AL No: 20.507 Federal Grantor: U.S. Department of Transportation, Federal Transit Administration, Federal Transit Cluster - Direct Award Compliance Requirements: Activities Allowed or Unallowed and Allowable Costs/Cost Principles. Condition: The District’s internal controls over compliance requirements did not identify ineligible costs applied to two separate Federal Transit Administration (FTA) grants as follows. Section 5307 Grant Award CA-2020-173-01: The District overclaimed Sacramento fixed route operating expenses beyond the amount apportioned for these routes in the grant agreement, resulting in ineligible costs of $183,848 being charged to the program. Questioned Costs: $183,548 Section 5307 Grant Award CA-2023-122-01: The District overclaimed Woodland fixed route operating expenses beyond the amount apportioned for these routes in the grant agreement, resulting in ineligible costs of $175,143 being charged to the program. Questioned Costs: $175,143. In addition to these ineligible costs, there were substantial changes to the Schedule of Expenditures of Federal Awards (SEFA) and federal grant revenue reported in the general ledger (GL) during the course of the audit. These changes and issues are as follows. There was a total of $302,813 removed from the SEFA and GL for claims prepared for expenses incurred after the period of performance end date specified in the grant for the relevant project and therefore would have been ineligible if the claim was submitted to the grantor. These claims were prepared for paratransit and microtransit operating assistance. There was a total of $243,823 removed from the SEFA and GL for claims prepared for an FTA direct program grant that is already past the end date of the period of performance and therefore would have been ineligible if the claim was submitted to the grantor. These claims were drafted for Woodland microtransit operating assistance. There was a total of $354,429 added to the SEFA for federal grant revenues recorded in the GL but not initially included on the SEFA. These claims are for the Yolo County Bike and Pedestrian Trail Network Planning Project and the Yolo 80 Managed Lanes Tolling Advance Planning project. There was a total of $1,106,389 of expenses reported on the SEFA but not recognized as revenue in the GL for amounts previously overclaimed for ineligible expenses but reclaimed and approved for eligible expenses in the current period. Criteria: 2 CFR Part 200, Subpart E (Uniform Guidance) Section 200.303 states that “The nonfederal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” Cause:. Grant management procedures are not documented and a schedule of all available grants was not prepared by the District to use when reconciling expenses for inclusion on the SEFA and accruing grant revenue. The errors on the SEFA were not captured by the District’s review procedures due to recent staff turnover, lack of documented procedures on grant management, and/or lack of training. Effect: Expenses were omitted from the SEFA that should have been included and other expenses were included on the SEFA that were not eligible. The SEFA had to be revised for multiple grants over the course of the audit, which delayed the audit testing and major program determination process. Context: The number of grants has increased since the pandemic due to new pandemic related grants becoming available that delayed the use of the District’s regular federal grants. This caused grants to be combined by grantors with different allowable expenses, areas of service, and periods of performance and caused grants to be extended, causing complexity. The District confirmed that there will be no other federal grants used for reimbursement of the expenses that were removed from the SEFA during the audit. Recommendation: We recommend the District develop written procedures to allocate expenses to routes and purposes under federal grants that document the timing of the preparation and review of the allocation schedule. A summary tab should be added to the allocation schedule to reconcile amounts for each route/purpose to total operating expenses, preventive maintenance, insurance, communications and other expenses allocated to the population of expenses in the general ledger. We also recommend the District develop a schedule to summarize all approved and pending grants that includes the amounts available under each grant, each route/purpose within each grant, periods of performance for each amount available, the last date to submit invoices, and amounts claimed and still available for each grant by route/purpose. The District should re-evaluate budgets if changes or delays occur to federal grants and ensure a new federal or local funding source is identified and claimed for the expenses. The SEFA should be prepared after expenses are reconciled to the GL at the invoice level by route/purpose and the allocation schedule is thoroughly reviewed. The SEFA should be reviewed by a knowledgeable member of management to ensure completeness and accuracy. We also recommend the District claim expenses more quickly to allow the granting agency time to review and approve the claims before the audit begins. We recommend the District reconcile expenses within 30 days of quarter end and prepare claims within 45 days of quarter end. If the District is unsure about the period of performance dates or other restrictions on a grant, staff should contact the granting agency for clarification. Finally, we recommend the District discuss the overclaimed amounts of $183,548 and $175,143 described above with the FTA to determine whether these overclaimed funds must be returned or whether they may be used to claim future expenses. View of Responsible Officials and Planned Corrective Action: Management’s response and planned corrective action is included at the Corrective Action Plan end of this report.
AL No: 20.507 Federal Grantor: U.S. Department of Transportation, Federal Transit Administration, Federal Transit Cluster - Direct Award Compliance Requirements: Activities Allowed or Unallowed and Allowable Costs/Cost Principles. Condition: The District’s internal controls over compliance requirements did not identify ineligible costs applied to two separate Federal Transit Administration (FTA) grants as follows. Section 5307 Grant Award CA-2020-173-01: The District overclaimed Sacramento fixed route operating expenses beyond the amount apportioned for these routes in the grant agreement, resulting in ineligible costs of $183,848 being charged to the program. Questioned Costs: $183,548 Section 5307 Grant Award CA-2023-122-01: The District overclaimed Woodland fixed route operating expenses beyond the amount apportioned for these routes in the grant agreement, resulting in ineligible costs of $175,143 being charged to the program. Questioned Costs: $175,143. In addition to these ineligible costs, there were substantial changes to the Schedule of Expenditures of Federal Awards (SEFA) and federal grant revenue reported in the general ledger (GL) during the course of the audit. These changes and issues are as follows. There was a total of $302,813 removed from the SEFA and GL for claims prepared for expenses incurred after the period of performance end date specified in the grant for the relevant project and therefore would have been ineligible if the claim was submitted to the grantor. These claims were prepared for paratransit and microtransit operating assistance. There was a total of $243,823 removed from the SEFA and GL for claims prepared for an FTA direct program grant that is already past the end date of the period of performance and therefore would have been ineligible if the claim was submitted to the grantor. These claims were drafted for Woodland microtransit operating assistance. There was a total of $354,429 added to the SEFA for federal grant revenues recorded in the GL but not initially included on the SEFA. These claims are for the Yolo County Bike and Pedestrian Trail Network Planning Project and the Yolo 80 Managed Lanes Tolling Advance Planning project. There was a total of $1,106,389 of expenses reported on the SEFA but not recognized as revenue in the GL for amounts previously overclaimed for ineligible expenses but reclaimed and approved for eligible expenses in the current period. Criteria: 2 CFR Part 200, Subpart E (Uniform Guidance) Section 200.303 states that “The nonfederal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” Cause:. Grant management procedures are not documented and a schedule of all available grants was not prepared by the District to use when reconciling expenses for inclusion on the SEFA and accruing grant revenue. The errors on the SEFA were not captured by the District’s review procedures due to recent staff turnover, lack of documented procedures on grant management, and/or lack of training. Effect: Expenses were omitted from the SEFA that should have been included and other expenses were included on the SEFA that were not eligible. The SEFA had to be revised for multiple grants over the course of the audit, which delayed the audit testing and major program determination process. Context: The number of grants has increased since the pandemic due to new pandemic related grants becoming available that delayed the use of the District’s regular federal grants. This caused grants to be combined by grantors with different allowable expenses, areas of service, and periods of performance and caused grants to be extended, causing complexity. The District confirmed that there will be no other federal grants used for reimbursement of the expenses that were removed from the SEFA during the audit. Recommendation: We recommend the District develop written procedures to allocate expenses to routes and purposes under federal grants that document the timing of the preparation and review of the allocation schedule. A summary tab should be added to the allocation schedule to reconcile amounts for each route/purpose to total operating expenses, preventive maintenance, insurance, communications and other expenses allocated to the population of expenses in the general ledger. We also recommend the District develop a schedule to summarize all approved and pending grants that includes the amounts available under each grant, each route/purpose within each grant, periods of performance for each amount available, the last date to submit invoices, and amounts claimed and still available for each grant by route/purpose. The District should re-evaluate budgets if changes or delays occur to federal grants and ensure a new federal or local funding source is identified and claimed for the expenses. The SEFA should be prepared after expenses are reconciled to the GL at the invoice level by route/purpose and the allocation schedule is thoroughly reviewed. The SEFA should be reviewed by a knowledgeable member of management to ensure completeness and accuracy. We also recommend the District claim expenses more quickly to allow the granting agency time to review and approve the claims before the audit begins. We recommend the District reconcile expenses within 30 days of quarter end and prepare claims within 45 days of quarter end. If the District is unsure about the period of performance dates or other restrictions on a grant, staff should contact the granting agency for clarification. Finally, we recommend the District discuss the overclaimed amounts of $183,548 and $175,143 described above with the FTA to determine whether these overclaimed funds must be returned or whether they may be used to claim future expenses. View of Responsible Officials and Planned Corrective Action: Management’s response and planned corrective action is included at the Corrective Action Plan end of this report.
