2024-001: Internal Controls over Compliance for Allowable Costs Federal Grantor: U.S. Department of Health and Human Services Pass-Through Grantor: Missouri Department of Health and Senior Services Federal Assistance Listing Number: 93.044/93.045/93.053 Program Title: Aging Cluster Pass-through Entity Identifying Number: ERS1052004 Award Year: 2024 Questioned Costs: None Criteria: 2 CFR 200.303 states, “The recipient and subrecipient must: (a) Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” Condition: During our audit, we noted instances of deviations from documented internal control policies and management override of internal controls: • The former Executive Director implemented a 36-hour work week policy by closing the administrative offices at noon every Friday effective January 1, 2024. However, the Agency’s Personnel Policies and Administrative Procedures, Guidelines and Benefits manual was not updated to reflect this change from a 40-hour to a 36-hour work week. Employees recorded 4 hours of “Other Paid Leave” on their timesheets every Friday for the time the offices were closed. We also noted that employees recorded “Other Paid Leave” for the Friday after Thanksgiving during the fiscal year. This was not one of the officially recognized paid holidays in the adopted policy manual. • The Agency did not follow the prescribed procedures for reviewing and paying credit card charges during the year. The Agency’s Accounting Manual calls for all receipts for credit card charges to be submitted to the CFO to verify the charges on the monthly statement prior to paying the credit card bill. However, during the fiscal year there were instances noted where the former Executive Director made credit card payments online, circumventing the Agency’s accounts payable process. The Accounting Manual also prohibits unauthorized charges to the company credit card, such as personal expenditures. We noted $3,171 of personal charges made by the former Executive Director to the company credit card in the general ledger. These charges were recorded as prepaid expenses in the accounting system and therefore were not charged to federal awards. The former CFO would reduce the Executive Director’s paycheck to reimburse the company for any personal charges noted on the credit card. Cause: The November 2023 Board minutes mention the Executive Director’s plan for going to a 36-hour work week effective January 1, 2024, however, the Board did not approve the policy at that time and the Agency’s personnel policy manual was not updated and approved by the Board. The June 2024 Board minutes reflect an approved motion by the Board to approve the 36-hour work week and the policy manual was updated to reflect the 36-hour work week in October 2024. The revised policy manual also reflects 14 paid holidays, which was increased from the 11 paid holidays noted in the prior version of the manual. During the fiscal year, there was management override of the prescribed internal controls regarding charges to the company credit card. Effect: Internal controls over compliance that can prevent and detect noncompliance with federal statutes, regulations and the terms and conditions of the Agency’s federal awards are necessary to ensure that only allowable and authorized expenses are charged to federal awards. Recommendation: We recommend that the Agency implement procedures to ensure that the prescribed internal controls, policies and procedures officially adopted by the Board of Directors are implemented and consistently followed.
2024-001: Internal Controls over Compliance for Allowable Costs Federal Grantor: U.S. Department of Health and Human Services Pass-Through Grantor: Missouri Department of Health and Senior Services Federal Assistance Listing Number: 93.044/93.045/93.053 Program Title: Aging Cluster Pass-through Entity Identifying Number: ERS1052004 Award Year: 2024 Questioned Costs: None Criteria: 2 CFR 200.303 states, “The recipient and subrecipient must: (a) Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” Condition: During our audit, we noted instances of deviations from documented internal control policies and management override of internal controls: • The former Executive Director implemented a 36-hour work week policy by closing the administrative offices at noon every Friday effective January 1, 2024. However, the Agency’s Personnel Policies and Administrative Procedures, Guidelines and Benefits manual was not updated to reflect this change from a 40-hour to a 36-hour work week. Employees recorded 4 hours of “Other Paid Leave” on their timesheets every Friday for the time the offices were closed. We also noted that employees recorded “Other Paid Leave” for the Friday after Thanksgiving during the fiscal year. This was not one of the officially recognized paid holidays in the adopted policy manual. • The Agency did not follow the prescribed procedures for reviewing and paying credit card charges during the year. The Agency’s Accounting Manual calls for all receipts for credit card charges to be submitted to the CFO to verify the charges on the monthly statement prior to paying the credit card bill. However, during the fiscal year there were instances noted where the former Executive Director made credit card payments online, circumventing the Agency’s accounts payable process. The Accounting Manual also prohibits unauthorized charges to the company credit card, such as personal expenditures. We noted $3,171 of personal charges made by the former Executive Director to the company credit card in the general ledger. These charges were recorded as prepaid expenses in the accounting system and therefore were not charged to federal awards. The former CFO would reduce the Executive Director’s paycheck to reimburse the company for any personal charges noted on the credit card. Cause: The November 2023 Board minutes mention the Executive Director’s plan for going to a 36-hour work week effective January 1, 2024, however, the Board did not approve the policy at that time and the Agency’s personnel policy manual was not updated and approved by the Board. The June 2024 Board minutes reflect an approved motion by the Board to approve the 36-hour work week and the policy manual was updated to reflect the 36-hour work week in October 2024. The revised policy manual also reflects 14 paid holidays, which was increased from the 11 paid holidays noted in the prior version of the manual. During the fiscal year, there was management override of the prescribed internal controls regarding charges to the company credit card. Effect: Internal controls over compliance that can prevent and detect noncompliance with federal statutes, regulations and the terms and conditions of the Agency’s federal awards are necessary to ensure that only allowable and authorized expenses are charged to federal awards. Recommendation: We recommend that the Agency implement procedures to ensure that the prescribed internal controls, policies and procedures officially adopted by the Board of Directors are implemented and consistently followed.
