Finding 2021-002: Segregation of Duties Federal Program: Research and Development Cluster (Education and Human Resources) Assistance Listing Number and Title: 47.076 STEM Education Name of Federal Agency, Pass Through Entity (when applicable), Award Number and Year: National Science Foundation: 1431638 (9/1/2014 – 8/31/2022), 1524963 (11/1/2015 – 9/30/2021), 1500529 (9/1/2015 – 8/31/2022), 1624185 (9/16/2016 – 8/31/2022), 1640791 (9/15/2016 – 8/31/2022), 1720869 (5/15/2017 – 4/30/2022), 1726113 (8/1/2017 – 9/30/2023), 1821462 (7/1/2018 – 6/30/2024), 1812860 (9/1/2018 – 8/31/2020), 1940925 (1/15/2020 – 12/31/2023), 1907950 (7/1/2019 – 6/30/2024), 2015205 (4/1/2020 – 3/31/2022), 2021059 (10/1/2020 – 9/30/2024) Federal Program: Research and Development Cluster (Mathematical and Physical Sciences) Assistance Listing Number and Title: 47.049 Mathematical and Physical Sciences Name of Federal Agency, Pass Through Entity, Award Number and Year: National Science Foundation: 1821372 (10/1/2018 – 9/30/2024 pass through entity American Physical Society), 1834530 (9/1/2018 – 8/31/2025 pass through entity American Physical Society), 1938815 (8/1/2020 – 7/31/2024) Federal Program: Research and Development Cluster (Science) Assistance Listing Number and Title: 43.001 Science Name of Federal Agency, Pass Through Entity: National Aeronautics and Space Administration: NNX16AR36A (8/24/2016 – 8/23/2021 pass through entity Temple University of the Commonwealth System of Higher Education), 80NSSC21K1560 (6/28/2021 – 6/27/2022 pass through entity Temple University of the Commonwealth System of Higher Education) Material Weakness in Internal Controls Over Compliance, Other matters Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): As noted in 2 CFR 200.303 “The non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Condition: The Chief Financial Officer is responsible for posting entries into the accounting system without a second level review, and obtaining all bank statements unopened while also having the ability to add or modify payees and unilaterally initiate and authorize electronic fund transfers such as automated clearing house payments. The CFO is also responsible for opening the mail which may contain payments by check, and can manually reduce receivable balances. Cause: Accounting department employees have not been trained to perform tasks that would allow for a proper segregation of duties related to accounting entries. Employees outside of the accounting department are permitted to work from home, which limits the employees who can perform functions such as opening the mail. Effect or Potential Effect: If any one employee can control all stages of a transaction, defalcations or irregularities could occur and not be detected timely. Questioned Costs: None noted. Identification as a Repeat Finding, if Applicable: 2020-002 Recommendation: We recommend that AAPT provide training to the Finance and Administration staff so that entries can be subject to supervisory review by an individual knowledgeable as to the propriety of the entries. We recommend that AAPT segregate the ability to initiate and authorize electronic payments. We recommend that an employee outside of the Finance and Administration department open the AAPT mail and create an initial recordation log of checks or cash received. Views of Responsible Officials and Planned Corrective Actions: AAPT has instituted the segregation of duties of submitting and approval of electronic payments. The senior accountant has been authorized to submit the ACH/Wire transfer requests. The CFO has the authorization of approval of submitted electronic payments. The change was activated around March 15, 2024 The staff will be trained on generating journal entries previous prepared by the CFO and supervised and approve by the CFO – completed date May 15, 2024 The administrative assistant of the CEO will come to AAPT twice weekly to process incoming mail and create an initial recordation log of checks or cash received. The administrative assistant will not have access in any system to enter/modify/delete any information related to checks that are received. Anticipated Completion Date: January 2025 Responsible Official: Michael Brosnan, CFO
Finding 2021-002: Segregation of Duties Federal Program: Research and Development Cluster (Education and Human Resources) Assistance Listing Number and Title: 47.076 STEM Education Name of Federal Agency, Pass Through Entity (when applicable), Award Number and Year: National Science Foundation: 1431638 (9/1/2014 – 8/31/2022), 1524963 (11/1/2015 – 9/30/2021), 1500529 (9/1/2015 – 8/31/2022), 1624185 (9/16/2016 – 8/31/2022), 1640791 (9/15/2016 – 8/31/2022), 1720869 (5/15/2017 – 4/30/2022), 1726113 (8/1/2017 – 9/30/2023), 1821462 (7/1/2018 – 6/30/2024), 1812860 (9/1/2018 – 8/31/2020), 1940925 (1/15/2020 – 12/31/2023), 1907950 (7/1/2019 – 6/30/2024), 2015205 (4/1/2020 – 3/31/2022), 2021059 (10/1/2020 – 9/30/2024) Federal Program: Research and Development Cluster (Mathematical and Physical Sciences) Assistance Listing Number and Title: 47.049 Mathematical and Physical Sciences Name of Federal Agency, Pass Through Entity, Award Number and Year: National Science Foundation: 1821372 (10/1/2018 – 9/30/2024 pass through entity American Physical Society), 1834530 (9/1/2018 – 8/31/2025 pass through entity American Physical Society), 1938815 (8/1/2020 – 7/31/2024) Federal Program: Research and Development Cluster (Science) Assistance Listing Number and Title: 43.001 Science Name of Federal Agency, Pass Through Entity: National Aeronautics and Space Administration: NNX16AR36A (8/24/2016 – 8/23/2021 pass through entity Temple University of the Commonwealth System of Higher Education), 80NSSC21K1560 (6/28/2021 – 6/27/2022 pass through entity Temple University of the Commonwealth System of Higher Education) Material Weakness in Internal Controls Over Compliance, Other matters Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): As noted in 2 CFR 200.303 “The non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Condition: The Chief Financial Officer is responsible for posting entries into the accounting system without a second level review, and obtaining all bank statements unopened while also having the ability to add or modify payees and unilaterally initiate and authorize electronic fund transfers such as automated clearing house payments. The CFO is also responsible for opening the mail which may contain payments by check, and can manually reduce receivable balances. Cause: Accounting department employees have not been trained to perform tasks that would allow for a proper segregation of duties related to accounting entries. Employees outside of the accounting department are permitted to work from home, which limits the employees who can perform functions such as opening the mail. Effect or Potential Effect: If any one employee can control all stages of a transaction, defalcations or irregularities could occur and not be detected timely. Questioned Costs: None noted. Identification as a Repeat Finding, if Applicable: 2020-002 Recommendation: We recommend that AAPT provide training to the Finance and Administration staff so that entries can be subject to supervisory review by an individual knowledgeable as to the propriety of the entries. We recommend that AAPT segregate the ability to initiate and authorize electronic payments. We recommend that an employee outside of the Finance and Administration department open the AAPT mail and create an initial recordation log of checks or cash received. Views of Responsible Officials and Planned Corrective Actions: AAPT has instituted the segregation of duties of submitting and approval of electronic payments. The senior accountant has been authorized to submit the ACH/Wire transfer requests. The CFO has the authorization of approval of submitted electronic payments. The change was activated around March 15, 2024 The staff will be trained on generating journal entries previous prepared by the CFO and supervised and approve by the CFO – completed date May 15, 2024 The administrative assistant of the CEO will come to AAPT twice weekly to process incoming mail and create an initial recordation log of checks or cash received. The administrative assistant will not have access in any system to enter/modify/delete any information related to checks that are received. Anticipated Completion Date: January 2025 Responsible Official: Michael Brosnan, CFO
FINDING 2021-003 Subject: Water and Waste Disposal Systems for Rural Communities - Internal Controls Federal Agency: Department of Agriculture Federal Program: Water and Waste Disposal Systems for Rural Communities Assistance Listings Number: 10.760 Federal Award Number and Year (or Other Identifying Number): FY 2021 Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Matching, Level of Effort, Earmarking Audit Finding: Material Weakness Condition and Context An effective internal control system, which would include segregation of duties, was not in place at the Town in order to ensure compliance with requirements related to the grant agreement and the following compliance requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Matching. Activities Allowed or Unallowed and Allowable Costs/Cost Principles There was no documented oversight, review, or approval process in place over federal expenditures related to the grant. Although the Town Council approved grant project related contracts, individual expenditures did not have a documented review process in place (or consistent Town Council approval) to ensure disbursements made were allowable and in accordance with contract provisions related to the grant. Matching No documented reports, spreadsheets, or calculations prepared by the Town were provided to ensure matching requirements were met or being met. Additionally, the Town Council was not reviewing and approving all federal expenditures (including matching expenditures) related to the grant. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 18 TOWN OF NEWPORT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause A proper system of internal controls was not designed by management of the Town, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the Town's management 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, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. It also placed the Town at risk of noncompliance with the grant agreement. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the Town design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2021-004 Subject: Water and Waste Disposal System for Rural Communities - Reporting Federal Agency: Department of Agriculture Federal Program: Water and Waste Disposal System for Rural Communities Assistance Listings Number: 10.760 Federal Award Number and Year (or Other Identifying Number): FY 2021 Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Condition and Context Recipients are required to submit RD 442-2 (Statement of Budget, Income and Equity) and RD 442-3 (Balance Sheet) covering the fiscal year within 60 days of the end of the fiscal year to the United States Department of Agriculture (USDA). There was no documented oversight, review, or approval process to ensure the required RD 442-2 (Statement of Budget, Income and Equity) and RD 442-3 (Balance Sheet) reports were completed and submitted timely and accurately to the Department of Agriculture (USDA). Due to the lack of internal controls, the Town did not submit the required RD 442-2 and 442-3 reports to the USDA during the audit period. INDIANA STATE BOARD OF ACCOUNTS 19 TOWN OF NEWPORT SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 7 CFR 1780.47(e) states in part: ". . . within 60 days following the end of each fiscal year, furnish the RUS with annual financial statements, consisting of a verification of the organization's balance sheet and statement of income and expense by an appropriate official of the organization. Forms RD 442-2, 'Statement of Budget, Income and Equity,' and 442-3 may be used." Cause The Town was unable to provide documentation to show that the RD 442-2 and RD 442-3 reports were filed. Effect Without the proper implementation of an effectively designed system of internal controls, the Town could not ensure that the required reports were filed with the awarding agency. As such, the awarding agency did not have accurate and current information to discern the financial status of the Town's project. Furthermore, noncompliance with the provisions of federal statutes, regulations, and the terms and conditions or the federal award could result in the loss of future federal funding to the Town. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the Town's management design and implement a system of internal controls that would provide segregation of duties for the preparation and review of federal reports to ensure appropriate reviews, approvals, and oversight are taking place. Additionally, management should develop policies and procedures to ensure that all required reports are filed 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 2021-005 Subject: Highway Planning and Construction - Procurement Federal Agency: U.S. Department of Transportation Federal Program: Highway Planning and Construction Cluster Assistance Listings Number: 20.205 Federal Award Numbers and Years (or Other Identifying Numbers): DES #1702829, DES #1801831, DES #1401027, DES #1592335, DES #1592338, DES #1902029, DES #1902197, DES #1902815, DES #1902818 Pass-Through Entity: Indiana Department of Transportation Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context The County had not properly designed or implemented a system of internal controls that would be effective in preventing, or detecting and correcting, noncompliance to ensure that the Local Public Agency (LPA) Selection Review Checklist was properly supported. The lack of internal controls resulted in noncompliance. For consultant contracting (engineering and design related services) the Local Public Agency (LPA), (La Porte County) will create and send a Request for Proposal (RFP) to the Indiana Department of Transportation (INDOT), who will review and advertise them. Consultants can then respond to those RFPs by completing and submitting a Letter of Interest (LOI). After all LOIs are received and ranked, the County reports the number of LOIs received on the LPA Selection Review Checklist. The County did not keep or maintain the LOIs as reported to the INDOT on the LPA Selection Review Checklist. As a result, the number of LOIs documented on the checklist provided to the INDOT could not be verified or audited. In addition, we were unable to ensure the minimum number of LOIs were received to meet the procurement competition standards. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 27 LA PORTE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 49 CFR 18.36(9) states: "Grantees and subgrantees will maintain records sufficient to detail the significant history of a procurement. These records will include, but are not necessarily limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price." Cause Management did not develop a system of internal controls to maintain records sufficient to detail the history of a procurement as required by retaining the LOIs. Effect The failure to establish an effective internal control system places the County at risk of noncompliance with the grant agreement and the compliance requirements and resulted in a Qualified Opinion. 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 County. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the County's management design and implement a proper system of internal controls to ensure the County retains the LOIs to ensure compliance with procurement requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2021-006 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Numbers and Years (or Other Identifying Numbers): Regular FY 2021, Revenue Loss FY 2021 Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Modified Opinion Condition and Context An effective internal control system, which would include segregation of duties, was not in place at the County in order to ensure compliance with requirements related to the grant agreement and the procurement and suspension and debarment compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 28 LA PORTE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Prior to entering into subawards and covered transactions with Coronavirus State and Local Fiscal Recovery Funds (CSLFRF), SLFRF funds, recipients are required to verify that contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (e.g., grant agreement) that are expected to equal or exceed $25,000 and all subawards. The verification is to be done by checking the Excluded Parties List System (ELPS), collection of a certification from that person or entity, or adding a clause or condition to the covered transaction with that person or entity. Upon inquiring of the County to determine its policies and procedures related to suspension and debarment requirements for the Coronavirus State and Local Fiscal Recovery Funds (CSLFRF), SLFRF funds, the County stated procedures were not in place to ensure vendors were not suspended or debarred prior to entering into covered transactions. The County had not performed procedures to ensure the vendors were not suspended or debarred or otherwise excluded or disqualified from participation in federal assistance programs or activities during the audit period on 100 percent of the applicable two vendors that were paid with SLFRF funds, which totaled $657,583. 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). . . ." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you do business is not excluded or disqualified. You do this by: (a) Checking the EPLS, or (b) Collecting a certification from that person if allowed by this rule, or (c) Adding a clause or condition to the covered transaction with that person." Cause Management of the County did not develop a system of internal controls to ensure that policies and procedures were in place and followed, related to suspension and debarment. INDIANA STATE BOARD OF ACCOUNTS 29 LA PORTE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded. Any program funds the County used to pay contractors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Furthermore, 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 County. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County establish a proper system of internal controls, including policies and procedures to ensure its compliance with requirements related to suspension and debarment. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2021-006 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Numbers and Years (or Other Identifying Numbers): Regular FY 2021, Revenue Loss FY 2021 Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Modified Opinion Condition and Context An effective internal control system, which would include segregation of duties, was not in place at the County in order to ensure compliance with requirements related to the grant agreement and the procurement and suspension and debarment compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 28 LA PORTE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Prior to entering into subawards and covered transactions with Coronavirus State and Local Fiscal Recovery Funds (CSLFRF), SLFRF funds, recipients are required to verify that contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (e.g., grant agreement) that are expected to equal or exceed $25,000 and all subawards. The verification is to be done by checking the Excluded Parties List System (ELPS), collection of a certification from that person or entity, or adding a clause or condition to the covered transaction with that person or entity. Upon inquiring of the County to determine its policies and procedures related to suspension and debarment requirements for the Coronavirus State and Local Fiscal Recovery Funds (CSLFRF), SLFRF funds, the County stated procedures were not in place to ensure vendors were not suspended or debarred prior to entering into covered transactions. The County had not performed procedures to ensure the vendors were not suspended or debarred or otherwise excluded or disqualified from participation in federal assistance programs or activities during the audit period on 100 percent of the applicable two vendors that were paid with SLFRF funds, which totaled $657,583. 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). . . ." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you do business is not excluded or disqualified. You do this by: (a) Checking the EPLS, or (b) Collecting a certification from that person if allowed by this rule, or (c) Adding a clause or condition to the covered transaction with that person." Cause Management of the County did not develop a system of internal controls to ensure that policies and procedures were in place and followed, related to suspension and debarment. INDIANA STATE BOARD OF ACCOUNTS 29 LA PORTE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded. Any program funds the County used to pay contractors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Furthermore, 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 County. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County establish a proper system of internal controls, including policies and procedures to ensure its compliance with requirements related to suspension and debarment. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2021-007 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): Revenue Loss FY 2021 Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Condition and Context An effective internal control system, which would include segregation of duties, was not in place at the County in order to ensure compliance with requirement related to the grant agreement and the reporting compliance requirement. Recipients were required to submit a one-time Interim report to the U.S. Department of the Treasury (Treasury). The respective due date was August 31, 2021, or 60 days after receiving funding if funding was received by October 15. The report was to show expenditures by category. The County submitted the required interim report during the audit period. The County's process for the completion and submission of the Interim Report was that the County Auditor prepared the Interim Report based on the County's records, without a proper oversight or review process in place prior to submission. INDIANA STATE BOARD OF ACCOUNTS 30 LA PORTE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The Interim Report was determined to be materially misstated. The County understated the December 31, 2019 Base Year Revenues by $660,302. 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). . . ." Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, page 10, states in part: ". . . 10. Reporting. All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. . . ." 31 CFR 35.4(c) states in part: "Reporting and requests for other information. During the period of performance, recipients shall provide to the Secretary periodic reports providing detailed accounting of the uses of funds, . . ." Cause A proper system of internal controls was not designed or implemented by management of the County to ensure that policies and procedures were in place related to reporting to ensure the amounts reported were accurate. 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, noncompliance. Noncompliance with the provision of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of federal funding to the County. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 31 LA PORTE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that the management of the County establish a system of internal controls and develop policies and procedures over the preparation and review of federal reports to ensure appropriate reviews, approval, and oversight are taking place. Additionally, management should develop policies and procedures to ensure that the County provides the Treasury with complete and accurate information for all reports. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2021-003 – Reporting, Non-compliance (Material Weakness) Federal Program: U.S. Department of Health and Human Services – ALN 93.498, COVID-19 Provider Relief Fund (PRF) Criteria: 2 CFR Part 200.303(a) states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and terms and conditions of the federal award. Specific criteria are established by the U.S. Department of Health and Human Services (HHS) with respect to allowable cost and reporting requirements for this program, including: Funds shall reimburse the recipient only for health care related expenses or lost revenues that are attributable to coronavirus. Entities may elect to calculate, and report lost revenue using one of three options. Entities electing to calculate lost revenue using Option i report net revenue from patient care for each quarter and each year 2019, 2020, and 2021. For entities electing to report lost revenues using Option ii, the difference between budgeted and actual patient care revenues, budgets must be approved before March 27, 2020 and cover each quarter during the period of availability. Entities electing to calculate lost revenues using another reasonable method should report using option iii. Section 200.512 of the Uniform Guidance states that the audit, the data collection form, and the reporting package must be submitted within 30 calendar days after the auditee receives the auditor’s report or nine months after the end of the audit period (whichever is earlier). Condition and Context: Internal controls surrounding the review process performed were not effective in detecting and correcting the proper reporting prior to submission. In the Hospital’s Period 1 reporting in the PRF reporting portal, the Hospital entered Total Unreimbursed Expenses Attributable to Coronavirus of $6,308,940 instead of the Hospital’s actual Unreimbursed Expenses total of $1,724,167. The Hospital did not report a total of $120,930 in the Other Assistance Received section of the HRSA PRF Phase 1 Submission. Internal controls surrounding the review process performed were not effective in detecting and correcting the proper reporting prior to submission. Additionally, the Hospital improperly reported $177,904 in grant receipts that were included in the Other Assistance Received section of the HRSA Phase 1 Report as $49,461 in Q2 2020 Local, State, and Tribal Government Assistance, $118,443 in Q2 2020 FEMA Program Assistance and $10,000 in Q3 2020 Small Business Administration Assistance. Additionally, The Hospital did not complete and submit its audit report prior to the required deadline. Cause and Effect: Management review was not effective in detecting and correcting the omission of reporting for other assistance received by the Hospital or the incorrect reporting of funds. The Hospital was not in compliance with the audit filing requirement. Questioned Costs: None Repeat Finding: No Recommendation: We recommend that the Hospital strengthen internal controls to prevent omission of or improper inclusion in other assistance received by quarter during the period of availability and incorrect reporting of unreimbursed expenses on the PRF report. We recommend the Hospital ensure future audits are completed and submitted in a timely manner. Views of Responsible Officials of The Auditee: Management agrees with the finding. See accompanying corrective action plan.