AL No: 20.507 Federal Grantor: U.S. Department of Transportation, Federal Transit Administration, Federal Transit Cluster - Direct Award Compliance Requirements: Activities Allowed or Unallowed and Allowable Costs/Cost Principles. Condition: The District’s internal controls over compliance requirements did not identify ineligible costs applied to two separate Federal Transit Administration (FTA) grants as follows. Section 5307 Grant Award CA-2020-173-01: The District overclaimed Sacramento fixed route operating expenses beyond the amount apportioned for these routes in the grant agreement, resulting in ineligible costs of $183,848 being charged to the program. Questioned Costs: $183,548 Section 5307 Grant Award CA-2023-122-01: The District overclaimed Woodland fixed route operating expenses beyond the amount apportioned for these routes in the grant agreement, resulting in ineligible costs of $175,143 being charged to the program. Questioned Costs: $175,143. In addition to these ineligible costs, there were substantial changes to the Schedule of Expenditures of Federal Awards (SEFA) and federal grant revenue reported in the general ledger (GL) during the course of the audit. These changes and issues are as follows. There was a total of $302,813 removed from the SEFA and GL for claims prepared for expenses incurred after the period of performance end date specified in the grant for the relevant project and therefore would have been ineligible if the claim was submitted to the grantor. These claims were prepared for paratransit and microtransit operating assistance. There was a total of $243,823 removed from the SEFA and GL for claims prepared for an FTA direct program grant that is already past the end date of the period of performance and therefore would have been ineligible if the claim was submitted to the grantor. These claims were drafted for Woodland microtransit operating assistance. There was a total of $354,429 added to the SEFA for federal grant revenues recorded in the GL but not initially included on the SEFA. These claims are for the Yolo County Bike and Pedestrian Trail Network Planning Project and the Yolo 80 Managed Lanes Tolling Advance Planning project. There was a total of $1,106,389 of expenses reported on the SEFA but not recognized as revenue in the GL for amounts previously overclaimed for ineligible expenses but reclaimed and approved for eligible expenses in the current period. Criteria: 2 CFR Part 200, Subpart E (Uniform Guidance) Section 200.303 states that “The nonfederal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” Cause:. Grant management procedures are not documented and a schedule of all available grants was not prepared by the District to use when reconciling expenses for inclusion on the SEFA and accruing grant revenue. The errors on the SEFA were not captured by the District’s review procedures due to recent staff turnover, lack of documented procedures on grant management, and/or lack of training. Effect: Expenses were omitted from the SEFA that should have been included and other expenses were included on the SEFA that were not eligible. The SEFA had to be revised for multiple grants over the course of the audit, which delayed the audit testing and major program determination process. Context: The number of grants has increased since the pandemic due to new pandemic related grants becoming available that delayed the use of the District’s regular federal grants. This caused grants to be combined by grantors with different allowable expenses, areas of service, and periods of performance and caused grants to be extended, causing complexity. The District confirmed that there will be no other federal grants used for reimbursement of the expenses that were removed from the SEFA during the audit. Recommendation: We recommend the District develop written procedures to allocate expenses to routes and purposes under federal grants that document the timing of the preparation and review of the allocation schedule. A summary tab should be added to the allocation schedule to reconcile amounts for each route/purpose to total operating expenses, preventive maintenance, insurance, communications and other expenses allocated to the population of expenses in the general ledger. We also recommend the District develop a schedule to summarize all approved and pending grants that includes the amounts available under each grant, each route/purpose within each grant, periods of performance for each amount available, the last date to submit invoices, and amounts claimed and still available for each grant by route/purpose. The District should re-evaluate budgets if changes or delays occur to federal grants and ensure a new federal or local funding source is identified and claimed for the expenses. The SEFA should be prepared after expenses are reconciled to the GL at the invoice level by route/purpose and the allocation schedule is thoroughly reviewed. The SEFA should be reviewed by a knowledgeable member of management to ensure completeness and accuracy. We also recommend the District claim expenses more quickly to allow the granting agency time to review and approve the claims before the audit begins. We recommend the District reconcile expenses within 30 days of quarter end and prepare claims within 45 days of quarter end. If the District is unsure about the period of performance dates or other restrictions on a grant, staff should contact the granting agency for clarification. Finally, we recommend the District discuss the overclaimed amounts of $183,548 and $175,143 described above with the FTA to determine whether these overclaimed funds must be returned or whether they may be used to claim future expenses. View of Responsible Officials and Planned Corrective Action: Management’s response and planned corrective action is included at the Corrective Action Plan end of this report.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
2024-004 CASH MANAGEMENT Federal agency: U.S. Department of Homeland Security/FEMA Federal Program Title & Assistance Listing Number: Disaster Grants – Public Assistance (Presidentially Declared Disasters) - 97.036 Hazard Mitigation Grant Program – 97.039 Emergency Management Performance Grants – 97.042 Homeland Security Grant Program – 97.067 Award Period: Various Type of Finding: Material Weakness in Internal Control over Compliance Material Non-compliance Compliance Areas: Cash Management Questioned Costs: None Condition Management has been unable to provide sufficient appropriate audit evidence relating to the completeness, existence, accuracy, and valuation of the Department’s federal revenue, accounts receivable/payable and related deferred inflows of resources reported as of June 30, 2024. This was included in our basis for qualifying opinion on Governmental Activities and the Federal Grants Fund. The Department lacked effective processes and controls for determining the amount Due From Federal Government as part of its year-end close process. The Department did not consistently apply its process for recording the Due From amount for all federal grants throughout the year. The Federal Grants Fund (Fund 40280) has a deficit fund balance of $24,515,842 and a $31,837,546 balance related to deferred inflows for FEMA grant funds that were not received within the 90-day period of availability after fiscal year-end. Subsequent drawdowns/collections on the June 30, 2024 amount Due From Federal Government of $37,384,520 were poor, with the Department drawing down or receiving $10,160,346 from July 1, 2024 through November 22, 2024. The accounts receivable summary by grant as of June 30, 2024 contained abnormal credit balances in the amount of $328,175, which the Department will need to research to determine if there are any overdrawn amounts. Management’s Progress for Repeated Finding: Management did make progress implementing adequate controls to resolve the finding from the prior years, by billing and receiving amounts from previous fiscal years. However, a material weakness still exists over controls over these account balances. Criteria According to §200.303 Internal controls of 2 CFR Part 200, the non- Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Specific to the Department, federal reimbursement requests are completed quarterly with the reporting process. According to NMSA 1978 §6.-5-2, the Financial Control Division (the division) shall issue a manual of model accounting practices containing the procedures and policies. State agencies shall comply with the model accounting practices established by the division, and the administrative head of each state agency shall ensure that the model accounting practices are followed. According to FIN 16 General Accounting Practices in the Manual of Model Accounting Practices, all reporting of financial information must be timely, complete, and accurate, to the state agency’s management and to oversight agencies and entities. Effect State agency’s management and other agencies and entities may not be able to rely on the financial information presented by the Department due to untimely, incomplete, and inaccurate financial reporting. The Federal Government may place the Department on controlled draws. Cause While the Department has made improvements from prior year related to the reconciliation and draw down of all federal receivables, the Department continues to lack an effective control environment that allows for timely and accurate drawdowns, financial reporting, and accounting of the Department’s Federal accounts receivable/payable balance and related deferred inflows of resources.
2024-004 CASH MANAGEMENT Federal agency: U.S. Department of Homeland Security/FEMA Federal Program Title & Assistance Listing Number: Disaster Grants – Public Assistance (Presidentially Declared Disasters) - 97.036 Hazard Mitigation Grant Program – 97.039 Emergency Management Performance Grants – 97.042 Homeland Security Grant Program – 97.067 Award Period: Various Type of Finding: Material Weakness in Internal Control over Compliance Material Non-compliance Compliance Areas: Cash Management Questioned Costs: None Condition Management has been unable to provide sufficient appropriate audit evidence relating to the completeness, existence, accuracy, and valuation of the Department’s federal revenue, accounts receivable/payable and related deferred inflows of resources reported as of June 30, 2024. This was included in our basis for qualifying opinion on Governmental Activities and the Federal Grants Fund. The Department lacked effective processes and controls for determining the amount Due From Federal Government as part of its year-end close process. The Department did not consistently apply its process for recording the Due From amount for all federal grants throughout the year. The Federal Grants Fund (Fund 40280) has a deficit fund balance of $24,515,842 and a $31,837,546 balance related to deferred inflows for FEMA grant funds that were not received within the 90-day period of availability after fiscal year-end. Subsequent drawdowns/collections on the June 30, 2024 amount Due From Federal Government of $37,384,520 were poor, with the Department drawing down or receiving $10,160,346 from July 1, 2024 through November 22, 2024. The accounts receivable summary by grant as of June 30, 2024 contained abnormal credit balances in the amount of $328,175, which the Department will need to research to determine if there are any overdrawn amounts. Management’s Progress for Repeated Finding: Management did make progress implementing adequate controls to resolve the finding from the prior years, by billing and receiving amounts from previous fiscal years. However, a material weakness still exists over controls over these account balances. Criteria According to §200.303 Internal controls of 2 CFR Part 200, the non- Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Specific to the Department, federal reimbursement requests are completed quarterly with the reporting process. According to NMSA 1978 §6.-5-2, the Financial Control Division (the division) shall issue a manual of model accounting practices containing the procedures and policies. State agencies shall comply with the model accounting practices established by the division, and the administrative head of each state agency shall ensure that the model accounting practices are followed. According to FIN 16 General Accounting Practices in the Manual of Model Accounting Practices, all reporting of financial information must be timely, complete, and accurate, to the state agency’s management and to oversight agencies and entities. Effect State agency’s management and other agencies and entities may not be able to rely on the financial information presented by the Department due to untimely, incomplete, and inaccurate financial reporting. The Federal Government may place the Department on controlled draws. Cause While the Department has made improvements from prior year related to the reconciliation and draw down of all federal receivables, the Department continues to lack an effective control environment that allows for timely and accurate drawdowns, financial reporting, and accounting of the Department’s Federal accounts receivable/payable balance and related deferred inflows of resources.
2024-004 CASH MANAGEMENT Federal agency: U.S. Department of Homeland Security/FEMA Federal Program Title & Assistance Listing Number: Disaster Grants – Public Assistance (Presidentially Declared Disasters) - 97.036 Hazard Mitigation Grant Program – 97.039 Emergency Management Performance Grants – 97.042 Homeland Security Grant Program – 97.067 Award Period: Various Type of Finding: Material Weakness in Internal Control over Compliance Material Non-compliance Compliance Areas: Cash Management Questioned Costs: None Condition Management has been unable to provide sufficient appropriate audit evidence relating to the completeness, existence, accuracy, and valuation of the Department’s federal revenue, accounts receivable/payable and related deferred inflows of resources reported as of June 30, 2024. This was included in our basis for qualifying opinion on Governmental Activities and the Federal Grants Fund. The Department lacked effective processes and controls for determining the amount Due From Federal Government as part of its year-end close process. The Department did not consistently apply its process for recording the Due From amount for all federal grants throughout the year. The Federal Grants Fund (Fund 40280) has a deficit fund balance of $24,515,842 and a $31,837,546 balance related to deferred inflows for FEMA grant funds that were not received within the 90-day period of availability after fiscal year-end. Subsequent drawdowns/collections on the June 30, 2024 amount Due From Federal Government of $37,384,520 were poor, with the Department drawing down or receiving $10,160,346 from July 1, 2024 through November 22, 2024. The accounts receivable summary by grant as of June 30, 2024 contained abnormal credit balances in the amount of $328,175, which the Department will need to research to determine if there are any overdrawn amounts. Management’s Progress for Repeated Finding: Management did make progress implementing adequate controls to resolve the finding from the prior years, by billing and receiving amounts from previous fiscal years. However, a material weakness still exists over controls over these account balances. Criteria According to §200.303 Internal controls of 2 CFR Part 200, the non- Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Specific to the Department, federal reimbursement requests are completed quarterly with the reporting process. According to NMSA 1978 §6.-5-2, the Financial Control Division (the division) shall issue a manual of model accounting practices containing the procedures and policies. State agencies shall comply with the model accounting practices established by the division, and the administrative head of each state agency shall ensure that the model accounting practices are followed. According to FIN 16 General Accounting Practices in the Manual of Model Accounting Practices, all reporting of financial information must be timely, complete, and accurate, to the state agency’s management and to oversight agencies and entities. Effect State agency’s management and other agencies and entities may not be able to rely on the financial information presented by the Department due to untimely, incomplete, and inaccurate financial reporting. The Federal Government may place the Department on controlled draws. Cause While the Department has made improvements from prior year related to the reconciliation and draw down of all federal receivables, the Department continues to lack an effective control environment that allows for timely and accurate drawdowns, financial reporting, and accounting of the Department’s Federal accounts receivable/payable balance and related deferred inflows of resources.
2024-004 CASH MANAGEMENT Federal agency: U.S. Department of Homeland Security/FEMA Federal Program Title & Assistance Listing Number: Disaster Grants – Public Assistance (Presidentially Declared Disasters) - 97.036 Hazard Mitigation Grant Program – 97.039 Emergency Management Performance Grants – 97.042 Homeland Security Grant Program – 97.067 Award Period: Various Type of Finding: Material Weakness in Internal Control over Compliance Material Non-compliance Compliance Areas: Cash Management Questioned Costs: None Condition Management has been unable to provide sufficient appropriate audit evidence relating to the completeness, existence, accuracy, and valuation of the Department’s federal revenue, accounts receivable/payable and related deferred inflows of resources reported as of June 30, 2024. This was included in our basis for qualifying opinion on Governmental Activities and the Federal Grants Fund. The Department lacked effective processes and controls for determining the amount Due From Federal Government as part of its year-end close process. The Department did not consistently apply its process for recording the Due From amount for all federal grants throughout the year. The Federal Grants Fund (Fund 40280) has a deficit fund balance of $24,515,842 and a $31,837,546 balance related to deferred inflows for FEMA grant funds that were not received within the 90-day period of availability after fiscal year-end. Subsequent drawdowns/collections on the June 30, 2024 amount Due From Federal Government of $37,384,520 were poor, with the Department drawing down or receiving $10,160,346 from July 1, 2024 through November 22, 2024. The accounts receivable summary by grant as of June 30, 2024 contained abnormal credit balances in the amount of $328,175, which the Department will need to research to determine if there are any overdrawn amounts. Management’s Progress for Repeated Finding: Management did make progress implementing adequate controls to resolve the finding from the prior years, by billing and receiving amounts from previous fiscal years. However, a material weakness still exists over controls over these account balances. Criteria According to §200.303 Internal controls of 2 CFR Part 200, the non- Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Specific to the Department, federal reimbursement requests are completed quarterly with the reporting process. According to NMSA 1978 §6.-5-2, the Financial Control Division (the division) shall issue a manual of model accounting practices containing the procedures and policies. State agencies shall comply with the model accounting practices established by the division, and the administrative head of each state agency shall ensure that the model accounting practices are followed. According to FIN 16 General Accounting Practices in the Manual of Model Accounting Practices, all reporting of financial information must be timely, complete, and accurate, to the state agency’s management and to oversight agencies and entities. Effect State agency’s management and other agencies and entities may not be able to rely on the financial information presented by the Department due to untimely, incomplete, and inaccurate financial reporting. The Federal Government may place the Department on controlled draws. Cause While the Department has made improvements from prior year related to the reconciliation and draw down of all federal receivables, the Department continues to lack an effective control environment that allows for timely and accurate drawdowns, financial reporting, and accounting of the Department’s Federal accounts receivable/payable balance and related deferred inflows of resources.
