Cash Management Program Name: HIV Care Formula Grants (Ryan White HIV/AIDS Program Part B) (Assistance Listing 93.917) Federal Award Agency: United States Department of Health and Human Services Award Years: Federal Fiscal Years 2024 and 2025 Federal Award Number: 6 X07HA00022-34-01 Background The Department of Public Health (DPH) receives rebates for pharmaceuticals and records them as revenue for the Ryan White HIV/AIDS Program Part B to reduce the program’s cash needs. DPH uses a drawdown tool to determine the timing and amount of its federal drawdowns. Criteria Title 31 U.S. Code of Federal Regulations (CFR) Part 205.11(a) provides that a state must minimize the time elapsing between the transfer of funds from the United States Treasury and the state's payout of funds for federal assistance program purposes, whether the transfer occurs before or after the payout of funds. Title 2 CFR Part 200.303 requires the non-federal entity to establish and maintain effective internal control over federal awards that provides reasonable assurance that it is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition We reviewed DPH’s drawdown tool and determined that it was not effective in monitoring the department’s cash needs. The tool understated expenditures by $29,208,717. As a result, the cash-on-hand amounts were not reliable. Context DPH drew down $8,881,530 for expenditures during the audited period. Questioned Costs $0 Effect Ineffective monitoring of cash needs increases the risk that federal drawdowns will not occur in accordance with the department’s immediate cash requirements to administer the program. Cause A lack of management oversight contributed to the condition. Prior Audit Finding We previously reported this as finding 2024-200. Recommendation The Department of Public Health should strengthen internal controls over cash management to ensure that federal drawdowns align with the immediate cash needs to administer the program. Views of Responsible Officials “We agree with this finding. The Fiscal Department, in collaboration with Management Assurance, has implemented enhanced internal controls to strengthen oversight of cash management activities. Together, the teams developed and formalized enhanced control measures within the Drawdown Tool. These enhancements include daily transaction-level monitoring, integration of rebate offsets, application of a multi-SID tiered allocation structure, and the addition of 90-day liquidation period. The controls have been clearly documented to address identified gaps in operational effectiveness and ensure a balanced approach between automation and manual oversight. This framework provides increased transparency and reliability in managing the timely and accurate drawdown of Ryan White Part B funds while ensuring strong standards and best practices.”
Reporting – Federal Funding Accountability and Transparency Act Program Name: Disaster Grants – Public Assistance (Presidentially Declared Disasters) (Assistance Listing 97.036) Federal Award Agency: United States Department of Homeland Security Award Years: Federal Fiscal Years 2020 - 2025 Federal Award Numbers: 4087DRCTP00000001, 4500DRCTP00000001, and 4820DRCTP00000001 Background The Disaster Grants – Public Assistance program provides funding to state and local governments and certain types of private nonprofit organizations so that communities can quickly respond to and recover from presidentially declared disasters and emergencies. The Department of Emergency Services and Public Protection (DESPP) is the primary recipient for the State of Connecticut and is responsible for working with the Federal Emergency Management Agency (FEMA) throughout the disaster response and recovery process. In coordination with FEMA, DESPP receives and distributes funding to subrecipients for all projects within the state. Criteria Title 2 U.S. Code of Federal Regulations (CFR) Part 200.303 requires the non-federal entity to establish and maintain effective internal control over the federal award that provides reasonable assurance that it is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 2 CFR Part 170 Appendix A requires that states report any action that obligates $30,000 or more in federal funds for a subaward to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS) no later than the end of the following month after making the obligation. Recipients are to accurately report key data elements such as subaward numbers, amounts, and obligation dates. As of March 8, 2025, FSRS was retired and all subaward reporting data and functionality are now on the System for Award Management (SAM.gov). Condition DESPP did not establish effective internal controls over Federal Funding Accountability and Transparency Act (FFATA) reporting. The same individual entered subawards into FSRS and SAM.gov and reviewed the entries for accuracy and completeness. There was no documented management review process to verify the accuracy, completeness, and timeliness of FFATA reporting. We randomly selected ten subawards of $30,000 or more, totaling $12,224,700, and identified the following conditions: • DESPP entered two subawards, totaling $435,831, into FSRS 18 and 580 days late. • DESPP did not maintain adequate documentation to support the date it reported two subawards, totaling $9,556,735. As a result, we could not determine if DESPP reported the subawards on time. Transactions Tested Subaward Not Reported Report Not Timely Subaward Amount Incorrect Subaward Missing Key Elements 10 0 2 0 0 Dollar Amount of Tested Transactions Subaward Not Reported Report Not Timely Subaward Amount Incorrect Subaward Missing Key Elements $12,224,700 $0 $435,831 $0 $0 Context During the fiscal year ended June 30, 2025, DESPP made 68 subawards of $30,000 or more, totaling $38,215,595. The sample was not statistically valid. Questioned Costs $0 Effect There is an increased risk for inaccurate, incomplete, and untimely FFATA reporting. Additionally, DESPP decreased its public transparency regarding its spending of federal awards. Cause Management did not adequately monitor the internal control system or promptly remediate internal control deficiencies identified during prior audits, which contributed to the identified conditions. Prior Audit Finding We previously reported this as finding 2024-350 and in three prior audits. Recommendation The Department of Emergency Services and Public Protection should strengthen internal controls and promptly report subawards in compliance with the Federal Funding Accountability and Transparency Act. Views of Responsible Officials “DESPP does not agree with this finding. DESPP utilizes the federally designated FFATA reporting system (SAM.gov) for all FFATA reporting. This system does not possess the capability for any layered review or approval of information prior to upload or post submission. The system has no reporting mechanism to review information input into this system. Further, the system does not maintain capability to track the dates of changes and it records over upload dates at future submission timeframes. These issues have been repeatedly brought to the attention of both SAM.gov administrators at the federal level and DESPP’s FEMA funding agencies. In response to a similar finding by FEMA, DESPP provided the attached information, after which FEMA closed the DESPP finding. DESPP will continue to attempt to work with SAM.gov administrators to advocate for modifications to the FFATA reporting system to address these concerns, but is unable to address them unilaterally without federal agency intervention.” Auditors’ Concluding Comments DESPP should maintain sufficient documentation outside of SAM.gov to demonstrate compliance with reporting requirements and approvals by agency personnel.
Allowable Costs/Cost Principles – Assistance Payments Program Names: COVID-19 Section 8 Housing Choice Vouchers (Assistance Listing 14.871) Section 8 Housing Choice Vouchers (Assistance Listing 14.871) Federal Award Agency: United States Department of Housing and Urban Development Award Years: Federal Fiscal Years 2024 and 2025 Federal Award Number: ACC CT 901 VO Program Name: Mainstream Vouchers (Assistance Listing 14.879) Federal Award Agency: United States Department of Housing and Urban Development Award Years: Federal Fiscal Years 2024 and 2025 Federal Award Number: ACC CT 901 DVO Background The United States Department of Housing and Urban Development’s (HUD) Section 8 Housing Choice Vouchers Program provides rental assistance to help very low-income families afford decent, safe, and sanitary housing. Section 3202 of the American Rescue Plan Act of 2021 provided for new incremental Emergency Housing Vouchers. Office of Public and Indian Housing (PIH) notice PIH 2021-25 provides that public housing agencies (PHA) should report Emergency Housing Vouchers under the Section 8 Housing Choice Vouchers Program. The Mainstream Vouchers Program enables families to lease affordable private housing when the head, spouse, or co-head is a person with disabilities. Public housing agencies are authorized to administer the programs locally and make housing assistance payments on behalf of eligible families directly to landlords for the lease of suitable program-eligible rental housing. In Connecticut, the programs are administered locally by over 40 public housing agencies and statewide by the Department of Housing (DOH) and its contracted vendor. DOH advances program funds to its contractor that disburses the funds to landlords and participants. Criteria Title 2 U.S. Code of Federal Regulations (CFR) Part 200.303 requires the non-federal entity to establish and maintain effective internal control over the federal award that provides reasonable assurance that it is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 24 CFR Part 982.158 provides that the PHA must maintain complete and accurate accounts and other records for the program in accordance with HUD requirements, in a manner that permits a prompt and effective audit. Title 24 CFR Part 982.305 provides that the PHA must execute a HAP contract no later than 60 calendar days from the beginning of the lease term. The PHA must not pay any housing assistance payment to the owner until it has executed the contract. If the PHA executes the HAP contract during the period of 60 calendar days from the beginning of the lease term, it will pay housing assistance payments after the execution of the HAP contract. Any HAP contract executed after the 60-day period is void, and the PHA may not pay any housing assistance payment to the owner. Title 24 CFR Part 982.503 requires the PHA to adopt a payment standard schedule that establishes voucher payment standard amounts for each fair market rent area in the PHA jurisdiction. For each fair market rent area, the PHA must establish payment standard amounts for each unit size. Unit size is measured by the number of bedrooms. Title 24 CFR Part 982.505 states that a payment standard is used to calculate the monthly housing assistance payment for a family. The payment standard for the family is the lower of the payment standard amount for the family unit size or the payment standard amount for the size of the dwelling unit rented by the family. Title 24 CFR Part 982.516 requires the PHA to conduct a reexamination of family income and composition at least annually. The PHA must obtain and document in the tenant file third-party verifications of reported family annual income, the value of assets, expenses related to deductions from annual income, and other factors that affect the determination of adjusted income, or must document why third-party verification was not available. At the effective date of a regular or interim reexamination, the PHA must make appropriate adjustments in the HAP. Title 24 CFR Part 982.517 requires the PHA to maintain a utility allowance schedule for all tenant-paid utilities (except telephone), for tenant supplied refrigerators and ranges, and for other tenant paid housing services (e.g., trash collection). The utility allowance schedule must be determined based on the typical cost of utilities and services paid by energy-conservative households that occupy housing of similar size and type in the same locality. The PHA must review its schedule each year and must revise its allowance for a utility category if there has been a change of ten percent or more in the utility rate since the last time the utility schedule was revised. Condition Our review of 60 housing assistance payments and utility reimbursements, totaling $99,286 and $2,813, respectively, disclosed that in 14 cases, payments were incorrectly calculated. Some cases had multiple errors. • In two cases, the PHA incorrectly calculated the tenant’s total annual adjusted income. • In eight cases, the PHA incorrectly calculated the tenant’s total annual income. • In three cases, the PHA did not use the correct payment standard. • In two cases, the PHA incorrectly calculated the utility allowance or did not use the correct utility allowance schedule. These errors resulted in $1,211 in housing assistance and utility reimbursement overpayments and $49 in underpayments for the tested benefit months. Further review noted an additional $8,495 in housing assistance and utility reimbursement overpayments, and $379 in underpayments during the audited period. We also noted that in two cases, the PHA paid $37,233 under housing assistance payment contracts that were void because they were not executed within 60 calendar days from the beginning of the lease term. Context During the fiscal year ended June 30, 2025, housing assistance payment transactions and utility reimbursements for the Section 8 Housing Choice Vouchers and Mainstream Vouchers programs totaled $127,656,361. The sample was not statistically valid. Questioned Costs Our review identified questioned costs totaling $41,491 for the Section 8 Housing Choice Vouchers program. Effect DOH has reduced assurance of the accuracy of housing assistance payments and utility reimbursements. Cause The conditions are due to a lack of management oversight. Prior Audit Finding We have not previously reported this finding. Recommendation The Department of Housing should strengthen internal controls to ensure that it properly calculates Section 8 Housing Choice Vouchers and Mainstream Vouchers housing assistance and utility benefit payments. Views of Responsible Officials “We agree with the finding. DOH did contract with a third-party entity to provide these services; however, DOH retains overall responsibility for the program. Recently, DOH established a Section 8 division within DOH to provide more oversight over the program and the contactor. We are working closely with the contractor to strengthen their internal control, develop policies and procedures. DOH will continue collaborating with the contractor to enhance system controls and minimize the risk of future issues. All identified errors in this finding have been corrected including the questionable cost, and the software now includes a new feature designed to prevent similar problems going forward. DOH remains committed to continuous improvement and effective oversight of the program and contractor.”
