unknown Context: Total federal expenditures for the WIOA Cluster were $3,927,799 for the year ended June 30, 2022, which included $1,390,746 of expenditures to subrecipients. Cause: Although the Board has policies and procedures in place surrounding the subrecipient monitoring compliance requirements, due to staffing issues during the fiscal year and lack of knowledge of all the federal compliance requirements, no subrecipient monitoring was completed. Effect: The Board is not in compliance with the federal statutes, regulations, and terms and conditions of the federal award. Recommendation: We recommend that the Board review its policies and procedures for sufficiency and commit the appropriate personnel to subrecipient monitoring to ensure that the Board is in compliance with all federal requirements. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.
2022-007 ELIGIBILITY Federal Program Information: Federal Agency and Program Name, Federal Assistance Listing Number U.S. Department of Labor, WIOA Cluster 17.258/17.259/17.278 Criteria: 2 CFR 200.303 requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Per the provisions of the Workforce Innovation and Opportunity Act (WIOA), “A person is eligible to receive services under Youth Activities if they are an out-of-school youth or an in-school youth (Section 129(a)(1), WIOA, 128 Stat. 1504)”, and meet the definition of such as defined in the Uniform Guidance. Condition: During our testing of WIOA participants, it was noted by management that the eligibility determination for Youth Activities is maintained and conducted by the Board’s subrecipient. According to management, there are no procedures performed at the Board to verify the eligibility of Youth Activities participants to ensure that all federal compliance requirements are being adhered to. Questioned Costs: Unknown Context: Total federal expenditures for the WIOA Cluster were $3,927,799 for the year ended June 30, 2022. Cause: The Board does not perform any procedures to ensure that the Youth Activities participants meet all the federal compliance requirements for participation in the program. Effect: A Youth Activities participant(s) may be granted access to the Board’s program when they do not meet the prescribed eligibility requirements. Recommendation: We recommend that the Board implement policies and procedures to ensure that the necessary controls are in place to properly verify the eligibility of all Youth Activities participants. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.
2022-008 ALLOCATION OF GRANT EXPENSES Federal Program Information: Federal Agency and Program Name, Federal Assistance Listing Number U.S. Department of Labor, WIOA Cluster, 17.258/17.259/17.278 Criteria: 2 CFR 200.303 requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Condition: During our testing of WIOA Cluster expenditures, it was noted that the Board did not regularly reconcile expenditures to the appropriate assistance listing numbers within the WIOA Cluster during the year. Questioned Costs: Unknown Context: Total federal expenditures for the WIOA Cluster were $3,927,799 for the year ended June 30, 2022. Cause: The former Fiscal Manager estimated expenses for reimbursement requests and allocated expenses to the grants of the WIOA Cluster Assistance Listing numbers. When the reimbursements were received, the estimated expenses were not reconciled to the actual expenses. Effect: Expenses were not properly allocated to the correct Assistance Listing number within the WIOA cluster. Recommendation: We recommend that the Board implement policies and procedures to ensure that all expenses are for actual expenses incurred, and that timely reconciliations are performed to ensure the expenses are properly charged to the correct assistance listing number and grant. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.
2022-002 ACTIVITIES ALLOWED OR UNALLOWED Federal Program Information: Federal Agency and Program Name Federal Assistance Listing Number U.S. Department of Labor, WIOA Cluster, 17.258/17.259/17.278 Criteria: 2 CFR 200.303 requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.403(g) states that costs must “Be adequately documented.” Condition: During our testing of activities allowed or unallowed, it was noted that for six of the 60 items tested, management could not provide adequate supporting documentation for the items selected for testing. Additionally, for 20 of the 60 items tested, management could not provide adequate support that the charges were properly reviewed and approved prior to payment. Questioned Costs: $202,486 – Assistance Listing #17.258/#17.259/#17.278 Context: Total federal expenditures for the WIOA Cluster were $3,927,799 for the year ended June 30, 2022. Cause: The Board did not retain adequate documentation to support the charges to the federal program, and did not demonstrate that proper internal controls are in place and operating effectively to ensure that unallowable charges to the federal program do not occur. Effect: The Board is not in compliance with the federal statutes, regulations, and terms and conditions of the federal award. Additionally, unallowable payments to the federal program may have occurred due to the lack of effective internal controls in place. Recommendation: We recommend that the Board design and implement controls to ensure that all charges to federal programs are adequately reviewed and approved prior to payment, and that adequate supporting documentation for all federal program charges is maintained. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.