2024-006 REPORTING Federal Agency: U.S. Department of Homeland Security/FEMA Federal Program Title & Assistance Listing Number: Disaster Grants - Public Assistance (Presidentially Declared Disasters) - 97.036 Emergency Management Performance Grants - 97.042 Award Period: Various Type of Finding: Significant Deficiency in Internal Control over Compliance Other Non-compliance Questioned Costs: Unknown Condition: We noted the Department was not in compliance with requirements related to the reporting of grants. ALN 97.042 The Department did not complete the recipient share section of the federal financial reports for 4 out of 4 reports tested. ALN 97.036 We reviewed files for 5 subrecipients, from which there were 16 ongoing projects during fiscal year 2024. Of these, 4 of the 16 projects did not have evidence of the required reporting for Federal Funding Accountability and Transparency Act (FFATA). Criteria According to §200.302 Financial management of 2 CFR Part 200, the State's, and the other non- Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions. Further, the financial management system of each non-Federal entity must provide accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements. According to §200.303 Internal controls of 2 CFR Part 200, the non- Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effect. The auditor noted instances of noncompliance. Non-compliance may result in delayed reimbursement of eligible federal expenditures or the potential loss of federal funding. Cause The Department lacks established internal controls and procedures over financial grant management to ensure submitted reports are complete, agree to supporting spreadsheets, submitted timely, and properlv maintained in the files of the Department.
2024-006 REPORTING Federal Agency: U.S. Department of Homeland Security/FEMA Federal Program Title & Assistance Listing Number: Disaster Grants - Public Assistance (Presidentially Declared Disasters) - 97.036 Emergency Management Performance Grants - 97.042 Award Period: Various Type of Finding: Significant Deficiency in Internal Control over Compliance Other Non-compliance Questioned Costs: Unknown Condition: We noted the Department was not in compliance with requirements related to the reporting of grants. ALN 97.042 The Department did not complete the recipient share section of the federal financial reports for 4 out of 4 reports tested. ALN 97.036 We reviewed files for 5 subrecipients, from which there were 16 ongoing projects during fiscal year 2024. Of these, 4 of the 16 projects did not have evidence of the required reporting for Federal Funding Accountability and Transparency Act (FFATA). Criteria According to §200.302 Financial management of 2 CFR Part 200, the State's, and the other non- Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions. Further, the financial management system of each non-Federal entity must provide accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements. According to §200.303 Internal controls of 2 CFR Part 200, the non- Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effect. The auditor noted instances of noncompliance. Non-compliance may result in delayed reimbursement of eligible federal expenditures or the potential loss of federal funding. Cause The Department lacks established internal controls and procedures over financial grant management to ensure submitted reports are complete, agree to supporting spreadsheets, submitted timely, and properlv maintained in the files of the Department.
Special Tests – Enrollment Reporting Federal Agency: Department of Education Federal Program Title: Student Financial Assistance Cluster ASSISTANCE LISTING Number: 84.268 – Federal Direct Student Loans 84.063 – Federal Pell Grant Program Federal Award Identification Number and Year: P063P230362 2024 and P268K240362 2024 Award Period: June 1, 2023 to June 30, 2024 Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matter Criteria or specific requirement: Institutions are required to report enrollment information under the Pell grant and the Direct loan programs via the National Student Loan Data System (NSLDS) (OMB No. 1845-0035) (Pell, 34 CFR 690.83(b)(2); Direct Loan, 34 CFR 685.309). Institutions must review, update, and verify student enrollment statuses, program information, and effective dates that appear on the Enrollment Reporting Roster file or on the Enrollment Maintenance page of the NSLDS Professional Access (NSLDSFAP) website. There are two categories of enrollment information; “Campus Level” and “Program Level,” both of which need to be reported accurately and have separate record types. The NSLDS Enrollment Reporting Guide provides the requirements and guidance for reporting enrollment details using the NSLDS Enrollment Reporting Process. Institutions must report enrollment changes within 30 days; however, if a roster file is expected within 60 days, you may provide the updated data on that roster file. The University must also have an adequate process to internally review submissions to either the third-party servicer or directly to NSLDS. Additionally, Institutions are required to ensure adequate internal controls over compliance are established and maintained in accordance with 2 CFR 200.303. Condition: During our testing of the Direct Loan and Pell Grant programs, we selected a sample of 40 student enrollment changes to test for timeliness and accurate reporting of student status changes to the National Student Loan Data System (NSLDS). Our testing resulted in the following items of noncompliance. 1. 10 individual students where a student's campus-level enrollment effective date was not correctly reported to NSLDS. 34 CFR 685.309 (b)(1) and 34 CFR 690.83(b)(2) 2. 13 instances where a student’s enrollment status change was not reported timely to NSLDS. 34 CFR 685.309(b)(1) and 34 CFR 690.83(b)(2) Questioned costs: N/A Context: Out of a sample of 40 enrollment changes selected for testing for the requirement noted above, we noted 21 students with exceptions. 2 students had multiple instances of noncompliance. Cause: Turnover at the university did not lead to adequate corrective action taken after the prior year audit. The University was unaware of the errors which were caused by the transmission of data between there student information system and the third-party servicer. Effect: The NSLDS system could not be updated accurately or timely with student enrollment information. Repeat finding: Yes 2023-001 Recommendation: We recommend that the University ensure it has enhanced its policies and procedures regarding enrollment reporting including additional monitoring over the third-party service provider to ensure that reporting is completed accurately and timely. View of responsible official: The University agrees with the finding.
Special Tests – Enrollment Reporting Federal Agency: Department of Education Federal Program Title: Student Financial Assistance Cluster ASSISTANCE LISTING Number: 84.268 – Federal Direct Student Loans 84.063 – Federal Pell Grant Program Federal Award Identification Number and Year: P063P230362 2024 and P268K240362 2024 Award Period: June 1, 2023 to June 30, 2024 Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matter Criteria or specific requirement: Institutions are required to report enrollment information under the Pell grant and the Direct loan programs via the National Student Loan Data System (NSLDS) (OMB No. 1845-0035) (Pell, 34 CFR 690.83(b)(2); Direct Loan, 34 CFR 685.309). Institutions must review, update, and verify student enrollment statuses, program information, and effective dates that appear on the Enrollment Reporting Roster file or on the Enrollment Maintenance page of the NSLDS Professional Access (NSLDSFAP) website. There are two categories of enrollment information; “Campus Level” and “Program Level,” both of which need to be reported accurately and have separate record types. The NSLDS Enrollment Reporting Guide provides the requirements and guidance for reporting enrollment details using the NSLDS Enrollment Reporting Process. Institutions must report enrollment changes within 30 days; however, if a roster file is expected within 60 days, you may provide the updated data on that roster file. The University must also have an adequate process to internally review submissions to either the third-party servicer or directly to NSLDS. Additionally, Institutions are required to ensure adequate internal controls over compliance are established and maintained in accordance with 2 CFR 200.303. Condition: During our testing of the Direct Loan and Pell Grant programs, we selected a sample of 40 student enrollment changes to test for timeliness and accurate reporting of student status changes to the National Student Loan Data System (NSLDS). Our testing resulted in the following items of noncompliance. 1. 10 individual students where a student's campus-level enrollment effective date was not correctly reported to NSLDS. 34 CFR 685.309 (b)(1) and 34 CFR 690.83(b)(2) 2. 13 instances where a student’s enrollment status change was not reported timely to NSLDS. 34 CFR 685.309(b)(1) and 34 CFR 690.83(b)(2) Questioned costs: N/A Context: Out of a sample of 40 enrollment changes selected for testing for the requirement noted above, we noted 21 students with exceptions. 2 students had multiple instances of noncompliance. Cause: Turnover at the university did not lead to adequate corrective action taken after the prior year audit. The University was unaware of the errors which were caused by the transmission of data between there student information system and the third-party servicer. Effect: The NSLDS system could not be updated accurately or timely with student enrollment information. Repeat finding: Yes 2023-001 Recommendation: We recommend that the University ensure it has enhanced its policies and procedures regarding enrollment reporting including additional monitoring over the third-party service provider to ensure that reporting is completed accurately and timely. View of responsible official: The University agrees with the finding.
Special Tests – Using a Servicer or Financial Institution to Deliver Title IV Credit Balances to a Card or Other Access Device Federal Agency: Department of Education Federal Program Title: Student Financial Assistance Cluster ASSISTANCE LISTING Numbers: 84.268 – Federal Direct Student Loans 84.063 – Federal Pell Grant Program Federal Award Identification Number and Year: P063P230362 2024 and P268K240362 2024 Award Period: June 1, 2023 to June 30, 2024 Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matter Criteria or specific requirement: An institution must provide to Department of Education an up-to date URL for the contract for publication in a centralized database accessible to the public. Unless the school has a Tier Two arrangement under the threshold, the URL must also include the contract data described in the paragraph above (34 CFR 668.164(e)(2)(viii); 668.164(f)(4)(iii)(B); 668.164(f)(4)(v)). Additionally, Institutions are required to ensure adequate internal controls over compliance are established and maintained in accordance with 2 CFR 200.303. Condition: During our testing the University could not provide support that an up-to-date contract establishing their tier two arrangement was provided to the Department of Education. Questioned costs: N/A Context: The University did not meet the compliance requirement to report the contract and contract components to the Department of Education. Cause: Turnover at the university did not lead to adequate corrective action taken after the prior year audit. The University was not aware of the requirement and previously personal did not retain applicable support, if completed. Effect: The Department of Education was not provided required information regarding the contract. Repeat finding: Yes 2023-003 Recommendation: We recommend that the University ensure it has enhanced its policies and procedures to ensure required contracts and contract components are provided to the Department of education when required. View of responsible official: The University agrees with the finding.
Special Tests – Using a Servicer or Financial Institution to Deliver Title IV Credit Balances to a Card or Other Access Device Federal Agency: Department of Education Federal Program Title: Student Financial Assistance Cluster ASSISTANCE LISTING Numbers: 84.268 – Federal Direct Student Loans 84.063 – Federal Pell Grant Program Federal Award Identification Number and Year: P063P230362 2024 and P268K240362 2024 Award Period: June 1, 2023 to June 30, 2024 Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matter Criteria or specific requirement: An institution must provide to Department of Education an up-to date URL for the contract for publication in a centralized database accessible to the public. Unless the school has a Tier Two arrangement under the threshold, the URL must also include the contract data described in the paragraph above (34 CFR 668.164(e)(2)(viii); 668.164(f)(4)(iii)(B); 668.164(f)(4)(v)). Additionally, Institutions are required to ensure adequate internal controls over compliance are established and maintained in accordance with 2 CFR 200.303. Condition: During our testing the University could not provide support that an up-to-date contract establishing their tier two arrangement was provided to the Department of Education. Questioned costs: N/A Context: The University did not meet the compliance requirement to report the contract and contract components to the Department of Education. Cause: Turnover at the university did not lead to adequate corrective action taken after the prior year audit. The University was not aware of the requirement and previously personal did not retain applicable support, if completed. Effect: The Department of Education was not provided required information regarding the contract. Repeat finding: Yes 2023-003 Recommendation: We recommend that the University ensure it has enhanced its policies and procedures to ensure required contracts and contract components are provided to the Department of education when required. View of responsible official: The University agrees with the finding.