Eligibility Program Names: COVID-19 Section 8 Housing Choice Vouchers (Assistance Listing 14.871) Section 8 Housing Choice Vouchers (Assistance Listing 14.871) Federal Award Agency: United States Department of Housing and Urban Development Award Years: Federal Fiscal Years 2024 and 2025 Federal Award Number: ACC CT 901 VO Program Name: Mainstream Vouchers (Assistance Listing 14.879) Federal Award Agency: United States Department of Housing and Urban Development Award Years: Federal Fiscal Years 2024 and 2025 Federal Award Number: ACC CT 901 DVO Background The United States Department of Housing and Urban Development’s (HUD) Section 8 Housing Choice Vouchers Program provides rental assistance to help very low-income families afford decent, safe, and sanitary housing. Section 3202 of the American Rescue Plan Act of 2021 provided for new incremental Emergency Housing Vouchers. Office of Public and Indian Housing (PIH) notice PIH 2021-25 provides that public housing agencies (PHA) should report Emergency Housing Vouchers under the Section 8 Housing Choice Vouchers Program. The Mainstream Vouchers Program enables families to lease affordable private housing when the head, spouse, or co-head is a person with disabilities. Public housing agencies are authorized to administer the programs locally and make housing assistance payments on behalf of eligible families directly to landlords for the lease of suitable program-eligible rental housing. In Connecticut, the programs are administered locally by over 40 public housing agencies and statewide by the Department of Housing (DOH) and its contracted vendor. DOH advances program funds to its contractor that disburses the funds to landlords and participants. Criteria Title 2 U.S. Code of Federal Regulations (CFR) Part 200.303 requires the non-federal entity to establish and maintain effective internal control over the federal award that provides reasonable assurance that it is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 24 CFR Part 982.158 provides that the PHA must maintain complete and accurate accounts and other records for the program in accordance with HUD requirements, in a manner that permits a prompt and effective audit. Title 24 CFR Part 5.233 requires PHAs to use the Enterprise Income Verification system in its entirety as a third-party source to verify tenant employment and income information during mandatory reexaminations of family compositions and income. Office of Public and Indian Housing (PIH) notice PIH 2018-18 provides that PHAs maintain the report and documentation of any follow up in the tenant file. The PHAs are also required to maintain copies of the Enterprise Income Verification income and Income Validation Tool reports used to confirm family reported income within 120 days of the Inventory Management Public and Indian Housing Information Center submission date. Office of Public and Indian Housing (PIH) notice PIH 2012-28 provides that PHAs adopt procedures at admission and at annual recertification/reexamination to prevent lifetime registered sex offenders from receiving federal housing assistance. If the tenant or a member of the tenant’s household engages in criminal activity (including sex offenses) while living in HUD-assisted housing, the PHA should pursue eviction or termination. Condition Our review of 60 housing assistance payments and utility reimbursements, totaling $99,286 and $2,813, respectively, disclosed the following: · In four cases, the PHA did not have Income Validation Tool reports on file to support tenant employment and income. · In two cases, the PHA did not receive all required source documents prior to completing the initial/annual reexaminations. · In one case, the PHA did not verify the tenant’s employment and income noted on the Income Validation Tool. · In one case, the PHA did not verify household members were not lifetime registered sex offenders or check their criminal record during the annual reexamination. Context During the fiscal year ended June 30, 2025, housing assistance payment transactions and utility reimbursements for the Section 8 Housing Choice Vouchers and Mainstream Vouchers programs totaled $127,656,361. The sample was not statistically valid. Questioned Costs $0 Effect There is an increased risk that DOH provides financial assistance to ineligible individuals. Cause The conditions are due to a lack of management oversight. Prior Audit Finding We previously reported this as finding 2024-727 and in two prior audits. Recommendation The Department of Housing should properly monitor its contractor to ensure that it only awards benefits to eligible recipients. Views of Responsible Officials “We agree with the finding. DOH did contract with a third-party entity to provide these services. The contractor has been experiencing technical difficulties accessing the HUD system. We are aware of this current situation, and we are working with HUD to resolve this issue as soon as possible. “
Special Tests and Provisions – Housing Assistance Payments Program Names: COVID-19 Section 8 Housing Choice Vouchers (Assistance Listing 14.871) Section 8 Housing Choice Vouchers (Assistance Listing 14.871) Federal Award Agency: United States Department of Housing and Urban Development Award Years: Federal Fiscal Years 2024 and 2025 Federal Award Number: ACC CT 901 VO Program Name: Mainstream Vouchers (Assistance Listing 14.879) Federal Award Agency: United States Department of Housing and Urban Development Award Years: Federal Fiscal Years 2024 and 2025 Federal Award Number: ACC CT 901 DVO Background The United States Department of Housing and Urban Development’s (HUD) Section 8 Housing Choice Vouchers Program provides rental assistance to help very low-income families afford decent, safe, and sanitary housing. Section 3202 of the American Rescue Plan Act of 2021 provided for new incremental Emergency Housing Vouchers. Office of Public and Indian Housing (PIH) notice PIH 2021-25 provides that public housing agencies (PHA) should report Emergency Housing Vouchers under the Section 8 Housing Choice Vouchers Program. The Mainstream Vouchers Program enables families to lease affordable private housing when the head, spouse, or co-head is a person with disabilities. Public housing agencies are authorized to administer the programs locally and make housing assistance payments on behalf of eligible families directly to landlords for the lease of suitable program-eligible rental housing. In Connecticut, the programs are administered locally by over 40 public housing agencies and statewide by the Department of Housing (DOH) and its contracted vendor. DOH advances program funds to its contractor that disburses the funds to landlords and participants. Criteria Title 2 U.S. Code of Federal Regulations (CFR) Part 200.303 requires the non-federal entity to establish and maintain effective internal control over the federal award that provides reasonable assurance that it is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 24 CFR Part 982.158 provides that the PHA must maintain complete and accurate accounts and other records for the program in accordance with HUD requirements, in a manner that permits a prompt and effective audit. Title 24 CFR Part 982.516 requires the PHA to conduct a reexamination of family income and composition at least annually. The PHA must obtain and document in the tenant file third-party verifications of reported family annual income, the value of assets, expenses related to deductions from annual income, and other factors that affect the determination of adjusted income, or must document why third-party verification was not available. At the effective date of a regular or interim reexamination, the PHA must make appropriate adjustments in the HAP. Condition Our review of ten housing assistance payments and utility reimbursements totaling $17,721 and $351, respectively, disclosed that in one case, the PHA incorrectly calculated the payment. The PHA incorrectly calculated the tenant’s total annual income and total allowance/deductions. These errors resulted in an overpayment of $49 for the tested benefit month. Context During the fiscal year ended June 30, 2025, housing assistance payment transactions and utility reimbursements for the Section 8 Housing Choice Vouchers and Mainstream Vouchers programs totaled $127,656,361. The sample was not statistically valid. Questioned Costs Our review identified questioned costs totaling $49 for the Section 8 Housing Choice Vouchers program. Effect DOH has reduced assurance of the accuracy of housing assistance payments and utility reimbursements. Cause The condition was due to a lack of management oversight. Prior Audit Finding We have not previously reported this finding. Recommendation The Department of Housing should strengthen internal controls to ensure that it properly calculates and supports Section 8 Housing Choice Vouchers and Mainstream Vouchers housing assistance and utility benefit payments. Views of Responsible Officials “We agree with the finding. DOH did contract with a third-party entity to provide these services; however, DOH retains overall responsibility for the program. Recently, DOH established a Section 8 division within DOH to provide more oversight over the program and contactor. We are working closely with the contractor to strengthen their internal control, develop policies and procedures. DOH will continue collaborating with the contractor to enhance system controls and minimize the risk of future issues. All identified errors in this finding have been corrected including the questionable cost. DOH remains committed to continuous improvement and effective oversight of the program and contractor. “
Allowable Costs/Cost Principles – Evidence of Services Provided by Part-Time and Extension Credit Lecturers Program Name: Coronavirus State and Local Fiscal Recovery Funds (Assistance Listing 21.027) Federal Award Agency: Department of the Treasury Award Year: Federal Fiscal Year 2025 Federal Award Number: N/A Background The Office of Policy and Management (OPM) was designated as the primary state agency responsible for overseeing the Coronavirus State and Local Fiscal Recovery Funds and reporting to the federal government. OPM allocated funds to the CT State Community College and other state agencies to assist with carrying out the program’s objectives. CT State Community College contracts with part-time and extension credit lecturers who teach a term or class at a flat rate. The college pays them in equal installments based on the terms of individual contracts. Criteria Title 2 U.S. Code of Federal Regulations (CFR) Part 200.303 requires the non-federal entity to establish and maintain effective internal control over the federal award that provides reasonable assurance that it is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 2 CFR Part 200.430(g) provides that charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. Such records must be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, and comply with the established accounting policies and procedures of the recipient. Sections 3-117(b) and 3-119(a) of the Connecticut General Statutes require state entities to certify services are received and documented before paying contractors and state employees. Condition CT State Community College made $70,175,519 in salary and fringe benefit payments for 2,796 part-time and extension credit lecturers without verifying the lecturers provided the contractual services or documenting supervisory approval. Context During the fiscal year ended June 30, 2025, CT State Community College charged $70,624,749 in payroll and fringe benefit costs to Coronavirus State and Local Fiscal Recovery Funds, of which $70,175,519 was attributed to contracted faculty members. Questioned Costs $0 Effect CT State Community College could pay part-time and extension lecturers for services they did not provide. Cause CT State Community College lacks policies and procedures to ensure compensation for part-time and extension credit lecturers is contingent on fulfillment of contractual obligations. Prior Audit Finding We previously reported this as finding 2024-400. Recommendation CT State Community College should strengthen internal controls to ensure that part-time and extension credit lecturer payroll and fringe benefits costs are based on actual time worked and are properly approved. Views of Responsible Officials Response provided by CT State Community College: “Management agrees with this finding and work towards a viable long-term solution for workload review at the campus level is underway. As noted in previous audits, controls were implemented in Banner as part of the Payroll Exception review process that was initiated by the Audit Advisory Committee. These reports are currently unavailable due to limitations that will be resolved soon. Once resolved, the reports will be shared with the appropriate academic reviewer for confirmation of services received.” Views of Responsible Officials Response provided by the Office of Policy and Management: “The Office of Policy and Management has no additional response beyond that offered by the CT State Community College.”
Eligibility Program Names: COVID-19 Medical Assistance Program (Medicaid, Title XIX) (Assistance Listing 93.778) Medical Assistance Program (Medicaid, Title XIX) (Assistance Listing 93.778) Federal Award Agency: United States Department of Health and Human Services Award Years: Federal Fiscal Years 2024 and 2025 Federal Award Numbers: 2405CT5MAP and 2505CT5MAP Criteria Title 42 U.S. Code of Federal Regulations (CFR) Part 435.603 requires the state Medicaid agency to determine a household’s financial eligibility for Medicaid based on the sum of the modified adjusted gross income (MAGI) of every individual in the household. Title 42 United States Code Section 1396b(v) provides that aliens who meet certain requirements are eligible for Medicaid only if such care and services are necessary for the treatment of an emergency medical condition. Title 2 CFR Part 200.303 requires the non-federal entity to establish and maintain effective internal control over the federal award that provides reasonable assurance that it is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. The CFR requires the non-federal entity to take prompt action when it identifies instances of noncompliance, including noncompliance identified in audit findings. Condition We reviewed 60 Medicaid cases to determine if the Department of Social Services (DSS) properly granted eligibility. Our review included 40 MAGI cases totaling $12,386, of which $6,367 was federally reimbursed and 20 non-MAGI cases totaling $41,480, of which $21,029 was federally reimbursed. Our review disclosed that DSS granted Medicaid eligibility to one MAGI recipient upon denial of their renewal application in June 2023. DSS improperly continued eligibility for 30 months until notification of our review. DSS paid $7 in Medicaid benefits for the selected claim. Furthermore, our review disclosed that DSS paid an additional $10,587 in Medicaid benefits for the ineligible recipient during fiscal year 2025. We reviewed the status of prior audit findings to determine if DSS took appropriate steps to resolve and prevent identified conditions. Our review of 18 non-qualified aliens who received non-emergency medical services in prior audits disclosed that DSS issued $12,443 in payments for non-emergency medical services provided to one non-qualified alien who was ineligible to receive services in fiscal year 2025. Context DSS provided us with a detailed listing of fee-for-service benefit payments issued during the fiscal year ended June 30, 2025. We stratified the data into two eligibility determination groups based on MAGI and non-MAGI determinations (e.g., Aged, Blind and Disabled). During the fiscal year ended June 30, 2025, DSS issued $5,978,762,480 in payments on behalf of 2,379,288 MAGI recipients and received $3,038,953,956 in federal reimbursement. In addition, DSS issued $5,158,976,619 in payments on behalf of 772,464 non-MAGI recipients and received $2,598,909,828 in federal reimbursement. We further stratified the payment data for recipients without a Social Security number who were over three years old. DSS issued $91,099,447 in payments on behalf of 20,125 MAGI recipients and received $46,371,061 in federal reimbursement. In addition, DSS issued $36,001,833 in payments on behalf of 7,812 non-MAGI recipients and received $18,046,253 in federal reimbursement. Of these 27,937 recipients, we could not determine the number of non-qualified aliens without reviewing each case. The samples were not statistically valid. Questioned Costs We computed $11,518 in questioned costs by applying the applicable federal financial participation rate to the benefit payments associated with the ineligible recipients. Effect DSS received federal reimbursement for unallowed expenditures. Cause DSS implemented system overrides during COVID-19 that prevented case closure for recipients determined ineligible after the pandemic. DSS eligibility workers granted eligibility to a non-qualified alien without proper documentation or authority. Prior Audit Finding We previously reported this as finding 2024-012. Recommendation The Department of Social Services should strengthen internal controls to ensure that only eligible recipients receive Medicaid services in accordance with federal laws and the Medicaid State Plan. Views of Responsible Officials “The Department agrees with this finding. The Department identified cases where overrides that were applied during the public health emergency were not removed. This resulted in individuals remaining enrolled inappropriately. Our Business Systems Division is implementing a tiered resolution approach, beginning with individuals enrolled in the Medicare Savings Program and HUSKY-C coverage. Please note: The Department will not be returning the questioned costs associated with this finding. According to federal regulations, recoveries based on eligibility errors can only be pursued when identified by programs operating under CMS’ Payment Error Rate Measurement program, per section 1903(u) of the Social Security Act and regulations at Title 42 CFR Part 431, Subpart Q.”
Identification of the Federal Program: Assistance Listing Number: 14.218 Assistance Listing Title: Community Development Block Grants Cluster - Entitlement/Special Purpose Federal Agency: U.S. Department of the Housing and Urban Development Pass-through Entity: County of Orange Community Resources Department Pass-through Identification Number: J2JWJVWQBEA6 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): For federally funded programs, recipients are required to establish and maintain effective internal control over compliance in accordance with 2 CFR §200.303. These controls should provide reasonable assurance that federal awards are managed in compliance with applicable laws, regulations, and the provisions of contracts or grant agreements. Pursuant to 2 CFR §§200.403 through 200.405, costs charged to federal programs must be allowable, reasonable, necessary, and adequately documented. Recipients must maintain sufficient documentation to support the nature of expenditures, vendor selection, and cost reasonableness to ensure compliance with allowable cost principles. Additionally, pursuant to 2 CFR §200.318, non-Federal entities are required to use documented procurement procedures that reflect applicable federal, state, and local requirements. These procedures must ensure that procurement activities are conducted in a manner providing for full and open competition, use appropriate procurement methods, and include adequate documentation to support vendor selection and cost reasonableness. Recipients are responsible for ensuring that procurement activities performed by employees, consultants, or contractors on their behalf comply with these requirements. Failure to follow these procedures may result in costs that are not adequately supported as allowable under federal requirements. Further, pursuant to 24 CFR §570.506, when CDBG funds are used for rehabilitation activities, recipients must ensure that work is completed in accordance with applicable laws, codes, and requirements related to housing safety, quality, and habitability. This includes ensuring that required permits are obtained and inspections are performed in accordance with local building and safety requirements prior to and throughout construction activities. Condition: During our audit of the CDBG program, we identified the following deficiencies related to internal control and compliance over compliance requirements: Allowable Costs/Cost Principles: The City did not maintain sufficient documentation to support compliance with federal requirements related to CDBG-funded rehabilitation activities. Specifically, the City did not maintain adequate documentation to support vendor selection, cost reasonableness, or the basis for contractor procurement. In addition, the City did not maintain evidence demonstrating that procurement-related activities performed by a consultant on its behalf were conducted in accordance with established procedures. Special Tests and Provisions – Rehabilitation: During our testing of nine CDBG-funded rehabilitation projects, we noted that one project had a building permit on file that expired in 2008 and was not renewed prior to or during construction. Additionally, five projects had building permits that were issued after construction activities had already commenced, indicating that required permits were not obtained prior to the start of rehabilitation work. Cause: The City has not established and implemented effective internal controls and monitoring procedures over its CDBG program to ensure compliance with all federal requirements. Effect or Potential Effect: The City did not maintain sufficient documentation to support expenditures, limiting its ability to demonstrate that costs charged to the program are allowable, reasonable, and adequately supported in accordance with federal requirements. As a result, there is an increased risk that costs may be questioned or disallowed. Additionally, failure to obtain and maintain valid permits prior to construction increases the risk of noncompliance with rehabilitation requirements and may result in ineligible activities. Questioned Costs: None. Context: See condition above for the context of the finding. Recommendation: We recommend that the City strengthen its internal control system over the CDBG program by implementing and documenting formal policies and procedures to ensure compliance with federal requirements. This includes maintaining sufficient documentation to support vendor selection, cost reasonableness, and overall allowability of costs, as well as ensuring appropriate oversight of consultants performing activities on the City’s behalf. Additionally, the City should enhance its monitoring procedures over rehabilitation activities by maintaining sufficient documentation to support that work was performed in accordance with program requirements, including evidence of inspections and completion of approved work; permits or local approvals alone should not be relied upon as sole evidence of compliance. The City should provide training to staff involved in program administration and implement ongoing monitoring procedures to ensure compliance with federal requirements. Views of Responsible Officials: Management concurs with the finding and agrees to implement necessary corrective procedures.
Criteria: Per 2 CFR 200.302(a) and 2 CFR 200.303, non-Federal entities must maintain adequate records supporting Federal program transactions and implement internal controls to ensure compliance. The OMB Compliance Supplement (2025), Part 4 – HHS, for the CCDF program requires documentation supporting eligibility determinations, including documentation to support applicable health and safety standards, and maintain compliance to remain eligible for payment. Condition: During testing, the Organization was unable to provide required eligibility documentation for four children, representing two unique families. In addition, two providers were noted who were deficient in meeting the health and safety requirements of the Program and were subsequently terminated as participating providers. Despite the termination status, these providers later received additional program payments. The Organization was unable to provide documentation demonstrating that the providers corrected deficiencies or were re-approved prior to receiving subsequent payments. Because supporting documentation was not retained, we could not determine whether the providers met requirements to resume participation. The Organization explained that eligibility and health and safety documentation historically resided within a system of record that has been transferred entirely to the State following a transition of the program’s administration to the State. The Organization no longer retains access to that system or copies of all documentation contained therein. Cause: As part of the transition of program responsibilities back to the State, the Organization returned program records and no longer retained access to the State-managed system that housed eligibility information. The Organization did not maintain its own copies of all eligibility or health and safety documentation needed to support future audits. Effect: The Organization cannot demonstrate compliance with Federal eligibility documentation requirements for the affected participants. In addition, the Organization could not demonstrate that payments totaling $34,018 were made to providers who met health and safety requirements of the Program at the time services were delivered. These costs are considered questioned due to lack of supporting documentation. Questioned Costs: $34,018 Recommendations: The Organization should establish procedures to ensure eligibility documentation is retained by the Organization, even when a third-party system serves as the primary repository. Future programs should include a documented record-retention plan ensuring audit-ready records remain accessible.