Finding 2021-002 – Reporting – Material Weakness in Internal Control Over Compliance and Instance of Material Noncompliance. See finding 2021-002 for the included table. Criteria: 2021 Compliance Supplement and 2 CFR 200.303(a) stated that the non-federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-federal entity is managing the Federal award in compliance with Federal statutes, regulations, and terms and conditions of the federal award. Condition/Context: Under the Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Program (Provider Relief Fund), providers are required to submit reporting to the Health Resources Services Administration (HRSA) that describes the uses of the funds and how the provider complied with the terms and conditions of the program. The Organization received general and targeted funds for six different entities within the Organization. Repeat Findings from Prior Year(s): This is not a repeat finding. Cause and Effect: In addition to the challenges encountered while operating a health system during the Coronavirus (COVID-19) pandemic, leading up to the audit period, the Organization was significantly impacted by bankruptcy, turnover of leadership, and the lack of team members that had expertise with grant management and accounting. Those factors coupled with the evolving nature of PRF guidance led to incorrect reporting. The most significant effects noted were: - Lost revenues reported for Period 1 and Period 2 improperly included 2019 revenues from Astria Regional Medical Center, which closed due to reasons unrelated to the COVID-19 pandemic. This overstated lost revenues by approximately $140 million. However, as that issue related to a general distribution, it was determined Period 1 general distributions of $5,124,268 to Astria Health and Subsidiaries could be allocated to another entity within the Organization. Astria Sunnyside Hospital had unreimbursed lost revenue in excess of the Period 1 general distributions. As a result, while there are reporting issues as outlined in this finding, there are no related questioned costs arising from this matter. - Expenditures reported by the Organization were not supported by detailed schedules prior to the commencement of the single audit. After the start of related audit, management compiled and provided a detailed listing of expenditures that exceeded the $10,337,509 reported as expenditures for testing. - The Organization did not have proper controls in place to ensure the reports are prepared and reviewed by separate individuals and that evidence of review was documented and retained.- The Organization did not have proper document retention controls in place to support timely submission of three of five reports filed with HRSA. Questioned costs: None to be reported. Recommendation: We recommend management implement policies and procedures to ensure required reports for grants are prepared and reviewed by separate individuals with evidence of review documented and that financial reports are submitted timely with underlying support properly documented. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding. The Organization will review and modify policies and procedures over Federal Grant Awards to ensure management implements policies and procedures to ensure there is understanding of the terms and conditions of Federal awards and that reports are prepared and reviewed by separate individuals with evidence of review documented.
Finding 2021-002 – Reporting – Material Weakness in Internal Control Over Compliance and Instance of Material Noncompliance. See finding 2021-002 for the included table. Criteria: 2021 Compliance Supplement and 2 CFR 200.303(a) stated that the non-federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-federal entity is managing the Federal award in compliance with Federal statutes, regulations, and terms and conditions of the federal award. Condition/Context: Under the Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Program (Provider Relief Fund), providers are required to submit reporting to the Health Resources Services Administration (HRSA) that describes the uses of the funds and how the provider complied with the terms and conditions of the program. The Organization received general and targeted funds for six different entities within the Organization. Repeat Findings from Prior Year(s): This is not a repeat finding. Cause and Effect: In addition to the challenges encountered while operating a health system during the Coronavirus (COVID-19) pandemic, leading up to the audit period, the Organization was significantly impacted by bankruptcy, turnover of leadership, and the lack of team members that had expertise with grant management and accounting. Those factors coupled with the evolving nature of PRF guidance led to incorrect reporting. The most significant effects noted were: - Lost revenues reported for Period 1 and Period 2 improperly included 2019 revenues from Astria Regional Medical Center, which closed due to reasons unrelated to the COVID-19 pandemic. This overstated lost revenues by approximately $140 million. However, as that issue related to a general distribution, it was determined Period 1 general distributions of $5,124,268 to Astria Health and Subsidiaries could be allocated to another entity within the Organization. Astria Sunnyside Hospital had unreimbursed lost revenue in excess of the Period 1 general distributions. As a result, while there are reporting issues as outlined in this finding, there are no related questioned costs arising from this matter. - Expenditures reported by the Organization were not supported by detailed schedules prior to the commencement of the single audit. After the start of related audit, management compiled and provided a detailed listing of expenditures that exceeded the $10,337,509 reported as expenditures for testing. - The Organization did not have proper controls in place to ensure the reports are prepared and reviewed by separate individuals and that evidence of review was documented and retained.- The Organization did not have proper document retention controls in place to support timely submission of three of five reports filed with HRSA. Questioned costs: None to be reported. Recommendation: We recommend management implement policies and procedures to ensure required reports for grants are prepared and reviewed by separate individuals with evidence of review documented and that financial reports are submitted timely with underlying support properly documented. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding. The Organization will review and modify policies and procedures over Federal Grant Awards to ensure management implements policies and procedures to ensure there is understanding of the terms and conditions of Federal awards and that reports are prepared and reviewed by separate individuals with evidence of review documented.
Finding 2021-002 – Reporting – Material Weakness in Internal Control Over Compliance and Instance of Material Noncompliance. See finding 2021-002 for the included table. Criteria: 2021 Compliance Supplement and 2 CFR 200.303(a) stated that the non-federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-federal entity is managing the Federal award in compliance with Federal statutes, regulations, and terms and conditions of the federal award. Condition/Context: Under the Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Program (Provider Relief Fund), providers are required to submit reporting to the Health Resources Services Administration (HRSA) that describes the uses of the funds and how the provider complied with the terms and conditions of the program. The Organization received general and targeted funds for six different entities within the Organization. Repeat Findings from Prior Year(s): This is not a repeat finding. Cause and Effect: In addition to the challenges encountered while operating a health system during the Coronavirus (COVID-19) pandemic, leading up to the audit period, the Organization was significantly impacted by bankruptcy, turnover of leadership, and the lack of team members that had expertise with grant management and accounting. Those factors coupled with the evolving nature of PRF guidance led to incorrect reporting. The most significant effects noted were: - Lost revenues reported for Period 1 and Period 2 improperly included 2019 revenues from Astria Regional Medical Center, which closed due to reasons unrelated to the COVID-19 pandemic. This overstated lost revenues by approximately $140 million. However, as that issue related to a general distribution, it was determined Period 1 general distributions of $5,124,268 to Astria Health and Subsidiaries could be allocated to another entity within the Organization. Astria Sunnyside Hospital had unreimbursed lost revenue in excess of the Period 1 general distributions. As a result, while there are reporting issues as outlined in this finding, there are no related questioned costs arising from this matter. - Expenditures reported by the Organization were not supported by detailed schedules prior to the commencement of the single audit. After the start of related audit, management compiled and provided a detailed listing of expenditures that exceeded the $10,337,509 reported as expenditures for testing. - The Organization did not have proper controls in place to ensure the reports are prepared and reviewed by separate individuals and that evidence of review was documented and retained.- The Organization did not have proper document retention controls in place to support timely submission of three of five reports filed with HRSA. Questioned costs: None to be reported. Recommendation: We recommend management implement policies and procedures to ensure required reports for grants are prepared and reviewed by separate individuals with evidence of review documented and that financial reports are submitted timely with underlying support properly documented. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding. The Organization will review and modify policies and procedures over Federal Grant Awards to ensure management implements policies and procedures to ensure there is understanding of the terms and conditions of Federal awards and that reports are prepared and reviewed by separate individuals with evidence of review documented.
2021-004 – ALLOWABLE COSTS-INDIRECT COST ALLOCATION PLAN Federal Program Information: Federal Agency Federal Program Name Assistance Listing Number Grant Award(s) Unique Identifier(s) Department of Defense Basic Scientific Research 12.431 W15QKN-14-1-0001 W15QKN-20-1-1000 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). Non-profit organizations that charge indirect cost to federal awards based on federally negotiated rates should charge the award in accordance with any negotiated rate agreements and specific award conditions/limitations. Condition: The entity was subject to a 13% provisional rate utilizing a simplified allocation method that provided for certain adjustments to the distribution base. It was determined that the entity charged $703,925 for indirect costs during the year. However, the maximum amount of indirect costs pursuant to the provisional rate agreement was approximately $488,427. Questioned Costs: Approximately $215,498 (subject to final negotiated rate adjustments). Context: Total federal expenditures listed on the Schedule of Federal Awards was $6,267,848, of which $703,925 was charged to indirect costs. Cause: Management failed to ensure that indirect costs charged to the award were in accordance with the provisional rate in effect. Furthermore, internal controls and procedures related to the indirect cost allocation were not effectively designed or performed. Effect: National Center for the Advancement of STEM Education, Inc. is not in compliance with the indirect cost allocation plan requirements. SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (Continued) 2021-004 – ALLOWABLE COSTS-INDIRECT COST ALLOCATION PLAN (Continued) Federal Program Information: Federal Agency Federal Program Name Assistance Listing Number Grant Award(s) Unique Identifier(s) Department of Defense Basic Scientific Research 12.431 W15QKN-14-1-0001 W15QKN-20-1-1000 Recommendation: Management should implement procedures, which ensure amounts charged as indirect costs are in accordance with rate agreements in effect. Views of Responsible Officials: Management concurs with the finding and has developed a plan to correct the finding.