Finding 2024-001: Enrollment Reporting Federal Agency U.S. Department of Education Federal Program Student Financial Assistance Cluster (CFDA # 84.268, 84.063) Federal Award Year July 1, 2023 through June 30, 2024 Federal Award Numbers P063P231924; P268K241924Criteria Per Section 34 CFR 685.309, a school shall update the student status confirmation report for changes in student status, report the date the enrollment status was effective and return the student status confirmation report to the Secretary within 60 days of receipt. Per Section 4.4.3 of the National Students Loan Data System (NSLDS) enrollment reporting guide, reporting of graduated status is critical to the protection of a student’s interest subsidy and initiation of repayment periods. Per 34 CFR 668.22(d), the number of days in the approved leave of absence (LOA) cannot exceed 180 days. Per Volume 5 Chapter 1 of the SFA Handbook, if an LOA does not meet the conditions for an approved LOA, the student is considered to have ceased attendance and to have withdrawn from the school, and the school is required to perform an R2T4 calculation. Per 2 CFR 200.303, the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition For 20 out of 40 students, the students were appropriately reported with a Graduated status but with an effective date of January 16, 2024, rather than May 10, 2024. For 1 out of 40 students, the student communicated an LOA that would last two semesters and therefore, does not meet the requirements for an LOA status. The student should have been reported with a withdrawn status effective January 16, 2024 but instead was reported as less than half-time status effective January 16, 2024 and then LOA status effective August 26, 2024 and then withdrawn status effective January 21, 2025. Cause and Effect The control that management sets a predetermined schedule to submit an enrollment report, on at least a monthly basis is to ensure timely reporting to the NSLDS, and reviews all reports for the accuracy of all data elements prior to submission was not operating at a level to identify all discrepancies. Questioned Costs None identified. Sampling The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding in the Prior Year No. Recommendation We recommend the College enhance the precision of the control around the review of accuracy of the program level and campus level enrollment reporting submissions.Views of Responsible Officials The Financial Aid Office and the Registrar’s office agree that reporting to NDLDS for the year ended June 30, 2024 resulted in erroneous effective dates for graduated students and for one student on leave. A meeting has been set for both offices to meet and develop procedures to help ensure the reporting process is accurate. A plan is in place for review of the current year filings in early June 2025. A plan will be developed with dates for future years. This plan will include reporting procedures for all types of Davidson students who receive federal funds.
Finding 2024-001: Enrollment Reporting Federal Agency U.S. Department of Education Federal Program Student Financial Assistance Cluster (CFDA # 84.268, 84.063) Federal Award Year July 1, 2023 through June 30, 2024 Federal Award Numbers P063P231924; P268K241924Criteria Per Section 34 CFR 685.309, a school shall update the student status confirmation report for changes in student status, report the date the enrollment status was effective and return the student status confirmation report to the Secretary within 60 days of receipt. Per Section 4.4.3 of the National Students Loan Data System (NSLDS) enrollment reporting guide, reporting of graduated status is critical to the protection of a student’s interest subsidy and initiation of repayment periods. Per 34 CFR 668.22(d), the number of days in the approved leave of absence (LOA) cannot exceed 180 days. Per Volume 5 Chapter 1 of the SFA Handbook, if an LOA does not meet the conditions for an approved LOA, the student is considered to have ceased attendance and to have withdrawn from the school, and the school is required to perform an R2T4 calculation. Per 2 CFR 200.303, the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition For 20 out of 40 students, the students were appropriately reported with a Graduated status but with an effective date of January 16, 2024, rather than May 10, 2024. For 1 out of 40 students, the student communicated an LOA that would last two semesters and therefore, does not meet the requirements for an LOA status. The student should have been reported with a withdrawn status effective January 16, 2024 but instead was reported as less than half-time status effective January 16, 2024 and then LOA status effective August 26, 2024 and then withdrawn status effective January 21, 2025. Cause and Effect The control that management sets a predetermined schedule to submit an enrollment report, on at least a monthly basis is to ensure timely reporting to the NSLDS, and reviews all reports for the accuracy of all data elements prior to submission was not operating at a level to identify all discrepancies. Questioned Costs None identified. Sampling The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding in the Prior Year No. Recommendation We recommend the College enhance the precision of the control around the review of accuracy of the program level and campus level enrollment reporting submissions.Views of Responsible Officials The Financial Aid Office and the Registrar’s office agree that reporting to NDLDS for the year ended June 30, 2024 resulted in erroneous effective dates for graduated students and for one student on leave. A meeting has been set for both offices to meet and develop procedures to help ensure the reporting process is accurate. A plan is in place for review of the current year filings in early June 2025. A plan will be developed with dates for future years. This plan will include reporting procedures for all types of Davidson students who receive federal funds.
(3) Findings and Questioned Costs Relating to Federal Awards Finding No.: 2024-001 – Enrollment Reporting Federal Agency: U.S. Department of Education Pass-through Agency: Direct Program Name: Student Financial Assistance Cluster – Federal Direct Loan Program, Federal Pell Grant Program ALN Numbers: 84.268, 84.063 Federal Award Year: July 1, 2023 – June 30, 2024 Criteria Institutions are required to report enrollment information under the Pell grant, Direct Loan, and Federal Family Education Loan (FFEL) programs via the National Student Loan Data System (NSLDS) (OMB No. 1845-0035) (Pell, 34 CFR 690.83(b)(2); Direct Loan, 34 CFR 685.309). The administration of the Title IV programs depends heavily on the accuracy and timeliness of the enrollment reported by institutions. The Department of Education lists several certification methods for enrollment reporting, including certifying directly through the NSLDS web site, certifying through the NSLDS’s batch enrollment reporting process, or through certification of rosters provided to the National Student Clearinghouse (NSC). Per 2 CFR 200.303, 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 terms and conditions of the federal award. Condition Found In testing the Campus-Level enrollment reporting data elements as reported to NSLDS, key items to test are: OPEID Number, Enrollment Effective Date, Enrollment Status, and Certification Date. In testing the Program-Level enrollment reporting data elements, key items to test, if applicable, are: OPEID Number, CIP Code, CIP Year, Credential Level, Published Program Length Measurement, Published Program Length, Program Begin Date, Program Enrollment Status, and Program Enrollment Effective Date. Of the 40 students with enrollment changes that we selected for testwork, we identified three (3) students whose changes in enrollment status were not transmitted to NSLDS timely, as follows: • For two (2) students, the University was notified of each student’s enrollment status change from fulltime to graduated in May 2024. Accordingly, the students’ status changes should have been transmitted within sixty (60) days of degree conferral. However, submission was not timely, as the final submission of change of status ranged from sixty-nine (69) days to eighty-one (81) days after the required timeframe. • For one (1) student, the University was notified of the student’s enrollment status change from fulltime to withdrawn in May 2024. Accordingly, the student’s status change should have been transmitted within sixty (60) days of withdrawal date. However, submission was not timely, as the final submission of change of status was fifty-eight (58) days after the required submission date. Cause For the aforementioned three (3) students, the University’s internal control processes did not operate consistently to ensure that all enrollment information is transmitted to NSLDS timely. In each of these samples, additional manual intervention was required in order to successfully transmit the correct status due to either the original status submissions coming back as G Not Applied statuses, or students being enrolled in multiple concurrent programs which can create complexity with respect to status reporting. Due to staffing and resource constraints, the manual intervention required to resolve these items so that the correct status is reported to NSLDS did not occur in a timely manner. Possible Asserted Effect Untimely submission of student enrollment status information affects the determinations that lenders and servicers of students’ loans make related to in-school status, deferments, grace periods, and repayment schedules, as well as the federal government’s payment of interest subsidies. Questioned Costs No questioned costs were identified. Statistical Sampling The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding This is not a repeat finding. Recommendation We recommend that the University review and enhance its processes and internal controls to ensure that all enrollment information and status changes, including those effective at the end of a semester, are reported to NSLDS in a timely and accurate manner. Views of Responsible Officials The University has identified a remediation plan in response to the finding, including the following: 1. Immediate Mitigations (within 90 Days): a. The Office of the Registrar and Office of Financial Aid and Scholarship programs will formalize a quarterly check-in meeting with multiple levels of stakeholders to ensure that our enrollment reporting process is complying and to address any new concerns that may arise. These check-in meetings have been scheduled and begin on March 26, 2025. 2. Long-Term Mitigations (within 12 months) a. The Office of the Registrar will work with ITS colleagues to implement a Graduates Only Enrollment file for multi-career students to increase the quantity of records that can be automatically processed. This work will be made productional by February 1, 2026 i. This will reduce our error rate and decrease the volume of records requiring manual review, allowing for more focused attention on the most complicated scenarios.
(3) Findings and Questioned Costs Relating to Federal Awards Finding No.: 2024-001 – Enrollment Reporting Federal Agency: U.S. Department of Education Pass-through Agency: Direct Program Name: Student Financial Assistance Cluster – Federal Direct Loan Program, Federal Pell Grant Program ALN Numbers: 84.268, 84.063 Federal Award Year: July 1, 2023 – June 30, 2024 Criteria Institutions are required to report enrollment information under the Pell grant, Direct Loan, and Federal Family Education Loan (FFEL) programs via the National Student Loan Data System (NSLDS) (OMB No. 1845-0035) (Pell, 34 CFR 690.83(b)(2); Direct Loan, 34 CFR 685.309). The administration of the Title IV programs depends heavily on the accuracy and timeliness of the enrollment reported by institutions. The Department of Education lists several certification methods for enrollment reporting, including certifying directly through the NSLDS web site, certifying through the NSLDS’s batch enrollment reporting process, or through certification of rosters provided to the National Student Clearinghouse (NSC). Per 2 CFR 200.303, 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 terms and conditions of the federal award. Condition Found In testing the Campus-Level enrollment reporting data elements as reported to NSLDS, key items to test are: OPEID Number, Enrollment Effective Date, Enrollment Status, and Certification Date. In testing the Program-Level enrollment reporting data elements, key items to test, if applicable, are: OPEID Number, CIP Code, CIP Year, Credential Level, Published Program Length Measurement, Published Program Length, Program Begin Date, Program Enrollment Status, and Program Enrollment Effective Date. Of the 40 students with enrollment changes that we selected for testwork, we identified three (3) students whose changes in enrollment status were not transmitted to NSLDS timely, as follows: • For two (2) students, the University was notified of each student’s enrollment status change from fulltime to graduated in May 2024. Accordingly, the students’ status changes should have been transmitted within sixty (60) days of degree conferral. However, submission was not timely, as the final submission of change of status ranged from sixty-nine (69) days to eighty-one (81) days after the required timeframe. • For one (1) student, the University was notified of the student’s enrollment status change from fulltime to withdrawn in May 2024. Accordingly, the student’s status change should have been transmitted within sixty (60) days of withdrawal date. However, submission was not timely, as the final submission of change of status was fifty-eight (58) days after the required submission date. Cause For the aforementioned three (3) students, the University’s internal control processes did not operate consistently to ensure that all enrollment information is transmitted to NSLDS timely. In each of these samples, additional manual intervention was required in order to successfully transmit the correct status due to either the original status submissions coming back as G Not Applied statuses, or students being enrolled in multiple concurrent programs which can create complexity with respect to status reporting. Due to staffing and resource constraints, the manual intervention required to resolve these items so that the correct status is reported to NSLDS did not occur in a timely manner. Possible Asserted Effect Untimely submission of student enrollment status information affects the determinations that lenders and servicers of students’ loans make related to in-school status, deferments, grace periods, and repayment schedules, as well as the federal government’s payment of interest subsidies. Questioned Costs No questioned costs were identified. Statistical Sampling The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding This is not a repeat finding. Recommendation We recommend that the University review and enhance its processes and internal controls to ensure that all enrollment information and status changes, including those effective at the end of a semester, are reported to NSLDS in a timely and accurate manner. Views of Responsible Officials The University has identified a remediation plan in response to the finding, including the following: 1. Immediate Mitigations (within 90 Days): a. The Office of the Registrar and Office of Financial Aid and Scholarship programs will formalize a quarterly check-in meeting with multiple levels of stakeholders to ensure that our enrollment reporting process is complying and to address any new concerns that may arise. These check-in meetings have been scheduled and begin on March 26, 2025. 2. Long-Term Mitigations (within 12 months) a. The Office of the Registrar will work with ITS colleagues to implement a Graduates Only Enrollment file for multi-career students to increase the quantity of records that can be automatically processed. This work will be made productional by February 1, 2026 i. This will reduce our error rate and decrease the volume of records requiring manual review, allowing for more focused attention on the most complicated scenarios.