Finding 2025-011 – Lack of Internal Controls Over Major Federal Program – Coronavirus State and Local Fiscal Recovery Funds (Repeat Finding – 2023-011, 2024-011) PASS-THROUGH GRANTOR: Direct Grant FEDERAL AGENCY: U.S. Department of Treasury ASSISTANCE LISTING: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Procurement, Suspension and Debarment; Reporting; Subrecipient Monitoring QUESTIONED COSTS: $-0- Condition: During the process of documenting the County’s internal controls regarding federal disbursements, we noted that the County has not established procedures to ensure compliance with the following compliance requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Procurement and Suspension and Debarment; Reporting; Subrecipient Monitoring. Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal expenditures are made in accordance with federal compliance requirements. Effect of Condition: This condition could result in noncompliance with grant requirements and could result in a loss of federal funds to the County. Recommendation: OSAI recommends the County gain an understanding of requirements for this program and implement internal control procedures to ensure compliance with requirements. Management Response: Chairman of the Board of County Commissioners: The Board of County Commissioners will work with all County Officials to inform them of all grants and federal monies that Pottawatomie County receives to ensure that proper internal controls are implemented. Criteria: 2 CFR § 200.303 Internal Controls (a) reads as follows: The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Further, accountability and stewardship should be overall goals in management's accounting of federal funds. Internal controls should be designed to monitor compliance with laws and regulations pertaining to grant contracts.
Finding 2025-013 – Noncompliance with Reporting Over Major Federal Program - Coronavirus State and Local Fiscal Recovery Funds (Repeat Finding – 2023-013, 2024-013) PASS-THROUGH GRANTOR: Direct Grant FEDERAL AGENCY: U.S. Department of Treasury ASSISTANCE LISTING: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Reporting QUESTIONED COSTS: $-0- Condition: During the test of 100% of expenditures for the Coronavirus State and Local Fiscal Recovery Funds, totaling $5,176,520, thirty (32) expenditures totaling $2,780,668, were not accurately reported in the proper period on the quarterly reports, and two expenditures to subrecipients totaling $121,362, were improperly classified as “Revenue Replacement” expense instead of using the “Infrastructure” expense category as required by the Reporting compliance requirement. Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal expenditures are made in accordance with federal compliance requirements. Effect of Condition: This condition resulted in noncompliance with grant requirements. Recommendation: OSAI recommends the County design and implement a system of internal controls to ensure the accuracy and completeness of reports and to ensure compliance with federal requirements. Management Response: Chairman of the Board of County Commissioners: The Board of County Commissioners will take measures to ensure future compliance with all requirements of federal grants. Criteria: Accountability and stewardship should be overall goals in management’s accounting of federal funds. Internal controls should be designed to monitor compliance with laws and regulations pertaining to grant contracts. Title 2 CFR § 200.303(a) Internal Controls reads (a) reads as follows: The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Controls Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Compliance and Reporting Guidance, State and Local Fiscal Recovery Funds (10. Reporting.) reads as follows: All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. In addition, where appropriate, your organization needs to establish controls to ensure completion and timely submission of all mandatory performance and/or compliance reporting. Further, 2 CFR § 200.329 Monitoring and Reporting Program Performance (c)(1) reads as follows The non-Federal entity must submit performance reports at the interval required by the Federal awarding agency or pass-through entity to best inform improvements in program outcomes and productivity. Intervals must be no less frequent than annually nor more frequent than quarterly except in unusual circumstances, for example where more frequent reporting is necessary for the effective monitoring of the Federal award or could significantly affect program outcomes. Reports submitted annually by the non-Federal entity and/or pass-through entity must be due no later than 90 calendar days after the reporting period. Reports submitted quarterly or semiannually must be due no later than 30 calendar days after the reporting period. Alternatively, the Federal awarding agency or pass-through entity may require annual reports before the anniversary dates of multiple year Federal awards. The final performance report submitted by the non-Federal entity and/or pass-through entity must be due no later than 120 calendar days after the period of performance end date. A subrecipient must submit to the pass-through entity, no later than 90 calendar days after the period of performance end date, all final performance reports as required by the terms and conditions of the Federal award. See also § 200.344. If a justified request is submitted by a non-Federal entity, the Federal agency may extend the due date for any performance report.
Federal Agency: Department of Health and Human Services Federal Program: Family Planning Services – Title X Federal Assistance Listing Number(s): 93.217 Award Period: July 1, 2024 to June 30, 2025 Type of Finding: • Material weakness in Internal Control over Compliance • Compliance – Other Matters Criteria or Specific Requirement: The Code of Federal Regulations, 2 CFR Part 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. In addition, the federal financial reporting (FFR) instructions specify the requirements for accurate reporting. Condition: During our testing, there were multiple inaccuracies identified on the FFR submitted to the funder. Specifically, the Organization was not accurately reporting the federal share of expenditures, its non-federal share requirement and reporting on its program income on its quarterly FFR for the period ending March 31, 2025. Questioned Costs: None Context: The Notice of Awards specified the federal and recipient share of expenditures, and use of program income. This information is required to be reported on the Organization’s federal financial report, but amounts were not reported correctly based on the cumulative award totals. Cause: The Organization was not fully aware of the FFR reporting requirements. It also appears the Organization was completing the FFR based on the cash basis rather than the accrual basis as indicated on the FFR. Effect: The Organization did not report the correct amounts for federal share of expenditures, recipient share of expenditures or program income on its required FFR reporting. Repeat Finding: The finding is a repeat of a finding in the immediately prior year. Prior year finding number was 2024-001. Recommendation: We recommend management review the FFR instructions and develop procedures to ensure the required reporting submitted to the funder is complete and accurate. Additionally, systems should be put in place to both track and report its progress on the non-federal share requirement and any program income. Views of Responsible Official: Management agrees with the finding. Management will review its reporting policies and procedures.
Finding 2025-007 – Lack of Internal Controls Over Major Federal Program – Coronavirus State and Local Fiscal Recovery Funds (Repeat Finding – 2022-007, 2023-007, 2024-007) PASS THROUGH GRANTOR: Direct Grant FEDERAL AGENCY: U.S. Department of Treasury ASSISTANCE LISTING: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Procurement and Suspension and Debarment; Reporting; and Subrecipient Monitoring QUESTIONED COSTS: $0 Condition: During the process of documenting the County’s internal controls regarding federal disbursements, we noted that Comanche County has not established procedures to ensure compliance with the following compliance requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Procurement and Suspension and Debarment; Reporting; and Subrecipient Monitoring. Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal expenditures are made in accordance with federal compliance requirements. Effect of Condition: This condition could result in noncompliance to grant requirements and could lead to a loss of federal funds to the County. Recommendation: OSAI recommends the County gain an understanding of requirements for this program and implement internal control procedures to ensure compliance with requirements. Management Response: Chairman of the Board of County Commissioners: The Board of County Commissioners will work with all County Officials to go over all grants and federal monies that Comanche County receives to ensure that proper internal controls are implemented. Criteria: 2 CFR § 200.303 Internal Controls (a) reads as follows: The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Further, accountability and stewardship should be overall goals in management's accounting of federal funds. Internal controls should be designed to monitor compliance with laws and regulations pertaining to grant contracts.
Finding 2025-014 – Noncompliance with Reporting Over Major Federal Program – Coronavirus State and Local Fiscal Recovery Funds (Repeat Finding – 2022-014, 2023-014, 2024-014) PASS-THROUGH GRANTOR: Direct Grant FEDERAL AGENCY: U.S. Department of Treasury ASSISTANCE LISTING: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Reporting QUESTIONED COSTS: $0 Condition: During the test of sixty-five (65) expenditures for the Coronavirus State and Local Fiscal Recovery Funds, totaling $4,254,839, seventeen (17) expenditures, totaling $1,280,024, were not accurately reported in the proper period on the quarterly reports as required by the program. Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal expenditures are properly reported in accordance with federal compliance requirements. Effect of Condition: This condition resulted in noncompliance with grant requirements. Recommendation: OSAI recommends the County design and implement a system of internal controls to ensure the accuracy and completeness of reports and to ensure compliance with federal requirements. Management Response: Chairman of the Board of County Commissioners: The Board of County Commissioners have hired a grant administrator to assist with the reporting process. We will ensure that the reports are accurate and reported in the proper period. Criteria: GAO Standards – Section 2 – Establishing an Effective Internal Control System – OV2.23 states in part: Objectives of an Entity – Compliance Objectives Management conducts activities in accordance with applicable laws and regulations. As part of specifying compliance objectives, the entity determines which laws and regulations apply to the entity. Management is expected to set objectives that incorporate these requirements. Title 2 CFR § 200.303(a) Internal Controls reads (a) reads as follows: The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Additionally, Compliance and Reporting Guidance, State and Local Fiscal Recovery Funds (10. Reporting.) reads as follows: 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. In addition, where appropriate, your organization needs to establish controls to ensure completion and timely submission of all mandatory performance and/or compliance reporting. See Part 2 of this guidance for a full overview of recipient reporting responsibilities. Further, 2 CFR § 200.329 Monitoring and Reporting Program Performance (c)(1) reads as follows: The non-Federal entity must submit performance reports at the interval required by the Federal awarding agency or pass-through entity to best inform improvements in program outcomes and productivity. Intervals must be no less frequent than annually nor more frequent than quarterly except in unusual circumstances, for example where more frequent reporting is necessary for the effective monitoring of the Federal award or could significantly affect program outcomes. Reports submitted annually by the non-Federal entity and/or pass-through entity must be due no later than 90 calendar days after the reporting period. Reports submitted quarterly or semiannually must be due no later than 30 calendar days after the reporting period. Alternatively, the Federal awarding agency or pass-through entity may require annual reports before the anniversary dates of multiple year Federal awards. The final performance report submitted by the non-Federal entity and/or pass-through entity must be due no later than 120 calendar days after the period of performance end date. A subrecipient must submit to the pass-through entity, no later than 90 calendar days after the period of performance end date, all final performance reports as required by the terms and conditions of the Federal award. See also § 200.344. If a justified request is submitted by a non-Federal entity, the Federal agency may extend the due date for any performance report.
2 CFR § 400.1 gives regulatory effect to the Department of Agriculture for 2 CFR § 200.302(b)(3) which provides that the financial management system of each non-Federal entity must provide for records that sufficiently identify the amount, source and expenditure of funds for federally-funded activities. These records must contain information necessary to identify federal awards, authorizations, obligations, unobligated balances, assets, expenditures, income and interest and must be supported by source documentation. 2 CFR § 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish, document and maintain effective internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 7 CFR §§ 210.7(c), 210.8(c), and 225.9(d)) provide that at a minimum, a claim must include the number of reimbursable meals/snacks served by category and type during the period (generally a month) covered by the claim. All meals/snacks claimed for reimbursement must (a) be of types authorized by the school food authority’s, institution’s, or sponsor’s administering agency; (b) be served to eligible children; and (c) be supported by accurate meal/snack counts and records indicating the number of meals served by category and type. 100% percent of the site claim forms that were prepared by the Nutrition Group and provided to the Treasurer for submission during fiscal year 2025 were not reviewed for accuracy of information before submitting for reimbursement. During the first half of the fiscal year, the School District completed manual counts of snacks served. An over-reimbursement related to snacks in the amount of $179 in 1 month of the 2 months (50%) tested for compliance. This error occurred due to a weakness in internal controls which failed to ensure site claim forms for reimbursable meals and snacks served at each building and submitted to the Ohio Department of Education were entered correctly. The School District should implement policies and procedures to help ensure that monthly site claim forms prepared and provided by the Nutrition Group are reviewed prior to submission to reflect actual counts for reimbursable meals and snacks served.
Program: Impact Aid Federal Assistance Listing Number: 84.041 Federal Agency: U.S. Department of Education Pass-Through Agency: Direct award Grantor Number: Not applicable Questioned Costs: $-0- Type of Finding: Noncompliance (Other Matter), significant deficiency in internal control Compliance Requirement: N. Special Tests and Provisions – Wage Rate Requirements Repeat Finding: Yes. Same as finding 2024-001 and 2023-002. Criteria or Specific Requirement: Federal regulations require that contractors and subcontractors performing work on federally funded construction projects pay laborers and mechanics wages at rates not less than those prevailing on similar projects in the locality. These requirements are established under the Davis-Bacon Act and incorporated into federal grant compliance requirements under 2 CFR Part 200. Adequate monitoring of compliance with these wage requirements is required to ensure that workers are being paid correctly per 29 CFR 5.5 compliance provisions. Per 2 CFR section 200.303(a), a non-Federal entity must establish and maintain effective internal control 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 comply with guidance in “Standards for Internal Control in 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: During our testing for one of 2 contractors that were tested and funded under the Impact Aid program, we noted that the District did not obtain or review certified payroll reports from contractors to verify compliance with federal prevailing wage requirements. As a result, the District could not demonstrate that contractors complied with required wage provisions for the sampled projects. Cause: The District did not have established procedures to ensure that certified payroll documentation was obtained and reviewed for federally funded construction projects. District personnel were not aware that federal wage requirements applied to the project. Effect: Failure to ensure compliance with federal prevailing wage requirements may result in laborers and mechanics being paid less than required wage rates. This noncompliance could result in questioned costs, repayment of federal funds, or other sanctions by the awarding agency. Recommendation: We recommend the District implement policies and procedures to ensure effective monitoring of compliance with Federal wage rate requirements. This includes obtaining required wage determinations prior to project commencement, including wage requirements in contract documents, and collecting certified payroll reports from contractors. Views of Responsible Officials: The District concurs with this recommendation and will review its procedures over compliance with wage rate requirements under the Davis Bacon Act.
Federal Agency: U.S. Department of Agriculture Federal Program Name: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555 Pass-through Agency: Pennsylvania Department of Education Pass-through Entity Number: N/A Federal Award Identification Number and Year: 241PA305N1199, 251PA305N1199 Award Period: 7/1/2024 to 6/30/2025 Compliance Requirement: Reporting Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: Internal Control: Per 2 CFR section 200.303(a), a 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 comply 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 District was unable to provide evidence of independent review and approval for three of three reporting samples tested. Questioned Costs: None Context: The District did not properly review and approve three of three SNP Claim for Reimbursement Summary reports. Cause: The District did not have internal controls established to ensure proper review and approval of the SNP Claim for Reimbursement Summary report. Effect: There is a risk that meals submitted for reimbursement were overstated or understated. Repeat Finding: No Recommendation: We recommend that the District implement procedures to ensure that SNP Claim for Reimbursement Summary reports are independently reviewed and approved prior to submission to Program Electronic Application and Reimbursement System (PEARS). This review should be performed by an individual who is not involved in the preparation of the reports and evidence of the review should be documented. Views of Responsible Officials: The District will implement formal internal control procedures requiring review and documented approval of all SNP Claim for Reimbursement Summary reports prior to submission in PEARS. The following procedures will be implemented: 1. The Director of Food Services will prepare the monthly SNP Claim for Reimbursement Summary report and compile all supporting meal count documentation. 2. Prior to submission, the Administrative Assistant to the Director of Food Services or another designated individual independent of the preparation process will: a. Review the claim for mathematical accuracy; b. Verify meal counts against supporting documentation; c. Confirm claims are submitted within required timelines; and 3. Evidence of the review and approval will be documented through: a. Signature or electronic approval on the reimbursement summary report; and b. Retention of supporting documentation in accordance with federal and state record retention requirements. 4. A written standard operating procedure (SOP) outlining these review and approval responsibilities will be developed and communicated to applicable personnel. 5. The Chief of Finance and Operations will periodically monitor compliance with the procedure to ensure controls remain effective.