2021-005 – SUBRECIPIENT MONITORING – SUBAWARD AGREEMENTS Federal Program Information: Federal Agency Federal Program Name Assistance Listing Number Grant Award(s) Unique Identifier(s) Department of Defense Basic Scientific Research 12.431 W15QKN-14-1-0001 W15QKN-20-1-1000 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). Subrecipient agreements must make the subrecipient aware of the award information required by 2 CFR section 200.331(a): (1) Determines who is eligible to receive what Federal assistance; (2) Has its performance measured in relation to whether objectives of a Federal program were met; (3) Has responsibility for programmatic decision-making; (4) Is responsible for adherence to applicable Federal program requirements specified in the Federal award; and (5) In accordance with its agreement, uses the Federal funds to carry out a program for a public purpose specified in authorizing statute, as opposed to providing goods or services for the benefit of the pass-through entity. Furthermore, DoDGAR’s Appendix B Part 22 requires agreements make the subrecipient aware of federal provisions related to Nondiscrimination; Debarment and Suspension; Hatch Act; Environmental Standards; Drug-Free Workplace and other federal regulations. Condition: Standard Subrecipient agreements did not make reference to certain provisions which are required to be contained in the agreement. Questioned Costs: Not applicable. SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (Continued) 2021-005 – SUBRECIPIENT MONITORING – SUBAWARD AGREEMENTS (Continued) Federal Program Information: Federal Agency Federal Program Name Assistance Listing Number Grant Award(s) Unique Identifier(s) Department of Defense Basic Scientific Research 12.431 W15QKN-14-1-0001 W15QKN-20-1-1000 Context: There were twelve Subrecipient agreements executed during the year under the federal award with total expenditures of $2,086,200. Total federal expenditures listed on the Schedule of Federal Awards was $6,267,848. Cause: Internal controls and procedures related to Subrecipient monitoring requirements were not effectively designed or performed. Effect: The National Center for the Advancement of STEM Education, Inc. did not adequately include certain necessary language in the executed agreements to properly comply with Subrecipient monitoring. Recommendation: Management should establish proper policies and procedures which ensure Subrecipient agreements comply with applicable federal guidelines. Views of Responsible Officials: Management concurs with the finding and has developed a plan to correct the finding.
2021-006 – SPECIAL TESTS AND PROVISIONS – KEY PERSONNEL Federal Program Information: Federal Agency Federal Program Name Assistance Listing Number Grant Award(s) Unique Identifier(s) Department of Defense Basic Scientific Research 12.431 W15QKN-14-1-0001 W15QKN-20-1-1000 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). The award document specifies key personnel as chief investigators. Federal requirements stipulate the non-federal entity may change the staffing mix and level of involvement within limits specified by agency policy or in the award but may be required to obtain federal awarding agency approval of changes in key personnel (as identified in the award, which may differ from the non-federal entity’s designation in the application/proposal) and changes in the principal investigator’s/project director’s time commitment/level of participation in the project. For grants and cooperative agreements, this may include not only a change in the principal investigator or project director but also the disengagement from the project for more than three months, or a 25 percent reduction in time devoted to the project, by the approved project director or principal investigator (2 CFR sections 200.308(c) (2) and (3)). Condition: There was a lack of adequate payroll documentation. Payroll records did not demonstrate the level of time commitment and/or potential disengagement from the project by the designated principal investigators. Questioned Costs: Unknown. Context: Total federal expenditures listed on the Schedule of Federal Awards was $6,267,848, of which $232,167 was related to principal investigators. SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (Continued) 2021-006 – SPECIAL TESTS AND PROVISIONS – KEY PERSONNEL (Continued) Federal Program Information: Federal Agency Federal Program Name Assistance Listing Number Grant Award(s) Unique Identifier(s) Department of Defense Basic Scientific Research 12.431 W15QKN-14-1-0001 W15QKN-20-1-1000 Cause: Internal controls and procedures related to the payroll documentation were not effectively designed or performed. Effect: There is a risk that the principal investigators of the National Center for the Advancement of STEM Education, Inc. may not be allocating the proper time commitment to the project in accordance with federal guidelines. Recommendation: Management should establish proper policies and procedures which ensure payroll records clearly indicate the time commitment/level of participation in the project to comply with applicable federal guidelines. Views of Responsible Officials: Management concurs with the finding and has developed a plan to correct the finding.
2021-007 – PROCUREMENT – PROCUREMENT QUOTATIONS Federal Program Information: Federal Agency Federal Program Name Assistance Listing Number Grant Award(s) Unique Identifier(s) Department of Defense Basic Scientific Research 12.431 W15QKN-14-1-0001 W15QKN-20-1-1000 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 200.320 establishes thresholds for procurement methods to be utilized when acquiring property or services under a federal award including small purchases defined as follows: Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. Condition: Management utilizes the federally designated micro-purchase level of $10,000 and the simplified acquisition threshold of $250,000. Purchases between $10,000 and $250,000 did not have an adequate number of price or rate quotations obtained. Questioned Costs: $151,207 Context: There were nine acquisitions for property and services with federal awards totaling $151,207 that were considered small purchases. Total federal expenditures listed on the Schedule of Federal Awards was $6,267,848. Cause: Internal controls and procedures related to procurement were not effectively designed or performed. SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (Continued) 2021-007 – PROCUREMENT – PROCUREMENT QUOTATIONS (Continued) Federal Program Information: Federal Agency Federal Program Name Assistance Listing Number Grant Award(s) Unique Identifier(s) Department of Defense Basic Scientific Research 12.431 W15QKN-14-1-0001 W15QKN-20-1-1000 Effect: Small purchases were made without obtaining an adequate number of price quotations. Recommendation: Management should establish proper policies and procedures which ensure transactions have the proper procurement treatment that align with federal guidelines. Views of Responsible Officials: Management concurs with the finding and has developed a plan to correct the finding.
2021-008 – CASH MANAGEMENT Federal Program Information: Federal Agency Federal Program Name Assistance Listing Number Grant Award(s) Unique Identifier(s) Department of Defense Basic Scientific Research 12.431 W15QKN-14-1-0001 W15QKN-20-1-1000 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 200.305 requires that non-Federal entities other than states, payments methods must minimize the time elapsing between the transfer of funds from the United States Treasury or the pass-through entity and the disbursement by the non-Federal entity. The non-Federal entity must be paid in advance, provided it maintains or demonstrates the willingness to maintain both written procedures that minimize the time elapsing between the transfer of funds and disbursement by the non-Federal entity, and financial management systems that meet the standards for fund control and accountability as established in this part. Advance payments to a non-Federal entity must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the non-Federal entity in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity for direct program or project costs and the proportionate share of any allowable indirect costs. The non-Federal entity must make timely payment to contractors in accordance with the contract provisions. Condition: The National Center for the Advancement of STEM Education, Inc. drew down 49 payment advances totaling $5,870,068 from the basic scientific research grants for the fiscal year ended December 31, 2021. Of this amount, $1,031,698 was returned to the grantor. However, there was a lack of adequate documentation which demonstrated amounts advanced were expended and/or returned in a timely fashion. Questioned Costs: Not applicable. SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (Continued) 2021-008 – CASH MANAGEMENT (Continued) Federal Program Information: Federal Agency Federal Program Name Assistance Listing Number Grant Award(s) Unique Identifier(s) Department of Defense Basic Scientific Research 12.431 W15QKN-14-1-0001 W15QKN-20-1-1000 Context: The total amount of advances received during the year were $5,870,068. Expenditures of the federal award were $6,477,348 for the fiscal year. Cause: Internal controls and procedures related to the cash management were not effectively designed or performed. Effect: The National Center for the Advancement of STEM Education, Inc. did not comply with the cash management compliance requirement. Recommendation: Management should establish proper policies and procedures which ensure compliance with federal guidelines. Views of Responsible Officials: Management concurs with the finding and has developed a plan to correct the finding.
2021‐004 – Deficiency in Cash Management Controls over Compliance – Significant Deficiency Federal Program Information Funding Agency: U.S. Department of Commerce, Minority Business Development Agency Federal Award Agreement Number: Not Applicable Award Year: 2021 Title: MBDA Business Center CFDA Number: 11.805 Pass‐through Agency: Not Applicable, Direct Program Pass‐through Identification Number: Not Applicable, Direct Program Condition ‐ The Entity does not have policies in procedures to ensure bank reconciliations are being performed on a timely basis and reviewed and approved by someone other than the person preparing. Criteria ‐ 2 CFR section 200.303 – Internal Controls of the Uniform Guidance states that the nonfederal entity must: (a) Establish and maintain effective internal controls over 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). Questioned Costs ‐ Not applicable. Effect ‐ Bank reconciliations not performed on a timely manner may not detect misstatements or errors. Cause ‐ The Entity does not have proper controls in place to verify federal funds are received for the amount requested on a timely basis or retain detailed support reconciliations are being performed.
2021‐005 – Deficiency in Special Tests and Provision Controls over Compliance with Training – Significant Deficiency Federal Program Information Funding Agency: U.S. Department of Commerce, Minority Business Development Agency Federal Award Agreement Number: Not Applicable Award Year: 2021 Title: MBDA Business Center CFDA Number: 11.805 Pass‐through Agency: Not Applicable, Direct Program Pass‐through Identification Number: Not Applicable, Direct Program Condition ‐ The Entity was unable to provide support to test controls over compliance over training. Criteria – 2 CFR section 200.303 – Internal Controls of the Uniform Guidance states that the nonfederal entity must: (a) Establish and maintain effective internal controls over 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). Questioned Costs ‐ Not applicable. Effect ‐ The Entity may unintentionally miss a required training which could lead to repayment of funds. Cause ‐ The Entity is not following its policy to ensure all mandatory training is completed as needed.
2021‐006 – Deficiencies in Activities Allowed, Allowable Costs, and Period of Performance Controls over Compliance with Payroll – Significant Deficiency Federal Program Information Funding Agency: U.S. Department of Commerce, Minority Business Development Agency Federal Award Agreement Number: Not Applicable Award Year: 2021 Title: MBDA Business Center CFDA Number: 11.805 Pass‐through Agency: Not Applicable, Direct Program Pass‐through Identification Number: Not Applicable, Direct Program Condition ‐ During our review of payroll related transactions, the following were noted For 5 of the 40 payroll transactions tested, the employee did not have an approved timesheet or time and effort available for the pay period. For 3 of the 40 payroll transactions tested, no timesheet or other record of hours worked was available to support hours paid for the pay period. For 1 of the 40 payroll transactions tested, employee was not paid for all hours worked on timesheet. Criteria – 2 CFR section 200.303 – Internal Controls of the Uniform Guidance states that the nonfederal entity must: (a) Establish and maintain effective internal controls over 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). Per 2 CFR section 200.430 – Compensation – personal services, paragraph (i) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Questioned Costs –$1,010 Effect ‐ The Entity may unintentionally expense employee’s salary out of the federal grant that does not qualify or under/over compensate what is applicable for the work performed by that employee. This could lead to questioned costs and repayment of funds to the Grantor agency. Cause ‐ The Entity does not have proper controls in place to verify that documentation was maintained to indicate the employees’ time paid under the federal grant. Controls were put in place during the year but were not consistently followed.
