Department of Treasury, State of Iowa Chief Information Officer, Federal Financial Assistance Listing 21.027, NOFO #007 – 433524,433385, 2024 Coronavirus State and Local Fiscal Recovery Funds Procurement, Suspension & Debarment Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR 200.318 maintains that recipients must have and use documented procurement policies and must conform procurement standards in sections 200.317 through 200.327. 2 CFR 200 Appendix II requires certain provisions be included in contracts if criteria are applicable. Additionally, 2 CFR 200.214 requires recipients to restrict the subawards and contract with certain parities that are debarred, suspended, or excluded from participation in Federal assistance programs or activities. Condition: Testing of the federal program identified the following: - One instance where the Cooperative followed a bid process, however, the documentation was not retained to support the selection. Additionally, the contract with the vendor was missing required contract provisions in accordance with Uniform Guidance. - Two instances where the Cooperative did not follow the procurement process as detailed in the procurement policy and did not have any formal documentation or contract in place with the vendor. - Three instances where the Cooperative entered into a contract with a vendor over $25,000 and there was no review performed to ensure the vendor was not suspended or debarred. Cause: Contract provisions were not evaluated compared to Uniform Guidance contract requirements. Contracts entered were not evaluated in accordance with Uniform Guidance as it relates to suspension and debarment. Effect: Ineffective controls over this area of compliance could result in a reasonable possibility the Cooperative would be noncompliant with the compliance requirements outlined above. Additionally, the cooperative may enter into a covered transaction with a vendor that is suspended or debarred. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 3 out of 5 vendors were selected for testing. Repeat Finding from Prior Year: No Recommendation: We recommend that management implement procedures related to the review of contracts to ensure the procurement methods are being followed and to ensure contracts include the required Uniform Guidance provisions. Also, management should incorporate procedures to ensure vendors are not suspended or debarred from doing business with the federal government. Documentation should be retained to provide evidence that procedures were completed. Views of Responsible Officials: Management agrees with the finding.
FINDING 2024-002 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds: American Rescue Plan Act - Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY2024 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-004. Condition and Context Prior to entering into subawards and covered transactions with the COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF), recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. The County did not have an effective internal control system in place related to the suspension and debarment requirements. A population of eight covered transactions, totaling $1,359,873, of which payments to each individual vendor equaled or exceeded $25,000 paid from SLFRF funds were identified during the audit period. Three of the transactions, totaling $811,500, were selected for testing. For each of the three transactions, the County did not verify the vendor's suspension or debarment status prior to payment due to the County not having an effective internal control system in place to verify that contractors were neither suspended or debarred, or otherwise excluded or disqualified, from participating in federal assistance programs or activities. INDIANA STATE BOARD OF ACCOUNTS 18 LAWRENCE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Cause The County was unable to provide documentation to demonstrate they had effective internal controls in place to verify suspension and debarment status for covered transactions it intends to pay with federal funds. The County was unable to provide documentation to demonstrate they had properly verified that contractors were neither suspended nor debarred, or otherwise excluded or disqualified, from participating in federal assistance programs or activities. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, vendors and subrecipients to whom payments were equal to or in excess of $25,000 were not verified as to whether or not they were suspended, debarred, or otherwise excluded. Any program funds the County used to pay vendors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover those funds. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 19 LAWRENCE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that management of the County establish a proper system of internal controls and develop policies and procedures to ensure contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts or subawards that will be paid with federal grant funds. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Lead Reduction Grant - Reporting Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY23-24 Pass-Through Entity: Indiana Department of Health Compliance Requirement: Reporting Audit Finding: Material Weakness Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-003. Condition and Context For the Lead Reduction Grant, recipients were required to submit quarterly reports through the end of the grant period. Although the required reports were submitted timely as required, there were no internal controls in place that would likely be effective in preventing, or detecting and correcting, noncompliance related to the report. One employee prepared and submitted the reports without any evidence of an oversight or review process. The lack of internal controls was a systemic issue that continued throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 20 LAWRENCE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause A proper system of internal controls was not designed and implemented by management of the County, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. The County had not developed any policies and procedures requiring a secondary review of reports for accuracy prior to submission. Effect Without the proper implementation of an effectively designed system of internal controls over reporting, the County cannot ensure that the reports submitted are materially accurate and that any potential errors would be identified and corrected in a timely manner. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County design and implement a proper system of internal controls, including policies and procedures, to ensure that effective internal controls are implemented over all grant compliance requirements for reporting related to the Lead Reduction Grant. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-004 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - American Rescue Plan Act - Reporting Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY2024 Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-002. Condition and Context Recipients are required to submit quarterly or annual Project and Expenditure (P&E) reports to the U.S. Department of the Treasury (Treasury). The reporting periods, as well as the respective due dates, are based upon type of recipient and its population, as well as the recipient's allocation amount. Information to be reported includes projects funded, expenditures, and contracts for the appropriate reporting period. INDIANA STATE BOARD OF ACCOUNTS 21 LAWRENCE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The County was classified as a county with a population below 250,000 residents that received an allocation of less than $10 million in COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF). As such, the P&E report covering the period from April 1, 2023 to March 31, 2024, was required to be submitted to the Treasury by April 30, 2024. The P&E report was submitted April 30, 2024, as required; however, the information submitted did not match the County's ledgers for Total Expenditures and Total Cumulative Expenditures. Total Period Expenditures was reported as $2,720,340, as was Total Cumulative Expenditures. The ledger amount was $2,631,190, resulting in expenditures being overstated by $89,150. In addition, supporting documentation was not provided to support the amounts reported as Total Period Obligations and Cumulative Period Obligations, resulting in the inability to verify the accuracy of the information reported. There were no internal controls in place to prevent, or detect and correct, noncompliance related to the P&E report. Even though a County Commissioner reviewed and approved the report submission, as indicated by his signature, this review was not effective. The lack of internal controls and noncompliance was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Compliance and Reporting Guidance, State and Local Fiscal Recovery Funds, page 13, states in part: ". . . 10. Reporting. All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. . . ." 31 CFR 35.4(c) states in part: "Reporting and requests for other information. During the period of performance, recipients shall provide to the Secretary periodic reports providing detailed accounting of the uses of funds, . . ." Cause The County's system of internal controls was not effective in detecting the errors noted in the Condition and Context above and did not allow for the appropriate supporting documentation to be retained for review. INDIANA STATE BOARD OF ACCOUNTS 22 LAWRENCE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As such, the County did not report current period obligations, current period expenditures, and cumulative expenditures properly when filing the P&E reports during the audit period. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. In addition, not meeting the SLFRF reporting requirements increases the likelihood that the public will not have access to transparent and accurate information regarding expenditures of federal awards. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County design and implement a proper system of internal controls, including policies and procedures to ensure that effective internal controls are implemented over all grant compliance requirements for reporting and allow for the retention of all required supporting documentation. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-001 Subject: Federal Transit Cluster - Procurement and Suspension and Debarment Federal Agency: Department of Transportation Federal Program: Federal Transit Formula Grants Assistance Listings Number: 20.507 Federal Award Number and Year (or Other Identifying Number): IN-2022-018, IN-2024-003-00, IN-2018-028-06 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is customarily set at $250,000. However, Indiana Code 5-22-8 has a more restrictive threshold of $150,000 or less for when small purchase procedures may be used. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds: micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micro-purchase threshold but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. The City has a process in place that requires the Board of Public Works to approve bids and contracts, but the process did not operate effectively for one of three vendors tested who were subject to the small-purchase procurement requirements. One vendor was identified that fell within the small purchase threshold. Purchases from the vendor totaled $129,259. As such, price or rate quotations from an adequate number of qualified sources should have been obtained. However, the City did not obtain price or rate quotations for the purchases nor was full and open competition provided for the vendor. Additionally, there was no documentation available to support the rationale to limit competition nor was a contract awarded for the services provided. Suspension and Debarment Prior to entering into covered transactions with federal award funds, recipients are required to verify that vendors are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Inquiry and fieldwork determined that the City had a process in place to verify that vendors were not suspended or debarred but the process was not operating effectively. There was no documented oversight, review, or approval process to ensure the process was completed timely. INDIANA STATE BOARD OF ACCOUNTS 14 CITY OF ANDERSON SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Two vendors were selected for suspension and debarment testing. We were able to determine that suspension and debarment searches on the SAM.GOV website were made, but we could not determine that the searches occurred prior to contracting with the vendor. For the first vendor, the documentation provided indicated that the search for suspension and debarment on the SAM.GOV website was done subsequent to the purchase of the equipment. For the second vendor, the date of the search on the SAM.GOV website could not be determined. Additionally, the suspension and debarment verification was done by one employee without evidence of oversite and review. The lack of internal controls and noncompliance was a systemic issue throughout the audit period for the federal awards IN-2022-018, IN-2024-003-00, and IN-2018-028-06. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non- Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." 2 CFR 1200.10 adopts the Office of Management and Budget (OMB) guidance in subparts A through I of 2 CFR part 180, as supplemented by this part, as the Department of Transportation policies and procedures for nonprocurement suspension and debarment. 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." INDIANA STATE BOARD OF ACCOUNTS 15 CITY OF ANDERSON SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause Management had not designed or implemented a system of internal controls that would have ensured procedures were in place that would comply with the provisions of federal statutes, regulations, and the terms and conditions of the federal award in relation to the requirements of the Procurement and Suspension and Debarment compliance requirement. For the small purchases procurement requirement, several purchases from one vendor had occurred without the City noticing the small purchases threshold had been exceeded. For the requirement to check the suspension and debarment status, the City failed to document the date searched in one case and saved a search dated after the award date in another case. Effect The failure to design and implement an effective internal control system enabled noncompliance to remain undetected. Noncompliance with the provisions of federal statutes, regulations, and terms and conditions of the federal award could result in the reduction of future federal funding to the City. Questioned Costs There were no questioned costs identified.
FINDING 2024-002 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): SLFRP1096 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context Each entity that accepts federal money must comply with 2 CFR 300.318, which requires each entity to have their own documented procurement procedures. The City provided a procurement policy from Title II of an employee manual that did not fully satisfy the standards of 2 CFR 200.318. The employee manual was adopted in 2004. The COVID-19 - Coronavirus State and Local Fiscal Recovery Funds were used to pay for engineering services in the amount of $301,000. These services were not publicly bid even though the dollar amount of the services exceeds the simplified acquisition threshold. Prior to entering into subawards and covered transactions with the COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is done by checking the Excluded Parties List System (EPLS), collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. INDIANA STATE BOARD OF ACCOUNTS 16 CITY OF ANDERSON SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The City included suspension and debarment certifications with the agreements with many of the vendors who participated in the activities funded by the SLFRF funds. The City also checked the EPLS for some vendors. Evidence of compliance with the suspension and debarment verification requirements was not provided for two of four vendors selected for suspension and debarment testing. The lack of internal controls and noncompliance was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (c) (1) The non-Federal entity must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. . . . (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of the contract type, contractor selection or rejection, and the basis for the contract price. . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. . . . INDIANA STATE BOARD OF ACCOUNTS 17 CITY OF ANDERSON SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. A procurement method in which bids are publicly solicited and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The sealed bids method is the preferred method for procuring construction, if the conditions. (i) In order for sealed bidding to be feasible, the following conditions should be present: (A) A complete, adequate, and realistic specification or purchase description is available; (B) Two or more responsible bidders are willing and able to compete effectively for the business; and (C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price. (ii) If sealed bids are used, the following requirements apply: (A) Bids must be solicited from an adequate number of qualified sources, providing them sufficient response time prior to the date set for opening the bids, for local, and tribal governments, the invitation for bids must be publicly advertised; (B) The invitation for bids, which will include any specifications and pertinent attachments, must define the items or services in order for the bidder to properly respond; (C) All bids will be opened at the time and place prescribed in the invitation for bids, and for local and tribal governments, the bids must be opened publicly; (D) A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs must be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and (E) Any or all bids may be rejected if there is a sound documented reason. . . ." INDIANA STATE BOARD OF ACCOUNTS 18 CITY OF ANDERSON SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Cause The City did not have adequate internal controls over procurement and suspension and debarment. The City had not adopted a formal or informal policy for procurement that meets the requirements of 2 CFR 300.318. The City did not apply its procedures over suspension and debarment uniformly with one vendor not tested for suspension and debarment due to the specific aspects of the City's grant plan that the vendor was assigned to. Effect Without establishing effective internal controls over procurement and suspension and debarment, the City cannot ensure free and open competition or that the vendors paid with federal funds are eligible to participate in federal programs and might allow for payments to suspended or debarred parties that would be unallowable. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could potentially result in the loss of future funding to the City. Recommendation We recommended that management of the City establish a formal policy on procurement that meets the standards of 2 CFR 200.318 and develop effective internal controls and procedures to ensure that all vendors in which expenditures exceed $25,000 are not suspended, debarred, or otherwise excluded prior to entering into contracts or subawards.
