Finding 2025-004: Reportable finding considered a material weakness – Review and approval of expenses Program name: WIOA Cluster Assistance Listing: 17.258 Federal awarding agency: U.S. Department of Labor Pass-through entity: Maryland State Department of Labor Award identification number: P56-MG-PY25-A Award Years: 2024/2025 Criteria: Under 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: During our review of the detailed expenses charged to the federal award, we noted certain expense reimbursements with the description “deduct from reimbursement.” These items were employees personal credit card transactions that should not have been included in the expense reimbursements, however, we noted two additional transactions with similar descriptions that were reimbursed to the employee and charged to the federal award. The three transactions totaled $46. Cause: The Organization does have a process and controls in place to identify and prevent such occurrences, however, there was a breakdown in internal controls and these transactions were not identified during the review and approval process. Effect: Unallowable expenses were charged to the award. An employee was reimbursed for personal credit card expenses and these transactions were charged to the federal awards. Without sufficient review of expense details additional unallowable costs could be charged to the award. Repeat finding: This is not a repeat finding. Questioned costs: Known questioned costs are $46. Perspective: These transactions were identified in the process of determining the amount of further noncompliance due to other noncompliance issues noted during the audit. The issue appears to be isolated to these transactions. No other instances of improper reimbursement were found during our testing. Overall expense reimbursements to the award are not significant so material noncompliance or likely questioned costs are unlikely. Recommendation: We suggest that the Organization review and update internal controls to ensure that similar expenses do not get charged to the federal awards in the future. As part of the updated internal controls, employees performing the reviews should understand the importance of the review process and trained on allowable costs principles addressed in 2 CFR Part 200.401. Management’s response and corrective action plan (unaudited): See corrective action plan.
2025-002 Eligibility — Temporary Assistance for Needy Families and Emergency Solutions Grants Program Federal agency: U.S. Department of Health and Human Services (TANF); U.S. Department of Housing and Urban Development (ESG). Assistance Listings: 93.558 and 14.231. Federal award numbers were not available; pass-through entity identifying numbers: TANF (Adams County); DOLA DOH ESG, DOLA DOH HSP, DOLA DOH NS2G, DOLA DOH HRP, and DOLA DOH HPAP (State of Colorado); Encampment Resolution (Adams County). Award year: July 1, 2024 through June 30, 2025. Pass-through entities: Adams County (TANF and ESG); State of Colorado, Department of Local Affairs, Division of Housing (ESG). Federal expenditures: $1,079,200 (TANF) and $984,865 (ESG). Compliance requirement: Eligibility. Type of finding: material weakness in internal control over compliance. Repeat finding: Yes - prior-year finding 2024-02. Condition: During our audit of the Temporary Assistance for Needy Families (TANF) program (Assistance Listing 93.558) and the Emergency Solutions Grants Program (Assistance Listing 14.231) for the year ended June 30, 2025, it was noted that the Organization did not maintain adequate supporting documentation for determining client eligibility. Specifically, of the 40 selections tested, the Organization was unable to provide documentation supporting income determination for 1 selection, and documentation supporting United States citizenship or qualified alien status was missing for two selections. Our sample was not intended to be, and was not, a statistically valid sample. Criteria: In accordance with TANF program requirements and 2 CFR § 200.303 (internal controls), recipients must maintain sufficient records to support eligibility determinations. Adequate supporting documentation is essential to ensure compliance with federal guidelines and to prevent improper payments. Cause: The Organization administers the Family Shelter program, which serves individuals who are often unable to provide conventional source documentation supporting income or citizenship status because they are homeless or otherwise without typical identifying records. In those circumstances, the Organization's practice is to obtain a signed statement from the applicant attesting to homelessness, lack of income, or other eligibility criteria in lieu of source documentation. The Organization has a formalized practice through the required client file checklist and written policy requiring case managers to retain either source documentation or a signed self-attestation for each eligibility attribute in the individual client file. The policy was not adhered to by an employee and was not discovered by the quality/compliance control. As a result, for the items tested, neither source documentation nor a signed attestation was retained. Effect: The Organization is unable to demonstrate, through documentation retained in the individual client file, that each eligibility determination was supported by either source documentation or a signed self-attestation. The absence of retained eligibility documentation means that the Organization's internal control cannot be relied upon to ensure that benefits are provided only to eligible TANF program participants and hinders the Organization's ability to demonstrate compliance during federal or pass-through entity monitoring reviews, increasing the risk that material noncompliance with the eligibility compliance requirement could occur without timely detection. Questioned Costs None. No questioned costs are reported because the condition relates to the retention of eligibility documentation rather than to payments to known ineligible participants. Eligibility determinations were performed at intake and signed self-attestation forms were obtained in accordance with the Organization's practice; however, the completed forms were not retained in the individual client files. The audit did not identify any payments to participants determined to be ineligible. Recommendation We recommend the Organization (a) develop and implement a written policy and procedure requiring case managers, at the time of intake, to obtain and retain in the individual client file documentation supporting each TANF eligibility attribute - including income determination and U.S. citizenship or qualified alien status; the policy should expressly permit a signed self-attestation from the client to serve as the supporting documentation when, due to homelessness or other circumstances, conventional source documentation cannot reasonably be obtained; (b) provide periodic training to intake staff on the documentation requirements and acceptable forms of evidence; and (c) implement periodic supervisory review of completed intake files to confirm compliance with the documented retention policy. Management’s Response See corrective action plan.
2025-003 Expenditure Approval — Temporary Assistance for Needy Families and Emergency Solutions Grants Program Federal agency: U.S. Department of Health and Human Services (TANF); U.S. Department of Housing and Urban Development (ESG). Assistance Listings: 93.558 and 14.231. Federal award numbers were not available; pass-through entity identifying numbers: TANF (Adams County); DOLA DOH ESG, DOLA DOH HSP, DOLA DOH NS2G, DOLA DOH HRP, and DOLA DOH HPAP (State of Colorado); Encampment Resolution (Adams County). Award year: July 1, 2024 through June 30, 2025. Pass-through entities: Adams County (TANF and ESG); State of Colorado, Department of Local Affairs, Division of Housing (ESG). Federal expenditures: $1,079,200 (TANF) and $984,865 (ESG). Compliance requirement: Allowable costs/cost principles. Type of finding: material weakness in internal control over compliance. Repeat finding: No. Condition: During our audit of the Temporary Assistance for Needy Families (TANF) program (Assistance Listing 93.558) and the Emergency Solutions Grants (ESG) program (Assistance Listing 14.231) for the year ended June 30, 2025, it was noted that the Organization did not consistently follow its established policies and procedures requiring management approval prior to the disbursement of program expenditures. Specifically, 26 of the 80 expenditures tested were processed without evidence of the required management approval in accordance with the Organization's documented policies and procedures. Our sample was not intended to be, and was not, a statistically valid sample. Criteria: In accordance with 2 CFR § 200.303, non-federal entities are required to establish and follow internal controls over federal programs that provide reasonable assurance of compliance with federal statutes, regulations, and the terms and conditions of federal awards. The Organization's internal policies require management approval prior to the disbursement of program-related expenditures. Cause: The Organization's documented control requires management approval of each disbursement prior to payment; however, approvals are commonly obtained verbally and there is no standard approval form retained with each disbursement package. As a result, while approvals are routinely performed in practice, documented evidence of the approval is not consistently retained in the disbursement file. Effect: The Organization is unable to demonstrate through its own records that the required management approval was obtained prior to payment for the affected disbursements. The absence of retained approval evidence in the disbursement file means that the Organization's internal control cannot be relied upon to prevent or detect unallowable, unreasonable, or unauthorized costs being charged to the federal programs, increasing the risk that material noncompliance with the allowable costs/cost principles compliance requirements could occur without timely detection. Questioned Costs: None. No questioned costs are reported because the condition relates to the retention of approval evidence rather than to unallowable or unauthorized expenditures. Management approvals were performed at the time of disbursement in accordance with the Organization's practice; however, the approvals were obtained verbally and documented evidence was not retained in the disbursement files. The expenditures tested were otherwise supported and were allowable under the applicable program requirements, and the audit did not identify any unallowable costs charged to the programs. Recommendation: We recommend the Organization (a) implement a standard approval form or signature block that is completed, signed, and dated by each required reviewer prior to issuance of payment and retained as part of the disbursement support package for every TANF and ESG disbursement; (b) update its written disbursement procedures to require that the completed approval form be retained in the disbursement file at the time of payment, in lieu of verbal approval; and (c) implement a periodic supervisory review of disbursement files to confirm that the required approval evidence is consistently retained, with results communicated to the Executive Director. Management's Response: See corrective action plan.
Federal Grantor: Department of Housing and Urban Development Program: COVID-19 Community Development Block Grants/Entitlement Grants (CDBG) Program Award No. and Year: B20-MW-19-0003 and 2020, B23-MC-19-0003 and 2023, B24-MC-19-0003 and 2024, B25-MC-19-0003 and 2025 Federal Financial Assistance Listing Number: 14.218 Compliance Requirement: Reporting Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria: CFR Section 200.303(a), Internal Controls, states that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. CFR Appendix A to Part 170I(a)(2), Reporting Requirements, states the recipient must report each subaward to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS) no later than the end of the month following the month in which the subaward was issued. Condition: During our testing of the City’s compliance with reporting requirements, we noted the City did not have any formal controls in place over the review and approval of reports. Reports were prepared, certified and submitted by the same individual. Additionally, during our testing, we noted for two (2) subaward reports submitted to FSRS, the information was not submitted timely. Cause: The City did not have a formal review process in place over the reports under the program. Additionally, the City did not have a process in place to ensure reports were submitted to FSRS timely. Effect: Reports could be submitted with inaccurate information. Additionally, reports were not submitted to FSRS in accordance with the reporting requirements per Appendix A to Part 170I(a)(2). Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: A nonstatistical sample of six (6) of eleven (11) reports were selected. The condition above was identified during our testwork of the City’s internal controls over reporting. Repeat Finding from Prior Years: No. Recommendation: We recommend that the City adhere to their policies and procedures in accordance with 2 CFR 200.332 to ensure compliance with subrecipient monitoring requirements. Views of Responsible Officials: Management agrees with the finding. See separate corrective action plan.
Federal Grantor: Department of Housing and Urban Development Program: Youth Homelessness Demonstration Program Award No. and Year: IA0158Y7D022201, IA0134Y7D022202, IA0135Y7D022202, IA0156Y7D022201, IA0157Y7D022201 and 2024, and IA0158Y7D022302, IA0134Y7D022303, IA0135Y7D022303, IA156Y7D022302, IA0137Y7D022303 and 2025 Federal Financial Assistance Listing Number: 14.276 Compliance Requirement: Cash Management Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria: CFR Section 200.303(a), Internal Controls, states that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: During our testing of the City’s compliance with cash management requirements, we noted for two (2) reimbursement requests, there was no evidence of the Federal Funds Administrator’s review and approval prior to the request being submitted. Cause: The City did not maintain supporting documentation indicating that the Federal Funds Administrator reviewed and approved the reimbursement request prior to it being submitted. Effect: The City’s control was not consistently followed, which requires the Federal Funds Administrator’s review and approval over the reimbursement request to be documented prior to submission. Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: A nonstatistical sample of four (4) of twelve (12) reimbursement requests were selected. The condition above was identified during our testwork of the City’s internal controls over cash management. Repeat Finding from Prior Years: No. Recommendation: We recommend the City adhere to their policies and ensure the review and approval of reimbursement requests are documented. Views of Responsible Officials: Management agrees with the finding. See separate corrective action plan.
Federal Grantor: Department of Housing and Urban Development Program: Youth Homelessness Demonstration Program Award No. and Year: IA0158Y7D022201, IA0134Y7D022202, IA0135Y7D022202, IA0156Y7D022201, IA0157Y7D022201 and 2024, and IA0158Y7D022302, IA0134Y7D022303, IA0135Y7D022303, IA156Y7D022302, IA0137Y7D022303 and 2025 Federal Financial Assistance Listing Number: 14.276 Compliance Requirement: Subrecipient Monitoring Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria: CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: During our testing of the City’s compliance with subrecipient monitoring requirements, we noted there was no evidence that the Federal Funds Administrator reviewed and approved the risk assessments for three (3) subrecipients. Cause: The City did not maintain supporting documentation indicating that the Federal Funds Administrator reviewed and approved the risk assessment performed over subrecipients. Effect: The City’s control was not consistently followed, which requires the Federal Funds Administrator’s review and approval over the subrecipient risk assessments to be documented. Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: A nonstatistical sample of three (3) of five (5) subrecipients were selected. The condition above was identified during our testwork of the City’s internal controls over subrecipient monitoring. Repeat Finding from Prior Years: No. Recommendation: We recommend the City adhere to their policies and ensure the review and approval of subrecipient risk assessments are documented. Views of Responsible Officials: Management agrees with the finding. See separate corrective action plan.
Section III--Federal Award and State Project Findings and Questioned Costs Major Federal Award Programs and State Projects Audit: 2025-001 – Timely Reconciliations of Aged Accounts Payable Federal Agency: U.S. Department of Education Assistance Listing: 93.558, 93.658, 93.659 Program Name: Student Financial Assistance Cluster Type of Finding: Significant deficiency in internal control over compliance Questioned Costs: None Criteria: Under 2 CFR 200.303 1, nonfederal entities are required to establish, document, and maintain effective internal control over federal awards to provide reasonable assurance that transactions are properly recorded, reported, and managed in compliance with applicable federal statutes, regulations, and the terms and conditions of the federal award. Effective internal control includes timely reconciliation of subsidiary records to the general ledger, supervisory review of unusual or aged items, and retention of documentation evidencing preparation and review. Condition: During our testing of internal control over compliance related to federal awards, we noted the Authority did not consistently perform and document timely reconciliations of the aged accounts payable subsidiary ledger to the general ledger for expenditures charged to federal programs. As a result of this control lapse, the Authority ultimately wrote off approximately $34,695.50 of aged accounts payable that had not been timely identified and resolved through the reconciliation process. Cause: The condition appears to have resulted from inadequate monthly reconciliation procedures, lack of timely review and follow-up for aged items outstanding more than 90 days, and insufficient documentation and retention of evidence supporting the preparation and review of reconciliations. Effect: As a result, the Authority’s controls did not operate effectively to timely detect and correct errors, omissions, or unsupported items in expenditures charged to federal programs. This increased the risk of misstatement and noncompliance related to federal award activity. However, based on the audit procedures performed, we did not identify material noncompliance or any questioned costs related to this matter. Recommendation: We recommend that management implement and document monthly reconciliations of the aged accounts payable subsidiary ledger to the general ledger for all federal program expenditures. We further recommend that management require timely supervisory review of aged items exceeding 90 days, document the resolution of such items, and retain evidence of the preparation, review, and follow-up performed.
2025-002 Finding: Material Weakness in Internal Control Over Compliance and Material Non-Compliance Federal Agency: U.S. Department of Education Federal Programs: 84.063 Federal Pell Grant Program; 84.268 William D. Ford Federal Direct Loan Program Compliance Requirement: Cash Management Repeat Finding: No Criteria: Title 2 U.S. Code of Federal Regulations (CFR) Part 200.305 requires non-Federal entities using the advance payment method to minimize the time between the transfer of federal funds and their disbursement. Advance payments must be limited to the minimum amounts needed and aligned with the entity’s actual, immediate cash requirements. To use the advance payment method, entities must maintain written cash management procedures and financial management systems that provide effective control and accountability over federal funds. In addition, 2 CFR 200.302(b)(3) and (b)(6) require entities to maintain financial management systems and written procedures sufficient to permit the tracing of federal funds to underlying expenditures and to implement the cash management requirements of 2 CFR 200.305. 2 CFR 200.303 further requires entities to establish and maintain effective internal control over federal awards to provide reasonable assurance of compliance, including monitoring activities. For Title IV Student Financial Assistance programs, 34 CFR 668.162(b) requires institutions using the advance payment method to request funds only for amounts needed immediately for disbursements made or to be made to eligible students and to disburse those funds no later than three business days after receipt. Condition: The College did not have written procedures governing drawdowns, including draw calculations, timing, approvals, reconciliations, or the return of excess funds. Tested draws were not consistently supported by documentation evidencing the accuracy of the expenditures being reimbursed. In addition, the College did not perform or document reconciliations between underlying disbursement records and authorized draw requests and did not monitor cash balances to identify whether positive balances were carried forward from period to period. As a result, the College could not demonstrate that draw amounts consistently reflected only eligible expenditures incurred during the applicable period. Cause: Management had not established a formal, documented cash management control framework, and responsibilities for draw preparation, review, approval, reconciliation, and monitoring were not clearly defined. As a result, draw requests, supporting documentation, and reconciliations were prepared inconsistently or not retained, and controls were not in place to identify or prevent excess cash on hand. Effect: Because the College did not maintain written cash management procedures, retain consistent support for draw calculations, or perform and document reconciliations of draws to underlying student disbursements and cash balances, the College could not demonstrate that Title IV funds were drawn only for actual, immediate cash needs or that drawn funds were timely disbursed in accordance with advance payment requirements. This condition increases the risk that the College may draw excess cash or draw funds in advance of need, be unable to detect or prevent noncompliance due to inadequate internal controls, and be subject to the return of excess funds, administrative actions, or questioned costs if noncompliance could be quantified. Recommendation: The College should strengthen cash management controls over the SFA Cluster by implementing the following: 1. Adopting written cash management procedures addressing draw calculations, timing of draws, approvals and segregation of duties, required supporting documentation, reconciliation requirements, and the identification and return of excess cash. 2. Maintaining a standardized draw file for each draw that includes approval evidence, supporting disbursement detail, a reconciliation to student-level disbursements by award type, and documentation of cash balances before and after the draw. 3. Performing and retaining monthly reconciliations between student-level disbursement records and federal cash activity, including documented supervisory review. Auditor’s Note: The engagement team noted that the cash management control deficiencies described in this finding have a direct impact on the College’s ability to support other Title IV compliance requirements that rely on traceable federal cash activity, including Return of Title IV Funds (R2T4). Specifically, where the College does not retain draw or return support, does not perform reconciliations between underlying student transactions and authorized activity, and does not maintain a clear audit trail of federal cash balances, it may be unable to demonstrate that Title IV funds were returned to the Department when required and that such returns can be traced from student-level determinations through COD activity and ultimately to federal cash activity (e.g., G5). View of Responsible Officials: See Auditee’s Corrective Action Plan. Questioned Costs: $0, Unknown
2025-003 Finding: Material Weakness in Internal Control Over Compliance and Material Non-Compliance Federal Agency: U.S. Department of Education Federal Programs: 84.063 Federal Pell Grant Program; 84.268 William D. Ford Federal Direct Loan Program Compliance Requirement: Eligibility Questioned Costs: $0, Unknown Repeat Finding: No Criteria: Title IV Student Financial Assistance regulations require institutions to determine and document key components used in establishing a student’s eligibility for Title IV aid. Cost of Attendance (COA) is a required component in determining a student’s eligibility and award amounts for Title IV aid. Title 34 Code of Federal Regulations (CFR) Part 668.2 defines COA and specifies allowable components that must be consistently applied in determining student eligibility and Title IV aid awards. In addition, Title IV regulations require institutions to evaluate and monitor a student’s Satisfactory Academic Progress (SAP) status at appropriate points to determine continued eligibility for Title IV aid. Further, 2 CFR 200.303 requires non-Federal entities to establish, document, and maintain effective internal control over federal awards to provide reasonable assurance that federal programs are administered in compliance with applicable statutes and regulations. These internal controls include documentation retention, segregation of duties, and monitoring and review of key determinations that directly affect eligibility and award calculations. Condition: The College calculated Cost of Attendance outside of its student information system using a manually maintained Excel spreadsheet that could be altered without restriction. The College did not retain finalized COA determinations in a reliable or non-modifiable format, and supporting information necessary to independently recalculate COA amounts was not consistently available. In addition, while the College maintains that it calculated the students’ Satisfactory Academic Progress (SAP) status at the time eligibility determinations were made, it did not retain documentation or reports evidencing that SAP status was reviewed and considered as part of the eligibility determination process. The Financial Aid Director solely prepared COA and SAP determinations, and there was no independent review or approval of these calculations, resulting in a lack of segregation of duties. As a result, during audit testing, the engagement team was unable to reliably recalculate Cost of Attendance for certain students and unable to verify that students’ SAP status was appropriately reviewed when determining Title IV eligibility. Cause: Management has not established formal, documented methodologies or controls over eligibility determinations, including Cost of Attendance calculations and review of Satisfactory Academic Progress. Controls requiring system-based calculations, retention of supporting documentation, and documented supervisory review and approval were not in place, and responsibilities for preparation, review, and approval of eligibility components were not clearly defined. Effect: Because the College did not maintain reliable documentation or effective controls over key eligibility determinations, including Cost of Attendance calculations and evidence of Satisfactory Academic Progress review, the engagement team was unable to conclude that student eligibility for Title IV aid was determined accurately and in accordance with federal requirements for all students tested. As a result, the College may have awarded Title IV funds to students based on inaccurate or unsupported eligibility determinations, resulting in unknown questioned costs and material noncompliance with Title IV program requirements. Recommendation: The College should strengthen controls over Cost of Attendance determinations by: 1. Establishing written policies and procedures governing Cost of Attendance and Satisfactory Academic Progress determinations in accordance with Title IV requirements. 2. Utilizing the student information system, or another controlled system, to calculate and retain COA determinations and SAP evaluations in a non-modifiable format. 3. Implementing segregation of duties, including documented independent review and approval of COA determinations and evidence of SAP status review by an individual not involved in the original calculations. 4. Retaining sufficient supporting documentation to allow for independent recalculation and verification of Cost of Attendance amounts and confirmation that SAP was reviewed at the time eligibility determinations were made. View of Responsible Officials: See Auditee’s Corrective Action Plan.