2024-001: Internal Controls over Compliance for Allowable Costs Federal Grantor: U.S. Department of Health and Human Services Pass-Through Grantor: Missouri Department of Health and Senior Services Federal Assistance Listing Number: 93.044/93.045/93.053 Program Title: Aging Cluster Pass-through Entity Identifying Number: ERS1052004 Award Year: 2024 Questioned Costs: None Criteria: 2 CFR 200.303 states, “The recipient and subrecipient must: (a) Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” Condition: During our audit, we noted instances of deviations from documented internal control policies and management override of internal controls: • The former Executive Director implemented a 36-hour work week policy by closing the administrative offices at noon every Friday effective January 1, 2024. However, the Agency’s Personnel Policies and Administrative Procedures, Guidelines and Benefits manual was not updated to reflect this change from a 40-hour to a 36-hour work week. Employees recorded 4 hours of “Other Paid Leave” on their timesheets every Friday for the time the offices were closed. We also noted that employees recorded “Other Paid Leave” for the Friday after Thanksgiving during the fiscal year. This was not one of the officially recognized paid holidays in the adopted policy manual. • The Agency did not follow the prescribed procedures for reviewing and paying credit card charges during the year. The Agency’s Accounting Manual calls for all receipts for credit card charges to be submitted to the CFO to verify the charges on the monthly statement prior to paying the credit card bill. However, during the fiscal year there were instances noted where the former Executive Director made credit card payments online, circumventing the Agency’s accounts payable process. The Accounting Manual also prohibits unauthorized charges to the company credit card, such as personal expenditures. We noted $3,171 of personal charges made by the former Executive Director to the company credit card in the general ledger. These charges were recorded as prepaid expenses in the accounting system and therefore were not charged to federal awards. The former CFO would reduce the Executive Director’s paycheck to reimburse the company for any personal charges noted on the credit card. Cause: The November 2023 Board minutes mention the Executive Director’s plan for going to a 36-hour work week effective January 1, 2024, however, the Board did not approve the policy at that time and the Agency’s personnel policy manual was not updated and approved by the Board. The June 2024 Board minutes reflect an approved motion by the Board to approve the 36-hour work week and the policy manual was updated to reflect the 36-hour work week in October 2024. The revised policy manual also reflects 14 paid holidays, which was increased from the 11 paid holidays noted in the prior version of the manual. During the fiscal year, there was management override of the prescribed internal controls regarding charges to the company credit card. Effect: Internal controls over compliance that can prevent and detect noncompliance with federal statutes, regulations and the terms and conditions of the Agency’s federal awards are necessary to ensure that only allowable and authorized expenses are charged to federal awards. Recommendation: We recommend that the Agency implement procedures to ensure that the prescribed internal controls, policies and procedures officially adopted by the Board of Directors are implemented and consistently followed.