FINDING 2024-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Subrecipient Monitoring Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): SLFRP1096 Compliance Requirement: Subrecipient Monitoring Audit Finding: Material Weakness INDIANA STATE BOARD OF ACCOUNTS 19 CITY OF ANDERSON SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Subrecipients associated with the City's Non-profit, Affordable Housing, and Homeless Initiatives activities funded by the COVID-19 - Coronavirus State and Local Fiscal Recovery Funds were required to submit reports on program activities either quarterly or monthly. The City did not have adequate internal controls in place designed to ensure that these reports were reviewed. Responsibility for reviewing these reports rested primarily with one employee. For two of three subrecipients tested, we were not able to determine that there was a second employee involved that would ensure that the reports submitted by the subrecipients were reviewed by the City. The lack of internal controls was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.332 states: "All pass-through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and include the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward notification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes: (1) Federal award identification. (i) Subrecipient name (which 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 (see the definition of Federal award date in § 200.1 of this part) of award to the recipient by the Federal agency; (v) Subaward Period of Performance Start and End Date; INDIANA STATE BOARD OF ACCOUNTS 20 CITY OF ANDERSON SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (vi) Subaward Budget Period Start and End Date; (vii) Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; (viii) Total Amount of Federal Funds Obligated to the subrecipient by the passthrough entity including the current financial obligation; (ix) Total Amount of the Federal Award committed to the subrecipient by the passthrough entity; (x) Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); (xi) Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; (xii) Assistance Listings number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; (xiii) Identification of whether the award is R&D; and (xiv) Indirect cost rate for the Federal award (including if the de minimis rate is charged) per § 200.414. (2) All requirements imposed by the pass-through entity 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; (3) Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the Federal awarding agency including identification of any required financial and performance reports. (4) (i) An approved federally recognized indirect cost rate negotiated between the subrecipient and the Federal Government. If no approved rate exists, the passthrough entity must determine the appropriate rate in collaboration with the subrecipient, which is either: (A) The negotiated indirect cost rate between the pass-through entity and the subrecipient; which can be based on a prior negotiated rate between a different PTE and the same subrecipient. If basing the rate on a previously negotiated rate, the pass through entity is not required to collect information justifying this rate, but may elect to do so; (B) The de minimis indirect cost rate. (ii) The pass-through entity must not require use of a de minimis indirect cost rate if the subrecipient has a Federally approved rate. Subrecipients can elect to use the cost allocation method to account for indirect costs in accordance with § 200.405(d). INDIANA STATE BOARD OF ACCOUNTS 21 CITY OF ANDERSON SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (5) A requirement that the subrecipient permit the pass-through entity and auditors to have access to the subrecipient's records and financial statements as necessary for the pass-through entity to meet the requirements of this part; and (6) Appropriate terms and conditions concerning closeout of the subaward. . . . (b) Evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in paragraphs (d) and (e) of this section, which may include consideration of such factors as: (1) The subrecipient's prior experience with the same or similar subawards; (2) The results of previous audits including whether or not the subrecipient receives a Single Audit in accordance with Subpart F of this part, and the extent to which the same or similar subaward has been audited as a major program; (3) Whether the subrecipient has new personnel or new or substantially changed systems; and (4) The extent and results of Federal awarding agency monitoring (e.g., if the subrecipient also receives Federal awards directly from a Federal awarding agency). (c) Consider imposing specific subaward conditions upon a subrecipient if appropriate as described in § 200.208. (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity. (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. (3) Issuing a management decision for applicable audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521. INDIANA STATE BOARD OF ACCOUNTS 22 CITY OF ANDERSON SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (4) The pass-through entity is responsible for resolving audit findings specifically related to the subaward and not responsible for resolving crosscutting findings. If a subrecipient has a current Single Audit report posted in the Federal Audit Clearinghouse and has not otherwise been excluded from receipt of Federal funding (e.g., has been debarred or suspended), the pass-through entity may rely on the subrecipient's cognizant audit agency or cognizant oversight agency to perform audit follow-up and make management decisions related to cross-cutting findings in accordance with section § 200.513(a)(3)(vii). Such reliance does not eliminate the responsibility of the pass-through entity to issue subawards that conform to agency and award-specific requirements, to manage risk through ongoing subaward monitoring, and to monitor the status of the findings that are specifically related to the subaward. (e) Depending upon the pass-through entity's assessment of risk posed by the subrecipient (as described in paragraph (b) of this section), the following monitoring tools may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals: (1) Providing subrecipients with training and technical assistance on program related matters; and (2) Performing on-site reviews of the subrecipient's program operations. (3) Arranging for agreed-upon-procedures engagements as described in § 200.425. (f) Verify that every subrecipient is audited as required by Subpart F of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in § 200.501. (g) Consider whether the results of the subrecipient's audits, on-site reviews, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity's own records. (h) Consider taking enforcement action against noncompliant subrecipients as described in § 200.339 of this part and in program regulations." Cause A system of internal controls to include oversite and review of the quarterly or monthly reports prepared by the subrecipients was not in place. One individual was primarily responsible for reviewing the subrecipient reports. Effect Not having procedures in place for oversite and review of the monitoring reports could lead to noncompliance with the requirements for subrecipient monitoring. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. INDIANA STATE BOARD OF ACCOUNTS 23 CITY OF ANDERSON SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the City establish a proper system of internal controls to include oversite and review to ensure that the subrecipient report reviews are reviewed/approved by a second party. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Federal Agency: U.S. Department of the Treasury Federal Program Name: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP0727, 2024 Compliance Requirement Affected: Suspension and Debarment Award Period: Year Ending December 31, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: Physical evidence that the County ensured vendor was not suspended or debarred was not retained. Questioned Costs: None. Context: For two of two transactions tested for suspension and debarment, the County did not have documentation that the verification was done. Cause: The County does not have policies or procedures in place to ensure proper evidence with compliance requirements are retained. Effect: County could be using a vendor that is suspended or debarred at the time of the transaction. Repeat Finding: Yes, Finding 2023-0011. Recommendation: It is recommended that the County ensure properly language related to suspension and debarment is included in the contract, or other records are kept on file to support a verification was done. Views of Responsible Officials and Planned Corrective Actions: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Medical Assistance (Medicaid Cluster), Foster Care – Title IV-E Assistance Listing Number: 93.778, 93.658 Pass-Through Agency: Minnesota Department of Human Services Pass-Through Numbers: 2405MN5MAP, 2405MN5ADM, 2401MNFOST Federal Award Identification Number and Year: 2405MN5MAP, 2405MN5ADM, 2401MNFOST, 2024 Compliance Requirement Affected: Eligibility Award Period: Year Ending December 31, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Standard internal control procedures recommend internal reviews over case file eligibility determinations to ascertain case workers are complying with state and federal requirements and correctly determining program eligibility. Condition: The county is not performing internal casefile reviews of medical assistance or foster care cases. Questioned Costs: None. Context: During our testing of eligibility and testing of case file reviews completed during 2024 for Medical Assistance (Medicaid Cluster) and Foster Care – Title IV-E, it was noted that there were no documented case file reviews performed. Cause: Since the pandemic ended, the eligibility guidance has been changing rapidly, and the county is short staffed. Effect: The county could be reporting inaccurate information affecting the status of eligibility. Repeat Finding: Yes, Finding 2023-005 Recommendation: We recommend the County review case files on a periodic basis throughout the year and document the reviews. Views of Responsible Officials and Planned Corrective Actions: There is no disagreement with the audit finding. The County will implement and document procedures for periodic review of cash files to ensure eligibility requirements are being met.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Medical Assistance (Medicaid Cluster), Foster Care – Title IV-E Assistance Listing Number: 93.778, 93.658 Pass-Through Agency: Minnesota Department of Human Services Pass-Through Numbers: 2405MN5MAP, 2405MN5ADM, 2401MNFOST Federal Award Identification Number and Year: 2405MN5MAP, 2405MN5ADM, 2401MNFOST, 2024 Compliance Requirement Affected: Eligibility Award Period: Year Ending December 31, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Standard internal control procedures recommend internal reviews over case file eligibility determinations to ascertain case workers are complying with state and federal requirements and correctly determining program eligibility. Condition: The county is not performing internal casefile reviews of medical assistance or foster care cases. Questioned Costs: None. Context: During our testing of eligibility and testing of case file reviews completed during 2024 for Medical Assistance (Medicaid Cluster) and Foster Care – Title IV-E, it was noted that there were no documented case file reviews performed. Cause: Since the pandemic ended, the eligibility guidance has been changing rapidly, and the county is short staffed. Effect: The county could be reporting inaccurate information affecting the status of eligibility. Repeat Finding: Yes, Finding 2023-005 Recommendation: We recommend the County review case files on a periodic basis throughout the year and document the reviews. Views of Responsible Officials and Planned Corrective Actions: There is no disagreement with the audit finding. The County will implement and document procedures for periodic review of cash files to ensure eligibility requirements are being met.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Foster Care – Title IV-E Assistance Listing Number: 93.658 Pass-Through Agency: Minnesota Department of Human Services Pass-Through Numbers: 2401MNFOST Federal Award Identification Number and Year: 2401MNFOST, 2024 Compliance Requirement Affected: Reporting Award Period: Year Ending December 31, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: No formal evidence of review of the foster care report was kept on file. Questioned Costs: None. Context: State system does not have the ability to indicate who reviewed the report, and formal evidence of review was not retained. Cause: The County does not have policies or procedures in place to ensure review was taking place. Effect: The County could be reporting inaccurate information. Repeat Finding: Yes, Finding 2023-008. Recommendation: It is recommended that the County implement procedures to review the foster care report and retain evidence of the review. Views of Responsible Officials and Planned Corrective Actions: There is no disagreement with the audit finding. The County will implement procedures to review the foster care report and retain evidence of the review on file.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Foster Care – Title IV-E Assistance Listing Number: 93.658 Pass-Through Agency: Minnesota Department of Human Services Pass-Through Numbers: 2401MNFOST Federal Award Identification Number and Year: 2401MNFOST, 2024 Compliance Requirement Affected: Activities Allowed/Allowable Costs Award Period: Year Ending December 31, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: The County's internal controls do not include a process to retain documentation of review when the main reviewer is out of the office. Questioned Costs: None. Context: The State system does not have the ability to document electronic review of the disbursements when the Fiscal Supervisor is out of the office, and alternative physical evidence of review was not retained. In our testing, we noted that 1 of 12 SSIS disbursements tested did not have documentation of review. Cause: The County does not have policies or procedures in place to document review when reviewer is out of the office. Effect: Errors in the disbursements could occur. Repeat Finding: Yes, Finding 2023-009. Recommendation: It is recommended that the County implement procedures to document review of disbursements when not able to show an electronic approval in the SSIS system. Views of Responsible Officials and Planned Corrective Actions: There is no disagreement with the audit finding. The County will implement procedures to document review of disbursements when not able to show an electronic approval in the SSIS system.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Medical Assistance (Medicaid Cluster), Foster Care – Title IV-E Assistance Listing Number: 93.778, 93.658 Pass-Through Agency: Minnesota Department of Human Services Pass-Through Numbers: 2405MN5MAP, 2405MN5ADM, 2401MNFOST Federal Award Identification Number and Year: 2405MN5MAP, 2405MN5ADM, 2401MNFOST, 2024 Compliance Requirement Affected: Eligibility Award Period: Year Ending December 31, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Standard internal control procedures recommend internal reviews over case file eligibility determinations to ascertain case workers are complying with state and federal requirements and correctly determining program eligibility. Condition: The county is not performing internal casefile reviews of medical assistance or foster care cases. Questioned Costs: None. Context: During our testing of eligibility and testing of case file reviews completed during 2024 for Medical Assistance (Medicaid Cluster) and Foster Care – Title IV-E, it was noted that there were no documented case file reviews performed. Cause: Since the pandemic ended, the eligibility guidance has been changing rapidly, and the county is short staffed. Effect: The county could be reporting inaccurate information affecting the status of eligibility. Repeat Finding: Yes, Finding 2023-005 Recommendation: We recommend the County review case files on a periodic basis throughout the year and document the reviews. Views of Responsible Officials and Planned Corrective Actions: There is no disagreement with the audit finding. The County will implement and document procedures for periodic review of cash files to ensure eligibility requirements are being met.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Medical Assistance (Medicaid Cluster), Foster Care – Title IV-E Assistance Listing Number: 93.778, 93.658 Pass-Through Agency: Minnesota Department of Human Services Pass-Through Numbers: 2405MN5MAP, 2405MN5ADM, 2401MNFOST Federal Award Identification Number and Year: 2405MN5MAP, 2405MN5ADM, 2401MNFOST, 2024 Compliance Requirement Affected: Eligibility Award Period: Year Ending December 31, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Standard internal control procedures recommend internal reviews over case file eligibility determinations to ascertain case workers are complying with state and federal requirements and correctly determining program eligibility. Condition: The county is not performing internal casefile reviews of medical assistance or foster care cases. Questioned Costs: None. Context: During our testing of eligibility and testing of case file reviews completed during 2024 for Medical Assistance (Medicaid Cluster) and Foster Care – Title IV-E, it was noted that there were no documented case file reviews performed. Cause: Since the pandemic ended, the eligibility guidance has been changing rapidly, and the county is short staffed. Effect: The county could be reporting inaccurate information affecting the status of eligibility. Repeat Finding: Yes, Finding 2023-005 Recommendation: We recommend the County review case files on a periodic basis throughout the year and document the reviews. Views of Responsible Officials and Planned Corrective Actions: There is no disagreement with the audit finding. The County will implement and document procedures for periodic review of cash files to ensure eligibility requirements are being met.
Assistance Listing Numbers 93.658 Foster Care Title IV-E 93.667 Social Services Block Grant Federal Agency U.S. Department of Health and Human Services Pass-Through Agency Wisconsin Department of Children and Families Award Numbers / Years Various Criteria: Per 2 CFR §200.430 - Compensation—personal services, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed, are properly supported, and are consistent with the entity’s accounting records. Additionally, 2 CFR §200.303 - Internal Controls requires non-Federal entities to establish and maintain effective internal controls that provide reasonable assurance of compliance with Federal statutes, regulations, and terms and conditions of Federal awards. Condition/Context: As part of our testing procedures over payroll, we reconciled amounts recorded on the Payroll Ledger to the General Ledger for each payroll sample that we tested. From a sample of 40, we noted two instances where the amounts recorded in the General Ledger did not agree with the corresponding amounts recorded in the Payroll Ledger. Our sample was not statistically valid. Effect: Inaccurate or unsupported recording of payroll costs increases the risk that unallowable or misstated payroll expenses may be charged to Federal awards. If not corrected, this could result in inaccurate financial reporting and potential questioned costs. Questioned Costs: None noted. Cause: Payroll Ledger records are generated from programmatic reports based on timesheet entries in the county’s Dayforce system. While manual adjustments or allocations of programmatic reports to the Payroll Ledger are sometimes made before these records are ultimately posted to the General Ledger, no formal reconciliations are performed to account for these changes. As a result, discrepancies between the programmatic reports and the General Ledger are likely whenever there are adjustments or allocations in the programmatic reports which are not posted on the General Ledger. Recommendation: We recommend that management strengthen internal controls over payroll reconciliations by: • Implementing a system review process to ensure Payroll Ledger amounts reconcile to the General Ledger. • Conducting periodic reconciliations between the programmatic reports, Payroll Ledger and General Ledger and promptly investigating any discrepancies. • Providing training to accounting personnel on proper reconciliation procedures. Views of Responsible Officials: Dayforce is configured to allocate salary expenses to an employee’s home agency and department, regardless of where the employee assigns their hours in the timekeeping system. While the timesheet programmatic reflects the agency and department where hours and dollars are functionally charged, the payroll register aligns with the General Ledger based on home agency coding. As a result, the Payroll Register and General Ledger will reconcile with each other but may not align with programmatic reports, which are based on timesheet-level allocations. This system behavior is consistent with current configuration and financial reporting practices.