2025-004 Finding: Material Weakness in Internal Control Over Compliance and Material Non-Compliance Federal Agency: U.S. Department of Education Federal Programs: 84.063 Federal Pell Grant Program; 84.268 William D. Ford Federal Direct Loan Program Compliance Requirement: Reporting Questioned Costs: $0; Reporting only, no impact on award amount noted Repeat Finding: No Criteria: For Title IV programs reported through the Common Origination and Disbursement (COD) System, the U.S. Department of Education requires institutions to submit student disbursement records no later than 15 calendar days after making a disbursement or becoming aware of the need to adjust previously reported disbursement information. For the 2024-2025 award year, the Department provided a temporary flexibility under which institutions were not required to report disbursements made for the 2024-2025 award year until November 30, 2024, or 15 calendar days after the disbursement is made, whichever is later. For the Federal Pell Grant Program, Title 34 U.S. Code of Federal Regulations (CFR) Part 690.83 requires institutions to submit student Payment Data in accordance with prescribed procedures and to report changes by submitting updated Payment Data, and institutions must comply with procedures necessary to ensure reports are correct. For the Direct Loan Program, 34 CFR 685.309(a) requires participating schools to establish and maintain proper administrative and fiscal procedures and necessary records and to submit all reports required by the Direct Loan regulations and 34 CFR Part 668 to the Secretary. Further, 2 CFR 200.303 requires the recipient and subrecipient to establish, document, and maintain effective internal control over federal awards to provide reasonable assurance of compliance with federal statutes and regulations, including evaluating/monitoring compliance and taking prompt corrective action when noncompliance is identified. Condition: During testing of COD System reporting for the Pell Grant and Direct Loan programs, the engagement team noted exceptions in both the accuracy and timeliness of information reported to COD: 1. Accuracy: One instance identified in which the Cost of Attendance (COA) amount reported to the COD System for a student was later determined incorrect. 2. Timeliness: Seven instances identified where disbursements were not reported to the COD System within required reporting timeframes, of which six relate to Pell Grant disbursements and one relates to Direct Loan disbursements. The College did not have a formal, documented process to validate key COD data elements prior to submission or to monitor and evidence timely reporting, including exception tracking and documented supervisory review. Cause: Management has not established formal, written procedures and related review or monitoring controls over COD reporting that address both (a) validation of key data elements prior to submission and (b) monitoring of required reporting timelines and timely correction of exceptions. As a result, COD reporting was susceptible to human error and delays without timely detection and correction. Effect: As a result of the lack of preventive and detective controls over COD reporting, inaccurate COA information was reported to COD for one student and disbursement reporting was not timely in seven instances subject to our compliance testing procedures. While the exceptions identified did not impact the students’ award amounts, they represent noncompliance with federal reporting requirements and increase the risk that COD submissions may be inaccurate, incomplete, or not timely corrected, which can impair effective reconciliation and program oversight. The College corrected the incorrect COA reported for the student identified. Recommendation: The College should strengthen controls over COD reporting by: 1. Implementing written COD reporting procedures that define required data validations (including key data elements such as COA), documentation standards, and responsibilities for preparation, review, and submission. 2. Establishing a secondary review and documented approval of COD submissions prior to transmission, including review of changes, corrections, and supporting documentation. 3. Implementing a recurring reporting cadence (e.g., weekly/bi-weekly) and an automated or standardized tracking log to monitor the 15-day disbursement reporting requirement and flag late items for timely follow-up. 4. Performing and retaining periodic reconciliations and exception monitoring between internal student records and COD-accepted records to validate accuracy and timeliness, including documentation of corrections and the basis for changes. View of Responsible Officials: See Auditee’s Corrective Action Plan.
2025-005 Finding: Material Weakness in Internal Control Over Compliance and Material Non-Compliance Federal Agency: U.S. Department of Education Federal Programs: 84.063 Federal Pell Grant Program; 84.268 William D. Ford Federal Direct Loan Program Compliance Requirement: Special Tests and Provisions: Return of Title IV Funds Questioned Costs: $0, Unknown Repeat Finding: No Criteria: Title 34 U.S. Code of Federal Regulations (CFR) Part 34 CFR 668.22 requires an institution to determine the amount of Title IV aid earned when a Title IV recipient withdraws during a payment period or period of enrollment and to apply the Return of Title IV Funds requirements in accordance with the regulation. 34 CFR 668.24 requires institutions to establish and maintain program and fiscal records documenting the administration of Title IV programs, including documentation supporting each student’s receipt of Title IV funds, the amount, date, and basis of the institution’s calculation of the treatment of Title IV funds when a student withdraws, and documentation of the return of Title IV funds to the Department, as applicable. In addition, 2 CFR 200.303 requires the non-Federal entity to establish, document, and maintain effective internal control over federal awards that provides reasonable assurance of compliance with applicable statutes and regulations, including monitoring controls over key compliance processes. Condition: The College did not have a formal supervisory review process over Return of Title IV Funds (R2T4) calculations and related return activity. R2T4 calculations and submissions were prepared by the Financial Aid Director without documented independent review or approval. Additionally, the College did not maintain sufficient documentation to clearly identify and trace the specific return transmitted for each student subject to an R2T4 calculation with an institutional portion due to the Department. Rather than recording the return as a distinct transaction supported by a documented calculation and remittance trail, the Financial Aid Director manually adjusted the disbursed amounts in PeopleSoft to reflect net amounts after the return and also made manual updates within COD, without maintaining a supporting documentation package, audit trail, or reconciliation. As a result, for students tested, the engagement team could not reperform or trace student-level returns from the R2T4 calculation through COD activity and ultimately to cash activity in the federal funds accounts (e.g., G5). Given that this process applies to all students requiring an R2T4 calculation and an institutional return, the absence of supervisory review, documentation, and reconciliation represents a pervasive control deficiency. Cause: Management has not established formal written procedures and control requirements for R2T4 processing, including supervisory review and approval of calculations, documentation retention standards, and reconciliation of student-level R2T4 return amounts to system activity and federal cash activity. Responsibilities for review and reconciliation were not clearly defined, and the process relied on manual system edits that did not retain a reliable transaction trail. Effect: Because the College did not implement supervisory review over R2T4 calculations and did not maintain a complete documentation and reconciliation trail for student-level returns, the College was unable to demonstrate that institutional returns required by R2T4 were consistently calculated, recorded, and remitted in accordance with federal requirements. Recommendation: The College should strengthen controls over the R2T4 process by implementing the following: 1. Establish written R2T4 procedures requiring a standardized calculation and documentation package for each applicable withdrawal, including the withdrawal determination date, key calculation inputs, earned/unearned aid, and the institutional return amount. 2. Implement documented supervisory review and approval of each R2T4 calculation and related return submission prior to processing. 3. Eliminate undocumented manual netting edits and require returns to be recorded in a manner that preserves a clear, auditable trail (e.g., distinct transactions). 4. Perform and document periodic reconciliations of R2T4 calculation results to COD activity and COD activity to federal cash activity (e.g., G5), with documented investigation and resolution of differences. Auditor’s Note: The engagement team noted that the College’s inability to clearly trace and reconcile student-level R2T4 return amounts to COD activity and federal cash activity (e.g., G5) is consistent with the broader cash management control deficiencies described in the Cash Management finding. Specifically, the absence of standardized documentation, reconciliations, and monitoring over Title IV cash activity limits the College’s ability to evidence that R2T4 returns were processed and remitted accurately and in a manner that is verifiable and reproducible. View of Responsible Officials: See Auditee’s Corrective Action Plan.
2025-006 Finding: Significant Deficiency in Internal Control Over Compliance Federal Agency: U.S. Department of Education Federal Programs: 84.063 Federal Pell Grant Program; 84.268 William D. Ford Federal Direct Loan Program Compliance Requirement: Special Tests and Provisions: Verification Questioned Costs: $0; Verification only, no impact on award amount noted Repeat Finding: No Criteria: Title 34 U.S. Code of Federal Regulations (CFR) Part 34 CFR 668.51 through 668.61 require institutions participating in Title IV programs to comply with federal verification requirements, including verifying applicant information when selected, resolving discrepancies, and determining student eligibility prior to the disbursement of Title IV aid. An institution is required to establish written policies and procedures that incorporate the provisions of 34 CFR 668.51 through 668.61, including requirements for obtaining and reviewing acceptable documentation, completing verification, and maintaining records sufficient to demonstrate compliance with verification requirements. In addition, 2 CFR 200.303 requires the non-Federal entity to establish, document, and maintain effective internal control over federal awards to provide reasonable assurance of compliance with applicable statutes and regulations, including appropriate documentation, supervisory review, and monitoring over verification activities. Condition: The College did not have a documented supervisory review process over verification procedures performed by financial aid processing staff. Verification activities were performed by individual processors; however, there was no documented evidence identifying who completed the verification, such as initials, signatures, system sign-offs, or other reviewer identifiers retained for audit purposes. While the Financial Aid Director indicated that random reviews of verification files occur periodically as part of staff training, these reviews were informal and not documented. As a result, the College could not demonstrate that verification procedures were consistently reviewed or approved to ensure accuracy and compliance. Cause: Management has not established formal, documented procedures requiring supervisory review, approval, and retention of evidence for verification activities. Responsibilities for documenting completion and review of verification were not clearly defined, and reliance was placed on informal monitoring practices that were not retained. Effect: Because the College did not retain evidence of who performed or reviewed verification procedures, the College could not demonstrate that verification requirements were consistently applied and appropriately reviewed for accuracy and completeness. This condition increases the risk that errors, omissions, or noncompliance in verification may not be detected or corrected on a timely basis due to insufficient internal controls and monitoring. Recommendation: The College should strengthen controls over verification by: 1. Establishing written verification procedures that define staff responsibilities, required documentation, and supervisory review expectations. 2. Requiring documented evidence of completion and review of verification activities (e.g., initials, electronic sign-off, or system workflow approvals) for each verification file. 3. Documenting supervisory or quality control reviews, including the scope and results of any spot reviews performed, and retaining this documentation for audit and monitoring purposes. View of Responsible Officials: See Auditee’s Corrective Action Plan
2025-007 Finding: Material Weakness in Internal Control Over Compliance and Material Non-Compliance Federal Agency: U.S. Department of Education Federal Programs: 84.063 Federal Pell Grant Program; 84.268 William D. Ford Federal Direct Loan Program Compliance Requirement: Special Tests and Provisions: Disbursements to or on Behalf of Students Questioned Costs: $0; Notification requirement only, no impact on award amount noted Repeat Finding: No Criteria: Title 34 U.S. Code of Federal Regulations (CFR) Part 668.165(a)(1) requires that, before an institution disburses Title IV funds for any award year, the institution must notify the student of the amount of funds the student (or parent) can expect to receive under each Title IV program and how and when those funds will be disbursed. Further, 2 CFR 200.303 requires the recipient and subrecipient to establish, document, and maintain effective internal control over federal awards to provide reasonable assurance of compliance with federal statutes and regulations, including monitoring compliance and taking prompt corrective action when noncompliance is identified. Condition: During testing related to disbursements to or on behalf of students, the engagement team identified seven Pell Grant students for whom the required notification of Title IV funds and disbursement timing was not provided prior to the Pell disbursement. In each instance, the student was notified of the award after the disbursement had already been made. The College did not have a formal, documented process to ensure required notifications were issued before disbursement, or to evidence supervisory review and exception monitoring over the timing of notifications. Cause: Management has not established written procedures and related review or monitoring controls over the timing of Title IV disbursement notifications, including defined responsibility, documentation standards, and supervisory review to ensure notices are issued before disbursement. As a result, required notifications were not consistently provided timely. Effect: As a result of the lack of preventive and detective controls over disbursement notification requirements, the College did not timely notify students prior to disbursing Pell Grant funds in seven instances subject to our compliance testing procedures. While no impact on the students’ award amounts was noted, the exceptions represent noncompliance with federal notification requirements and increase the risk that students may not receive required information about their Title IV funding and disbursement timing prior to funds being disbursed. Recommendation: The College should strengthen controls over Title IV disbursement notifications by: 1. Implementing written procedures requiring the Title IV notification to be issued prior to any Title IV disbursement for the award year, including required content, timing, and documentation requirements. 2. Implementing documented supervisory review of notifications and exception follow-up to ensure notices are timely and recurring issues are promptly corrected. View of Responsible Officials: See Auditee’s Corrective Action Plan.
Finding 2025-004 Assistance Listing Number(s): 93.558 Name of Federal Program or Cluster: Temporary Assistance for Needy Families Name of Federal Agency: Department of Health and Human Services Name of Pass-through Entity: Virginia Department of Social Services Pass-through Entity Identifying Number: BEN-21-029 Award Period: July 1, 2024 through June 30, 2025 Criteria or Specific Requirement: Per 2 CFR 200.303 Internal controls, non-Federal entities must establish and maintain effective internal control over Federal awards to provide reasonable assurance of compliance with Federal statutes, regulations, and the terms and conditions of the award. Condition: For 14 of 60 disbursements tested, internal controls over the review and approval of costs charged to the Federal award were not documented. Cause: The entity does not have formalized or consistently documented control procedures over disbursements charged to Federal awards. Effect or Potential Effect: Lack of documented controls increases the risk that unallowable or unsupported costs may be charged to Federal awards without detection. Repeat Finding: This finding is a repeat of 2024-002 representing the continued internal control deficiency. Recommendation: UCM should formalize and document internal control procedures over Federal award expenditures, including documented review and approval processes to ensure compliance with Uniform Guidance. Views of Responsible Officials: Management acknowledges the finding and will work to implement appropriate corrective actions to address the deficiency and improve compliance going forward.
III Federal Award Findings and Questioned Costs FA 2025-001 Improve Controls over Procurement and Suspension and Debarment Compliance Requirement: Procurement and Suspension and Debarment Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Agriculture Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 10.553 – School Breakfast Program; 10.555 – National School Lunch Program 10.582 - Fresh Fruit and Vegetable Program Federal Award Numbers: 255GA324N1199 (Year: 2025), 255GA324L1603 (Year: 2025) Questioned Costs: $6,267 Description: A review of expenditures charged to the Child Nutrition Cluster revealed that the School District’s internal control procedures were not operating appropriately to ensure that the School District’s procurement and suspension and debarment procedures were followed. Background Information: The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential child care institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and secondary schools and encourages the domestic consumption of nutritious agricultural commodities. CNC funding is granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture, and GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the various CNC programs. CNC funds totaling $3,568,611.24 were expended and reported on the Jones County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2025. Criteria: As a recipient of federal awards, the School District is required to establish, document, and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.318 – General Procurement Standards state, “(a)… the recipient or subrecipient must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services. These documented procurement procedures must be consistent with State, local, and tribal laws and regulations… (b) Recipients and subrecipients must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders.” In addition, provisions included in the Uniform Guidance, Section 200.320 – Procurement Methods provide guidance for informal procurement methods and state “If simplified acquisition procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources.” Condition: A sample of 40 procurement transactions was randomly selected for testing using a nonstatistical sampling approach. These transactions were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. The School District could not provide evidence that an adequate number of rate or price quotations were obtained from qualified sources for four small purchase expenditures reviewed. Questioned Costs: Upon testing a sample of $159,951.89 in procurement transactions, known questioned costs of $6,267 were identified for expenditures that did not follow the School District’s procurement procedures. Using the total population of $1,778,019 in procurement transactions, we project the likely questioned costs to be approximately $69,659. The following Assistance Listing Numbers were affected by known and likely questioned costs: 10.553, 10.555, and 10.582. Cause: In discussing these deficiencies with the School District, they stated that the internal control procedures related to procurement were not being followed appropriately. In addition, management did not adequately monitor the procurement internal control procedures. Effect: The School District was not in compliance with the Uniform Guidance and GaDOE guidance. Failure to appropriately implement procedures to address procurement and suspension and debarment compliance requirements exposes the School District to unnecessary risk of error and misuse of federal funds and could result in the expenditure of federal funds with unqualified vendors. In addition, this deficiency could lead to the return of federal funds associated with unallowable expenditures. Recommendation: The School District should evaluate and improve internal control procedures to ensure that required procurement methods are properly identified and followed and required procurement and suspension and debarment documentation is properly identified, safeguarded, and retained. In addition, management should develop a monitoring process to ensure that these procedures are operating appropriately. Views of Responsible Officials: We concur with this finding.
