FINDING 2024-002 Subject: Special Education Cluster (IDEA) - Earmarking Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.027X, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 22611-168-PN01, 22611-168-ARP, 22619-168-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation did not have adequate procedures in place to ensure that the required level of expenditures for nonpublic school students with disabilities was met for each school. Although the Proportionate Share Report was prepared by the Treasurer and reviewed and approved by the Special Education Director, the internal controls were not effective to ensure nonpublic school expenditures were appropriately identified and reported. INDIANA STATE BOARD OF ACCOUNTS 16 METROPOLITAN SCHOOL DISTRICT OF NORTH POSEY COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) During fiscal years 2022-2023 and 2023-2024, the School Corporation was responsible for ensuring and providing oversight of the Special Education Cluster. However, there was inadequate oversight performed by the School Corporation in order to ensure compliance with the Matching, Level of Effort, Earmarking compliance requirement. Although the School Corporation has a separate object code to identify expenditures for the purpose of proportionate share, the money spent from that object code was less than the total required amount for the Non-Public Proportionate Share per their grant agreements for 22611-168-PN01, 22611-168-ARP, and 22619-168-ARP by $3,499, $5,846, and $8, respectively. The minimum earmarking requirement for the 22611-168-PN01, 22611-168-ARP, and 22619-168-ARP grant awards were $16,570, $5,846, and $679, respectively. Additionally, the School Corporation did not obtain a waiver from the Indiana Department of Education for the amount unspent for the requirement on the grant awards. The lack of internal controls and noncompliance were isolated to the 22611-168-PN01, 22611-168-ARP, and 22619-168-ARP grant awards. 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed, . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause The Treasurer and the Special Education Director were both new to their positions and did not fully understand the required level of expenditures for nonpublic school students with disabilities that must be met. Effect The lack of proper controls could enable material noncompliance to remain undetected. The School Corporation did not expend the required portion for nonpublic school students with disabilities. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funds to the School Corporation. INDIANA STATE BOARD OF ACCOUNTS 17 METROPOLITAN SCHOOL DISTRICT OF NORTH POSEY COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls and provide necessary training to ensure the School Corporation expends the required portion for nonpublic school students with disabilities. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-003 Subject: COVID-19 - Education Stabilization Fund - Equipment and Real Property Management Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425U Federal Award Number and Year (or Other Identifying Number): 700S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-001. Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. The School Corporation had not designed an internal control system and procedures to ensure all assets purchased with federal awards were added to the property records or capital asset listing. A property record or capital asset listing would include the following for each asset: a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number (FAIN)), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. The property record or capital asset listing should be maintained for assets purchased that exceed the School Corporation's capitalization threshold. The School Corporation maintained a detailed listing of capital assets; however, the asset records provided for audit did not include all assets purchased with the COVID-19 - Education Stabilization Fund award. An ironworker for the shop class was purchased from the ESSER 3E award for $6,499, but was not reflected on the School Corporation's capital asset ledger. The lack of internal controls and noncompliance were systemic issued throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 18 METROPOLITAN SCHOOL DISTRICT OF NORTH POSEY COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.313(d) states in part: "Management requirements. Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. . . ." Cause The School Corporation hired a third-party to take a physical inventory of the School Corporation's capital assets every two years. The last inventory was taken as of June 30, 2023. Between inventories, the School Corporation maintains records of all assets purchased above $5,000 and reports them to the third-party before the next physical inventory is performed. The School Corporation did not provide documentation of the assets purchased to be provided to the third-party responsible for taking the physical inventory. Effect The failure to establish an effective internal control system places the School Corporation at risk of noncompliance with the Equipment and Real Property Management compliance requirement. The lack of adequate capital asset records, which include purchased from federal funds, could allow for the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the program. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation maintain documentation of all capital assets purchased over the $5,000 in between physical inventories taken by the third-party to ensure all assets are properly accounted for and safe guarded. INDIANA STATE BOARD OF ACCOUNTS 19 METROPOLITAN SCHOOL DISTRICT OF NORTH POSEY COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-003 Subject: COVID-19 - Education Stabilization Fund - Equipment and Real Property Management Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425U Federal Award Number and Year (or Other Identifying Number): 700S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-001. Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. The School Corporation had not designed an internal control system and procedures to ensure all assets purchased with federal awards were added to the property records or capital asset listing. A property record or capital asset listing would include the following for each asset: a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number (FAIN)), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. The property record or capital asset listing should be maintained for assets purchased that exceed the School Corporation's capitalization threshold. The School Corporation maintained a detailed listing of capital assets; however, the asset records provided for audit did not include all assets purchased with the COVID-19 - Education Stabilization Fund award. An ironworker for the shop class was purchased from the ESSER 3E award for $6,499, but was not reflected on the School Corporation's capital asset ledger. The lack of internal controls and noncompliance were systemic issued throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 18 METROPOLITAN SCHOOL DISTRICT OF NORTH POSEY COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.313(d) states in part: "Management requirements. Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. . . ." Cause The School Corporation hired a third-party to take a physical inventory of the School Corporation's capital assets every two years. The last inventory was taken as of June 30, 2023. Between inventories, the School Corporation maintains records of all assets purchased above $5,000 and reports them to the third-party before the next physical inventory is performed. The School Corporation did not provide documentation of the assets purchased to be provided to the third-party responsible for taking the physical inventory. Effect The failure to establish an effective internal control system places the School Corporation at risk of noncompliance with the Equipment and Real Property Management compliance requirement. The lack of adequate capital asset records, which include purchased from federal funds, could allow for the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the program. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation maintain documentation of all capital assets purchased over the $5,000 in between physical inventories taken by the third-party to ensure all assets are properly accounted for and safe guarded. INDIANA STATE BOARD OF ACCOUNTS 19 METROPOLITAN SCHOOL DISTRICT OF NORTH POSEY COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-003 Subject: COVID-19 - Education Stabilization Fund - Equipment and Real Property Management Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425U Federal Award Number and Year (or Other Identifying Number): 700S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-001. Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. The School Corporation had not designed an internal control system and procedures to ensure all assets purchased with federal awards were added to the property records or capital asset listing. A property record or capital asset listing would include the following for each asset: a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number (FAIN)), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. The property record or capital asset listing should be maintained for assets purchased that exceed the School Corporation's capitalization threshold. The School Corporation maintained a detailed listing of capital assets; however, the asset records provided for audit did not include all assets purchased with the COVID-19 - Education Stabilization Fund award. An ironworker for the shop class was purchased from the ESSER 3E award for $6,499, but was not reflected on the School Corporation's capital asset ledger. The lack of internal controls and noncompliance were systemic issued throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 18 METROPOLITAN SCHOOL DISTRICT OF NORTH POSEY COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.313(d) states in part: "Management requirements. Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. . . ." Cause The School Corporation hired a third-party to take a physical inventory of the School Corporation's capital assets every two years. The last inventory was taken as of June 30, 2023. Between inventories, the School Corporation maintains records of all assets purchased above $5,000 and reports them to the third-party before the next physical inventory is performed. The School Corporation did not provide documentation of the assets purchased to be provided to the third-party responsible for taking the physical inventory. Effect The failure to establish an effective internal control system places the School Corporation at risk of noncompliance with the Equipment and Real Property Management compliance requirement. The lack of adequate capital asset records, which include purchased from federal funds, could allow for the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the program. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation maintain documentation of all capital assets purchased over the $5,000 in between physical inventories taken by the third-party to ensure all assets are properly accounted for and safe guarded. INDIANA STATE BOARD OF ACCOUNTS 19 METROPOLITAN SCHOOL DISTRICT OF NORTH POSEY COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-004 Subject: COVID-19 - Education Stabilization Fund - Special Tests and Provisions - Wage Rate Requirements Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Tests and Provisions - Wage Rate Requirements Audit Findings: Material Weakness, Modified Opinion Condition and Context Construction contracts in excess of $2,000 financed by federal assistance funds must pay wages not less than those established for the locality of the project (prevailing wage rates) by the Department of Labor (DOL) to their laborers and mechanics. Nonfederal entities are to include in their construction contracts subject to the Wage Rate Requirements a provision that the contractor or subcontractor comply with these requirements and the DOL regulations. This would include a requirement to submit a copy of the payroll and statement of compliance to the entity for each week in which contract work was performed. The School Corporation had not designed nor implemented a system of internal controls to ensure that construction contracts in excess of $2,000 paid from federal grant funds included a prevailing wage rate clause. Two construction contracts, totaling $9,625 from ESSER funds, were paid during the audit period. The contracts did not include the required prevailing wage rate clause, nor were the certified payrolls submitted by both the contractors. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 20 METROPOLITAN SCHOOL DISTRICT OF NORTH POSEY COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 29 CFR 5.5 states in part: "(a) Required contract clauses. The Agency head will cause or require the contracting officer to require the contracting officer to insert in full, or (for contracts covered by the Federal Acquisition Regulation (48 CFR chapter 1)) by reference, in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part from Federal funds or in accordance with guarantees of a Federal agency or financed from funds obtained by pledge of any contract of a Federal agency to make a loan, grant or annual contribution (except where a different meaning is expressly indicated), and which is subject to the labor standards provisions of any of the laws referenced by § 5.1, the following clauses . . . (1) Minimum wages — (i) Wage rates and fringe benefits. All laborers and mechanics employed or working upon the site of the work (or otherwise working in construction or development of the project under a development statute), will be paid unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account (except such payroll deductions as are permitted by regulations issued by the Secretary of Labor under the Copeland Act (29 CFR part 3)), the full amount of basic hourly wages and bona fide fringe benefits (or cash equivalents thereof) due at time of payment computed at rates not less than those contained in the wage determination of the Secretary of Labor which is attached hereto and made a part hereof, regardless of any contractual relationship which may be alleged to exist between the contractor and such laborers and mechanics. . . . (3) Records and certified payrolls — . . . (ii) Certified payroll requirements — (A) Frequency and method of submission. The contractor or subcontractor must submit weekly, for each week in which any DBA- or Related Acts-covered work is performed, certified payrolls to the [write in name of appropriate Federal agency] if the agency is a party to the contract, but if the agency is not such a party, the contractor will submit the certified payrolls to the applicant, sponsor, owner, or other entity, as the case may be, that maintains such records, for transmission to the [write in name of agency]. The prime contractor is responsible for the submission of all certified payrolls by all subcontractors. A contracting agency or prime contractor may permit or require contractors to submit certified payrolls through an electronic system, as long as the electronic system requires a legally valid electronic signature; the system allows the contractor, the contracting agency, and the Department of Labor to access the certified payrolls upon request for at least 3 years after the work on the prime contract has been completed; and the contracting agency or prime contractor permits other methods of submission in situations where the contractor is unable or limited in its ability to use or access the electronic system. . . ." INDIANA STATE BOARD OF ACCOUNTS 21 METROPOLITAN SCHOOL DISTRICT OF NORTH POSEY COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200 Appendix II states in part: "In addition to other provisions required by the Federal agency or non-Federal entity; all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following, as applicable. . . . (D) Davis-Bacon Act, as amended (40 U.S.C. 3141-3148). When required by Federal program legislation, all prime construction contracts in excess of $2,000 awarded by non- Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, and 3146-3148) as supplemented by Department of Labor regulations (29 CFR Part 5, 'Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction'). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor. In addition, contractors must be required to pay wages not less than once a week. . . ." Cause The School Corporation was unaware of the Davis Bacon Act and its requirements on contracts which use federal funds. This resulted in no internal control for the wage rate requirements for these contracts. Effect Without the proper implementation of an effectively designed system of internal controls, there were no internal controls to verify compliance for federal funds spent on construction. As a result, construction contracts entered into did not contain the required wage rate requirements clauses nor were certified payrolls obtained by the School Corporation. 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 School Corporation's management establish a system of internal controls and include the wage rate requirement clause in construction contracts. In addition, certified payrolls should be obtained as required. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-004 Subject: COVID-19 - Education Stabilization Fund - Special Tests and Provisions - Wage Rate Requirements Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Tests and Provisions - Wage Rate Requirements Audit Findings: Material Weakness, Modified Opinion Condition and Context Construction contracts in excess of $2,000 financed by federal assistance funds must pay wages not less than those established for the locality of the project (prevailing wage rates) by the Department of Labor (DOL) to their laborers and mechanics. Nonfederal entities are to include in their construction contracts subject to the Wage Rate Requirements a provision that the contractor or subcontractor comply with these requirements and the DOL regulations. This would include a requirement to submit a copy of the payroll and statement of compliance to the entity for each week in which contract work was performed. The School Corporation had not designed nor implemented a system of internal controls to ensure that construction contracts in excess of $2,000 paid from federal grant funds included a prevailing wage rate clause. Two construction contracts, totaling $9,625 from ESSER funds, were paid during the audit period. The contracts did not include the required prevailing wage rate clause, nor were the certified payrolls submitted by both the contractors. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 20 METROPOLITAN SCHOOL DISTRICT OF NORTH POSEY COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 29 CFR 5.5 states in part: "(a) Required contract clauses. The Agency head will cause or require the contracting officer to require the contracting officer to insert in full, or (for contracts covered by the Federal Acquisition Regulation (48 CFR chapter 1)) by reference, in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part from Federal funds or in accordance with guarantees of a Federal agency or financed from funds obtained by pledge of any contract of a Federal agency to make a loan, grant or annual contribution (except where a different meaning is expressly indicated), and which is subject to the labor standards provisions of any of the laws referenced by § 5.1, the following clauses . . . (1) Minimum wages — (i) Wage rates and fringe benefits. All laborers and mechanics employed or working upon the site of the work (or otherwise working in construction or development of the project under a development statute), will be paid unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account (except such payroll deductions as are permitted by regulations issued by the Secretary of Labor under the Copeland Act (29 CFR part 3)), the full amount of basic hourly wages and bona fide fringe benefits (or cash equivalents thereof) due at time of payment computed at rates not less than those contained in the wage determination of the Secretary of Labor which is attached hereto and made a part hereof, regardless of any contractual relationship which may be alleged to exist between the contractor and such laborers and mechanics. . . . (3) Records and certified payrolls — . . . (ii) Certified payroll requirements — (A) Frequency and method of submission. The contractor or subcontractor must submit weekly, for each week in which any DBA- or Related Acts-covered work is performed, certified payrolls to the [write in name of appropriate Federal agency] if the agency is a party to the contract, but if the agency is not such a party, the contractor will submit the certified payrolls to the applicant, sponsor, owner, or other entity, as the case may be, that maintains such records, for transmission to the [write in name of agency]. The prime contractor is responsible for the submission of all certified payrolls by all subcontractors. A contracting agency or prime contractor may permit or require contractors to submit certified payrolls through an electronic system, as long as the electronic system requires a legally valid electronic signature; the system allows the contractor, the contracting agency, and the Department of Labor to access the certified payrolls upon request for at least 3 years after the work on the prime contract has been completed; and the contracting agency or prime contractor permits other methods of submission in situations where the contractor is unable or limited in its ability to use or access the electronic system. . . ." INDIANA STATE BOARD OF ACCOUNTS 21 METROPOLITAN SCHOOL DISTRICT OF NORTH POSEY COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200 Appendix II states in part: "In addition to other provisions required by the Federal agency or non-Federal entity; all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following, as applicable. . . . (D) Davis-Bacon Act, as amended (40 U.S.C. 3141-3148). When required by Federal program legislation, all prime construction contracts in excess of $2,000 awarded by non- Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, and 3146-3148) as supplemented by Department of Labor regulations (29 CFR Part 5, 'Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction'). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor. In addition, contractors must be required to pay wages not less than once a week. . . ." Cause The School Corporation was unaware of the Davis Bacon Act and its requirements on contracts which use federal funds. This resulted in no internal control for the wage rate requirements for these contracts. Effect Without the proper implementation of an effectively designed system of internal controls, there were no internal controls to verify compliance for federal funds spent on construction. As a result, construction contracts entered into did not contain the required wage rate requirements clauses nor were certified payrolls obtained by the School Corporation. 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 School Corporation's management establish a system of internal controls and include the wage rate requirement clause in construction contracts. In addition, certified payrolls should be obtained as required. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-004 Subject: COVID-19 - Education Stabilization Fund - Special Tests and Provisions - Wage Rate Requirements Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Tests and Provisions - Wage Rate Requirements Audit Findings: Material Weakness, Modified Opinion Condition and Context Construction contracts in excess of $2,000 financed by federal assistance funds must pay wages not less than those established for the locality of the project (prevailing wage rates) by the Department of Labor (DOL) to their laborers and mechanics. Nonfederal entities are to include in their construction contracts subject to the Wage Rate Requirements a provision that the contractor or subcontractor comply with these requirements and the DOL regulations. This would include a requirement to submit a copy of the payroll and statement of compliance to the entity for each week in which contract work was performed. The School Corporation had not designed nor implemented a system of internal controls to ensure that construction contracts in excess of $2,000 paid from federal grant funds included a prevailing wage rate clause. Two construction contracts, totaling $9,625 from ESSER funds, were paid during the audit period. The contracts did not include the required prevailing wage rate clause, nor were the certified payrolls submitted by both the contractors. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 20 METROPOLITAN SCHOOL DISTRICT OF NORTH POSEY COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 29 CFR 5.5 states in part: "(a) Required contract clauses. The Agency head will cause or require the contracting officer to require the contracting officer to insert in full, or (for contracts covered by the Federal Acquisition Regulation (48 CFR chapter 1)) by reference, in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part from Federal funds or in accordance with guarantees of a Federal agency or financed from funds obtained by pledge of any contract of a Federal agency to make a loan, grant or annual contribution (except where a different meaning is expressly indicated), and which is subject to the labor standards provisions of any of the laws referenced by § 5.1, the following clauses . . . (1) Minimum wages — (i) Wage rates and fringe benefits. All laborers and mechanics employed or working upon the site of the work (or otherwise working in construction or development of the project under a development statute), will be paid unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account (except such payroll deductions as are permitted by regulations issued by the Secretary of Labor under the Copeland Act (29 CFR part 3)), the full amount of basic hourly wages and bona fide fringe benefits (or cash equivalents thereof) due at time of payment computed at rates not less than those contained in the wage determination of the Secretary of Labor which is attached hereto and made a part hereof, regardless of any contractual relationship which may be alleged to exist between the contractor and such laborers and mechanics. . . . (3) Records and certified payrolls — . . . (ii) Certified payroll requirements — (A) Frequency and method of submission. The contractor or subcontractor must submit weekly, for each week in which any DBA- or Related Acts-covered work is performed, certified payrolls to the [write in name of appropriate Federal agency] if the agency is a party to the contract, but if the agency is not such a party, the contractor will submit the certified payrolls to the applicant, sponsor, owner, or other entity, as the case may be, that maintains such records, for transmission to the [write in name of agency]. The prime contractor is responsible for the submission of all certified payrolls by all subcontractors. A contracting agency or prime contractor may permit or require contractors to submit certified payrolls through an electronic system, as long as the electronic system requires a legally valid electronic signature; the system allows the contractor, the contracting agency, and the Department of Labor to access the certified payrolls upon request for at least 3 years after the work on the prime contract has been completed; and the contracting agency or prime contractor permits other methods of submission in situations where the contractor is unable or limited in its ability to use or access the electronic system. . . ." INDIANA STATE BOARD OF ACCOUNTS 21 METROPOLITAN SCHOOL DISTRICT OF NORTH POSEY COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200 Appendix II states in part: "In addition to other provisions required by the Federal agency or non-Federal entity; all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following, as applicable. . . . (D) Davis-Bacon Act, as amended (40 U.S.C. 3141-3148). When required by Federal program legislation, all prime construction contracts in excess of $2,000 awarded by non- Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, and 3146-3148) as supplemented by Department of Labor regulations (29 CFR Part 5, 'Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction'). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor. In addition, contractors must be required to pay wages not less than once a week. . . ." Cause The School Corporation was unaware of the Davis Bacon Act and its requirements on contracts which use federal funds. This resulted in no internal control for the wage rate requirements for these contracts. Effect Without the proper implementation of an effectively designed system of internal controls, there were no internal controls to verify compliance for federal funds spent on construction. As a result, construction contracts entered into did not contain the required wage rate requirements clauses nor were certified payrolls obtained by the School Corporation. 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 School Corporation's management establish a system of internal controls and include the wage rate requirement clause in construction contracts. In addition, certified payrolls should be obtained as required. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-004 Subject: COVID-19 - Education Stabilization Fund - Special Tests and Provisions - Wage Rate Requirements Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Tests and Provisions - Wage Rate Requirements Audit Findings: Material Weakness, Modified Opinion Condition and Context Construction contracts in excess of $2,000 financed by federal assistance funds must pay wages not less than those established for the locality of the project (prevailing wage rates) by the Department of Labor (DOL) to their laborers and mechanics. Nonfederal entities are to include in their construction contracts subject to the Wage Rate Requirements a provision that the contractor or subcontractor comply with these requirements and the DOL regulations. This would include a requirement to submit a copy of the payroll and statement of compliance to the entity for each week in which contract work was performed. The School Corporation had not designed nor implemented a system of internal controls to ensure that construction contracts in excess of $2,000 paid from federal grant funds included a prevailing wage rate clause. Two construction contracts, totaling $9,625 from ESSER funds, were paid during the audit period. The contracts did not include the required prevailing wage rate clause, nor were the certified payrolls submitted by both the contractors. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 20 METROPOLITAN SCHOOL DISTRICT OF NORTH POSEY COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 29 CFR 5.5 states in part: "(a) Required contract clauses. The Agency head will cause or require the contracting officer to require the contracting officer to insert in full, or (for contracts covered by the Federal Acquisition Regulation (48 CFR chapter 1)) by reference, in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part from Federal funds or in accordance with guarantees of a Federal agency or financed from funds obtained by pledge of any contract of a Federal agency to make a loan, grant or annual contribution (except where a different meaning is expressly indicated), and which is subject to the labor standards provisions of any of the laws referenced by § 5.1, the following clauses . . . (1) Minimum wages — (i) Wage rates and fringe benefits. All laborers and mechanics employed or working upon the site of the work (or otherwise working in construction or development of the project under a development statute), will be paid unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account (except such payroll deductions as are permitted by regulations issued by the Secretary of Labor under the Copeland Act (29 CFR part 3)), the full amount of basic hourly wages and bona fide fringe benefits (or cash equivalents thereof) due at time of payment computed at rates not less than those contained in the wage determination of the Secretary of Labor which is attached hereto and made a part hereof, regardless of any contractual relationship which may be alleged to exist between the contractor and such laborers and mechanics. . . . (3) Records and certified payrolls — . . . (ii) Certified payroll requirements — (A) Frequency and method of submission. The contractor or subcontractor must submit weekly, for each week in which any DBA- or Related Acts-covered work is performed, certified payrolls to the [write in name of appropriate Federal agency] if the agency is a party to the contract, but if the agency is not such a party, the contractor will submit the certified payrolls to the applicant, sponsor, owner, or other entity, as the case may be, that maintains such records, for transmission to the [write in name of agency]. The prime contractor is responsible for the submission of all certified payrolls by all subcontractors. A contracting agency or prime contractor may permit or require contractors to submit certified payrolls through an electronic system, as long as the electronic system requires a legally valid electronic signature; the system allows the contractor, the contracting agency, and the Department of Labor to access the certified payrolls upon request for at least 3 years after the work on the prime contract has been completed; and the contracting agency or prime contractor permits other methods of submission in situations where the contractor is unable or limited in its ability to use or access the electronic system. . . ." INDIANA STATE BOARD OF ACCOUNTS 21 METROPOLITAN SCHOOL DISTRICT OF NORTH POSEY COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200 Appendix II states in part: "In addition to other provisions required by the Federal agency or non-Federal entity; all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following, as applicable. . . . (D) Davis-Bacon Act, as amended (40 U.S.C. 3141-3148). When required by Federal program legislation, all prime construction contracts in excess of $2,000 awarded by non- Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, and 3146-3148) as supplemented by Department of Labor regulations (29 CFR Part 5, 'Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction'). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor. In addition, contractors must be required to pay wages not less than once a week. . . ." Cause The School Corporation was unaware of the Davis Bacon Act and its requirements on contracts which use federal funds. This resulted in no internal control for the wage rate requirements for these contracts. Effect Without the proper implementation of an effectively designed system of internal controls, there were no internal controls to verify compliance for federal funds spent on construction. As a result, construction contracts entered into did not contain the required wage rate requirements clauses nor were certified payrolls obtained by the School Corporation. 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 School Corporation's management establish a system of internal controls and include the wage rate requirement clause in construction contracts. In addition, certified payrolls should be obtained as required. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding number: 2024-003 Federal agency: U.S. Department of Agriculture Pass-through agency: Commonwealth Department of Elementary and Second Education Program: Child Nutrition Cluster – National School Lunch Program ALN #: 10.555 Award number: 13-035 Award year: July 1, 2023 to June 30, 2024 Finding: Internal Control and Compliance over Allowability and Reporting Prior Year Finding: Yes; 2023-003 Type of Finding: Significant Deficiency and Noncompliance Criteria Allowability: Reimbursement for meals served is not based on costs; it is determined solely by applying the applicable meals times rates formula. Financial Reporting: a. Claims for Reimbursement SFAs and sponsors must submit monthly claims for reimbursement for meals and snacks served to eligible students within 60 days following the last day of the month covered by the claim (7 CFR sections 210.8, 220.11, 215.10, and 225.15(c). The state agency has an additional 30 days to submit a consolidated report to FNS (7 CFR 210.5(d), 220.13(b)(2), 215.11(c)(2), and 225.8). b. Recordkeeping Each month’s claim for reimbursement and all data used in the claims review process must be maintained on file. Accurate records must be maintained justifying all meals claimed and documenting that all Program funds were spent only on allowable Child Nutrition Program costs. Failure to maintain such records may be grounds for denial of reimbursement for meals served and/or administrative costs claimed during the period covered by the records in question. Records are required to be retained for a period of three years after submission of the final Claim for Reimbursement for the fiscal year. Or, if audit findings have not been resolved, the records must be retained beyond the three-year period aslong as required for the resolution of the issues raised by the audit. School food authorities are required to make the information available to the Department and the state agency upon request. Additionally, 2 CFR 200.303 indicates that non-Federal entities receiving Federal awards 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 completeness and accuracy testing of the City of Boston Public Schools Food and Nutrition Services (FNS) monthly claims for reimbursement and recordkeeping, which included the allowability of meals reimbursed, we noted that edit checks were performed and documented monthly at the school site level confirming meal count reports. However, out of a sample of 60 days across 12 schools, there were 14 days across 7 schools that did not agree to the underlying manual tally sheets. Additionally, out of a sample of 12 monthly Field Coordinator reviews across 72 school sites, there were 3 reviews where the City was unable to provide evidence that the Field Coordinator’s review and approval took place. Cause This appears to be due to insufficient policies and procedures surrounding the claims for reimbursement and recordkeeping. Effect Meal count reports utilized for the monthly claims for reimbursement are not complete and accuracy, nor do they have complete and accurate underlying records to substantiate the meals requested for reimbursement. Whether Sampling was Statistically Valid The sample was not intended to be, and was not, a statistically valid sample. Questioned Costs $108 Recommendation We recommend that FNS enhance their policies and procedures to include a more thorough review and approval of meal counts at the school level to ensure allowability as well as completeness and accuracy of the meal counts submitted for reimbursement. Additionally, we recommend FNS re-enforce their policy to ensure underlying records are maintained in accordance with program requirements. View of Responsible Officials from the Auditee FNS agrees with the importance of accurate meal counting and claiming. Because most errors result from arithmetic or data entry mistakes when cafeteria staff record meals served on paper tally sheets and laterenter totals into the computer, we now require that all meals served in the cafeterias be recorded electronically in the POS system at the point of service. We are also exploring ways to use the electronic POS system to record meals that are served in classrooms. The monthly review of school edit check reports by the field coordinators is also now documented using a Google Form that each coordinator is required to complete each month for review by the financial analyst prior to submission of the claim. We will emphasize the importance of proper meal counting and retention of documents during training for cashiers and cafeteria managers.
Finding number: 2024-004 Federal agency: U.S. Department of Agriculture Pass-through agency: Commonwealth Department of Elementary and Second Education Program: Child and Adult Care Food Program ALN #: 10.558 Award number: 13-035-CF-815 Award year: July 1, 2023 to June 30, 2024 Finding: Internal Control over Allowability Prior Year Finding: No Type of Finding: Significant Deficiency Criteria Reimbursement for Operating Costs of Child and Adult Care Centers CACFP centers and sponsors of centers shall be reimbursed solely according to the meals-times-rates formula outlined in II, “Program Procedures.” Costs claimed by the institution as operating costs must be related to preparing and serving meals to children and/or adults under the CACFP (7 CFR 226.11(c) and definition of “operating costs” in 7 CFR 226.2). Additionally, 2 CFR 200.303 indicates that non-Federal entities receiving Federal awards 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 over the allowability of meals reimbursed, we noted that edit checks were performed and documented monthly at the school site level confirming meal count reports. However, out of a sample of 12 monthly Field Coordinator reviews across 72 school sites, there were 3 reviews where the City was unable to provide evidence that the Field Coordinator’s review and approval took place. Cause Field Coordinator edit checks were not precise enough to detect meal count differences for those sites which use a hardcopy tally sheet to count meals priors to entering into the POS system. Additionally, the City was unable to provide documentation showing that the Field Coordinator's review and approval took place in cases. This appears to be due to an insufficient process for documenting and retaining evidence of the Field Coordinator's monthly review. Effect Meal count reports utilized for the monthly claims for reimbursement are not complete and accuracy, nor do they have complete and accurate underlying records to substantiate the meals requested for reimbursement. Whether Sampling was Statistically Valid The sample was not intended to be, and was not, a statistically valid sample. Questioned Costs None Recommendation We recommend that FNS enhance their policies and procedures to include a more thorough review and approval of meal counts at the school level to ensure allowability as well as completeness and accuracy of the meal counts submitted for reimbursement. Additionally, we recommend FNS re-enforce their policy to ensure underlying records are maintained in accordance with program requirements. View of Responsible Officials from the Auditee FNS agrees with the importance of accurate meal counting and claiming. We have implemented a new standard operating procedure for after-school supper meals served under CACFP that includes more thorough review of meal counts and related documentation prior to submission of the claim, monthly documentation of the edit check review by Field Coordinators using a Google Form, and procedures for holding program and site-based staff accountable for correctly documenting meal counts and submitting paperwork in a timely manner.
Finding number: 2024-005 Federal agency: U.S. Department of Housing and Urban Development Pass-through agency: N/A – Direct Funding Program: CDBG Entitlement/Special Purpose Grants Cluster ALN #: 14.218 Award number: Various Award year: Various Finding: Internal Control over FFATA Reporting Prior Year Finding: No Type of Finding: Significant Deficiency Criteria Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No.109-282), as amended by Section 6202 of Public Law 110-252, hereafter referred as the “Transparency Act” that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reporting should be made in FSRS no later than the last day of the month following the month in which the subaward/subaward amendment obligation was made or the subcontract award/subcontract modification was made. Additionally, 2 CFR 200.303 indicates that non-Federal entities receiving Federal awards 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 Special Reporting for Federal Funding Accounting and Transparency Act (FFATA) reports, we were unable to verify the review and approval of the FFATA reports by the City Auditor’s Office for 7 out of 7 reports selected for testing. Additionally, we were unable to verify the reports were submitted timely. Cause This appears to be due to lack of a formal documented review over when the FFATA reports were approved and submitted. Effect The City Auditor’s Office has an insufficient process in place to ensure the timely filing of the FFATA reports. Whether Sampling was Statistically Valid The sample was not intended to be, and was not, a statistically valid sample. Questioned Costs: None Recommendation We recommend that the City Auditor’s Office re-enforce control procedures to ensure that the FFATA reports formal review, approval and submission is documented. View of Responsible Officials from the Auditee The City has performed reviews and approvals prior to FFATA reports being submitted, however it has been verbal due to the proximity of the individuals working on this activity. The City will implement Google Calendar meetings and email confirmations once review is completed so that there is documentation of review approval and submission of FFATA reports.