2021‐007 – Deficiency in Reporting Controls over Compliance with Financial Reporting – Significant Deficiency Federal Program Information Funding Agency: U.S. Department of Commerce, Minority Business Development Agency Federal Award Agreement Number: Not Applicable Award Year: 2021 Title: MBDA Business Center CFDA Number: 11.805 Pass‐through Agency: Not Applicable, Direct Program Pass‐through Identification Number: Not Applicable, Direct Program Condition ‐ The Entity was unable to provide the annual SF‐424A or provide support it was submitted on a timely basis. All other reporting under the program was submitted timely and accurately. Criteria – 2 CFR section 200.303 – Internal Controls of the Uniform Guidance states that the nonfederal entity must: (a) Establish and maintain effective internal controls over 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). Questioned Costs ‐ Not applicable. Effect ‐ Not submitting an accurate annual report due on a timely basis could result in disallowed costs. Cause ‐ The Entity did not have sufficient controls in place to ensure all reporting is submitted to the grantor agency accurately and on a timely basis, and to retain documentation of the reporting.
2021‐004 – Deficiency in Cash Management Controls over Compliance – Significant Deficiency Federal Program Information Funding Agency: U.S. Department of Commerce, Minority Business Development Agency Federal Award Agreement Number: Not Applicable Award Year: 2021 Title: MBDA Business Center CFDA Number: 11.805 Pass‐through Agency: Not Applicable, Direct Program Pass‐through Identification Number: Not Applicable, Direct Program Condition ‐ The Entity does not have policies in procedures to ensure bank reconciliations are being performed on a timely basis and reviewed and approved by someone other than the person preparing. Criteria ‐ 2 CFR section 200.303 – Internal Controls of the Uniform Guidance states that the nonfederal entity must: (a) Establish and maintain effective internal controls over 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). Questioned Costs ‐ Not applicable. Effect ‐ Bank reconciliations not performed on a timely manner may not detect misstatements or errors. Cause ‐ The Entity does not have proper controls in place to verify federal funds are received for the amount requested on a timely basis or retain detailed support reconciliations are being performed.
2021‐005 – Deficiency in Special Tests and Provision Controls over Compliance with Training – Significant Deficiency Federal Program Information Funding Agency: U.S. Department of Commerce, Minority Business Development Agency Federal Award Agreement Number: Not Applicable Award Year: 2021 Title: MBDA Business Center CFDA Number: 11.805 Pass‐through Agency: Not Applicable, Direct Program Pass‐through Identification Number: Not Applicable, Direct Program Condition ‐ The Entity was unable to provide support to test controls over compliance over training. Criteria – 2 CFR section 200.303 – Internal Controls of the Uniform Guidance states that the nonfederal entity must: (a) Establish and maintain effective internal controls over 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). Questioned Costs ‐ Not applicable. Effect ‐ The Entity may unintentionally miss a required training which could lead to repayment of funds. Cause ‐ The Entity is not following its policy to ensure all mandatory training is completed as needed.
2021‐006 – Deficiencies in Activities Allowed, Allowable Costs, and Period of Performance Controls over Compliance with Payroll – Significant Deficiency Federal Program Information Funding Agency: U.S. Department of Commerce, Minority Business Development Agency Federal Award Agreement Number: Not Applicable Award Year: 2021 Title: MBDA Business Center CFDA Number: 11.805 Pass‐through Agency: Not Applicable, Direct Program Pass‐through Identification Number: Not Applicable, Direct Program Condition ‐ During our review of payroll related transactions, the following were noted For 5 of the 40 payroll transactions tested, the employee did not have an approved timesheet or time and effort available for the pay period. For 3 of the 40 payroll transactions tested, no timesheet or other record of hours worked was available to support hours paid for the pay period. For 1 of the 40 payroll transactions tested, employee was not paid for all hours worked on timesheet. Criteria – 2 CFR section 200.303 – Internal Controls of the Uniform Guidance states that the nonfederal entity must: (a) Establish and maintain effective internal controls over 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). Per 2 CFR section 200.430 – Compensation – personal services, paragraph (i) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Questioned Costs –$1,010 Effect ‐ The Entity may unintentionally expense employee’s salary out of the federal grant that does not qualify or under/over compensate what is applicable for the work performed by that employee. This could lead to questioned costs and repayment of funds to the Grantor agency. Cause ‐ The Entity does not have proper controls in place to verify that documentation was maintained to indicate the employees’ time paid under the federal grant. Controls were put in place during the year but were not consistently followed.
2021‐007 – Deficiency in Reporting Controls over Compliance with Financial Reporting – Significant Deficiency Federal Program Information Funding Agency: U.S. Department of Commerce, Minority Business Development Agency Federal Award Agreement Number: Not Applicable Award Year: 2021 Title: MBDA Business Center CFDA Number: 11.805 Pass‐through Agency: Not Applicable, Direct Program Pass‐through Identification Number: Not Applicable, Direct Program Condition ‐ The Entity was unable to provide the annual SF‐424A or provide support it was submitted on a timely basis. All other reporting under the program was submitted timely and accurately. Criteria – 2 CFR section 200.303 – Internal Controls of the Uniform Guidance states that the nonfederal entity must: (a) Establish and maintain effective internal controls over 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). Questioned Costs ‐ Not applicable. Effect ‐ Not submitting an accurate annual report due on a timely basis could result in disallowed costs. Cause ‐ The Entity did not have sufficient controls in place to ensure all reporting is submitted to the grantor agency accurately and on a timely basis, and to retain documentation of the reporting.
2021‐004 – Deficiency in Cash Management Controls over Compliance – Significant Deficiency Federal Program Information Funding Agency: U.S. Department of Commerce, Minority Business Development Agency Federal Award Agreement Number: Not Applicable Award Year: 2021 Title: MBDA Business Center CFDA Number: 11.805 Pass‐through Agency: Not Applicable, Direct Program Pass‐through Identification Number: Not Applicable, Direct Program Condition ‐ The Entity does not have policies in procedures to ensure bank reconciliations are being performed on a timely basis and reviewed and approved by someone other than the person preparing. Criteria ‐ 2 CFR section 200.303 – Internal Controls of the Uniform Guidance states that the nonfederal entity must: (a) Establish and maintain effective internal controls over 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). Questioned Costs ‐ Not applicable. Effect ‐ Bank reconciliations not performed on a timely manner may not detect misstatements or errors. Cause ‐ The Entity does not have proper controls in place to verify federal funds are received for the amount requested on a timely basis or retain detailed support reconciliations are being performed.
2021‐005 – Deficiency in Special Tests and Provision Controls over Compliance with Training – Significant Deficiency Federal Program Information Funding Agency: U.S. Department of Commerce, Minority Business Development Agency Federal Award Agreement Number: Not Applicable Award Year: 2021 Title: MBDA Business Center CFDA Number: 11.805 Pass‐through Agency: Not Applicable, Direct Program Pass‐through Identification Number: Not Applicable, Direct Program Condition ‐ The Entity was unable to provide support to test controls over compliance over training. Criteria – 2 CFR section 200.303 – Internal Controls of the Uniform Guidance states that the nonfederal entity must: (a) Establish and maintain effective internal controls over 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). Questioned Costs ‐ Not applicable. Effect ‐ The Entity may unintentionally miss a required training which could lead to repayment of funds. Cause ‐ The Entity is not following its policy to ensure all mandatory training is completed as needed.
2021‐006 – Deficiencies in Activities Allowed, Allowable Costs, and Period of Performance Controls over Compliance with Payroll – Significant Deficiency Federal Program Information Funding Agency: U.S. Department of Commerce, Minority Business Development Agency Federal Award Agreement Number: Not Applicable Award Year: 2021 Title: MBDA Business Center CFDA Number: 11.805 Pass‐through Agency: Not Applicable, Direct Program Pass‐through Identification Number: Not Applicable, Direct Program Condition ‐ During our review of payroll related transactions, the following were noted For 5 of the 40 payroll transactions tested, the employee did not have an approved timesheet or time and effort available for the pay period. For 3 of the 40 payroll transactions tested, no timesheet or other record of hours worked was available to support hours paid for the pay period. For 1 of the 40 payroll transactions tested, employee was not paid for all hours worked on timesheet. Criteria – 2 CFR section 200.303 – Internal Controls of the Uniform Guidance states that the nonfederal entity must: (a) Establish and maintain effective internal controls over 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). Per 2 CFR section 200.430 – Compensation – personal services, paragraph (i) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Questioned Costs –$1,010 Effect ‐ The Entity may unintentionally expense employee’s salary out of the federal grant that does not qualify or under/over compensate what is applicable for the work performed by that employee. This could lead to questioned costs and repayment of funds to the Grantor agency. Cause ‐ The Entity does not have proper controls in place to verify that documentation was maintained to indicate the employees’ time paid under the federal grant. Controls were put in place during the year but were not consistently followed.
2021‐007 – Deficiency in Reporting Controls over Compliance with Financial Reporting – Significant Deficiency Federal Program Information Funding Agency: U.S. Department of Commerce, Minority Business Development Agency Federal Award Agreement Number: Not Applicable Award Year: 2021 Title: MBDA Business Center CFDA Number: 11.805 Pass‐through Agency: Not Applicable, Direct Program Pass‐through Identification Number: Not Applicable, Direct Program Condition ‐ The Entity was unable to provide the annual SF‐424A or provide support it was submitted on a timely basis. All other reporting under the program was submitted timely and accurately. Criteria – 2 CFR section 200.303 – Internal Controls of the Uniform Guidance states that the nonfederal entity must: (a) Establish and maintain effective internal controls over 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). Questioned Costs ‐ Not applicable. Effect ‐ Not submitting an accurate annual report due on a timely basis could result in disallowed costs. Cause ‐ The Entity did not have sufficient controls in place to ensure all reporting is submitted to the grantor agency accurately and on a timely basis, and to retain documentation of the reporting.