Assistance Listing Numbers 93.658 Foster Care Title IV-E 93.667 Social Services Block Grant Federal Agency U.S. Department of Health and Human Services Pass-Through Agency Wisconsin Department of Children and Families Award Numbers / Years Various Criteria: Per 2 CFR §200.430 - Compensation—personal services, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed, are properly supported, and are consistent with the entity’s accounting records. Additionally, 2 CFR §200.303 - Internal Controls requires non-Federal entities to establish and maintain effective internal controls that provide reasonable assurance of compliance with Federal statutes, regulations, and terms and conditions of Federal awards. Condition/Context: As part of our testing procedures over payroll, we reconciled amounts recorded on the Payroll Ledger to the General Ledger for each payroll sample that we tested. From a sample of 40, we noted two instances where the amounts recorded in the General Ledger did not agree with the corresponding amounts recorded in the Payroll Ledger. Our sample was not statistically valid. Effect: Inaccurate or unsupported recording of payroll costs increases the risk that unallowable or misstated payroll expenses may be charged to Federal awards. If not corrected, this could result in inaccurate financial reporting and potential questioned costs. Questioned Costs: None noted. Cause: Payroll Ledger records are generated from programmatic reports based on timesheet entries in the county’s Dayforce system. While manual adjustments or allocations of programmatic reports to the Payroll Ledger are sometimes made before these records are ultimately posted to the General Ledger, no formal reconciliations are performed to account for these changes. As a result, discrepancies between the programmatic reports and the General Ledger are likely whenever there are adjustments or allocations in the programmatic reports which are not posted on the General Ledger. Recommendation: We recommend that management strengthen internal controls over payroll reconciliations by: • Implementing a system review process to ensure Payroll Ledger amounts reconcile to the General Ledger. • Conducting periodic reconciliations between the programmatic reports, Payroll Ledger and General Ledger and promptly investigating any discrepancies. • Providing training to accounting personnel on proper reconciliation procedures. Views of Responsible Officials: Dayforce is configured to allocate salary expenses to an employee’s home agency and department, regardless of where the employee assigns their hours in the timekeeping system. While the timesheet programmatic reflects the agency and department where hours and dollars are functionally charged, the payroll register aligns with the General Ledger based on home agency coding. As a result, the Payroll Register and General Ledger will reconcile with each other but may not align with programmatic reports, which are based on timesheet-level allocations. This system behavior is consistent with current configuration and financial reporting practices.
Assistance Listing Numbers 93.658 Foster Care Title IV-E 93.667 Social Services Block Grant Federal Agency U.S. Department of Health and Human Services Pass-Through Agency Wisconsin Department of Children and Families Award Numbers / Years Various Criteria: Per 2 CFR §200.430 - Compensation—personal services, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed, are properly supported, and are consistent with the entity’s accounting records. Additionally, 2 CFR §200.303 - Internal Controls requires non-Federal entities to establish and maintain effective internal controls that provide reasonable assurance of compliance with Federal statutes, regulations, and terms and conditions of Federal awards. Condition/Context: As part of our testing procedures over payroll, we reconciled amounts recorded on the Payroll Ledger to the General Ledger for each payroll sample that we tested. From a sample of 40, we noted two instances where the amounts recorded in the General Ledger did not agree with the corresponding amounts recorded in the Payroll Ledger. Our sample was not statistically valid. Effect: Inaccurate or unsupported recording of payroll costs increases the risk that unallowable or misstated payroll expenses may be charged to Federal awards. If not corrected, this could result in inaccurate financial reporting and potential questioned costs. Questioned Costs: None noted. Cause: Payroll Ledger records are generated from programmatic reports based on timesheet entries in the county’s Dayforce system. While manual adjustments or allocations of programmatic reports to the Payroll Ledger are sometimes made before these records are ultimately posted to the General Ledger, no formal reconciliations are performed to account for these changes. As a result, discrepancies between the programmatic reports and the General Ledger are likely whenever there are adjustments or allocations in the programmatic reports which are not posted on the General Ledger. Recommendation: We recommend that management strengthen internal controls over payroll reconciliations by: • Implementing a system review process to ensure Payroll Ledger amounts reconcile to the General Ledger. • Conducting periodic reconciliations between the programmatic reports, Payroll Ledger and General Ledger and promptly investigating any discrepancies. • Providing training to accounting personnel on proper reconciliation procedures. Views of Responsible Officials: Dayforce is configured to allocate salary expenses to an employee’s home agency and department, regardless of where the employee assigns their hours in the timekeeping system. While the timesheet programmatic reflects the agency and department where hours and dollars are functionally charged, the payroll register aligns with the General Ledger based on home agency coding. As a result, the Payroll Register and General Ledger will reconcile with each other but may not align with programmatic reports, which are based on timesheet-level allocations. This system behavior is consistent with current configuration and financial reporting practices.
2024-002 Eligibility – METS Prior Year Finding Number: N/A Year of Finding Origination: 2024 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of Health and Human Services Program: 93.778 Medical Assistance Program Award Number and Year: 2405MN5ADM; 2024 Pass-Through Agency: Minnesota Department of Human Services Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 42 U.S. Code of Federal Regulations §§ 435.911 and 435.945 require the state Medicaid agency to determine and verify eligibility of enrollees in Medicaid. The Minnesota Department of Human Services provides the Minnesota Health Care Programs Eligibility Policy Manual. The manual contains the Minnesota Department of Human Services eligibility policies for the Minnesota Health Care Programs, including the eligibility requirements of Medical Assistance. Specific eligibility requirements are included for participants’ Social Security number and citizenship verification, as well as requirements of agencies to process applications within 45 days for most applicants, up to 60 days for certain applicants. Minnesota Statutes, Section 256B.05, requires county agencies to administer Medical Assistance. Condition: The Minnesota Department of Human Services maintains the computer system, METS, which is used by Watonwan County to support the eligibility determination process. In the case files tested for eligibility, not all documentation to support participant eligibility was updated or input correctly. The following exceptions were noted in the sample of 40 case files tested: • One participant’s Social Security number was entered incorrectly and not verified, and citizenship status was not verified. • One participant’s application was processed 199 days after receipt. Questioned Costs: Not applicable. Watonwan County administers the program, but the State of Minnesota pays benefits to participants in this program. Context: The State of Minnesota and Watonwan County split the eligibility determination process. Generally, Watonwan County resolves eligibility issues when prompted by the system, while the State performs the initial review of the case files, including determining the information in METS is verified. Participants receive benefits from the State. The population consisted of 3,336 active METS cases enrolled in the Medical Assistance Program in 2024; the sample size was 40 case files. The sample size was based on the guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: The improper input or updating of information in METS and lack of verification of key eligibility-determining factors increase the risk that program participants will receive benefits when they are not eligible. Delays in processing applications increase the risk that program benefits will not be provided to those eligible to receive them. Cause: Program personnel indicated one of the case files was transferred from another county and the supporting documentation was not included in the information provided, and one case file was overlooked by the program personnel responsible for processing the information. Recommendation: We recommend Watonwan County implement additional procedures to provide reasonable assurance that all documentation needed to resolve eligibility issues exists and program personnel properly process applications as well as input, update, or verify the documentation in METS. In addition, Watonwan County should consider providing further training to program personnel. View of Responsible Official: Acknowledge
2024-003 Eligibility – MAXIS Prior Year Finding Number: N/A Year of Finding Origination: 2024 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of Health and Human Services Program: 93.778 Medical Assistance Program Award Number and Year: 2405MN5ADM; 2024 Pass-Through Agency: Minnesota Department of Human Services Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 42 U.S. Code of Federal Regulations §§ 435.911 and 435.945 require the state Medicaid agency to determine and verify eligibility of enrollees in Medicaid. The Minnesota Department of Human Services provides the Minnesota Health Care Programs Eligibility Policy Manual. The manual contains the Minnesota Department of Human Services eligibility policies for the Minnesota Health Care Programs, including the eligibility requirements of Medical Assistance. Specific eligibility requirements are included for participants’ citizenship and asset verification. Minnesota Statutes, Section 256B.05, requires county agencies to administer Medical Assistance. Condition: The Minnesota Department of Human Services maintains the computer system, MAXIS, which is used by Watonwan County to support the eligibility determination process. In the case files tested for eligibility, not all documentation to support participant eligibility was updated or input correctly. In a sample of 40 case files tested, two participants’ citizenship was not verified and one participants’ assets were not verified. Questioned Costs: Not applicable. Watonwan County administers the program, but the State of Minnesota pays benefits to participants in this program. Context: The State of Minnesota and Watonwan County split the eligibility determination process. Pursuant to Minnesota statutes, Watonwan County performs the “intake function” needed for this program, while the State maintains the MAXIS system, which supports the eligibility determination process. Participants receive benefit payments from the State. The population consisted of 572 active MAXIS cases enrolled in the Medical Assistance Program in 2024; the sample size was 40 case files. The sample size was based on the guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: The lack of verification in MAXIS of key eligibility-determining factors increases the risk that program participants will receive benefits when they are not eligible. Cause: Program personnel responsible for resolving eligibility issues in MAXIS did not ensure all required information was verified. Recommendation: We recommend Watonwan County implement additional procedures to provide reasonable assurance that all documentation needed to support eligibility determinations exists, the program personnel properly input or update the documentation in MAXIS, and the program personnel follow up on issues in a timely manner. In addition, Watonwan County should consider providing further training to program personnel. View of Responsible Official: Acknowledge
2024-004 Reporting Prior Year Finding Number: N/A Year of Finding Origination: 2024 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of Health and Human Services Program: 93.778 Medical Assistance Program Award Number and Year: 2405MN5ADM; 2024 Pass-Through Agency: Minnesota Department of Human Services Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. For federal awards received from the Minnesota Department of Human Services (DHS), the County should establish and maintain internal control to provide assurance that program reports are completed in accordance with DHS reporting instructions. As part of Watonwan County’s federal award reporting requirements, the County submits the quarterly Local Collaborative Time Study (LCTS) Public Health Cost Schedule (DHS-3220.3) and the Annual Collaborative Report to DHS. Condition: The following exceptions were noted in the tested program reports: • Sampled DHS-3220.3 reports understated the federal funds cost pool by including state grant funds in the reported federal revenue offsets. In total, the two sampled reports understated the federal funds cost pool by $17,494. • The 2024 Annual Collaborative Report was submitted on July 2, 2025, which is after the due date of April 30, 2025. Questioned Costs: None. Context: DHS relies on accurate and timely reporting of program costs and activities to ensure that resulting grant funds paid to the County are for applicable federal program costs and activities as well as to provide detailed information necessary for maintaining proper oversight over federal programs. The population of program reports tested included four quarterly DHS-3220.3 reports; the sample was two quarterly DHS-3220.3 reports. The sample sizes were based on the guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: Inaccurate reports and late submission of reports can impair the DHS’s ability to provide required oversight over federal programs and can result in the County receiving either more or less federal funds than allowed based on the actual underlying activity. Cause: The County’s controls over preparation of the reports were not sufficient to identify the reporting errors and ensure timely reporting. Recommendation: We recommend Watonwan County implement controls that ensure that all DHS reports are completed accurately and in accordance with DHS instructions. We also recommend the County revise and resubmit any DHS-3220.3 reports permitted with federal revenue offset activity reported incorrectly. View of Responsible Official: Acknowledge
Finding 2024-003: Eligibility – Lack of Internal Controls Federal Program: Rural Rental Housing Loans – Assistance Lising #10.415 Federal Agency: U.S. Department of Agriculture - Rural Development Award Period: 2024 Finding resolution status Unresolved Information on universe and population size The universe consisted of tenant files of all tenants living in projects financed with rural rental housing loans (143) during the fiscal year. Sample size information 15 tenant files were reviewed. Identification as a repeat finding This is not a repeat finding. Criteria 2 CFR §200.303(c) requires non-Federal entities to establish and maintain effective internal controls over Federal awards that provide reasonable assurance of compliance with applicable laws, regulations, and program requirements. As a fundamental internal control principle, review of key financial and program compliance documents, including tenant certifications, should be performed by an individual independent from the preparer to prevent and detect errors or misstatements. Statement of condition During our testing of compliance for eligibility, we noted that the same employee was responsible for both preparing and reviewing the tenant files. Cause The organization has limited staffing resources, resulting in the assignment of incompatible duties to a single employee without sufficient compensating controls. Effect When the preparer is also the reviewer, the risk of undetected errors or omissions increases. This could result in inaccurate tenant certifications, noncompliance with RD program requirements, and potential misreporting of tenant eligibility or rental assistance amounts. Auditor non-compliance code S – Internal Control Deficiency Questioned costs None Views of responsible officials Management concurs with the finding and will take steps to resolve the material weakness. Context This issue was observed in the preparation and review process for RD Form 3560-8 and/or HUD Form 50058, where staffing limitations resulted in the same individuals both preparing and reviewing tenant certifications. Recommendation We recommend that the Authority establish procedures to ensure all RD Form 3560-8 and HUD Form 50058 submissions are subject to an independent review prior to submission.