Finding number: 2024-006 Federal agency: U.S. Department of Education Pass-through agency: Commonwealth Department of Elementary and Secondary Education Program: Title I, Grants to Local Education Agencies ALN #: 84.010 Award number: 0305-000549-2024-0035 Award year: September 12, 2023 to September 30, 2025 Finding: Internal Control and Compliance over Payroll Costs Prior Year Finding: Yes; 2023-006 Type of Finding: Significant Deficiency and Noncompliance Criteria In accordance with 2 CFR 200.430(i)(1), charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; (iv) Encompass both Federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity; and (vi) Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Additionally, 2 CFR 200.303 indicates that non-Federal entities receiving Federal awards 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 allowable costs associated with payroll charges, we noted that the City of Boston Public Schools (BPS) documents time and attendance of employees on daily timesheets signed by the employee, and that these timesheets are approved by the Department Head/Supervisor on a Department Time Summary Report (DTSR). However, for our sample of 60 payroll transactions charged to the program, 3 transactions were not supported by a completed timesheet. Cause This appears to be due to an insufficient system for collecting, filing and maintaining supporting documentation for payroll transactions charged to Federal programs. Effect Insufficient review of payroll documentation increases the risk of inaccurate payroll costs being allocated to a grant award. Additionally, BPS is not in compliance with 2 CFR 200.430(i)(1) regarding documentation in support of salaries and wages charge to the federal program. Whether Sampling was Statistically Valid The sample was not intended to be, and was not, a statistically valid sample. Questioned Costs: Questioned costs of $13,382, for unsupported payroll charges, were charged to ALN # 84.010, Award No. 0305-000549-2024-0035 Recommendation We recommend that BPS re-enforce its policies and procedures to ensure their review of payroll charges and records are retained to ensure that all payroll costs charged to the federal program are supported by documentation as required by 2 CFR 200.430(i)(1). View of Responsible Officials from the Auditee BPS will add additional guidance around timesheet retention to the trainings for new timekeepers and at the annual payroll training held every August.
Finding number: 2024-007 Federal agency: U.S. Department of Education Pass-through agency: Commonwealth Department of Elementary and Secondary Education Program: Title I, Grants to Local Education Agencies ALN #: 84.010 Award number: Various Award year: Various Finding: Internal Control over Annual Report Card, High School Graduation Rate Prior Year Finding: Yes; 2023-009 Type of Finding: Significant Deficiency Criteria An SEA and its LEAs must report graduation rate data for all public high schools at the school, LEA, and state levels using the four-year adjusted cohort rate and, at an SEA’s or LEA’s discretion, one or more extended-year adjusted cohort rates. Graduation rate data must be reported both in the aggregate and disaggregated by the subgroups in Section 1111(c)(2) of the ESEA, homeless status, status as a child in foster care using a four-year adjusted cohort graduation rate (and any extended-year adjusted cohort rates) (ESEA sections 1111(h)(1)(C)(iii)(II) and 8101(23), (25)(20 USC 6311(h)(1)(C)(iii)(II) and 7801(23), (25). Except as noted below, only students who earn a regular high school diploma may be counted as a graduate for purposes of calculating graduation rates. The term “regular high school diploma” means the standard high school diploma that is awarded to the preponderance of students in the state and that is fully aligned with the state standards (but not to alternate academic achievement standards for students with the most significant cognitive disabilities) or a higher diploma. A regular high school diploma does not include a recognized equivalent of a diploma, such as a general equivalency diploma (GED), certificate of completion, certificate of attendance, or similar lesser credential (ESEA, Section 8101(43) (20 USC 7801(43). An SEA may, but is not required to, award a state-defined alternate diploma for students with the most significant cognitive disabilities who take an alternate assessment aligned with alternate academic achievement standards. That diploma must be standards based, aligned with the state’s requirements for a regular high school diploma, and obtained within the time period for which the state ensures the availability of a free appropriate public education. If an SEA awards an alternate diploma, the SEA may count those students in its four-year and any extended-year adjusted cohort graduation rate, even if the student takes more than four years to receive the alternate diploma (ESEA, Section 8101(23)(A)(ii)(I)(bb), (25)(A)(ii)(I)(bb) (20 USC 7801(23)(A)(ii)(I)(bb), (25)(A)(ii)(I)(bb). To remove a student from the cohort, a school or LEA must confirm, in writing, that the student transferred out, emigrated to another country, transferred to a prison or juvenile facility, or is deceased. To confirm that a student transferred out, the school or LEA must have official written documentation that the student enrolled in another school or in an educational program that culminates in the award of a regular high school diploma. A student who is retained in grade, enrolls in a GED program, or leaves school for any other reason may not be counted as having transferred out for the purpose of calculating graduation rate and must remain in the adjusted cohort (ESEA sections 1111(h)(1)(C)(iii)(II) and 8101(23), (25) (20 USC 6311(h)(1)(C)(iii)(II) and 7801(23), (25). Additionally, 2 CFR 200.303 indicates that non-Federal entities receiving Federal awards 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 Per the City of Boston Public School’s (BPS) Student Withdrawal Procedures policy, school leaders are required to sign off, via a Google Form, prior to state data submissions in October, March and June that there is sufficient documentation to support all students who have withdrawn from their school. During our testing of 14 public high schools in which BPS is responsible for reporting graduation data, 6 school leaders did not submit their school’s certification for the data submission timeframe selected. Additionally, we noted 2 schools where the school leader provided a certification; however, their certification was not submitted prior to the state’s data submission. Lastly, we noted that for 2 of 60 students removed from their respective cohorts in the Student Information Management System (SIMS) selected for testing, the City of Boston Public Schools (BPS) could not provide any official written documentation that the student emigrated to another country, is deceased, or is enrolled in another school or in an education program that culminates in the award of a regular high school diploma. Cause This appears to be due to an insufficient system for collecting school leader’s certifications prior to state submission and insufficient review of supporting documentation before removal of students from the adjusted cohort graduation rate. Effect BPS is potentially misstating the number of students in the adjusted cohorts used by the Commonwealth of Massachusetts to determine the 4-year adjusted cohort graduation rate. Whether Sampling was Statistically Valid The sample was not intended to be, and was not, a statistically valid sample. Questioned Costs: None Recommendation BPS management should re-enforce their policy and the requirements with staff related to the removal of students from the adjusted cohorts used to determine the 4-year adjusted cohort graduation rate. In addition,BPS management should re-enforce their policies and procedures to obtain and monitor official written documentation of student transfers that is required to remove students from their respective cohort. View of Responsible Officials from the Auditee While all school leaders have not completed the certification form, BPS central office staff conduct reviews of all withdrawal documentation prior to state reporting submissions. For any student found to not have sufficient documentation in that testing, central office staff reach out to school leaders to alert them to the issue and instruct them to upload sufficient documentation. If that documentation is not uploaded by a certain date, the withdrawal codes for those students are changed to reflect a dropout status. In this year’s sample of 60 students, BPS was able to produce documentation for 58 students, a marked improvement from previous year’s samples.
Finding number: 2024-008 Federal agency: U.S. Department of Education Pass-through agency: Commonwealth Department of Elementary and Secondary Education Program: Title I, Grants to Local Education Agencies ALN #: 84.010 Award number: Various Award year: Various Finding: Internal Control over Assessment System Security Prior Year Finding: Yes; 2023-010 Type of Finding: Significant Deficiency Criteria SEAs, in consultation with LEAs, are required to establish and maintain an assessment system that is valid, reliable, and consistent with relevant professional and technical standards. Within their assessment system, SEAs must have policies and procedures to maintain test security and ensure that LEAs implement those policies and procedures (Title I, Section 1111(b)(2)(B)(iii) of the ESEA (20 USC 6311(b)(2)(B)(iii). Additionally, 2 CFR 200.303 indicates that non-Federal entities receiving Federal awards 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 Each year schools who administer the Massachusetts Comprehensive Assessment System (MCAS) test are required to review and sign the Superintendent’s Assurance of Proper MCAS Test Administration form (Assurance Form), attesting their school will meet all the requirements and test administration protocols as outlined by the City of Boston Public Schools (BPS) and the Massachusetts Department of Secondary Education. During our testing of 16 schools in which BPS is responsible for administering the MCAS test, the form for one school were not obtained. Cause This appears to be due to an insufficient system for collecting and retaining school leader’s certifications ensuring they will meet all requirements and test administration protocols.Effect Schools are potentially not following all requirements and protocols related to the administration of the MCAS test and therefore not maintaining an assessment system that is valid, reliable and consistent with professional technical standards. Whether Sampling was Statistically Valid The sample was not intended to be, and was not, a statistically valid sample. Questioned Costs: None Recommendation BPS management should re-enforce their policy and the requirements to obtain and monitor official written documentation of school’s compliance with the administration of the MCAS test. View of Responsible Officials from the Auditee In addition to the superintendent’s assurance form, staff from the Office of Data and Accountability conduct announced and unannounced visits to schools during MCAS testing. These visits include observations of testing locations and test material storage, as well as support when questions arise. Observation notes are stored centrally.
Finding number: 2024-009 Federal agency: U.S. Department of Education Pass-through agency: Commonwealth Department of Elementary and Secondary Education Program: Title I, Grants to Local Education Agencies; Supporting Effective Instruction State Grants (formerly Improving Teacher Quality State Grants); and Student Support and Academic Enrichment Program ALN #: 84.010; 84.367; 84.424 Award number: Various Award year: Various Finding: Internal Control over Participation of Private School Children Prior Year Finding: Yes; 2023-008 Type of Finding: Significant Deficiency Criteria For programs funded under Title I, Part A (Assistance Listing 84.010), an LEA, after timely and meaningful consultation with private school officials, must provide equitable services to eligible private school children, their teachers, and their families. Eligible private school children are those who reside in a participating public school attendance area and have educational needs under Section 1115(c) of the ESEA (20 USC 6315(c). The amount of funds an LEA makes available for equitable services under Title I, Part A must be equal to the proportion of funds generated by private school children from low-income families who reside in participating public school attendance areas. An LEA must determine the proportional share available for services for eligible private school children based on the total amount of Title I funds received prior to any expenditures or transfers of funds within the program, such as reservations for administration, parental involvement, and district-wide activities (20 USC 6320(a)(4)(A). LEAs determine the proportional share by multiplying the proportion of children from low-income families who attend private schools and live in participating Title I attendance areas by the LEA’s total Title I allocation (including any funds transferred into Title I). For more information, see Title I, Part A of the ESEA: Providing Equitable Services to Eligible Private School Children, Teachers, and Families (October 7, 2019) (https://oese.ed.gov/files/2020/07/equitable-services-guidance100419.pdf). For programs under Title VIII of the ESEA (Assistance Listing 84.011, 84.365, 84.367, and 84.424), an agency, consortium, or entity receiving financial assistance under an applicable program must provide eligible private school children and their teachers or other education personnel with equitable services or other benefits under the program. Before an agency, consortium, or entity makes any decision that affects the opportunity of eligible private school children, teachers, and other educational personnel to participate, the agency, consortium, or entity must engage in timely and meaningful consultation with private school officials. Expenditures for services and benefits to eligible private school children and their teachers andother education personnel must be equal on a per-pupil basis to the expenditures for participating public school children and their teachers and other educational personnel, taking into account the number and education needs of the children, teachers and other education personnel to be services (Section 8501 of ESEA (20 USC 7881); 34 CFR sections 299.6 through 299.9). The control of funds used to provide equitable services to eligible private school students, teachers and other educational personnel, and families, and title to materials, equipment, and property purchased with those funds must be in a public agency and the public agency must administer the funds, materials, equipment, and property. The provision of equitable services must be by employees of a public agency or through a contract by the public agency with an individual, association, agency, or organization that is independent of the private school. The contract must be under the control of the public agency (Sections 1117(d), and 8501(d) of ESEA (20 USC 6320(d), and 7881(d); section 18005(b) of the CARES Act; 34 CFR sections 76.661, 200.64(b)(3), 200.67, and 299.9). Additionally, 2 CFR 200.303 indicates that non-Federal entities receiving Federal awards 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 ALN 84.010: As part of the City of Boston Public School’s (BPS) policy over compliance with private school funding, we noted the data on children from low-income families who reside in the participating Title I public school attendance area and attend the private school is provided by the private school officials, which is then inputted and calculated by BPS on their Title I application. We were able to verify that the amount of funds available for equitable services for BPS was determined by multiplying the proportion of private school children from low-income families residing in participating public school attendance areas by the LEA’s total Title I, Part A allocation. However, we were unable to confirm completeness and accuracy of the eligible private school children counts used in the calculation as BPS did not retain the correspondence from the schools to support the data ultimately included in their calculation. ALN 84.367 and ALN 84.424: As part of BPS’ policy over compliance with private school funding, we noted the private school student count is provided by the private school officials, which is then inputted and calculated by BPS on their Title II and Title IV applications. We were able to verify that the amount of funds available for equitable services for BPS are equal on a per-pupil basis. However, we were unable to confirm completeness and accuracy of the eligible private school children counts used in the calculation as BPS did not retain the correspondence from the schools to support the data ultimately included in their calculation.Cause This appears to be due to an insufficient system in place to ensure retention of all supporting documentation related to compliance with providing equitable services for eligible private school children. Effect BPS is potentially using inaccurate or incomplete data when calculating the amount of funds available for equitable services for eligible private school children. Whether Sampling was Statistically Valid The sample was not intended to be, and was not, a statistically valid sample. Questioned Costs: None Recommendation When utilizing data provided by private school officials to determine the eligible private school child count, we recommend BPS retain copies of their correspondence to ensure completeness and accuracy of the calculation. View of Responsible Officials from the Auditee BPS requests that private schools wishing to participate in receiving Title funds submit detailed student eligibility information, and which is saved to an internal drive, with other supporting documentation pertaining to equitable services compliance. This adjustment to record keeping practice has been instituted beginning with the FY25 grant application cycle.