Statement of Condition: During out audit, it was determined that the original supporting documentation for the PRF Period 1 and 2 Report submissions did not agree to the actual submissions and that there was no evidence retained that the PRF Period 1 report was reviewed and approved by a separate individual outside of the preparer. Further, certain personnel expenses included in total other PRF expenses were not supported by documented time studies to substantiate the percentage of salaries and fringe benefits included in PRF Periods 1 and 2 Reports. Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Cause of Condition: There was turnover in the Chief Financial Officer position and finance department during the period that the PRF Period 1 and 2 report submissions were required to be submitted and supporting records could not be located. Although outside consultants were brought in before a new Chief Financial Officer was hired, due to the turnover and small size of the finance department, the auditee did not have an internal control process in place to ensure an independent review was done of the submission and supporting documentation, including documented time studies. Effect of Condition: While the Nursing Home incurred more than sufficient eligible expenditures and lost revenues to exhibit that the Nursing Home funds were fully utilized, the reporting of the Period 1 and Period 2 expenditures was not supported by the original documentation maintained by the former CFO and outside consultants for certain personnel and fringe benefits, including time studies for allocation of personnel. Recommendation: We recommend that management implement a control process which includes a documented secondary review of approval. Due to the untimely reporting of this finding, the Nursing Home is past the timeframe for filing revisions to Period 1 and Period 2 PRF reports. Therefore, we also recommend the Nursing Home maintain documentation that details they incurred enough eligible expenditures and lost revenues to continue to qualify for the full amount of the funding, even though certain expenses claimed on the Period 1 and Period 2 Reports are not supported by documented time studies. Views of Responsible Official: Management agrees with the recommendation. See corrective action plan.
Statement Condition: During out audit, it was determined that the original supporting documentation for the PRF Period 1 and 2 Report submissions did not agree to the actual submissions and that there was no evidence retained that the PRF Period 1 report was reviewed and approved by a separate individual outside of the preparer. Further, certain personnel expenses included in other PRF expenses were not supported by documented time studies to substantiate the percentage of salaries and fringe benefits included in PRF Periods 1 and 2 Reports. Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Cause of Condition: There was turnover in the Chief Financial Officer (CFO) position and finance department during the period that the PRF Period 1 and 2 report submissions were required to be submitted and supporting records could not be located. Although outside consultants were brought in before a new Chief Financial Officer was hired, due to the turnover and small size of the finance department, the auditee did not have an internal control process in place to ensure an independent review was done of the submission and supporting documentation, including documented time studies. Effect of Condition: While Cottages incurred more than sufficient eligible expenditures and lost revenues to exhibit that Cottages funds were fully utilized, the reporting of the Period 1 and Period 2 expenditures was not supported by the original documentation maintained by the former CFO and outside consultants for certain personnel and fringe benefits, including time studies for allocation of personnel. Recommendation: We recommend that management implement a control process which includes a documented secondary review of approval. Due to the untimely reporting of this finding, Cottages is past the timeframe for filing revisions to Period 1 and Period 2 PRF reports. Therefore, we also recommend Cottages maintain documentation that details they incurred enough eligible expenditures and lost revenues to continue to qualify for the full amount of the funding, even though certain expenses claimed on the Period 1 and Period 2 Reports are not supported by documented time studies. Views of Responsible Official: Management agrees with the recommendation. See corrective action plan.
#2021-007 – Significant Deficiency – Special Tests Criteria Uniform Guidance (UG) requires non-Federal entities that receive grant funding to have written policies in the following areas: Internal Controls (2CFR 200.303) Travel (2CFR 200.474) Financial Management and Accounting which includes Cash Management and Allowability (2CFR 200.302) Personnel Compensation – Time and Effort Reporting (2CFR 200.430(i)) Conflict of Interest/Disclosures (2CFR 200.318) Procurement (2CFR 200.319) Condition During the audit we noted that the Organization does not have written policies in place over these areas in accordance with Uniform Guidance. Cause The Organization was not aware of the requirement to have these written policies in place. Effect The potential effect of not having these policies in place is that Organization’s expenses are not in accordance with UGG. Questioned Costs None Perspective Information No policies or procedures were noted that are in accordance with Uniform Guidance. As a response to the prior year finding, the Organization noted that they will add policies to the fiscal manual for future compliance. Identification as a repeat finding A similar issue was noted in prior year finding #2020-007. Recommendation We recommend that the Organization update the fiscal manual to include policies that are compliant with Uniform Guidance. View of responsible officials and planned corrective action Policies will be placed and adopted by the agency that meet the UG code. These policies will be placed in the fiscal manual. The fiscal manual will be created by using federal guidelines and by using the DDAP fiscal manual as guidance.
#2021-007 – Significant Deficiency – Special Tests Criteria Uniform Guidance (UG) requires non-Federal entities that receive grant funding to have written policies in the following areas: Internal Controls (2CFR 200.303) Travel (2CFR 200.474) Financial Management and Accounting which includes Cash Management and Allowability (2CFR 200.302) Personnel Compensation – Time and Effort Reporting (2CFR 200.430(i)) Conflict of Interest/Disclosures (2CFR 200.318) Procurement (2CFR 200.319) Condition During the audit we noted that the Organization does not have written policies in place over these areas in accordance with Uniform Guidance. Cause The Organization was not aware of the requirement to have these written policies in place. Effect The potential effect of not having these policies in place is that Organization’s expenses are not in accordance with UGG. Questioned Costs None Perspective Information No policies or procedures were noted that are in accordance with Uniform Guidance. As a response to the prior year finding, the Organization noted that they will add policies to the fiscal manual for future compliance. Identification as a repeat finding A similar issue was noted in prior year finding #2020-007. Recommendation We recommend that the Organization update the fiscal manual to include policies that are compliant with Uniform Guidance. View of responsible officials and planned corrective action Policies will be placed and adopted by the agency that meet the UG code. These policies will be placed in the fiscal manual. The fiscal manual will be created by using federal guidelines and by using the DDAP fiscal manual as guidance.
Criteria: Coronavirus Aid, Relief, and Economic Security (CARES) Act, Pub. L. No. 116-36m Division A, Title V (2020) requires that the Coronavirus Relief Fund (CRF) monies must be used to cover costs that are: 1. Necessary expenditures incurred due to the public health emergency with respect to COVID-19; 2. Not accounted for in the governments' most recently approved budget as of March 27, 2020; and 3. Incurred during the period that begins on March 1, 2020 and ends on December 31, 2021. Additionally, 2 CFR 200.303 requires the recipient of federal funds 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 awards. Condition/Context: We selected a statistically valid random sample of transactions charged to the program of 40 emergency assistance transactions and 12 general disbursement transactions to test controls of disbursement costs charged to the major program and found the following: - One general disbursement transaction was not supported with appropriate documentation. - Emergency Assistance transactions were for checks written in 2020 but inappropriately recorded in 2021. Cause: The primary factor that contributed to the deficiencies was the lack of sufficient controls implemented to appropriately review and monitor disbursement activity and ensure amounts were properly recorded in the general ledger. Effect: Disbursement transactions were being processed incorrectly. We were unable to obtain sufficient assurance over compliance, and the major program received a qualified opinion. Questioned Costs: Known and likely questioned costs did not exceed $25,000. Repeat finding: This finding is a repeat of finding 2020-005 from the prior year. Recommendation: In order to ensure disbursement transactions are properly reviewed, approved, and supporting documentation is maintained, we recommend the Tribes ensure controls over disbursement procedures are designed and operating effectively. Views of responsible officials and planned corrective action: The Tribes commit to a comprehensive corrective action plan, including a thorough review of document processes, implementing additional controls for disbursements transactions, ensuring proper documentation review in the future, enhancing controls over the timing of expenditure recognition, and providing additional training, to personnel involved in disbursement process.
Criteria: Per 2 CFR 200.303, the Tribes must "Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal Statutes, regulations, and the terms and conditions of the Federal Award." Condition/Context: We randomly selected four performance and special reports for testing and found that one of four performance and special reports were not prepared and filed with funding agency. Cause: The Tribes do not have a process in place to ensure reports are prepared and submitted to the funding agency. Effect: Required performance and special reports were not submitted. Questioned costs: There were no reportable instances of questioned costs. Repeat finding: This is not a repeated finding from the prior year. Recommendation: The Tribe should review the terms and conditions of all grant awards to ensure they have an understanding of all reporting requirements necessary under each grant. Additionally, the Tribe should implement policies and procedures to monitor reporting deadlines to ensure that reports are prepared and submitted as applicable. Views of responsible officials and planned corrective action: The Tribes will ensure compliance with future reporting requirements, such as review and enhancement of reporting procedures, personnel training, and monitoring and oversight by management.
Criteria: American Rescue Plan Act of 2021, Pub. L. No. 117-2, requires that the Coronavirus State and Local Fiscal Recovery Fund monies must be used to cover costs that are: 1. Support public health expenditures, by funding COVID-19 mitigation efforts, medical expenses, behavioral healthcare, and certain public health and safety staff; 2. Address negative economic impacts caused by the public health emergency, including economic harms to works, households, small business, impacted industries, and the public sector; 3. Replace lost public sector revenue to provide government services; recipients may use this funding to provide government services to the extent of the reduction in revenue experienced due to the pandemic; 4. Provide premium pay for essential works, offering additional support to those who have borne and will bear the greatest health risks because of their service in critical infrastructure sectors; and 5. Invest in water, sewer, and broadband infrastructure, making necessary investments to improve access to clean drinking water, support vital wastewater and stormwater infrastructure, and to expand access to broadband internet. Additionally, 2 CFR 200.303 requires the recipient of federal funds establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition/Context: We selected a statistically valid random sample of transactions charged to the program of 40 emergency assistance transactions to test controls of disbursement costs charged to the major program and found the following: - One emergency assistance disbursement transaction was not supported with appropriate documentation. - There were expenses in the amount of $3,717,000 recognized for the program as of December 31, 2021 related to checks for emergency assistance payments to individuals that did not complete an application indicating eligibility. An entry was recorded by the Tribes to appropriately adjust these expenses from as of December 31, 2021. Cause: The primary factor that contributed to the deficiencies was the lack of sufficient controls implemented to appropriately review and monitor disbursement activity and ensure amounts were properly recorded in the general ledger. Effect: Emergency assistance transactions were being processed incorrectly. We were unable to obtain sufficient assurance over compliance, and the major program received a qualified opinion. Questioned costs: We tested $120,000 emergency assistance transactions out of federal expenditures of $12,768,000. Known and likely questioned costs totaled $322,200. Repeat finding: This is not a repeat finding from the prior year. Recommendation: In order to ensure disbursement transactions are properly reviewed, approved, and supporting documentation, maintained, we recommend the Tribes ensure controls over disbursement procedures are designed and operating effectively. Views of responsible officials and planned corrective action: The Tribes will ensure compliance with future program allowable costs and allowable activities requirements, such as documentation review and enhanced controls to ensure accurate recognition of expenditures.