2024-002 Activities Allowed or Unallowed and Allowable Costs/Cost Principles Prior Year Finding Number: N/A Year of Finding Origination: 2024 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Material Weakness and Modified Opinion Federal Agency: U.S. Department of Agriculture Program: 10.561 State Administrative Matching Grants for the Supplemental Nutrition Assistance Program Award Number and Year: 242MN101S2514; 2024 Pass-Through Agency: Minnesota Department of Human Services Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Administrative program costs for the State Administrative Matching Grants for the Supplemental Nutrition Assistance Program are submitted to the Minnesota Department of Human Services (DHS) through the DHS Income Maintenance DHS-2550 report on a quarterly basis. DHS provides reporting instructions, including information regarding eligible and ineligible costs. Condition: The following exceptions were noted in the sample of 40 expenditures tested: • One claim was reported as eligible expenditures but was not eligible for federal reimbursement. • Two claims included activity that was allocated on an incorrect full-time equivalent (FTE) split. • Three timesheets tested included payroll costs that were incorrectly reported as Income Maintenance Random Moments Time Studies participants payroll expense. Some of the items noted above are included in the Child Support Services Activities Allowed and Unallowed, Allowable Costs/Cost Principles finding (2024-004) and the Medical Assistance Program Activities Allowed and Unallowed, Allowable Costs/Cost Principles, and Reporting finding (2024-005). Questioned Costs: Questioned costs identified were less than $25,000. Context: DHS relies on accurate identification and reporting of program costs to ensure grant funds paid to the Health and Human Services are for allowable federal program activities and costs and provide detailed information necessary for maintaining proper oversight over federal programs. Total expenditures reported on the SEFA are $827,634, consisting of 2,972 transactions. The sample of 40 transactions totaled $145,877. The sample sizes were based on the guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: Errors in the identification and reporting of costs on the quarterly reports can impair DHS’ ability to provide required oversight over federal programs and result in the County receiving either more or less federal funds than justified based on the actual underlying activity. Cause: The Health and Human Services’ controls over the identification of allowable activities and costs, preparation of the quarterly reports, and maintenance of payroll allocations in the accounting system were not sufficient to identify these errors. Recommendation: We recommend the Health and Human Services implement controls to ensure activities allowed and allowable costs are appropriately identified and reported to DHS in accordance with federal program guidance and DHS instructions. We also recommend the Health and Human Services correct and resubmit reports submitted with unallowable activities or costs, costs allocated incorrectly, or activity reported incorrectly. View of Responsible Official: Acknowledge
2024-003 Procurement, Suspension, and Debarment Prior Year Finding Number: N/A Year of Finding Origination: 2024 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Material Weakness and Modified Opinion Federal Agency: U.S. Department of Agriculture Program: 10.561 State Administrative Matching Grants for the Supplemental Nutrition Assistance Program Award Number and Year: 242MN101S2514; 2024 Pass-Through Agency: Minnesota Department of Human Services Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 2 U.S. Code of Federal Regulations § 200.318(i) states that the Health and Human Services must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Additionally, the Health and Human Services must follow further federal guidance over full and open competition as provided in Title 2 U.S. Code of Federal Regulations § 200.319, and perform a cost or price analysis as provided in Title 2 U.S. Code of Federal Regulations § 200.324. Federal requirements prohibit non-federal entities from contracting with or making subawards under covered transactions to parties that are suspended or debarred. Title 2 U.S. Code of Federal Regulations § 180.300 describes a required verification process. Prior to entering into the transaction, one of the following must be performed: (1) checking SAM.gov exclusions, (2) collecting a certification, or (3) adding a clause or condition to the covered transaction. Condition: The following exceptions were noted in the procurements testing: • All five small purchases tested did not have documentation of price or rate quotations obtained from an adequate number of qualified sources detailing the history of procurement or documentation of full and open competition. • For the five micro-purchase procurements tested, Southwest Health and Human Services did not document how purchases are distributed among qualified suppliers, as practical. • For one of the four covered transactions tested, the verification for suspended or debarred vendors was not performed before entering into the procurement. • For the one transaction over the simplified acquisition threshold tested, no documentation was maintained detailing the history of the procurement, demonstrating full and open competition, or that a cost or price analysis was performed. Questioned Costs: None. Context: The threshold used for the procurement testing was based on the Health and Human Services’ policy for simplified acquisition threshold (over $150,000), small purchases ($3,000 to $150,000), and micro-purchases ($3,000 or less). The suspension and debarment covered transaction threshold is $25,000. The population consisted of one procurement over the simplified acquisition threshold, 37 small purchases, 38 micro-purchases, and 18 covered transactions. The sample was one over the simplified acquisition threshold, five small purchases, five micro-purchases, and four covered transactions. The sample size was based on guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing and Single Audits. Effect: It cannot be determined that the contracting process was open and fair because the Health and Human Services did not document the rationale for the contractor selection. It also cannot be determined that an entity was not suspended, debarred, or otherwise excluded from conducting business with the Health and Human Services. Cause: Southwest Health and Human Services does not have processes in place to ensure federal requirements for procurement are followed. Recommendation: We recommend the Health and Human Services maintain documentation on the history of a procurement, provide for full and open competition, and perform a cost or price analysis to support compliance with Title 2 U.S. Code of Federal Regulations §§ 200.318, 200.319, and 200.324. We further recommend the Health and Human Services maintain documentation to demonstrate that vendors were not debarred, suspended, or otherwise excluded from conducting business with the Health and Human Services; this documentation should be completed prior to entering into a covered transaction. View of Responsible Official: Concur
2024-004 Activities Allowed or Unallowed and Allowable Costs/Cost Principles Prior Year Finding Number: 2023-002 Year of Finding Origination: 2022 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Material Weakness and Modified Opinion Federal Agency: U.S. Department of Health and Human Services Program: 93.563 Child Support Services Award Number and Year: 2301MNCEST and 2301MNCSES, 2024 Pass-Through Agency: Minnesota Department of Human Services Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Administrative program costs for Child Support Services are submitted to the Minnesota Department of Human Services (DHS) through the DHS Income Maintenance DHS-2550 report on a quarterly basis. DHS provides reporting instructions, including information regarding eligible and ineligible costs. Condition: Five of the 40 expenditures selected for testing were allocated on an incorrect full-time equivalent (FTE) split or there was no documentation to support the allocation used. Some of the items are included in the State Administrative Matching Grants for the Supplemental Nutrition Assistance Program Activities Allowed and Unallowed, Allowable Costs/Cost Principles finding (2024-002) and the Medical Assistance Program Activities Allowed and Unallowed, Allowable Costs/Cost Principles, and Reporting finding (2024-005). Questioned Costs: Questioned costs identified were less than $25,000. Context: DHS relies on accurate identification and reporting of program costs to ensure grant funds paid to the Health and Human Services are for allowable federal program activities/costs and provide detailed information necessary for maintaining proper oversight over federal programs. Total expenditures reported on the SEFA are $838,835, consisting of 2,339 transactions. The sample of 40 transactions totaled $148,900. The sample sizes were based on the guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: Errors in the identification and reporting of costs on the quarterly reports can impair DHS’ ability to provide required oversight over federal programs and result in the County receiving either more or less federal funds than justified based on the actual underlying activity. Cause: The Health and Human Services’ controls over the identification of allowable activities and costs, preparation of the quarterly reports, and maintenance of payroll allocations in the accounting system were not sufficient to identify these errors. Recommendation: We recommend the Health and Human Services implement controls to ensure activities allowed and allowable costs are appropriately identified and reported to DHS in accordance with federal program guidance and DHS instructions. We also recommend the Health and Human Services correct and resubmit reports submitted with costs allocated incorrectly. View of Responsible Official: Acknowledge
2024-004 Activities Allowed or Unallowed and Allowable Costs/Cost Principles Prior Year Finding Number: 2023-002 Year of Finding Origination: 2022 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Material Weakness and Modified Opinion Federal Agency: U.S. Department of Health and Human Services Program: 93.563 Child Support Services Award Number and Year: 2301MNCEST and 2301MNCSES, 2024 Pass-Through Agency: Minnesota Department of Human Services Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Administrative program costs for Child Support Services are submitted to the Minnesota Department of Human Services (DHS) through the DHS Income Maintenance DHS-2550 report on a quarterly basis. DHS provides reporting instructions, including information regarding eligible and ineligible costs. Condition: Five of the 40 expenditures selected for testing were allocated on an incorrect full-time equivalent (FTE) split or there was no documentation to support the allocation used. Some of the items are included in the State Administrative Matching Grants for the Supplemental Nutrition Assistance Program Activities Allowed and Unallowed, Allowable Costs/Cost Principles finding (2024-002) and the Medical Assistance Program Activities Allowed and Unallowed, Allowable Costs/Cost Principles, and Reporting finding (2024-005). Questioned Costs: Questioned costs identified were less than $25,000. Context: DHS relies on accurate identification and reporting of program costs to ensure grant funds paid to the Health and Human Services are for allowable federal program activities/costs and provide detailed information necessary for maintaining proper oversight over federal programs. Total expenditures reported on the SEFA are $838,835, consisting of 2,339 transactions. The sample of 40 transactions totaled $148,900. The sample sizes were based on the guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: Errors in the identification and reporting of costs on the quarterly reports can impair DHS’ ability to provide required oversight over federal programs and result in the County receiving either more or less federal funds than justified based on the actual underlying activity. Cause: The Health and Human Services’ controls over the identification of allowable activities and costs, preparation of the quarterly reports, and maintenance of payroll allocations in the accounting system were not sufficient to identify these errors. Recommendation: We recommend the Health and Human Services implement controls to ensure activities allowed and allowable costs are appropriately identified and reported to DHS in accordance with federal program guidance and DHS instructions. We also recommend the Health and Human Services correct and resubmit reports submitted with costs allocated incorrectly. View of Responsible Official: Acknowledge
2024-005 Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Reporting Prior Year Finding Number: 2023-003 Year of Finding Origination: 2022 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Material Weakness and Modified Opinion Federal Agency: U.S. Department of Health and Human Services Program: 93.778 Medical Assistance Program Award Number and Year: 2405MN5ADM and 2405MN5MAP, 2024 Pass-Through Agency: Minnesota Department of Human Services Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Administrative program costs for the Medical Assistance Program are submitted to DHS through the DHS Income Maintenance (DHS-2550) report, the Social Service Fund Report (DHS-2556), and Local Collaborative Time Study Cost Schedule Reports (DHS-3220) on a quarterly basis. DHS provides reporting instructions, including information regarding eligible and ineligible costs. Condition: The following exceptions were noted in the sample of 40 expenditures tested for activities allowed or unallowed and allowable costs/cost principles: • Two claims were incorrectly allocated in the DHS-2550 and Public Health DHS-3220 reports, which resulted in expenditures reported in the incorrect categories. • One claim reported on the DHS-2550 report included expenditures ineligible for federal grant reimbursement. • Two claims and two timesheets for a Minnesota Department of Public Safety program were included in the DHS-2556 report as eligible expenditures but were not eligible for federal reimbursement. • For four timesheets tested, the payroll costs were incorrectly coded according to the Income Maintenance Random Moments Time Studies and Social Services Time Studies. Some of the items are included in the Child Support Services Activities Allowed and Unallowed, Allowable Costs/Cost Principles finding (2024-002) and the State Administrative Matching Grants for the Supplemental Nutrition Assistance Program Activities Allowed and Unallowed, Allowable Costs/Cost Principles finding (2024-004). In addition, the following exceptions were noted in the first and third quarter DHS reports tested for reporting: • The DHS-2550 and DHS-2556 reports improperly included interest on leased vehicles. • Depreciation expense was incorrectly reported on the DHS-2550 reports. • Payroll adjustments were made to the general ledger that were not reflected on the DHS-2550 and DHS-2556 reports. • Postage and fuel costs were not reported at the correct rates on the DHS-2550 and DHS-2556 reports. • The DHS-2556 reports incorrectly excluded Out of Home Placement Aid. • The DHS-2556 reports excluded IT costs that were eligible expenditures. Questioned Costs: Known questioned costs are $6,274; likely questioned costs are $51,942, for total questioned costs of $58,216. Known and likely questioned costs are calculated based on expenditures identified during testing that were included in the DHS reports and were either not eligible expenditures or were incorrectly allocated to the Medical Assistance Program. Context: DHS relies on accurate identification and reporting of program costs to ensure grant funds paid to the Health and Human Services are for allowable federal program activities and costs and provide detailed information necessary for maintaining proper oversight over federal programs. Total expenditures reported on the SEFA are $2,837,564, consisting of 3,561 transactions. The sample of 40 transactions total $187,658. The reporting population consisted of four quarterly DHS-2550, DHS-2556, and Public Health DHS-3220 reports; the sample was two quarterly DHS-2550, DHS-2556, and Public Health DHS-3220 reports. The sample sizes were based on the guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: Errors in the identification and reporting of costs on the quarterly reports can impair DHS’ ability to provide required oversight over federal programs and result in the County receiving either more or less federal funds than justified based on the actual underlying activity. Cause: The Health and Human Services’ controls over the identification of allowable activities and costs, preparation and review of the quarterly reports, and maintenance of payroll allocations in the accounting system were not sufficient to identify these errors. Recommendation: We recommend the Health and Human Services implement controls to ensure activities allowed and allowable costs are appropriately identified and accurately reported to DHS in accordance with federal program guidance and DHS instructions. We also recommend the Health and Human Services correct and resubmit reports submitted with unallowable activities or costs, costs allocated incorrectly, or activity reporting incorrectly. View of Responsible Official: Acknowledge