Finding No: 2025-006 – Internal control deficiencies over accounting for federal funds received Federal Programs ALN 97.036, Disaster Grants - Public Assistance (Presidentially Declared Disasters) ALN 21.027, Coronavirus State and Local Fiscal Recovery Funds Name of Federal Agency ALN 21.027, Coronavirus State and Local Fiscal Recovery Funds Category U.S. Department of Treasury U.S. Department of Homeland Security Compliance Requirement Activities Allowed/Unallowed, Allowable Costs/Cost Principles, Period of Performance, Project Accounting. Criteria 2 CFR Part 200 Subpart D Subsection 200.302 states the following: The recipient's and subrecipient's financial management system must provide for the following: 1. Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity. 2. Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand. Puerto Rico Ports Authority (A Component Unit of the Commonwealth of Puerto Rico) Schedule of Findings and Questioned Costs – (Continued) Year Ended June 30, 2025 - 102 - Part III – Federal Award Findings and Questioned Costs – (continued) Finding No: 2025-006 – Internal control deficiencies over accounting for federal funds received Criteria – (continued) 3. Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. 4. Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes. See § 200.303. 5. Comparison of expenditures with budget amounts for each Federal award. 6. Written procedures to implement the requirements of § 200.305. 7. Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award. In addition, the 2 CFR Compliance Supplement states the following under Special Test and Provisions – Project Accounting: For large projects, the recipient is required to make an accounting to Federal Emergency Management Agency (FEMA) of eligible costs. Similarly, the subrecipient must make an accounting to the recipient. In submitting the accounting, the entity is required to certify that reported costs were incurred in performance of eligible work, that the approved work was completed, that the project is in compliance with the provisions of the FEMA-State Agreement, all grant conditions were met, and that payments for that project were made in accordance with the applicable payment provisions. For improved and alternate projects, if the total cost of the projects does not equal or exceed the approved eligible costs, then the auditor should expect to see an adjustment to reduce eligible costs (44 CFR section 206.205). For Small Projects, FEMA does not adjust estimated costs to the actual incurred amount. The Subrecipient must certify that they completed the approved SOW, and the Recipient must certify that they made all payments in accordance with the FEMA-State/Territory/Tribe agreement. This is typically completed on a Small Project Completion Certification. Puerto Rico Ports Authority (A Component Unit of the Commonwealth of Puerto Rico) Schedule of Findings and Questioned Costs – (Continued) Year Ended June 30, 2025 - 103 - Part III – Federal Award Findings and Questioned Costs – (continued) Finding No: 2025-006 – Internal control deficiencies over accounting for federal funds received Condition During our procedures over the Authority’s funds received from FEMA we noticed the following: 1. Return of interest earned on FEMA-related funds totaling approximately $211,853 was not timely recorded in the general ledger and was subsequently recorded through a post-closing entry dated January 26, 2026. 2. Management initially misclassified approximately $6 million received under the Coronavirus State and Local Fiscal Recovery Funds as state funds rather than federal awards. As a result, the amount was originally excluded from the Schedule of Expenditures of Federal Awards (the Schedule). Cause The condition was caused by the Authority's lack of personnel on the federal funds management office which has been present during prior audit periods, the early retirement program established under Act No. 80 of August 3, 2020 – “Law for Incentivized Retirement Program and Justice for Our Servants” (Act No. 80), and the resignation of some personnel from their occupied position and left the Authority willingly as stated in finding 2025-004 are the main causes for the condition. Effect Inadequate accounting and controls over federal funds can cause incorrect revenue recognition as capital advances are recognized as revenue when used appropriately and not when received. In addition, this can cause amounts to be included on the Schedule incorrectly as some of the activities received as capital advances have not actually occurred. It also creates risk of allocating funds in the incorrect federal awards as some of these have similar uses and assistance listing numbers. Also, the Authority could be subject to penalties or sanctions from the Federal Grantor. Puerto Rico Ports Authority (A Component Unit of the Commonwealth of Puerto Rico) Schedule of Findings and Questioned Costs – (Continued) Year Ended June 30, 2025 - 104 - Part III – Federal Award Findings and Questioned Costs – (continued) Finding No: 2025-006 – Internal control deficiencies over accounting for federal funds received Context The Authority recognized as federal award revenue of $6 million approximately, as contributions from the Commonwealth of Puerto Rico and therefore were originally not included in the Schedule. Also, $211,853 on the bank accounts where FEMA funds were deposited had to be returned since the funds cannot be deposited in an interest-bearing account. Journal entry recognizing this return was subsequently recorded through a post-closing entry dated January 26, 2026. Identification of repeat finding This is a repeat finding from the immediate previous audit, Finding 2025-006 Questioned costs None as adjustments were made during the audit to correct the misstatement. Recommendation We recommend the Authority’s Federal Funds Management Office (FFMO) and finance department coordinate with the external consultant who handles federal funds received from FEMA to better identify and classify funds received. In addition, we recommend the Authority to address the FFMO personnel limitations by hiring additional personnel for the Authority, re-shifting task between current personnel or by relaying on outsourced third party providers. Views of responsible officials and planned corrective actions We agreed with the auditors’ finding and recommendation. See further details regarding this matter within the Corrective Action Plan provided on pages 108-114.
2025-001 Improve Compliance and Controls Over Reporting Federal Program Information Federal Agency: U.S. Department of the Treasury Award Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Pass-Through Entity: Not applicable Award Year: 2021 Compliance Requirement: Reporting Type of Finding Compliance Internal Control over Compliance – Significant Deficiency Criteria or Specific Requirement 2 CFR 200.303(a) requires the auditee to establish and maintain effective internal control over Federal awards to ensure compliance with Federal statutes, regulations, and terms and conditions. For SLFRF funds, the Treasury Compliance and Reporting Guidance requires recipients to submit accurate and complete Project and Expenditure Reports (P&E Reports), including both current period and cumulative expenditures. Condition and Context During our testing of SLFRF expenditures reported in the 2025 Project and Expenditure (P&E) Report, we noted that the Town’s underlying accounting records and supporting detail did not agree to the amounts reported to Treasury. Specifically, current period expenditures per the general ledger differed from the amounts reported in the P&E Report. For the project “Park St. Sewer Main”, the Town reported local expenditures of $324,641, as current period expenditures despite the project having been fully expended in a prior reporting period. Overall, the total expenditures reported was not impacted as the budget for the project was not changed. Cause The discrepancy was caused by the Town’s lack of a formal control requiring reconciliation and detailed review of SLFRF report data to underlying accounting records before submission. Effect or Potential Effect Reporting discrepancies hinder the review and administration process of the grantor and could lead to incorrect allocation of funding. Questioned Costs None. Identification as a Repeat Finding No. Recommendation The Town should implement a formal reconciliation process requiring agreement of current period expenditures to the general ledger prior to submission of reports and retain such documentation. Views of Responsible Official and Planned Corrective Action Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.
Finding 2025-012 – Lack of Internal Controls Over Major Federal Program – Coronavirus State and Local Fiscal Recovery Funds (Repeat Finding – 2022-012, 2024-012) PASS THROUGH GRANTOR: Direct Grant FEDERAL AGENCY: U.S. Department of Treasury ASSISTANCE LISTING: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Procurement and Suspension and Debarment; Reporting; Subrecipient Monitoring QUESTIONED COSTS: $-0- Condition: During the process of documenting the County’s internal controls regarding federal disbursements, we noted that the County has not established procedures to ensure compliance with the following compliance requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Procurement and Suspension and Debarment; Reporting; Subrecipient Monitoring. Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal expenditures are made in accordance with federal compliance requirements. Effect of Condition: This condition could result in noncompliance with grant requirements and could result in a loss of federal funds to the County. Recommendation: OSAI recommends the County gain an understanding of requirements for this program and implement internal control procedures to ensure compliance with grant requirements. Management Response: Chairman of the Board of County Commissioners: The Board of County Commissioners will work with all County Officials to go over all grants and federal monies that the County receives to ensure that proper internal controls are implemented. Criteria: OMB 2 CFR 200, Subpart D. 200.303(a) reads as follows: Subpart D-Post Federal Award Requirements §200.303 Internal Controls The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Further, accountability and stewardship should be overall goals in management's accounting of federal funds. Internal controls should be designed to monitor compliance with laws and regulations pertaining to grant contracts.
Finding 2025-015 – Noncompliance with Reporting Over Major Federal Program – Coronavirus State and Local Fiscal Recovery Funds PASS-THROUGH GRANTOR: Direct Grant FEDERAL AGENCY: U.S. Department of Treasury ASSISTANCE LISTING: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Reporting QUESTIONED COSTS: $-0- Condition: During the test of 100% of expenditures for the Coronavirus State and Local Fiscal Recovery Funds totaling $10,706,312, reflected five (5) expenditures totaling $10,182,497, were not accurately reported in the proper period on the quarterly reports as required by the Reporting compliance requirement. Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal expenditures are properly reported in accordance with federal compliance requirements. Effect of Condition: This condition resulted in noncompliance with grant requirements. Recommendation: OSAI recommends the County design and implement a system of internal controls to ensure the accuracy and completeness of reports and to ensure compliance with federal requirements. Management Response: Chairman of the Board of County Commissioners: The BOCC will ensure that the reports are accurate and reported in the proper period. Criteria: GAO Standards – Section 2 – Establishing an Effective Internal Control System – OV2.23 states in part: Objectives of an Entity – Compliance Objectives Management conducts activities in accordance with applicable laws and regulations. As part of specifying compliance objectives, the entity determines which laws and regulations apply to the entity. Management is expected to set objectives that incorporate these requirements. 2 CFR § 200.303 Internal Controls (a) reads as follows: The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Additionally, Compliance and Reporting Guidance, State and Local Fiscal Recovery Funds (10. Reporting.) reads as follows: All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. In addition, where appropriate, your organization needs to establish controls to ensure completion and timely submission of all mandatory performance and/or compliance reporting. Further, 2 CFR § 200.329 Monitoring and Reporting Program Performance (c)(1) reads as follows: The non-Federal entity must submit performance reports at the interval required by the Federal awarding agency or pass-through entity to best inform improvements in program outcomes and productivity. Intervals must be no less frequent than annually nor more frequent than quarterly except in unusual circumstances, for example where more frequent reporting is necessary for the effective monitoring of the Federal award or could significantly affect program outcomes. Reports submitted annually by the non-Federal entity and/or pass-through entity must be due no later than 90 calendar days after the reporting period. Reports submitted quarterly or semiannually must be due no later than 30 calendar days after the reporting period. Alternatively, the Federal awarding agency or pass-through entity may require annual reports before the anniversary dates of multiple year Federal awards. The final performance report submitted by the non-Federal entity and/or pass-through entity must be due no later than 120 calendar days after the period of performance end date. A subrecipient must submit to the pass-through entity, no later than 90 calendar days after the period of performance end date, all final performance reports as required by the terms and conditions of the Federal award. See also § 200.344. If a justified request is submitted by a non-Federal entity, the Federal agency may extend the due date for any performance report.
Material Weakness – Finding 2025-002: Schedule of Expenditures of Federal Awards Completeness Statement of Condition In connection with our audit, management initially represented that the schedule of expenditures of federal awards was complete and accurate. During the course of the audit, in response to auditor inquiry regarding another grant held by the Organization, management determined that the grant represented federal funds passed through the Housing Authority of Cook County, Illinois under State and Local Fiscal Recovery Funds, ALN 21.027, and that the related expenditures of $709,506 had not been included in the schedule of expenditures of federal awards as initially prepared. This indicates that the Organization's controls did not identify and accumulate all federal awards expended during the year, specifically federal awards received as pass-through funding from a local government unit. Criteria Title 2 U.S. Code of Federal Regulations Part 200 (Uniform Guidance) requires the auditee to prepare a schedule of expenditures of federal awards that includes the total federal awards expended for the period (2 CFR 200.508 and 200.510(b)). Federal awards expended include awards received indirectly from pass-through entities, including state and local governments such as counties. The non-Federal entity is also required to establish and maintain effective internal control over the federal award that provides reasonable assurance the entity is managing the award in compliance with federal statutes, regulations, and the terms and conditions of the award (2 CFR 200.303). A complete and accurate schedule of expenditures of federal awards is necessary for the proper determination of major programs and the scope of the single audit. Cause The Organization's process for identifying federal awards did not include adequate procedures to detect federal funds passed through local government entities. The grant was initially treated as a non-federal award because its federal source was not apparent on its face, and the grant agreement and related funder documentation were not evaluated for indicators of federal funding (such as an Assistance Listing Number, a federal award identification number, the identity of the originating federal agency, or references to the Uniform Guidance). Effect A federal award was omitted from the schedule of expenditures of federal awards as initially prepared, resulting in an understatement of reported federal expenditures of $709,506. An incomplete schedule could result in incorrect determination of major programs and audit scope and in noncompliance with the reporting requirements of the Uniform Guidance. The schedule was subsequently revised to include the program. Questioned Costs None noted. Perspective The finding relates to the identification of a single federal pass-through award received from a local government unit. While isolated to that award, it reflects a deficiency in the design of the Organization's controls over the identification of federal awards. Statistical Sample A statistical sample is not applicable to this finding. Repeat Finding This audit finding is not a repeat finding. Recommendation We recommend that the Organization implement procedures to identify all federal awards expended, including funds passed through state and local governments. For each grant and contract, management should review the executed agreement and related funder documentation for indicators of federal funding, including an Assistance Listing Number, a federal award identification number, the originating federal agency, the pass-through entity identifying number, and references to the Uniform Guidance, and should confirm the federal funding status with the pass-through entity when it is not clear. The Organization should maintain a centralized listing of awards that is reconciled to the general ledger and reviewed for completeness in preparing the schedule of expenditures of federal awards. View of Responsible Officials Management agrees with the finding. Management will implement procedures to identify all federal awards expended, including pass-through awards received from state and local government units, and to evaluate grant agreements and funder documentation for indicators of federal funding, so that the schedule of expenditures of federal awards is complete and accurate.
Finding No.: 2025-002 – Allowability – Significant deficiency Federal Agency: Various Program Name: Research and Development Cluster ALN Number: Various Federal Award Year: July 1, 2024 – June 30, 2025 Criteria In accordance with 2 CFR 200.303(a), non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). To ensure compliance with federally funded grants, particularly concerning indirect cost rates, the institution must adhere to specific criteria. Firstly, compliance with the Uniform Guidance (2 CFR Part 200) is essential. This regulation establishes uniform administrative requirements, cost principles, and audit requirements for federal awards to non-federal entities. The institution must follow these guidelines, which include the proper application and calculation of indirect cost rates. Additionally, adherence to approved indirect cost rates as specified in 2 CFR 200.414 is required. The institution must apply the federally approved indirect cost rates when charging costs to federal awards, ensuring that any deviations, such as using a de minimis rate, are appropriately justified and documented. Conditions Found During our audit we found 2 out of 9 samples selected for our compliance testwork, the College used an incorrect indirect cost (IDC) rate. This represents an overcharge, as the IDC rate is intended to cover general administrative expenses that cannot be directly attributed to a specific project. In utilizing a higher rate, the College effectively inflated the administrative costs charged to the federal grants. Cause The cause of the condition is that the College’s internal controls over the review of the rates applied to calculate the IDC charges were not operating effectively to the awards throughout the year. The College manually calculates what the IDC costs are based upon outdated rates and was booked into their financial reporting system without a supplemental review or reconciliation. Possible Asserted Effect The inflated rate has led to an unwarranted increase in administrative costs charged to federal grants, potentially resulting in the overcharge. Questioned Costs The known questioned costs are $1,836 and the likely questioned costs are $2,282. Statistical Sampling Neither samples were intended to be, and were not, a statistically valid sample. Repeat Finding The condition found constitutes a repeat finding from the prior year. Recommendation We recommend that management review its internal controls and establish a routine audit and monitoring process to regularly review the application of indirect cost rates and ensure compliance with federal regulations. Views of Responsible Officials Recommendation accepted. Please refer to corrective action plan.
Finding No.: 2025-003- Equipment – Material weakness and material non-compliance Federal Agency: Various Program Name: Research and Development Cluster ALN Number: Various Federal Award Year: July 1, 2024 – June 30, 2025 Criteria Institutions with federally acquired research and development equipment must adhere to specific guidelines outlined in 2 CFR 200.313. This regulation mandates that entities conduct bi-annual inventory counts of federally acquired equipment to ensure accurate tracking and accountability. It requires maintaining detailed records of all equipment, including acquisition date, cost, location, and current status, to reflect any changes or discrepancies following each inventory count. Additionally, the regulation specifies procedures for the appropriate disposal of federally acquired equipment that is no longer needed or has reached the end of its useful life. Entities must request disposal instructions from the federal awarding agency and ensure that disposal methods comply with federal regulations, including obtaining necessary approvals and documenting the disposal process. Furthermore, in accordance with 2 CFR 200.303(a), non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Conditions Found During our testing over equipment, we identified that the College did not conduct an inventory count in the fiscal year under audit or the preceding fiscal year. During our testing over equipment dispositions, we noted that the College maintains a listing of equipment disposals, this listing did not include the date of disposition. Additionally, management was unable to provide documentation demonstrating that during the disposition of equipment the College requested disposition instructions from the federal awarding agency, when required by the terms and conditions of the award and was unable to provide supporting documentation of the individual disposals. Cause The cause of this condition was that the College did not follow its internal policies to conduct a physical inventory count, which contributed to the inability to track the specific timing of equipment retirements. Furthermore, the College lacked formally written policies and procedures governing the disposal of federally acquired equipment to ensure the disposal process, including obtaining necessary approvals, is documented and executed in compliance with Uniform Guidance. Possible Asserted Effect Improper disposal practices and the failure to perform a physical inventory count compromise the integrity of inventory management. Moreover, the absence of formal policies could result in federal noncompliance. 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 The conditions found constitute a repeat finding from the prior year. Recommendation We recommend that management perform a thorough physical inventory audit to locate all equipment and update the master equipment listing with accurate details, including current locations and statuses. Additionally, we recommend the institution review and regularly circulate formal policies and procedures for the appropriate disposal of non-functional or obsolete equipment. This should include obtaining necessary approvals and documenting the disposal process as per federal guidelines and federal awarding agency instructions. Views of Responsible Officials Recommendation accepted. Please refer to corrective action plan.