Finding Reference Number: 2024-002 NH Department of Education Child Nutrition Cluster (Assistance Listing #10.553, #10.555, #10.556, #10.559) Federal Award Numbers: 244NH304N1099, 244NH304N1199 Federal Award Year: 2023, 2024 U.S. Department of Agriculture Compliance Requirement: Reporting Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: N/A Statistically Valid Sample: The sample was not intended to be, and was not, a statistically valid sample. 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, (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). Aspects of the Transparency Act that relate to subaward reporting (1) under grants and cooperative agreements were implemented in OMB in 2 CFR Part 170 and (2) under contracts, by the regulatory agencies responsible for the Federal Acquisition Regulation (FAR at 5 FR 39414 et seq., July 8, 2010). The requirements pertain to recipients (i.e., direct recipients) of grants or cooperative agreements who make first-tier subawards and contractors (i.e., prime contractors) that award first-tier subcontracts. There are limited exceptions as specified in 2 CFR Part 170 and the FAR. The guidance at 2 CFR Part 170 currently applies only to federal financial assistance awards in the form of grants and cooperative agreements (e.g., it does not apply to loans made by a federal agency to a recipient), however the subaward reporting requirement applies to all types of first-tier subawards under a grant or cooperative agreement. 2 CFR Part 170 “subaward” has the meaning given in 2 CFR 200.1 and means an award provided by a pass-through entity to a subrecipient for the subrecipient to carry out part of a federal award received by the pass-through entity. It does not include payments to a contractor or payments to an individual that is a beneficiary of a federal program. A subaward may be provided through any form of legal agreement, including an agreement that the pass-through entity considers a contract. Additionally, per 2 CFR 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide 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 the year ended June 30, 2024, we noted the New Hampshire Department of Education (the Department) passed through $40,468,041 in Child Nutrition Cluster Grants (CNC Grant) to Local Educational Agencies (LEAs). During our testwork, we noted that the Department did not submit FFATA reports for all subawards. The following noncompliance was noted for the sample selected: Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward incorrect key elements 40 40 0 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward incorrect key elements $ 584,546 $ 584,546 $0 $0 $0 Cause The Department came to a determination that the FFATA reporting did not apply to the first-tier subawards provided to the LEAs under the child nutrition program. Effect The condition found that first-tier subawards were not reported in the Federal Funding Accountability and Transparency Act Subaward Reporting System. Questioned Costs: None. Recommendation We recommend DOE implement a process and internal controls to ensure that all first-tier subawards of $30,000 or more be reported in accordance with the Federal Funding Accountability and Transparency Act. View of Responsible Officials: Management concurs with the finding above.
Finding Reference Number: 2024-002 NH Department of Education Child Nutrition Cluster (Assistance Listing #10.553, #10.555, #10.556, #10.559) Federal Award Numbers: 244NH304N1099, 244NH304N1199 Federal Award Year: 2023, 2024 U.S. Department of Agriculture Compliance Requirement: Reporting Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: N/A Statistically Valid Sample: The sample was not intended to be, and was not, a statistically valid sample. 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, (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). Aspects of the Transparency Act that relate to subaward reporting (1) under grants and cooperative agreements were implemented in OMB in 2 CFR Part 170 and (2) under contracts, by the regulatory agencies responsible for the Federal Acquisition Regulation (FAR at 5 FR 39414 et seq., July 8, 2010). The requirements pertain to recipients (i.e., direct recipients) of grants or cooperative agreements who make first-tier subawards and contractors (i.e., prime contractors) that award first-tier subcontracts. There are limited exceptions as specified in 2 CFR Part 170 and the FAR. The guidance at 2 CFR Part 170 currently applies only to federal financial assistance awards in the form of grants and cooperative agreements (e.g., it does not apply to loans made by a federal agency to a recipient), however the subaward reporting requirement applies to all types of first-tier subawards under a grant or cooperative agreement. 2 CFR Part 170 “subaward” has the meaning given in 2 CFR 200.1 and means an award provided by a pass-through entity to a subrecipient for the subrecipient to carry out part of a federal award received by the pass-through entity. It does not include payments to a contractor or payments to an individual that is a beneficiary of a federal program. A subaward may be provided through any form of legal agreement, including an agreement that the pass-through entity considers a contract. Additionally, per 2 CFR 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide 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 the year ended June 30, 2024, we noted the New Hampshire Department of Education (the Department) passed through $40,468,041 in Child Nutrition Cluster Grants (CNC Grant) to Local Educational Agencies (LEAs). During our testwork, we noted that the Department did not submit FFATA reports for all subawards. The following noncompliance was noted for the sample selected: Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward incorrect key elements 40 40 0 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward incorrect key elements $ 584,546 $ 584,546 $0 $0 $0 Cause The Department came to a determination that the FFATA reporting did not apply to the first-tier subawards provided to the LEAs under the child nutrition program. Effect The condition found that first-tier subawards were not reported in the Federal Funding Accountability and Transparency Act Subaward Reporting System. Questioned Costs: None. Recommendation We recommend DOE implement a process and internal controls to ensure that all first-tier subawards of $30,000 or more be reported in accordance with the Federal Funding Accountability and Transparency Act. View of Responsible Officials: Management concurs with the finding above.
Finding Reference Number: 2024-002 NH Department of Education Child Nutrition Cluster (Assistance Listing #10.553, #10.555, #10.556, #10.559) Federal Award Numbers: 244NH304N1099, 244NH304N1199 Federal Award Year: 2023, 2024 U.S. Department of Agriculture Compliance Requirement: Reporting Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: N/A Statistically Valid Sample: The sample was not intended to be, and was not, a statistically valid sample. 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, (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). Aspects of the Transparency Act that relate to subaward reporting (1) under grants and cooperative agreements were implemented in OMB in 2 CFR Part 170 and (2) under contracts, by the regulatory agencies responsible for the Federal Acquisition Regulation (FAR at 5 FR 39414 et seq., July 8, 2010). The requirements pertain to recipients (i.e., direct recipients) of grants or cooperative agreements who make first-tier subawards and contractors (i.e., prime contractors) that award first-tier subcontracts. There are limited exceptions as specified in 2 CFR Part 170 and the FAR. The guidance at 2 CFR Part 170 currently applies only to federal financial assistance awards in the form of grants and cooperative agreements (e.g., it does not apply to loans made by a federal agency to a recipient), however the subaward reporting requirement applies to all types of first-tier subawards under a grant or cooperative agreement. 2 CFR Part 170 “subaward” has the meaning given in 2 CFR 200.1 and means an award provided by a pass-through entity to a subrecipient for the subrecipient to carry out part of a federal award received by the pass-through entity. It does not include payments to a contractor or payments to an individual that is a beneficiary of a federal program. A subaward may be provided through any form of legal agreement, including an agreement that the pass-through entity considers a contract. Additionally, per 2 CFR 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide 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 the year ended June 30, 2024, we noted the New Hampshire Department of Education (the Department) passed through $40,468,041 in Child Nutrition Cluster Grants (CNC Grant) to Local Educational Agencies (LEAs). During our testwork, we noted that the Department did not submit FFATA reports for all subawards. The following noncompliance was noted for the sample selected: Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward incorrect key elements 40 40 0 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward incorrect key elements $ 584,546 $ 584,546 $0 $0 $0 Cause The Department came to a determination that the FFATA reporting did not apply to the first-tier subawards provided to the LEAs under the child nutrition program. Effect The condition found that first-tier subawards were not reported in the Federal Funding Accountability and Transparency Act Subaward Reporting System. Questioned Costs: None. Recommendation We recommend DOE implement a process and internal controls to ensure that all first-tier subawards of $30,000 or more be reported in accordance with the Federal Funding Accountability and Transparency Act. View of Responsible Officials: Management concurs with the finding above.
Finding Reference Number: 2024-002 NH Department of Education Child Nutrition Cluster (Assistance Listing #10.553, #10.555, #10.556, #10.559) Federal Award Numbers: 244NH304N1099, 244NH304N1199 Federal Award Year: 2023, 2024 U.S. Department of Agriculture Compliance Requirement: Reporting Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: N/A Statistically Valid Sample: The sample was not intended to be, and was not, a statistically valid sample. 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, (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). Aspects of the Transparency Act that relate to subaward reporting (1) under grants and cooperative agreements were implemented in OMB in 2 CFR Part 170 and (2) under contracts, by the regulatory agencies responsible for the Federal Acquisition Regulation (FAR at 5 FR 39414 et seq., July 8, 2010). The requirements pertain to recipients (i.e., direct recipients) of grants or cooperative agreements who make first-tier subawards and contractors (i.e., prime contractors) that award first-tier subcontracts. There are limited exceptions as specified in 2 CFR Part 170 and the FAR. The guidance at 2 CFR Part 170 currently applies only to federal financial assistance awards in the form of grants and cooperative agreements (e.g., it does not apply to loans made by a federal agency to a recipient), however the subaward reporting requirement applies to all types of first-tier subawards under a grant or cooperative agreement. 2 CFR Part 170 “subaward” has the meaning given in 2 CFR 200.1 and means an award provided by a pass-through entity to a subrecipient for the subrecipient to carry out part of a federal award received by the pass-through entity. It does not include payments to a contractor or payments to an individual that is a beneficiary of a federal program. A subaward may be provided through any form of legal agreement, including an agreement that the pass-through entity considers a contract. Additionally, per 2 CFR 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide 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 the year ended June 30, 2024, we noted the New Hampshire Department of Education (the Department) passed through $40,468,041 in Child Nutrition Cluster Grants (CNC Grant) to Local Educational Agencies (LEAs). During our testwork, we noted that the Department did not submit FFATA reports for all subawards. The following noncompliance was noted for the sample selected: Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward incorrect key elements 40 40 0 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward incorrect key elements $ 584,546 $ 584,546 $0 $0 $0 Cause The Department came to a determination that the FFATA reporting did not apply to the first-tier subawards provided to the LEAs under the child nutrition program. Effect The condition found that first-tier subawards were not reported in the Federal Funding Accountability and Transparency Act Subaward Reporting System. Questioned Costs: None. Recommendation We recommend DOE implement a process and internal controls to ensure that all first-tier subawards of $30,000 or more be reported in accordance with the Federal Funding Accountability and Transparency Act. View of Responsible Officials: Management concurs with the finding above.