U.S. Department of Agriculture 2025-007 Weakness in Internal Controls Over Compliance of Allowable Costs/Cost Principles of Payroll Disbursements Federal Program: Child Nutrition Cluster — USDA Commodities (15.550), School Breakfast Program (10.553), National School Lunch Program (10.555), Summer Food Service Program for Children (10.559) Grant Period: Year Ended June 30, 2025; Pass-through Entity: Louisiana Department of Education Condition: During payroll disbursement control testing and Single Audit compliance procedures, the auditors identified weaknesses in internal controls over compliance of allowable costs/cost principles of payroll disbursements in the Child Nutrition Cluster. Specifically, controls were not sufficient to consistently prevent or detect AESOP schedule mismatches, unsupported payroll master file entries, and timekeeping system interface discrepancies. As a result, minor payroll errors were not identified or corrected on a timely basis and minor improper payments charged to the Child Nutrition Cluster occurred. Criteria: Uniform Guidance requires non‑Federal entities to establish and maintain effective internal control over Federal awards that provides reasonable assurance that the entity is managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award (2 CFR § 200.303(a)). Effective internal controls over compliance of allowable costs/cost principles of payroll disbursements to Federal programs includes controls to ensure employee schedules, payroll master file changes, and time and attendance data are accurate, supported, and appropriately reviewed to prevent or detect improper payments. Cause of Condition: Control testing and Single Audit compliance procedures on payroll disbursements indicated that internal controls were not adequately designed or implemented to ensure compliance with requirements of allowable costs/cost principles that Federal award costs must be allowable, reasonable, and necessary for the performance of the Federal program. Potential Effect of Condition: As a result, the School Board did not have adequate internal controls over compliance related to allowable costs and cost principles for payroll disbursements charged to the Child Nutrition Cluster. Essentially controls were not properly designed and implemented to provide reasonable assurance that payroll expenditures were accurate, allowable, and adequately supported. The identified misstatements included $2.11 related to GAP pay errors and $116.96 of unsupported substitute pay. Although these amounts were individually immaterial, a per‑item projection of the identified errors to the full payroll population of approximately 974 transactions resulted in an estimated maximum projected exposure of approximately $2,800. While this projected amount was determined to be trivial and not expected to result in questioned costs, the control deficiencies increased the risk that improper payroll payments would not be prevented or detected on a timely basis and that unallowable payroll costs could remain charged to Federal programs. Recommendation: Management should design, implement, and maintain effective internal controls over compliance of allowable costs/cost principles of payroll disbursements to Federal programs to provide reasonable assurance that payroll expenditures comply with Uniform Guidance requirements. In addition, management should establish and enforce procedures to ensure employee schedules, payroll master file changes, and time and attendance records are accurate, supported, and appropriately reviewed prior to payroll processing, and that payroll costs charged to the Child Nutrition Cluster represent compensation for actual services performed. Review procedures should be formalized and consistently evidenced through signatures, initials, electronic timestamps, dates, checklists or system audit trails. Management’s Response: Management agrees with the finding and has reviewed the payroll items identified during the audit and has taken corrective action to address schedule discrepancies and unsupported payroll entries. Management has conducted a review of employee schedules within the timekeeping system to ensure alignment with payroll records and has corrected errors identified. Management plans to continue performing periodic reviews of payroll data to identify potential discrepancies and to take corrective action as needed. Management will also evaluate identified payroll discrepancies on a case‑by‑case basis to determine whether recovery or adjustment is appropriate.
2025-002 - Equipment/Real Property Management Federal Program Information: Department of Education – Special Education Cluster (IDEA) CFDA – 84.027/84.173 Criteria: The following CFR(s) apply to this finding: 2 CFR 200.303 Internal Controls; 2 CFR 200.313(d)(1)(2)(3). Condition: During audit procedures, it was identified that the Supervisory Union did not have internal controls in place to ensure that all appropriate equipment and real property management requirements were in place. Cause: Unknown Effect: The Supervisory Union may not be consistently following all appropriate equipment and real property management standards and procedures. There was an instance where the asset purchased equipment did not have a property record and was not recorded in the asset list. Identification of Questioned Costs: None identified. Context: Of the one, and only equipment purchase identified during FY25, there was no property record and it was not recorded on the asset list. Repeat Finding: This is not a repeat finding. Recommendation: It is recommended that the Supervisory Union implements controls to ensure that it follows all appropriate equipment and real property management standards and procedures. We also recommend that the Supervisory Union review its equipment and property policy to ensure that it is updated and complete.
2025-003 - Controls Over Disbursements Federal Program Information: Department of Education - Special Education Cluster (IDEA) CFDA - 84.027/84.173 Department of Education - Child Nutrition Cluster CFDA – 10.553/10.555/10.559 pf/10.582 Criteria: 2 CFR 200.303 Internal Controls Condition: During audit procedures, it was identified that the Supervisory Union did not have internal controls in place to ensure that invoices were properly approved and paid in a timely manner. Cause: Unknown Effect: The Supervisory Union did not always properly approve invoices, could not always locate invoices, and paid invoices beyond the due date. Identification of Questioned Costs: None identified. Context: Between both programs, a total of 43 disbursements were chosen for testing. 11 were adjusting entries. Of the remaining 32, 4 were not paid in a timely manner; 21 were missing either invoices or PO’s or not properly approved. Repeat Finding: This is a repeat finding of 2024-003. Recommendation: It is recommended that the Supervisory Union implement controls to ensure that invoices are managed and paid appropriately. Views of Responsible Officials and Corrective Action Plan: Client agrees with finding, and the unabridged version of their response can be found in the Corrective Action Plan. Please see the Corrective Action Plan issued by the Grand Isle Supervisory Union.
2025-002 – Significant Deficiency – Internal Control over Compliance Program: WIOA Cluster (ALN 17.258; ALN 17.259; ALN 17.278) Criteria: Per 2 CFR 200.303, recipients must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the 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: During our testing of compliance with requirements applicable to major federal programs, we noted that the entity did not have formal, consistently applied review and approval controls over key compliance areas. Specifically, evidence of supervisory review and approval was not consistently documented for compliance-related transactions. As a result, review procedures appear to be informal, inconsistent, or reliant on individual practices rather than standardized, documented controls. Cause: This condition appears to be the result of a lack of internal controls designed to ensure compliance with Uniform Guidance. Effect: The absence of formal and consistently documented review and approval procedures increases the risk that noncompliance with federal program requirements could occur and not be prevented or detected on a timely basis. Recommendation: We recommend that the Organization formalize policies and procedures by developing and documenting standardized procedures for review and approval of key compliance activities across all major federal programs, implement documented review controls, and enhance monitoring and oversight. View of Responsible Officials: Management agrees with the recommendation and has developed a much more stringent review and approval process.
FA 2025-001 Improve Controls over Procurement and Suspension and Debarment Compliance Requirement: Procurement and Suspension and Debarment Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Agriculture Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 10.553 – School Breakfast Program; 10.555 – National School Lunch Program Federal Award Numbers: 255GA324N1199 (Year: 2025) Questioned Costs: $7,536 Description: A review of expenditures charged to the Child Nutrition Cluster revealed that the School District’s internal control procedures were not operating appropriately to ensure that the School District’s procurement and suspension and debarment procedures were followed. Background Information: The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential child care institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and secondary schools and encourages the domestic consumption of nutritious agricultural commodities. CNC funding is granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture, and GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the various CNC programs. CNC funds totaling $2,718,778.68 were expended and reported on the Jeff Davis County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2025. Criteria: As a recipient of federal awards, the School District is required to establish, document, and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.318 – General Procurement Standards state, “(a)… the recipient or subrecipient must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services. These documented procurement procedures must be consistent with State, local, and tribal laws and regulations… (b) Recipients and subrecipients must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders.” In addition, provisions included in the Uniform Guidance, Section 200.320 – Procurement Methods provide guidance for informal procurement methods and state “If simplified acquisition procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources.” Furthermore, Title 2 CFR Section 180.300 states in part that the recipient or subrecipient must “verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM.gov Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person.” Condition: A sample of 40 procurement transactions was randomly selected for testing using a nonstatistical sampling approach. These transactions were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. The following deficiencies were noted: • For twenty expenditures, documentation maintained to support the entity’s verification that the vendors were not suspended or debarred or otherwise excluded from participating in the transaction lacked evidence of supervisory review as required by the School District’s policies and procedures. • The School District could not provide evidence that an adequate number of rate or price quotations were obtained from qualified sources for two small purchase expenditures reviewed. Questioned Costs: Upon testing a sample of $82,497 in procurement transactions, known questioned costs of $7,536 were identified for expenditures that did not follow the School District’s procurement procedures. Using the total population of $1,613,491 in procurement transactions, we project the likely questioned costs to be approximately $147,385. The following Assistance Listing Numbers were affected by known and likely questioned costs: 10.553 and 10.555. Cause: In discussing these deficiencies with the School District, they believe these issues are primarily due to the lack of proper documentation and not following its policies and procedures that govern the procurement process for federal programs. Effect: The School District was not in compliance with the Uniform Guidance and GaDOE guidance. Failure to appropriately implement procedures to address procurement and suspension and debarment compliance requirements exposes the School District to unnecessary risk of error and misuse of federal funds and could result in the expenditure of federal funds with unqualified vendors. In addition, this deficiency could lead to the return of federal funds associated with unallowable expenditures. Recommendation: The School District should evaluate and improve internal control procedures to ensure that required procurement methods are properly identified and followed and required procurement and suspension and debarment documentation is properly identified, safeguarded, and retained. In addition, management should develop a monitoring process to ensure that these procedures are operating appropriately. Views of Responsible Officials: We concur with this finding.
2025-003 Allowable Costs – Payroll, Fringe, and General Disbursements Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Child Care and Development Block Grant Operation of a Child Care Resource Center – Baltimore, Harford, and Cecil Counties; Professional Development/Quality (688) Operation of a Child Care Resource Center – Baltimore, Harford, and Cecil Counties; Infants and Toddlers (689) Specialized Training for Caregivers and Child Care Providers (707) Operation of a Child Care Resource Center - Baltimore, Harford, and Cecil Counties; Professional Development/ Quality (788) Operation of a Child Care Resource Center - Baltimore, Harford, and Cecil Counties; Infants and Toddlers (789) Pass-Through Agencies: Maryland State Department of Education (707) Maryland Family Network (688, 689, 788, 789) Pass-Through Numbers: 2201MDCCDD (688, 689, 707) 2401MDCCDD (788, 789) Award Periods: July 1, 2023 – September 30, 2024 (688, 689) August 15, 2022 – June 30, 2025 (707) July 1, 2024 – June 30, 2025 (788, 789) Type of Finding: Material Weakness in Internal Control over Compliance and Material Non-Compliance Criteria: Recipients of federal funds are required to establish and maintain effective internal controls over federal funds received, per 2 CFR section 200.303. Allowable costs must be approved by the awarding agency (2 CFR section 200.407) and necessary and reasonable for the performance of the federal award and allocable under the principles of 2 CFR, Subpart E. Additionally, costs must be adequately documented. Condition: Direct costs incurred were allocated through journal entries to the grant without support of an allocation methodology. Management was unable to provide an understanding of how to trace the allocated amounts to a consistent methodology or to original source documentation. Additionally, credit card costs did not have proper evidence of approval maintained. Lastly, evidence of review for time and effort was not consistently maintained and could not be provided to support selections made. Context: Of the general disbursement population, $44,115 general disbursements were booked via unsupported journal entry (allocated). Of the payroll and fringe benefit disbursement population, $21,319 were booked via unsupported journal entry (allocated). Additionally, one out of one credit card transactions selected did not have evidence of approval. Lastly, forty out of forty payroll transactions tested did not have proper evidence of the review for time and effort. Questioned Costs: $66,995 Cause: Internal controls surrounding allocations were not properly designed and implemented and an audit trail for allocation journal entries/source documentation was not maintained. Effect: The lack of evidence for audit trail and lack of effective internal controls over allocations provides an opportunity for noncompliance and errors. Repeat Finding: Yes; prior year finding 2024-003 Recommendation: We recommend that the Organization design, implement and monitor internal controls over allocations as well as maintain source documentation to support amounts charged to the grant. Views of Responsible Officials of the Auditee: There is no disagreement with the audit finding.
Period of Performance Federal Agency: U.S. Department of Health and Human Services Operation of a Child Care Resource Center – Baltimore, Harford and Cecil Counties; Professional Development/Quality (688) Specialized Training for Caregivers and Child Care Providers (707) Operation of a Child Care Resource Center - Baltimore, Harford and Cecil Counties; Professional Development/ Quality (788) Operation of a Child Care Resource Center - Baltimore, Harford and Cecil Counties; Infants and Toddlers (789) Assistance Listing Number: 93.575 Pass-Through Agencies: Maryland State Department of Education (707) Maryland Family Network (688, 788, 789) Pass-Through Numbers: 2201MDCCDD (688, 707) 2401MDCCDD (788, 789) Award Periods: July 1, 2023 – September 30, 2024 (688) August 15, 2022 – June 30, 2025 (707) July 1, 2024 – June 30, 2025 (788, 789) Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria: Recipients of federal funds are required to establish and maintain effective internal controls over federal funds received, per 2 CFR section 200.303. Additionally, charges must be incurred during the approved period of performance, per 2 CFR 200.309. Condition: The Organization did not maintain evidence to support approval of payroll allocation journal entries. Additionally, one transaction did not occur within the period of performance. Context: Auditors tested five payroll journal entry allocations out of a total sample of 75 period of performance transactions, and all lacked evidence of appropriate approval to support that the disbursements were recorded within the proper period of performance. Additionally, one out of 75 transactions did not occur within the period of performance. Questioned Costs: None Cause: Internal controls over the approval of payroll journal entries and general disbursements were not adequately designed and implemented to ensure supporting documentation was maintained. Effect: The absence of effective internal controls over period of performance increases the risk of noncompliance with federal award requirements and the potential for errors. Repeat Finding: Yes; prior year finding 2024-004 Recommendation: We recommend that the Organization design, implement, and monitor effective internal controls over credit card disbursements and maintain appropriate documentation evidencing review and approval to ensure compliance with period of performance requirements. Views of Responsible Officials of the Auditee: There is no disagreement with the audit finding.