Finding No.: 2025-004 – Enrollment Reporting- Significant deficiency Federal Agency: U.S. Department of Education Program Name: Student Financial Assistance Cluster ALN Number: Various Federal Award Year: July 1, 2024 – June 30, 2025 Criteria In accordance with 2 CFR 200.303(a), non-Federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Conditions Found During our enrollment reporting testing we identified the following: (1) For 9 of 60 students selected for testing, the student’s graduation or withdrawal status was not updated within 60 days, the required timeframe to be reported to the NSLDS. The student’s identified had been granted extension periods to complete coursework. (2) For 1 of 60 students selected for testing the enrollment status in the NSLDS did not agree to the College’s internal records. (3) For 4 of 60 students selected for testing the College’s records lacked sufficient evidence to demonstrate when the institution became aware of the students’ status changes. Cause The cause of this noncompliance was a control deficiency in which the institution lacked sufficient monitoring, documenting, and review procedures over student enrollment status changes reported to the NSLDS. The engagement team notes that the institution did not have a reconciliation process to ensure status updates, specifically graduation and withdrawal dates, were accurately tracked and reported within the required timeframes, particularly when coursework extension periods were granted. Additionally, the institution lacked a formal review mechanism to cross-reference NSLDS records against internal databases to identify individual discrepancies, as well as a standardized procedure to document and retain the specific dates on which official status change notifications were received. Possible Asserted Effect Failure to perform review procedures over enrollment reporting changes could result in reporting more or less students enrolled receiving financial aid than what true enrollment is which could result in students receiving aid when not required or failure to receive aid from the Department of Education. Questioned Costs Not applicable. Statistical Sampling The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding The conditions found constitute a repeat finding from the prior year. Recommendation We recommend that management implement a monitoring and review process to ensure all student enrollment status changes are accurately and timely transmitted to the NSLDS. Specifically, management should establish a formal tracking mechanism for students granted coursework extensions to ensure their graduation or withdrawal dates are updated within required timeframes, and design a monthly reconciliation procedure to cross-reference NSLDS records against internal student databases to identify and resolve any individual discrepancies. Additionally, management should implement a standardized document retention policy to consistently record and preserve the dates the institution becomes aware of student status changes to ensure compliance with federal reporting deadlines. Views of Responsible Officials Recommendation accepted. Please refer to corrective action plan.
Finding 2025-004 – Various Federal Programs: Cash Management – Excess Federal Cash, Untimely Reconciliations (Material Weakness): Information on the federal program – Strengthening Historically Black Colleges and Universities (HBCUs), (Title III), FAL No. 84.031B, June 30, 2025; Historically Black Colleges and Universities (HBCU) (FUTURE ACT), FAL No. 84.031E, June 30, 2025; Minority Science and Engineering Improvement Program (MSEIP), FAL No. 84.120A, June 30, 2025; Science Consortium of Minority Schools, FAL No. 84.120A, June 30, 2025; Empowerment of Undergraduate STEM Majors through Scholarships and Strengthening STEM Identity, FAL No. 47.076, June 30, 2025; Tennessee Louis Stokes (TSLAMP), FAL No. 47.076, June 30, 2025. Criteria – 2 CFR §200.303 requires non-Federal entities to establish and maintain effective internal control over federal awards. 2 CFR §200.305(b) requires that payments be limited to the minimum amounts needed and timed to be in accordance with the actual, immediate cash requirements of the non-Federal entity. 2 CFR §200.308 requires that expenditures remain within approved budget limits unless prior approvals are obtained. Condition – At June 30, 2025, the College maintained excess federal cash balances across multiple federal programs, indicating that cash drawdowns and/or payable balances were not aligned with immediate cash needs for allowable program expenditures. These balances represented federal funds drawn or recorded as payable to federal agencies that were not supported by actual and immediate allowable program expenditures at year-end. The following table summarizes excess federal cash balances identified by program as of June 30, 2025: "Minority Science and Engineering Improvement Program" 120,031 "Science Consortium of Minority Schools" 169,907 "NSF - Empowerment of Undergraduate STEM Majors" 94,801 "NSF - Tennessee Louis Stokes TSLAMP" 54,834 "Title 111" 455,679 "FUTURE" 188,215 "Total Identified Excess Cash" "$ 1,083,467" Condition – (Continued) The College did not adequately reconcile federal cash activity to underlying grant expenditures on a timely basis and did not ensure that drawdowns were limited to amounts necessary to meet immediate cash needs. In addition, the College lacked effective monitoring controls to identify and resolve excess cash positions across federal programs in a timely manner. Federal bank reconciliations were untimely and error-prone. Corrections occurred only after auditor inquiry. Federal accounts also earned excess interest. Cause – The College lacked sufficient policies, procedures, and supervisory review controls to ensure that federal cash drawdowns were based on actual expenditures, that federal cash and grant reconciliations were prepared timely and accurately. Additionally, monitoring controls over cash balances, interest tracking and remittance were not effectively designed or implemented across federal programs. Effect – The lack of effective controls over federal cash management resulted in excess cash being maintained beyond immediate program needs. These conditions increase the risk of noncompliance with federal requirements, including potential return of excess cash or disallowed costs, and increase the risk of material misstatement of federal expenditures and cash balances. Questioned Costs – $1,083,467 Repeat Finding – No Auditor’s Perspective – From a compliance perspective, maintaining excess federal cash balances indicates that the College’s internal control over compliance did not operate effectively during the audit period. The condition demonstrates that drawdowns were not consistently based on actual incurred costs and that monitoring over federal cash was not functioning as designed. Given the pervasiveness of these conditions across multiple programs, this represents a systemic control deficiency. In accordance with 2 CFR §200.303 and auditing standards, this condition constitutes a material weakness in internal control over compliance. Auditor’s Recommendation – We recommend that the College strengthen controls over federal cash management and budget monitoring by implementing procedures to ensure that drawdowns are based on actual allowable expenditures and limited to immediate cash needs. Management should establish and enforce timely grant and federal bank reconciliation processes, monitor interest earnings and federal cash balances, and implement supervisory review controls to ensure compliance with federal requirements across all programs. Views of Responsible Officials – The College requests drawdowns for Title III and FUTURE programs on a reimbursable basis, including review and approval procedures. Of the total amount identified for the Title III program, a $181,433 receivable related to FY2025. The balance related to prior year(s) activity. The College will review its Federal program cost allocation procedures to ensure all eligible costs are properly identified and supported. The College has engaged two accounting firms to assist with staff training and bring all reconciliations current. In addition, standard month-end and year-end closing procedures will be implemented to address timely, accurate Federal program reconciliations and audit readiness going forward. The College experienced significant staff turnover within the business office. In addition, the College is undergoing conversion to a new Enterprise Resource Planning (ERP) system which affected its ability to complete some functions within a timely manner.
2025-007: REPORTING REQUIREMENTS Program: Public Safety Partnership and Community Policing Grants Federal Assistance Listing Number: 16.710 Federal Agency: U.S. Department of Justice Pass-Through Agency: Direct award Grantor Number: 15JCOPS-24-GG-03437-SSIX Questioned Costs: $-0- Type of Finding: Noncompliance (Other Matter), significant deficiency in internal control Compliance Requirement: L. Reporting Condition: The District did not prepare and submit the required Federal Financial Report (SF-425) associated with its COPS School Violence Prevention Program (SVPP) grant. During audit testing, the District was unable to provide evidence that the SF-425 had been completed or submitted to the grantor. Additionally, the District could not provide supporting documentation demonstrating that a final financial report, reimbursement request, or other required grant closeout reporting had been prepared and submitted in accordance with the grant terms and conditions. The District lacked adequate internal controls to ensure required federal reports were identified, prepared, reviewed, retained, and submitted timely. Criteria or Specific Requirement: The terms and conditions of the COPS School Violence Prevention Program grant require recipients to prepare and submit financial and performance reports, including the Federal Financial Report (SF-425), as required by the grant award. Additionally, 2 CFR § 200.303 requires non-Federal entities to establish and maintain effective internal control over Federal awards that provides reasonable assurance of compliance with Federal statutes, regulations, and the terms and conditions of Federal awards. Cause: The District did not have sufficient procedures in place to identify, track, prepare, retain, and monitor grant reporting requirements. Responsibilities for grant reporting and retention of supporting documentation have not been formally established or monitored. Effect: As a result of the control deficiency, the District could not demonstrate compliance with federal reporting requirements for the SVPP grant. The absence of completed reports and supporting documentation limited the District's ability to demonstrate that required financial information had been accurately reported to the grantor. Failure to submit and retain required reporting documentation may impair the federal awarding agency's ability to monitor grant expenditures and program performance and could result in increased oversight, delayed reimbursements, or other administrative actions. Repeat Finding: No. Recommendation: The District should establish and implement procedures to ensure all federal reporting requirements are identified, prepared, reviewed, submitted, and retained in accordance with grant requirements. Procedures should include maintaining a grant compliance calendar, assigning responsibility for report preparation and submission, documenting supervisory review, and retaining evidence of submission and supporting documentation for all required reports and reimbursement requests. Views of Responsible Officials: The District concurs with this recommendation. See the corrective action plan in a separately published document.
LACK OF PROCEDURES TO ENSURE PROPER SUSPENSION AND DEBARMENT REQUIREMENTS Program: AL 21.027 – COVID-19 – Coronavirus State and Local Fiscal Recovery Funds – Suspension & Debarment Grant: SLFRP0923, March 3, 2021, through December 31, 2024 Federal Grantor: U.S. Department of the Treasury Criteria: Title 2 of the U.S. Code of Federal Regulations (CFR) § 200.303 (January 1, 2023) states the following, in relevant part: The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The U.S. Department of the Treasury adopted the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards in 2 CFR § 1000.10 (January 1, 2023), which states the following: Except for the deviations set forth elsewhere in this Part, the Department of the Treasury adopts the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, set forth at 2 CFR part 200. 2 CFR § 200.214 (January 1, 2023) states the following: Non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. 2 CFR § 180.300 (January 1, 2023) requires non-Federal entities to verify that an entity is not excluded or disqualified prior to entering into a covered transaction by: “(a) Checking SAM Exclusions; or (b) Collecting a certification from that . . . [entity]; or (c) Adding a clause or condition to the covered transaction with that . . . [entity].” A good internal control plan requires the County to have proper procedures in place to verify that contractors paid with Federal funds are not suspended, debarred, or otherwise excluded from or ineligible for participation in Federal programs or activities. Condition: The County did not have controls in place to ensure that suspension and debarment requirements were followed and adequately documented. We noted the County used Coronavirus State and Local Fiscal Recovery Funds to pay nine vendors over $25,000 each, totaling $1,387,268, during the fiscal year ended June 30, 2025. The County failed to ensure that these vendors were not excluded or disqualified prior to entering into these covered transactions. Context: The County did not have a system in place to ensure proper application of the federal guidelines for the federal disbursements. Effect: Without adequate procedures to ensure contractors are not suspended, debarred, or otherwise excluded from or ineligible for participation in Federal programs or activities, there is an increased risk for the misuse of Federal funds and noncompliance with Federal regulations, leading to possible Federal sanctions. Cause: Lack of procedures and knowledge regarding suspension and debarment requirements. Questioned Costs: None Repeat Finding: Yes Recommendation: We recommend the County implement procedures to ensure, prior to entering into a covered transaction, that a contractor is not suspended, debarred, or otherwise excluded from or ineligible for participation in Federal programs or activities, and those procedures are adequately documented. View of Officials: The County will implement procedures to ensure when a contractor is paid with federal funds, sam.gov will be utilized to verify the entity has not been suspended or debarred and such procedure will be adequately documented.
FA 2025-001 Improve Controls over Procurement and Suspension and Debarment Compliance Requirement: Procurement and Suspension and Debarment Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Title: 84.027A – Grants to States; 84.173A – Preschool Grants Federal Award Number: H027A230073 (Year: 2024), H027A240073 (Year: 2025), H173A240081 (Year: 2025) Questioned Costs: $4,500 Description: A review of expenditures charged to the Special Education Cluster revealed that the School District’s internal control procedures were not operating appropriately to ensure that the School District’s procurement and suspension and debarment procedures were followed. Background Information: The Special Education Cluster (SEC), which is comprised of the Special Education Grants to States (IDEA, Part B) and Special Education Preschool Grants (IDEA Preschool) programs, was authorized under the Individuals with Disabilities Education Act (IDEA). Special Education Cluster funding is available to ensure that all children with disabilities have available to them a free appropriate public education that emphasizes special education and related services designed to meet their unique needs and prepares them for further education, employment, and independent living; ensure that the rights of children with disabilities and their parents are protected; assist states, localities, educational service agencies, and federal agencies to provide for the education of all children with disabilities; and assess and ensure the effectiveness of efforts to educate children with disabilities. SEC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. SEC funds totaling $525,466 were expended and reported on the Evans County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2025. Criteria: As a recipient of federal awards, the School District is required to establish, document, and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.318 – General Procurement Standards state, “(a)… the recipient or subrecipient must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services. These documented procurement procedures must be consistent with State, local, and tribal laws and regulations… (b) Recipients and subrecipients must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders.” In addition, provisions included in the Uniform Guidance, Section 200.320 – Procurement Methods provide guidance for informal procurement methods and state “If simplified acquisition procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources.” Provisions included in the Uniform Guidance, Section 200.320(c) – Noncompetitive Procurement states that procurement by a noncompetitive method may only be used if one of the circumstances outlined applies, including when “the procurement transaction can only be fulfilled by a single source.” Furthermore, Title 2 CFR Section 180.300 states in part that the recipient or subrecipient must “verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM.gov Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person.” Condition: A sample of 12 procurement transactions was randomly selected for testing using a nonstatistical sampling approach. These transactions were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. The School District could not provide evidence that an adequate number of rate or price quotations were obtained from qualified sources or documentary evidence as justification for single source procurement for one small purchase expenditure reviewed. In addition, a sample of 2 covered transactions was randomly selected for testing using a nonstatistical sampling approach. These expenditures were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. Although it was determined that the vendors associated with these transactions were not suspended or debarred or otherwise excluded from participating in the transaction, documentation could not be provided to support the entity’s verification as required by the School District’s policies and procedures. Questioned Costs: Upon testing a sample of $10,504 in procurement transactions, known questioned costs of $4,500 were identified for expenditures that did not follow the School District’s procurement procedures. Using the total population of $101,739 in procurement transactions, we project the likely questioned costs to be approximately $43,585. The following Assistance Listing Numbers were affected by known and likely questioned costs: 84.027A and 84.173A. Cause: In discussing these deficiencies with the School District, they believe these issues are primarily due to the lack of proper documentation and not following its policies and procedures that govern the procurement process for federal programs. Specifically, Management stated that rate or price quotations were not obtained because the vendor was considered a single source provider; however, documentation supporting the single source procurement method was not maintained. Effect: The School District was not in compliance with the Uniform Guidance and GaDOE guidance. Failure to appropriately implement procedures to address procurement and suspension and debarment compliance requirements exposes the School District to unnecessary risk of error and misuse of federal funds and could result in the expenditure of federal funds with unqualified vendors. In addition, this deficiency could lead to the return of federal funds associated with unallowable expenditures. Recommendation: The School District should evaluate and improve internal control procedures to ensure that required procurement methods are properly identified and followed and required procurement and suspension and debarment documentation is properly identified, safeguarded, and retained. In addition, management should develop a monitoring process to ensure that these procedures are operating appropriately. Views of Responsible Officials: We concur with this finding.
1. FINDING NUMBER:14 2025 - 003 2. THIS FINDING IS: New 3. Federal Program Name and Year: Special Education Cluster 4. Project No.: 24-4620-EI,25-4620-00,25-4620-EI,24-4625-00,25-4625-00,24-4600-00,25-4600-00 5. AL No.: 84.027,84.173 6. Passed Through: Illinois State Board of Education 7. Federal Agency: U.S. Department of Education 8. Criteria or specific requirement (including statutory, regulatory, or other citation): Per Uniform Guidance (2 CFR §200.302 and §200.303), non-Federal entities are required to maintain effective internal controls over Federal awards and maintain records that adequately identify the source and application of funds for federally funded activities. Financial management systems should provide accurate, current, and complete disclosure of financial results and adequately support expenditures charged to Federal programs. Expenditures submitted for reimbursement should be readily traceable to the accounting records and supported by appropriate documentation. 9. Condition: During our testing of expenditures submitted for reimbursement under the Special Education Grant, we noted that expenditures included in reimbursement requests were difficult to reconcile to supporting documentation and the District's accounting records. Specifically, amounts recorded within the general ledger for certain purchased services and supplies and materials expenditures were incomplete and could not independently support the amounts claimed for reimbursement. District personnel were required to provide additional grant tracking schedules and other supporting records to reconcile the expenditures reported for reimbursement. 10. Questioned Costs: None 11. Context: As part of our Uniform Guidance compliance testing, we reviewed expenditures charged to and reimbursed under the Special Education Grant. During testing, we noted instances in which expenditure amounts reported for reimbursement could not be directly traced to the general ledger and required reconciliation to separate grant tracking documentation maintained outside the accounting system. 12. Effect: The lack of a complete and accurate grant tracking process increases the risk that unsupported, inaccurate, duplicate, or unallowable expenditures could be included in reimbursement requests and charged to the Federal program. Inadequate documentation also impairs management's ability to effectively monitor grant activity and increases the risk of noncompliance with Federal grant requirements. 13. Cause: The District's procedures for tracking and recording grant expenditures were not sufficient to ensure that amounts reported for reimbursement were fully supported by and readily traceable to the general ledger. The District relied on supplemental grant tracking records to compile reimbursement requests because expenditures recorded in the accounting records were not maintained in a manner that allowed for complete and efficient reconciliation of grant activity. 14. Recommendation: We recommend the District strengthen its grant accounting and monitoring procedures by: 1. Ensuring all Special Education Grant expenditures are accurately and completely recorded within the general ledger, 2. Maintaining a clear audit trail between reimbursement requests, supporting invoices, payroll records (if applicable), grant tracking schedules, and the general ledger, 3. Performing periodic reconciliations between grant reimbursement requests and accounting records prior to submission, 4. Establishing documented review procedures to verify the completeness and accuracy of expenditures charged to Federal programs, and 5. Providing training to personnel responsible for grant accounting and reimbursement preparation to ensure compliance with Uniform Guidance documentation requirements. Implementation of these procedures will improve accountability over Federal funds, strengthen compliance with Uniform Guidance requirements, and reduce the risk of unsupported costs being charged to Federal programs. 15. Management's response: Management agrees with the finding and will strengthen grant tracking and reconciliation procedures to ensure expenditures submitted for reimbursement are fully supported, accurately recorded in the general ledger, and readily traceable to the underlying documentation.