Finding Reference: 2024-003 NH Department of Military National Guard Military Operations and Maintenance (O&M) Projects (Assistance Listing #12.401) Federal Award Number: W012TF0190201001, W012TF023-27-2-1001 Federal Award Year: 2022, 2023, 2024 U.S. Department of Defense Compliance Requirement: Reporting Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: 2023-002 Statistically Valid Sample: The sample was not intended to be, and was not, a statistically valid sample. Criteria The SF-270, Request for Advance or Reimbursement must be submitted as part of the cash draw request process. Additionally, per 2 CFR 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide 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 testwork over the SF-270 Request for Advance or Reimbursement report, we identified the following: A. For 23 of 35 SF-270 reports selected for testwork, we were unable to agree line items a, total program outlays and line-item c, net program outlays, to the supporting documentation provided. B. For 22 of 35 SF-270 reports selected for testwork, we were unable agree line-item e, total, to the supporting documentation provided. C. For 22 of 35 SF-270 reports selected for testwork, we were unable agree line-item f, non-federal share of amount online e, to the supporting documentation provided. D. For 7 of 35 reports selected for testwork, we were unable to agree line-item g, federal share of amount online e, to the supporting documentation provided. E. For 4 of 35 reports selected for testwork, we were unable to agree line-item h, federal payments previously requested, to the supporting documentation provided. F. For 4 of 35 reports selected for testwork, we were unable to agree line item i, federal share now requested, to the supporting documentation provided. G. For all 35 SF-270 reports selected for testwork, we identified that there was a lack of segregation of duties related to the preparation of the SF-270 as there was no documented supervisory review performed over the completeness and accuracy of the reports prior to submission. Cause The cause of the condition found was due to insufficient policies and procedures to track total expenditures incurred by appendix for each federal award year. The Department relies on the previous amounts reported on the SF-270 report only and does not readily maintain supporting documentation for each report to reconcile the amounts reported on the SF-270 report to New Hampshire First, the State’s centralized accounting system. For each federal fiscal year, the Department uses an internal tracking sheet that tracks by appendix the federal share of costs incurred each month. The tracking sheet does not include the state share of expenses if a state match is required. As a result, for several appendices the tracking sheet used by the Department does not reconcile to the SF-270 report. Effect The effect of the condition found is SF-270 reports submitted were not complete and accurate. Questioned Costs: Not determinable. Recommendation We recommend that the existing policies and procedures in place to prepare the SF-270 be reviewed and internal controls be implemented that will include an independent supervisory review to ensure that the SF-270 is complete and accurate at the time of submission. This would include ensuring that each line item of the SF-270 properly reconciles to supporting documentation. This documentation should be maintained with each report to substantiate the amounts reported are complete and accurate. View of Responsible Officials: Management does not concur with this finding. Rejoinder: As documented within the condition found, for a sample of SF-270 reports selected for testwork, we were unable to agree the amount reported to the supporting documentation provided by the Department. A reconciliation and analysis of expenditures to New Hampshire First, the State of New Hampshire’s centralized accounting system, was not provided by the Department as part of this audit.
Finding Reference Number: 2024-004 NH Department of Military National Guard Military Operations and Maintenance (O&M) Projects (Assistance Listing #12.401) Federal Award Number: W012TF0190201001, W012TF023-27-2-1001 Federal Award Year: 2022, 2023, 2024 U.S. Department of Defense Compliance Requirement: Cash Management Type of Finding: Material Weakness Prior Year Finding: 2023-003 Statistically Valid Sample: The sample was not intended to be, and was not, a statistically valid sample. Criteria 2 CFR 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide 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. This would include internal controls related to the cash management process. Condition As part of our testwork over the cash management process, we identified a lack of segregation of duties related to the preparation of the cash request amount and the approval and authorization for the amount to be drawn. During the year ended June 30, 2024, the same individual calculated and authorized each cash draw for the 35 cash draws selected for testwork. Cause The cause of the condition found was due to insufficient internal controls to ensure an independent supervisory review is performed over each cash draw request, resulting in a lack of segregation of duties. Effect The effect of the condition found is that an error in the cash draw amount calculated could be made and the error would not be identified timely. Questioned Costs: None. Recommendation We recommend that internal controls be implemented that would result in a documented independent review over the amount calculated for the cash draw request to ensure that the amount drawn is complete and accurate. View of Responsible Officials: Management does not concur with this finding. Rejoinder: As documented within the condition found the Department does not have sufficient controls in place to ensure the accuracy of the cash draw as there is no supervisory review performed by the Department. The reliance on the federal government to review the accuracy of the cash draw is not a substitute for the Department maintaining its own internal controls.
Finding Reference Number: 2024-005 NH Fish and Game Department Fish and Wildlife Cluster (Assistance Listing #15.605, #15.611, #15.626) Federal Award Numbers: F22AF00995-00, F22AF00929-00, F23AF03086-00, F22AF00514-01, F22AF02616-02 Federal Award Year: 2022, 2023 U.S. Department of Interior Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: N/A Statistically Valid Sample: The sample was not intended to be, and was not, a statistically valid sample. Criteria A pass-through entity (PTE) must: 1. Identify the Award and Applicable Requirements - Clearly identify to the subrecipient required award information and applicable requirements described in 2 CFR section 200.332(a). 2. Evaluate Risk – Evaluate each subrecipient’s risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward (2 CFR section 200.332(b)). 3. Monitor – Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals (2 CFR sections 200.332(d) through (f)). In addition to procedures identified as necessary based upon the evaluation of subrecipient risk or specifically required by the terms and conditions of the award, subaward monitoring must include the following: a. Reviewing financial and programmatic (performance and special reports) required by the PTE. b. Following up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the federal award provided to the subrecipient from the PTE detected through audits, on-site reviews, and other means. c. Issuing a management decision for audit findings pertaining to the federal award provided to the subrecipient from the PTE as required by 2 CFR section 200.521. 2 CFR 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide 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. This would include internal controls related to the cash management process. Condition During the year ended June 30, 2024, the New Hampshire Fish and Game Department (the Department) passed through $484,952 of federal funding to 1 subrecipient to fund 4 different projects. As part of our testwork related subrecipient monitoring, we identified the following: A. The Department communicates award information through the approved grant agreement. For 3 of 4 projects selected for testwork, the Department did not communicate all the required award information as outlined in 2 CFR 200.332(b). Specifically, the following elements were not communicated: • Subrecipient's unique entity identifier • Identification of whether the Federal award is for research and development B. As part of the during the award monitoring testwork, we noted that the Department completes a risk assessment questionnaire for all new projects they approve for the subrecipient. As part of our testwork over the risk assessments performed, we identified the following: • For 1 of 4 projects selected for testwork, there was no risk assessment questionnaire completed. • For 3 of 4 projects selected for testwork, a risk assessment questionnaire was completed, however there were no required monitoring procedures outlined within the questionnaire. As a result, we were not able to determine what monitoring procedures should have been performed over the projects as a result of the risk assessment. C. The Department’s during the award monitoring includes the review and approval of the subrecipient’s request for reimbursement. During our testwork over the review and approval of the request for reimbursement, we noted that for all 9 invoices selected for testwork, that while the invoice appeared to be properly reviewed and approved, the level of detail included within the invoice would not allow the Department to determine the reasonableness of the costs incurred to ensure that they were incurred in accordance with the grant agreement. D. The Department’s during the award monitoring includes obtaining a progress report related to each project that the subrecipient has been granted funding for. As part of our testwork, we identified that for all 4 projects selected for testwork, while a progress report was obtained, there was no evidence provided to support that the Department had reviewed the report. As a result, we were unable to determine based on the Department’s risk assessment procedures what the type and frequency of monitoring procedures that should have been performed over each project. E. The Department does not have formal policies and procedures to review and maintain documentation to evidence the review and approval of the subrecipient’s unform guidance report. There was no documentation to support that the Department had obtained and reviewed its subrecipient’s most recent uniform guidance report issued. Cause The cause of the condition found was primarily due to a lack of formal written policies and procedures and internal controls to ensure that all required subrecipient monitoring compliance procedures are being performed by the Department. Effect The effect of the condition found is that the Department did not comply with 2 CFR section 200.332(a), 2 CFR section 200.332(b), 2 CFR sections 200.332(d) through (f), and 2 CFR section 200.501(h). Questioned Costs: None. Recommendation We recommend the Department develop written policies and procedures and implement internal controls to ensure that the Department complies with 2 CFR section 200.332(a), 2 CFR section 200.332(b), 2 CFR sections 200.332(d) through (f), and 2 CFR section 200.501(h). This would ensure that all subrecipient grant agreements contains all required communications, that a risk assessment is performed that will outline the types and frequency of monitoring procedures to be performed, that all during the award monitoring activities are properly documented and that the receipt and review of the subrecipient’s uniform guidance report is properly documented. View of Responsible Officials: Management partially concurs with this finding. Rejoinder: As documented within the condition found, sufficient documentation was not provided to demonstrate that the Department complied with 2 CFR section 200.332(a), 2 CFR section 200.332(b), 2 CFR sections 200.332(d) through (f), and 2 CFR section 200.501(h).
Finding Reference Number: 2024-006 NH Fish and Game Department Fish and Wildlife Cluster (Assistance Listing #15.605, #15.611, #15.626) Federal Award Numbers: F22AF00995-00, F22AF00929-00, F23AF03086-00, F22AF00514-01, F22AF02616-02, F19AF00556-01, F21AF04030-06, F22AF03670-01 Federal Award Year: 2019, 2021, 2022, 2023 U.S. Department of Interior Compliance Requirement: SEFA Reporting Type of Finding: Material Weakness and Noncompliance Prior Year Finding: N/A Statistically Valid Sample: The sample was not intended to be, and was not, a statistically valid sample. Criteria Title 2 U.S. Code of Federal Regulations Part 200 (2 CFR section 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements, section 200.510(b) states the auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with § 200.502. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide 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 The New Hampshire Fish and Game Department (the Department) oversees 25 different grants funded under the Fish and Wildlife Cluster (the Program). To assist in the management of the grants, the Department uses QuickBooks as their main system of books and records, rather than the State of New Hampshire’s centralized accounting system, NH First. The Department manually enters expenditure transactional data into QuickBooks and heavily relies on a number of excel tracking sheets to track expenditures, cash draws, and in-kind match earned for each of the 25 grants. During our testwork over the Program, we identified the following: A. For 2 of 25 grants, we identified that there were out of period costs that were included on the Schedule of Expenditures of Federal Awards (SEFA) for the year ended June 30, 2024. Specifically we identified the following: a. For 1 of the 2 grants, the Department, included $247,562 of the expenditures that were paid between March 17, 2017 and January 13, 2023 and should not have been reported on the June 30, 2024 SEFA, resulting in an overstatement of expenditures. b. For the other 1 of 2 grants, the Department included $761 of expenditures that were paid on February 10, 2023 and should not have been reported on the June 30, 2024 SEFA, resulting in an overstatement of expenditures. B. For 1 of 25 grants, the Department reported on the SEFA the amount reimbursed through the cash draw process as of June 30, 2024 rather than expenditures paid during that same period. As such, the amount reported on the June 30, 2024 SEFA was understated by $14,830. C. For 1 of 25 grants, we were unable to reconcile the amount reported on the SEFA. For the grant, the Department included $2,637,617 of expenditures on the June 30, 2024 SEFA. As part of our review of the expenditures reported, we were unable to recalculate the amount included by the Department. Based upon the total expenditures incurred during the period ending June 30, 2024, it appeared that the amount that should have been reported was $2,755,548. As such, it appeared that the June 30 2024 was understated by $117,931. D. For 5 of 5 grants that reported subrecipient pass through expenditures, it appeared that the Department reported pass-through expenditures on the SEFA that included both the state and federal share of the costs, resulting in the pass-through amount being overstated by $118,195. Cause The cause of the condition found appears to be related to the heavy reliance on manual spreadsheets and QuickBooks. The manual data entry into QuickBooks and the use of spreadsheets are susceptible to human error. As the Department does not have any internal controls in place to ensure the spreadsheets or QuickBooks reconcile to NH First, if there was an error in the data used by the Department, it would be difficult to detect. In addition, the Department incorrectly included prior period costs on the SEFA as it had been believed that since the costs had not previously been reported but were eligible for reimbursement should be included on the June 30, 2024 SEFA. Effect The effect of the condition found is that the expenditures and subrecipient pass through amounts were not accurately presented on the SEFA. Questioned Costs: Not determinable. Recommendation We recommend that the Department develop written policies and procedures and implement internal controls to ensure all spreadsheets utilized to manage the program reconcile to QuickBooks and that QuickBooks reconciles to NH first on a routine basis. The Department should also implement internal controls to evaluate the amounts reported on the SEFA to ensure that only current period expenditures that are eligible for reimbursement are reported on the SEFA. View of Responsible Officials: Management partially concurs with this finding. Rejoinder: As documented within the condition found, we were unable to obtain documentation that supported a reconciliation between QuickBooks and New Hampshire First was performed. The amounts reported on the SEFA by the Department for this program were not complete and accurate.