FINDING 2025-003 Subject: Special Education Cluster (IDEA) - Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Program: Special Education Grants to States Assistance Listings Number: 84.027 Federal Award Numbers and Years (or Other identifying Numbers): 22611-133-PN01, 23611-133-PN01, 24611-133-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 19 LEWIS CASS SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The internal control system in place at the School Corporation was not effective in ensuring compliance with requirements related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Procurement - Small Purchases Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a nonfederal entity. As Indiana Code has set a more restrictive threshold of $150,000, the informal procurement method is permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds: micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. A total of two vendors were determined to require small purchase procedures, totaling $123,078. For the two vendors tested, the School Corporation did not obtain price or rate quotations. Additionally, documentation detailing the history of procurement, which must include the reason for the procurement method used, was absent for those two vendors. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such 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 (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the System for Award Management (SAM) Excluded Parties List System (EPLS), collecting a certification from that person or entity, or adding a clause or condition to the covered transaction with that person or entity. A population of two covered transactions for goods or services totaling $123,078, both of which equaled or exceeded the $25,000 threshold paid from the special education funds during the audit period, were identified and selected for testing. For both transactions, the School Corporation did not verify that the vendor was not suspended, debarred, or otherwise excluded from or eligible for participation in federal assistance programs or activities prior to issuing payment. The lack of effective internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 20 LEWIS CASS SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.214 states: "Non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases— (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Cause The School Corporation did not have adequate internal controls to ensure compliance with procurement and suspension and debarment requirements. Effect The lack of an effective internal control system enabled material noncompliance to occur and remain undetected. Noncompliance with the Procurement and Suspension and Debarment compliance requirement could enable small purchases made by the School Corporation to be uncompetitive and could lead to contracting with vendors who are suspended or debarred from receiving federal grant funding. INDIANA STATE BOARD OF ACCOUNTS 21 LEWIS CASS SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the management of the School Corporation develop policies and procedures to ensure there are appropriate procurement procedures for goods and services and contractors and subrecipients, as appropriate, are verified to not be suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding 2025-003 - Internal Control Deficiencies Over Financial Reporting and Audit Readiness (Significant Deficiency) Information on Federal Programs – U.S. Department of Health and Human Services — Health Resources and Services Administration (HRSA), FALN 93.224 Health Center Program (and other HRSA programs, as applicable) Compliance Requirement Financial Management / Reporting (2 CFR 200.302; 2 CFR 200.303) Criteria – 1. Under 2 CFR 200.302 (Financial Management), non-Federal entities must maintain financial records that: • Accurately reflect financial transactions, and • Are supported by source documentation sufficient for audit purposes. 2. Under 2 CFR 200.303 (Internal Controls), non-Federal entities must establish and maintain effective internal controls to provide reasonable assurance that: • Financial reporting is reliable, and • Federal awards are managed in compliance with applicable requirements. Federal awarding agencies, including HRSA, and auditing standards further expect timely preparation of financial statements and adequate documentation supporting material account balances. Condition – During the audit of the financial statements and the Single Audit for the year ended June 30, 2025, we identified deficiencies in the Organization’s internal controls related to financial reporting timeliness, documentation, and audit readiness. Specifically: • The year-end financial close process was significantly delayed, with the fiscal year ended June 30, 2025 not substantially completed until May 2026. • Turnover in key accounting and finance personnel during the audit period adversely affected continuity in financial reporting and audit preparation. • The Organization experienced difficulty reconciling and substantiating beginning balances carried forward from the predecessor auditor, including limited supporting documentation. • The Organization was unable to timely provide sufficient supporting documentation for: - Property and equipment balances, including historical cost, additions, and accumulated depreciation, and - Lease accounting balances, including lease amortization schedules and related calculations. • As a result, audit completion required multiple follow-up requests and alternative audit procedures to obtain sufficient audit evidence. Cause – The deficiencies appear to be the result of a combination of factors, including: • Turnover in key accounting personnel, resulting in loss of institutional knowledge. • Inadequate transition documentation during the change in audit firms, leading to insufficient support for opening balances. • Lack of fully documented policies and procedures governing: - Fixed asset accounting and reconciliation, - Lease accounting and amortization tracking, and - Period-end financial close processes. • Insufficient supervisory review controls to ensure timely reconciliation and documentation of significant balances. Effect – These deficiencies increase the risk that: • Financial information used to support federal awards may be incomplete, inaccurate, or unsupported. • Audit completion timelines may be significantly delayed, increasing administrative burden and audit costs. • Management’s ability to rely on timely financial information for compliance and decision-making may be impaired. Auditor’s Perspective – From the auditor’s perspective, these deficiencies affected audit efficiency and timeliness, but did not prevent the auditor from ultimately obtaining sufficient and appropriate audit evidence to support the financial statements and the Schedule of Expenditures of Federal and State Grant Awards. No material misstatements were identified in the financial statements or in federal award amounts reported, and no questioned costs were noted. Accordingly, the deficiencies relate primarily to audit readiness, documentation, and governance processes, rather than a systemic failure of controls over financial reporting or federal compliance. Based on the nature of the deficiencies and the audit evidence obtained, the finding is appropriately classified as a significant deficiency and does not rise to the level of a material weakness. Questioned Costs – None. Auditor’s Recommendations – From an internal control and audit-readiness perspective, we recommend that management strengthen controls over financial reporting and documentation by implementing the following actions: • Formal Financial Close Process - Implement a documented monthly and year-end financial close process that includes defined timelines, assigned responsibilities, and required supervisory review and approval. • Fixed Asset and Lease Accounting Support - Establish and maintain complete supporting schedules for material asset-related balances, including: - A fixed asset subsidiary ledger reconciled to the general ledger, and - Lease accounting and amortization schedules prepared and reviewed in accordance with applicable accounting standards. • Balance-Sheet Reconciliations - Perform and document timely reconciliations of all significant balance-sheet accounts, including explicit reconciliation of beginning balances following changes in auditors or accounting personnel. • Documentation Retention Practices - Enhance documentation retention procedures to ensure that all material balances are supported by verifiable source records that are readily available for audit and management review. • Personnel and Auditor Transition Procedures - Develop and implement formal transition procedures for changes in key accounting personnel or external auditors to promote continuity of financial records and institutional knowledge. • Supervisory Review Controls - Strengthen supervisory review controls by requiring documented evidence of review and approval of account reconciliations and key supporting schedules. • Training and Technical Expertise Provide targeted internal training and/or obtain external technical support, as needed, to ensure adequate expertise in complex accounting areas such as fixed assets and leases. Implementation of these actions is expected to improve the timeliness and reliability of financial reporting, reduce audit delays, and strengthen compliance with Uniform Guidance and HRSA financial-management expectations. Views of Responsible Officials – Management concurs with the finding. OIC experienced turnover in key finance positions, delayed year-end close activities, and documentation challenges during the auditor transition; management will strengthen close, documentation, and audit readiness controls.
Finding 2025-006 Revenue Recognition, Contractual Allowances, Accounts Receivable, and Billing System Reconciliations (Material Weakness) Information on Federal Programs – HHS–HRSA Section 330 Health Center Program, June 30, 2025; U.S. Department of Labor Workforce Development Awards, June 30, 2025 Criteria – Under 2 CFR § 200.302 and § 200.303, non-Federal entities must maintain financial management systems and internal controls that provide reasonable assurance that federal funds are properly managed, financial results are accurately reported, and assets are safeguarded. These controls must align with GAAP and recognized internal control frameworks (COSO). GAAP (ASC 606) requires patient service revenue to be recognized at net realizable value, reflecting contractual allowances, sliding-fee discounts, and implicit price concessions at the time revenue is recorded. Accounts receivable must be evaluated for collectability, supported by an allowance for doubtful accounts, and written off only through documented and approved processes. HRSA Section 330 financial management requirements further require health centers to maintain accurate billing, accounts receivable, and reconciliation processes to support fiscal integrity and compliance with federal award conditions. Condition – OIC’s revenue-cycle processes exhibit multiple, interrelated control deficiencies that collectively impair the accuracy and reliability of patient service revenue and accounts receivable reporting: 1. Revenue Recognition Methodology • Patient revenue recorded in the general ledger is based on an estimated flat per-encounter rate multiplied by total encounters, rather than at net realizable value. • Contractual allowances, payer-specific discounts, and implicit price concessions are not estimated or recognized at the time revenue is initially recorded. 2. Accounts Receivable Valuation and Write-Off Controls • Patient receivables are written off within the EPIC billing system without documented review of collectability, allowance analysis, or documented approval by Executive Management. • Write-offs processed in EPIC do not consistently result in corresponding adjustments to general ledger accounts receivable. 3. Billing System and General Ledger Reconciliations • EPIC and eClinicalWorks billing systems are not integrated with the Sage MIP general ledger. • Patient revenue and accounts receivable balances are recorded through manual journal entries. • Formal, consistent, and documented reconciliations between billing system activity (gross charges, contractual adjustments, collections) and the general ledger are not performed as part of the monthly close. 4. Revenue Cycle Oversight and Monitoring • Patient statements are generated only when a patient balance is due, limiting an independent verification mechanism over gross charges and third-party payment processing. • Given the absence of system integration and reliance on manual processes, compensating oversight controls are insufficient to mitigate the combined risks noted above. Cause – Management has not implemented a comprehensive, GAAP-aligned revenue-cycle control framework that integrates revenue recognition, contractual allowance estimation, accounts receivable management, billing system reconciliation, and write-off governance. System limitations, reliance on historical estimation practices, and incomplete documentation of review and approval controls have contributed to the deficiencies. Effect – The combined effect of these deficiencies is an increased risk that patient service revenue and accounts receivable are materially overstated and not reflective of amounts expected to be collected. This condition: • Impairs the reliability and auditability of financial statements • Weakens internal control over federal program financial reporting • Increases the likelihood that material misstatements could occur and not be prevented or detected timely • Creates elevated compliance risk under Uniform Guidance, HRSA Section 330 financial management standards, and Single Audit reporting requirements Given the materiality of patient service revenue and accounts receivable to the financial statements, this condition constitutes a material weakness in internal control over financial reporting. Perspective – This material weakness reflects pervasive deficiencies across OIC’s revenue cycle that affect the accuracy, integrity, and auditability of patient service revenue and accounts receivable, which represent significant components of the financial statements and federal program reporting. The absence of GAAP-aligned revenue recognition, effective accounts receivable oversight, and reliable reconciliation between billing systems and the general ledger limits management’s and the Board’s ability to rely on reported financial results for decision-making and program oversight. Given the reliance on federal funding, particularly under the HRSA Section 330 Health Center Program, these deficiencies elevate compliance risk under Uniform Guidance and increase exposure to adverse Single Audit outcomes if not timely remediated. The Board and Audit Committee should view this matter as a high-priority governance issue requiring active oversight of management’s remediation efforts, including clear timelines, accountability, and validation that revised controls are designed and operating effectively. Prompt and sustained corrective action is necessary to restore confidence in financial reporting, demonstrate stewardship of federal resources, and reduce the risk of recurring audit findings. Questioned Costs – None identified. Recommendation – Management should implement a coordinated remediation strategy to strengthen the revenue cycle and restore compliance with GAAP and Uniform Guidance requirements. At a minimum, management should: • Discontinue or substantially revise the flat per-encounter revenue estimation methodology. • Record patient revenue at net realizable value at initial recognition, including estimated contractual allowances and implicit price concessions. 1. Accounts Receivable and Write-Off Governance • Perform documented monthly reviews of accounts receivable aging and collectability. • Maintain and review an allowance for doubtful accounts prior to any write-off activity. • Require documented CFO or Executive Management approval for all write-offs impacting the general ledger. • Ensure all billing-system write-offs are fully reconciled to the general ledger. 2. Billing System and General Ledger Reconciliations • Evaluate the feasibility of implementing automated interfaces between EPIC, eClinicalWorks, and the general ledger. • Establish formal, timely, and documented reconciliations between billing system reports and general ledger balances, reviewed by personnel independent of preparation. 3. Oversight and Compensating Controls • Enhance revenue-cycle oversight through expanded management review reports, reconciliation procedures, or other compensating controls that provide visibility into gross charges, adjustments, collections, and zero-balance accounts. 4. Oversight and Compensating Controls • Enhance revenue-cycle oversight through expanded management review reports, reconciliation procedures, or other compensating controls that provide visibility into gross charges, adjustments, collections, and zero-balance accounts. Implementing these actions will improve financial reporting accuracy, strengthen internal control over federal programs, and reduce audit and compliance risk. View of Responsible Officials – Management concurs with the finding. OIC will strengthen revenue cycle controls to improve patient service revenue recognition, accounts receivable valuation, write-off governance, and billing system reconciliations.
Failure to comply with the grant agreement's terms and applicable regulations: 2 CFR section 200.512(a) requires the reporting package and data collection form be submitted to the Federal Audit Clearinghouse the earlier of 30 calendar days after the reports are received from auditors or nine months after the end of the audit period. Further, 2 CFR 200.303 requires the Organization to establish and maintain effective internal control over compliance for timely preparation and submission of required reports.
Federal Agency: U.S. Department of Education Federal Program Title: Student Financial Assistance Cluster ALN Numbers: 84.268, 84.063, 84.007 Federal Award Identification Number and Year: P268K257727, P063P247727, P007A249116 Award Period: July 1, 2024 - June 30, 2025 Type of Finding: Material Weakness in Internal Control Over Compliance Criteria or specific requirement: 2 CFR part 200 section 200.303 requires that non-Federal entities receiving federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the federal award. The Code of federal Regulations, 34 CFR 688.164, requires any Title IV federal funds disbursed to a student or parent that are not received or negotiated must be returned to the appropriate federal financial aid program no later than 240 days after the check or electronic fund transfer (EFT) was issued. If a check or an EFT is returned, the College may make additional attempts to deliver the funds, provided that those attempts are made no later than 45 days after the funds were returned or rejected. In cases where the College does not make another attempt, the funds must be returned before the end of the initial 45-day period. The College must cease all attempts to disburse the funds and return them no later than 240 days after the date it issued the first check. Unclaimed Title IV FSA funds must not escheat to the state, revert to the College, or be transferred to any other third party. Condition: The College does not have a control in place to specifically monitor outstanding Title IV federal funded checks issued to students. This absence of oversight prevents the College from ensuring that these funds are returned within 240 days of check issuance. Questioned Costs: N/A. Context: During our testing, it was noted the College did not have a control in place to ensure the return of outstanding Title IV federally funded checks that were old and needed to be returned to the U.S. Department of Education prior to 240 days after issuance. Cause: The College did not have a control in place to ensure outstanding Title IV checks over 240 days are sent back to the Department of Education. Effect: The College is not in compliance with Department of Education requirements to establish internal controls over outstanding checks and refunds of disbursements to students. Repeat Finding: Yes, 2024-003. Recommendation: We recommend the College review the requirements and implement a control to specifically monitor the outstanding Title IV funded checks. Views of responsible officials: There is no disagreement with the finding.
Federal Agency: U.S. Department of Education Federal Program Title: Student Financial Assistance Cluster ALN Numbers: 84.268, 84.063, 84.007, 84.033 Federal Award Identification Number and Year: P268K257727, P063P247727, P007A249116, P033A249116 Award Period: July 1, 2024 - June 30, 2025 Type of Finding: Material Weakness in Internal Control Over Compliance; Compliance, Other Matter Criteria or specific requirement: The Code of Federal Regulations, 34 CFR 682.610, states that institutions must accurately report the enrollment status of all students regardless of whether they receive aid from the institution or not. This includes the enrollment effective date and related enrollment status, which must be reporting for both the Campus-Level and the Program-Level, as well as the program begin date. Changes to said status are required to be reported within 30 days of becoming aware of the status change, or with the next scheduled transmission of statuses if the scheduled transmission is within 60 days. In addition, Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Condition: The College did not properly report student enrollment changes for students who received federal student aid to the National Student Loan Data System (NSLDS). Additionally, the College did not have a control process in place to ensure timely and accurate reporting. Questioned Costs: None. Context: In our sample of 60 students selected for National Student Loan Data System (NSLDS) enrollment reporting testing, we identified 7 students had campus enrollment status reported incorrectly, 15 students had an enrollment effective date that did not match NSLDS, 60 students were reported past the 60-day reporting timeframe, 60 students were not certified every 60 days, 5 students where NSLDS Program enrollment effective date did not match the institutions records, 4 students where the students NSLDS Program enrollment status did not match the institutions records. Additionally, there was no observable review process to ensure timely and accurate reporting to NSLDS. Cause: The College did not have proper controls or procedures in place to verify student’s status in NSLDS matched the institution’s records in a timely manner. Effect: The College was not in compliance with the requirements to properly report student enrollment data correctly. Incorrect dates submitted to NSLDS may be used to determine the grace period for the repayment and interest of outstanding Title IV student loans. Repeat Finding: Yes. 2024-002. Recommendation: We recommend the College review current processes and procedures for NSLDS enrollment reporting and implement an internal control that ensures reporting is both timely and accurate as well as retaining evidence of this control being performed. Views of responsible officials: There is no disagreement with the finding.