Cluster name: Student Financial Assistance Cluster Assistance Listings numbers and names: 84.007 Federal Supplemental Educational Opportunity Grants 84.033 Federal Work-Study Program 84.063 Federal Pell Grant Program 84.268 Federal Direct Student Loans Award numbers and year: P007A230133, P033A230133, P063P230512, P063Q230512, and P268K230512 July 1, 2023 through June 30, 2024 Federal agency: U.S. Department of Education Compliance requirement: Special tests and provisions - return of Title IV funds Questioned costs: $943 Condition—Contrary to federal regulation and the District’s policies and procedures, the District’s Financial Aid and Scholarships Department (Department) did not return $943 of Student Financial Assistance’s (SFA) Title IV funds for 1 student who received grants and loans and withdrew during a payment period or period of enrollment in which the student began attendance.1 Specifically, for 1 of 25 students tested, the District did not complete the required calculation and return the $943 unearned portion of a student’s $3,698 original Pell grant award to the U.S. Department of Education (ED) after the student withdrew from the District. Effect—The District’s not returning $943 of Title IV funds to ED resulted in Title IV funds not being spent as intended by program requirements. Further, there is an increased risk that the District may need to return additional Title IV funds to ED. For example, the Department’s Management reported that it identified an additional 81 students, or $153,318 in Title IV funds, for whom it did not perform required calculations during the period November 2023 through June 30, 2024. This includes $143,509 in Pell Grants, $5,718 in Direct Loans, $3,716 in Federal Work Study, and $375 in Federal Supplemental Educational Opportunity Grants that may not have been spent as intended by program requirements. Cause—The District’s student information system’s automated controls did not flag students who withdrew and required a return to Title IV calculation. In November 2023, the District made changes to its student information system without performing tests to ensure the automated controls were properly identifying and flagging students who withdrew. Criteria—Federal regulation and District policies and procedures require the return of Title IV funds when a recipient of Title IV grant or loan assistance withdraws from the District during a payment period or period of enrollment in which the recipient began attendance. Specifically, the District must determine the amount of Title IV aid earned by the student as of the student’s withdrawal date. If the total amount of Title IV assistance earned by the student is less than the amount that was disbursed to the student or on his or her behalf as of the date of the institution’s determination that the student withdrew, the difference must be returned to the Title IV programs (34 Code of Federal Regulations [CFR] §668.22[a][1-5]).2 Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform calculations for all students who received Title IV funds and withdrew during the period November 2023 through June 2024 and immediately return all unearned aid to ED. 2. Review and update the student information system’s automated controls to properly identify and flag all students who receive Title IV funds and withdraw from the District. 3. Test any changes made to the student information system and verify controls are operating as designed to comply with the SFA cluster’s requirements. The District’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 The Title IV programs as part of the Student Financial Assistance cluster are administered by the Department of Education (those with Assistance Listings beginning with 84) and authorized by Title IV of the Higher Education Act of 1965, as amended (HEA), and collectively are referred to as the “Title IV programs.” 2 Pima County Community College District. (2023). Pima County Community College District Policy and Procedures 2023-2024 V2. Page 253 of 272.
Cluster name: Student Financial Assistance Cluster Assistance Listings numbers and names: 84.007 Federal Supplemental Educational Opportunity Grants 84.033 Federal Work-Study Program 84.063 Federal Pell Grant Program 84.268 Federal Direct Student Loans Award numbers and year: P007A230133, P033A230133, P063P230512, P063Q230512, and P268K230512 July 1, 2023 through June 30, 2024 Federal agency: U.S. Department of Education Compliance requirement: Special tests and provisions - return of Title IV funds Questioned costs: $943 Condition—Contrary to federal regulation and the District’s policies and procedures, the District’s Financial Aid and Scholarships Department (Department) did not return $943 of Student Financial Assistance’s (SFA) Title IV funds for 1 student who received grants and loans and withdrew during a payment period or period of enrollment in which the student began attendance.1 Specifically, for 1 of 25 students tested, the District did not complete the required calculation and return the $943 unearned portion of a student’s $3,698 original Pell grant award to the U.S. Department of Education (ED) after the student withdrew from the District. Effect—The District’s not returning $943 of Title IV funds to ED resulted in Title IV funds not being spent as intended by program requirements. Further, there is an increased risk that the District may need to return additional Title IV funds to ED. For example, the Department’s Management reported that it identified an additional 81 students, or $153,318 in Title IV funds, for whom it did not perform required calculations during the period November 2023 through June 30, 2024. This includes $143,509 in Pell Grants, $5,718 in Direct Loans, $3,716 in Federal Work Study, and $375 in Federal Supplemental Educational Opportunity Grants that may not have been spent as intended by program requirements. Cause—The District’s student information system’s automated controls did not flag students who withdrew and required a return to Title IV calculation. In November 2023, the District made changes to its student information system without performing tests to ensure the automated controls were properly identifying and flagging students who withdrew. Criteria—Federal regulation and District policies and procedures require the return of Title IV funds when a recipient of Title IV grant or loan assistance withdraws from the District during a payment period or period of enrollment in which the recipient began attendance. Specifically, the District must determine the amount of Title IV aid earned by the student as of the student’s withdrawal date. If the total amount of Title IV assistance earned by the student is less than the amount that was disbursed to the student or on his or her behalf as of the date of the institution’s determination that the student withdrew, the difference must be returned to the Title IV programs (34 Code of Federal Regulations [CFR] §668.22[a][1-5]).2 Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform calculations for all students who received Title IV funds and withdrew during the period November 2023 through June 2024 and immediately return all unearned aid to ED. 2. Review and update the student information system’s automated controls to properly identify and flag all students who receive Title IV funds and withdraw from the District. 3. Test any changes made to the student information system and verify controls are operating as designed to comply with the SFA cluster’s requirements. The District’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 The Title IV programs as part of the Student Financial Assistance cluster are administered by the Department of Education (those with Assistance Listings beginning with 84) and authorized by Title IV of the Higher Education Act of 1965, as amended (HEA), and collectively are referred to as the “Title IV programs.” 2 Pima County Community College District. (2023). Pima County Community College District Policy and Procedures 2023-2024 V2. Page 253 of 272.