Federal Program Information: Funding Agency: U.S Department of Health and Human Services FALN: 93.926 Federal Award Identification Number: 5 H49MC00119‐21‐00 / 6 H49MC00119‐20‐01 Pass Through Entity: State of Georgia Department of Human Services Award Year: 2020‐2024 Criteria: Under 2 CFR Section 200.303(a), non‐federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally, regulations require that in order for activities and costs to be allowed under Federal awards, 45CFR, part 75 all costs must be adequately documented. Condition: The Organization lacked supporting documentation for non‐payroll expenses. Due to lack of supporting documentation and evidence of approval for payment could not be verified. Of the sixty (60) transactions examined, fourteen (14) lacked supporting documentation for review, and approval for payment by a Manager. Effect: Management possibly did not expend funds in accordance with the approved detailed lineitem budget and grant agreement and possibly expended funds which did not contribute to the objective set forth for the program. (lack of approved invoices, lack of supporting documentation). Cause: Expenses including approved invoices and/or supporting documentation were not properly maintained in part due to several changes in personnel within the accounting area and overall limited number of personnel for certain functions and lack of board oversight. Questioned Costs: Known questioned costs of $2,066 and likely questioned costs of $11,507 for Healthy Start. Recommendation: We recommend that internal controls be strengthened and processes implemented to ensure all expenses include supporting documentation/invoice indicating nature of expense, amount, authorization and approval for payment.
Federal Program Information: Funding Agency: U.S Department of Health and Human Services FALN: 93.926 Federal Award Identification Number: 5 H49MC00119‐21‐00 / 6 H49MC00119‐20‐01 Pass Through Entity: State of Georgia Department of Human Services Award Year: 2020‐2024 Criteria: Under 2 CFR Section 200.303(a), non‐federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally, under 2 CFR sections 200.308 200.309 and 200.403(h)), the Organization may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass‐through entity made the federal award that were authorized by the federal awarding agency or pass‐through entity. Condition: The Organization lacked supporting documentation for non‐payroll expenses. Due to lack of supporting documentation, period of performance could not be verified. Of the sixty (60) nonpayroll transactions examined, fourteen (14) lacked supporting documentation for review. Effect: Management possibly did not expend funds in accordance with the approved detailed lineitem budget and grant agreement and possibly expended funds in the incorrect period of performance. Cause: Expenses including approved invoices and/or supporting documentation were not properly maintained in part due to several changes in personnel within the accounting area and overall limited number of personnel for certain functions and lack of board oversight. Questioned costs: Known questioned costs of $2,066 and likely questioned costs of $11,507 for Healthy Start. Recommendation: We recommend that internal controls be strengthened and processes implemented to ensure all expenses include supporting documentation/invoice indicating period of performance.
Federal Program Information: Funding Agency: U.S Department of Health and Human Services FALN: 93.926 Federal Award Identification Number: 5 H49MC00119‐21‐00 / 6 H49MC00119‐20‐01 Pass Through Entity: State of Georgia Department of Human Services Award Year: 2020‐2024 Criteria: Under 2 CFR Section 200.303(a), non‐federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally regulations require the reimbursement payment method may be used on a Federal award for activities as specified in 2 CFR section 200.305(b)(3), program costs must be paid by non‐ Federal entity funds before submitting a payment request (2 CFR section 200.305(b)(3)), i.e., the non‐ Federal entity must disburse funds for program purposes before requesting payment from the Federal awarding agency or pass‐through entity. Condition: The Organization has a policy which in includes thee Fiscal/Grant Manager and/or the CEO review all drawdown requests to ensure costs are paid before reimbursement is requested. However of the sixteen (16) drawdown requests that we tested, there was no evidence of review and approval for payment. Effect: Management possibly did not expend funds in accordance with the federal award due to lack of evidence of oversight/review of drawdowns and after reimbursable expenses have been incurred. Cause: Management did not document evidence of review and approval of drawdown requests. This was due in part to lack of oversight. Also there were several changes in personnel within the accounting area and overall limited number of personnel for certain functions and lack of board oversight. Questioned costs: None Recommendation: We recommend that internal controls be strengthened and processes implemented to ensure all draw down requests are reviewed and approved to ensure costs were accurately reported and paid before requesting reimbursement.
Federal Program Information: Funding Agency: U.S Department of Health and Human Services FALN: 93.926 Federal Award Identification Number: 5 H49MC00119‐21‐00 / 6 H49MC00119‐20‐01 Pass Through Entity: State of Georgia Department of Human Services Award Year: 2020‐2024 Criteria: Under 2 CFR Section 200.303(a), non‐federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally, under 2 CFR Section 200.320, the Organization must have and use documented procurement procedures for acquisition of property and services under a federal award or a sub‐award. Condition: The Organization does have approved policies and procedures over procurement that meet the requirements of the Uniform Guidance. However the Organization is not following its prescribed policies and procedures. The Organization lacked supporting documentation verifying procurement policies and procedures were followed. Due to lack of supporting documentation, procurement could not be verified. Of the sixty (60) transactions examined, fourteen (14) lacked supporting documentation for review of procurement. Effect: Not following procurement policies and procedures may result in funds to be returned back to grantor and/or impact future funding. Cause: Supporting procurement documentation for acquisition of property and services were not properly maintained in part due to several changes in personnel within the accounting area and overall limited number of personnel for certain functions and lack of board oversight. Questioned Costs: Known questioned costs of $2,066 and likely questioned costs of $11,507 for Healthy Start. Recommendation: We recommend the Organization strengthen its policies and procedures to ensure procurement is adequately documented for that goods and services purchased in accordance with Uniform Guidance and other federal guidelines.
Federal Program Information: Funding Agency: U.S Department of Health and Human Services FALN: 93.926 Federal Award Identification Number: 5 H49MC00119‐21‐00 / 6 H49MC00119‐20‐01 Pass Through Entity: State of Georgia Department of Human Services Award Year: 2020‐2024 Criteria: Under 2 CFR Section 200.303(a), non‐federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Under 2 CFR part 180, the Organization is required to verify suspension or debarment from the excluded parties list system regarding compliance. Condition: Under 2 CFR part 180, the Organization is required to verify suspension or debarment from the excluded parties list system regarding compliance. Though the Organization did not have a policy for suspension and debarment, the Organization complied with the requirements. Effect: Not having a suspension and debarment policy may result in funds to be returned back to grantor and/or impact future funding. Cause: Supporting suspension and debarment documentation for acquisition of property and services were not properly established in part due to several changes in personnel within the accounting area and overall limited number of personnel for certain functions and lack of board oversight. Questioned Costs: None Recommendation: We recommend the Organization strengthen its policies and procedures to ensure procurement and suspension and debarment is adequately documented for that goods and services purchased in accordance with Uniform Guidance and other federal guidelines. In addition, the Organization should verify that all vendors under covered transactions are not listed on the excluded parties list system by performing a search on sam.gov and maintaining the results of such search in the vendor’s file.
Federal Program Information: Funding Agency: U.S Department of Health and Human Services FALN: 93.926 Federal Award Identification Number: 5 H49MC00119‐21‐00 / 6 H49MC00119‐20‐01 Pass Through Entity: State of Georgia Department of Human Services Award Year: 2020‐2024 Criteria: Under 2 CFR Section 200.303(a), non‐federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally, regulations require that in order for activities and costs to be allowed under Federal awards, 45CFR, part 75 all costs must be adequately documented. Condition: The Organization lacked supporting documentation for non‐payroll expenses. Due to lack of supporting documentation and evidence of approval for payment could not be verified. Of the sixty (60) transactions examined, fourteen (14) lacked supporting documentation for review, and approval for payment by a Manager. Effect: Management possibly did not expend funds in accordance with the approved detailed lineitem budget and grant agreement and possibly expended funds which did not contribute to the objective set forth for the program. (lack of approved invoices, lack of supporting documentation). Cause: Expenses including approved invoices and/or supporting documentation were not properly maintained in part due to several changes in personnel within the accounting area and overall limited number of personnel for certain functions and lack of board oversight. Questioned Costs: Known questioned costs of $2,066 and likely questioned costs of $11,507 for Healthy Start. Recommendation: We recommend that internal controls be strengthened and processes implemented to ensure all expenses include supporting documentation/invoice indicating nature of expense, amount, authorization and approval for payment.
Federal Program Information: Funding Agency: U.S Department of Health and Human Services FALN: 93.926 Federal Award Identification Number: 5 H49MC00119‐21‐00 / 6 H49MC00119‐20‐01 Pass Through Entity: State of Georgia Department of Human Services Award Year: 2020‐2024 Criteria: Under 2 CFR Section 200.303(a), non‐federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally, under 2 CFR sections 200.308 200.309 and 200.403(h)), the Organization may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass‐through entity made the federal award that were authorized by the federal awarding agency or pass‐through entity. Condition: The Organization lacked supporting documentation for non‐payroll expenses. Due to lack of supporting documentation, period of performance could not be verified. Of the sixty (60) nonpayroll transactions examined, fourteen (14) lacked supporting documentation for review. Effect: Management possibly did not expend funds in accordance with the approved detailed lineitem budget and grant agreement and possibly expended funds in the incorrect period of performance. Cause: Expenses including approved invoices and/or supporting documentation were not properly maintained in part due to several changes in personnel within the accounting area and overall limited number of personnel for certain functions and lack of board oversight. Questioned costs: Known questioned costs of $2,066 and likely questioned costs of $11,507 for Healthy Start. Recommendation: We recommend that internal controls be strengthened and processes implemented to ensure all expenses include supporting documentation/invoice indicating period of performance.