Federal Agency: U.S. Department of Education Federal Program Title: Student Financial Assistance Cluster ALN Numbers: 84.268, 84.063, 84.007, 84.033 Federal Award Identification Number and Year: P268K257727, P063P247727, P007A249116, P033A249116 Award Period: July 1, 2024 - June 30, 2025 Type of Finding: Material Weakness in Internal Control Over Compliance Criteria or specific requirement: Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Condition: The College does not review the work or internal control reports of its third-party servicer who performs its monthly reconciliations for Title IV funds. Questioned Costs: N/A. Context: The College uses a third-party to perform its monthly reconciliations. The College did not review internal controls reports, such as SOC1 reports or perform other documented reviews of the third-party servicers work. Cause: The College did not have a control in place to review the controls and accuracy of the thirdparty servicers work. Effect: The College is not in compliance with Department of Education requirements to establish internal controls over the direct loan, Pell, FSEOG, and FWS reconciliations. Repeat Finding: Yes, 2024-004. Recommendation: We recommend the College review internal control reports and implement review controls for work performed by third-party servicers. Views of responsible officials: There is no disagreement with the finding.
Federal Agency: U.S. Department of Education Federal Program Title: Student Financial Assistance Cluster ALN Numbers: 84.268, 84.063, 84.007, 84.033 Federal Award Identification Number and Year: P268K257727, P063P247727, P007A249116, P033A249116 Award Period: July 1, 2024 - June 30, 2025 Type of Finding: Significant Deficiency in Internal Control Over Compliance; Compliance, Other Matter Criteria or specific requirement: 34 CFR 668.22(a)(1) states that when a recipient of Title IV grant or loan assistance withdraws from an institution during a period of enrollment that the recipient began attendance in, the institution must determine the amount of Title IV assistance that the student earned in accordance with 34 CFR 668.22(e) which states that the calculation to determine this is equal to the percentage of the period of enrollment that the student completed as of the withdrawal date if this date occurs before completion of 60% of the period of enrollment. The amount unearned by the student is the complement of this percentage and is required to be returned as soon as possible but no later than 45 days after the date of the institution’s determination that the student withdrew as described in 34 CFR 668.22(j)(1). The withdrawal date is the date by which the student began the withdrawal process or provided official notification to the institution of intent to withdraw. If the student ceased attendance without providing notification to the institution the midpoint of the period of enrollment should be used. If the student’s ceasing attendance is due to illness, accident, or other circumstance beyond the students control the withdrawal date is date the institution becomes aware of these circumstances, as described in 668.22(c). Further (j)(2) states an institution not required to take attendance must determine the withdraw date for students who withdraw without providing notification to the institution no later than 30 days after the end of the earlier of the period of enrollment, academic year in which withdrawal occurred, or education program for which the student withdrew. Additionally, per 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain effective internal controls designed to reasonably ensure compliance with federal laws, regulations, and program requirements related to these awards. Condition: The College did not accurately calculate Return of Title IV (R2T4) calculations. The College also did not maintain documentation of the internal controls to ensure the R2T4 process complied with federal regulations and guidelines. Questioned Costs: $5,458. Context: During our testing, it was noted out of our sample of 15, 2 students R2T4 calculation was not performed or not mechanically performed correctly. Additionally, the College does not have a formal review process in place to ensure compliance with federal laws, regulations, and program compliance requirements. Cause: The College does not have proper procedures in place to ensure R2T4 calculations are performed accurately and did not maintain documentation of the controls in place to ensure compliance with federal laws, regulation and program compliance requirements over R2T4. Effect: Failure to properly calculate R2T4 could result in the student returning an incorrect amount of aid. Further the lack of evidence of an internal control in place to ensure compliance with federal requirements could result in errors going undetected by the College. Repeat Finding: Yes, 2024-005. Recommendation: We recommend the College review its current procedures for Title IV funds and implement a control that prevents and detects errors in this process. We also recommend the College maintain evidence of the formal review process that ensures Return of Title IV calculations are being performed timely and correctly to minimize the likelihood that errors may go undetected and not corrected in a timely manner. Views of responsible officials: There is no disagreement with the finding.
Federal Agency: U.S. Department of Education Federal Program Title: Student Financial Assistance Cluster ALN Numbers: 84.268, 84.063, 84.007, 84.033 Federal Award Identification Number and Year: P268K257727, P063P247727, P007A249116, P033A249116 Award Period: July 1, 2024 - June 30, 2025 Type of Finding: Material Weakness in Internal Control Over Compliance; Compliance, Other Matters Criteria or specific requirement: The Code of Federal Regulations (34 CFR § 682.604) states a school must ensure that exit counseling is conducted with each Stafford Loan borrower and graduate or professional student PLUS Loan borrower either in person, by audiovisual presentation, or by interactive electronic means. In each case, the school must ensure that this counseling is conducted shortly before the student borrower ceases at least half-time study at the school, and that an individual with expertise in the title IV programs is reasonably available shortly after the counseling to answer the student borrower's questions. As an alternative, in the case of a student borrower enrolled in a correspondence program or a study-abroad program that the home institution approves for credit, written counseling materials may be provided by mail within 30 days after the student borrower completes the program. If a student borrower withdraws from school without the school's prior knowledge or fails to complete an exit counseling session as required, the school must, within 30 days after learning that the student borrower has withdrawn from school or failed to complete the exit counseling as required, ensure that exit counseling is provided through interactive electronic means, by mailing written counseling materials to the student borrower at the student borrower's last known address, or by sending written counseling materials to an email address provided by the student borrower that is not an email address associated with the school sending the counseling materials. Additionally, uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Condition: The College did not send exit counseling notifications to students who graduated or withdrew during the fiscal year. Questioned Costs: None Context: During our eligibility testing, it was noted 6 of 6 students who were in our eligibility sample and either graduated or withdrew did not receive exit counseling notifications. Cause: The College did have a process within its system to send out exit counseling notifications, but it was not set up properly and students were not being notified of exit counseling requirements. The College did not have proper controls in place ensure exit counseling notifications were being sent out. Effect: The College is not in compliance with Department of Education requirements over exit counseling. Repeat Finding: No. Recommendation: We recommend the College changes its process and controls to ensure exit counseling emails are sent to graduate/withdraw students throughout the year. Views of responsible officials: There is no disagreement with the finding.
Federal Agency: U.S. Department of Education Federal Program Title: Student Financial Assistance Cluster ALN Numbers: 84.268, 84.063, 84.007, 84.033 Federal Award Identification Number and Year: P268K257727, P063P247727, P007A249116, P033A249116 Award Period: July 1, 2024 - June 30, 2025 Type of Finding: Significant Deficiency in Internal Control Over Compliance; Compliance, Other Matter Criteria or specific requirement: The Code of Federal Regulations (34 CFR § 668.34(a)) requires institutions to establish a reasonable satisfactory academic progress (SAP) policy for determining whether an otherwise eligible student is making satisfactory academic progress in his or her educational program and may receive assistance under Title IV, HEA programs. Per 2 CFR 200.303, nonfederal entities receiving federal awards must establish and maintain effective internal control designed to reasonably ensure compliance with federal laws, regulations, and the terms and conditions of the award. Condition: The College did not properly identify students on satisfactory academic progress (SAP) suspension, resulting in disbursement of aid to ineligible students. Questioned Costs: $5,530 Context: During our testing of 60 students, we identified 4 students who were not meeting Satisfactory Academic Progress (SAP) requirements and were not placed on SAP suspension and received aid they were ineligible for. Cause: The college does not have a proper process to ensure students not meeting SAP requirements are not disbursed aid. Effect: Ineligible students received Title IV funds. Repeat Finding: 2024-006. Recommendation: We recommend that the College review its processes and internal controls related to SAP and ensure procedures are in place to ensure students who are not meeting SAP requirements are properly identified and disbursed aid in accordance with the institutions SAP policy. Views of responsible officials: There is no disagreement with the finding.
Criteria or Specific Requirement According to §200.303 Internal Controls of 2 CFR Part 200, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition and Context During our testing, we noted the Organization was unable to provide documentation to support management review and approval of the eight drawdown requests selected for testing prior to the drawdowns occurring. Effect The incorrect amount of federal funds may be requested to be drawn down. Questioned Costs None identified. Cause Management Oversight. Drawdowns were prepared and submitted without secondary review. Recommendation We recommend the Organization to review internal controls in regards to the approval of federal fund drawdown requests. Views of Responsible Officials The Organization is in agreement with finding. The control issue was due to turnover in finance staff during fiscal year 2025. Under the direction of the Organization’s new CFO, the following revised procedures for cash management have been implemented for fiscal year 2026: • Payroll Documentation: A staff accountant or the controller will compile payroll expense details along with supporting documentation for each drawdown. • Review and Approval: This documentation is submitted to the CFO for review prior to any fund transfer. • Drawdown Execution: Upon approval, the CFO will initiate the drawdown from PMS. • Frequency: Drawdowns are processed on a biweekly basis and reflect expenses from the preceding payroll cycle. Upon completion of the drawdown, the CFO will save a copy of the drawdown request to the internal drive. • This drawdown receipt is reviewed by a second staff member, either the controller or senior accountant. • Drawdowns are also reviewed during monthly bank reconciliations.
Finding 2025-004: Reportable finding considered a material weakness – Review and approval of expenses Program name: WIOA Cluster Assistance Listing: 17.258 Federal awarding agency: U.S. Department of Labor Pass-through entity: Maryland State Department of Labor Award identification number: P56-MG-PY25-A Award Years: 2024/2025 Criteria: Under 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: During our review of the detailed expenses charged to the federal award, we noted certain expense reimbursements with the description “deduct from reimbursement.” These items were employees personal credit card transactions that should not have been included in the expense reimbursements, however, we noted two additional transactions with similar descriptions that were reimbursed to the employee and charged to the federal award. The three transactions totaled $46. Cause: The Organization does have a process and controls in place to identify and prevent such occurrences, however, there was a breakdown in internal controls and these transactions were not identified during the review and approval process. Effect: Unallowable expenses were charged to the award. An employee was reimbursed for personal credit card expenses and these transactions were charged to the federal awards. Without sufficient review of expense details additional unallowable costs could be charged to the award. Repeat finding: This is not a repeat finding. Questioned costs: Known questioned costs are $46. Perspective: These transactions were identified in the process of determining the amount of further noncompliance due to other noncompliance issues noted during the audit. The issue appears to be isolated to these transactions. No other instances of improper reimbursement were found during our testing. Overall expense reimbursements to the award are not significant so material noncompliance or likely questioned costs are unlikely. Recommendation: We suggest that the Organization review and update internal controls to ensure that similar expenses do not get charged to the federal awards in the future. As part of the updated internal controls, employees performing the reviews should understand the importance of the review process and trained on allowable costs principles addressed in 2 CFR Part 200.401. Management’s response and corrective action plan (unaudited): See corrective action plan.
2025-002 Eligibility — Temporary Assistance for Needy Families and Emergency Solutions Grants Program Federal agency: U.S. Department of Health and Human Services (TANF); U.S. Department of Housing and Urban Development (ESG). Assistance Listings: 93.558 and 14.231. Federal award numbers were not available; pass-through entity identifying numbers: TANF (Adams County); DOLA DOH ESG, DOLA DOH HSP, DOLA DOH NS2G, DOLA DOH HRP, and DOLA DOH HPAP (State of Colorado); Encampment Resolution (Adams County). Award year: July 1, 2024 through June 30, 2025. Pass-through entities: Adams County (TANF and ESG); State of Colorado, Department of Local Affairs, Division of Housing (ESG). Federal expenditures: $1,079,200 (TANF) and $984,865 (ESG). Compliance requirement: Eligibility. Type of finding: material weakness in internal control over compliance. Repeat finding: Yes - prior-year finding 2024-02. Condition: During our audit of the Temporary Assistance for Needy Families (TANF) program (Assistance Listing 93.558) and the Emergency Solutions Grants Program (Assistance Listing 14.231) for the year ended June 30, 2025, it was noted that the Organization did not maintain adequate supporting documentation for determining client eligibility. Specifically, of the 40 selections tested, the Organization was unable to provide documentation supporting income determination for 1 selection, and documentation supporting United States citizenship or qualified alien status was missing for two selections. Our sample was not intended to be, and was not, a statistically valid sample. Criteria: In accordance with TANF program requirements and 2 CFR § 200.303 (internal controls), recipients must maintain sufficient records to support eligibility determinations. Adequate supporting documentation is essential to ensure compliance with federal guidelines and to prevent improper payments. Cause: The Organization administers the Family Shelter program, which serves individuals who are often unable to provide conventional source documentation supporting income or citizenship status because they are homeless or otherwise without typical identifying records. In those circumstances, the Organization's practice is to obtain a signed statement from the applicant attesting to homelessness, lack of income, or other eligibility criteria in lieu of source documentation. The Organization has a formalized practice through the required client file checklist and written policy requiring case managers to retain either source documentation or a signed self-attestation for each eligibility attribute in the individual client file. The policy was not adhered to by an employee and was not discovered by the quality/compliance control. As a result, for the items tested, neither source documentation nor a signed attestation was retained. Effect: The Organization is unable to demonstrate, through documentation retained in the individual client file, that each eligibility determination was supported by either source documentation or a signed self-attestation. The absence of retained eligibility documentation means that the Organization's internal control cannot be relied upon to ensure that benefits are provided only to eligible TANF program participants and hinders the Organization's ability to demonstrate compliance during federal or pass-through entity monitoring reviews, increasing the risk that material noncompliance with the eligibility compliance requirement could occur without timely detection. Questioned Costs None. No questioned costs are reported because the condition relates to the retention of eligibility documentation rather than to payments to known ineligible participants. Eligibility determinations were performed at intake and signed self-attestation forms were obtained in accordance with the Organization's practice; however, the completed forms were not retained in the individual client files. The audit did not identify any payments to participants determined to be ineligible. Recommendation We recommend the Organization (a) develop and implement a written policy and procedure requiring case managers, at the time of intake, to obtain and retain in the individual client file documentation supporting each TANF eligibility attribute - including income determination and U.S. citizenship or qualified alien status; the policy should expressly permit a signed self-attestation from the client to serve as the supporting documentation when, due to homelessness or other circumstances, conventional source documentation cannot reasonably be obtained; (b) provide periodic training to intake staff on the documentation requirements and acceptable forms of evidence; and (c) implement periodic supervisory review of completed intake files to confirm compliance with the documented retention policy. Management’s Response See corrective action plan.