2022-003 EARMARKING Federal Program Information:, Federal Agency and Program Name Federal Assistance Listing Number U.S. Department of Labor, WIOA Cluster 17.258/17.259/17.278 Criteria: 2 CFR 200.303 requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Per the provisions stated in the Uniform Guidance under the WIOA Cluster for Local Areas: (1) A local area may expend no more than 10 percent of the Adult, Dislocated Worker, and Youth Activities funds allocated to the local area under Sections 128(b) (WIOA, 128 Stat. 1502) and 133(b) (WIOA, 128 Stat. 1516) for within state allocations. The funds provided for administrative costs by one of the three fund sources (Adult, Dislocated Worker, Youth Activities) can be used for administrative costs of the other two sources. (2) The amount that may be spent on incumbent worker training may not exceed 20 percent of the amount of the combined total of federal funds allocated to local areas to carry out the Adult and Dislocated Worker programs for a program year (20 CFR section 680.800; Section 134(d)(4), WIOA, 128 Stat. 1535). (3) WIOA authorizes workforce investment areas, with the approval of the governor, to transfer up to 100 percent of the Adult Activities funds to Dislocated Workers Activities, and up to 100 percent of Dislocated Workers Activities funds to Adult Activities (Section 133(b)(4), WIOA, 128 Stat. 1518). (4) At the discretion of the local board, not more than 10 percent of the total funds allocated to the local area under section 128(b) and under section 133(b)(2)-(3) may be used to implement a pay-for-performance contract strategy as defined in WIOA Section 3(47) (WIOA Section 129(c)(1)(D) and 134(d)(1)(A)(iii)). (5) As no state has received prior approval for implementation of a PFP contract strategy, no funds from the program years prior to PY 2019 are available for PFP contract strategies or for the accompanying extended disbursement. However, these funds could still be used for other types of performance-based contracting, but the life of those funds remains the normal two-year limit for local WIOA grant funds. Per the provisions stated in the Uniform Guidance under the WIOA Cluster for Youth Activities: (1) A minimum of 75 percent of the Youth Activity funds allocated to states and local areas, except for the local area expenditures for administration, must be used to provide services to out-of-school youth (Section 129(a)(4)(A), WIOA, 128 Stat. 1506). (2) Not less than 20 percent of Youth Activity funds allocated to the local area, except for the local area expenditures for administration, must be used to provide paid and unpaid work experiences (Section 129(c)(4)), WIOA, 128 Stat. 1510). Condition: Upon inquiry of management, it was noted that the Board did not perform procedures to ensure that the expenditures of the WIOA Cluster were within the earmarking requirements noted in the Uniform Guidance during the fiscal year ended June 30, 2022. Questioned Costs: Unknown Context: Total federal expenditures for the WIOA Cluster were $3,927,799 for the year ended June 30, 2022. Cause: The Board did not perform the appropriate procedures to verify that the expenditures of the WIOA Cluster were within the earmarking requirements noted within the Uniform Guidance. Effect: The Board is not in compliance with the federal statutes, regulations, and terms and conditions of the federal award. Recommendation: We recommend that the Board implement controls and procedures to ensure that all requirements for earmarking within the Uniform Guidance are properly followed. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.