Cluster name: Student Financial Assistance Cluster Assistance Listings numbers and names: 84.007 Federal Supplemental Educational Opportunity Grants 84.033 Federal Work-Study Program 84.063 Federal Pell Grant Program 84.268 Federal Direct Student Loans Award numbers and year: P007A230133, P033A230133, P063P230512, P063Q230512, and P268K230512 July 1, 2023 through June 30, 2024 Federal agency: U.S. Department of Education Compliance requirement: Special tests and provisions - return of Title IV funds Questioned costs: $943 Condition—Contrary to federal regulation and the District’s policies and procedures, the District’s Financial Aid and Scholarships Department (Department) did not return $943 of Student Financial Assistance’s (SFA) Title IV funds for 1 student who received grants and loans and withdrew during a payment period or period of enrollment in which the student began attendance.1 Specifically, for 1 of 25 students tested, the District did not complete the required calculation and return the $943 unearned portion of a student’s $3,698 original Pell grant award to the U.S. Department of Education (ED) after the student withdrew from the District. Effect—The District’s not returning $943 of Title IV funds to ED resulted in Title IV funds not being spent as intended by program requirements. Further, there is an increased risk that the District may need to return additional Title IV funds to ED. For example, the Department’s Management reported that it identified an additional 81 students, or $153,318 in Title IV funds, for whom it did not perform required calculations during the period November 2023 through June 30, 2024. This includes $143,509 in Pell Grants, $5,718 in Direct Loans, $3,716 in Federal Work Study, and $375 in Federal Supplemental Educational Opportunity Grants that may not have been spent as intended by program requirements. Cause—The District’s student information system’s automated controls did not flag students who withdrew and required a return to Title IV calculation. In November 2023, the District made changes to its student information system without performing tests to ensure the automated controls were properly identifying and flagging students who withdrew. Criteria—Federal regulation and District policies and procedures require the return of Title IV funds when a recipient of Title IV grant or loan assistance withdraws from the District during a payment period or period of enrollment in which the recipient began attendance. Specifically, the District must determine the amount of Title IV aid earned by the student as of the student’s withdrawal date. If the total amount of Title IV assistance earned by the student is less than the amount that was disbursed to the student or on his or her behalf as of the date of the institution’s determination that the student withdrew, the difference must be returned to the Title IV programs (34 Code of Federal Regulations [CFR] §668.22[a][1-5]).2 Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform calculations for all students who received Title IV funds and withdrew during the period November 2023 through June 2024 and immediately return all unearned aid to ED. 2. Review and update the student information system’s automated controls to properly identify and flag all students who receive Title IV funds and withdraw from the District. 3. Test any changes made to the student information system and verify controls are operating as designed to comply with the SFA cluster’s requirements. The District’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 The Title IV programs as part of the Student Financial Assistance cluster are administered by the Department of Education (those with Assistance Listings beginning with 84) and authorized by Title IV of the Higher Education Act of 1965, as amended (HEA), and collectively are referred to as the “Title IV programs.” 2 Pima County Community College District. (2023). Pima County Community College District Policy and Procedures 2023-2024 V2. Page 253 of 272.