2025-003 Expenditure Approval — Temporary Assistance for Needy Families and Emergency Solutions Grants Program Federal agency: U.S. Department of Health and Human Services (TANF); U.S. Department of Housing and Urban Development (ESG). Assistance Listings: 93.558 and 14.231. Federal award numbers were not available; pass-through entity identifying numbers: TANF (Adams County); DOLA DOH ESG, DOLA DOH HSP, DOLA DOH NS2G, DOLA DOH HRP, and DOLA DOH HPAP (State of Colorado); Encampment Resolution (Adams County). Award year: July 1, 2024 through June 30, 2025. Pass-through entities: Adams County (TANF and ESG); State of Colorado, Department of Local Affairs, Division of Housing (ESG). Federal expenditures: $1,079,200 (TANF) and $984,865 (ESG). Compliance requirement: Allowable costs/cost principles. Type of finding: material weakness in internal control over compliance. Repeat finding: No. Condition: During our audit of the Temporary Assistance for Needy Families (TANF) program (Assistance Listing 93.558) and the Emergency Solutions Grants (ESG) program (Assistance Listing 14.231) for the year ended June 30, 2025, it was noted that the Organization did not consistently follow its established policies and procedures requiring management approval prior to the disbursement of program expenditures. Specifically, 26 of the 80 expenditures tested were processed without evidence of the required management approval in accordance with the Organization's documented policies and procedures. Our sample was not intended to be, and was not, a statistically valid sample. Criteria: In accordance with 2 CFR § 200.303, non-federal entities are required to establish and follow internal controls over federal programs that provide reasonable assurance of compliance with federal statutes, regulations, and the terms and conditions of federal awards. The Organization's internal policies require management approval prior to the disbursement of program-related expenditures. Cause: The Organization's documented control requires management approval of each disbursement prior to payment; however, approvals are commonly obtained verbally and there is no standard approval form retained with each disbursement package. As a result, while approvals are routinely performed in practice, documented evidence of the approval is not consistently retained in the disbursement file. Effect: The Organization is unable to demonstrate through its own records that the required management approval was obtained prior to payment for the affected disbursements. The absence of retained approval evidence in the disbursement file means that the Organization's internal control cannot be relied upon to prevent or detect unallowable, unreasonable, or unauthorized costs being charged to the federal programs, increasing the risk that material noncompliance with the allowable costs/cost principles compliance requirements could occur without timely detection. Questioned Costs: None. No questioned costs are reported because the condition relates to the retention of approval evidence rather than to unallowable or unauthorized expenditures. Management approvals were performed at the time of disbursement in accordance with the Organization's practice; however, the approvals were obtained verbally and documented evidence was not retained in the disbursement files. The expenditures tested were otherwise supported and were allowable under the applicable program requirements, and the audit did not identify any unallowable costs charged to the programs. Recommendation: We recommend the Organization (a) implement a standard approval form or signature block that is completed, signed, and dated by each required reviewer prior to issuance of payment and retained as part of the disbursement support package for every TANF and ESG disbursement; (b) update its written disbursement procedures to require that the completed approval form be retained in the disbursement file at the time of payment, in lieu of verbal approval; and (c) implement a periodic supervisory review of disbursement files to confirm that the required approval evidence is consistently retained, with results communicated to the Executive Director. Management's Response: See corrective action plan.
Federal Grantor: Department of Housing and Urban Development Program: COVID-19 Community Development Block Grants/Entitlement Grants (CDBG) Program Award No. and Year: B20-MW-19-0003 and 2020, B23-MC-19-0003 and 2023, B24-MC-19-0003 and 2024, B25-MC-19-0003 and 2025 Federal Financial Assistance Listing Number: 14.218 Compliance Requirement: Reporting Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria: CFR Section 200.303(a), Internal Controls, states that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. CFR Appendix A to Part 170I(a)(2), Reporting Requirements, states the recipient must report each subaward to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS) no later than the end of the month following the month in which the subaward was issued. Condition: During our testing of the City’s compliance with reporting requirements, we noted the City did not have any formal controls in place over the review and approval of reports. Reports were prepared, certified and submitted by the same individual. Additionally, during our testing, we noted for two (2) subaward reports submitted to FSRS, the information was not submitted timely. Cause: The City did not have a formal review process in place over the reports under the program. Additionally, the City did not have a process in place to ensure reports were submitted to FSRS timely. Effect: Reports could be submitted with inaccurate information. Additionally, reports were not submitted to FSRS in accordance with the reporting requirements per Appendix A to Part 170I(a)(2). Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: A nonstatistical sample of six (6) of eleven (11) reports were selected. The condition above was identified during our testwork of the City’s internal controls over reporting. Repeat Finding from Prior Years: No. Recommendation: We recommend that the City adhere to their policies and procedures in accordance with 2 CFR 200.332 to ensure compliance with subrecipient monitoring requirements. Views of Responsible Officials: Management agrees with the finding. See separate corrective action plan.
Federal Grantor: Department of Housing and Urban Development Program: Youth Homelessness Demonstration Program Award No. and Year: IA0158Y7D022201, IA0134Y7D022202, IA0135Y7D022202, IA0156Y7D022201, IA0157Y7D022201 and 2024, and IA0158Y7D022302, IA0134Y7D022303, IA0135Y7D022303, IA156Y7D022302, IA0137Y7D022303 and 2025 Federal Financial Assistance Listing Number: 14.276 Compliance Requirement: Cash Management Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria: CFR Section 200.303(a), Internal Controls, states that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: During our testing of the City’s compliance with cash management requirements, we noted for two (2) reimbursement requests, there was no evidence of the Federal Funds Administrator’s review and approval prior to the request being submitted. Cause: The City did not maintain supporting documentation indicating that the Federal Funds Administrator reviewed and approved the reimbursement request prior to it being submitted. Effect: The City’s control was not consistently followed, which requires the Federal Funds Administrator’s review and approval over the reimbursement request to be documented prior to submission. Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: A nonstatistical sample of four (4) of twelve (12) reimbursement requests were selected. The condition above was identified during our testwork of the City’s internal controls over cash management. Repeat Finding from Prior Years: No. Recommendation: We recommend the City adhere to their policies and ensure the review and approval of reimbursement requests are documented. Views of Responsible Officials: Management agrees with the finding. See separate corrective action plan.
Federal Grantor: Department of Housing and Urban Development Program: Youth Homelessness Demonstration Program Award No. and Year: IA0158Y7D022201, IA0134Y7D022202, IA0135Y7D022202, IA0156Y7D022201, IA0157Y7D022201 and 2024, and IA0158Y7D022302, IA0134Y7D022303, IA0135Y7D022303, IA156Y7D022302, IA0137Y7D022303 and 2025 Federal Financial Assistance Listing Number: 14.276 Compliance Requirement: Subrecipient Monitoring Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria: 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 the terms and conditions of the federal award. Condition: During our testing of the City’s compliance with subrecipient monitoring requirements, we noted there was no evidence that the Federal Funds Administrator reviewed and approved the risk assessments for three (3) subrecipients. Cause: The City did not maintain supporting documentation indicating that the Federal Funds Administrator reviewed and approved the risk assessment performed over subrecipients. Effect: The City’s control was not consistently followed, which requires the Federal Funds Administrator’s review and approval over the subrecipient risk assessments to be documented. Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: A nonstatistical sample of three (3) of five (5) subrecipients were selected. The condition above was identified during our testwork of the City’s internal controls over subrecipient monitoring. Repeat Finding from Prior Years: No. Recommendation: We recommend the City adhere to their policies and ensure the review and approval of subrecipient risk assessments are documented. Views of Responsible Officials: Management agrees with the finding. See separate corrective action plan.
Section III--Federal Award and State Project Findings and Questioned Costs Major Federal Award Programs and State Projects Audit: 2025-001 – Timely Reconciliations of Aged Accounts Payable Federal Agency: U.S. Department of Education Assistance Listing: 93.558, 93.658, 93.659 Program Name: Student Financial Assistance Cluster Type of Finding: Significant deficiency in internal control over compliance Questioned Costs: None Criteria: Under 2 CFR 200.303 1, nonfederal entities are required to establish, document, and maintain effective internal control over federal awards to provide reasonable assurance that transactions are properly recorded, reported, and managed in compliance with applicable federal statutes, regulations, and the terms and conditions of the federal award. Effective internal control includes timely reconciliation of subsidiary records to the general ledger, supervisory review of unusual or aged items, and retention of documentation evidencing preparation and review. Condition: During our testing of internal control over compliance related to federal awards, we noted the Authority did not consistently perform and document timely reconciliations of the aged accounts payable subsidiary ledger to the general ledger for expenditures charged to federal programs. As a result of this control lapse, the Authority ultimately wrote off approximately $34,695.50 of aged accounts payable that had not been timely identified and resolved through the reconciliation process. Cause: The condition appears to have resulted from inadequate monthly reconciliation procedures, lack of timely review and follow-up for aged items outstanding more than 90 days, and insufficient documentation and retention of evidence supporting the preparation and review of reconciliations. Effect: As a result, the Authority’s controls did not operate effectively to timely detect and correct errors, omissions, or unsupported items in expenditures charged to federal programs. This increased the risk of misstatement and noncompliance related to federal award activity. However, based on the audit procedures performed, we did not identify material noncompliance or any questioned costs related to this matter. Recommendation: We recommend that management implement and document monthly reconciliations of the aged accounts payable subsidiary ledger to the general ledger for all federal program expenditures. We further recommend that management require timely supervisory review of aged items exceeding 90 days, document the resolution of such items, and retain evidence of the preparation, review, and follow-up performed.
2025-002 Finding: Material Weakness in Internal Control Over Compliance and Material Non-Compliance Federal Agency: U.S. Department of Education Federal Programs: 84.063 Federal Pell Grant Program; 84.268 William D. Ford Federal Direct Loan Program Compliance Requirement: Cash Management Repeat Finding: No Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200.305 requires non-Federal entities using the advance payment method to minimize the time between the transfer of federal funds and their disbursement. Advance payments must be limited to the minimum amounts needed and aligned with the entity’s actual, immediate cash requirements. To use the advance payment method, entities must maintain written cash management procedures and financial management systems that provide effective control and accountability over federal funds. In addition, 2 CFR 200.302(b)(3) and (b)(6) require entities to maintain financial management systems and written procedures sufficient to permit the tracing of federal funds to underlying expenditures and to implement the cash management requirements of 2 CFR 200.305. 2 CFR 200.303 further requires entities to establish and maintain effective internal control over federal awards to provide reasonable assurance of compliance, including monitoring activities. For Title IV Student Financial Assistance programs, 34 CFR 668.162(b) requires institutions using the advance payment method to request funds only for amounts needed immediately for disbursements made or to be made to eligible students and to disburse those funds no later than three business days after receipt. Condition: The College did not have written procedures governing drawdowns, including draw calculations, timing, approvals, reconciliations, or the return of excess funds. Tested draws were not consistently supported by documentation evidencing the accuracy of the expenditures being reimbursed. In addition, the College did not perform or document reconciliations between underlying disbursement records and authorized draw requests and did not monitor cash balances to identify whether positive balances were carried forward from period to period. As a result, the College could not demonstrate that draw amounts consistently reflected only eligible expenditures incurred during the applicable period. Cause: Management had not established a formal, documented cash management control framework, and responsibilities for draw preparation, review, approval, reconciliation, and monitoring were not clearly defined. As a result, draw requests, supporting documentation, and reconciliations were prepared inconsistently or not retained, and controls were not in place to identify or prevent excess cash on hand. Effect: Because the College did not maintain written cash management procedures, retain consistent support for draw calculations, or perform and document reconciliations of draws to underlying student disbursements and cash balances, the College could not demonstrate that Title IV funds were drawn only for actual, immediate cash needs or that drawn funds were timely disbursed in accordance with advance payment requirements. This condition increases the risk that the College may draw excess cash or draw funds in advance of need, be unable to detect or prevent noncompliance due to inadequate internal controls, and be subject to the return of excess funds, administrative actions, or questioned costs if noncompliance could be quantified. Recommendation: The College should strengthen cash management controls over the SFA Cluster by implementing the following: 1. Adopting written cash management procedures addressing draw calculations, timing of draws, approvals and segregation of duties, required supporting documentation, reconciliation requirements, and the identification and return of excess cash. 2. Maintaining a standardized draw file for each draw that includes approval evidence, supporting disbursement detail, a reconciliation to student-level disbursements by award type, and documentation of cash balances before and after the draw. 3. Performing and retaining monthly reconciliations between student-level disbursement records and federal cash activity, including documented supervisory review. Auditor’s Note: The engagement team noted that the cash management control deficiencies described in this finding have a direct impact on the College’s ability to support other Title IV compliance requirements that rely on traceable federal cash activity, including Return of Title IV Funds (R2T4). Specifically, where the College does not retain draw or return support, does not perform reconciliations between underlying student transactions and authorized activity, and does not maintain a clear audit trail of federal cash balances, it may be unable to demonstrate that Title IV funds were returned to the Department when required and that such returns can be traced from student-level determinations through COD activity and ultimately to federal cash activity (e.g., G5). View of Responsible Officials: See Auditee’s Corrective Action Plan. Questioned Costs: $0, Unknown
2025-003 Finding: Material Weakness in Internal Control Over Compliance and Material Non-Compliance Federal Agency: U.S. Department of Education Federal Programs: 84.063 Federal Pell Grant Program; 84.268 William D. Ford Federal Direct Loan Program Compliance Requirement: Eligibility Questioned Costs: $0, Unknown Repeat Finding: No Criteria: Title IV Student Financial Assistance regulations require institutions to determine and document key components used in establishing a student’s eligibility for Title IV aid. Cost of Attendance (COA) is a required component in determining a student’s eligibility and award amounts for Title IV aid. Title 34 Code of Federal Regulations (CFR) Part 668.2 defines COA and specifies allowable components that must be consistently applied in determining student eligibility and Title IV aid awards. In addition, Title IV regulations require institutions to evaluate and monitor a student’s Satisfactory Academic Progress (SAP) status at appropriate points to determine continued eligibility for Title IV aid. Further, 2 CFR 200.303 requires non-Federal entities to establish, document, and maintain effective internal control over federal awards to provide reasonable assurance that federal programs are administered in compliance with applicable statutes and regulations. These internal controls include documentation retention, segregation of duties, and monitoring and review of key determinations that directly affect eligibility and award calculations. Condition: The College calculated Cost of Attendance outside of its student information system using a manually maintained Excel spreadsheet that could be altered without restriction. The College did not retain finalized COA determinations in a reliable or non-modifiable format, and supporting information necessary to independently recalculate COA amounts was not consistently available. In addition, while the College maintains that it calculated the students’ Satisfactory Academic Progress (SAP) status at the time eligibility determinations were made, it did not retain documentation or reports evidencing that SAP status was reviewed and considered as part of the eligibility determination process. The Financial Aid Director solely prepared COA and SAP determinations, and there was no independent review or approval of these calculations, resulting in a lack of segregation of duties. As a result, during audit testing, the engagement team was unable to reliably recalculate Cost of Attendance for certain students and unable to verify that students’ SAP status was appropriately reviewed when determining Title IV eligibility. Cause: Management has not established formal, documented methodologies or controls over eligibility determinations, including Cost of Attendance calculations and review of Satisfactory Academic Progress. Controls requiring system-based calculations, retention of supporting documentation, and documented supervisory review and approval were not in place, and responsibilities for preparation, review, and approval of eligibility components were not clearly defined. Effect: Because the College did not maintain reliable documentation or effective controls over key eligibility determinations, including Cost of Attendance calculations and evidence of Satisfactory Academic Progress review, the engagement team was unable to conclude that student eligibility for Title IV aid was determined accurately and in accordance with federal requirements for all students tested. As a result, the College may have awarded Title IV funds to students based on inaccurate or unsupported eligibility determinations, resulting in unknown questioned costs and material noncompliance with Title IV program requirements. Recommendation: The College should strengthen controls over Cost of Attendance determinations by: 1. Establishing written policies and procedures governing Cost of Attendance and Satisfactory Academic Progress determinations in accordance with Title IV requirements. 2. Utilizing the student information system, or another controlled system, to calculate and retain COA determinations and SAP evaluations in a non-modifiable format. 3. Implementing segregation of duties, including documented independent review and approval of COA determinations and evidence of SAP status review by an individual not involved in the original calculations. 4. Retaining sufficient supporting documentation to allow for independent recalculation and verification of Cost of Attendance amounts and confirmation that SAP was reviewed at the time eligibility determinations were made. View of Responsible Officials: See Auditee’s Corrective Action Plan.