Finding number: 2024-009 Federal agency: U.S. Department of Education Pass-through agency: Commonwealth Department of Elementary and Secondary Education Program: Title I, Grants to Local Education Agencies; Supporting Effective Instruction State Grants (formerly Improving Teacher Quality State Grants); and Student Support and Academic Enrichment Program ALN #: 84.010; 84.367; 84.424 Award number: Various Award year: Various Finding: Internal Control over Participation of Private School Children Prior Year Finding: Yes; 2023-008 Type of Finding: Significant Deficiency Criteria For programs funded under Title I, Part A (Assistance Listing 84.010), an LEA, after timely and meaningful consultation with private school officials, must provide equitable services to eligible private school children, their teachers, and their families. Eligible private school children are those who reside in a participating public school attendance area and have educational needs under Section 1115(c) of the ESEA (20 USC 6315(c). The amount of funds an LEA makes available for equitable services under Title I, Part A must be equal to the proportion of funds generated by private school children from low-income families who reside in participating public school attendance areas. An LEA must determine the proportional share available for services for eligible private school children based on the total amount of Title I funds received prior to any expenditures or transfers of funds within the program, such as reservations for administration, parental involvement, and district-wide activities (20 USC 6320(a)(4)(A). LEAs determine the proportional share by multiplying the proportion of children from low-income families who attend private schools and live in participating Title I attendance areas by the LEA’s total Title I allocation (including any funds transferred into Title I). For more information, see Title I, Part A of the ESEA: Providing Equitable Services to Eligible Private School Children, Teachers, and Families (October 7, 2019) (https://oese.ed.gov/files/2020/07/equitable-services-guidance100419.pdf). For programs under Title VIII of the ESEA (Assistance Listing 84.011, 84.365, 84.367, and 84.424), an agency, consortium, or entity receiving financial assistance under an applicable program must provide eligible private school children and their teachers or other education personnel with equitable services or other benefits under the program. Before an agency, consortium, or entity makes any decision that affects the opportunity of eligible private school children, teachers, and other educational personnel to participate, the agency, consortium, or entity must engage in timely and meaningful consultation with private school officials. Expenditures for services and benefits to eligible private school children and their teachers andother education personnel must be equal on a per-pupil basis to the expenditures for participating public school children and their teachers and other educational personnel, taking into account the number and education needs of the children, teachers and other education personnel to be services (Section 8501 of ESEA (20 USC 7881); 34 CFR sections 299.6 through 299.9). The control of funds used to provide equitable services to eligible private school students, teachers and other educational personnel, and families, and title to materials, equipment, and property purchased with those funds must be in a public agency and the public agency must administer the funds, materials, equipment, and property. The provision of equitable services must be by employees of a public agency or through a contract by the public agency with an individual, association, agency, or organization that is independent of the private school. The contract must be under the control of the public agency (Sections 1117(d), and 8501(d) of ESEA (20 USC 6320(d), and 7881(d); section 18005(b) of the CARES Act; 34 CFR sections 76.661, 200.64(b)(3), 200.67, and 299.9). Additionally, 2 CFR 200.303 indicates that non-Federal entities receiving Federal awards 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 ALN 84.010: As part of the City of Boston Public School’s (BPS) policy over compliance with private school funding, we noted the data on children from low-income families who reside in the participating Title I public school attendance area and attend the private school is provided by the private school officials, which is then inputted and calculated by BPS on their Title I application. We were able to verify that the amount of funds available for equitable services for BPS was determined by multiplying the proportion of private school children from low-income families residing in participating public school attendance areas by the LEA’s total Title I, Part A allocation. However, we were unable to confirm completeness and accuracy of the eligible private school children counts used in the calculation as BPS did not retain the correspondence from the schools to support the data ultimately included in their calculation. ALN 84.367 and ALN 84.424: As part of BPS’ policy over compliance with private school funding, we noted the private school student count is provided by the private school officials, which is then inputted and calculated by BPS on their Title II and Title IV applications. We were able to verify that the amount of funds available for equitable services for BPS are equal on a per-pupil basis. However, we were unable to confirm completeness and accuracy of the eligible private school children counts used in the calculation as BPS did not retain the correspondence from the schools to support the data ultimately included in their calculation.Cause This appears to be due to an insufficient system in place to ensure retention of all supporting documentation related to compliance with providing equitable services for eligible private school children. Effect BPS is potentially using inaccurate or incomplete data when calculating the amount of funds available for equitable services for eligible private school children. Whether Sampling was Statistically Valid The sample was not intended to be, and was not, a statistically valid sample. Questioned Costs: None Recommendation When utilizing data provided by private school officials to determine the eligible private school child count, we recommend BPS retain copies of their correspondence to ensure completeness and accuracy of the calculation. View of Responsible Officials from the Auditee BPS requests that private schools wishing to participate in receiving Title funds submit detailed student eligibility information, and which is saved to an internal drive, with other supporting documentation pertaining to equitable services compliance. This adjustment to record keeping practice has been instituted beginning with the FY25 grant application cycle.
Finding number: 2024-009 Federal agency: U.S. Department of Education Pass-through agency: Commonwealth Department of Elementary and Secondary Education Program: Title I, Grants to Local Education Agencies; Supporting Effective Instruction State Grants (formerly Improving Teacher Quality State Grants); and Student Support and Academic Enrichment Program ALN #: 84.010; 84.367; 84.424 Award number: Various Award year: Various Finding: Internal Control over Participation of Private School Children Prior Year Finding: Yes; 2023-008 Type of Finding: Significant Deficiency Criteria For programs funded under Title I, Part A (Assistance Listing 84.010), an LEA, after timely and meaningful consultation with private school officials, must provide equitable services to eligible private school children, their teachers, and their families. Eligible private school children are those who reside in a participating public school attendance area and have educational needs under Section 1115(c) of the ESEA (20 USC 6315(c). The amount of funds an LEA makes available for equitable services under Title I, Part A must be equal to the proportion of funds generated by private school children from low-income families who reside in participating public school attendance areas. An LEA must determine the proportional share available for services for eligible private school children based on the total amount of Title I funds received prior to any expenditures or transfers of funds within the program, such as reservations for administration, parental involvement, and district-wide activities (20 USC 6320(a)(4)(A). LEAs determine the proportional share by multiplying the proportion of children from low-income families who attend private schools and live in participating Title I attendance areas by the LEA’s total Title I allocation (including any funds transferred into Title I). For more information, see Title I, Part A of the ESEA: Providing Equitable Services to Eligible Private School Children, Teachers, and Families (October 7, 2019) (https://oese.ed.gov/files/2020/07/equitable-services-guidance100419.pdf). For programs under Title VIII of the ESEA (Assistance Listing 84.011, 84.365, 84.367, and 84.424), an agency, consortium, or entity receiving financial assistance under an applicable program must provide eligible private school children and their teachers or other education personnel with equitable services or other benefits under the program. Before an agency, consortium, or entity makes any decision that affects the opportunity of eligible private school children, teachers, and other educational personnel to participate, the agency, consortium, or entity must engage in timely and meaningful consultation with private school officials. Expenditures for services and benefits to eligible private school children and their teachers andother education personnel must be equal on a per-pupil basis to the expenditures for participating public school children and their teachers and other educational personnel, taking into account the number and education needs of the children, teachers and other education personnel to be services (Section 8501 of ESEA (20 USC 7881); 34 CFR sections 299.6 through 299.9). The control of funds used to provide equitable services to eligible private school students, teachers and other educational personnel, and families, and title to materials, equipment, and property purchased with those funds must be in a public agency and the public agency must administer the funds, materials, equipment, and property. The provision of equitable services must be by employees of a public agency or through a contract by the public agency with an individual, association, agency, or organization that is independent of the private school. The contract must be under the control of the public agency (Sections 1117(d), and 8501(d) of ESEA (20 USC 6320(d), and 7881(d); section 18005(b) of the CARES Act; 34 CFR sections 76.661, 200.64(b)(3), 200.67, and 299.9). Additionally, 2 CFR 200.303 indicates that non-Federal entities receiving Federal awards 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 ALN 84.010: As part of the City of Boston Public School’s (BPS) policy over compliance with private school funding, we noted the data on children from low-income families who reside in the participating Title I public school attendance area and attend the private school is provided by the private school officials, which is then inputted and calculated by BPS on their Title I application. We were able to verify that the amount of funds available for equitable services for BPS was determined by multiplying the proportion of private school children from low-income families residing in participating public school attendance areas by the LEA’s total Title I, Part A allocation. However, we were unable to confirm completeness and accuracy of the eligible private school children counts used in the calculation as BPS did not retain the correspondence from the schools to support the data ultimately included in their calculation. ALN 84.367 and ALN 84.424: As part of BPS’ policy over compliance with private school funding, we noted the private school student count is provided by the private school officials, which is then inputted and calculated by BPS on their Title II and Title IV applications. We were able to verify that the amount of funds available for equitable services for BPS are equal on a per-pupil basis. However, we were unable to confirm completeness and accuracy of the eligible private school children counts used in the calculation as BPS did not retain the correspondence from the schools to support the data ultimately included in their calculation.Cause This appears to be due to an insufficient system in place to ensure retention of all supporting documentation related to compliance with providing equitable services for eligible private school children. Effect BPS is potentially using inaccurate or incomplete data when calculating the amount of funds available for equitable services for eligible private school children. Whether Sampling was Statistically Valid The sample was not intended to be, and was not, a statistically valid sample. Questioned Costs: None Recommendation When utilizing data provided by private school officials to determine the eligible private school child count, we recommend BPS retain copies of their correspondence to ensure completeness and accuracy of the calculation. View of Responsible Officials from the Auditee BPS requests that private schools wishing to participate in receiving Title funds submit detailed student eligibility information, and which is saved to an internal drive, with other supporting documentation pertaining to equitable services compliance. This adjustment to record keeping practice has been instituted beginning with the FY25 grant application cycle.
Finding number: 2024-010 Federal agency: U.S. Department of Education Pass-through agency: Commonwealth Department of Elementary and Secondary Education Program: Special Education (IDEA) Cluster ALN #: 84.027; 84.173 Award number: 240-714716-2023-0035; 0240-000558-2024-0035 Award year: October 3, 2022 to September 30, 2024; October 2, 2023 to September 30, 2025 Finding: Internal Control and Compliance over Payroll Costs Prior Year Finding: Yes; 2023-011 Type of Finding: Significant Deficiency and Noncompliance Criteria In accordance with 2 CFR 200.430(i)(1), charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; (iv) Encompass both Federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity; and (vi) Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Additionally, 2 CFR 200.303 indicates that non-Federal entities receiving Federal awards must establish and maintain effective internal control over the Federal award that provides reasonable assurance that thenon-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 allowable costs associated with payroll charges, we noted that the City of Boston Public Schools (BPS) documents time and attendance of employees on daily timesheets signed by the employee, and that these timesheets are approved by the Department Head/Supervisor on a Department Time Summary Report (DTSR). However, for our sample of 60 payroll transactions charged to the program, 4 DTSR’s were not approved. Additionally, although the DTSR was approved, the transactions were not supported by a completed timesheet for an additional 3 selections. Cause This appears to be due to an insufficient system for collecting, filing and maintaining supporting documentation for payroll transactions charged to Federal programs. Effect Insufficient review of payroll documentation increases the risk of inaccurate payroll costs being allocated to a grant award. Additionally, BPS is not in compliance with 2 CFR 200.430(i)(1) regarding documentation in support of salaries and wages charge to the federal program. Whether Sampling was Statistically Valid The sample was not intended to be, and was not, a statistically valid sample. Questioned Costs: Questioned costs of $13,149, for unsupported payroll charges Recommendation We recommend that BPS re-enforce its policies and procedures to ensure their review of payroll charges and records are retained and documented to ensure that all payroll costs charged to the federal program are supported by documentation as required by 2 CFR 200.430(i)(1). View of Responsible Officials from the Auditee BPS will add additional guidance around timesheet retention to the trainings for new timekeepers and at the annual payroll training held every August. Additionally, BPS is exploring electronic timesheets, with a pilot focusing on staff that work at multiple sites.
Finding number: 2024-010 Federal agency: U.S. Department of Education Pass-through agency: Commonwealth Department of Elementary and Secondary Education Program: Special Education (IDEA) Cluster ALN #: 84.027; 84.173 Award number: 240-714716-2023-0035; 0240-000558-2024-0035 Award year: October 3, 2022 to September 30, 2024; October 2, 2023 to September 30, 2025 Finding: Internal Control and Compliance over Payroll Costs Prior Year Finding: Yes; 2023-011 Type of Finding: Significant Deficiency and Noncompliance Criteria In accordance with 2 CFR 200.430(i)(1), charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; (iv) Encompass both Federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity; and (vi) Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Additionally, 2 CFR 200.303 indicates that non-Federal entities receiving Federal awards must establish and maintain effective internal control over the Federal award that provides reasonable assurance that thenon-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 allowable costs associated with payroll charges, we noted that the City of Boston Public Schools (BPS) documents time and attendance of employees on daily timesheets signed by the employee, and that these timesheets are approved by the Department Head/Supervisor on a Department Time Summary Report (DTSR). However, for our sample of 60 payroll transactions charged to the program, 4 DTSR’s were not approved. Additionally, although the DTSR was approved, the transactions were not supported by a completed timesheet for an additional 3 selections. Cause This appears to be due to an insufficient system for collecting, filing and maintaining supporting documentation for payroll transactions charged to Federal programs. Effect Insufficient review of payroll documentation increases the risk of inaccurate payroll costs being allocated to a grant award. Additionally, BPS is not in compliance with 2 CFR 200.430(i)(1) regarding documentation in support of salaries and wages charge to the federal program. Whether Sampling was Statistically Valid The sample was not intended to be, and was not, a statistically valid sample. Questioned Costs: Questioned costs of $13,149, for unsupported payroll charges Recommendation We recommend that BPS re-enforce its policies and procedures to ensure their review of payroll charges and records are retained and documented to ensure that all payroll costs charged to the federal program are supported by documentation as required by 2 CFR 200.430(i)(1). View of Responsible Officials from the Auditee BPS will add additional guidance around timesheet retention to the trainings for new timekeepers and at the annual payroll training held every August. Additionally, BPS is exploring electronic timesheets, with a pilot focusing on staff that work at multiple sites.
Finding number: 2024-011 Federal agency: U.S. Department of Education Pass-through agency: Commonwealth Department of Elementary and Secondary Education Program: Student Support and Academic Enrichment Program ALN #: 84.424 Award number: 0309-000548-2024-0035 Award year: September 12, 2023 to September 30, 2025 Finding: Internal Control and Compliance over Period of Performance Prior Year Finding: No Type of Finding: Material Weakness and Material Noncompliance Criteria Period of Performance A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308, 200.309, and 200.403(h). A period of performance may contain one or more budget periods. LEAs and SEAs must obligate funds during the 27 months, extending from July 1 of the fiscal year for which the funds were appropriated through September 30 of the second following fiscal year. This maximum period includes a 15-month period of initial availability plus a 12-month period for carryover. Additionally, 2 CFR 200.303 indicates that non-Federal entities receiving Federal awards 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 period of performance associated with those expenditures charged to grant awards which began during fiscal year 2024 and cost transfers, we noted noncompliance for 2 expenditures out of a sample of 4. Per review of the underlying vendor invoices, the service period for these expenditures started prior to the award start date of September 12, 2023.Cause This appears to be due to an insufficient review of invoices to ensure the underlying services performed by vendors are within the grant awards outlined grant period. Effect Insufficient review of vendor invoices increases the risk of costs being charged to a grant award outside its approved budget period. Whether Sampling was Statistically Valid The sample was not intended to be, and was not, a statistically valid sample. Questioned Costs: $1,250,864 Recommendation We recommend that the Boston Public Schools (BPS) re-enforce its policies and procedures to ensure their review of expenditures charged to the award also includes a detailed review of the underlying vendor service period. View of Responsible Officials from the Auditee BPS will take a multi-step approach to ensuring accuracy of spending to the grant award period: 1. Reinforce our existing practice of ensuring that period of service is reflected on Purchase Orders, which it was for the PO’s in question. 2. Working with major suppliers to ensure they understand the grant funded nature of their program and the eligible dates of service, which are outlined on the Purchase Order 3. Review / Update training for our Accounts Payable team on ensuring that the period of service on an invoice matches the period of service on the Purchase Order 4. Review / Update training for our State & Federal Grants, Programs, and Compliance teams to ensure that expenses are reviewed before the end of the grant period to ensure compliance with federal regulations.