Reference Number: 2025 – 001 Federal Agency: U.S. Department of Agriculture Federal Program Name: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555 Pass-through Agency: Pennsylvania Department of Education Pass-through Entity Number: N/A Federal Award Identification Number and Year: 241PA305N1199, 251PA305N1199 Award Period: 07/1/2024 to 6/30/2025 Compliance Requirement: Reporting Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: Internal Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The District was unable to provide evidence of independent review and approval for three of three reporting samples tested. Questioned Costs: None Context: The District did not properly review and approve three of three SNP Claim for Reimbursement Summary reports. Section III – Findings and Questioned Costs – Major Federal Programs (Continued) Cause: The District did not have internal controls established to ensure proper review and approval of the SNP Claim for Reimbursement Summary report. Effect: There is a risk that meals submitted for reimbursement were overstated or understated. Repeat Finding: No Recommendation: We recommend that the District implement procedures to ensure that SNP Claim for Reimbursement Summary reports are independently reviewed and approved prior to submission to Program Electronic Application and Reimbursement System (PEARS). This review should be performed by an individual who is not involved in the preparation of the reports and evidence of the review should be documented.
TEMPORARY ASSISTANCE FOR NEEDY FAMILIES – 93.558 Federal Awarding Agency: U.S. Department of Health and Human Services (HHS), Administration for Children and Families Federal Award Fiscal Years: 2024; 2025 Federal Award Number: 2401RITANF; 2501RITANF Administered by: Rhode Island Department of Human Services (DHS) Compliance Requirement: Special Tests and Provisions – Income Eligibility and Verification System INCOME ELIGIBILITY AND VERIFICATION SYSTEM Internal controls were lacking in ensuring that Income Eligibility Verification (IEVS) data was run and processed timely to determine whether it affects the recipient's eligibility or the amount of assistance received. Background: RIBridges, the State’s integrated eligibility system, interfaces with various electronic data exchanges in determining the initial and subsequent continuance of eligibility. The State utilizes information, most notably, wage and unemployment income (UI), obtained from the State Wage Information Collection Agency (SWICA), the Rhode Island Department of Labor and Training (DLT), and the federal Beneficiary & Earnings Data Exchange (BENDEX), in addition to other data sources to comply with IEVS. Criteria: 2 CFR §200.303 requires that a non-federal entity must “establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in ‘Standards for Internal Control in the Federal Government’ issued by the Comptroller General of the United States or the ‘Internal Control-Integrated Framework’ issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Federal regulation 45 CFR §205.55 requires that “each state shall participate in the Income Eligibility and Verification System (IEVS) required by Section 1137 of the Social Security Act as amended. Under the state plan the state is required to coordinate data exchanges with other federally assisted benefit programs, request and use income and benefit information when making eligibility determinations and adhere to standardized formats and procedures in exchanging information with other programs and agencies. Specifically, the state is required to request and obtain information as follows (42 USC 1320b-7; 45 CFR §205.55): (a.) Wage information from the state Wage Information Collection Agency (SWICA) should be obtained for all applicants at the first opportunity following receipt of the application, and for all recipients on a quarterly basis. (b.) Unemployment Compensation (UC) information should be obtained for all applicants at the first opportunity, and in each of the first three months in which the individual is receiving aid. This information should also be obtained in each of the first three months following any recipient-reported loss of employment. If an individual is found to be receiving UC, the information should be requested until benefits are exhausted. (c.) All available information from the Social Security Administration (SSA) for all applicants at the first opportunity. (d.) Information from the US Citizenship and Immigration Services and any other information from other agencies in the state or in other states that might provide income or other useful information. (e.) Unearned income from the Internal Revenue Service (IRS).” 45 CFR §205.55 provides that the State shall review and compare the information obtained from each data exchange against information contained in the case record to determine whether it affects the applicant's or the recipient's eligibility or the amount of assistance within 45 days. Condition: DHS did not outline within its TANF state plan how it complies with Section 1137 of the Social Security Act, as amended, as it relates to IEVS requirements. As part of our testing, we sampled 25 newly enrolled/added cases and determined if information was obtained from external data exchanges (SWICA, DLT UI & BENDEX) for all applicants at the first opportunity, and within 45 days of application as defined by federal regulations. The following errors were noted in our testing (note that an individual case may have more than one error): • 8 new cases not run against SWICA interface data within 45 days of application; • 7 new cases not run against BENDEX interface data within 45 days of application; and • 6 new cases not run against DLT UI interface data within 45 days of application. While income verifications were eventually performed in the cases reviewed, three of the errors noted above exceeded 175 days before verification was performed. Additionally, as part of eligibility compliance testing, we determined whether ongoing data exchange interfaces were performed, verified and processed by the agency for individuals already receiving benefits. • 2 of 60 cases where SWICA information was identified and not verified, processed, or added to the eligibility case file timely. While our testing found the IEVS processes to be operating during fiscal 2025, substantial delays in initial data verification and follow-up on data identified by periodic revalidation processes were noted in a significant percentage of cases reviewed. We considered the high percentage of untimely verifications to represent a material weakness in controls over eligibility as ineligible benefits could be expended for significant periods of time without detection. Cause: Absence of IEVS procedures documented within the TANF state plan. Lack of supporting documentation in the case record and insufficient procedures to ensure that income interfaces are run against client information prior to and during eligibility periods. Effect: Noncompliance with TANF IEVS requirements mandated by federal regulations. Improper or incorrect benefit payments could be claimed to the TANF program. Questioned Costs: Undetermined Valid Statistical Sample: Not Applicable RECOMMENDATIONS 2025-047a Conduct a review of the TANF state plan and update it to include detailed procedures for utilizing IEVS interfaces and incorporating the resulting information into eligibility determinations. 2025-047b Ensure that income data interfaces are properly executed and that the information obtained is used to make timely benefit eligibility determinations.
TEMPORARY ASSISTANCE FOR NEEDY FAMILIES – 93.558 Federal Awarding Agency: U.S. Department of Health and Human Services (HHS), Administration for Children and Families Federal Award Fiscal Years: 2024; 2025 Federal Award Number: 2401RITANF; 2501RITANF Administered by: Rhode Island Department of Human Services (DHS) CCDF CLUSTER – 93.575, 93.596 Federal Awarding Agency: U.S. Department of Health and Human Services (HHS), Administration for Children and Families Federal Award Fiscal Years: 2024; 2025 Federal Award Number: 2401RICCDF; 2501RICCDF Administered by: Rhode Island Department of Human Services (DHS) Compliance Requirement: Reporting DHS FINANCIAL REPORTING Misstatements identified in quarterly financial reports. Background: ACF requires separate financial reports in place of the SF-425 for both CCDF and TANF. The ACF-696 quarterly report provides information on CCDF expenditures to ensure compliance with federal spending requirements. The TANF ACF-196R reports quarterly expenditure data on the use of federal TANF funds, State TANF Maintenance of Effort (MOE) and State expenditures. Criteria: Per 45 CFR §265.7(b)(1) the requirements for the TANF Financial Report to be “a complete and accurate report” means that the reported data accurately reflect information available to the State in case records, financial records, and automated data systems. Per 45 CFR §98.65(g) Lead Agencies shall submit financial reports, in a manner specified by ACF, quarterly for each fiscal year until funds are expended. Per 2 CFR §200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: Ineffective controls over financial reporting to ensure complete and accurate program information is reported to the federal grantor. As part of our audit testing, we randomly selected two quarters and reviewed all submitted reports for open grants during the selected period. Our review noted the following: 1) ACF-196R: Our review of the TANF Financial Reports for the quarter ending December 31, 2024, for grant year 2023, found that the Department of Human Services (DHS) did not accurately report certain amounts, specifically, line item 11.b. Pre-Kindergarten/Head Start – DHS overstated reported expenditures by $1,411,129. 2) ACF-696: Our review of the CCDF Financial Reports found that the DHS did not accurately report certain amounts on the CCDF Financial Reports. Most notably, misstatements in the quarter ending March 31, 2025 included: • Line Item 1 Mandatory Funds Total – expenditures overstated by $1,135,189. • Line Item 1 Matching Funds Total – expenditures overstated by $2,635. • Line Item 1 MOE Total – expenditures understated by $475,489. Additional discrepancies were noted in the report for the quarter ending June 30, 2025 and DHS reconciliations of variances reported for Matching and Discretionary Funds remained ongoing. Cause: Inadequate review of the report compilation process and lack of reconciliation between costs reported in the financial reports to the underlying detail in the State’s accounting system for the period being reported. Effect: Inaccurate reporting and noncompliance with federal regulations. Questioned Costs: None Valid Statistical Sample: Not Applicable RECOMMENDATIONS 2025-051a Reconcile reported federal expenditures to the corresponding accounting detail. 2025-051b Implement adequate review controls to ensure accurate and timely financial reporting. 2025-051c Amend the ACF-196R and ACF-696 reports to correct expenditures reported.
CCDF CLUSTER – 93.575, 93.596 Federal Awarding Agency: U.S. Department of Health and Human Services (HHS), Administration for Children and Families Federal Award Fiscal Years: 2024; 2025 Federal Award Number: 2401RICCDF; 2501RICCDF Administered by: Rhode Island Department of Human Services (DHS) Compliance Requirement: Cost Sharing (including Matching), Level of Effort, Earmarking INTERNAL CONTROL OVER EARMARKING COMPLIANCE REQUIREMENTS DHS’s internal controls over earmarking compliance requirements were deemed ineffective. Criteria: Federal regulation 45 CFR §98.50(b) and (d) provides the minimum and/or maximum amount/percentage of CCDF funds to be used for specified activities such as administrative costs and improvement in the quality of child care services. 2 CFR §200.303(a) requires recipients and subrecipients of federal assistance to establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: Internal controls over compliance with earmarking requirements were found to be deficient. On a quarterly basis, the Department of Human Services (DHS) aggregates program expenditures to track and monitor the agencies’ compliance with specific CCDF earmarking requirements. The deficiencies noted in Finding 2025 051 detail the misstatements relating to reported expenditures in federal reports that also impacted DHS’s ability to effectively evaluate compliance with earmarking requirements. Reporting inaccuracies were largely determined to be caused by the inclusion of program activity outside of the reporting period. Although we ultimately determined that DHS complied with earmarking requirements using accurate expenditures for the period, DHS’s procedures were deemed ineffective to ensure that only applicable program expenditures were included in calculations of the minimum/maximum amount of funds used for specified activities. Cause: DHS staff were unaware of errors in reports/expenditure detail used to calculate compliance with earmarking requirements. Effect: Inaccurate or incomplete data used in calculations to monitor compliance with earmarking requirements may result in the agency incorrectly determining compliance. Possible noncompliance with federal regulations may result in questioned costs. Questioned Costs: None Valid Statistical Sample: Not Applicable RECOMMENDATION 2025-052 Implement adequate review procedures over underlying expenditures utilized within calculations for evaluating compliance with earmarking requirements.
FOSTER CARE TITLE IV-E – 93.658 Federal Award Agency: U.S. Department of Health and Human Services (HHS) Federal Award Fiscal Years: 2024, 2025 Federal Award Numbers: 2401RIFOST, 2501RIFOST Administered by: Rhode Island Department of Children, Youth and Families (DCYF) ADOPTION ASSISTANCE – 93.659 Federal Award Agency: U.S. Department of Health and Human Services (HHS) Federal Award Fiscal Years: 2024, 2025 Federal Award Numbers: 2401RIADPT, 2501RIADPT Administered by: Rhode Island Department of Children, Youth and Families (DCYF) Compliance Requirement: Reporting CONTROLS OVER REPORTING FOR IV-E PROGRAMS DCYF should establish, document, and implement effective internal control over program reporting to ensure the accuracy, completeness, and timeliness of federal report submissions. Background: DCYF administration of the Foster Care and Adoption Assistance programs includes required Form CB-496 reporting of financial and operating data on a quarterly basis to the U.S. Department of Health and Human Services. Form CB-496 reporting includes DCYF certification of report accuracy, correctness, and compliance with award terms and conditions. Criteria: 2 CFR 200.303 requires that Federal award recipients “establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” Further, the “internal controls should align with the guidance issued by the Comptroller General of the United States” (Green Book) which includes “segregation of duties in designing control activities so that incompatible duties are segregated” to “reduce the risk of error, misuse, or fraud.” In the case of reporting as a control activity, Compliance Supplement 2025, Part 6 expects that “segregation of duties exists between those preparing and those reviewing and filing required reports.” For Foster Care program awards, Form CB 496 reporting is required and includes recipient certification of the correctness and accuracy of financial and program data reported. Per the references, CB-496 report preparation and review/certification duties are incompatible and should be segregated by documented processes, responsibilities, authorities. Condition: DCYF did not provide supporting documentation demonstrating appropriate segregation of duties between the preparation and review/certification of the CB‑496 report for Foster Care reporting for the periods ending September 30, 2024 and March 31, 2025, or for Adoption Assistance reporting for the period ended March 31, 2025. Additionally, DCYF did not provide documentation describing the internal controls, processes, responsibilities, or authorities governing Foster Care and Adoption Assistance reporting. In conjunction with our audit, we noted that expenditures reported on federal reports for the quarter ending June 30, 2025 were not recorded in the State’s accounting system until fiscal 2026. This timing difference resulted in a significant difference between expenditures claimed on federal reports and amounts reported in the State accounting system which is the basis for program expenditures reported in the State’s Schedule of Expenditures of Federal Awards. While the timing difference does not impact the reporting of grant expenditures for the federal grant year, it supports the need for more oversight to ensure the alignment of reported federal expenditures between federal reports and the State accounting system. This reporting difference and routine late filings of federal reports results from delays in the completion of cost allocation procedures. Proper controls would have allowed for timely identification of the discrepancy and more timely reporting in the State accounting system. Cause: DCYF has not documented and implemented internal control activities over Foster Care or Adoption Assistance program reporting requirements, nor has it documented responsibilities and authorities associated with program reporting to ensure segregation of duties. Current procedures would not ensure that errors in federal reporting would be detected and corrected prior to report filing. Effect: Inaccurate or incomplete federal reporting could occur and not be detected by the Department. Questioned Costs: None Valid Statistical Sampling: Not Applicable RECOMMENDATIONS 2025-056a Establish, document, and implement effective internal control that ensures segregation of reporting duties between the report preparation and review to provide reasonable assurance over the accuracy and completeness of federal reporting. Implementation should include the training of sufficient personnel to sustain procedures, control activities, and compliance in the event of staff turnover. 2025-056b Ensure completion of cost allocation procedures to allow for timely federal reporting of program expenditures and reconciliation of federal reports with the State accounting system.
SNAP CLUSTER – 10.551, 10.561 Federal Awarding Agency: U.S. Department of Agriculture (USDA); Food and Nutrition Service (FNS) Federal Award Fiscal Years: 2024; 2025 Federal Award Number: 244RI405S2514; 254RI405S2514 Administered by: Rhode Island Department of Human Services (DHS) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES – 93.558 Federal Awarding Agency: U.S. Department of Health and Human Services (HHS); Administration for Children and Families Federal Award Fiscal Years: 2024; 2025 Federal Award Number: 2401RITANF; 2501RITANF Administered by: Rhode Island Department of Human Services (DHS) CCDF CLUSTER – 93.575, 93.596 Federal Awarding Agency: U.S. Department of Health and Human Services (HHS); Administration for Children and Families Federal Award Fiscal Years: 2024; 2025 Federal Award Number: 2401RICCDF; 2501RICCDF Administered by: Rhode Island Department of Human Services (DHS) FOSTER CARE TITLE IV-E – 93.658 Federal Award Agency: U.S. Department of Health and Human Services (HHS) Federal Award Fiscal Years: 2024; 2025 Federal Award Numbers: 2401RIFOST, 2501RIFOST Administered by: Rhode Island Department of Children, Youth and Families (DCYF) ADOPTION ASSISTANCE – 93.659 Federal Award Agency: U.S. Department of Health and Human Services (HHS) Federal Award Fiscal Years: 2024; 2025 Federal Award Numbers: 2401RIADPT, 2501RIADPT Administered by: Rhode Island Department of Children, Youth and Families (DCYF) CHILDREN’S HEALTH INSURANCE PROGRAM – 93.767 Federal Awarding Agency: U.S. Department of Health and Human Services (HHS) Federal Award Fiscal Years: 2024; 2025 Federal Award Number: 2405RI5021; 2505RI5021 Administered by: Executive Office of Health and Human Services (EOHHS) MEDICAID CLUSTER – 93.775, 93.777, 93.778 Federal Awarding Agency: U.S. Department of Health and Human Services (HHS) Federal Award Fiscal Years: 2024; 2025 Federal Award Number: 2405RI5ADM; 2505RI5ADM Administered by: Executive Office of Health and Human Services (EOHHS) Compliance Requirement: Allowable Costs/Cost Principles INTERNAL CONTROLS OVER COST ALLOCATION Internal controls over administrative costs allocated to certain federal programs need to be improved to ensure that costs allocated to the programs comply with federal regulations. Background: Administrative expenditures incurred by various State agencies involved in the administration of certain federal programs (e.g., EOHHS, Department of Behavioral Healthcare, Developmental Disabilities & Hospitals (BHDDH), Department of Human Services (DHS), and Department of Children, Youth, & Families (DCYF)) are allocated to the programs through federally approved cost allocation systems. The majority of administrative expenditures claimed are determined through each agency’s cost allocation system (administered through the use of a proprietary web-based application supported by a contractor) and claimed on the respective federal reports. Agencies must periodically adjust administrative expenditures reported in the State accounting system to align with the administrative costs determined through their respective cost allocation systems. Criteria: Management is responsible for implementing and maintaining internal controls to ensure administrative costs are charged in accordance with federal regulations. Specifically, 2 CFR §200.303(a) requires recipients and subrecipients of federal assistance to establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: While most State health and human services agencies administering federal programs utilize federally approved cost allocation plans (CAP), internal controls are not sufficiently documented and monitored to ensure expenditures allocated to federal programs are accurate and in compliance with federal regulations. Recommended controls found to be specifically lacking included: • Documented reconciliations between costs allocated to federal programs and the State accounting system were lacking or untimely; • Supervisory review and monitoring were lacking or not formalized, as most agency cost allocation systems are operated by one individual; • Monitoring to ensure that administrative expenditures being allocated to federal programs meet the requirements of federal Uniform Guidance is not being performed; and • Analysis of quarterly cost allocation results to ensure that the contractor application is properly allocating agency costs in accordance with its federally-approved cost allocation plan. EOHHS, BHDDH, DCYF, and DHS administer their cost allocation processes through a contracted proprietary web-based application called AlloCAP. We have found that each department’s understanding of their individual CAP is limited to the manual processes carried out each quarter to complete the allocation process with little understanding or analysis being performed to validate the accuracy of the allocation results. While the application has built-in quality control checks, the State agency responsible for the administration of the federal program to which the costs are allocated is responsible for ensuring the accuracy and federal compliance of the costs allocated. The State needs to consider implementing processes (e.g., reviewing supporting documentation, conducting analytics) across the agencies utilizing AlloCAP or consider obtaining a SOC 1 Type 2 audit (an independent report that evaluates the operating effectiveness of the contractor application) to validate that the contracted cost allocation processes are consistently and accurately allocating costs in accordance with the federally approved cost allocation plan for the respective programs. Cause: Controls over the allocation of administrative costs through AlloCAP lacked documentation and based on current procedures, would not be effective in detecting errors in the quarterly CAP results due to a lack of evaluation and monitoring. Effect: Potential noncompliance with federal requirements relating to allowable costs. Questioned Costs: None Valid Statistical Sampling: Not Applicable RECOMMENDATION 2025-033 Improve internal controls over administrative claiming to federal programs by 1) completely documenting cost allocation policies and procedures, 2) reconciling quarterly cost allocation results to the State accounting system, 3) enhancing supervision and monitoring of the cost allocation process, and 4) implementing procedures to validate that AlloCAP quarterly results (or consider the need for SOC engagements with that objective) are consistent with underlying federally approved cost allocation plans.