2024-006 Eligibility – MAXIS Prior Year Finding Number: 2023-004 Year of Finding Origination: 2011 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Material Weakness and Modified Opinion Federal Agency: U.S. Department of Health and Human Services Program: 93.778 Medical Assistance Program Award Number and Year: 2405MN5ADM; 2024 Pass-Through Agency: Minnesota Department of Human Services Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 42 U.S. Code of Federal Regulations §§ 435.911 and 435.945 require the state Medicaid agency to determine and verify eligibility of enrollees in Medicaid. The Minnesota Department of Human Services provides the Minnesota Health Care Programs Eligibility Policy Manual. The manual contains the Minnesota Department of Human Services eligibility policies for the Minnesota Health Care Programs, including the eligibility requirements of Medical Assistance. Specific eligibility requirements are included for participants’ citizenship verification, income limits, and asset verification. Minnesota Statutes § 256B.05 requires agencies to administer Medical Assistance. Condition: The Minnesota Department of Human Services maintains the computer system, MAXIS, which is used by the Health and Human Services to support the eligibility determination process. In the case files reviewed for eligibility, not all documentation to support participant eligibility was available, updated, or input correctly. The following exceptions were noted in the sample of 40 case files tested: • Five case files did not have verification of citizenship; and two additional case files had verification of citizenship, but MAXIS was not properly updated. • One case file did not include support for the income listed in MAXIS. • Two case files included amounts for client accounts (assets) that were not properly updated or supported for the most recent application or renewal. Questioned Costs: Not applicable. The Health and Human Services administers the program, but the State of Minnesota pays benefits to participants in this program. Context: The State of Minnesota and the Health and Human Services split the eligibility determination process. Pursuant to Minnesota statutes, the Health and Human Services performs the “intake function” needed for this program, while the State maintains the MAXIS system, which supports the eligibility determination process. Participants receive benefit payments from the State. The population consisted of 3,804 active MAXIS cases enrolled in the Medical Assistance Program in 2024; the sample size was 40 case files. The sample size was based on the guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: The improper input or updating of information into MAXIS and the lack of verification or follow-up of eligibility-determining factors increase the risk that program participants will receive benefits when they are not eligible. Cause: Program personnel entering case file information into MAXIS did not ensure all required information was input or updated correctly, supported, or retained. Recommendation: We recommend Southwest Health and Human Services implement additional procedures to provide reasonable assurance that all necessary documentation to support eligibility determinations exists, the program personnel properly input or update the documentation in MAXIS, and the program personnel follow up on issues in a timely manner. In addition, Southwest Health and Human Services should consider providing further training to program personnel. View of Responsible Official: Acknowledge
2024-005 Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Reporting Prior Year Finding Number: 2023-003 Year of Finding Origination: 2022 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Material Weakness and Modified Opinion Federal Agency: U.S. Department of Health and Human Services Program: 93.778 Medical Assistance Program Award Number and Year: 2405MN5ADM and 2405MN5MAP, 2024 Pass-Through Agency: Minnesota Department of Human Services Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Administrative program costs for the Medical Assistance Program are submitted to DHS through the DHS Income Maintenance (DHS-2550) report, the Social Service Fund Report (DHS-2556), and Local Collaborative Time Study Cost Schedule Reports (DHS-3220) on a quarterly basis. DHS provides reporting instructions, including information regarding eligible and ineligible costs. Condition: The following exceptions were noted in the sample of 40 expenditures tested for activities allowed or unallowed and allowable costs/cost principles: • Two claims were incorrectly allocated in the DHS-2550 and Public Health DHS-3220 reports, which resulted in expenditures reported in the incorrect categories. • One claim reported on the DHS-2550 report included expenditures ineligible for federal grant reimbursement. • Two claims and two timesheets for a Minnesota Department of Public Safety program were included in the DHS-2556 report as eligible expenditures but were not eligible for federal reimbursement. • For four timesheets tested, the payroll costs were incorrectly coded according to the Income Maintenance Random Moments Time Studies and Social Services Time Studies. Some of the items are included in the Child Support Services Activities Allowed and Unallowed, Allowable Costs/Cost Principles finding (2024-002) and the State Administrative Matching Grants for the Supplemental Nutrition Assistance Program Activities Allowed and Unallowed, Allowable Costs/Cost Principles finding (2024-004). In addition, the following exceptions were noted in the first and third quarter DHS reports tested for reporting: • The DHS-2550 and DHS-2556 reports improperly included interest on leased vehicles. • Depreciation expense was incorrectly reported on the DHS-2550 reports. • Payroll adjustments were made to the general ledger that were not reflected on the DHS-2550 and DHS-2556 reports. • Postage and fuel costs were not reported at the correct rates on the DHS-2550 and DHS-2556 reports. • The DHS-2556 reports incorrectly excluded Out of Home Placement Aid. • The DHS-2556 reports excluded IT costs that were eligible expenditures. Questioned Costs: Known questioned costs are $6,274; likely questioned costs are $51,942, for total questioned costs of $58,216. Known and likely questioned costs are calculated based on expenditures identified during testing that were included in the DHS reports and were either not eligible expenditures or were incorrectly allocated to the Medical Assistance Program. Context: DHS relies on accurate identification and reporting of program costs to ensure grant funds paid to the Health and Human Services are for allowable federal program activities and costs and provide detailed information necessary for maintaining proper oversight over federal programs. Total expenditures reported on the SEFA are $2,837,564, consisting of 3,561 transactions. The sample of 40 transactions total $187,658. The reporting population consisted of four quarterly DHS-2550, DHS-2556, and Public Health DHS-3220 reports; the sample was two quarterly DHS-2550, DHS-2556, and Public Health DHS-3220 reports. The sample sizes were based on the guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: Errors in the identification and reporting of costs on the quarterly reports can impair DHS’ ability to provide required oversight over federal programs and result in the County receiving either more or less federal funds than justified based on the actual underlying activity. Cause: The Health and Human Services’ controls over the identification of allowable activities and costs, preparation and review of the quarterly reports, and maintenance of payroll allocations in the accounting system were not sufficient to identify these errors. Recommendation: We recommend the Health and Human Services implement controls to ensure activities allowed and allowable costs are appropriately identified and accurately reported to DHS in accordance with federal program guidance and DHS instructions. We also recommend the Health and Human Services correct and resubmit reports submitted with unallowable activities or costs, costs allocated incorrectly, or activity reporting incorrectly. View of Responsible Official: Acknowledge
Finding 2024-001 - Reporting: Federal Funding Accountability and Transparency Act ("FFATA") - Significant Deficiency Name of Federal Agency: U.S. Department of Health and Human Services Federal Program Names: Health Center Program Cluster - Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care and COVID-19 - Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care, Grants for New and Expanded Services Under the Health Center Program, and COVID-19 - Grants for New and Expanded Services Under the Health Center Program; Grants to Provide Outpatient Early Intervention Services with Respect to HIV Disease Assistance Listing Numbers: 93.224, 93.527, and 93.918 Federal Award Identification Numbers and Years: Health Center Program Cluster: H8FCS40832 - 2021, H80CS00626 - 2022, H8CS00626 - 2023, H8LCS51759 - 2023, H8KCS49691 - 2023, and H8KCS49691 - 2024; Grants to Provide Outpatient Early Intervention Services with Respect to HIV Disease: H76HA00521 - 2023, and H76HA00521 - 2024 Criteria 1. In accordance with 2 CFR Section 200.303, Internal Controls, the nonFederal entity must: (a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonFederal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control Integrated Framework," issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 2. Under the requirements of the FFATA (Pub. L. No. 109-282), as amended by Section 6202 of Pub. L. No. 110-252, that are codified in 2 CFR Part 170, prime recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). The prime recipient is required to file a FFATA subaward report by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. Condition Health Center Program Cluster: 1. During our audit, we noted the FFATA subawards were not submitted timely to the FSRS. Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 2 0 2 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $4,153,728 $0 $4,153,728 $0 $0 Grants to Provide Outpatient Early Intervention Services with Respect to HIV Disease: 2. During our audit, we noted the evidence of review and approval was performed after the FFATA subaward was submitted to the FSRS. 3. During our audit, we noted the FFATA subawards were not submitted timely to the FSRS. Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 1 0 1 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $191,710 $0 $191,710 $0 $0 Cause Health Center Program Cluster: 1. As a result of personnel changes within the finance department, the FFATA reporting was not done timely. Grants to Provide Outpatient Early Intervention Services with Respect to HIV Disease: 2. There is no formal policy in place requiring the CFO (or designee) to review and approve the FFATA reports before submission to the FSRS. 3. As a result of personnel changes within the finance department, the FFATA reporting was not done timely. Effect or Potential Effect 1. The condition could result in key data elements inaccurately reported and/or not supported by the source documentation. 2. The FFATA subawards were not submitted timely to the FSRS. Questioned Costs None. Context Health Center Program Cluster: Two exceptions from a statistically valid sample of two. Grants to Provide Outpatient Early Intervention Services with Respect to HIV Disease: One exception from a statistically valid sample of one. Identification as Repeat Finding Health Center Program Cluster: 1. Yes (see prior year finding number 2023-002) Recommendation Health Center Program Cluster: 1. We recommend that management create an e-mail reminder or other alert mechanism and implement controls to ensure compliance with the reporting requirements under FFATA. Grants to Provide Outpatient Early Intervention Services with Respect to HIV Disease: 2. We recommend that all FFATA reports be reviewed and approved by the CFO or designee before submission to FSRS and evidence of approval be maintained. 3. We recommend that management create an e-mail reminder or other alert mechanism and implement controls to ensure compliance with the reporting requirements under FFATA. Views of Responsible Officials Health Center Program Cluster: 1. BCHN has created a policy regarding the FFATA reporting process. In this process the Electronic Handbook (EHB) is reviewed weekly to ensure that if new awarded funding is released, BCHN is alerted to the need to complete the FFATA report. BCHN has created a spreadsheet to track all the awarded funding and due dates for FFATA reports. Every month, at the board meeting, the spreadsheet is presented to the board with any new awarded funding and when the FFATA report is completed. Grants to Provide Outpatient Early Intervention Services with Respect to HIV Disease: 2. BCHN has begun a process where the FFATA report is put together by the Finance Manager and reviewed and signed off by the CFO before submitting the report. 3. BCHN has created a policy regarding the FFATA reporting process. In this process the Electronic Handbook (EHB) is reviewed weekly to ensure that if new awarded funding is released, BCHN is alerted to the need to complete the FFATA report. BCHN has created a spreadsheet to track all the awarded funding and due dates for FFATA reports. Every month, at the board meeting, the spreadsheet is presented to the board with any new awarded funding and when the FFATA report is completed.
Finding 2024-003 - Activities Allowed or Unallowed and Allowable Costs/Cost Principles - Significant Deficiency Name of Federal Agency: U.S. Department of Health and Human Services Federal Program Names: Health Center Program Cluster - Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care and COVID-19 - Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care and Grants for New and Expanded Services Under the Health Center Program and COVID-19 - Grants for New and Expanded Services Under the Health Center Program Assistance Listing Numbers: 93.224 and 93.527 Federal Award Identification Numbers and Years: H8FCS40832 - 2021, H80CS00626 - 2022, H8CS00626 - 2023, H8LCS51759 - 2023, H8KCS49691 - 2023, H8KCS49691 - 2024 Criteria In accordance with 2 CFR Section 200.303, Internal Controls, the nonFederal entity must: (a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonFederal entity is managing the Federal award in compliance with federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control Integrated Framework," issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition During our audit, we noted that there was no evidence, such as a signature, evidencing review and approval by a direct supervisor of the timesheets and time and effort reports were not done. Cause There is no formal policy requiring timesheets and time and effort reports be approved by a direct supervisor and evidence of approval retained. Effect or Potential Effect The condition could result in inaccuracies in the allocation of salaries to the federal grants or unallowable costs being charged. Questioned Costs None. Context Two exceptions from a statistically valid sample of two. Identification as Repeat Finding Yes (see prior year finding number 2023-004) Recommendation We recommend that management put in place a formal policy requiring all timesheets be approved by a direct supervisor and that evidence of that approval be retained. We also recommend a time and effort report be done for every employee and be approved by a direct supervisor and that evidence of the approval be retained. Views of Responsible Officials BCHN has put together a training program for employees to ensure that timecards are reviewed and approved by both the employee and the supervisor on a bi-weekly basis. Before payroll is processed, approvals by employees and supervisors will be checked. HR will provide a monthly time and effort report to the finance team. This report will provide total number of hours worked by each employee for each assigned cost center.
Finding 2024-004 - Period of Performance - Significant Deficiency Name of Federal Agency: U.S. Department of Health and Human Services Federal Program Names: Health Center Program Cluster - Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care and COVID-19 - Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care and Grants for New and Expanded Services Under the Health Center Program and COVID-19 - Grants for New and Expanded Services Under the Health Center Program Assistance Listing Numbers: 93.224 and 93.527 Federal Award Identification Numbers and Years: H8FCS40832 - 2021, H80CS00626 - 2022, H8CS00626 - 2023, H8LCS51759 - 2023, H8KCS49691 - 2023, H8KCS49691 - 2024 Criteria In accordance with 2 CFR Section 200.303, Internal Controls, the nonFederal entity must: (a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonFederal entity is managing the Federal award in compliance with federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control Integrated Framework," issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition During our audit, we noted that there was no evidence, such as a signature, evidencing review and approval by a direct supervisor of the timesheets and time and effort reports were not done. Cause There is no formal policy requiring timesheets and time and effort reports be approved by a direct supervisor and evidence of approval retained. Effect or Potential Effect The condition could result in inaccuracies in the allocation of salaries to the federal grants or costs not incurred within the period of performance. Questioned Costs None. Context Two exceptions from a statistically valid sample of two. Identification as Repeat Finding This finding is not a repeat finding. Recommendation We recommend that management put in place a formal policy requiring all timesheets be approved by a direct supervisor and that evidence of that approval be retained. We also recommend a time and effort report be done for every employee and be approved by a direct supervisor and that evidence of the approval be retained. Views of Responsible Officials BCHN has put together a training program for employees to ensure that timecards are reviewed and approved by both the employee and the supervisor on a bi-weekly basis. Before payroll is processed, approvals by employees and supervisors will be checked. HR will provide a monthly time and effort report to the finance team. This report will provide total number of hours worked by each employee for each assigned cost center.