Finding number: 2024-012 Federal agency: U.S. Department of Homeland Security Pass-through agency: N/A – Direct Funding Program: Staffing for Adequate Fire and Emergency Response (SAFER) ALN #: 97.083 Award number: EMW-2020-FF-00996 Award year: February 27, 2022 to February 26, 2025 Finding: Internal Control over Financial Reporting and Performance Reporting Prior Year Finding: Yes; 2023-015 and 2023-016 Type of Finding: Significant Deficiency Criteria Financial Reporting Per the Department of Homeland Security (DHS) Notice of Funding Opportunity (NOFO) for Fiscal Year 2020 Staffing for Adequate Fire and Emergency Response (SAFER) Grant Program, recipients of the SAFER Program grants are required to submit an FFR (SF-425) on a semi-annual basis. The FFR is to be submitted using the online FEMA GO based on the calendar year beginning with the period after the start of the period of performance. Grant recipients are required to submit an FFR throughout the entire period of performance of the grant. Reports are due: 1. No later than July 30 (for the period January 1 – June 30) 2. No later than January 30 (for the period July 1 – December 31) 3. Within 120 days after the end of the period of performance Performance Reporting Per the Department of Homeland Security (DHS) Notice of Funding Opportunity (NOFO) for Fiscal Year 2020 Staffing for Adequate Fire and Emergency Response (SAFER) Grant Program and the Federal Emergency Management Agency (FEMA) Grant Programs Directorate Information Bulletin No. 471, the recipient is responsible for completing and submitting a Programmatic Performance Report (PPR) using FEMA GO. For those awards which began in prior year, the PPR is due every six months based on the calendar year until the period of performance ends, and no later than 30 days after the six-month period end.Additionally, 2 CFR 200.303 indicates that non-Federal entities receiving Federal awards 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 Financial Reporting During our testing of both semi-annual Federal Financial SF-425 (SF-425) reports, we were unable to verify approval of the SF-425 for reporting period ending 12/31/2023 by the Deputy Commissioner of the Boston Fire Department prior to submission. Performance Reporting Additionally, during our testing over both required semi-annual performance progress reports (PPRs) for fiscal year 2023, we noted the semi-annual PPR covering July 1, 2023 to December 31, 2023 was filed 65 days late on April 5, 2024. Additionally, we noted the semi-annual PPR covering January 1, 2024 to June 30, 2024 was filed one day late on August 1, 2024. Cause Financial Reporting This appears to be due to lack of a formal documented review over the semi-annual SF-425 reports. Progress Reporting This appears to be due to inadequate program detail to ensure complete and accurate information for reporting at the time of the submission deadlines. Effect Financial Reporting The Boston Fire Department (BFD) does not have effective internal controls over the Federal award to ensure the completeness and accuracy of the semi-annual SF-425 Financial Report. Performance Reporting The BFD has an insufficient process in place to ensure completeness and accuracy of the period expenditures and the timely filing of the semi-annual PPRs. Whether Sampling was Statistically Valid The sample was not intended to be, and was not, a statistically valid sample. Questioned Costs NoneRecommendation We recommend that the BFD re-enforce control procedures to ensure that the SF-425 Financial Reports formal review and approval is documented. Additionally, we recommend that the BPD implement control procedures to ensure that the PPRs are filed timely and reviewed against supporting schedules to ensure completeness and accuracy of each report prior to submission. View of Responsible Officials from the Auditee BFD has taken considerable steps to incorporate and implement proper control procedures surrounding all grant related matters, i.e. programmatic and financial reporting and oversight. In August 2023, the department hired a Financial Grants Manager with more than ten years of experience working in municipal government with grants to ensure proper financial oversight is established and enforced. In February 2024, the department hired a Programmatic Grants Manager to ensure and implement proper policies and procedures regarding programmatic aspects of the department’s external funds. The department has acquired licenses for Airtable, an online platform for creating and sharing relational databases. It combines the features of a database and a spreadsheet, allowing users to store, organize, and collaborate on information about anything. This platform allows the department to track upcoming reporting deadlines, maintain information regarding grant related purchases, etc. The Programmatic and Financial Grants Manager have been reviewing all currently funded grants, to include SAFER, to ensure that the general ledger postings accurately reflect allowable costs so that when reports are filed the information reported in FEMA GO is accurate and complete. The Department projected that timely and accurate filing will be in effect no later than in January 2025 in order to complete the semi-annual reports due for the period ending December 31, 2024. The department had a high success rate in ensuring timely completion, approval and submission of financial reports for the most recently reporting period.
FINDING 2024-002 Information on the federal program: Subject: Education Stabilization Fund (ESSER) – Internal Controls Federal Agency: Department of Education Federal Program: COVID-19 – Education Stabilization Fund Assistance Listing Number: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Finding: Material Weakness Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following: (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 Financial reporting . . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Reporting compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: There were no questioned costs identified. Context: The School Corporation was required to submit two Annual Data Reports to the Indiana Department of Education (IDOE) during the audit period to meet federal reporting requirements for ESSER grant awards. We noted that the ESSER II and ESSER III amounts reported on the Year 2 report ($241,092 and $180,266, respectively) did not agree to the underlying expenditure records ($226,005 and $88,368, respectively, for the period of July 1, 2021 through June 30, 2022). We also noted that the ESSER II and ESSER III amounts reported on the Year 3 report ($136,199 and $255,826, respectively) did not agree to the underlying expenditure records ($170,866 and $192,735, respectively, for the period of July 1, 2021 through June 30, 2022). Additionally, the number of employees reported on the Year 4CrossAct report was overstated by 4 employees. Identification as a repeat finding: No. Recommendation: We recommend someone other than the preparer of the report perform a documented review prior to submission to validate the accuracy and completeness of the data submitted. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2024-002 Information on the federal program: Subject: Education Stabilization Fund (ESSER) – Internal Controls Federal Agency: Department of Education Federal Program: COVID-19 – Education Stabilization Fund Assistance Listing Number: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Finding: Material Weakness Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following: (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 Financial reporting . . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Reporting compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: There were no questioned costs identified. Context: The School Corporation was required to submit two Annual Data Reports to the Indiana Department of Education (IDOE) during the audit period to meet federal reporting requirements for ESSER grant awards. We noted that the ESSER II and ESSER III amounts reported on the Year 2 report ($241,092 and $180,266, respectively) did not agree to the underlying expenditure records ($226,005 and $88,368, respectively, for the period of July 1, 2021 through June 30, 2022). We also noted that the ESSER II and ESSER III amounts reported on the Year 3 report ($136,199 and $255,826, respectively) did not agree to the underlying expenditure records ($170,866 and $192,735, respectively, for the period of July 1, 2021 through June 30, 2022). Additionally, the number of employees reported on the Year 4CrossAct report was overstated by 4 employees. Identification as a repeat finding: No. Recommendation: We recommend someone other than the preparer of the report perform a documented review prior to submission to validate the accuracy and completeness of the data submitted. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2024-003 Information on the federal program: Subject: Education Stabilization Fund – Special Tests and Provisions - Wage Rate Requirements Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listing Number: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Tests and Provisions - Wage Rate Requirements Audit Findings: Significant Deficiency Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 29 CFR 5.5 states in part: (1) Minimum wages. (i) All laborers and mechanics employed or working upon the site of the work (or under the United States Housing Act of 1937 or under the Housing Act of 1949 in the construction or development of the project), will be paid unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account (except such payroll deductions as are permitted by regulations issued by the Secretary of Labor under the Copeland Act (29 CFR part 3)), the full amount of wages and bona fide fringe benefits (or cash equivalents thereof) due at time of payment computed at rates not less than those contained in the wage determination of the Secretary of Labor which is attached hereto and made a part hereof, regardless of any contractual relationship which may be alleged to exist between the contractor and such laborers and mechanics… (3)(ii)(A) The contractor shall submit weekly for each week in which any contract work is performed a copy of all payrolls to the (write in name of appropriate federal agency) if the agency is a party to the contract, but if the agency is not such a party, the contractor will submit the payrolls to the applicant, sponsor, or owner, as the case may be, for transmission to the (write in name of agency). 2 CFR 200 Appendix II states in part: In addition to other provisions required by the Federal agency or non-Federal entity; all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following, as applicable. . . . (40 U.S.C. 3141-3148). When required by Federal program legislation, all prime construction contracts in excess of $2,000 awarded by non-Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, and 3146-3148) as supplemented by Department of Labor regulations (29 CFR Part 5, “Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction”). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor. In addition, contractors must be required to pay wages not less than once a week.. . .” Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Special Tests and Provisions – Wage Rate Requirements compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The failure to design and implement an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Special Tests and Provisions – Wage Rate Requirements compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: The School Corporation had improvements at various buildings. It did not properly include Davis- Bacon wage rate requirements in the vendor contract, nor did it obtain weekly payroll reports certifications from the construction vendor to monitor compliance with Davis-Bacon wage rate requirements. The total project cost disbursed during the audit period was $73,209 which included materials and labor. Identification as a repeat finding: No. Recommendation: We recommend the School Corporation implement a formal process to ensure the required weekly payroll reports certifications are collected and reviewed for projects requiring labor installation and funded by federal grants subject to Davis-Bacon wage rate requirements to ensure compliance with federal regulations. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2024-003 Information on the federal program: Subject: Education Stabilization Fund – Special Tests and Provisions - Wage Rate Requirements Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listing Number: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Tests and Provisions - Wage Rate Requirements Audit Findings: Significant Deficiency Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 29 CFR 5.5 states in part: (1) Minimum wages. (i) All laborers and mechanics employed or working upon the site of the work (or under the United States Housing Act of 1937 or under the Housing Act of 1949 in the construction or development of the project), will be paid unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account (except such payroll deductions as are permitted by regulations issued by the Secretary of Labor under the Copeland Act (29 CFR part 3)), the full amount of wages and bona fide fringe benefits (or cash equivalents thereof) due at time of payment computed at rates not less than those contained in the wage determination of the Secretary of Labor which is attached hereto and made a part hereof, regardless of any contractual relationship which may be alleged to exist between the contractor and such laborers and mechanics… (3)(ii)(A) The contractor shall submit weekly for each week in which any contract work is performed a copy of all payrolls to the (write in name of appropriate federal agency) if the agency is a party to the contract, but if the agency is not such a party, the contractor will submit the payrolls to the applicant, sponsor, or owner, as the case may be, for transmission to the (write in name of agency). 2 CFR 200 Appendix II states in part: In addition to other provisions required by the Federal agency or non-Federal entity; all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following, as applicable. . . . (40 U.S.C. 3141-3148). When required by Federal program legislation, all prime construction contracts in excess of $2,000 awarded by non-Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, and 3146-3148) as supplemented by Department of Labor regulations (29 CFR Part 5, “Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction”). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor. In addition, contractors must be required to pay wages not less than once a week.. . .” Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Special Tests and Provisions – Wage Rate Requirements compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The failure to design and implement an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Special Tests and Provisions – Wage Rate Requirements compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: The School Corporation had improvements at various buildings. It did not properly include Davis- Bacon wage rate requirements in the vendor contract, nor did it obtain weekly payroll reports certifications from the construction vendor to monitor compliance with Davis-Bacon wage rate requirements. The total project cost disbursed during the audit period was $73,209 which included materials and labor. Identification as a repeat finding: No. Recommendation: We recommend the School Corporation implement a formal process to ensure the required weekly payroll reports certifications are collected and reviewed for projects requiring labor installation and funded by federal grants subject to Davis-Bacon wage rate requirements to ensure compliance with federal regulations. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2024-004 Information on the federal program: Subject: Child Nutrition Cluster - Internal Controls Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program Assistance Listing Number: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY2023, FY2024 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Finding: Significant Deficiency Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the eligibility compliance requirement. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the Activities Allowed or Unallowed, Allowable Costs/Cost Principles requirements. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: There were no questioned costs identified. Context: We noted there was no review of 4 timecards selected for testing in a sample of 40 payroll transactions. Identification as a repeat finding, if applicable: No. Recommendation: We recommended that the School Corporation's management ensure all timecards are formally reviewed and the School Corporation maintain the supporting documentation. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2024-004 Information on the federal program: Subject: Child Nutrition Cluster - Internal Controls Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program Assistance Listing Number: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY2023, FY2024 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Finding: Significant Deficiency Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the eligibility compliance requirement. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the Activities Allowed or Unallowed, Allowable Costs/Cost Principles requirements. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: There were no questioned costs identified. Context: We noted there was no review of 4 timecards selected for testing in a sample of 40 payroll transactions. Identification as a repeat finding, if applicable: No. Recommendation: We recommended that the School Corporation's management ensure all timecards are formally reviewed and the School Corporation maintain the supporting documentation. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2024-004 Information on the federal program: Subject: Child Nutrition Cluster - Internal Controls Federal Agency: Department of Agriculture Federal Program: School Breakfast Program, National School Lunch Program Assistance Listing Number: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY2023, FY2024 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Finding: Significant Deficiency Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the eligibility compliance requirement. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the Activities Allowed or Unallowed, Allowable Costs/Cost Principles requirements. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: There were no questioned costs identified. Context: We noted there was no review of 4 timecards selected for testing in a sample of 40 payroll transactions. Identification as a repeat finding, if applicable: No. Recommendation: We recommended that the School Corporation's management ensure all timecards are formally reviewed and the School Corporation maintain the supporting documentation. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Finding Number: 2024-001 Federal Agency: U.S. Department of Health and Human Services Pass-through Agency: State of Vermont, Division of Alcohol and Drug Abuse Program: Block Grants for Prevention and Treatment of Substance Abuse Assistance Listing Number: 93.959 Award Number: 03420-09722 Award Year: 2024 Finding: Internal controls over financial reporting Prior Year Finding: N/A Type of Finding: Significant Deficiency Criteria In accordance with 2 CFR §200.303, the non-federal entity must: (1) Establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "internal Control Integrated Framework", issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). (2) Comply with U.S. Constitution, federal statutes, regulations, and the terms and conditions of the federal awards. (3) Evaluate and monitor the non-federal entity's compliance with statutes, regulations, and the terms and conditions of the federal awards. (4) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. (5) Take reasonable measures to safeguard protected personally identifiable information and other information the federal awarding agency or pass-through entity designates as sensitive or the non-federal entity considers sensitive consistent with applicable federal, state, local, and tribal laws regarding privacy and responsibility over confidentiality. Condition Management did not have effective internal controls over financial reporting. A large number of material audit adjustments were required and ending balances were not correct. This creates a higher risk of material misstatement of federal award expenditures. Cause It appears that these were isolated incidents. The causes were due to a one-time grant transfer from another organization which created confusion and some accidental oversight. Effect Poor internal controls over financial reporting create the opportunity for fraud or abuse and can cause the financial statements or the schedule of federal expenditures to be materially misstated. Whether Sampling was Statistically Valid The sample was not intended to be, and was not, a statistically valid sample. Questioned Costs: None Recommendation: We recommend that the Organization implement stronger internal controls over financial reporting and to strengthen the fiscal year end accounting close process. We also recommend that the Organization adopt a formal policy for month and year end accounting. View of Responsible Officals from the Auditee: Management agrees with this finding and recommendation. The Organization is going to strenghten their internal controls in many different ways. Proper segregation of duties will be implemented for all significant accounting functions and strictly followed so that no one single individual has complete control over all aspects of a financial transaction. Clear approval processes will be established so that workflows are reviewed and approved. Finally, periodic reconciliations will be performed and documented so that ending balances are correct going forward.