Cluster name: Student Financial Assistance Cluster Assistance Listings numbers and names: 84.007 Federal Supplemental Educational Opportunity Grants 84.033 Federal Work-Study Program 84.063 Federal Pell Grant Program 84.268 Federal Direct Student Loans Award numbers and year: P007A230133, P033A230133, P063P230512, P063Q230512, and P268K230512 July 1, 2023 through June 30, 2024 Federal agency: U.S. Department of Education Compliance requirement: Special tests and provisions - return of Title IV funds Questioned costs: $943 Condition—Contrary to federal regulation and the District’s policies and procedures, the District’s Financial Aid and Scholarships Department (Department) did not return $943 of Student Financial Assistance’s (SFA) Title IV funds for 1 student who received grants and loans and withdrew during a payment period or period of enrollment in which the student began attendance.1 Specifically, for 1 of 25 students tested, the District did not complete the required calculation and return the $943 unearned portion of a student’s $3,698 original Pell grant award to the U.S. Department of Education (ED) after the student withdrew from the District. Effect—The District’s not returning $943 of Title IV funds to ED resulted in Title IV funds not being spent as intended by program requirements. Further, there is an increased risk that the District may need to return additional Title IV funds to ED. For example, the Department’s Management reported that it identified an additional 81 students, or $153,318 in Title IV funds, for whom it did not perform required calculations during the period November 2023 through June 30, 2024. This includes $143,509 in Pell Grants, $5,718 in Direct Loans, $3,716 in Federal Work Study, and $375 in Federal Supplemental Educational Opportunity Grants that may not have been spent as intended by program requirements. Cause—The District’s student information system’s automated controls did not flag students who withdrew and required a return to Title IV calculation. In November 2023, the District made changes to its student information system without performing tests to ensure the automated controls were properly identifying and flagging students who withdrew. Criteria—Federal regulation and District policies and procedures require the return of Title IV funds when a recipient of Title IV grant or loan assistance withdraws from the District during a payment period or period of enrollment in which the recipient began attendance. Specifically, the District must determine the amount of Title IV aid earned by the student as of the student’s withdrawal date. If the total amount of Title IV assistance earned by the student is less than the amount that was disbursed to the student or on his or her behalf as of the date of the institution’s determination that the student withdrew, the difference must be returned to the Title IV programs (34 Code of Federal Regulations [CFR] §668.22[a][1-5]).2 Further, federal regulation requires establishing and maintaining effective internal control over federal awards that provides reasonable assurance that federal programs are being managed in compliance with all applicable laws, regulations, and award terms (2 CFR §200.303). Recommendations—The Department should: 1. Perform calculations for all students who received Title IV funds and withdrew during the period November 2023 through June 2024 and immediately return all unearned aid to ED. 2. Review and update the student information system’s automated controls to properly identify and flag all students who receive Title IV funds and withdraw from the District. 3. Test any changes made to the student information system and verify controls are operating as designed to comply with the SFA cluster’s requirements. The District’s corrective action plan at the end of this report includes the views and planned corrective action of its responsible officials. We are not required to and have not audited these responses and planned corrective actions and therefore provide no assurances as to their accuracy. 1 The Title IV programs as part of the Student Financial Assistance cluster are administered by the Department of Education (those with Assistance Listings beginning with 84) and authorized by Title IV of the Higher Education Act of 1965, as amended (HEA), and collectively are referred to as the “Title IV programs.” 2 Pima County Community College District. (2023). Pima County Community College District Policy and Procedures 2023-2024 V2. Page 253 of 272.