MEDICAID CLUSTER – 93.775, 93.777, 93.778 Federal Awarding Agency: U.S. Department of Health and Human Services (HHS) Federal Award Fiscal Years: 2024; 2025 Federal Award Number: 2405RI5MAP; 2505RI5MAP Administered by: Executive Office of Health and Human Services (EOHHS) Compliance Requirement: Allowable Costs/Cost Principles CONTROLS OVER COMMUNITY HEALTH WORKER (CHW) PROVIDERS ENROLLMENT AND CLAIMING Controls over CHW provider enrollment and claiming needs to be improved to ensure that only allowable costs are reimbursed by the Medicaid program. Background: Community Health Worker (CHW) providers are front line public health professionals who often have similar cultural beliefs, chronic health conditions, disability, or life experiences as other people in the same community. CHW providers link people to needed health information and services with the intent to prevent disability, disease and the progression of other health conditions while improving access to, quality of, and cultural responsiveness of service providers. In 2021, the Rhode Island Department of Health (RIDOH) received a competitive grant award from the US Centers for Disease Control and Prevention (CDC) to train, deploy and engage CHW providers as part of the States Health Equity Zones Initiative, and as a result Medicaid billing by CHW providers has increased year over year through fiscal 2025. Criteria: Federal regulations require the State Medicaid Agency to screen and enroll all providers in accordance with 42 CFR Part 455, Subpart E. Rhode Island Regulation (210-RICR-20-00-1.7) states, “To be eligible to participate in the Rhode Island Medicaid program as any provider type, a provider must: (1.) Be fully licensed, certified, registered, and/or credentialed, where required by the State, as an active practitioner by the agency or board overseeing the specific provider type.” 2 CFR §200.303(a) requires recipients and subrecipients of federal assistance to establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: A review by the Office of Program Integrity (OPI) identified a significant increase in claiming by CHW providers which prompted investigation and proposed changes to the State Approved Plan requiring (1) all CHW providers to be screened for required certifications and background checks and (2) the creation of system edits capping the allowable service time billed for each beneficiary. Prior to the State’s proposed change to its approved State Plan (May 2025), all newly and currently enrolled Community Health Worker providers were not screened to ensure certification with the Rhode Island Certification Board. System edits within the MMIS were lacking to prevent excessive billing or billing for CHW services not rendered. OPI continues to investigate the claiming of CHW providers to determine the extent of unallowable costs reimbursed through the Medicaid Program. The amount of questioned costs for this claim group is believed to be significant but have not been determined or concluded at this time. OPI continues to review the claiming activity for this provider group and is properly referring provider cases to the Medicaid Fraud Control Unit at the Attorney General’s office when appropriate. Cause: Insufficient screening of enrolled CHW providers compounded with a lack of system edits in the claims adjudication process. Effect: Potential fraud, program abuse, and overpayments. Questioned Costs: Undetermined Valid Statistical Sampling: Not Applicable RECOMMENDATIONS 2025-070a Screen all newly and currently enrolled CHW providers not previously subjected to certification and background check criteria. 2025-070b Review prior CHW claims to identify overpayments or potential fraud. Refer fraud to the Medicaid Fraud Control Unit for investigation and possible recovery.
Significant Deficiency /Other Non-compliance Program: Assistance Listing: 10.553/10.555 – Child Nutrition Cluster Repeat Finding from prior year: Yes; 2024-002 Criteria: 2 CFR §200.112 – Conflict of Interest requires non-federal entities to disclose in writing any potential conflicts of interest to the federal awarding agency or pass-through entity. 2 CFR §200.302 - Financial Management requires funds to be expended and accounted for the federal award in accordance with state laws and procedures for expending and accounting for state funds which include Miss. Code Ann. §25-1-53 and Miss. Code Ann. §25-4-105. 2 CFR §200.303 – Internal Controls requires non-federal entities to establish and maintain effective internal control over federal awards that provides reasonable assurance of compliance with federal statutes, regulations, and the terms and conditions of the award. 2 CFR §200.403- Factors Affecting Allowability of Costs states that federal award costs must be necessary, reasonable, and allowable. The COSO Internal Control—Integrated Framework and the GAO Standards for Internal Control in the Federal Government (Green Book) provide the accepted framework for evaluating internal control over compliance (Control Environment and Control Activities). Condition: As reported in the prior year, we observed that the District's system of internal controls is not adequate to ensure compliance with applicable federal and state laws and regulations governing conflicts of interest and personnel hiring practices. We observed that the Food Service Director's child was employed by the Food Service Department, creating a potential conflict-of-interest situation and a violation of applicable federal conflict-of-interest requirements and state nepotism laws. Specifically, we observed that the Board's minutes do not clearly identify the individual who recommended the employee to the board for hire, and the District failed to report the employment of individual to the appropriate division of the Mississippi Department of Education as required. This resulted in the payment of $22,194, including salary and related benefits paid to the related employee for potentially unallowable costs associated with the federal grant. Context/Perspective: This finding is a result of our statistically valid random sample of twenty-five payroll disbursements for single audit purposes and our follow up of a prior year audit finding. Cause: The District’s internal control system over personnel activities is not adequately designed to ensure that conflicts of interest related to hiring decisions are identified and prevented in accordance with applicable state and federal statutes and prevent unallowable cost being charged to the federal program. Effect: Failure to establish and maintain adequate internal controls over personnel hiring practices increases the risk of noncompliance with applicable federal and state laws and regulations which could result in unallowable costs charged to the program due to conflicts of interest. Recommendation: The District should strengthen internal controls over hiring of personnel to ensure compliance with applicable laws, regulations, and conflict-of-interest requirements and to ensure that only allowable costs are charged to the federal grant program. This should also include implementing procedures for the disclosure and independent review of potential conflicts of interest, providing periodic ethics training, and establishing monitoring processes to ensure ongoing compliance with state nepotism laws and federal conflict-of-interest requirements as well as improvements to the internal controls over the preparation of the board minutes to ensure that the position and name of person recommending personnel to the board for hiring is clearly identified. Questioned Cost: None. Views of Responsible Official(s): The Auditee’s Corrective Action Plan lists the District’s response to the finding.
Significant Deficiency/ Other Noncompliance Program: Assistance Listing: 10.553/10.555 – Child Nutrition Cluster Repeat Finding: No Criteria: 2 CFR §200.302 - Financial Management requires funds to be expended and accounted for the federal award in accordance with state laws and procedures for expending and accounting for state funds which includes the "Accounting Manual for School Districts" by the Mississippi Department of Education which emphasizes that one of the most important aspects of controls over expenditures is an efficient and effective system of purchasing. The objectives of an effective purchasing system are to buy materials, supplies, commodities, and services that are of the right quality, quantity, price and from the right source with delivery being at the right place. These objectives should be accomplished in accordance with management's purchasing policies and in accordance with applicable federal and state purchasing laws. Each school district shall adopt purchasing policies and establish a purchasing system which will meet these objectives. 2 CFR 200.303 requires that a non-federal entity must establish and maintain effective internal control over a federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statues, regulations, and the terms and conditions of the federal award. 2 CFR 214 states that recipients and subrecipients are subject to the nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, as well as 2 CFR 180. Condition: As part of our statistically valid random sample of sixty non-payroll disbursements from the District’s grant expenditures from major programs, we observed the following instances where information required to ensure that these expenditures fulfilled requirements of 2 CFR Part 200 as follows was not obtained by the District or was otherwise unavailable for our examination: • Several instances where the paid invoices exceeded the purchase order amount, which included instances where purchase orders were prepared for one dollar. • Several instances where certifications from SAM.gov were not obtained and included in the paid invoice packet to document that the District had verified that the vendor was not suspended or debarred. Context/Perspective: This finding is based on our statistically valid random sample of sixty non-payroll cash disbursements charged to major programs of the District. Effect: Failure to follow the federal and state requirements could affect future eligibility for federal award programs or could result in a loss or misappropriation of public assets. Questioned Costs: None Recommendation: We recommend that the District implement additional internal controls as necessary to ensure that purchase orders are prepared for accurate amounts where required and that written certifications are obtained to ensure that vendors have not been suspended or debarred. We specifically recommend that verifications from SAM.gov be obtained by printing or saving the “No Matches Found” page to a pdf and attaching it to the paid invoice packet or procurement file. Views of Responsible Officials: The Auditee’s Corrective Action Plan lists the District’s response to the findings.
FS 2025-01 Strengthen Controls over Special Reporting Compliance Requirement: Reporting Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Agriculture Pass-Through Entity: Georgia Department of Education Assistance Listing Number and Title: 10.553 – School Breakfast Program 10.555 – National School Lunch Program Federal Award Number: 255GA324N1199 (Year: 2025) Questioned Costs: $89 Repeat of Prior Year Finding: FA 2024-001, FA 2023-001, FA 2022-001 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over the monthly Claims for Reimbursement process. Background Information: The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential child care instructions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and secondary schools and encourages the domestic consumption of nutritious agricultural commodities. CNC funding is granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture. GaDOE is responsible for distributing funds to local educational agencies (LEAs) based upon each School District’s monthly Form DE0106 Claim Data report submissions. These DE0106 reports are to be supported by the corresponding Form DE0112 Daily Record of Number of Breakfasts Served and Form DE0118 Daily Record of Number of Lunches Served, which are prepared by the School District from their School Food Service meal sales system. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in Title 7 CFR Section 210.7(c) require that the School District “base Claims for Reimbursement on lunch counts, taken daily at the point of service, which correctly identify the number of free, reduced price and paid lunches served to eligible children” and “correctly record, consolidate and report those lunch and supplement counts on the Claim for Reimbursement.” In addition, provisions included in Title 7 CFR Section 220.11(d) state that the School District “shall establish internal controls which ensure the accuracy of breakfast counts prior to the submission of the monthly Claim for Reimbursement.” Condition: A sample of three Form DE0106 reports was randomly selected for testing using a nonstatistical sampling approach. Additionally, the months of July 2024 and June 2025 were selected for testing. These reports were reviewed to determine if appropriate internal controls were implemented and applicable reporting compliance requirements were met. Meal count errors were noted for three out of the five months tested. The number of meals served per the Form DE0112 and DE0118 reports for these three months did not match the number of meals reported and claimed on the Form DE0106 reports resulting in the over-claiming of 31 lunch or breakfast meals during the period under review. 84 Questioned Costs: Upon testing a sample of $613,855 in Form DE0106 reports submitted for reimbursement, known questioned costs of $89 were identified for excess reimbursements. Using the population being sampled, which totaled $1,887,172, we project the likely questioned costs to be approximately $273. The following Assistance Listing Numbers were affected by known and likely questioned costs: 10.553 and 10.555. Cause: In discussing these deficiencies with management, errors were made when entering meal counts on to the Form DE-0106 from the daily meal count sheets. Effect: The School District is not in compliance with the Uniform Guidance and GaDOE guidance. Failure to submit accurate monthly Claims for Reimbursement to GaDOE can result in the School District obtaining more federal funding than they are eligible to receive. This deficiency may expose the School District to unnecessary financial strains and overages within the CNC fund. Recommendation: The School District should evaluate their internal control processes regarding the creation of the Form DE0106 reports and develop or modify procedures to ensure Claims for Reimbursement are based on final and accurate meal counts. The School District should become more familiar with the federal regulations related to the CNC programs in order to develop or modify procedures that will ensure accurate reporting of meals served. Furthermore, management should develop and implement a monitoring process to ensure that controls are operating appropriately. Views of Responsible Officials: We concur with this finding.
The Metcalfe County Fiscal Court Failed To Implement Adequate Controls Over Federal Expenditures Federal Program: Assistance Listing Number #14.228 COVID-19 - Community Development Block Grants/State’s Program and Non-Entitlement Grants in Hawaii Award Number and Year: 20C-202, 2020 Name of Federal Agency and Pass-Through Agency: US Department of Housing and Urban Development, Passed Through Kentucky Department for Local Government Compliance Requirements: Activities Allowed & Allowable Costs, Special Tests and Provisions Type of Finding: Material Weakness COVID Related: Yes Amount of Questioned Costs: None noted Identification of Questioned Costs and How Computed: None noted Repeat Finding: Not repeat finding Condition and Context The Metcalfe County Fiscal Court failed to implement adequate internal controls over the Community Development Block Grants/State’s Program and Non-Entitlement Grants in Hawaii – COVID-19 (CDBG-CV) program to ensure all compliance requirements were being met and that record keeping was being done correctly. The fiscal court contracted with a third party that oversaw the planning, design, inspection services, environmental services, and construction administration for the project without any oversight by the fiscal court. The fiscal court did not receive copies of invoices or certified payroll records from the contractor or third-party administrator to review before disbursements were made to the contractor. During testing of the federal program compliance, auditors obtained invoices and certified payroll records from the third-party administrator and concluded that the fiscal court was in compliance with federal requirements. Cause The fiscal court relied on a third-party administrator for the recording of all CDBG-CV project activity. The fiscal court also relied on the third-party to satisfy compliance requirements and failed to establish any review process or independent internal controls that verified that activities performed and amounts charged to the program were allowable under all applicable compliance requirements. Effect By relying on a third-party administrator’s controls, and without enacting any internal controls, the county increased the risk of misappropriation of funds and noncompliance with federal grant guidelines. This deficiency could have potentially led to the repayment of questioned costs and less federal funding in the future. Criteria 2 CFR § 200.303, titled Internal Controls, states the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government,” issued by the Comptroller General of the United States (Green Book) or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Recommendations We recommend the Metcalfe County Fiscal Court establish internal controls over the federal expenditure process and ensure all activity related to federal expenditures is reviewed for accuracy and compliance.
2025-003 Internal Control Over Payroll Charged to Federal Awards Program Information Federal Agency U.S. Department of Health and Human Services Assistance Listing Numbers 93.224 Health Centers Program Cluster Award Numbers H80CS00055, H8GCS48089 Criteria Under 2 CFR 200.303, the auditee is required to establish, document, and maintain effective internal control over federal awards, and under 2 CFR 200.430, compensation charged to federal awards must be supported by records that accurately reflect work performed and provide reasonable assurance that charges are accurate, allowable, and properly allocated. [ ] Compliance Finding [X] Significant Deficiency [ ] Material Weakness Condition During fiscal year 2025, we noted that payroll rates used to charge employees’ compensation to the federal award were not reviewed and approved in accordance with the auditee’s established payroll control process. A sample size of 25 employees included 5 employees for which there was no evidence the rate of pay used was approved by the appropriate level per Clinic policy. Cause The auditee did not consistently perform or retain evidence of the payroll-rate approval for employees whose wages were charged to federal awards due to turnover in payroll personnel and insufficient monitoring. Effect Without evidence that payroll rates were reviewed and approved, there is a reasonable possibility that unallowable, inaccurate, or improperly allocated payroll costs could be charged to the federal award and not be prevented, or detected and corrected, on a timely basis. Questioned Costs No questioned costs were identified as a result of this finding. All wages paid were considered reasonable based on the work performed. Recommendation We recommend the Clinic implement a documented payroll-rate approval process, require evidence of approval before payroll costs are charged to federal awards, periodically review payroll-rate changes, and retain approval documentation as part of the official payroll records. Views of responsible officials and planned corrective action White Bird Clinic agrees with this finding. With the onboarding of a new Director of Human Resources, best practices around payroll documentation have been implemented. This includes individual forms for all wage changes per employee. Approval is documented with Supervisors’ signatures on these forms. The wage form is used to update the payroll system and a final accuracy review is performed by the HR Director to verify the updated rate matches the approved change form. The approved wage forms are securely stored in the Human Resources files.