Reference Number: 2024-002 – Inadequate Documentation for Participant Stipends Federal Program Title: WIOA Cluster Federal Assistance Listing Number: 17.258 Federal Agency: Department of Labor (DOL) Pass-Through Entity: State of California Employment Development Department Federal Award Number and Year: AA211079 Fiscal Year 2023-2024 Category of Finding: Activities Allowed or Unallowed; Allowable Costs/Cost Principles Type of Finding: Material Weakness in Internal Control over Compliance, Instance of Noncompliance Criteria Title 2 Code of Federal Regulations (2 CFR) §200.343(g) states that for costs to be allowable under federal awards, costs be adequately documented. 2 CFR §200.303 states that the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 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 audit of compliance with activities allowed or unallowed and allowable costs/cost principles, we noted that the Organization was unable to provide adequate supporting documentation (attendance sheets and/or sign in sheets with signatures) for thirty-nine (39) direct non payroll costs. Cause The Organization has experienced significant turnover in key personnel in the Organization’s finance department and management in past years. Absent robust accounting policies and procedures, when vacancies occur, information can be lost and as individuals are getting up to speed, some processes may not be fully executed if they are manual and not fully embedded into an automated system. Effect Not providing sufficient documentation to auditors to demonstrate compliance with federal compliance results in an audit scope limitation. Failure to adequately document and maintain support for expenditures results in non-compliance with 2 CFR) §200.343(g) and there is a risk that federal funds may be used for unallowable activities and/or costs. Questioned Costs Questioned costs were not determinable. Context For thirty-nine (39) out of sixty (60) direct nonpayroll costs selected for testing, the Company did not provide adequate supporting documentation (attendance sheets and/or sign in sheets with signatures). The sample was not a statistically valid sample. Recommendation We recommend that the Organization develop and document processes and procedures for participant attendance tracking and participant stipends paid. Views of Responsible Officials and Planned Corrective Action Person responsible: Leona Smith Di Faustino, Interim Executive Director Corrective Action Plan: The organization will strengthen and document a formal process for documenting attendance. This process will include provide training to employees responsible for tracking attendance, implementing a signature sheet to be submitted and reviewed by program managers after each class, and incorporate review of attendance sheets into the payment processes for participant stipend payments ensuring only participants who correctly documented attendance are able to receive the stipend funds. Anticipated Implementation Date: July 1, 2025
Criteria Title 2 Code of Federal Regulations (2 CFR) §200.303 states that the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 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 participant intake forms for the WIOA programs, we noted that thirty-nine (39) forms did not contain documentation of review and approval by the Executive Director and there was no documented process for case management participant eligibility determinations. This is a repeat finding of 2023-003. Cause The Organization has experienced significant turnover in key personnel in the Organization’s finance department and management in past years. Absent robust accounting policies and procedures, when vacancies occur, information can be lost and as individuals are getting up to speed, some processes may not be fully executed if they are manual and not fully embedded into an automated system. Effect No documented review processes for participant intake forms or participant eligibility determinations are deficiencies in internal control and could result in ineligible participants being noted as eligible and included in the program. Questioned Costs Questioned costs were not identified. Context For the thirty-nine (39) participate intake forms selected for testing, all thirty-nine were missing evidence of review. The sample was not a statistically valid sample. Recommendation We recommend that the Organization develop and document review processes to ensure all participant intake forms are reviewed by a second person in addition to the case manager and that all participant eligibility determinations are reviewed. Views of Responsible Officials and Planned Corrective Action Person responsible: Leona Smith Di Faustino, Interim Executive Director Corrective Action Plan: During the period being audited internal controls for program participants documents were not reviewed by the former Executive Director. The new Executive Director has implemented a check and balance procedure that requires the Case Manager, Program Manager, and Executive Director to review and sign off on participant application forms and to be documented on the participants application before the participant can move forward in the program. Anticipated Implementation Date: July 1, 2024
Homeowner Assistance Fund—Service Organization Internal Controls Background: Under the American Rescue Plan Act (ARPA) of 2021, the U.S. Department of the Treasury (U.S. Treasury) provided funding to DOA’s Division of Energy, Housing and Community Resources (DEHCR) for the HAF program. This program was established to mitigate financial hardships associated with the public health emergency, including for the purpose of preventing homeowner mortgage delinquencies, defaults, foreclosures, losses of utilities or home energy services, and displacements of homeowners experiencing financial hardship after January 21, 2020. To administer the HAF program, DOA contracted with a service organization to host and maintain a computer system to assist in determining the eligibility of individuals applying for HAF benefits, approving these benefits, storing information on HAF applicants, and for reporting HAF activities to the federal government. During our FY 2022-23 single audit (report 24-3), we identified concerns that DOA did not have sufficient procedures in place to obtain the service organization audit report from its service organization for HAF nor to use the service organization audit report as a tool to assess the effectiveness of the internal controls for the computer system maintained by the service organization. We recommended that DOA obtain the service organization audit report for the computer system used to administer the HAF program and complete a review of this report, assess the effectiveness of the internal controls for the computer system maintained by the service organization, and review the complementary user entity controls at DOA that are required to be in place for it to rely on the service organization audit report. In addition, DOA was to document its review, and to implement user entity controls if needed (Finding 2023-101). In its response to our recommendations, and as noted in the Summary Schedule of Prior Audit Findings, DOA requested and received the service organization audit report. In addition, DOA developed procedures to: -review the service organization audit report; -assess of the effectiveness of the internal controls on the computer system maintained by the service organization; and -review the complementary user entity controls that are required to be in place for it to rely on the service organization audit report, and to implement user entity controls if needed. DOA indicated it had completed in June 2024 a preliminary review of the service organization audit report, including the opinion, testing exceptions, and complementary user-entity controls, but DOA had not completed its assessment of the effectiveness of the internal controls on the computer system maintained by the service organization nor documented its review. Criteria: Under 2 CFR s. 200.303, DOA is responsible for establishing and maintaining effective internal control over federal awards to provide reasonable assurance that federal awards are managed in compliance with federal statutes, regulations, and the award terms and conditions. This includes instances in which management contracts with a service organization, which is an organization that provides services to another entity and whose services are relevant to the entity’s internal controls. When using a service organization, the entity should gain assurances that the internal controls at the service organization are operating effectively because weaknesses in the service organization’s internal controls could affect the activity of the entity. Such assurances could be gained through a service organization audit, which includes a report on the service organization’s internal controls by an independent auditor. One type of audit that may be completed includes an opinion on the fairness of management’s description of the internal controls in place at the service organization, whether the auditor believes the service organization’s internal controls are suitably designed to achieve the internal control objectives, and whether the service organization’s internal controls are effective at achieving the internal control objectives. In addition, an entity relying on a service organization audit report should review the complementary user entity controls referenced in the report and ensure these controls or others are in place at the entity. If an entity relying on a service organization does not obtain a service organization audit report, the entity should ensure it has assessed the work being completed by the service organization, and it has implemented procedures to ensure both the accuracy of processing completed by the service organization and the information provided by the service organization. Condition: In May 2024, DOA requested and received the April 2024 service organization audit report that covered the period from September 1, 2023, to February 29, 2024. We found that DOA developed procedures to review the service organization audit report, assess the effectiveness of the internal controls on the computer system maintained by the service organization, and assess the complementary user entity controls. However, DOA did not complete its review and assessment of the April 2024 service organization audit report during FY 2023-24. Context: During FY 2023-24, DOA expended $30.9 million in HAF funding. DOA reported that $27.8 million, or 89.9 percent of the expenditures, was for benefit payments to various entities such as mortgage and utility companies on behalf of individuals who had their eligibility determinations processed by the computer system maintained by DOA’s service organization. We reviewed and discussed with DEHCR its procedures for determining eligibility for HAF participants, including its reliance on the computer system maintained by the service organization. Questioned Costs: None. Effect: DOA and the federal government cannot be assured that the service organization controls are effective in determining eligibility or completing federal reporting for HAF. Cause: Although DOA developed procedures to obtain and review the service organization audit report for HAF, it did not complete its review and assessment of the service organization audit report until October 2024. Recommendation: We recommend the Wisconsin Department of Administration implement its new policies and procedures to review and assess the service organization audit report for the Homeowner Assistance Fund to establish and maintain effective internal control over federal awards. Finding 2024-100: Homeowner Assistance Fund—Service Organization Internal Controls COVID-19—Homeowner Assistance Fund (Assistance Listing number 21.026) Award Number Award Year None 2021 Questioned Costs: None Type of Finding: Significant Deficiency, Noncompliance Response from the Wisconsin Department of Administration: The Wisconsin Department of Administration agrees with the audit finding and recommendation.
Coronavirus State and Local Fiscal Recovery Funds—Unallowable Costs Background: The State was advanced a total of $3.0 billion under the CSLFRF program in FY 2020-21 and FY 2021-22, from the U.S. Department of the Treasury (U.S. Treasury). CSLFRF was created under the American Rescue Plan Act (ARPA), and later revised by the Consolidated Appropriations Act, 2023. CSLFRF is administered by DOA. DOA expended funding under CSLFRF for various programs that it established. In addition, DOA entered into a memorandum of understanding (MOU) with various state agencies to administer several different programs funded by CSLFRF. In January 2022, DOA entered into an MOU with SPD to provide assistance to SPD to hire staff to fill project positions to address its case backlog. Through position requests to DOA in 2021, 2022, and 2023, SPD received approval to create 65.0 two-year project positions to be funded by the CSLFRF grant. Criteria: Under 2 CFR s. 200.303, SPD is responsible for establishing and maintaining effective internal control over federal awards to provide reasonable assurance that federal awards are managed in compliance with federal statutes, regulations, and the terms and conditions of federal awards. Further, SPD is required to follow U.S. Treasury guidance that requires it to maintain documentation to demonstrate that CSLFRF funding was used in accordance with federal regulations. Condition: We reviewed payroll records to determine whether employee time charged to the CSLFRF grant was approved by an appropriate supervisor with knowledge of the employee’s work effort. We reviewed the approvals for a selection of 15 project employees at SPD funded by the CSLFRF grant and found that time was approved by an appropriate supervisor for all but one of the employees. We found that the time for one employee was not approved in STAR HCM, the State’s payroll system. Certain amounts charged to the grant for this employee were unallowable to be charged to the grant. This employee was appointed to one of the project positions funded by the CSLFRF grant under the MOU with DOA. This employee left state service on October 6 2023, and was appointed to the project position beginning on October 9, 2023. The employee ended employment with SPD on November 17, 2023. During the three pay periods between October 9, 2023, and November 17, 2023, the employee recorded 3 days of work time and 27 days of leave. Further, on November 30, 2023, the employee was paid $86,605 for accumulated unused leave earned in their previous position. Context: During FY 2023-24, SPD expended $5.6 million in CSLFRF funding. We interviewed SPD staff to gain an understanding of SPD’s administration of the CSLFRF funding, including how it charged payroll costs to the CSLFRF grant. We reviewed payroll transactions made by SPD for the CSLFRF program, identified the payout for a terminated employee, and followed up with SPD regarding the purpose of the transaction. Questioned Costs: $107,164, which consists of $86,605 in payment for unused leave and $20,559 in leave taken during the three-week period the employee worked in the project position. Effect: SPD charged payroll costs to the CSLFRF grant that did not relate to the underlying project positions established in the MOU with DOA. Cause: SPD staff indicated that charging the CSLFRF grant for the costs related to the unused leave for the employee was an oversight. According to SPD staff, the former employee made a decision to terminate from the project position and the unused leave was inadvertently charged to the grant. SPD staff did not explain why the 27 days of leave was charged to the grant during the months of October and November of 2023, or why the employee’s time was not approved in STAR. Recommendation: We recommend the Wisconsin State Public Defender’s Office: -review and update its procedures to ensure employee timesheets are appropriately approved by a supervisor with knowledge of each employee’s work effort; -review and update its procedures to ensure costs are charged to the correct accounting codes and funding sources are appropriately used; -take steps to ensure it administers the funding for the Coronavirus State and Local Fiscal Recovery Funds grant in compliance with the memorandum of understanding with the Department of Administration and with federal rules; and -adjust its accounting records to use a different funding source for the leave and termination payments for unused leave for the employee identified during the audit. Finding 2024-902: Coronavirus State and Local Fiscal Recovery Funds—Unallowable Costs COVID-19—Coronavirus State and Local Fiscal Recovery Funds (Assistance Listing number 21.027) Award Number Award Year None 2021 Questioned Costs: $107,164 Type of Finding: Noncompliance Response from the Wisconsin State Public Defender’s Office: The Wisconsin State Public Defender’s Office agrees with the audit finding and recommendations.
Coronavirus State and Local Fiscal Recovery Funds—Unallowable Costs Background: The State was advanced a total of $3.0 billion under the CSLFRF program in FY 2020-21 and FY 2021-22, from the U.S. Department of the Treasury (U.S. Treasury). CSLFRF was created under the American Rescue Plan Act (ARPA), and later revised by the Consolidated Appropriations Act, 2023. CSLFRF is administered by DOA. DOA expended funding under CSLFRF for various programs that it established. In addition, DOA entered into a memorandum of understanding (MOU) with various state agencies to administer several different programs funded by CSLFRF. In January 2022, DOA entered into an MOU with SPD to provide assistance to SPD to hire staff to fill project positions to address its case backlog. Through position requests to DOA in 2021, 2022, and 2023, SPD received approval to create 65.0 two-year project positions to be funded by the CSLFRF grant. Criteria: Under 2 CFR s. 200.303, SPD is responsible for establishing and maintaining effective internal control over federal awards to provide reasonable assurance that federal awards are managed in compliance with federal statutes, regulations, and the terms and conditions of federal awards. Further, SPD is required to follow U.S. Treasury guidance that requires it to maintain documentation to demonstrate that CSLFRF funding was used in accordance with federal regulations. Condition: We reviewed payroll records to determine whether employee time charged to the CSLFRF grant was approved by an appropriate supervisor with knowledge of the employee’s work effort. We reviewed the approvals for a selection of 15 project employees at SPD funded by the CSLFRF grant and found that time was approved by an appropriate supervisor for all but one of the employees. We found that the time for one employee was not approved in STAR HCM, the State’s payroll system. Certain amounts charged to the grant for this employee were unallowable to be charged to the grant. This employee was appointed to one of the project positions funded by the CSLFRF grant under the MOU with DOA. This employee left state service on October 6 2023, and was appointed to the project position beginning on October 9, 2023. The employee ended employment with SPD on November 17, 2023. During the three pay periods between October 9, 2023, and November 17, 2023, the employee recorded 3 days of work time and 27 days of leave. Further, on November 30, 2023, the employee was paid $86,605 for accumulated unused leave earned in their previous position. Context: During FY 2023-24, SPD expended $5.6 million in CSLFRF funding. We interviewed SPD staff to gain an understanding of SPD’s administration of the CSLFRF funding, including how it charged payroll costs to the CSLFRF grant. We reviewed payroll transactions made by SPD for the CSLFRF program, identified the payout for a terminated employee, and followed up with SPD regarding the purpose of the transaction. Questioned Costs: $107,164, which consists of $86,605 in payment for unused leave and $20,559 in leave taken during the three-week period the employee worked in the project position. Effect: SPD charged payroll costs to the CSLFRF grant that did not relate to the underlying project positions established in the MOU with DOA. Cause: SPD staff indicated that charging the CSLFRF grant for the costs related to the unused leave for the employee was an oversight. According to SPD staff, the former employee made a decision to terminate from the project position and the unused leave was inadvertently charged to the grant. SPD staff did not explain why the 27 days of leave was charged to the grant during the months of October and November of 2023, or why the employee’s time was not approved in STAR. Recommendation: We recommend the Wisconsin State Public Defender’s Office: -review and update its procedures to ensure employee timesheets are appropriately approved by a supervisor with knowledge of each employee’s work effort; -review and update its procedures to ensure costs are charged to the correct accounting codes and funding sources are appropriately used; -take steps to ensure it administers the funding for the Coronavirus State and Local Fiscal Recovery Funds grant in compliance with the memorandum of understanding with the Department of Administration and with federal rules; and -adjust its accounting records to use a different funding source for the leave and termination payments for unused leave for the employee identified during the audit. Finding 2024-902: Coronavirus State and Local Fiscal Recovery Funds—Unallowable Costs COVID-19—Coronavirus State and Local Fiscal Recovery Funds (Assistance Listing number 21.027) Award Number Award Year None 2021 Questioned Costs: $107,164 Type of Finding: Noncompliance Response from the Wisconsin State Public Defender’s Office: The Wisconsin State Public Defender’s Office agrees with the audit finding and recommendations.