Finding 2024-001 - Reporting: Federal Funding Accountability and Transparency Act ("FFATA") - Significant Deficiency Name of Federal Agency: U.S. Department of Health and Human Services Federal Program Names: Health Center Program Cluster - Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care and COVID-19 - Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care, Grants for New and Expanded Services Under the Health Center Program, and COVID-19 - Grants for New and Expanded Services Under the Health Center Program; Grants to Provide Outpatient Early Intervention Services with Respect to HIV Disease Assistance Listing Numbers: 93.224, 93.527, and 93.918 Federal Award Identification Numbers and Years: Health Center Program Cluster: H8FCS40832 - 2021, H80CS00626 - 2022, H8CS00626 - 2023, H8LCS51759 - 2023, H8KCS49691 - 2023, and H8KCS49691 - 2024; Grants to Provide Outpatient Early Intervention Services with Respect to HIV Disease: H76HA00521 - 2023, and H76HA00521 - 2024 Criteria 1. In accordance with 2 CFR Section 200.303, Internal Controls, the nonFederal entity must: (a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonFederal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control Integrated Framework," issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 2. Under the requirements of the FFATA (Pub. L. No. 109-282), as amended by Section 6202 of Pub. L. No. 110-252, that are codified in 2 CFR Part 170, prime recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). The prime recipient is required to file a FFATA subaward report by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. Condition Health Center Program Cluster: 1. During our audit, we noted the FFATA subawards were not submitted timely to the FSRS. Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 2 0 2 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $4,153,728 $0 $4,153,728 $0 $0 Grants to Provide Outpatient Early Intervention Services with Respect to HIV Disease: 2. During our audit, we noted the evidence of review and approval was performed after the FFATA subaward was submitted to the FSRS. 3. During our audit, we noted the FFATA subawards were not submitted timely to the FSRS. Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 1 0 1 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $191,710 $0 $191,710 $0 $0 Cause Health Center Program Cluster: 1. As a result of personnel changes within the finance department, the FFATA reporting was not done timely. Grants to Provide Outpatient Early Intervention Services with Respect to HIV Disease: 2. There is no formal policy in place requiring the CFO (or designee) to review and approve the FFATA reports before submission to the FSRS. 3. As a result of personnel changes within the finance department, the FFATA reporting was not done timely. Effect or Potential Effect 1. The condition could result in key data elements inaccurately reported and/or not supported by the source documentation. 2. The FFATA subawards were not submitted timely to the FSRS. Questioned Costs None. Context Health Center Program Cluster: Two exceptions from a statistically valid sample of two. Grants to Provide Outpatient Early Intervention Services with Respect to HIV Disease: One exception from a statistically valid sample of one. Identification as Repeat Finding Health Center Program Cluster: 1. Yes (see prior year finding number 2023-002) Recommendation Health Center Program Cluster: 1. We recommend that management create an e-mail reminder or other alert mechanism and implement controls to ensure compliance with the reporting requirements under FFATA. Grants to Provide Outpatient Early Intervention Services with Respect to HIV Disease: 2. We recommend that all FFATA reports be reviewed and approved by the CFO or designee before submission to FSRS and evidence of approval be maintained. 3. We recommend that management create an e-mail reminder or other alert mechanism and implement controls to ensure compliance with the reporting requirements under FFATA. Views of Responsible Officials Health Center Program Cluster: 1. BCHN has created a policy regarding the FFATA reporting process. In this process the Electronic Handbook (EHB) is reviewed weekly to ensure that if new awarded funding is released, BCHN is alerted to the need to complete the FFATA report. BCHN has created a spreadsheet to track all the awarded funding and due dates for FFATA reports. Every month, at the board meeting, the spreadsheet is presented to the board with any new awarded funding and when the FFATA report is completed. Grants to Provide Outpatient Early Intervention Services with Respect to HIV Disease: 2. BCHN has begun a process where the FFATA report is put together by the Finance Manager and reviewed and signed off by the CFO before submitting the report. 3. BCHN has created a policy regarding the FFATA reporting process. In this process the Electronic Handbook (EHB) is reviewed weekly to ensure that if new awarded funding is released, BCHN is alerted to the need to complete the FFATA report. BCHN has created a spreadsheet to track all the awarded funding and due dates for FFATA reports. Every month, at the board meeting, the spreadsheet is presented to the board with any new awarded funding and when the FFATA report is completed.
Finding 2024-003 - Activities Allowed or Unallowed and Allowable Costs/Cost Principles - Significant Deficiency Name of Federal Agency: U.S. Department of Health and Human Services Federal Program Names: Health Center Program Cluster - Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care and COVID-19 - Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care and Grants for New and Expanded Services Under the Health Center Program and COVID-19 - Grants for New and Expanded Services Under the Health Center Program Assistance Listing Numbers: 93.224 and 93.527 Federal Award Identification Numbers and Years: H8FCS40832 - 2021, H80CS00626 - 2022, H8CS00626 - 2023, H8LCS51759 - 2023, H8KCS49691 - 2023, H8KCS49691 - 2024 Criteria In accordance with 2 CFR Section 200.303, Internal Controls, the nonFederal entity must: (a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonFederal entity is managing the Federal award in compliance with federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control Integrated Framework," issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition During our audit, we noted that there was no evidence, such as a signature, evidencing review and approval by a direct supervisor of the timesheets and time and effort reports were not done. Cause There is no formal policy requiring timesheets and time and effort reports be approved by a direct supervisor and evidence of approval retained. Effect or Potential Effect The condition could result in inaccuracies in the allocation of salaries to the federal grants or unallowable costs being charged. Questioned Costs None. Context Two exceptions from a statistically valid sample of two. Identification as Repeat Finding Yes (see prior year finding number 2023-004) Recommendation We recommend that management put in place a formal policy requiring all timesheets be approved by a direct supervisor and that evidence of that approval be retained. We also recommend a time and effort report be done for every employee and be approved by a direct supervisor and that evidence of the approval be retained. Views of Responsible Officials BCHN has put together a training program for employees to ensure that timecards are reviewed and approved by both the employee and the supervisor on a bi-weekly basis. Before payroll is processed, approvals by employees and supervisors will be checked. HR will provide a monthly time and effort report to the finance team. This report will provide total number of hours worked by each employee for each assigned cost center.
Finding 2024-004 - Period of Performance - Significant Deficiency Name of Federal Agency: U.S. Department of Health and Human Services Federal Program Names: Health Center Program Cluster - Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care and COVID-19 - Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care and Grants for New and Expanded Services Under the Health Center Program and COVID-19 - Grants for New and Expanded Services Under the Health Center Program Assistance Listing Numbers: 93.224 and 93.527 Federal Award Identification Numbers and Years: H8FCS40832 - 2021, H80CS00626 - 2022, H8CS00626 - 2023, H8LCS51759 - 2023, H8KCS49691 - 2023, H8KCS49691 - 2024 Criteria In accordance with 2 CFR Section 200.303, Internal Controls, the nonFederal entity must: (a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonFederal entity is managing the Federal award in compliance with federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control Integrated Framework," issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition During our audit, we noted that there was no evidence, such as a signature, evidencing review and approval by a direct supervisor of the timesheets and time and effort reports were not done. Cause There is no formal policy requiring timesheets and time and effort reports be approved by a direct supervisor and evidence of approval retained. Effect or Potential Effect The condition could result in inaccuracies in the allocation of salaries to the federal grants or costs not incurred within the period of performance. Questioned Costs None. Context Two exceptions from a statistically valid sample of two. Identification as Repeat Finding This finding is not a repeat finding. Recommendation We recommend that management put in place a formal policy requiring all timesheets be approved by a direct supervisor and that evidence of that approval be retained. We also recommend a time and effort report be done for every employee and be approved by a direct supervisor and that evidence of the approval be retained. Views of Responsible Officials BCHN has put together a training program for employees to ensure that timecards are reviewed and approved by both the employee and the supervisor on a bi-weekly basis. Before payroll is processed, approvals by employees and supervisors will be checked. HR will provide a monthly time and effort report to the finance team. This report will provide total number of hours worked by each employee for each assigned cost center.
Finding 2024-001 - Reporting: Federal Funding Accountability and Transparency Act ("FFATA") - Significant Deficiency Name of Federal Agency: U.S. Department of Health and Human Services Federal Program Names: Health Center Program Cluster - Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care and COVID-19 - Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care, Grants for New and Expanded Services Under the Health Center Program, and COVID-19 - Grants for New and Expanded Services Under the Health Center Program; Grants to Provide Outpatient Early Intervention Services with Respect to HIV Disease Assistance Listing Numbers: 93.224, 93.527, and 93.918 Federal Award Identification Numbers and Years: Health Center Program Cluster: H8FCS40832 - 2021, H80CS00626 - 2022, H8CS00626 - 2023, H8LCS51759 - 2023, H8KCS49691 - 2023, and H8KCS49691 - 2024; Grants to Provide Outpatient Early Intervention Services with Respect to HIV Disease: H76HA00521 - 2023, and H76HA00521 - 2024 Criteria 1. In accordance with 2 CFR Section 200.303, Internal Controls, the nonFederal entity must: (a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonFederal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control Integrated Framework," issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 2. Under the requirements of the FFATA (Pub. L. No. 109-282), as amended by Section 6202 of Pub. L. No. 110-252, that are codified in 2 CFR Part 170, prime recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). The prime recipient is required to file a FFATA subaward report by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. Condition Health Center Program Cluster: 1. During our audit, we noted the FFATA subawards were not submitted timely to the FSRS. Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 2 0 2 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $4,153,728 $0 $4,153,728 $0 $0 Grants to Provide Outpatient Early Intervention Services with Respect to HIV Disease: 2. During our audit, we noted the evidence of review and approval was performed after the FFATA subaward was submitted to the FSRS. 3. During our audit, we noted the FFATA subawards were not submitted timely to the FSRS. Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 1 0 1 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $191,710 $0 $191,710 $0 $0 Cause Health Center Program Cluster: 1. As a result of personnel changes within the finance department, the FFATA reporting was not done timely. Grants to Provide Outpatient Early Intervention Services with Respect to HIV Disease: 2. There is no formal policy in place requiring the CFO (or designee) to review and approve the FFATA reports before submission to the FSRS. 3. As a result of personnel changes within the finance department, the FFATA reporting was not done timely. Effect or Potential Effect 1. The condition could result in key data elements inaccurately reported and/or not supported by the source documentation. 2. The FFATA subawards were not submitted timely to the FSRS. Questioned Costs None. Context Health Center Program Cluster: Two exceptions from a statistically valid sample of two. Grants to Provide Outpatient Early Intervention Services with Respect to HIV Disease: One exception from a statistically valid sample of one. Identification as Repeat Finding Health Center Program Cluster: 1. Yes (see prior year finding number 2023-002) Recommendation Health Center Program Cluster: 1. We recommend that management create an e-mail reminder or other alert mechanism and implement controls to ensure compliance with the reporting requirements under FFATA. Grants to Provide Outpatient Early Intervention Services with Respect to HIV Disease: 2. We recommend that all FFATA reports be reviewed and approved by the CFO or designee before submission to FSRS and evidence of approval be maintained. 3. We recommend that management create an e-mail reminder or other alert mechanism and implement controls to ensure compliance with the reporting requirements under FFATA. Views of Responsible Officials Health Center Program Cluster: 1. BCHN has created a policy regarding the FFATA reporting process. In this process the Electronic Handbook (EHB) is reviewed weekly to ensure that if new awarded funding is released, BCHN is alerted to the need to complete the FFATA report. BCHN has created a spreadsheet to track all the awarded funding and due dates for FFATA reports. Every month, at the board meeting, the spreadsheet is presented to the board with any new awarded funding and when the FFATA report is completed. Grants to Provide Outpatient Early Intervention Services with Respect to HIV Disease: 2. BCHN has begun a process where the FFATA report is put together by the Finance Manager and reviewed and signed off by the CFO before submitting the report. 3. BCHN has created a policy regarding the FFATA reporting process. In this process the Electronic Handbook (EHB) is reviewed weekly to ensure that if new awarded funding is released, BCHN is alerted to the need to complete the FFATA report. BCHN has created a spreadsheet to track all the awarded funding and due dates for FFATA reports. Every month, at the board meeting, the spreadsheet is presented to the board with any new awarded funding and when the FFATA report is completed.
Finding 2024-003 - Activities Allowed or Unallowed and Allowable Costs/Cost Principles - Significant Deficiency Name of Federal Agency: U.S. Department of Health and Human Services Federal Program Names: Health Center Program Cluster - Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care and COVID-19 - Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care and Grants for New and Expanded Services Under the Health Center Program and COVID-19 - Grants for New and Expanded Services Under the Health Center Program Assistance Listing Numbers: 93.224 and 93.527 Federal Award Identification Numbers and Years: H8FCS40832 - 2021, H80CS00626 - 2022, H8CS00626 - 2023, H8LCS51759 - 2023, H8KCS49691 - 2023, H8KCS49691 - 2024 Criteria In accordance with 2 CFR Section 200.303, Internal Controls, the nonFederal entity must: (a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonFederal entity is managing the Federal award in compliance with federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control Integrated Framework," issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition During our audit, we noted that there was no evidence, such as a signature, evidencing review and approval by a direct supervisor of the timesheets and time and effort reports were not done. Cause There is no formal policy requiring timesheets and time and effort reports be approved by a direct supervisor and evidence of approval retained. Effect or Potential Effect The condition could result in inaccuracies in the allocation of salaries to the federal grants or unallowable costs being charged. Questioned Costs None. Context Two exceptions from a statistically valid sample of two. Identification as Repeat Finding Yes (see prior year finding number 2023-004) Recommendation We recommend that management put in place a formal policy requiring all timesheets be approved by a direct supervisor and that evidence of that approval be retained. We also recommend a time and effort report be done for every employee and be approved by a direct supervisor and that evidence of the approval be retained. Views of Responsible Officials BCHN has put together a training program for employees to ensure that timecards are reviewed and approved by both the employee and the supervisor on a bi-weekly basis. Before payroll is processed, approvals by employees and supervisors will be checked. HR will provide a monthly time and effort report to the finance team. This report will provide total number of hours worked by each employee for each assigned cost center.