Finding Reference Number: 2024-007 NH Fish and Game Department Fish and Wildlife Cluster (Assistance Listing #15.605, #15.611, #15.626) Federal Award Numbers: F22AF02312-00, F21AF04100-02, F22AF02844-00, F24AF00586-00, F23AF02720-00, F21AF03886-03, F20AF11939-04, F23AF02954-00, F23AF02609-00, F23AF02714-01, F19AF00556-01, F19AF00556-01, F22AF03670-01, F19AF00556-01, F22AF02616-02, F22AF00514-01, F19AF00556-01, F21AF04030-06 Federal Award Year: 2019, 2020 2021, 2022, 2023, 2024 U.S. Department of Interior Compliance Requirement: Activities Allowed or Unallowed/Allowable Costs/Costs Principles Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: N/A Statistically Valid Sample: The sample was not intended to be, and was not, a statistically valid sample. Criteria Per Part 3 of the Compliance Supplement, costs must be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-federal entity in order to be allowable under federal awards. Further per 2 CFR section 200.502, the determination of when a Federal award is expended must be based on when the activity related to the Federal award occurs. Generally, the activity related to the Federal award pertains to events that require the non-Federal entity to comply with Federal statutes, regulations, and the terms and conditions of Federal awards, such as expenditure/expense transactions associated with grants. Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide 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 testwork over Activities Allowed or Unallowed/Allowable Costs/Costs Principles, we identified the following: A. For 18 of 25 payroll and fringe benefit costs selected for testwork, we were unable to agree the payroll and fringe benefit costs charged to the Fish and Wildlife Cluster (the program) to the State of New Hampshire’s centralized accounting system, NH First. The New Hampshire Department of Fish and Game (the Department) does not charge payroll and fringe benefit costs incurred by the program as processed in NH First. Instead, the Department utilizes an internally calculated "federal rate" that is used to charge both payroll and fringe benefit costs based upon the number of hours worked to the program. As described by the Department, the federal rate is calculated based upon an employee's fringe benefits, the approved NH First pay rate, and the employee’s years of service. While we were able to recalculate the employee’s payroll and fringe benefit amounts for each of the 20 samples selected testwork as recorded in NH First, we were not able to reconcile this amount to what the Department actually charged the program. A variance of $9,754 was identified and included in the Questioned Cost amount below. B. For 5 of 25 payroll costs selected for testwork, we were unable to obtain support to substantiate the payroll costs recorded by the Department, including the Fish and Game Activity Task Report, which shows the Department's method of allocating time and payroll to the Cluster. As a result, we were unable to reconcile the amount paid in NH First of $11,541 to what the Department had allocated to the program. While we were able to recalculate the employee’s payroll and fringe benefit amounts for each of the 5 samples selected based upon what was recorded in NH First, we were not able to reconcile this amount to what the Department had actually charged the program. Since we were unable to determine what was charged to the program this amount is not a known questioned cost below. C. Indirect costs charged to the program are based upon the Department's "federal rate" calculation of payroll and fringe benefit costs as described above in Bullet A. As a result, we were unable to substantiate the basis upon which the indirect cost rate was applied for all 25 payroll periods for testwork. We further noted that for 2 of 25 payroll periods selected for testwork, the indirect costs drawn down at the time of grant close out in proportion to the payroll drawn down exceeded the 18.19% indirect cost rate that should be applied to payroll. A variance of $1,655 was identified and included in the Questioned Cost amount below. D. During our testwork over the allowability of non-payroll costs, we identified that for 2 of 60 invoices selected for testwork, the invoice was not approved by the Division Chief prior to payment as required. Of the 2 invoices, 1 invoice was approved by the program supervisor and 1 invoice did not contain any evidence of it being approved. While the invoices did not appear to be properly reviewed, the amount paid appeared to be properly supported and as such, no questioned costs were identified. Cause The cause of the condition found is that the Department does not utilize the NH First system as the basis to charge payroll, fringe and indirect costs to the program. As described in the condition found above, the Department performs its own calculation of what the payroll and fringe benefit costs are based upon the Department’s calculated federal rate and then subsequently data enters their calculated expenditure information into QuickBooks. The Department uses QuickBooks to track all federal expenditures under the program by individual federal grant. The Department does not perform any reconciliations to ensure what was entered into QuickBooks reconciles to the NH First system in order to verify that the data in QuickBooks is complete and accurate. In addition, the cause of the condition found related to the review and approval of non-payroll costs is primarily a result of insufficient internal controls in place to ensure all invoices are reviewed and approved prior to payment. Effect The effect of the condition found is that the Department would be unable to detect an error within the amounts data entered into QuickBooks and the amount allocated to the program could be inaccurate. In addition, insufficient review and approval of non-payroll expenditures could result in unallowable costs charged to the program. Questioned Costs: $11,409 Recommendation We recommend that the Department develop written policies and procedures that outline how payroll and fringe benefit costs are charged to the program and implement controls to ensure the amount of payroll and fringe benefits entered into QuickBooks properly reconciles to NH First as part of its routine payroll process. We also recommend that the Department implement internal controls to ensure that the correct indirect cost rate is utilized based upon the applicable time period for which indirect costs are being calculated. Finally, we recommend that the Department review its existing policies and procedures related to the review and approval of non-payroll expenditures to ensure that they are properly reviewed and approved prior to payment. View of Responsible Officials: Management partially concurs with this finding. Rejoinder: As documented within the condition found, the Department did not provide documentation to support that QuickBooks is reconciled to New Hampshire First to ensure that the data within QuickBooks is complete and accurate. Within Bullets B and C were unable to obtain documentation to support these transactions from the Department within a timely manner. As a result of our audit procedures, we identified questioned costs of $11,409. We further note that the NH First system does allow for the allocation of employee salaries to grants from the standard or normal accounting assignment of their costs. The Department has elected not to implement this model.
Finding Reference Number: 2024-008 NH Fish and Game Department Fish and Wildlife Cluster (Assistance Listing #15.605, #15.611, #15.626) Federal Award Numbers: F22AF00995-00, F22AF00929-00, F23AF03086-00, F22AF00514-01, F22AF02616-02, F21AF04100-02, F21AF03886-03 Federal Award Year: 2021, 2022, 2023 U.S. Department of Interior Compliance Requirement: Matching Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: N/A Statistically Valid Sample: The sample was not intended to be, and was not, a statistically valid sample. Criteria In-kind match requirement is to test records to corroborate the values placed on in-kind contributions (including third party in-kind contributions) are in accordance with 2 CFR 200.306, 200.434, and 200.414, and the terms and conditions of the award. Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide 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 To meet the federal match required under the program, the New Hampshire Fish and Game Department (the Department) utilizes in-kind match that is earned from volunteer hours and costs contributed by its third party subrecipient. During our testwork over in-kind match, we identified the following: A. For 7 of 9 subrecipient invoices selected for testwork used to support the Department’s in-kind match, we were unable to obtain documentation to support the amount of the in-kind match earned. For each of the 7 sample selections, the value of the in-kind contribution was handwritten on the subrecipient's invoice for unrelated services. There was no documentation obtained to support the accuracy of this handwritten amount. Upon inquiry, the Department confirmed that no further verification was performed to ensure the subrecipient's in-kind match was accurate and based upon costs in support of the grant associated with the in-kind match. B. For 1 of 4 volunteer in-kind match contribution calculations, the Department incorrectly allocated volunteer hours using the prior fiscal year rates, resulting in an excess of in-kind match being recorded as earned. In addition, we were unable to verify the existence of 1 of the volunteer timesheets used in this calculation for this sample selection. Cause The cause of the condition found is primarily due to insufficient internal controls to ensure that the value of the match contributed by its subrecipient is complete and accurate. Due to the long-standing and collaborative relationship between the Department and the subrecipient, the Department has not developed or implemented formalized policies and procedures related to validating the existence of in-kind match earned. Further, related to the volunteer hours, the cause of the condition is due to human error. With over 250 timesheets to process, the volume of data and calculations are susceptible to error. Effect The effect of the condition found is that the Department did not have appropriate documentation to support the in-kind match earned and applied against its federal award in support of federal funds that were drawn. This could lead to unallowable costs being charged to the grant if the sufficient match was not made. Questioned Costs: $201,250 Recommendation We recommend that the Department implement written policies and procedures surrounding the tracking of in-kind match. Internal controls should be implemented to ensure the accuracy of the in-kind match earned, including ensuring that there is supporting documentation to substantiate the amount earned. The existing policies and procedures should also be enhanced related to volunteer time to monitor to ensure that all required timesheets are completed before using the volunteer time in support of its matching requirement and that the appropriate rate is used when determining the value of the volunteer in-kind match. View of Responsible Officials: Management concurs with this finding except for the questioned cost amount. Rejoinder: As documented within the condition found, we were unable to obtain sufficient documentation to support in-kind matching costs. As a result of our audit procedures, we identified questioned costs of $201,250.
Finding Reference Number: 2024-005 NH Fish and Game Department Fish and Wildlife Cluster (Assistance Listing #15.605, #15.611, #15.626) Federal Award Numbers: F22AF00995-00, F22AF00929-00, F23AF03086-00, F22AF00514-01, F22AF02616-02 Federal Award Year: 2022, 2023 U.S. Department of Interior Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: N/A Statistically Valid Sample: The sample was not intended to be, and was not, a statistically valid sample. Criteria A pass-through entity (PTE) must: 1. Identify the Award and Applicable Requirements - Clearly identify to the subrecipient required award information and applicable requirements described in 2 CFR section 200.332(a). 2. Evaluate Risk – Evaluate each subrecipient’s risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward (2 CFR section 200.332(b)). 3. Monitor – Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals (2 CFR sections 200.332(d) through (f)). In addition to procedures identified as necessary based upon the evaluation of subrecipient risk or specifically required by the terms and conditions of the award, subaward monitoring must include the following: a. Reviewing financial and programmatic (performance and special reports) required by the PTE. b. Following up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the federal award provided to the subrecipient from the PTE detected through audits, on-site reviews, and other means. c. Issuing a management decision for audit findings pertaining to the federal award provided to the subrecipient from the PTE as required by 2 CFR section 200.521. 2 CFR 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide 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. This would include internal controls related to the cash management process. Condition During the year ended June 30, 2024, the New Hampshire Fish and Game Department (the Department) passed through $484,952 of federal funding to 1 subrecipient to fund 4 different projects. As part of our testwork related subrecipient monitoring, we identified the following: A. The Department communicates award information through the approved grant agreement. For 3 of 4 projects selected for testwork, the Department did not communicate all the required award information as outlined in 2 CFR 200.332(b). Specifically, the following elements were not communicated: • Subrecipient's unique entity identifier • Identification of whether the Federal award is for research and development B. As part of the during the award monitoring testwork, we noted that the Department completes a risk assessment questionnaire for all new projects they approve for the subrecipient. As part of our testwork over the risk assessments performed, we identified the following: • For 1 of 4 projects selected for testwork, there was no risk assessment questionnaire completed. • For 3 of 4 projects selected for testwork, a risk assessment questionnaire was completed, however there were no required monitoring procedures outlined within the questionnaire. As a result, we were not able to determine what monitoring procedures should have been performed over the projects as a result of the risk assessment. C. The Department’s during the award monitoring includes the review and approval of the subrecipient’s request for reimbursement. During our testwork over the review and approval of the request for reimbursement, we noted that for all 9 invoices selected for testwork, that while the invoice appeared to be properly reviewed and approved, the level of detail included within the invoice would not allow the Department to determine the reasonableness of the costs incurred to ensure that they were incurred in accordance with the grant agreement. D. The Department’s during the award monitoring includes obtaining a progress report related to each project that the subrecipient has been granted funding for. As part of our testwork, we identified that for all 4 projects selected for testwork, while a progress report was obtained, there was no evidence provided to support that the Department had reviewed the report. As a result, we were unable to determine based on the Department’s risk assessment procedures what the type and frequency of monitoring procedures that should have been performed over each project. E. The Department does not have formal policies and procedures to review and maintain documentation to evidence the review and approval of the subrecipient’s unform guidance report. There was no documentation to support that the Department had obtained and reviewed its subrecipient’s most recent uniform guidance report issued. Cause The cause of the condition found was primarily due to a lack of formal written policies and procedures and internal controls to ensure that all required subrecipient monitoring compliance procedures are being performed by the Department. Effect The effect of the condition found is that the Department did not comply with 2 CFR section 200.332(a), 2 CFR section 200.332(b), 2 CFR sections 200.332(d) through (f), and 2 CFR section 200.501(h). Questioned Costs: None. Recommendation We recommend the Department develop written policies and procedures and implement internal controls to ensure that the Department complies with 2 CFR section 200.332(a), 2 CFR section 200.332(b), 2 CFR sections 200.332(d) through (f), and 2 CFR section 200.501(h). This would ensure that all subrecipient grant agreements contains all required communications, that a risk assessment is performed that will outline the types and frequency of monitoring procedures to be performed, that all during the award monitoring activities are properly documented and that the receipt and review of the subrecipient’s uniform guidance report is properly documented. View of Responsible Officials: Management partially concurs with this finding. Rejoinder: As documented within the condition found, sufficient documentation was not provided to demonstrate that the Department complied with 2 CFR section 200.332(a), 2 CFR section 200.332(b), 2 CFR sections 200.332(d) through (f), and 2 CFR section 200.501(h).