Waivers for State Innovation for Section 1332 of the Patient Protection and Affordable Care Act—Financial Reporting Background: Section 1332 of the federal Patient Protection and Affordable Care Act of 2010 (Affordable Care Act) permits a state to apply for a waiver to pursue innovative strategies for providing residents with access to high quality, affordable health insurance while retaining the basic protections of the Affordable Care Act. 2017 Wisconsin Act 138 created the Wisconsin Healthcare Stability Plan (WIHSP), under which the State covers a portion of the financial risk of health insurers. Act 138 required OCI to implement WIHSP if Wisconsin’s waiver plan was approved by the federal government. OCI applied for a waiver, which was approved by the U.S. Department of Health and Human Services (DHHS) in July 2018. Under the approved waiver, a health insurance carrier in the healthcare insurance exchange may be reimbursed a portion of the claims it incurred in the prior calendar year. In 2019, DHHS awarded OCI funding under the 1332 State Innovation Waivers program to administer WIHSP for the period January 1, 2019, through December 31, 2023. OCI received an extension of the federal funding in 2022, covering the period January 1, 2024, through December 31, 2028. From the inception of the program and through June 30, 2024, OCI expended $680.8 million under the 1332 State Innovation Waivers program. The federal funding is used, along with state appropriations, to reimburse insurance carriers participating in the healthcare insurance exchange for a portion of enrollee claims. Insurance carriers submit various attestations and enrollee claim information to OCI. Criteria: 2 CFR s. 200.303 requires OCI to establish and maintain effective internal control over its federal programs and to provide reasonable assurance that the federal programs are administered in compliance with federal statutes, regulations, and the terms and conditions of its federal awards. Under the terms and conditions for the 1332 State Innovation Waivers grant award, OCI is required to report expenditures annually using the Standard Form 425 (SF-425) Federal Financial Report. Condition: We found OCI did not complete all required lines of the SF-425 Federal Financial Report filed for the year ended December 31, 2023. OCI reported zero expenditures in line 10e (federal share of expenditures) when OCI should have reported $680,759,297 in line 10e. As a result, line 10h, which is a calculated field, incorrectly indicated that OCI had an unobligated balance of federal funds of $894,224,285, when the unobligated balance should have been reported as $213,464,988. Context: OCI expended $208.3 million in federal funds under the 1332 State Innovations Waivers program in FY 2023-24. We reviewed OCI’s written procedures for federal reporting and interviewed the WIHSP Administrator and OCI finance staff to gain an understanding of the reporting procedures. We tested the SF-425 Federal Financial Report submitted by OCI for calendar year 2023 and compared the amounts reported to the accounting records. Questioned Costs: None. Effect: OCI reported inaccurate information in its federal financial report filed in FY 2023-24, which resulted in inaccurate information being provided to the federal awarding agency. Cause: OCI staff indicated they believed the prepopulated fields were not editable and that they only signed and certified the report. We also note OCI did not have procedures in place to require a secondary review and sign off on the report prior to submission. Recommendation: We recommend the Wisconsin Office of the Commissioner of Insurance: -develop written procedures to require a secondary review of the annual Standard Form 425 Federal Financial Report that include steps for conducting and documenting the secondary review; and -work with the U.S. Department of Health and Human Services to determine whether the Standard Form 425 Federal Financial Report for calendar year 2023 needs to be corrected and refiled. Finding 2024-900: Waivers for State Innovation for Section 1332 of the Patient Protection and Affordable Care Act—Financial Reporting Waivers for State Innovation for Section 1332 of the Patient Protection and Affordable Care Act (PPACA) (Assistance Listing number 93.423) Award Numbers Award Years SIWIW190008-03 2021 SIWIW190008-04 2022 SIWIW190008-05 2023 Questioned Costs: None Type of Finding: Significant Deficiency, Noncompliance Response from the Wisconsin Office of the Commissioner of Insurance: The Wisconsin Office of the Commissioner of Insurance agrees with the audit finding and recommendations.
Waivers for State Innovation for Section 1332 of the Patient Protection and Affordable Care Act—Verification Audits Background: Section 1332 of the Affordable Care Act permits a state to apply for a waiver to pursue innovative strategies for providing residents with access to high quality, affordable health insurance while retaining the basic protections of the Affordable Care Act. 2017 Wisconsin Act 138 created WIHSP, under which the State covers a portion of the financial risk of health insurance carriers. Act 138 required OCI to implement WIHSP if Wisconsin’s waiver plan was approved by the federal government. OCI applied for a waiver, which was approved by DHHS in July 2018. Under the approved waiver, a health insurance carrier in the healthcare insurance exchange may be reimbursed a portion of the claims it incurred in the prior calendar year. In 2019, DHHS awarded OCI funding under the 1332 State Innovation Waivers program to administer WIHSP for the period January 1, 2019, through December 31, 2023. OCI received an extension of the federal funding in 2022, covering the period January 1, 2024, through December 31, 2028. From the inception of the program and through June 30, 2024, OCI expended $680.8 million under the 1332 State Innovation Waivers program. The federal funding is used, along with state appropriations, to reimburse insurance carriers participating in the healthcare insurance exchange for a portion of enrollee claims. Insurance carriers submit various attestations and enrollee claim information to OCI. Criteria: 2 CFR s. 200.303 requires OCI to establish and maintain effective internal control over its federal programs and to provide reasonable assurance that the federal programs are administered in compliance with federal statutes, regulations, and the terms and conditions of its federal awards. OCI is also responsible for ensuring costs charged to federal grant programs it administers are allowable under federal statutes, federal regulations, and the terms and conditions of the federal award. To ensure the attestations were completed, and to assess the validity of the enrollee claims submitted by the insurance carriers, the WIHSP Administrator and finance staff at OCI conducted a verification audit. OCI’s written procedures for conducting the verification audit required OCI to: -test a random sample of at least 60 enrollees across all the participating insurance carriers for the phase I audit, including ensuring claims for these enrollees were incurred in the benefit year and paid prior to the established deadline of April 30 of the calendar year following the applicable benefit year; -randomly sample and review proof of payment for two claims for each enrollee sampled during the phase I audit; and -have a secondary reviewer review a portion of the audit documents and initial review results for the phase I and II audits. Condition: We identified two concerns with OCI’s administration of the verification audits it performed related to its 1332 State Innovation Waivers program. First, in the phase I audit conducted for benefit year 2022, OCI did not detect that one insurance carrier reported in the audit response spreadsheet that it had paid two claims for two enrollees after April 30, which was the established deadline for claims. This was not detected by OCI during either the initial or secondary review of the claims information in the audit response spreadsheet. After we identified this issue, OCI followed up with the insurance carrier and determined that the payment dates for these claims had been inaccurately reported and obtained documentation from the insurance carrier to support that the claims had been paid prior to the April 30 deadline. Second, for the phase II audit conducted for benefit year 2022, the proof of payment for 9 of the 130 claims tested included the claim date but did not include documentation of the payment date. After we identified this issue, OCI followed up with the insurance carriers and obtained documentation to support that the claims were paid prior to the April 30 deadline. Context: OCI expended $208.3 million in federal funds under the 1332 State Innovations Waiver program in FY 2023-24. We reviewed OCI’s written procedures and interviewed the WIHSP Administrator and OCI finance staff to gain an understanding of the phase I and phase II verification audits. We reviewed the documentation related to the verification audits completed for benefit year 2022, which supported payments made to insurance carriers in FY 2023-24. For all 65 enrollees that OCI sampled for phase I of the verification audits, we tested whether documentation matched between the claims report and the amounts included in the insurance carriers audit response spreadsheet. For the 65 enrollees in phase II of the verification audit, we also tested the claims documentation provided by the insurance carriers. During our FY 2020-21 single audit (report 22-5), we identified concerns with OCI’s audit process and made recommendations to OCI. Questioned Costs: None. Effect: OCI may not have identified claims that did not meet eligibility requirements or lacked appropriate supporting documentation, which could result in unallowable costs. Cause: OCI staff did not correctly follow the verification audit written procedures, which require the initial and secondary reviewer to verify that sampled claims were paid prior to the established deadline. Further, OCI’s audit response spreadsheet does not restrict insurance carriers from entering claims incurred or paid outside of the allowable periods. OCI staff relied on the claim date in completing the phase II audit and did not request the payment date information from the insurance carriers. Further, the instructions OCI provided insurers for submitting proof of payment for the phase II audit did not explicitly direct insurance carriers to include the payment date on the documentation submitted to support the claims. Recommendation: We recommend the Wisconsin Office of the Commissioner of Insurance: -review and update the audit response spreadsheet to restrict insurance carriers from entering claims service and payment dates outside of the allowable periods; -update instructions and guidance provided to insurance carriers to clearly indicate that claims documentation submitted to the Office of the Commissioner of Insurance should include the claim payment date; and -follow its written procedures for conducting verification audits, including reviewing to ensure the claims documentation supports that claims have been paid before the established deadline. Finding 2024-901: Waivers for State Innovation for Section 1332 of the Patient Protection and Affordable Care Act—Verification Audits Waivers for State Innovation for Section 1332 of the Patient Protection and Affordable Care Act (PPACA) (Assistance Listing number 93.423) Award Numbers Award Years SIWIW190008-03 2021 SIWIW190008-04 2022 Questioned Costs: None Type of Finding: Significant Deficiency, Noncompliance Response from the Wisconsin Office of the Commissioner of Insurance: The Wisconsin Office of the Commissioner of Insurance agrees with the audit finding and recommendations.
Information on the federal program: Subject: Education Stabilization Fund – Special Tests and Provisions – Wage Rate Requirements Federal Agency: Department of Education Federal Program: COVID-19 – Education Stabilization Fund Assistance Listing Number: 84.425D, 84.425U Federal Award Number and Year (or Other Identifying Numbers): S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Tests and Provisions – Wage Rate Requirements Audit Finding: Material Weakness, Material Noncompliance, Modified Opinion Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 29 CFR 5.5 states in part: (1) Minimum wages. (i) All laborers and mechanics employed or working upon the site of the work (or under the United States Housing Act of 1937 or under the Housing Act of 1949 in the construction or development of the project), will be paid unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account (except such payroll deductions as are permitted by regulations issued by the Secretary of Labor under the Copeland Act (29 CFR part 3)), the full amount of wages and bona fide fringe benefits (or cash equivalents thereof) due at time of payment computed at rates not less than those contained in the wage determination of the Secretary of Labor which is attached hereto and made a part hereof, regardless of any contractual relationship which may be alleged to exist between the contractor and such laborers and mechanics… (3)(ii)(A) The contractor shall submit weekly for each week in which any contract work is performed a copy of all payrolls to the (write in name of appropriate federal agency) if the agency is a party to the contract, but if the agency is not such a party, the contractor will submit the payrolls to the applicant, sponsor, or owner, as the case may be, for transmission to the (write in name of agency). 2 CFR 200 Appendix II states in part: In addition to other provisions required by the Federal agency or non-Federal entity; all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following, as applicable. . . . Section III – Federal Award Findings and Questioned Costs (Continued) FINDING 2024-003 (Continued) (D) Davis-Bacon Act, as amended (40 U.S.C. 3141-3148). When required by Federal program legislation, all prime construction contracts in excess of $2,000 awarded by non-Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, and 3146-3148) as supplemented by Department of Labor regulations (29 CFR Part 5, “Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction”). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor. In addition, contractors must be required to pay wages not less than once a week.. . .” Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Special Tests and Provisions – Wage Rate Requirements compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The failure to design and implement an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Special Tests and Provisions – Wage Rate Requirements compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: The School Corporation had two projects for playground equipment and installation at various buildings which was funded with ESSER III (84.425U) grant awards. The School Corporation did not include Davis-Bacon wage rate requirements in the vendor contract, and the School Corporation did not obtain the weekly payroll reports certifications from the construction vendor to monitor compliance with Davis-Bacon wage rate requirements. Therefore, no review was performed to ensure that pay rates complied with the federal wage rate requirements. The total project cost disbursed during the audit period was $219,292 which included materials and labor. Identification as a repeat finding: This is a repeat finding from the immediately prior audit. The finding number was 2022-001. Recommendation: We recommend the School Corporation implement a formal process to ensure the required weekly payroll reports certifications are collected and reviewed for projects requiring labor installation and funded by federal grants subject to Davis-Bacon wage rate requirements to ensure compliance with federal regulations. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Criteria or specific requirement: Compliance: 2 CFR §200.332(a) - Requirements for Pass-Through Entities states, in part, that all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. 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 City did not furnish all required information to subrecipients at the time the subawards were issued. Context: The City failed to obtain the required Unique Entity Identifier (UEI) from one out of five subrecipients tested and the Federal Award Identification Number (FAIN) from five out of five subrecipients tested in accordance with proper subrecipient monitoring procedures. Questioned costs: None. Cause: The City did not establish effective internal controls and procedures over subrecipient monitoring.Effect: Excluding required federal grant award information at the time of the subaward may cause subrecipients and their auditors to be uninformed about program-specific regulations that apply to the funds they receive. There is also the potential for subrecipients to have incomplete Schedules of Expenditures of Federal Awards (SEFA) in subrecipients’ Single Audit reports, and federal funds may not be properly audited at the subrecipient level in accordance with the Uniform Guidance.Recommendation: The City should review and enhance its internal controls and procedures to ensure that all required information is included in subawards at the time of issuance and maintained in subsequent modifications. Views of responsible officials: The City agrees with this finding. See separate Corrective Action Plan related to this finding.
Finding 2024‐004: Significant Deficiency and Non‐Material Noncompliance – Housing Voucher Cluster REAC Report Criteria: Per 2 CFR Section 200.303, non‐Federal entities receiving federal awards must establish and maintain internal controls designed to reasonably ensure compliance with federal statutes, regulations, and terms and conditions of the federal award. In accordance with the requirements of this program, grant recipients are to maintain complete and accurate accounts which requires that (1) account balances are properly maintained, (2) records and accounting transactions support a proper roll‐forward of equity, and (3) errors are corrected and detected. Condition: During our testing, we noted that the County’s Real Estate Assessment Center (“REAC”) submission from 2022 and 2023 were rejected by the US Department of Housing and Urban Development (“HUD”) because amounts did not properly roll forward from previous periods. The REAC submission did not meet the requirement of being completed timely and accurately. Cause: The County’s internal control to ensure the accuracy of the REAC submissions was not operating effectively. Effect: Inaccurate record keeping results in unreliable information on which to base decision making. This also resulted in rejected REAC submissions. Questioned Costs: None Repeat Finding: No Recommendation: The County utilizes contractors to assist in HUD REAC submissions. However, a contractor with accounting expertise lacks context related to the activities and administration of the program at the County. We recommend that the individuals overseeing the process of completing HUD REAC submissions conduct thorough reviews of the accounting records that support the REAC submission inputs and that the amounts are reported on the proper Financial Data Schedule Lines within the REAC submission. Views of Responsible Officials: The Office of Housing and Community Development concurs with the finding and recommendations.
Finding 2024‐004: Significant Deficiency and Non‐Material Noncompliance – Housing Voucher Cluster REAC Report Criteria: Per 2 CFR Section 200.303, non‐Federal entities receiving federal awards must establish and maintain internal controls designed to reasonably ensure compliance with federal statutes, regulations, and terms and conditions of the federal award. In accordance with the requirements of this program, grant recipients are to maintain complete and accurate accounts which requires that (1) account balances are properly maintained, (2) records and accounting transactions support a proper roll‐forward of equity, and (3) errors are corrected and detected. Condition: During our testing, we noted that the County’s Real Estate Assessment Center (“REAC”) submission from 2022 and 2023 were rejected by the US Department of Housing and Urban Development (“HUD”) because amounts did not properly roll forward from previous periods. The REAC submission did not meet the requirement of being completed timely and accurately. Cause: The County’s internal control to ensure the accuracy of the REAC submissions was not operating effectively. Effect: Inaccurate record keeping results in unreliable information on which to base decision making. This also resulted in rejected REAC submissions. Questioned Costs: None Repeat Finding: No Recommendation: The County utilizes contractors to assist in HUD REAC submissions. However, a contractor with accounting expertise lacks context related to the activities and administration of the program at the County. We recommend that the individuals overseeing the process of completing HUD REAC submissions conduct thorough reviews of the accounting records that support the REAC submission inputs and that the amounts are reported on the proper Financial Data Schedule Lines within the REAC submission. Views of Responsible Officials: The Office of Housing and Community Development concurs with the finding and recommendations.