Finding 2024-004 - Period of Performance - Significant Deficiency Name of Federal Agency: U.S. Department of Health and Human Services Federal Program Names: Health Center Program Cluster - Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care and COVID-19 - Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care and Grants for New and Expanded Services Under the Health Center Program and COVID-19 - Grants for New and Expanded Services Under the Health Center Program Assistance Listing Numbers: 93.224 and 93.527 Federal Award Identification Numbers and Years: H8FCS40832 - 2021, H80CS00626 - 2022, H8CS00626 - 2023, H8LCS51759 - 2023, H8KCS49691 - 2023, H8KCS49691 - 2024 Criteria In accordance with 2 CFR Section 200.303, Internal Controls, the nonFederal entity must: (a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonFederal entity is managing the Federal award in compliance with federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control Integrated Framework," issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition During our audit, we noted that there was no evidence, such as a signature, evidencing review and approval by a direct supervisor of the timesheets and time and effort reports were not done. Cause There is no formal policy requiring timesheets and time and effort reports be approved by a direct supervisor and evidence of approval retained. Effect or Potential Effect The condition could result in inaccuracies in the allocation of salaries to the federal grants or costs not incurred within the period of performance. Questioned Costs None. Context Two exceptions from a statistically valid sample of two. Identification as Repeat Finding This finding is not a repeat finding. Recommendation We recommend that management put in place a formal policy requiring all timesheets be approved by a direct supervisor and that evidence of that approval be retained. We also recommend a time and effort report be done for every employee and be approved by a direct supervisor and that evidence of the approval be retained. Views of Responsible Officials BCHN has put together a training program for employees to ensure that timecards are reviewed and approved by both the employee and the supervisor on a bi-weekly basis. Before payroll is processed, approvals by employees and supervisors will be checked. HR will provide a monthly time and effort report to the finance team. This report will provide total number of hours worked by each employee for each assigned cost center.
Finding 2024-001 - Reporting: Federal Funding Accountability and Transparency Act ("FFATA") - Significant Deficiency Name of Federal Agency: U.S. Department of Health and Human Services Federal Program Names: Health Center Program Cluster - Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care and COVID-19 - Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care, Grants for New and Expanded Services Under the Health Center Program, and COVID-19 - Grants for New and Expanded Services Under the Health Center Program; Grants to Provide Outpatient Early Intervention Services with Respect to HIV Disease Assistance Listing Numbers: 93.224, 93.527, and 93.918 Federal Award Identification Numbers and Years: Health Center Program Cluster: H8FCS40832 - 2021, H80CS00626 - 2022, H8CS00626 - 2023, H8LCS51759 - 2023, H8KCS49691 - 2023, and H8KCS49691 - 2024; Grants to Provide Outpatient Early Intervention Services with Respect to HIV Disease: H76HA00521 - 2023, and H76HA00521 - 2024 Criteria 1. In accordance with 2 CFR Section 200.303, Internal Controls, the nonFederal entity must: (a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonFederal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control Integrated Framework," issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 2. Under the requirements of the FFATA (Pub. L. No. 109-282), as amended by Section 6202 of Pub. L. No. 110-252, that are codified in 2 CFR Part 170, prime recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). The prime recipient is required to file a FFATA subaward report by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. Condition Health Center Program Cluster: 1. During our audit, we noted the FFATA subawards were not submitted timely to the FSRS. Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 2 0 2 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $4,153,728 $0 $4,153,728 $0 $0 Grants to Provide Outpatient Early Intervention Services with Respect to HIV Disease: 2. During our audit, we noted the evidence of review and approval was performed after the FFATA subaward was submitted to the FSRS. 3. During our audit, we noted the FFATA subawards were not submitted timely to the FSRS. Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 1 0 1 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $191,710 $0 $191,710 $0 $0 Cause Health Center Program Cluster: 1. As a result of personnel changes within the finance department, the FFATA reporting was not done timely. Grants to Provide Outpatient Early Intervention Services with Respect to HIV Disease: 2. There is no formal policy in place requiring the CFO (or designee) to review and approve the FFATA reports before submission to the FSRS. 3. As a result of personnel changes within the finance department, the FFATA reporting was not done timely. Effect or Potential Effect 1. The condition could result in key data elements inaccurately reported and/or not supported by the source documentation. 2. The FFATA subawards were not submitted timely to the FSRS. Questioned Costs None. Context Health Center Program Cluster: Two exceptions from a statistically valid sample of two. Grants to Provide Outpatient Early Intervention Services with Respect to HIV Disease: One exception from a statistically valid sample of one. Identification as Repeat Finding Health Center Program Cluster: 1. Yes (see prior year finding number 2023-002) Recommendation Health Center Program Cluster: 1. We recommend that management create an e-mail reminder or other alert mechanism and implement controls to ensure compliance with the reporting requirements under FFATA. Grants to Provide Outpatient Early Intervention Services with Respect to HIV Disease: 2. We recommend that all FFATA reports be reviewed and approved by the CFO or designee before submission to FSRS and evidence of approval be maintained. 3. We recommend that management create an e-mail reminder or other alert mechanism and implement controls to ensure compliance with the reporting requirements under FFATA. Views of Responsible Officials Health Center Program Cluster: 1. BCHN has created a policy regarding the FFATA reporting process. In this process the Electronic Handbook (EHB) is reviewed weekly to ensure that if new awarded funding is released, BCHN is alerted to the need to complete the FFATA report. BCHN has created a spreadsheet to track all the awarded funding and due dates for FFATA reports. Every month, at the board meeting, the spreadsheet is presented to the board with any new awarded funding and when the FFATA report is completed. Grants to Provide Outpatient Early Intervention Services with Respect to HIV Disease: 2. BCHN has begun a process where the FFATA report is put together by the Finance Manager and reviewed and signed off by the CFO before submitting the report. 3. BCHN has created a policy regarding the FFATA reporting process. In this process the Electronic Handbook (EHB) is reviewed weekly to ensure that if new awarded funding is released, BCHN is alerted to the need to complete the FFATA report. BCHN has created a spreadsheet to track all the awarded funding and due dates for FFATA reports. Every month, at the board meeting, the spreadsheet is presented to the board with any new awarded funding and when the FFATA report is completed.
Finding 2024-003 - Activities Allowed or Unallowed and Allowable Costs/Cost Principles - Significant Deficiency Name of Federal Agency: U.S. Department of Health and Human Services Federal Program Names: Health Center Program Cluster - Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care and COVID-19 - Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care and Grants for New and Expanded Services Under the Health Center Program and COVID-19 - Grants for New and Expanded Services Under the Health Center Program Assistance Listing Numbers: 93.224 and 93.527 Federal Award Identification Numbers and Years: H8FCS40832 - 2021, H80CS00626 - 2022, H8CS00626 - 2023, H8LCS51759 - 2023, H8KCS49691 - 2023, H8KCS49691 - 2024 Criteria In accordance with 2 CFR Section 200.303, Internal Controls, the nonFederal entity must: (a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonFederal entity is managing the Federal award in compliance with federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control Integrated Framework," issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition During our audit, we noted that there was no evidence, such as a signature, evidencing review and approval by a direct supervisor of the timesheets and time and effort reports were not done. Cause There is no formal policy requiring timesheets and time and effort reports be approved by a direct supervisor and evidence of approval retained. Effect or Potential Effect The condition could result in inaccuracies in the allocation of salaries to the federal grants or unallowable costs being charged. Questioned Costs None. Context Two exceptions from a statistically valid sample of two. Identification as Repeat Finding Yes (see prior year finding number 2023-004) Recommendation We recommend that management put in place a formal policy requiring all timesheets be approved by a direct supervisor and that evidence of that approval be retained. We also recommend a time and effort report be done for every employee and be approved by a direct supervisor and that evidence of the approval be retained. Views of Responsible Officials BCHN has put together a training program for employees to ensure that timecards are reviewed and approved by both the employee and the supervisor on a bi-weekly basis. Before payroll is processed, approvals by employees and supervisors will be checked. HR will provide a monthly time and effort report to the finance team. This report will provide total number of hours worked by each employee for each assigned cost center.
Finding 2024-004 - Period of Performance - Significant Deficiency Name of Federal Agency: U.S. Department of Health and Human Services Federal Program Names: Health Center Program Cluster - Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care and COVID-19 - Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care and Grants for New and Expanded Services Under the Health Center Program and COVID-19 - Grants for New and Expanded Services Under the Health Center Program Assistance Listing Numbers: 93.224 and 93.527 Federal Award Identification Numbers and Years: H8FCS40832 - 2021, H80CS00626 - 2022, H8CS00626 - 2023, H8LCS51759 - 2023, H8KCS49691 - 2023, H8KCS49691 - 2024 Criteria In accordance with 2 CFR Section 200.303, Internal Controls, the nonFederal entity must: (a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonFederal entity is managing the Federal award in compliance with federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control Integrated Framework," issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition During our audit, we noted that there was no evidence, such as a signature, evidencing review and approval by a direct supervisor of the timesheets and time and effort reports were not done. Cause There is no formal policy requiring timesheets and time and effort reports be approved by a direct supervisor and evidence of approval retained. Effect or Potential Effect The condition could result in inaccuracies in the allocation of salaries to the federal grants or costs not incurred within the period of performance. Questioned Costs None. Context Two exceptions from a statistically valid sample of two. Identification as Repeat Finding This finding is not a repeat finding. Recommendation We recommend that management put in place a formal policy requiring all timesheets be approved by a direct supervisor and that evidence of that approval be retained. We also recommend a time and effort report be done for every employee and be approved by a direct supervisor and that evidence of the approval be retained. Views of Responsible Officials BCHN has put together a training program for employees to ensure that timecards are reviewed and approved by both the employee and the supervisor on a bi-weekly basis. Before payroll is processed, approvals by employees and supervisors will be checked. HR will provide a monthly time and effort report to the finance team. This report will provide total number of hours worked by each employee for each assigned cost center.
Finding 2024-001 - Reporting: Federal Funding Accountability and Transparency Act ("FFATA") - Significant Deficiency Name of Federal Agency: U.S. Department of Health and Human Services Federal Program Names: Health Center Program Cluster - Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care and COVID-19 - Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care, Grants for New and Expanded Services Under the Health Center Program, and COVID-19 - Grants for New and Expanded Services Under the Health Center Program; Grants to Provide Outpatient Early Intervention Services with Respect to HIV Disease Assistance Listing Numbers: 93.224, 93.527, and 93.918 Federal Award Identification Numbers and Years: Health Center Program Cluster: H8FCS40832 - 2021, H80CS00626 - 2022, H8CS00626 - 2023, H8LCS51759 - 2023, H8KCS49691 - 2023, and H8KCS49691 - 2024; Grants to Provide Outpatient Early Intervention Services with Respect to HIV Disease: H76HA00521 - 2023, and H76HA00521 - 2024 Criteria 1. In accordance with 2 CFR Section 200.303, Internal Controls, the nonFederal entity must: (a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the nonFederal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control Integrated Framework," issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 2. Under the requirements of the FFATA (Pub. L. No. 109-282), as amended by Section 6202 of Pub. L. No. 110-252, that are codified in 2 CFR Part 170, prime recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). The prime recipient is required to file a FFATA subaward report by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. Condition Health Center Program Cluster: 1. During our audit, we noted the FFATA subawards were not submitted timely to the FSRS. Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 2 0 2 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $4,153,728 $0 $4,153,728 $0 $0 Grants to Provide Outpatient Early Intervention Services with Respect to HIV Disease: 2. During our audit, we noted the evidence of review and approval was performed after the FFATA subaward was submitted to the FSRS. 3. During our audit, we noted the FFATA subawards were not submitted timely to the FSRS. Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 1 0 1 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $191,710 $0 $191,710 $0 $0 Cause Health Center Program Cluster: 1. As a result of personnel changes within the finance department, the FFATA reporting was not done timely. Grants to Provide Outpatient Early Intervention Services with Respect to HIV Disease: 2. There is no formal policy in place requiring the CFO (or designee) to review and approve the FFATA reports before submission to the FSRS. 3. As a result of personnel changes within the finance department, the FFATA reporting was not done timely. Effect or Potential Effect 1. The condition could result in key data elements inaccurately reported and/or not supported by the source documentation. 2. The FFATA subawards were not submitted timely to the FSRS. Questioned Costs None. Context Health Center Program Cluster: Two exceptions from a statistically valid sample of two. Grants to Provide Outpatient Early Intervention Services with Respect to HIV Disease: One exception from a statistically valid sample of one. Identification as Repeat Finding Health Center Program Cluster: 1. Yes (see prior year finding number 2023-002) Recommendation Health Center Program Cluster: 1. We recommend that management create an e-mail reminder or other alert mechanism and implement controls to ensure compliance with the reporting requirements under FFATA. Grants to Provide Outpatient Early Intervention Services with Respect to HIV Disease: 2. We recommend that all FFATA reports be reviewed and approved by the CFO or designee before submission to FSRS and evidence of approval be maintained. 3. We recommend that management create an e-mail reminder or other alert mechanism and implement controls to ensure compliance with the reporting requirements under FFATA. Views of Responsible Officials Health Center Program Cluster: 1. BCHN has created a policy regarding the FFATA reporting process. In this process the Electronic Handbook (EHB) is reviewed weekly to ensure that if new awarded funding is released, BCHN is alerted to the need to complete the FFATA report. BCHN has created a spreadsheet to track all the awarded funding and due dates for FFATA reports. Every month, at the board meeting, the spreadsheet is presented to the board with any new awarded funding and when the FFATA report is completed. Grants to Provide Outpatient Early Intervention Services with Respect to HIV Disease: 2. BCHN has begun a process where the FFATA report is put together by the Finance Manager and reviewed and signed off by the CFO before submitting the report. 3. BCHN has created a policy regarding the FFATA reporting process. In this process the Electronic Handbook (EHB) is reviewed weekly to ensure that if new awarded funding is released, BCHN is alerted to the need to complete the FFATA report. BCHN has created a spreadsheet to track all the awarded funding and due dates for FFATA reports. Every month, at the board meeting, the spreadsheet is presented to the board with any new awarded funding and when the FFATA report is completed.