Finding Reference Number: 2024-006 NH Fish and Game Department Fish and Wildlife Cluster (Assistance Listing #15.605, #15.611, #15.626) Federal Award Numbers: F22AF00995-00, F22AF00929-00, F23AF03086-00, F22AF00514-01, F22AF02616-02, F19AF00556-01, F21AF04030-06, F22AF03670-01 Federal Award Year: 2019, 2021, 2022, 2023 U.S. Department of Interior Compliance Requirement: SEFA Reporting Type of Finding: Material Weakness and Noncompliance Prior Year Finding: N/A Statistically Valid Sample: The sample was not intended to be, and was not, a statistically valid sample. Criteria Title 2 U.S. Code of Federal Regulations Part 200 (2 CFR section 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements, section 200.510(b) states the auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with § 200.502. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide 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 The New Hampshire Fish and Game Department (the Department) oversees 25 different grants funded under the Fish and Wildlife Cluster (the Program). To assist in the management of the grants, the Department uses QuickBooks as their main system of books and records, rather than the State of New Hampshire’s centralized accounting system, NH First. The Department manually enters expenditure transactional data into QuickBooks and heavily relies on a number of excel tracking sheets to track expenditures, cash draws, and in-kind match earned for each of the 25 grants. During our testwork over the Program, we identified the following: A. For 2 of 25 grants, we identified that there were out of period costs that were included on the Schedule of Expenditures of Federal Awards (SEFA) for the year ended June 30, 2024. Specifically we identified the following: a. For 1 of the 2 grants, the Department, included $247,562 of the expenditures that were paid between March 17, 2017 and January 13, 2023 and should not have been reported on the June 30, 2024 SEFA, resulting in an overstatement of expenditures. b. For the other 1 of 2 grants, the Department included $761 of expenditures that were paid on February 10, 2023 and should not have been reported on the June 30, 2024 SEFA, resulting in an overstatement of expenditures. B. For 1 of 25 grants, the Department reported on the SEFA the amount reimbursed through the cash draw process as of June 30, 2024 rather than expenditures paid during that same period. As such, the amount reported on the June 30, 2024 SEFA was understated by $14,830. C. For 1 of 25 grants, we were unable to reconcile the amount reported on the SEFA. For the grant, the Department included $2,637,617 of expenditures on the June 30, 2024 SEFA. As part of our review of the expenditures reported, we were unable to recalculate the amount included by the Department. Based upon the total expenditures incurred during the period ending June 30, 2024, it appeared that the amount that should have been reported was $2,755,548. As such, it appeared that the June 30 2024 was understated by $117,931. D. For 5 of 5 grants that reported subrecipient pass through expenditures, it appeared that the Department reported pass-through expenditures on the SEFA that included both the state and federal share of the costs, resulting in the pass-through amount being overstated by $118,195. Cause The cause of the condition found appears to be related to the heavy reliance on manual spreadsheets and QuickBooks. The manual data entry into QuickBooks and the use of spreadsheets are susceptible to human error. As the Department does not have any internal controls in place to ensure the spreadsheets or QuickBooks reconcile to NH First, if there was an error in the data used by the Department, it would be difficult to detect. In addition, the Department incorrectly included prior period costs on the SEFA as it had been believed that since the costs had not previously been reported but were eligible for reimbursement should be included on the June 30, 2024 SEFA. Effect The effect of the condition found is that the expenditures and subrecipient pass through amounts were not accurately presented on the SEFA. Questioned Costs: Not determinable. Recommendation We recommend that the Department develop written policies and procedures and implement internal controls to ensure all spreadsheets utilized to manage the program reconcile to QuickBooks and that QuickBooks reconciles to NH first on a routine basis. The Department should also implement internal controls to evaluate the amounts reported on the SEFA to ensure that only current period expenditures that are eligible for reimbursement are reported on the SEFA. View of Responsible Officials: Management partially concurs with this finding. Rejoinder: As documented within the condition found, we were unable to obtain documentation that supported a reconciliation between QuickBooks and New Hampshire First was performed. The amounts reported on the SEFA by the Department for this program were not complete and accurate.
Finding Reference Number: 2024-007 NH Fish and Game Department Fish and Wildlife Cluster (Assistance Listing #15.605, #15.611, #15.626) Federal Award Numbers: F22AF02312-00, F21AF04100-02, F22AF02844-00, F24AF00586-00, F23AF02720-00, F21AF03886-03, F20AF11939-04, F23AF02954-00, F23AF02609-00, F23AF02714-01, F19AF00556-01, F19AF00556-01, F22AF03670-01, F19AF00556-01, F22AF02616-02, F22AF00514-01, F19AF00556-01, F21AF04030-06 Federal Award Year: 2019, 2020 2021, 2022, 2023, 2024 U.S. Department of Interior Compliance Requirement: Activities Allowed or Unallowed/Allowable Costs/Costs Principles Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: N/A Statistically Valid Sample: The sample was not intended to be, and was not, a statistically valid sample. Criteria Per Part 3 of the Compliance Supplement, costs must be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-federal entity in order to be allowable under federal awards. Further per 2 CFR section 200.502, the determination of when a Federal award is expended must be based on when the activity related to the Federal award occurs. Generally, the activity related to the Federal award pertains to events that require the non-Federal entity to comply with Federal statutes, regulations, and the terms and conditions of Federal awards, such as expenditure/expense transactions associated with grants. Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide 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 testwork over Activities Allowed or Unallowed/Allowable Costs/Costs Principles, we identified the following: A. For 18 of 25 payroll and fringe benefit costs selected for testwork, we were unable to agree the payroll and fringe benefit costs charged to the Fish and Wildlife Cluster (the program) to the State of New Hampshire’s centralized accounting system, NH First. The New Hampshire Department of Fish and Game (the Department) does not charge payroll and fringe benefit costs incurred by the program as processed in NH First. Instead, the Department utilizes an internally calculated "federal rate" that is used to charge both payroll and fringe benefit costs based upon the number of hours worked to the program. As described by the Department, the federal rate is calculated based upon an employee's fringe benefits, the approved NH First pay rate, and the employee’s years of service. While we were able to recalculate the employee’s payroll and fringe benefit amounts for each of the 20 samples selected testwork as recorded in NH First, we were not able to reconcile this amount to what the Department actually charged the program. A variance of $9,754 was identified and included in the Questioned Cost amount below. B. For 5 of 25 payroll costs selected for testwork, we were unable to obtain support to substantiate the payroll costs recorded by the Department, including the Fish and Game Activity Task Report, which shows the Department's method of allocating time and payroll to the Cluster. As a result, we were unable to reconcile the amount paid in NH First of $11,541 to what the Department had allocated to the program. While we were able to recalculate the employee’s payroll and fringe benefit amounts for each of the 5 samples selected based upon what was recorded in NH First, we were not able to reconcile this amount to what the Department had actually charged the program. Since we were unable to determine what was charged to the program this amount is not a known questioned cost below. C. Indirect costs charged to the program are based upon the Department's "federal rate" calculation of payroll and fringe benefit costs as described above in Bullet A. As a result, we were unable to substantiate the basis upon which the indirect cost rate was applied for all 25 payroll periods for testwork. We further noted that for 2 of 25 payroll periods selected for testwork, the indirect costs drawn down at the time of grant close out in proportion to the payroll drawn down exceeded the 18.19% indirect cost rate that should be applied to payroll. A variance of $1,655 was identified and included in the Questioned Cost amount below. D. During our testwork over the allowability of non-payroll costs, we identified that for 2 of 60 invoices selected for testwork, the invoice was not approved by the Division Chief prior to payment as required. Of the 2 invoices, 1 invoice was approved by the program supervisor and 1 invoice did not contain any evidence of it being approved. While the invoices did not appear to be properly reviewed, the amount paid appeared to be properly supported and as such, no questioned costs were identified. Cause The cause of the condition found is that the Department does not utilize the NH First system as the basis to charge payroll, fringe and indirect costs to the program. As described in the condition found above, the Department performs its own calculation of what the payroll and fringe benefit costs are based upon the Department’s calculated federal rate and then subsequently data enters their calculated expenditure information into QuickBooks. The Department uses QuickBooks to track all federal expenditures under the program by individual federal grant. The Department does not perform any reconciliations to ensure what was entered into QuickBooks reconciles to the NH First system in order to verify that the data in QuickBooks is complete and accurate. In addition, the cause of the condition found related to the review and approval of non-payroll costs is primarily a result of insufficient internal controls in place to ensure all invoices are reviewed and approved prior to payment. Effect The effect of the condition found is that the Department would be unable to detect an error within the amounts data entered into QuickBooks and the amount allocated to the program could be inaccurate. In addition, insufficient review and approval of non-payroll expenditures could result in unallowable costs charged to the program. Questioned Costs: $11,409 Recommendation We recommend that the Department develop written policies and procedures that outline how payroll and fringe benefit costs are charged to the program and implement controls to ensure the amount of payroll and fringe benefits entered into QuickBooks properly reconciles to NH First as part of its routine payroll process. We also recommend that the Department implement internal controls to ensure that the correct indirect cost rate is utilized based upon the applicable time period for which indirect costs are being calculated. Finally, we recommend that the Department review its existing policies and procedures related to the review and approval of non-payroll expenditures to ensure that they are properly reviewed and approved prior to payment. View of Responsible Officials: Management partially concurs with this finding. Rejoinder: As documented within the condition found, the Department did not provide documentation to support that QuickBooks is reconciled to New Hampshire First to ensure that the data within QuickBooks is complete and accurate. Within Bullets B and C were unable to obtain documentation to support these transactions from the Department within a timely manner. As a result of our audit procedures, we identified questioned costs of $11,409. We further note that the NH First system does allow for the allocation of employee salaries to grants from the standard or normal accounting assignment of their costs. The Department has elected not to implement this model.