Reporting Federal Agency: U.S. Department of Agriculture Federal Program Title: Child Nutrition Cluster (CNC) State Administering Department: California Department of Education ALN: 10.553, 10.555, 10.556, 10.559, 10.582 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 247CACA3N1199; October 1, 2023 – September 30, 2024 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Title 2 – Federal Financial Assistance Subtitle A – Office of Management and Budget Guidance for Grants and Agreements. Chapter II – Office of Management and Budget Guidance. Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D – Post Federal Award Requirements. § 200.303 - Internal controls (2 CFR 200.303): The recipient and subrecipient must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). § 200.302 – Financial management (b) The recipient's and subrecipient's financial management system must provide for the following: (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. (3) Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. Title 2 – Federal Financial Assistance Subtitle A – Office of Management and Budget Guidance for Grants and Agreements Chapter I – Office of Management and Budget Government-Wide Guidance for Federal Financial Assistance Part 170 – Reporting Subaward and Executive Compensation Information Subpart A – General § 170.105 Applicability (a) Applicability in general. This part applies to a Federal agency’s Federal financial assistance as defined in § 170.300. This part applies to all recipients and subrecipients of Federal awards who meet the reporting requirements of paragraph (c) of this section, unless exempt under Federal statute or by paragraph (d) of this section. Appendix A to Part 170—Award Term I. Reporting Subawards and Executive Compensation (a) Reporting of first-tier subawards — (1) Applicability. Unless the recipient is exempt as provided in paragraph (d) of this award term, the recipient must report each subaward that equals or exceeds $30,000 in Federal funds for a subaward to an entity or Federal agency. The recipient must also report a subaward if a modification increases the Federal funding to an amount that equals or exceeds $30,000. All reported subawards should reflect the total amount of the subaward. (2) Reporting Requirements. (i) The recipient must report each subaward described in paragraph (a)(1) of this award term to the Federal Funding Accountability and Transparency Act (FFATA) subaward reporting functionality (formerly FSRS and now reported through SAM.gov) at http://www.fsrs.gov. (ii) For subaward information, report no later than the end of the month following the month in which the subaward was issued. (c) Reporting of total compensation of subrecipient executives — (1) Applicability. Unless a first-tier subrecipient is exempt as provided in paragraph (d) of this appendix, the recipient must report the executive total compensation of each of the subrecipient's five most highly compensated executives for the subrecipient's preceding completed fiscal year, if: (i) The total Federal funding authorized to date under the subaward equals or exceeds $30,000; (ii) In the subrecipient's preceding fiscal year, the subrecipient received: (A) 80 percent or more of its annual gross revenues from Federal procurement contracts (and subcontracts) and Federal awards (and subawards) subject to the Transparency Act; and, (B) $25,000,000 or more in annual gross revenues from Federal procurement contracts (and subcontracts), and Federal awards (and subawards) subject to the Transparency Act; and (iii) The public does not have access to information about the compensation of the executives through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986 after receiving this subaward. (To determine if the public has access to the compensation information, see the U.S. Security and Exchange Commission total compensation filings at http://www.sec.gov/answers/execomp.htm.) (2) Reporting Requirements. Subrecipients must report to the recipient their executive total compensation described in paragraph (c)(1) of this appendix. The recipient is required to submit this information to the Federal Funding Accountability and Transparency Act (FFATA) subaward reporting functionality (formerly FSRS and now reported through SAM.gov) at http://www.fsrs.gov no later than the end of the month following the month in which the subaward was made. As of March 2025, this functionality has been migrated to SAM.gov, which now serves as the system of record for FFATA subaward reporting. Condition: Audit procedures included testing FFATA reporting submissions for 40 subrecipients to evaluate compliance with federal reporting requirements and the design and implementation of internal controls over the FFATA reporting process. Our testing identified that FFATA reports for 40 of the 40 subrecipients were not submitted within the required reporting timeframe. Although the reports were ultimately submitted and the information reported was complete and accurate, the submissions were delayed following the federal government's transition from the FFATA Subaward Reporting System (FSRS.gov) to the SAM.gov Subaward Reporting platform. The transition eliminated the bulk upload functionality previously used by the Department, significantly increasing the manual effort required to complete FFATA reporting while the Department worked to implement the new reporting process. Questioned costs: None Context: See “Condition.” Cause: During fiscal year 2024-25, the U.S. General Services Administration (GSA) transitioned FFATA reporting from FSRS.gov to the SAM.gov Subaward Reporting system. As part of this transition, the bulk upload functionality previously utilized by the Department was not initially available in the new system, significantly increasing the resources needed to prepare and submit FFATA reports. The increased reporting burden, coupled with staffing constraints and technical challenges encountered during implementation of the new reporting platform, contributed to delays in submitting FFATA reports within federally required timeframes. Effect: As a result of the elimination of the bulk upload process, staffing limitations, and implementation challenges associated with the federal reporting system transition, FFATA reports for 40 of 40 subrecipients were not submitted within the federally required reporting deadlines, resulting in noncompliance with FFATA reporting requirements. However, all required reports were ultimately submitted and contained complete and accurate information. Repeat finding: No Recommendation: The Department should evaluate staffing and resource needs associated with FFATA reporting and establish contingency procedures to address significant changes in federal reporting processes. Management should continue to monitor federal system changes, document implementation challenges, and maintain communication with federal agencies when external system limitations affect reporting timeliness. Additionally, the Department should identify and implement process improvements, including available automated reporting solutions and workarounds, to mitigate the impact of future system changes and help ensure FFATA reports are submitted within required timeframes. Views of responsible officials: Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report.
Reporting Federal Agency: U.S. Department of Agriculture Federal Program Title: Summer Electronic Benefit Transfer Program for Children State Administering Department: California Department of Social Services (CDSS) ALN: 10.646 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 257CDSS7N1175; October 1, 2024 - September 30, 2025 257CDSS6N1803; October 1, 2024 - September 30, 2025 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Title 2 – Federal Financial Assistance Subtitle A – Office of Management and Budget Guidance for Grants and Agreements. Chapter II – Office of Management and Budget Guidance. Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D – Post Federal Award Requirements. § 200.303 - Internal controls (2 CFR 200.303): The recipient and subrecipient must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). § 200.302 – Financial management (b) The recipient's and subrecipient's financial management system must provide for the following: (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. §200.328 Financial reporting (c) The recipient or subrecipient must submit financial reports as required by the Federal award. Reports submitted annually by the recipient or subrecipient must be due no later than 90 calendar days after the reporting period. Reports submitted quarterly or semiannually must be due no later than 30 calendar days after the reporting period. (d) The final financial report submitted by the recipient must be due no later than 120 calendar days after the conclusion of the period of performance. A subrecipient must submit a final financial report to a pass-through entity no later than 90 calendar days after the conclusion of the period of performance. Title 7 – Agriculture Subtitle B - Regulations of the Department of Agriculture Chapter II - Food and Nutrition Service, Department of Agriculture Subchapter C - Supplemental Nutrition Assistance and Food Distribution Program Part 274 – Issuance and Use of Program Benefits § 274.1 Issuance system approval standards (a) Basic issuance requirements. State agencies shall establish issuance and accountability systems which ensure that only certified eligible households receive benefits; that Program benefits are timely distributed in the correct amounts; and that benefit issuance and reconciliation activities are properly conducted and accurately reported to FNS. § 274.4 Reconciliation and reporting (c) Required reports. The State agency shall review and submit the following reports to FNS on a monthly basis: (1) Form FNS-46, Issuance Reconciliation Report, shall be submitted by each State agency operating an issuance system. The report shall be prepared at the level of the State agency where the actual reconciliation of posted benefits and the master issuance file occurs. (i) The State agency shall identify and report the number and value of all issuances which do not reconcile with the master issuance file. All unreconciled issuances shall be identified as specified on this reporting document. (ii) The report shall be received by FNS no later than 90 days following the end of the report month. Condition: Audit procedures included a review of 3 FNS-46 reports selected from a population of 12 reports submitted during the audit period to determine whether reports were filed in accordance with federal reporting deadlines. Of the 3 reports tested, 2 were not submitted within the required timeframe. Specifically, the reports were submitted 23 and 38 days after the applicable federal due dates. As a result, the Department did not consistently comply with federal reporting requirements for timely submission of FNS-46 reports. Questioned costs: None Context: See “Condition.” Cause: The Department did not maintain sufficiently precise internal controls to ensure FNS-46 reports were prepared, reviewed, and submitted in accordance with federally established reporting deadlines. Specifically, monitoring and supervisory review procedures were not designed or operating at a level of precision sufficient to identify and correct delays in report preparation and submission before the applicable due dates. As a result, late submissions were not detected and resolved in a timely manner. Effect: Failure to submit FNS-46 reports in a timely manner delays federal oversight of S-EBT issuance activity and increases the risk that reconciliation issues, including improper or unsupported issuances, are not promptly identified and resolved. Continued delays may result in noncompliance with federal reporting requirements and reduce the usefulness of reported information for program oversight. Repeat finding: No Recommendation: We recommend that the Department implement controls to ensure timely submission of FNS-46 reports, including establishing a formal reporting calendar aligned with the 90-day requirement, assigning clear responsibility for report preparation and review, and implementing monitoring procedures to track progress and escalate delays. Controls should operate with sufficient precision to ensure all required reports are completed and submitted within prescribed deadlines. Views of responsible officials: Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report.
Period of Performance Federal Agency: U.S. Department of Labor Federal Program Title: Unemployment Insurance State Administering Department: Employment Development Department (EDD) ALN: 17.225 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 23A60UB00053; April 1, 2023 - May 22, 2025 23A60UB000081; April 1, 2023 - May 22, 2025 25A60UD000072; January 8, 2025 - January 8, 2028 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Title 2 – Federal Financial Assistance Subtitle A – Office of Management and Budget Guidance for Grants and Agreements. Chapter II – Office of Management and Budget Guidance. Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D – Post Federal Award Requirements. § 200.303 - Internal controls (2 CFR 200.303): The recipient and subrecipient must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Subpart E – Cost Principles § 200.403 – Factors affecting allowability of costs Except where otherwise authorized by statute, costs must meet the following criteria to be allowable under Federal awards: (h) Administrative closeout costs may be incurred until the due date of the final report(s). If incurred, these costs must be liquidated prior to the due date of the final report(s) and charged to the final budget period of the award unless otherwise specified by the Federal agency. All other costs must be incurred during the approved budget period. At its discretion, the Federal agency is authorized to waive prior written approvals to carry forward unobligated balances to subsequent budget periods. See § 200.308(g)(3). Condition: For awards with period of performance start dates occurring during the fiscal year, audit procedures included testing 40 transactions recorded in the general ledger during the initial month of the award. Based on these procedures, we identified five instances where a portion of payroll hours charged to the grant related to services performed prior to the approved period of performance start date of January 8, 2025. The total amount of payroll costs charged outside of the period of performance at the beginning of the award was $12,898. For awards with period of performance end dates occurring during the fiscal year, audit procedures included testing 40 transactions recorded in the general ledger during the final month of the award and subsequent to the period of performance end date. Based on these procedures, we identified 25 instances where a portion of payroll hours charged to the grants related to services performed after the approved period of performance end date of May 22, 2025. The total amount of payroll costs charged outside of the period of performance at the end of the award was $12,968. Questioned costs: $25,866 Context: See “Condition.” Cause: The condition resulted from controls over payroll cost allocation that were not performed with sufficient precision to ensure payroll charges were reviewed against authorized award start and end dates prior to being recorded to Federal awards. As a result, payroll costs incurred outside of the approved period of performance were not prevented or detected in a timely manner. Effect: The Department charged payroll costs to Federal awards outside the approved budget period, resulting in noncompliance with Federal requirements and a potential overstatement of allowable Federal expenditures. Repeat finding: No Recommendation: We recommend that management strengthen internal controls over payroll charging to Federal awards by implementing procedures to verify that project service dates fall within the authorized award dates before costs are charged to the grant. We also recommend the Department implement supervisory or system-based review controls to identify payroll charges posted outside the approved budget period and prevent such costs from being charged to Federal awards. These actions will help ensure payroll costs charged to federal awards are allowable, reduce the risk of unallowable charges, and improve compliance with Uniform Guidance. Views of responsible officials: Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report.
Reporting Federal Agency: U.S. Department of Labor Federal Program Title: Unemployment Insurance State Administering Department: Employment Development Department (EDD) ALN: 17.225 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: UI347022055A6; April 1, 2020 – June 30, 2025 UI387882255A6; April 1, 2022 – May 22, 2025 23A60UR000018; January 1, 2023 – September 30, 2025 23A55UD000003; February 27, 2023 – September 30, 2025 23A60UB000081; April 1, 2023 – May 22, 2025 23A55UD000007; April 27, 2023 – April 26, 2026 24A55UT000026; October 1, 2023 – September 30, 2024 24A60UD000027; February 19, 2024 – February 19, 2027 25A55UE000010; July 1, 2024 – December 31, 2025 25A60UD000072; January 8, 2025 – January 8, 2028 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Material Weakness in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Title 2 – Federal Financial Assistance Subtitle A – Office of Management and Budget Guidance for Grants and Agreements. Chapter II – Office of Management and Budget Guidance. Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D – Post Federal Award Requirements. § 200.303 - Internal controls (2 CFR 200.303): The recipient and subrecipient must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). § 200.302 – Financial management (b) The recipient's and subrecipient's financial management system must provide for the following: (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. (3) Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. Subtitle B – Federal Agency Regulations for Grants and Agreements Chapter XXIX – Department of Labor Part 2900 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards Subpart D – Post Federal Award Requirements § 2900.14 – Financial reporting In addition to the guidance set forth in 2 CFR 200.328, for Federal awards from the Department of Labor, the DOL awarding agency will prescribe whether the report will be on a cash or an accrual basis. If the DOL awarding agency requires reporting on an accrual basis and the recipient's accounting system is not on the accrual basis, the recipient will not be required to convert its accounting system, but must develop and report such accrual information through best estimates based on an analysis of the documentation on hand. ETA-9130 Reporting Requirements 1) Submission of the ETA-9130 is required on a quarterly basis. Reporting quarter end dates shall correspond to the following calendar quarter end dates: March 31, June 30, September 30, and December 31. A final quarter ETA-9130 is required at the completion of the quarter, encompassing the grant award end date, or at the completion of the quarter in which all funds have been expended, whichever comes first. 2) Quarterly reports, including the final quarter report, are required to be submitted no later than 45 calendar days after the end of each specified reporting period. The reporting due dates are: May 15, August 15, November 15, and February 15. The deadlines for ETA-9130 submissions do not change, even in instances when the reporting due date falls on a weekend or holiday. The e-reporting system is available 24 hours a day, 7 days a week, and reports can be submitted in advance of the due date. 3) All financial data is required to be reported cumulative from grant inception, through the end of each reporting period. Expenditure data is required to be reported on an accrual basis. 4) A separate ETA-9130 is required for each program and each fund source (subaccount) awarded to a grant recipient. 5) All sections of the report must be completed unless otherwise noted in the grant agreement Condition: Audit procedures included a review of the entire population of Form 9130 reports for administrative expenses, consisting of 22 reports. Our testing identified that certain reported amounts did not agree to the underlying general ledger for 12 reports, resulting in a total variance of $32,843,139. Additionally, audit procedures identified that internal controls over reporting were not operating effectively to ensure the timely and accurate submission of reports. Specifically, six reports were not submitted by the required due dates, and 12 reports contained inaccuracies at the time of submission, and controls were not performed with sufficient precision to verify that reported information was complete and accurate in accordance with federal reporting requirements. Questioned costs: None Context: See “Condition.” Cause: The controls over the preparation and review of Form 9130 reports that were not performed with sufficient precision to identify and resolve discrepancies between reported amounts and the underlying general ledger. Specifically, controls were not designed or operating at a level precise enough to ensure that reported data was accurate, reconciled, and submitted in a timely manner in accordance with federal requirements. As a result, variances and reporting errors were not detected or corrected prior to submission. Effect: The lack of a robust and thorough reconciliation process between Form 9130 reports and the Administrative Fund (870) general ledger may lead to inaccurate reporting. Repeat finding: Yes – 2024-003 Recommendation: Management should establish a formal reconciliation process to ensure that Form 9130 administrative expense reports align with the general ledger. This process should include assigning responsibility to a designated finance team member for performing and documenting reconciliations, implementing a monthly reconciliation schedule, and promptly investigating and resolving any variances with documented approvals. Additionally, financial reporting policies should be updated to incorporate reconciliation requirements, and staff should receive training on compliance and reconciliation procedures to strengthen internal controls and reduce the risk of reporting inaccuracies. Views of responsible officials: Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report.
Special Tests and Provisions Federal Agency: U.S. Department of Labor Federal Program Title: Unemployment Insurance State Administering Department: Employment Development Department (EDD) ALN: 17.225 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 24A55UI000061; October 1, 2023 - December 31, 2026 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Title 2 – Federal Financial Assistance Subtitle A – Office of Management and Budget Guidance for Grants and Agreements. Chapter II – Office of Management and Budget Guidance. Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D – Post Federal Award Requirements. § 200.303 - Internal controls (2 CFR 200.303): The recipient and subrecipient must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 42 – The Public Health and Welfare Chapter 7 – Social Security Subchapter III – Grants to States for Unemployment Compensation Administration § 503 – State laws (g) Recovery of unemployment benefit payments (1) A State shall deduct from unemployment benefits otherwise payable to an individual an amount equal to any overpayment made to such individual under an unemployment benefit program of the United States or of any other State, and not previously recovered. The amount so deducted shall be paid to the jurisdiction under whose program such overpayment was made. Any such deduction shall be made only in accordance with the same procedures relating to notice and opportunity for a hearing as apply to the recovery of overpayments of regular unemployment compensation paid by such State. 2025 California Code Unemployment Insurance Code - UIC Division 1 – Unemployment and Disability Compensation Part 1 – Unemployment Compensation Chapter 5 - Unemployment Compensation Benefits Article 1 – Eligibility and Disqualifications Section 1257 An individual is also disqualified for unemployment compensation benefits if: (a) He or she willfully, for the purpose of obtaining unemployment compensation benefits, either made a false statement or representation, including, but not limited to, using a false name, false social security number, or other false identification, with actual knowledge of the falsity thereof, or withheld a material fact in order to obtain any unemployment compensation benefits under this division. Article 4 - Overpayments Section 1375.1 If the director finds that an individual has been overpaid unemployment compensation benefits because he or she willfully, for the purpose of obtaining unemployment compensation benefits, either made a false statement or representation, with actual knowledge of the falsity thereof, or withheld a material fact, the director shall assess against the individual an amount equal to 30 percent of the overpayment amount. Assessments collected under this section shall be deposited in the following manner: (a) For penalty assessments established prior to October 22, 2013, 100 percent of the overpayment penalty amount in the Benefit Audit Fund. (b) For penalty assessments established on or after October 22, 2013, as follows: (1) 50 percent of the overpayment penalty amount in the Unemployment Trust Fund. (2) 50 percent of the overpayment penalty amount in the Benefit Audit Fund. Condition: Audit procedures included testing 60 overpayment case files to assess whether overpayments were properly established and whether penalties were applied in accordance with program requirements. Based on this testing, we identified one instance of noncompliance in which an overpayment met the criteria for the assessment of a penalty; however, the Department did not apply the required 30 percent penalty to the overpayment amount. Questioned costs: None Context: See “Condition.” Cause: The controls over the review and approval of overpayment determinations that were not performed with sufficient precision to ensure that cases meeting the criteria for penalty assessment were consistently identified and evaluated. Specifically, controls were not operating at a level precise enough to verify that overpayment cases involving willful misrepresentation or omission of material facts were subject to the required review for application of the 30 percent penalty prior to finalization. As a result, penalties required under program provisions were not consistently applied. Effect: As a result of controls not operating with sufficient precision to ensure proper evaluation of overpayment cases, penalties required under program provisions were not consistently assessed. This resulted in noncompliance with applicable requirements and increases the risk that overpayments may not be fully recovered, thereby reducing program collections and weakening the Department’s enforcement of program rules. Repeat finding: Yes – 2024-004 Recommendation: We recommend that management strengthen internal controls over overpayment determinations to ensure penalties are assessed when required. Specifically, the Department should implement procedures requiring personnel to evaluate whether an overpayment resulted from a willful false statement or representation, with actual knowledge of the falsity, or withholding of a material fact for the purpose of obtaining unemployment compensation benefits, and, when those conditions are present, apply the required 30 percent penalty before the overpayment determination is finalized. We also recommend the Department implement supervisory review or system-based controls to identify cases in which the facts support penalty assessment, but the penalty has not been applied. These actions will help ensure overpayments and related penalties are properly established, improve compliance with applicable requirements, and reduce the risk of underassessment. Views of responsible officials: Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report.