Assistance Listing Number, Federal Agency, and Program Name - Student Financial Assistance Cluster (Federal Pell Grant Program - 84.063, Federal Direct Student Loans - 84.268) Federal Award Identification Number and Year - 84.063 and 84.268 Pass-through Entity - N/A Finding Type - Significant deficiency Repeat Finding - No Criteria - In accordance with 2 CFR 200.303, the College must establish and maintain effective internal control over its federal awards in order to provide reasonable assurance that it is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Specific to these Title IV programs, 34 CFR 668.22 outlines the requirements for institutions to follow when returns of Title IV funds are required, including identifying when calculations are necessary and the time frame in which they are required to be returned. Condition - There was a lack of internal controls in place related to the return of Title IV funds. Questioned Costs - $104 If Questioned Costs are Not Determinable, Description of Why Known Questioned Costs were Undetermined or Otherwise Could Not be Reported - N/A Identification of How Questioned Costs Were Computed - R2T4 corrected amounts were computed using the correct number of days attended. Questioned costs were computed by comparing the required amounts to be returned to the amount originally returned by the University for the four incorrect calculations. Context - Of the seven students selected for R2T4 calculation testing, five student calculations included incorrect number of days attended within the calculation inputs. Cause and Effect - A lack of review of the inputs to the R2T4 calculation inputs lead to inaccurate computation of the amount to be returned. Recommendation - We recommend the University implement a review control that would identify errors in inputs to the R2T4 calculation. Views of Responsible Officials and Corrective Action Plan - The director will update the academic calendar on the COD R2T4 calculator yearly and verify dates and length of breaks are correct. The University will continue to have the senior financial aid advisor complete R2T4, and the director will sign off on calculations.
Assistance Listing Number, Federal Agency, and Program Name - Student Financial Assistance Cluster (Federal Pell Grant Program - 84.063, Federal Direct Student Loans - 84.268) Federal Award Identification Number and Year - 84.063 and 84.268 Pass-through Entity - N/A Finding Type - Significant deficiency Repeat Finding - No Criteria - In accordance with 2 CFR 200.303, the College must establish and maintain effective internal control over its federal awards in order to provide reasonable assurance that it is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Specific to these Title IV programs, 34 CFR 668.22 outlines the requirements for institutions to follow when returns of Title IV funds are required, including identifying when calculations are necessary and the time frame in which they are required to be returned. Condition - There was a lack of internal controls in place related to the return of Title IV funds. Questioned Costs - $104 If Questioned Costs are Not Determinable, Description of Why Known Questioned Costs were Undetermined or Otherwise Could Not be Reported - N/A Identification of How Questioned Costs Were Computed - R2T4 corrected amounts were computed using the correct number of days attended. Questioned costs were computed by comparing the required amounts to be returned to the amount originally returned by the University for the four incorrect calculations. Context - Of the seven students selected for R2T4 calculation testing, five student calculations included incorrect number of days attended within the calculation inputs. Cause and Effect - A lack of review of the inputs to the R2T4 calculation inputs lead to inaccurate computation of the amount to be returned. Recommendation - We recommend the University implement a review control that would identify errors in inputs to the R2T4 calculation. Views of Responsible Officials and Corrective Action Plan - The director will update the academic calendar on the COD R2T4 calculator yearly and verify dates and length of breaks are correct. The University will continue to have the senior financial aid advisor complete R2T4, and the director will sign off on calculations.
2024-004 8540.032 Department Of Education Student Financial Aid 84.063, 84.268 "P063P218567-2024 P268K228567-2024" N/A N/A 7/1/23 - 6/30/24 Significant Deficiency Did not result in material questioned costs therefore will document as a SD. Finding is neither systemic nor will it lead to 5% questioned cost. N/A "Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. The Code of Federal Regulations, 34 CFR 682.610, states that institutions must report accurately the enrollment status of all students regardless of if they receive aid from the institution or not. 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. The Code of Federal Regulations, 34 CFR 685.309(b), states the school is required to report changes in the student’s enrollment status, the effective date of the status, and an anticipated completion date. " The University did not properly report student enrollment changes for students who received federal student aid to the National Student Loan Data System (NSLDS). N/A "During our testing of 9 students, we identified 4 students whose enrollment status changes were not reported, 1 student with an incorrect effective date reported, 1 student with an incorrect program begin date, and 6 students whose status changes were not reported timely. In addition, 1 student was incorrectly reported as withdrawal who should not have had a status change reported. We also note that for 7 of the selected students, enrollment status was not certified every 60 days. We also note that the University did not document any evidence of review." The college did not have the appropriate resources and staffing in place to verify they were in compliance with all requirements. The University 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. Yes We recommend the University review current processes for reporting to NSLDS and implement procedures to ensure submissions are reported timely and accurately. Management agrees with this finding. See 0100.25
2024-004 8540.032 Department Of Education Student Financial Aid 84.063, 84.268 "P063P218567-2024 P268K228567-2024" N/A N/A 7/1/23 - 6/30/24 Significant Deficiency Did not result in material questioned costs therefore will document as a SD. Finding is neither systemic nor will it lead to 5% questioned cost. N/A "Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. The Code of Federal Regulations, 34 CFR 682.610, states that institutions must report accurately the enrollment status of all students regardless of if they receive aid from the institution or not. 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. The Code of Federal Regulations, 34 CFR 685.309(b), states the school is required to report changes in the student’s enrollment status, the effective date of the status, and an anticipated completion date. " The University did not properly report student enrollment changes for students who received federal student aid to the National Student Loan Data System (NSLDS). N/A "During our testing of 9 students, we identified 4 students whose enrollment status changes were not reported, 1 student with an incorrect effective date reported, 1 student with an incorrect program begin date, and 6 students whose status changes were not reported timely. In addition, 1 student was incorrectly reported as withdrawal who should not have had a status change reported. We also note that for 7 of the selected students, enrollment status was not certified every 60 days. We also note that the University did not document any evidence of review." The college did not have the appropriate resources and staffing in place to verify they were in compliance with all requirements. The University 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. Yes We recommend the University review current processes for reporting to NSLDS and implement procedures to ensure submissions are reported timely and accurately. Management agrees with this finding. See 0100.25
2024-005 8540.10 Department Of Education Student Financial Aid 84.063, 84.268 "P063P218567-2024 P268K228567-2024" N/A N/A 7/1/23 - 6/30/24 Material Weakness Material Appears to be systemic. "34 CFR 668.21(a) states that the institution must return all title IV, HEA program funds that were credited to the student's account at the instituion or disbursed directly to the student for th payment period. The instituion must return those funds no later than 30 days after the date that the instituion becomes aware that the student will not or has not begun attendance. Per 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements." The University did not properly evaluate students in need of Return of Title IV (R2T4) calculations. 283.39 "During our testing of 6 R2T4 calculations, we noted that 4 students were incorrectly evaluated as a withdrawal exemption and no R2T4 calculation was performed. For these 4 students, all 4 should have had an R2T4 calculation, and 2 should have had returned funds. In addition, we observed 1 student for whom 100% of funds were returned despite the student completing a portion of the term. We also noted 1 student who completed the term with passing grades for whom an R2T4 calculation was completed, and funds were returned in error. Additionally, R2T4 calculations did not have documentation of review." The college did not have the appropriate resources and staffing in place to verify they were in compliance with all requirements. The University could return incorrect amounts based off of their calculations and incorrect calculations could effect student repayment amounts based off of amount earned. No We recommend that the University review policies and procedures related to R2T4 calculations to ensure calculations are performed accurately. Management agrees with this finding. See 0100.25
2024-005 8540.10 Department Of Education Student Financial Aid 84.063, 84.268 "P063P218567-2024 P268K228567-2024" N/A N/A 7/1/23 - 6/30/24 Material Weakness Material Appears to be systemic. "34 CFR 668.21(a) states that the institution must return all title IV, HEA program funds that were credited to the student's account at the instituion or disbursed directly to the student for th payment period. The instituion must return those funds no later than 30 days after the date that the instituion becomes aware that the student will not or has not begun attendance. Per 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements." The University did not properly evaluate students in need of Return of Title IV (R2T4) calculations. 283.39 "During our testing of 6 R2T4 calculations, we noted that 4 students were incorrectly evaluated as a withdrawal exemption and no R2T4 calculation was performed. For these 4 students, all 4 should have had an R2T4 calculation, and 2 should have had returned funds. In addition, we observed 1 student for whom 100% of funds were returned despite the student completing a portion of the term. We also noted 1 student who completed the term with passing grades for whom an R2T4 calculation was completed, and funds were returned in error. Additionally, R2T4 calculations did not have documentation of review." The college did not have the appropriate resources and staffing in place to verify they were in compliance with all requirements. The University could return incorrect amounts based off of their calculations and incorrect calculations could effect student repayment amounts based off of amount earned. No We recommend that the University review policies and procedures related to R2T4 calculations to ensure calculations are performed accurately. Management agrees with this finding. See 0100.25
2024-006 8540.13 Department Of Education Student Financial Aid 84.063, 84.268 "P063P218567-2024 P268K228567-2024" N/A N/A 7/1/23 - 6/30/24 Significant Deficiency Did not result in material questioned costs therefore will document as a SD. Finding is neither systemic nor will it lead to 5% questioned cost. N/A "The Gramm-Leach-Bliley Act (GLBA) requires financial institutions to explain their information-sharing practices to their customers and to safeguard sensitive data (16 CFR 314). The regulation states that the college must designate a qualified individual responsible for overseeing and implementting your information security program and enforcing your information security program. (16 CFR 314.4(a)). The entity shall have a Written Information Security Program (WISP) that outlines the design and implementation of the risk assessment procedures. (16 CFR 314.4(b)). At a minimum, the institution's written information security program must address the implementation of the minimum safeguards identified in 16 CFR 314.4(c)(1) through (8) including: Assess apps developed by the institution. In addition, the written security program provides for the institution to regularly test or otherwise monitor the effectiveness of the safeguards it has implemented (16 CFR 314.4(d)). Per 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements." "The College has a Written Information Security Program; however, the College did not meet the minimum requirements stated in the Gramm-Leach-Bliley Act. Additionally, we were unable to observe evidence that the WISP was formally reviewed and approved. " N/A "The WISP was missing the element discussing the secure disposal of customer information. Additionally, there was not am observable formal review or authorization. " The college did not have the appropriate resources and staffing in place to verify they were in compliance with all requirements. There is a risk the College’s information and systems could be vulnerable to attacks or intrusions, and these attacks may not be detected in a timely manner. Yes We recommend the College design controls to ensure an adequate review process is in place to ensure compliance with reporting requirements. Management agrees with this finding. See 0100.25
2024-006 8540.13 Department Of Education Student Financial Aid 84.063, 84.268 "P063P218567-2024 P268K228567-2024" N/A N/A 7/1/23 - 6/30/24 Significant Deficiency Did not result in material questioned costs therefore will document as a SD. Finding is neither systemic nor will it lead to 5% questioned cost. N/A "The Gramm-Leach-Bliley Act (GLBA) requires financial institutions to explain their information-sharing practices to their customers and to safeguard sensitive data (16 CFR 314). The regulation states that the college must designate a qualified individual responsible for overseeing and implementting your information security program and enforcing your information security program. (16 CFR 314.4(a)). The entity shall have a Written Information Security Program (WISP) that outlines the design and implementation of the risk assessment procedures. (16 CFR 314.4(b)). At a minimum, the institution's written information security program must address the implementation of the minimum safeguards identified in 16 CFR 314.4(c)(1) through (8) including: Assess apps developed by the institution. In addition, the written security program provides for the institution to regularly test or otherwise monitor the effectiveness of the safeguards it has implemented (16 CFR 314.4(d)). Per 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements." "The College has a Written Information Security Program; however, the College did not meet the minimum requirements stated in the Gramm-Leach-Bliley Act. Additionally, we were unable to observe evidence that the WISP was formally reviewed and approved. " N/A "The WISP was missing the element discussing the secure disposal of customer information. Additionally, there was not am observable formal review or authorization. " The college did not have the appropriate resources and staffing in place to verify they were in compliance with all requirements. There is a risk the College’s information and systems could be vulnerable to attacks or intrusions, and these attacks may not be detected in a timely manner. Yes We recommend the College design controls to ensure an adequate review process is in place to ensure compliance with reporting requirements. Management agrees with this finding. See 0100.25
2024-007 8515.01 Department Of Education Student Financial Aid 84.063, 84.268 "P063P218567-2024 P268K228567-2024" N/A N/A 7/1/23 - 6/30/24 Significant Deficiency Did not result in material questioned costs therefore will document as a SD. Finding is neither systemic nor will it lead to 5% questioned cost. N/A "Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. The Code of Federal Regulations, 34 CFR 682.604, states that 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. Per 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Per 34 CFR 690.62 states the Pell grant for an academic year is based upon the payment and disbursement schedule published by the Secretary for each award year. 34 CFR 690.80(b)(1)) states if the student’s enrollment status changes from one academic term to another within the same award year, the institution shall recalculate the Federal Pell Grant award for the new payment period taking into account any changes in the cost of attendance." The University used a third-party servicer to perform key controls, but did not have documented review of the work performed by their third-party servicer. Additionally, the University did not notify 3 students of required exit counseling. The University also incorrectly disbursed Pell funds for 4 students. 1845 E During our eligibility testing of 60 students, we noted that the university did not document evidence of review for controls performed by their third party servicer. The University did not document review of award packaging, professional judgment determinations, COD reporting, or verification procedures. We also noted that 3 students were graduates or withdrawals but did not receive notifcation of required exit counseling. Additionally, out of 37 students receiving Pell, 3 were overawarded and 1 was underawarded. 1 student had an incorrect EFC used in their award packaging. The college did not have the appropriate resources and staffing in place to verify they were in compliance with all requirements. Without proper controls the University risks being out of compliance with federal laws and regulations, as well as program compliance requirements. No We recommend the College design controls to ensure an adequate review process is in place to ensure compliance with reporting requirements. Management agrees with this finding. See 0100.25
2024-007 8515.01 Department Of Education Student Financial Aid 84.063, 84.268 "P063P218567-2024 P268K228567-2024" N/A N/A 7/1/23 - 6/30/24 Significant Deficiency Did not result in material questioned costs therefore will document as a SD. Finding is neither systemic nor will it lead to 5% questioned cost. N/A "Per Uniform Guidance 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. The Code of Federal Regulations, 34 CFR 682.604, states that 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. Per 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Per 34 CFR 690.62 states the Pell grant for an academic year is based upon the payment and disbursement schedule published by the Secretary for each award year. 34 CFR 690.80(b)(1)) states if the student’s enrollment status changes from one academic term to another within the same award year, the institution shall recalculate the Federal Pell Grant award for the new payment period taking into account any changes in the cost of attendance." The University used a third-party servicer to perform key controls, but did not have documented review of the work performed by their third-party servicer. Additionally, the University did not notify 3 students of required exit counseling. The University also incorrectly disbursed Pell funds for 4 students. 1845 E During our eligibility testing of 60 students, we noted that the university did not document evidence of review for controls performed by their third party servicer. The University did not document review of award packaging, professional judgment determinations, COD reporting, or verification procedures. We also noted that 3 students were graduates or withdrawals but did not receive notifcation of required exit counseling. Additionally, out of 37 students receiving Pell, 3 were overawarded and 1 was underawarded. 1 student had an incorrect EFC used in their award packaging. The college did not have the appropriate resources and staffing in place to verify they were in compliance with all requirements. Without proper controls the University risks being out of compliance with federal laws and regulations, as well as program compliance requirements. No We recommend the College design controls to ensure an adequate review process is in place to ensure compliance with reporting requirements. Management agrees with this finding. See 0100.25