2022-004 PERIOD OF PERFORMANCE Federal Program Information: Federal Agency and Program Name, Federal Assistance Listing Number U.S. Department of Labor, WIOA Cluster 17.258/17.259/17.278 Criteria: 2 CFR 200.303 requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.309 states that “a non-Federal entity may charge to the Federal award only allowable costs incurred during the period of performance.” Condition: During our testing of period of performance, it was noted that for 13 of 25 transactions tested, proper supporting documentation could not be provided. Additionally, for 16 of 25 transactions tested, there was no evidence of proper review and approval of the transactions. Questioned Costs: $15,158 – Assistance Listing #17.258/#17.259/#17.278 Context: Total federal expenditures for the WIOA Cluster were $3,927,799 for the year ended June 30, 2022. Cause: The Board did not have proper internal controls in place to ensure that proper supporting documentation was maintained for all transactions, and that all transactions were properly reviewed and approved prior to payment. Effect: The Board could have had expenditures that were outside the proper period of performance of the grant. Recommendation: We recommend that the Board implement internal controls and policies to ensure that supporting documentation is maintained for all transactions, and that a member of management who is knowledgeable of the period of performance is reviewing and approving all transactions prior to payment. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.
2022-005 REPORTING Federal Program Information: Federal Agency and Program Name, Federal Assistance Listing Number U.S. Department of Labor, WIOA Cluster 17.258/17.259/17.278 Criteria: 2 CFR 200.303 requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” ETA-9130, Financial Report (OMB No. 1205-0461) – All ETA grantees are required to submit quarterly financial reports for each grant award they receive. Reports are required to be prepared using the specific format and instructions for the applicable program(s); in this case, Workforce Innovation and Opportunity Act instructions for the following: Statewide Adult; Workforce Statewide Youth; Statewide Dislocated Worker; Local Adult; Local Youth; and Local Dislocated Worker. Reports are due 45 days after the end of the reporting quarter. Financial data is required to be reported cumulatively from grant inception through the end of each reporting period. WIOA Participant Individual Record Layout (PIRL) (OMB No. 1205-0526) - The report is used to report services, activities, and outcomes of service for all job seekers and veterans. The WIOA Adult, Dislocated Worker, and Youth Programs are responsible for reporting common WIOA performance indicators. 2 CFR 170 Appendix A, as it relates to reporting for the Federal Funding Accountability and Transparency Act, “unless the auditee is exempt as provided in paragraph d. of this award term, the auditee must report each action that equals or exceeds $30,000 in Federal funds for a subaward to a non-Federal entity or Federal agency as noted in paragraph e. no later than the end of the month following the month in which the obligation was made.” Condition: Upon inquiry of management, no supporting documentation could be provided that the ETA-9130, Financial Reports (OMB No. 1205-0461) and the WIOA Participant Individual Record Layout (OMB No. 1205-0526) performance reports required by the WIOA Cluster were prepared and submitted. Additionally, the entity made first tier subawards of greater than $30,000, but could not provide supporting documentation that the necessary reports were filed to satisfy the requirements of the Federal Funding Accountability and Transparency Act (FFATA). Questioned Costs: Unknown Context: Total federal expenditures for the WIOA Cluster were $3,927,799 for the year ended June 30, 2022. Cause: The Board did not have adequate policies and internal controls in place to ensure that all required reports for the WIOA Cluster and FFATA were submitted accurately and in a timely fashion. Effect: The Board is not in compliance with the federal statutes, regulations, and terms and conditions of the federal award. Recommendation: We recommend that the Board design and implement controls to ensure that all required reporting is submitted accurately and in a timely fashion. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.