Reporting Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Aging Cluster State Administering Department: California Department of Aging ALN: 93.044, 93.045, 93.053 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 2401CAOACM; October 1, 2023 – September 30, 2025 2401CAOAHD; October 1, 2023 – September 30, 2025 2401CAOANS; October 1, 2023 – September 30, 2025 2401CAOASS; October 1, 2023 – September 30, 2025 2501CAOACM; October 1, 2024 – September 30, 2026 2501CAOAHD; October 1, 2024 – September 30, 2026 2501CAOANS; October 1, 2024 – September 30, 2026 2501CAOASS; October 1, 2024 – September 30, 2026 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Title 2 – Federal Financial Assistance Subtitle A – Office of Management and Budget Guidance for Grants and Agreements. Chapter II – Office of Management and Budget Guidance. Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D – Post Federal Award Requirements. § 200.303 - Internal controls (2 CFR 200.303): The recipient and subrecipient must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). § 200.302 – Financial management (b) The recipient's and subrecipient's financial management system must provide for the following: (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. (3) Maintaining records that sufficiently identify the amount, source, and expenditure of Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. Title 2 – Federal Financial Assistance Subtitle A – Office of Management and Budget Guidance for Grants and Agreements Chapter I – Office of Management and Budget Government-Wide Guidance for Federal Financial Assistance Part 170 – Reporting Subaward and Executive Compensation Information Subpart A – General § 170.105 Applicability (a) Applicability in general. This part applies to a Federal agency’s Federal financial assistance as defined in § 170.300. This part applies to all recipients and subrecipients of Federal awards who meet the reporting requirements of paragraph (c) of this section, unless exempt under Federal statute or by paragraph (d) of this section. Appendix A to Part 170—Award Term I. Reporting Subawards and Executive Compensation (a) Reporting of first-tier subawards — (1) Applicability. Unless the recipient is exempt as provided in paragraph (d) of this award term, the recipient must report each subaward that equals or exceeds $30,000 in Federal funds for a subaward to an entity or Federal agency. The recipient must also report a subaward if a modification increases the Federal funding to an amount that equals or exceeds $30,000. All reported subawards should reflect the total amount of the subaward. (2) Reporting Requirements. (i) The recipient must report each subaward described in paragraph (a)(1) of this award term to the Federal Funding Accountability and Transparency Act (FFATA) subaward reporting functionality (formerly FSRS and now reported through SAM.gov) at http://www.fsrs.gov. (ii) For subaward information, report no later than the end of the month following the month in which the subaward was issued. (c) Reporting of total compensation of subrecipient executives — (1) Applicability. Unless a first-tier subrecipient is exempt as provided in paragraph (d) of this appendix, the recipient must report the executive total compensation of each of the subrecipient's five most highly compensated executives for the subrecipient's preceding completed fiscal year, if: (i) The total Federal funding authorized to date under the subaward equals or exceeds $30,000; (ii) In the subrecipient's preceding fiscal year, the subrecipient received: (A) 80 percent or more of its annual gross revenues from Federal procurement contracts (and subcontracts) and Federal awards (and subawards) subject to the Transparency Act; and, (B) $25,000,000 or more in annual gross revenues from Federal procurement contracts (and subcontracts), and Federal awards (and subawards) subject to the Transparency Act; and (iii) The public does not have access to information about the compensation of the executives through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986 after receiving this subaward. (To determine if the public has access to the compensation information, see the U.S. Security and Exchange Commission total compensation filings at http://www.sec.gov/answers/execomp.htm.) (2) Reporting Requirements. Subrecipients must report to the recipient their executive total compensation described in paragraph (c)(1) of this appendix. The recipient is required to submit this information to the FFATA subaward reporting functionality (formerly FSRS and now reported through SAM.gov) at http://www.fsrs.gov no later than the end of the month following the month in which the subaward was made. As of March 2025, this functionality has been migrated to SAM.gov, which now serves as the system of record for FFATA subaward reporting. Condition: Audit procedures included a review of 60 FFATA reporting submissions associated with subrecipients. During this review, we assessed compliance with federal reporting requirements and evaluated the adequacy of internal controls over the FFATA reporting process. Of the 60 subrecipients examined, we identified that FFATA reporting was not performed timely for 31 subrecipients. Additionally, audit procedures further determined that reporting was only being performed once annually for all sampled subrecipients, rather than on an ongoing basis as required. The department lacked documented procedures and monitoring mechanisms to ensure timely and accurate reporting, including verification that subrecipient data was submitted in accordance with federal requirements. Questioned costs: None Context: See “Condition.” Cause: Procedures to perform the required FFATA reporting were not established by the Department. The absence of documented policies, assigned responsibilities, and monitoring mechanisms create an environment which may result in noncompliance with federal reporting. Effect: The lack of established procedures and internal controls for FFATA reporting resulted in noncompliance, with 31 out of 60 subrecipients not reported timely as required. Repeat finding: Yes, 2024-013 Recommendation: The Department should implement a robust process and related internal controls to ensure timely and accurate FFATA reporting. These controls should include developing written policies and procedures that outline the steps for collecting subrecipient data, preparing reports, and submitting them within required timelines; assigning accountability by designating specific personnel responsible for compliance; and implementing a monitoring and review process to verify completion and accuracy of reporting. Additionally, training programs should be established to ensure staff understand reporting requirements, and automated tracking tools or checklists should be utilized to provide transparency and reduce the risk of missed submissions. By introducing these internal controls, the Department can strengthen its compliance framework, mitigate the risk of federal funding repercussions, and enhance overall operational integrity. Views of responsible officials: Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report.
Subrecipient Monitoring Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Aging Cluster State Administering Department: California Department of Aging ALN: 93.044, 93.045, 93.053 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 2401CAOACM; October 1, 2023 – September 30, 2025 2401CAOAHD; October 1, 2023 – September 30, 2025 2401CAOANS; October 1, 2023 – September 30, 2025 2401CAOASS; October 1, 2023 – September 30, 2025 2501CAOACM; October 1, 2024 – September 30, 2026 2501CAOAHD; October 1, 2024 – September 30, 2026 2501CAOANS; October 1, 2024 – September 30, 2026 2501CAOASS; October 1, 2024 – September 30, 2026 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Material Weakness in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Title 2 – Federal Financial Assistance Subtitle A – Office of Management and Budget Guidance for Grants and Agreements. Chapter II – Office of Management and Budget Guidance. Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D – Post Federal Award Requirements. § 200.303 - Internal controls (2 CFR 200.303): The recipient and subrecipient must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 2 – Grants and Agreements. Subtitle A – Office of Management and Budget Guidance for Grants and Agreements. Chapter II – Office of Management and Budget Guidance. Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D – Post Federal Award Requirements. §200.332 Requirements for passthrough entities (2 CFR 200.332): All pass-through entities must: (a) Verify that the subrecipient is not excluded or disqualified in accordance with §180.300. Verification methods are provided in §180.300, which include confirming in SAM.gov that a potential subrecipient is not suspended, debarred, or otherwise excluded from receiving Federal funds. Condition: Audit procedures included a review of eight subrecipient agreements to determine whether the Department complied with federal suspension and debarment requirements for covered transactions. The subrecipient agreements reviewed did not contain a suspension and debarment certification clause indicating that the subrecipient was not suspended or debarred from participation in federally funded programs. Furthermore, the Department was unable to provide documentation demonstrating that suspension and debarment verification procedures, such as a review of the System for Award Management (SAM), had been performed prior to entering into the covered transactions. As part of audit procedures, we independently verified the suspension and debarment status of all subrecipients tested through a review of the SAM Exclusions database and noted that none were suspended or debarred at the time of our testing. Questioned costs: None Context: See “Condition.” Cause: Controls designed to ensure compliance with federal suspension and debarment requirements were not operating with sufficient precision to verify and document the eligibility of subrecipients prior to entering into covered transactions. Specifically, personnel responsible for administering the program had not established or consistently performed procedures to verify suspension and debarment status through SAM or obtain required certifications, resulting in unsupported compliance with 2 CFR §200.214 and 2 CFR Part 180. Effect: Failure to verify and document suspension and debarment status prior to entering into covered transactions results in noncompliance with 2 CFR §180.300 and increases the risk that federal funds could be awarded to subrecipients that are suspended or debarred from participation in federally funded programs. Although the audit's independent verification determined that none of the subrecipients tested were suspended or debarred, the lack of documented verification procedures prevents the Department from demonstrating compliance with federal requirements and increases the risk that ineligible parties could be engaged in future transactions. Repeat finding: No Recommendation: The Department should review and strengthen its procedures for verifying the suspension and debarment status of subrecipients before entering into any agreement involving federal funds and ensure that the verification documentation is maintained. Alternatively, incorporate a clause in subrecipient contracts certification of their suspension or debarment status. Views of responsible officials: Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report.
Period of Performance Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Epidemiology and Laboratory Capacity for Program Infectious Diseases (ELC) State Administering Department: California Department of Public Health ALN: 93.323 Pass-Through Agency: Heluna Health Pass-Through Number(s): 95-2557063 Award Number and Period: NU50CK000539; August 1, 2019 – July 31, 2027 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Title 2 – Federal Financial Assistance Subtitle A – Office of Management and Budget Guidance for Grants and Agreements. Chapter II – Office of Management and Budget Guidance. Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D – Post Federal Award Requirements. § 200.303 - Internal controls (2 CFR 200.303): The recipient and subrecipient must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Subpart E – Cost Principles § 200.403 – Factors affecting allowability of costs Except where otherwise authorized by statute, costs must meet the following criteria to be allowable under Federal awards: (h) Administrative closeout costs may be incurred until the due date of the final report(s). If incurred, these costs must be liquidated prior to the due date of the final report(s) and charged to the final budget period of the award unless otherwise specified by the Federal agency. All other costs must be incurred during the approved budget period. At its discretion, the Federal agency is authorized to waive prior written approvals to carry forward unobligated balances to subsequent budget periods. See § 200.308(g)(3). Condition: For awards with period of performance end dates occurring during the fiscal year, audit procedures included testing transactions recorded in the general ledger during the final month and after of the award. We tested a sample of nineteen transactions totaling $2,643,649. Our testing identified three transactions, totaling $33,571, for which costs were incurred after the ending of the period of performance. Specifically, the award period end date on July 31, 2024; however, the associated costs were incurred between August 1, 2024 and February 28, 2025. Questioned costs: $66,833 ($33,571 related to the sample tested and $33,262 in the untested population). Context: See “Condition.” Cause: Controls over the review of expenditures at the end of the period of performance were not operating with sufficient precision to ensure that only allowable costs incurred before the award end date were charged to the appropriate Federal award. Specifically, management did not consistently apply procedures to verify that expenditures were recorded to the correct grant and within the applicable period of performance, resulting in the misclassification of post-award costs to the grant. Effect: Ineffective internal controls may result in questioned costs and noncompliance with the terms of the grant. Repeat finding: No Recommendation: The Department should strengthen controls over grant accounting by implementing procedures to ensure that expenditures are both charged to the correct grant and incurred within the applicable period of performance. This should include establishing controls to verify grant coding and transaction dates prior to posting or reimbursement, as well as enhancing supervisory review processes to detect and prevent misclassification of expenditures and the recording of unallowable post-award costs. Additionally, the Department should provide training to personnel responsible for grant accounting on proper grant coding and period-ofperformance requirements. Views of responsible officials: Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report.
Suspension and Debarment Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Epidemiology and Laboratory Capacity for Program Infectious Diseases (ELC) State Administering Department: California Department of Public Health ALN: 93.323 Pass-Through Agency: Heluna Health Pass-Through Number(s): 95-2557063 Award Number and Period: NU50CK000539; August 1, 2019 – July 31, 2027 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Material Weakness in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Title 2 – Federal Financial Assistance Subtitle A – Office of Management and Budget Guidance for Grants and Agreements. Chapter II – Office of Management and Budget Guidance. Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D – Post Federal Award Requirements. § 200.303 - Internal controls (2 CFR 200.303): The recipient and subrecipient must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). § 200.214 – Suspension and debarment. Non-Federal entities are subject to the nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR Part 180. These regulations restrict awards, subawards, and contracts with parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. Title 2 – Grants and Agreements. Subtitle A – Office of Management and Budget Guidance for Grants and Agreements. Chapter I – Office of Management and Budget Government-Wide Guidance for Grants and Agreements. Part 180 – OMB Guidelines to Agencies on Government- Wide Debarment and Suspension (Non-procurement). Subpart C – Responsibilities of Participants Regarding Transactions Doing Business With Other Persons §180.300 (2 CFR 180.300): When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You may do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or a condition to the covered transactions with that person. Condition: Audit procedures included a review of nine vendor contracts and eleven subrecipient agreements to determine whether the Department complied with federal suspension and debarment requirements for covered transactions. Of the nine vendor contracts reviewed, six (67%) did not contain a suspension and debarment certification clause indicating that the contractor was not suspended or debarred from participation in federally funded programs. In addition, all eleven (100%) subrecipient agreements reviewed did not contain a suspension and debarment certification clause indicating that the subrecipient was not suspended or debarred from participation in federally funded programs. Furthermore, the Department was unable to provide documentation demonstrating that suspension and debarment verification procedures, such as a review of the System for Award Management (SAM), had been performed prior to entering into the covered transactions. As part of audit procedures, we independently verified the suspension and debarment status of all vendors and subrecipients tested through a review of the SAM Exclusions database and noted that none were suspended or debarred at the time of our testing. However, the Department's records did not demonstrate compliance with the federal requirement to verify the eligibility of contractors and subrecipients prior to entering into covered transactions. This condition is not in compliance with the suspension and debarment requirements contained in 2 CFR Part 180, as adopted by 2 CFR §200.214. Questioned costs: None Context: See “Condition.” Cause: Controls designed to ensure compliance with federal suspension and debarment requirements were not operating with sufficient precision to verify and document the eligibility of contractors and subrecipients prior to entering into covered transactions. Specifically, personnel responsible for administering the ELC program had not established or consistently performed procedures to verify suspension and debarment status through SAM or obtain required certifications, resulting in unsupported compliance with 2 CFR §200.214 and 2 CFR Part 180. Effect: Failure to verify and document suspension and debarment status prior to entering into covered transactions results in noncompliance with 2 CFR §180.300 and increases the risk that federal funds could be awarded to contractors or subrecipients that are suspended or debarred from participation in federally funded programs. Although the audit's independent verification determined that none of the vendors or subrecipients tested were suspended or debarred, the lack of documented verification procedures prevents the Department from demonstrating compliance with federal requirements and increases the risk that ineligible parties could be engaged in future transactions. Repeat finding: Yes – 2024-008 Recommendation: Public Health should review and strengthen its procedures for verifying the suspension and debarment status of vendors and subrecipients before entering into any agreement involving federal funds and ensure that the verification documentation is maintained. Alternatively, incorporate a clause in vendor and subrecipient contracts certification of their suspension or debarment status. Views of responsible officials: Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report.
Subrecipient Monitoring Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Epidemiology and Laboratory Capacity for ProgramInfectious Diseases (ELC) State Administering Department: California Department of Public Health ALN: 93.323 Pass-Through Agency: Heluna Health Pass-Through Number(s): 95-2557063 Award Number and Period: NU50CK000539; August 1, 2019 – July 31, 2027 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Title 2 – Federal Financial Assistance Subtitle A – Office of Management and Budget Guidance for Grants and Agreements. Chapter II – Office of Management and Budget Guidance. Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D – Post Federal Award Requirements. § 200.303 - Internal controls (2 CFR 200.303): The recipient and subrecipient must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). § 200.302 – Financial management (b) The recipient's and subrecipient's financial management system must provide for the following: (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. (3) Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. § 200.332 – Requirements for pass-though entities A pass-through entity must: (b) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the information provided below. A pass-through entity must provide the best available information when some of the information below is unavailable. A pass-through entity must provide the unavailable information when it is obtained. Required information includes: (1) Federal award identification. (i) Subrecipient's name (must match the name associated with its unique entity identifier); (ii) Subrecipient's unique entity identifier; (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date; (v) Subaward Period of Performance Start and End Date; (vi) Subaward Budget Period Start and End Date; (vii) Amount of Federal Funds Obligated in the subaward; (viii) Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity, including the current financial obligation; (ix) Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; (x) Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA); (xi) Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity; (xii) Assistance Listings title and number; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at the time of disbursement; (xiii) Identification of whether the Federal award is for research and development; and (xiv) Indirect cost rate for the Federal award (including if the de minimis rate is used in accordance with § 200.414). Condition: Audit procedures included a review of eleven subrecipient agreements to determine whether the pass-through entity included the information required to be communicated to subrecipients in accordance with Uniform Guidance. Of the eleven agreements tested, all eleven (100%) did not contain one or more required federal award identification elements. Specifically, the agreements omitted the subrecipient’s Unique Entity Identifier (UEI), the Federal Award Identification Number (FAIN), the Federal award date, the applicable Assistance Listing Number (ALN), identification of whether the award was designated as research and development (R&D), and the applicable indirect cost rate for the federal award, including whether the de minimis indirect cost rate authorized under 2 CFR §200.414 was being used. As a result, the subrecipient agreements did not include all information required to be provided to subrecipients under 2 CFR §200.332(b). Questioned costs: None Context: See “Condition.” Cause: Controls designed to ensure the inclusion of all federally required award identification information in subrecipient agreements were not operating with sufficient precision to identify and prevent the omission of required elements prior to execution of the agreements. As a result, agreements were issued without all information required under 2 CFR §200.332(b), including the UEI, FAIN, Federal award date, ALN, identification of whether the award was designated as R&D, and the applicable indirect cost rate. Effect: The omission of required federal award information from subrecipient agreements may limit subrecipients' understanding of applicable federal award requirements and increase the risk of noncompliance with federal regulations. Incomplete award information may also result in inaccurate or inconsistent administration, monitoring, and reporting of federal awards by subrecipients and the pass-through entity. Repeat finding: Yes – 2024-009 Recommendation: Public Health should ensure every subaward includes all requirements imposed on the subrecipient so that the federal award is used in accordance with Federal statutes, regulations and the terms and conditions of the federal award. Views of responsible officials: Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report.