FINDING 2024-002 Subject: Economic Development Cluster - Reporting Federal Agency: Department of Commerce Federal Program: Economic Adjustment Assistance Assistance Listings Number: 11.307 Federal Award Number and Year (or Other Identifying Number): 06-79-06420 Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Condition and Context An effective system of internal controls was not in place at the City in order to ensure compliance with the grant agreement and the reporting compliance requirement. The grant agreement for the City's construction project states that the City is to submit a Federal Financial Report (SF-425) on a semi-annual basis. The SF-425 report includes, among other line items: cash receipts, cash disbursements, cash on hand, total federal funds authorized, and total recipient share required. Both of the submitted SF-425 reports were tested. Additionally, the City was required to submit progress reports on a quarterly basis. Two of the quarterly reports were selected for testing. Both the SF-425 reports and the quarterly progress reports were prepared and submitted by one employee of the City. Evidence of an established internal control over the reports tested was not available for audit. The data submitted in the SF-425 report submitted by the City for the reporting period ending on September 30, 2024, contained the following errors: Cash receipts were understated by $1,037,155. INDIANA STATE BOARD OF ACCOUNTS 19 CITY OF KOKOMO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cash disbursements were understated by $1,037,155. The lack of internal controls and noncompliance was isolated to the award 06-79-06420, EDA-Davis Road construction project. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337): (1) Identification, in its accounts, 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 and year, name of the Federal agency, and name of the pass-through entity, if any. (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. If a Federal awarding agency requires reporting on an accrual basis from a recipient that maintains its records on other than an accrual basis, the recipient must not be required to establish an accrual accounting system. This recipient may develop accrual data for its reports on the basis of an analysis of the documentation on hand. . . . (3) Records that identify adequately the source and application of funds for federallyfunded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. . . ." Cause Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the City's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. The errors were due to federal reimbursements not being included as cash receipts and cash disbursements in the SF-425 reports. INDIANA STATE BOARD OF ACCOUNTS 20 CITY OF KOKOMO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls over reporting, the City could not ensure that the reports submitted were accurate. In addition, not meeting the Economic Development Cluster reporting requirements increases the likelihood that the public will not have access to transparent and accurate information regarding expenditures of federal awards. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the City design and implement a proper system of internal controls, including policies and procedures, to ensure that the City provides the Department of Commerce with complete and accurate information for the SF-425 and quarterly reports. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-003 Subject: CDBG - Entitlement/Special Purpose Grants Cluster - Internal Control Federal Agency: Department of Housing and Urban Development Federal Programs: Community Development Block Grants/Entitlement Grants, COVID-19 Community Development Block Grants/Entitlement Grants Assistance Listings Number: 14.218 Federal Award Numbers and Years (or Other Identifying Numbers): B11MN180005, B21MC180005, B22MC180005, B23MC180005, B20MW180005 Compliance Requirement: Reporting Audit Finding: Significant Deficiency Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-003. Condition and Context An effective internal control system, which would include segregation of duties, was not in place at the City in order to ensure compliance with requirements related to the grant agreement and the Reporting compliance requirement. Recipients are required to submit FFATA (Federal Funding Accountability and Transparency Act) Reports that are input into the FSRS (Federal Subaward Reporting System) database based on subrecipient agreements. The City did not have an oversight or review process in place to ensure the required reports were submitted timely, accurately, and completely. The reports were generated and submitted by one individual, without a review or oversight process to detect and correct errors prior to submission. The lack of internal controls was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause The City's management did not have properly designed internal controls in place to review reports prior to submission. INDIANA STATE BOARD OF ACCOUNTS 22 CITY OF GARY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls over reporting, the City cannot ensure that the reports submitted are materially accurate and correct. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the management of the City design and implement a proper system of internal controls, including a segregation of duties, to ensure the accuracy of the FFATA Reports. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-003 Subject: CDBG - Entitlement/Special Purpose Grants Cluster - Internal Control Federal Agency: Department of Housing and Urban Development Federal Programs: Community Development Block Grants/Entitlement Grants, COVID-19 Community Development Block Grants/Entitlement Grants Assistance Listings Number: 14.218 Federal Award Numbers and Years (or Other Identifying Numbers): B11MN180005, B21MC180005, B22MC180005, B23MC180005, B20MW180005 Compliance Requirement: Reporting Audit Finding: Significant Deficiency Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-003. Condition and Context An effective internal control system, which would include segregation of duties, was not in place at the City in order to ensure compliance with requirements related to the grant agreement and the Reporting compliance requirement. Recipients are required to submit FFATA (Federal Funding Accountability and Transparency Act) Reports that are input into the FSRS (Federal Subaward Reporting System) database based on subrecipient agreements. The City did not have an oversight or review process in place to ensure the required reports were submitted timely, accurately, and completely. The reports were generated and submitted by one individual, without a review or oversight process to detect and correct errors prior to submission. The lack of internal controls was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause The City's management did not have properly designed internal controls in place to review reports prior to submission. INDIANA STATE BOARD OF ACCOUNTS 22 CITY OF GARY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls over reporting, the City cannot ensure that the reports submitted are materially accurate and correct. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the management of the City design and implement a proper system of internal controls, including a segregation of duties, to ensure the accuracy of the FFATA Reports. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-004 Subject: Congressionally Recommended Awards - Procurement and Suspension and Debarment Federal Agency: Department of Justice Federal Program: Congressionally Recommended Awards Assistance Listings Number: 16.753 Federal Award Number and Year (or Other Identifying Number): FY2024 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context Prior to entering into subawards and covered transactions with the award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (e.g., grant agreement) that are expended to equal or exceed $25,000 and all subawards. The verification is to be done by checking the System for Award Management (SAM) Excluded Parties List System (EPLS), collecting a certification from the person or entity, or adding a clause or condition to the covered transaction with that person or entity. One covered transaction paid from the award funds during the audit period was identified and tested. The covered transaction, totaling $999,998, did not include the appropriate provisions in the contract, nor did the City require a certification or check the SAM EPLS to ensure the entity was not suspended or debarred prior to making payment. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 23 CITY OF GARY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management of the City did not follow their formalized suspension and debarment policy to ensure procedures related to suspension and debarment were in place and followed. Effect Without the proper implementation of an effectively designed system of internal controls, the City could not ensure the vendors paid with federal funds were eligible to participate in federal programs. Any program funds the City used to pay vendors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the City establish a proper system of internal controls and follow policies and procedures to ensure contractors and subrecipients, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into contracts or subawards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-005 Subject: Congressionally Recommended Awards - Internal Control Federal Agency: Department of Justice Federal Program: Congressionally Recommended Awards Assistance Listings Number: 16.753 Federal Award Number and Year (or Other Identifying Number): FY2024 Compliance Requirement: Reporting Audit Finding: Material Weakness Condition and Context An effective internal control system, which would include segregation of duties, was not in place at the City in order to ensure compliance with requirements related to the grant agreement and the Reporting compliance requirement. Recipients are required to submit semiannual performance reports along with quarterly financial reports based on grant activity. The City did not have an oversight or review process in place to ensure the required reports were submitted timely, accurately, and completely. The reports were generated and submitted by one individual, without a review or oversight process to detect and correct errors prior to submission. The lack of internal controls was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause The City's management did not have properly designed internal controls in place to review reports prior to submission. Effect Without the proper implementation of an effectively designed system of internal controls over reporting, the City cannot ensure that the reports submitted are materially accurate and correct. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 25 CITY OF GARY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that the management of the City design and implement a proper system of internal controls, including a segregation of duties, to ensure the accuracy of the semiannual performance reports and quarterly financial reports. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-006 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY2023 Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Condition and Context Recipients are required to submit quarterly or annual Project and Expenditure (P&E) reports to the U.S. Department of the Treasury (Treasury). The reporting periods, as well as the respective due dates, are based upon type of recipient and its population, as well as the recipient's allocation amount. Information to be reported includes projects funded, expenditures, and contracts for the appropriate reporting period. The City was classified as a metropolitan city with a population below 250,000 residents that received an allocation of more than $10 million in COVID-19 - Coronavirus State and Local Fiscal Recovery Funds. The quarterly reports were to cover one calendar quarter and must be submitted to the Treasury by the last day of the month following the end of the period covered. The City submitted all required P&E reports during the audit period. The internal controls in place were not effective and did not prevent, or detect and correct, errors in the P&E reports prior to submission. In a test of two of the four submitted reports, errors were identified as noted below: Quarter 2 report (April 1, 2024 to June 30, 2024) • The Total Cumulative Expenditures reported were understated by $2,185,409. Quarter 3 report (July 1, 2024 to September 30, 2024) • The Total Cumulative Expenditures reported were understated by $2,366,082. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 26 CITY OF GARY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.328 states: "Unless otherwise approved by OMB, the Federal awarding agency must solicit only the OMBapproved governmentwide data elements for collection of financial information (at time of publication the Federal Financial Report or such future, OMB-approved, governmentwide data elements available from the OMB-designated standards lead. This information must be collected with the frequency required by the terms and conditions of the Federal award, but no less frequently than annually nor more frequently 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, and preferably in coordination with performance reporting. The Federal awarding agency must use OMBapproved common information collections, as applicable, when providing financial and performance reporting information." 31 CFR 35.4(c) states: "Reporting and requests for other information. During the period of performance, recipients shall provide to the Secretary or her delegate, as applicable, periodic reports providing detailed accounting of the uses of funds, modifications to a State or Territory's tax revenue sources, and such other information as the Secretary or her delegate, as applicable, may require for the administration of this section. In addition to regular reporting requirements, the Secretary may request other additional information as may be necessary or appropriate, including as may be necessary to prevent evasions of the requirements of this subpart. False statements or claims made to the Secretary may result in criminal, civil, or administrative sanctions, including fines, imprisonment, civil damages and penalties, debarment from participating in Federal awards or contracts, and/or any other remedy available by law." Cause The City's management did not have effective internal controls in place to ensure proper amounts were reported prior to submission. A consultant prepared the reports based on calculations from a spreadsheet, which did not agree to the City's ledgers due to timing and reconciling differences. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of federal funding to the City. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 27 CITY OF GARY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that management of the City strengthen its system of internal controls over the preparation and review of federal reports to ensure appropriate reviews, approvals, and oversight are effective in preventing, or detecting and correcting, noncompliance. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Criteria: Per 2 CFR 200.303, non-Federal entities must 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. Controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” (Green Book) and the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: During the audit, we noted that the Organization lacked documented internal controls over compliance in several key areas, including disbursements/expenditures, payroll, and progress reporting. Specifically, there was insufficient evidence of review and approval processes during the period from the beginning of the fiscal year through March 2024. In April 2024, the Organization implemented written policies and formalized internal controls; however, these were not retroactively applied to transactions prior to that date. Cause: The Organization had not previously developed or implemented formal written policies and procedures to document control activities, such as review and approval of expenditures and programmatic reporting, due in part to limited staffing and evolving compliance infrastructure. Effect: The absence of documented internal controls increased the risk of noncompliance with Federal program requirements related to allowable costs, payroll documentation, and performance reporting. Questioned Cost: None identified. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Organization continue to enforce and refine the internal controls implemented in April 2024 to ensure consistent documentation of review and approval for expenditures, payroll, and reporting. Furthermore, we encourage management to conduct periodic internal reviews to confirm that controls are functioning as intended across all departments handling Federal awards. Views of Responsible Officials and Planned Corrective Action (unaudited): See Corrective Action Plan.
Criteria or Specific Requirement: Per 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. Condition: The required SF-271 report was not submitted timely and was submitted after being requested for the audit. The required SF-425 report was not accurately completed and not submitted. Questioned Costs: None. Context: The Town did not submit the required grant reporting in a timely manner. Cause: The Town does not have adequate policies in place to ensure accurate and timely financial reporting for federal awards. Effect: The Town was not in compliance with the financial reporting requirements. Repeat Finding: No. Recommendation: The Town should continue its efforts to strengthen internal controls to ensure continuous monitoring and review of project obligations resulting in reports that are submitted in compliance with the grant requirements. Views of Responsible Officials and Planned Corrective Actions: There is no disagreement with the finding. The Town’s grants team will continue to work with departments and any outside consultants to ensure reporting is completed timely and accurately.
Criteria or Specific Requirement: Per 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. Condition: The required SF-271 report was not submitted timely and was submitted after being requested for the audit. The required SF-425 report was not accurately completed and not submitted. Questioned Costs: None. Context: The Town did not submit the required grant reporting in a timely manner. Cause: The Town does not have adequate policies in place to ensure accurate and timely financial reporting for federal awards. Effect: The Town was not in compliance with the financial reporting requirements. Repeat Finding: No. Recommendation: The Town should continue its efforts to strengthen internal controls to ensure continuous monitoring and review of project obligations resulting in reports that are submitted in compliance with the grant requirements. Views of Responsible Officials and Planned Corrective Actions: There is no disagreement with the finding. The Town’s grants team will continue to work with departments and any outside consultants to ensure reporting is completed timely and accurately.