2022-006 SUBRECIPIENT MONITORING Federal Program Information: Federal Agency and Program Name, Federal Assistance Listing Number U.S. Department of Labor, WIOA Cluster 17.258/17.259/17.278 Criteria: 2 CFR 200.303 requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Recipients must ensure that commercial organizations that are subrecipients under WIOA Title I and expend more than the minimum level specified in 2 CFR Part 200, Subpart F, have either an organization-wide audit conducted in accordance with 2 CFR Part 200 or a program-specific financial and compliance audit (20 CFR section 683.210). 2 CFR 200.332(b) requires that all pass-through entities must: Evaluate each subrecipient’s risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in paragraphs (d) and (e) of this section. Condition: Upon inquiry of management, the Board did not perform any subrecipient monitoring procedures related to the Board’s grant agreement with its subrecipient for the fiscal year ended June 30, 2022. Questioned Costs: Unknown Context: Total federal expenditures for the WIOA Cluster were $3,927,799 for the year ended June 30, 2022, which included $1,390,746 of expenditures to subrecipients. Cause: Although the Board has policies and procedures in place surrounding the subrecipient monitoring compliance requirements, due to staffing issues during the fiscal year and lack of knowledge of all the federal compliance requirements, no subrecipient monitoring was completed. Effect: The Board is not in compliance with the federal statutes, regulations, and terms and conditions of the federal award. Recommendation: We recommend that the Board review its policies and procedures for sufficiency and commit the appropriate personnel to subrecipient monitoring to ensure that the Board is in compliance with all federal requirements. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.
2022-007 ELIGIBILITY Federal Program Information: Federal Agency and Program Name, Federal Assistance Listing Number U.S. Department of Labor, WIOA Cluster 17.258/17.259/17.278 Criteria: 2 CFR 200.303 requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Per the provisions of the Workforce Innovation and Opportunity Act (WIOA), “A person is eligible to receive services under Youth Activities if they are an out-of-school youth or an in-school youth (Section 129(a)(1), WIOA, 128 Stat. 1504)”, and meet the definition of such as defined in the Uniform Guidance. Condition: During our testing of WIOA participants, it was noted by management that the eligibility determination for Youth Activities is maintained and conducted by the Board’s subrecipient. According to management, there are no procedures performed at the Board to verify the eligibility of Youth Activities participants to ensure that all federal compliance requirements are being adhered to. Questioned Costs: Unknown Context: Total federal expenditures for the WIOA Cluster were $3,927,799 for the year ended June 30, 2022. Cause: The Board does not perform any procedures to ensure that the Youth Activities participants meet all the federal compliance requirements for participation in the program. Effect: A Youth Activities participant(s) may be granted access to the Board’s program when they do not meet the prescribed eligibility requirements. Recommendation: We recommend that the Board implement policies and procedures to ensure that the necessary controls are in place to properly verify the eligibility of all Youth Activities participants. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.
2022-008 ALLOCATION OF GRANT EXPENSES Federal Program Information: Federal Agency and Program Name, Federal Assistance Listing Number U.S. Department of Labor, WIOA Cluster, 17.258/17.259/17.278 Criteria: 2 CFR 200.303 requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Condition: During our testing of WIOA Cluster expenditures, it was noted that the Board did not regularly reconcile expenditures to the appropriate assistance listing numbers within the WIOA Cluster during the year. Questioned Costs: Unknown Context: Total federal expenditures for the WIOA Cluster were $3,927,799 for the year ended June 30, 2022. Cause: The former Fiscal Manager estimated expenses for reimbursement requests and allocated expenses to the grants of the WIOA Cluster Assistance Listing numbers. When the reimbursements were received, the estimated expenses were not reconciled to the actual expenses. Effect: Expenses were not properly allocated to the correct Assistance Listing number within the WIOA cluster. Recommendation: We recommend that the Board implement policies and procedures to ensure that all expenses are for actual expenses incurred, and that timely reconciliations are performed to ensure the expenses are properly charged to the correct assistance listing number and grant. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.