New York City Human Resources Administration (“HRA”) Finding #: 2024-007 Funding Year(s): 9/1/2020 - 9/1/2028 HOME Investment Partnerships Program (FAL #14.239) Contract Numbers: M-20-MC-36-0204 Federal Agency: U.S. Department of Housing and Urban Development Type of Finding: Allowable Costs and Eligibility - Compliance and Internal Control (Significant Deficiency) Criteria: In accordance with 23 CFR sections 1.9, 172.11(a), 420.113(a), and 630.106(a), costs incurred under federal awards are considered allowable and reimbursable when such costs are deemed necessary and reasonable; incurred subsequent to the date of authorization to proceed and in accordance with the conditions contained in the project agreement and the plans specifications; and, not included as costs used to meet cost sharing or matching requirements, among other things. As stipulated by 24 CFR §92.209, tenant-based rental assistance (“TBRA”) may only be provided to very low- and low-income families. The participating jurisdiction must determine that the family is very low- or low-income before the assistance is provided. During the period of assistance, the participating jurisdiction must annually determine that the family continues to be low-income. Also, the maximum monthly assistance that a participating jurisdiction may pay to, or on behalf of, a family may not exceed the difference between a rent standard for the unit size established by the participating jurisdiction and 30% of the family's monthly adjusted income. Additionally, the participating jurisdiction must disapprove a lease if the rent is not reasonable, based on rents that are charged for comparable unassisted rental units. Additionally, as stipulated by 2 CFR Section 200.303, recipients of federal awards are required to establish and maintain an internal control environment that complies with either the guidance in “Standards for Internal Control in the Federal Government” (the “Green Book”) 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”) for the federal funding streams it administers. Condition/Context: The New York City Human Resources Administration (“HRA”) utilizes the Current System to assess beneficiaries’ eligibility to receive TBRA through the HOME Investment Partnerships Program (“HOME”). To assess eligibility, HRA program staff obtain income supporting documentation to determine if the household met the low-income requirement and to calculate the maximum subsidy amount to be paid by HRA. Additionally, a rent reasonableness valuation is performed which compares the current beneficiary’s rent to other rents charged for comparable units to ensure reasonableness. Upon the completion of the eligibility determination by an HRA staff member, a designated program supervisor reviews and approves the eligibility determination, subsidy amount, and tenant share within the Current System. In the prior year, a material weakness in internal controls was identified concerning incorrect TBRA payments. Our inquiries with management during the current year revealed that no improvements were made to the operating effectiveness of this internal control process. In fiscal 2024, total TBRA payments charged to the grant were $3,742,133, which is not material to the program overall. Cause/Effect: While HRA has a process in place to assess the eligibility of tenants and calculate the monthly TBRA payments on behalf of those tenants to ensure allowability of costs incurred, a comprehensive review was not consistently performed to support those determinations and calculations. As a result, costs were incurred on behalf of certain tenants that may not have met the eligibility requirements, or an incorrect amount may have been paid on their behalf. Questioned Costs: None noted. Identification as a Repeat Finding: This finding is similar to finding #2023-002, included on pages 225 through 226 of the Fiscal 2023 Single Audit report. Recommendation: We recommend that HRA strengthen their internal controls governing the eligibility determination and monthly TBRA payment calculation process, including creating a comprehensive review checklist to ensure each tenant meets every eligibility requirement and HRA’s portion of the TBRA payments are properly calculated, and that appropriate supervisory review and approval is consistently performed and documented prior to processing payments and charging costs to the grant.
New York City Housing Preservation & Development (“HPD”) Finding #: 2024-005 Funding Year(s): 7/1/2023 – 6/30/2024 Section 8 Project-Based Cluster: Section 8 Moderate Rehabilitation Single Room Occupancy (FAL #14.249) Lower Income Housing Assistance Program – Section 8 Moderate Rehabilitation (FAL #14.856) Contract Numbers: N/A Federal Agency: U.S. Department of Housing and Urban Development (“HUD”) Type of Finding: Eligibility and Reporting - Material Noncompliance and Internal Control (Material Weakness) Criteria: As stipulated by 24 CFR Section 880.603, prior to providing housing assistance payments (HAP) to participants, HPD must verify the eligibility of applicants by (a) obtaining signed applications; (b) conducting verifications of family income and other pertinent information; (c) documenting inspections and tenant certifications, as appropriate; and, (d) determining that tenant income did not exceed the maximum limit set by HUD. HPD must also reexamine family income and composition for each tenant at least once every 12 months to verify continued eligibility and adjust the HAP amount, as necessary. Further, the HUD 50058 form, titled Family Report is used by Public Housing Agencies (PHAs) to collect information on families receiving house assistance through the program and submission is required before the effective date of the annual recertification. Additionally, as stipulated by 2 CFR Section 200.303, recipients of Federal Awards are required to establish and maintain an internal control environment that complies with either the guidance in “Standards for Internal Control in the Federal Government” (the “Green Book”) 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”) for the federal funding streams it administers. Condition/Context: To assess eligibility, HPD’s policy is to conduct annual recertifications of family income and composition. As part of that process, HPD sends a recertification package to the head of household, which contains documentation