Federal Program Information: Funding Agency: U.S Department of Health and Human Services FALN: 93.926 Federal Award Identification Number: 5 H49MC00119‐21‐00 / 6 H49MC00119‐20‐01 Pass Through Entity: State of Georgia Department of Human Services Award Year: 2020‐2024 Criteria: Under 2 CFR Section 200.303(a), non‐federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally regulations require the reimbursement payment method may be used on a Federal award for activities as specified in 2 CFR section 200.305(b)(3), program costs must be paid by non‐ Federal entity funds before submitting a payment request (2 CFR section 200.305(b)(3)), i.e., the non‐ Federal entity must disburse funds for program purposes before requesting payment from the Federal awarding agency or pass‐through entity. Condition: The Organization has a policy which in includes thee Fiscal/Grant Manager and/or the CEO review all drawdown requests to ensure costs are paid before reimbursement is requested. However of the sixteen (16) drawdown requests that we tested, there was no evidence of review and approval for payment. Effect: Management possibly did not expend funds in accordance with the federal award due to lack of evidence of oversight/review of drawdowns and after reimbursable expenses have been incurred. Cause: Management did not document evidence of review and approval of drawdown requests. This was due in part to lack of oversight. Also there were several changes in personnel within the accounting area and overall limited number of personnel for certain functions and lack of board oversight. Questioned costs: None Recommendation: We recommend that internal controls be strengthened and processes implemented to ensure all draw down requests are reviewed and approved to ensure costs were accurately reported and paid before requesting reimbursement.
Federal Program Information: Funding Agency: U.S Department of Health and Human Services FALN: 93.926 Federal Award Identification Number: 5 H49MC00119‐21‐00 / 6 H49MC00119‐20‐01 Pass Through Entity: State of Georgia Department of Human Services Award Year: 2020‐2024 Criteria: Under 2 CFR Section 200.303(a), non‐federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally, under 2 CFR Section 200.320, the Organization must have and use documented procurement procedures for acquisition of property and services under a federal award or a sub‐award. Condition: The Organization does have approved policies and procedures over procurement that meet the requirements of the Uniform Guidance. However the Organization is not following its prescribed policies and procedures. The Organization lacked supporting documentation verifying procurement policies and procedures were followed. Due to lack of supporting documentation, procurement could not be verified. Of the sixty (60) transactions examined, fourteen (14) lacked supporting documentation for review of procurement. Effect: Not following procurement policies and procedures may result in funds to be returned back to grantor and/or impact future funding. Cause: Supporting procurement documentation for acquisition of property and services were not properly maintained in part due to several changes in personnel within the accounting area and overall limited number of personnel for certain functions and lack of board oversight. Questioned Costs: Known questioned costs of $2,066 and likely questioned costs of $11,507 for Healthy Start. Recommendation: We recommend the Organization strengthen its policies and procedures to ensure procurement is adequately documented for that goods and services purchased in accordance with Uniform Guidance and other federal guidelines.
Federal Program Information: Funding Agency: U.S Department of Health and Human Services FALN: 93.926 Federal Award Identification Number: 5 H49MC00119‐21‐00 / 6 H49MC00119‐20‐01 Pass Through Entity: State of Georgia Department of Human Services Award Year: 2020‐2024 Criteria: Under 2 CFR Section 200.303(a), non‐federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Under 2 CFR part 180, the Organization is required to verify suspension or debarment from the excluded parties list system regarding compliance. Condition: Under 2 CFR part 180, the Organization is required to verify suspension or debarment from the excluded parties list system regarding compliance. Though the Organization did not have a policy for suspension and debarment, the Organization complied with the requirements. Effect: Not having a suspension and debarment policy may result in funds to be returned back to grantor and/or impact future funding. Cause: Supporting suspension and debarment documentation for acquisition of property and services were not properly established in part due to several changes in personnel within the accounting area and overall limited number of personnel for certain functions and lack of board oversight. Questioned Costs: None Recommendation: We recommend the Organization strengthen its policies and procedures to ensure procurement and suspension and debarment is adequately documented for that goods and services purchased in accordance with Uniform Guidance and other federal guidelines. In addition, the Organization should verify that all vendors under covered transactions are not listed on the excluded parties list system by performing a search on sam.gov and maintaining the results of such search in the vendor’s file.
Finding 2021-001 - Material Weakness in Internal Control and Material Noncompliance Assistance Listing No.: 93.498 COVID-19 - Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Federal Agency: U.S. Department of Health and Human Services Pass-Through Agency: Not Applicable Award Number/Year: Not applicable/2020 Compliance Requirement: Activities Allowed and Unallowed; Allowable Costs/Cost Principles Questioned Costs: $156,376 of known questioned costs. Criteria: Non-federal entities in receipt of federal funds must comply with the requirements of 2 CFR 200.303(a), which require an entity to establish and maintain effective internal control over the Federal award to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Provider Relief Funds (PRF) payments must be used for allowable expenses and lost revenue described in the PRF terms and conditions and specified in guidance issued by the U.S. Department of Health and Human Services (HHS). Activities allowed have been defined as expenses used to prevent, prepare for, and respond to coronavirus, domestically or internationally, for necessary expenses to reimburse, through grants or other mechanisms, eligible health care providers for health care related expenses or lost revenues that are attributable to coronavirus.Condition and Context: The Manor included expenses in its Period 1 submission that did not meet the criteria of an allowable expense as defined by the HHS guidance (the Guidance). The Manor included $156,376 in supplies and dining expenses that were not specifically used to prevent, prepare for, and respond to coronavirus. This is not a statistically valid sample. Effect: The Manor claimed expenses that were not in accordance with the Guidance and therefore deemed unallowable. Cause: Management misinterpreted the Guidance and claimed unallowable expenses in their reporting of qualified expenses. Recommendation: We recommend that management implement procedures to ensure that the most recent guidance is reviewed and understood and that information used in accumulated allowable expenses is reviewed, with errors addressed prior to submission. Additionally, we recommend that questioned costs are offset against unused lost revenues in future submissions. View of Responsible Officials: The Manor agrees with the finding. The Manor reported expenses in its period 1 submission of $798,256 which included all skilled nursing supplies expenses and an allocation of dining supplies which all of which were not necessarily used to prevent, prepare for, and respond to coronavirus. The Manor was able to provide direct costs used to prevent, prepare for, and respond to coronavirus that totaled $908,131 of which $266,251 were reported in period 2, thus $156,376 was over reported in period 1. The Manor agrees with the finding and misinterpreted the guidance but was able to substantiate $641,880 of expenses reported in period 1 as direct costs used to prevent, prepare for and respond to coronavirus. Additionally, the Manor reported $740,727 of lost revenues in the period 1 report that could be applied against the PRF payments. Procedures have been implemented to ensure that all future reporting will only include direct costs used to prevent, prepare for and respond to coronavirus.
Department of Health and Human Services Federal Financial Assistance Listing #93.498 COVID‐19 Provider Relief Fund (PRF) and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year – Period 1 and Period 2 TIN #201209404, Period 1 and Period 2 TIN #208729268, Period 2 TIN #262181659, Period 1 and Period 2 TIN #273274611, Period 2 TIN #800015864 Activities Allowed or Unallowed and Allowable Costs/Cost Principles, and Reporting Significant Deficiency in Internal Control over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Condition: The Organization’s final expenditure listing and lost revenue identified as eligible and claimed under the Provider Relief Fund program did not have documented review and approval by a separate individual outside of the preparer. In addition, the Organization’s special reports submitted to the Department of Health and Human Services (HHS) for Period 1 and Period 2 were not reviewed and approved by a separate individual outside of the preparer. Cause: The Organization did not have an adequate internal control policy in place to ensure review and approval over the final expenditure listing, lost revenue calculation claimed under the federal program, or preparation of HHS Period 1 and 2 reporting were documented. Effect: The lack of adequate policies governing review and approval increases the risk that employees participating in the federal award administration may not be able to detect and correct noncompliance in a timely manner. Questioned Costs: None reported. Context: Key line items were tested on the Period 1 and 2 Department of Health and Human Services special reports. Repeat Finding from Prior Years: No Recommendation: We recommend the Organization implement a control process which includes a secondary review and approval of the summarized final expenditure listing used to claim the allowable costs and lost revenue calculation under the federal program and a secondary review and approval of required reports to be submitted to the federal agency. Views of Responsible Officials: Management agrees with the finding.
Federal Financial Assistance Listing #93.498 COVID‐19 Provider Relief Fund (PRF) and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year – Period 1 and Period 2 TIN #201209404, Period 1 and Period 2 TIN #208729268, Period 2 TIN #262181659, Period 1 and Period 2 TIN #273274611, Period 2 TIN #800015864 Reporting Material Weakness in Internal Control Over Compliance and Material Noncompliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Condition: The Organization selected option ii to calculate lost revenue which consists of a comparison of actual results during the period of availability to the approved budget. The Organization did not have a budget for the entire reporting period that was approved prior to March 27, 2020. Cause: The Organization did have an approved budget prior to March 27, 2020, for calendar year 2020, but the approved budget did not cover the entire period of availability. Effect: The reporting to HHS for Period 1 and 2 was considered incorrect. The Organization did not have a budget approved prior to March 27, 2020, for the entire period of availability. Questioned Costs: None reported. Context: Key line items were tested on the Period 1 and 2 Department of Health and Human Services special reports. Repeat Finding from Prior Years: No Recommendation: We recommend that management implement procedures to ensure the lost revenue calculation claimed meet the requirements of the federal program. Views of Responsible Officials: Management agrees with the finding.
Department of Health and Human Services Federal Financial Assistance Listing #93.498 COVID‐19 Provider Relief Fund (PRF) and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year – Period 1 and Period 2 TIN #201209404, Period 1 and Period 2 TIN #208729268, Period 2 TIN #262181659, Period 1 and Period 2 TIN #273274611, Period 2 TIN #800015864 Activities Allowed or Unallowed and Allowable Costs/Cost Principles Material Weakness in Internal Control Over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Condition: During our testing, there was no documentation for a portion of the sample selected. Cause: The Organization did not have an internal control process in place to ensure that allowable expenses were all properly supported. Effect: The lack of adequate policies governing expenditure support increases the risk that employees participating in the federal award administration may not be able to detect and correct noncompliance in a timely manner. Questioned Costs: None reported. Context: A nonstatistical sample of 65 expenditures were selected for testing, which accounted for $140,360 of $1,292,789 direct program expenditures. Of these 65 items, seven were unsupported. Repeat Finding from Prior Years: No Recommendation: We recommend that the Organization enhance internal control policies to ensure all expenditures are supported to ensure that all payments are necessary, correct, meet the requirements of the federal program including an assessment of the period of availability, and are properly recorded in the reports required to be submitted to the federal agency. Views of Responsible Officials: Management agrees with the finding.