2022-002 ACTIVITIES ALLOWED OR UNALLOWED Federal Program Information: Federal Agency and Program Name Federal Assistance Listing Number U.S. Department of Labor, WIOA Cluster, 17.258/17.259/17.278 Criteria: 2 CFR 200.303 requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.403(g) states that costs must “Be adequately documented.” Condition: During our testing of activities allowed or unallowed, it was noted that for six of the 60 items tested, management could not provide adequate supporting documentation for the items selected for testing. Additionally, for 20 of the 60 items tested, management could not provide adequate support that the charges were properly reviewed and approved prior to payment. Questioned Costs: $202,486 – Assistance Listing #17.258/#17.259/#17.278 Context: Total federal expenditures for the WIOA Cluster were $3,927,799 for the year ended June 30, 2022. Cause: The Board did not retain adequate documentation to support the charges to the federal program, and did not demonstrate that proper internal controls are in place and operating effectively to ensure that unallowable charges to the federal program do not occur. Effect: The Board is not in compliance with the federal statutes, regulations, and terms and conditions of the federal award. Additionally, unallowable payments to the federal program may have occurred due to the lack of effective internal controls in place. Recommendation: We recommend that the Board design and implement controls to ensure that all charges to federal programs are adequately reviewed and approved prior to payment, and that adequate supporting documentation for all federal program charges is maintained. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.
2022-003 EARMARKING Federal Program Information:, Federal Agency and Program Name Federal Assistance Listing Number U.S. Department of Labor, WIOA Cluster 17.258/17.259/17.278 Criteria: 2 CFR 200.303 requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Per the provisions stated in the Uniform Guidance under the WIOA Cluster for Local Areas: (1) A local area may expend no more than 10 percent of the Adult, Dislocated Worker, and Youth Activities funds allocated to the local area under Sections 128(b) (WIOA, 128 Stat. 1502) and 133(b) (WIOA, 128 Stat. 1516) for within state allocations. The funds provided for administrative costs by one of the three fund sources (Adult, Dislocated Worker, Youth Activities) can be used for administrative costs of the other two sources. (2) The amount that may be spent on incumbent worker training may not exceed 20 percent of the amount of the combined total of federal funds allocated to local areas to carry out the Adult and Dislocated Worker programs for a program year (20 CFR section 680.800; Section 134(d)(4), WIOA, 128 Stat. 1535). (3) WIOA authorizes workforce investment areas, with the approval of the governor, to transfer up to 100 percent of the Adult Activities funds to Dislocated Workers Activities, and up to 100 percent of Dislocated Workers Activities funds to Adult Activities (Section 133(b)(4), WIOA, 128 Stat. 1518). (4) At the discretion of the local board, not more than 10 percent of the total funds allocated to the local area under section 128(b) and under section 133(b)(2)-(3) may be used to implement a pay-for-performance contract strategy as defined in WIOA Section 3(47) (WIOA Section 129(c)(1)(D) and 134(d)(1)(A)(iii)). (5) As no state has received prior approval for implementation of a PFP contract strategy, no funds from the program years prior to PY 2019 are available for PFP contract strategies or for the accompanying extended disbursement. However, these funds could still be used for other types of performance-based contracting, but the life of those funds remains the normal two-year limit for local WIOA grant funds. Per the provisions stated in the Uniform Guidance under the WIOA Cluster for Youth Activities: (1) A minimum of 75 percent of the Youth Activity funds allocated to states and local areas, except for the local area expenditures for administration, must be used to provide services to out-of-school youth (Section 129(a)(4)(A), WIOA, 128 Stat. 1506). (2) Not less than 20 percent of Youth Activity funds allocated to the local area, except for the local area expenditures for administration, must be used to provide paid and unpaid work experiences (Section 129(c)(4)), WIOA, 128 Stat. 1510). Condition: Upon inquiry of management, it was noted that the Board did not perform procedures to ensure that the expenditures of the WIOA Cluster were within the earmarking requirements noted in the Uniform Guidance during the fiscal year ended June 30, 2022. Questioned Costs: Unknown Context: Total federal expenditures for the WIOA Cluster were $3,927,799 for the year ended June 30, 2022. Cause: The Board did not perform the appropriate procedures to verify that the expenditures of the WIOA Cluster were within the earmarking requirements noted within the Uniform Guidance. Effect: The Board is not in compliance with the federal statutes, regulations, and terms and conditions of the federal award. Recommendation: We recommend that the Board implement controls and procedures to ensure that all requirements for earmarking within the Uniform Guidance are properly followed. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.