that the tenant must complete for verification purposes. HPD then analyzes and verifies all information included in the recertification package to determine if the tenant is eligible to continue to receive HAPs and adjust the tenant rent and HAP amounts as necessary for the following 12-month period. The HUD 50058 form is submitted upon completion of the annual recertification to update family income, composition and rent calculations. We selected a non-statistical sample of forty (40) tenants who received HAPs under the Section 8 Project-Based Cluster during fiscal year 2024. For eighteen (18) of the tenants tested, HPD was not able to provide documentation to support that an eligibility recertification for the tenant, including a review of the HAP calculation, was performed within the previous 12 months, as required. For those eighteen (18) tenants, HPD did not submit the HUD 50058 form by the effective date of the annual recertification as required. Cause/Effect: While HPD has a process in place to assess the eligibility of tenants receiving HAPs under the Section 8 Project-Based Cluster, the reexamination of family income and composition was not consistently performed and HUD 50058 updated and submitted for each tenant at least once every 12 months to support the tenant’s continued eligibility to receive benefits through this program at the appropriate amounts. Questioned Costs: None identified. Identification as a Repeat Finding: This finding is similar to finding #2023-014, included on pages 250 and 251 of the Fiscal 2023 Single Audit report. Recommendation: We recommend that HPD strengthen their internal controls governing the eligibility requirements, including implementing a control to ensure recertifications of family income and composition are performed at least once every 12 months and the tenants HAP amount is adjusted as necessary to meet the eligibility requirements per 24 CFR sections 880.603, 881.601, 882.514, 882.808, 833.701, 884.214, 886.119, and 886.318. HUD 50058 forms should be submitted before the effective date of the annual recertification of tenants to inform HUD of updates to family income, composition and rent calculations as required.
New York City Housing Preservation & Development (“HPD”) Finding #: 2024-005 Funding Year(s): 7/1/2023 – 6/30/2024 Section 8 Project-Based Cluster: Section 8 Moderate Rehabilitation Single Room Occupancy (FAL #14.249) Lower Income Housing Assistance Program – Section 8 Moderate Rehabilitation (FAL #14.856) Contract Numbers: N/A Federal Agency: U.S. Department of Housing and Urban Development (“HUD”) Type of Finding: Eligibility and Reporting - Material Noncompliance and Internal Control (Material Weakness) Criteria: As stipulated by 24 CFR Section 880.603, prior to providing housing assistance payments (HAP) to participants, HPD must verify the eligibility of applicants by (a) obtaining signed applications; (b) conducting verifications of family income and other pertinent information; (c) documenting inspections and tenant certifications, as appropriate; and, (d) determining that tenant income did not exceed the maximum limit set by HUD. HPD must also reexamine family income and composition for each tenant at least once every 12 months to verify continued eligibility and adjust the HAP amount, as necessary. Further, the HUD 50058 form, titled Family Report is used by Public Housing Agencies (PHAs) to collect information on families receiving house assistance through the program and submission is required before the effective date of the annual recertification. Additionally, as stipulated by 2 CFR Section 200.303, recipients of Federal Awards are required to establish and maintain an internal control environment that complies with either the guidance in “Standards for Internal Control in the Federal Government” (the “Green Book”) 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”) for the federal funding streams it administers. Condition/Context: To assess eligibility, HPD’s policy is to conduct annual recertifications of family income and composition. As part of that process, HPD sends a recertification package to the head of household, which contains documentation that the tenant must complete for verification purposes. HPD then analyzes and verifies all information included in the recertification package to determine if the tenant is eligible to continue to receive HAPs and adjust the tenant rent and HAP amounts as necessary for the following 12-month period. The HUD 50058 form is submitted upon completion of the annual recertification to update family income, composition and rent calculations. We selected a non-statistical sample of forty (40) tenants who received HAPs under the Section 8 Project-Based Cluster during fiscal year 2024. For eighteen (18) of the tenants tested, HPD was not able to provide documentation to support that an eligibility recertification for the tenant, including a review of the HAP calculation, was performed within the previous 12 months, as required. For those eighteen (18) tenants, HPD did not submit the HUD 50058 form by the effective date of the annual recertification as required. Cause/Effect: While HPD has a process in place to assess the eligibility of tenants receiving HAPs under the Section 8 Project-Based Cluster, the reexamination of family income and composition was not consistently performed and HUD 50058 updated and submitted for each tenant at least once every 12 months to support the tenant’s continued eligibility to receive benefits through this program at the appropriate amounts. Questioned Costs: None identified. Identification as a Repeat Finding: This finding is similar to finding #2023-014, included on pages 250 and 251 of the Fiscal 2023 Single Audit report. Recommendation: We recommend that HPD strengthen their internal controls governing the eligibility requirements, including implementing a control to ensure recertifications of family income and composition are performed at least once every 12 months and the tenants HAP amount is adjusted as necessary to meet the eligibility requirements per 24 CFR sections 880.603, 881.601, 882.514, 882.808, 833.701, 884.214, 886.119, and 886.318. HUD 50058 forms should be submitted before the effective date of the annual recertification of tenants to inform HUD of updates to family income, composition and rent calculations as required.