2025-004 Finding: Material Weakness in Internal Control Over Compliance and Material Non-Compliance Federal Agency: U.S. Department of Education Federal Programs: 84.063 Federal Pell Grant Program; 84.268 William D. Ford Federal Direct Loan Program Compliance Requirement: Reporting Questioned Costs: $0; Reporting only, no impact on award amount noted Repeat Finding: No Criteria: For Title IV programs reported through the Common Origination and Disbursement (COD) System, the U.S. Department of Education requires institutions to submit student disbursement records no later than 15 calendar days after making a disbursement or becoming aware of the need to adjust previously reported disbursement information. For the 2024-2025 award year, the Department provided a temporary flexibility under which institutions were not required to report disbursements made for the 2024-2025 award year until November 30, 2024, or 15 calendar days after the disbursement is made, whichever is later. For the Federal Pell Grant Program, Title 34 U.S. Code of Federal Regulations (CFR) Part 690.83 requires institutions to submit student Payment Data in accordance with prescribed procedures and to report changes by submitting updated Payment Data, and institutions must comply with procedures necessary to ensure reports are correct. For the Direct Loan Program, 34 CFR 685.309(a) requires participating schools to establish and maintain proper administrative and fiscal procedures and necessary records and to submit all reports required by the Direct Loan regulations and 34 CFR Part 668 to the Secretary. Further, 2 CFR 200.303 requires the recipient and subrecipient to establish, document, and maintain effective internal control over federal awards to provide reasonable assurance of compliance with federal statutes and regulations, including evaluating/monitoring compliance and taking prompt corrective action when noncompliance is identified. Condition: During testing of COD System reporting for the Pell Grant and Direct Loan programs, the engagement team noted exceptions in both the accuracy and timeliness of information reported to COD: 1. Accuracy: One instance identified in which the Cost of Attendance (COA) amount reported to the COD System for a student was later determined incorrect. 2. Timeliness: Seven instances identified where disbursements were not reported to the COD System within required reporting timeframes, of which six relate to Pell Grant disbursements and one relates to Direct Loan disbursements. The College did not have a formal, documented process to validate key COD data elements prior to submission or to monitor and evidence timely reporting, including exception tracking and documented supervisory review. Cause: Management has not established formal, written procedures and related review or monitoring controls over COD reporting that address both (a) validation of key data elements prior to submission and (b) monitoring of required reporting timelines and timely correction of exceptions. As a result, COD reporting was susceptible to human error and delays without timely detection and correction. Effect: As a result of the lack of preventive and detective controls over COD reporting, inaccurate COA information was reported to COD for one student and disbursement reporting was not timely in seven instances subject to our compliance testing procedures. While the exceptions identified did not impact the students’ award amounts, they represent noncompliance with federal reporting requirements and increase the risk that COD submissions may be inaccurate, incomplete, or not timely corrected, which can impair effective reconciliation and program oversight. The College corrected the incorrect COA reported for the student identified. Recommendation: The College should strengthen controls over COD reporting by: 1. Implementing written COD reporting procedures that define required data validations (including key data elements such as COA), documentation standards, and responsibilities for preparation, review, and submission. 2. Establishing a secondary review and documented approval of COD submissions prior to transmission, including review of changes, corrections, and supporting documentation. 3. Implementing a recurring reporting cadence (e.g., weekly/bi-weekly) and an automated or standardized tracking log to monitor the 15-day disbursement reporting requirement and flag late items for timely follow-up. 4. Performing and retaining periodic reconciliations and exception monitoring between internal student records and COD-accepted records to validate accuracy and timeliness, including documentation of corrections and the basis for changes. View of Responsible Officials: See Auditee’s Corrective Action Plan.
2025-005 Finding: Material Weakness in Internal Control Over Compliance and Material Non-Compliance Federal Agency: U.S. Department of Education Federal Programs: 84.063 Federal Pell Grant Program; 84.268 William D. Ford Federal Direct Loan Program Compliance Requirement: Special Tests and Provisions: Return of Title IV Funds Questioned Costs: $0, Unknown Repeat Finding: No Criteria: Title 34 U.S. Code of Federal Regulations (CFR) Part 34 CFR 668.22 requires an institution to determine the amount of Title IV aid earned when a Title IV recipient withdraws during a payment period or period of enrollment and to apply the Return of Title IV Funds requirements in accordance with the regulation. 34 CFR 668.24 requires institutions to establish and maintain program and fiscal records documenting the administration of Title IV programs, including documentation supporting each student’s receipt of Title IV funds, the amount, date, and basis of the institution’s calculation of the treatment of Title IV funds when a student withdraws, and documentation of the return of Title IV funds to the Department, as applicable. In addition, 2 CFR 200.303 requires the non-Federal entity to establish, document, and maintain effective internal control over federal awards that provides reasonable assurance of compliance with applicable statutes and regulations, including monitoring controls over key compliance processes. Condition: The College did not have a formal supervisory review process over Return of Title IV Funds (R2T4) calculations and related return activity. R2T4 calculations and submissions were prepared by the Financial Aid Director without documented independent review or approval. Additionally, the College did not maintain sufficient documentation to clearly identify and trace the specific return transmitted for each student subject to an R2T4 calculation with an institutional portion due to the Department. Rather than recording the return as a distinct transaction supported by a documented calculation and remittance trail, the Financial Aid Director manually adjusted the disbursed amounts in PeopleSoft to reflect net amounts after the return and also made manual updates within COD, without maintaining a supporting documentation package, audit trail, or reconciliation. As a result, for students tested, the engagement team could not reperform or trace student-level returns from the R2T4 calculation through COD activity and ultimately to cash activity in the federal funds accounts (e.g., G5). Given that this process applies to all students requiring an R2T4 calculation and an institutional return, the absence of supervisory review, documentation, and reconciliation represents a pervasive control deficiency. Cause: Management has not established formal written procedures and control requirements for R2T4 processing, including supervisory review and approval of calculations, documentation retention standards, and reconciliation of student-level R2T4 return amounts to system activity and federal cash activity. Responsibilities for review and reconciliation were not clearly defined, and the process relied on manual system edits that did not retain a reliable transaction trail. Effect: Because the College did not implement supervisory review over R2T4 calculations and did not maintain a complete documentation and reconciliation trail for student-level returns, the College was unable to demonstrate that institutional returns required by R2T4 were consistently calculated, recorded, and remitted in accordance with federal requirements. Recommendation: The College should strengthen controls over the R2T4 process by implementing the following: 1. Establish written R2T4 procedures requiring a standardized calculation and documentation package for each applicable withdrawal, including the withdrawal determination date, key calculation inputs, earned/unearned aid, and the institutional return amount. 2. Implement documented supervisory review and approval of each R2T4 calculation and related return submission prior to processing. 3. Eliminate undocumented manual netting edits and require returns to be recorded in a manner that preserves a clear, auditable trail (e.g., distinct transactions). 4. Perform and document periodic reconciliations of R2T4 calculation results to COD activity and COD activity to federal cash activity (e.g., G5), with documented investigation and resolution of differences. Auditor’s Note: The engagement team noted that the College’s inability to clearly trace and reconcile student-level R2T4 return amounts to COD activity and federal cash activity (e.g., G5) is consistent with the broader cash management control deficiencies described in the Cash Management finding. Specifically, the absence of standardized documentation, reconciliations, and monitoring over Title IV cash activity limits the College’s ability to evidence that R2T4 returns were processed and remitted accurately and in a manner that is verifiable and reproducible. View of Responsible Officials: See Auditee’s Corrective Action Plan.
2025-006 Finding: Significant Deficiency in Internal Control Over Compliance Federal Agency: U.S. Department of Education Federal Programs: 84.063 Federal Pell Grant Program; 84.268 William D. Ford Federal Direct Loan Program Compliance Requirement: Special Tests and Provisions: Verification Questioned Costs: $0; Verification only, no impact on award amount noted Repeat Finding: No Criteria: Title 34 U.S. Code of Federal Regulations (CFR) Part 34 CFR 668.51 through 668.61 require institutions participating in Title IV programs to comply with federal verification requirements, including verifying applicant information when selected, resolving discrepancies, and determining student eligibility prior to the disbursement of Title IV aid. An institution is required to establish written policies and procedures that incorporate the provisions of 34 CFR 668.51 through 668.61, including requirements for obtaining and reviewing acceptable documentation, completing verification, and maintaining records sufficient to demonstrate compliance with verification requirements. In addition, 2 CFR 200.303 requires the non-Federal entity to establish, document, and maintain effective internal control over federal awards to provide reasonable assurance of compliance with applicable statutes and regulations, including appropriate documentation, supervisory review, and monitoring over verification activities. Condition: The College did not have a documented supervisory review process over verification procedures performed by financial aid processing staff. Verification activities were performed by individual processors; however, there was no documented evidence identifying who completed the verification, such as initials, signatures, system sign-offs, or other reviewer identifiers retained for audit purposes. While the Financial Aid Director indicated that random reviews of verification files occur periodically as part of staff training, these reviews were informal and not documented. As a result, the College could not demonstrate that verification procedures were consistently reviewed or approved to ensure accuracy and compliance. Cause: Management has not established formal, documented procedures requiring supervisory review, approval, and retention of evidence for verification activities. Responsibilities for documenting completion and review of verification were not clearly defined, and reliance was placed on informal monitoring practices that were not retained. Effect: Because the College did not retain evidence of who performed or reviewed verification procedures, the College could not demonstrate that verification requirements were consistently applied and appropriately reviewed for accuracy and completeness. This condition increases the risk that errors, omissions, or noncompliance in verification may not be detected or corrected on a timely basis due to insufficient internal controls and monitoring. Recommendation: The College should strengthen controls over verification by: 1. Establishing written verification procedures that define staff responsibilities, required documentation, and supervisory review expectations. 2. Requiring documented evidence of completion and review of verification activities (e.g., initials, electronic sign-off, or system workflow approvals) for each verification file. 3. Documenting supervisory or quality control reviews, including the scope and results of any spot reviews performed, and retaining this documentation for audit and monitoring purposes. View of Responsible Officials: See Auditee’s Corrective Action Plan
2025-007 Finding: Material Weakness in Internal Control Over Compliance and Material Non-Compliance Federal Agency: U.S. Department of Education Federal Programs: 84.063 Federal Pell Grant Program; 84.268 William D. Ford Federal Direct Loan Program Compliance Requirement: Special Tests and Provisions: Disbursements to or on Behalf of Students Questioned Costs: $0; Notification requirement only, no impact on award amount noted Repeat Finding: No Criteria: Title 34 U.S. Code of Federal Regulations (CFR) Part 668.165(a)(1) requires that, before an institution disburses Title IV funds for any award year, the institution must notify the student of the amount of funds the student (or parent) can expect to receive under each Title IV program and how and when those funds will be disbursed. Further, 2 CFR 200.303 requires the recipient and subrecipient to establish, document, and maintain effective internal control over federal awards to provide reasonable assurance of compliance with federal statutes and regulations, including monitoring compliance and taking prompt corrective action when noncompliance is identified. Condition: During testing related to disbursements to or on behalf of students, the engagement team identified seven Pell Grant students for whom the required notification of Title IV funds and disbursement timing was not provided prior to the Pell disbursement. In each instance, the student was notified of the award after the disbursement had already been made. The College did not have a formal, documented process to ensure required notifications were issued before disbursement, or to evidence supervisory review and exception monitoring over the timing of notifications. Cause: Management has not established written procedures and related review or monitoring controls over the timing of Title IV disbursement notifications, including defined responsibility, documentation standards, and supervisory review to ensure notices are issued before disbursement. As a result, required notifications were not consistently provided timely. Effect: As a result of the lack of preventive and detective controls over disbursement notification requirements, the College did not timely notify students prior to disbursing Pell Grant funds in seven instances subject to our compliance testing procedures. While no impact on the students’ award amounts was noted, the exceptions represent noncompliance with federal notification requirements and increase the risk that students may not receive required information about their Title IV funding and disbursement timing prior to funds being disbursed. Recommendation: The College should strengthen controls over Title IV disbursement notifications by: 1. Implementing written procedures requiring the Title IV notification to be issued prior to any Title IV disbursement for the award year, including required content, timing, and documentation requirements. 2. Implementing documented supervisory review of notifications and exception follow-up to ensure notices are timely and recurring issues are promptly corrected. View of Responsible Officials: See Auditee’s Corrective Action Plan.
Finding 2025-004 Assistance Listing Number(s): 93.558 Name of Federal Program or Cluster: Temporary Assistance for Needy Families Name of Federal Agency: Department of Health and Human Services Name of Pass-through Entity: Virginia Department of Social Services Pass-through Entity Identifying Number: BEN-21-029 Award Period: July 1, 2024 through June 30, 2025 Criteria or Specific Requirement: Per 2 CFR 200.303 Internal controls, non-Federal entities must establish and maintain effective internal control over Federal awards to provide reasonable assurance of compliance with Federal statutes, regulations, and the terms and conditions of the award. Condition: For 14 of 60 disbursements tested, internal controls over the review and approval of costs charged to the Federal award were not documented. Cause: The entity does not have formalized or consistently documented control procedures over disbursements charged to Federal awards. Effect or Potential Effect: Lack of documented controls increases the risk that unallowable or unsupported costs may be charged to Federal awards without detection. Repeat Finding: This finding is a repeat of 2024-002 representing the continued internal control deficiency. Recommendation: UCM should formalize and document internal control procedures over Federal award expenditures, including documented review and approval processes to ensure compliance with Uniform Guidance. Views of Responsible Officials: Management acknowledges the finding and will work to implement appropriate corrective actions to address the deficiency and improve compliance going forward.
III Federal Award Findings and Questioned Costs FA 2025-001 Improve Controls over Procurement and Suspension and Debarment Compliance Requirement: Procurement and Suspension and Debarment Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Agriculture Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 10.553 – School Breakfast Program; 10.555 – National School Lunch Program 10.582 - Fresh Fruit and Vegetable Program Federal Award Numbers: 255GA324N1199 (Year: 2025), 255GA324L1603 (Year: 2025) Questioned Costs: $6,267 Description: A review of expenditures charged to the Child Nutrition Cluster revealed that the School District’s internal control procedures were not operating appropriately to ensure that the School District’s procurement and suspension and debarment procedures were followed. Background Information: The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential child care institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and secondary schools and encourages the domestic consumption of nutritious agricultural commodities. CNC funding is granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture, and GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the various CNC programs. CNC funds totaling $3,568,611.24 were expended and reported on the Jones County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2025. Criteria: As a recipient of federal awards, the School District is required to establish, document, and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.318 – General Procurement Standards state, “(a)… the recipient or subrecipient must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services. These documented procurement procedures must be consistent with State, local, and tribal laws and regulations… (b) Recipients and subrecipients must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders.” In addition, provisions included in the Uniform Guidance, Section 200.320 – Procurement Methods provide guidance for informal procurement methods and state “If simplified acquisition procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources.” Condition: A sample of 40 procurement transactions was randomly selected for testing using a nonstatistical sampling approach. These transactions were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. The School District could not provide evidence that an adequate number of rate or price quotations were obtained from qualified sources for four small purchase expenditures reviewed. Questioned Costs: Upon testing a sample of $159,951.89 in procurement transactions, known questioned costs of $6,267 were identified for expenditures that did not follow the School District’s procurement procedures. Using the total population of $1,778,019 in procurement transactions, we project the likely questioned costs to be approximately $69,659. The following Assistance Listing Numbers were affected by known and likely questioned costs: 10.553, 10.555, and 10.582. Cause: In discussing these deficiencies with the School District, they stated that the internal control procedures related to procurement were not being followed appropriately. In addition, management did not adequately monitor the procurement internal control procedures. Effect: The School District was not in compliance with the Uniform Guidance and GaDOE guidance. Failure to appropriately implement procedures to address procurement and suspension and debarment compliance requirements exposes the School District to unnecessary risk of error and misuse of federal funds and could result in the expenditure of federal funds with unqualified vendors. In addition, this deficiency could lead to the return of federal funds associated with unallowable expenditures. Recommendation: The School District should evaluate and improve internal control procedures to ensure that required procurement methods are properly identified and followed and required procurement and suspension and debarment documentation is properly identified, safeguarded, and retained. In addition, management should develop a monitoring process to ensure that these procedures are operating appropriately. Views of Responsible Officials: We concur with this finding.