2022-004 PERIOD OF PERFORMANCE Federal Program Information: Federal Agency and Program Name, Federal Assistance Listing Number U.S. Department of Labor, WIOA Cluster 17.258/17.259/17.278 Criteria: 2 CFR 200.303 requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR 200.309 states that “a non-Federal entity may charge to the Federal award only allowable costs incurred during the period of performance.” Condition: During our testing of period of performance, it was noted that for 13 of 25 transactions tested, proper supporting documentation could not be provided. Additionally, for 16 of 25 transactions tested, there was no evidence of proper review and approval of the transactions. Questioned Costs: $15,158 – Assistance Listing #17.258/#17.259/#17.278 Context: Total federal expenditures for the WIOA Cluster were $3,927,799 for the year ended June 30, 2022. Cause: The Board did not have proper internal controls in place to ensure that proper supporting documentation was maintained for all transactions, and that all transactions were properly reviewed and approved prior to payment. Effect: The Board could have had expenditures that were outside the proper period of performance of the grant. Recommendation: We recommend that the Board implement internal controls and policies to ensure that supporting documentation is maintained for all transactions, and that a member of management who is knowledgeable of the period of performance is reviewing and approving all transactions prior to payment. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.
2022-005 REPORTING Federal Program Information: Federal Agency and Program Name, Federal Assistance Listing Number U.S. Department of Labor, WIOA Cluster 17.258/17.259/17.278 Criteria: 2 CFR 200.303 requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” ETA-9130, Financial Report (OMB No. 1205-0461) – All ETA grantees are required to submit quarterly financial reports for each grant award they receive. Reports are required to be prepared using the specific format and instructions for the applicable program(s); in this case, Workforce Innovation and Opportunity Act instructions for the following: Statewide Adult; Workforce Statewide Youth; Statewide Dislocated Worker; Local Adult; Local Youth; and Local Dislocated Worker. Reports are due 45 days after the end of the reporting quarter. Financial data is required to be reported cumulatively from grant inception through the end of each reporting period. WIOA Participant Individual Record Layout (PIRL) (OMB No. 1205-0526) - The report is used to report services, activities, and outcomes of service for all job seekers and veterans. The WIOA Adult, Dislocated Worker, and Youth Programs are responsible for reporting common WIOA performance indicators. 2 CFR 170 Appendix A, as it relates to reporting for the Federal Funding Accountability and Transparency Act, “unless the auditee is exempt as provided in paragraph d. of this award term, the auditee must report each action that equals or exceeds $30,000 in Federal funds for a subaward to a non-Federal entity or Federal agency as noted in paragraph e. no later than the end of the month following the month in which the obligation was made.” Condition: Upon inquiry of management, no supporting documentation could be provided that the ETA-9130, Financial Reports (OMB No. 1205-0461) and the WIOA Participant Individual Record Layout (OMB No. 1205-0526) performance reports required by the WIOA Cluster were prepared and submitted. Additionally, the entity made first tier subawards of greater than $30,000, but could not provide supporting documentation that the necessary reports were filed to satisfy the requirements of the Federal Funding Accountability and Transparency Act (FFATA). Questioned Costs: Unknown Context: Total federal expenditures for the WIOA Cluster were $3,927,799 for the year ended June 30, 2022. Cause: The Board did not have adequate policies and internal controls in place to ensure that all required reports for the WIOA Cluster and FFATA were submitted accurately and in a timely fashion. Effect: The Board is not in compliance with the federal statutes, regulations, and terms and conditions of the federal award. Recommendation: We recommend that the Board design and implement controls to ensure that all required reporting is submitted accurately and in a timely fashion. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.