New York City Housing Preservation & Development (“HPD”) Finding #: 2024-004 Funding Year(s): 7/1/2023 – 6/30/2024 Housing Voucher Cluster: Section 8 Housing Choice Vouchers (FAL #14.871) Contract Numbers: N/A Federal Agency: U.S. Department of Housing and Urban Development Type of Finding: Eligibility and Special Tests and Provisions (Utility Allowance Schedule) - Material Noncompliance and Internal Control (Material Weakness) Criteria: As stipulated by 24 CFR Section 982.201, prior to providing housing assistance payments (HAP) to participants, HPD must verify the eligibility of applicants based on their family income and composition. Per 24 CFR section 982.516, HPD must also reexamine family income and composition for each tenant at least once every 12 months to verify continued eligibility and adjust the HAP amount, as necessary. Further, as stipulated by 24 CFR Section 982.517, HPD must maintain an up-to-date utility allowance schedule and establish procedures to properly apply the updated utility allowances to each tenant’s HAP calculations as part of the annual reexamination process. Additionally, as stipulated by 2 CFR Section 200.303, recipients of Federal Awards are required to establish and maintain an internal control environment that complies with either the guidance in “Standards for Internal Control in the Federal Government” (the “Green Book”) 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”) for the federal funding streams it administers. Condition/Context: To assess eligibility, HPD’s policy is to conduct annual recertifications of family income and composition. As part of that process, HPD sends a recertification package to the head of household, which contains documentation that the tenant must complete for verification purposes. HPD then analyzes and verifies all information included in the recertification package to determine if the tenant is eligible to continue to receive HAPs and adjust the tenant rent and HAP amounts as necessary for the following 12-month period. We selected a non-statistical sample of forty (40) tenants who received HAPs under the Housing Voucher Cluster during fiscal year 2024. For thirteen (13) of the tenants tested, HPD was not able to provide documentation to support that an eligibility recertification for the tenant, including a review of the utility allowance and HAP calculation, was performed within the previous 12 months, as required. Cause/Effect: While HPD has a process in place to assess the eligibility of tenants receiving HAPs under the Housing Voucher Cluster, the reexamination of family income and composition and utility allowance was not consistently performed at least once every 12 months to support the tenant’s continued eligibility to receive benefits through this program at the appropriate amounts. Questioned Costs: None identified. Identification as a Repeat Finding: This finding is similar to finding #2023-016, included on pages 254 and 255 of the Fiscal 2023 Single Audit report. Recommendation: We recommend that HPD strengthen their internal controls governing the eligibility requirements, including implementing a control to ensure recertifications of family income and composition are performed at least once every 12 months and the tenants HAP amount and tenant utility allowance is adjusted as necessary to meet the eligibility requirements per 24 CFR sections 5.230, 5.609, 982.201 and 982.516.
New York City Housing Preservation & Development (“HPD”) Finding #: 2024-004 Funding Year(s): 7/1/2023 – 6/30/2024 Housing Voucher Cluster: Section 8 Housing Choice Vouchers (FAL #14.871) Contract Numbers: N/A Federal Agency: U.S. Department of Housing and Urban Development Type of Finding: Eligibility and Special Tests and Provisions (Utility Allowance Schedule) - Material Noncompliance and Internal Control (Material Weakness) Criteria: As stipulated by 24 CFR Section 982.201, prior to providing housing assistance payments (HAP) to participants, HPD must verify the eligibility of applicants based on their family income and composition. Per 24 CFR section 982.516, HPD must also reexamine family income and composition for each tenant at least once every 12 months to verify continued eligibility and adjust the HAP amount, as necessary. Further, as stipulated by 24 CFR Section 982.517, HPD must maintain an up-to-date utility allowance schedule and establish procedures to properly apply the updated utility allowances to each tenant’s HAP calculations as part of the annual reexamination process. Additionally, as stipulated by 2 CFR Section 200.303, recipients of Federal Awards are required to establish and maintain an internal control environment that complies with either the guidance in “Standards for Internal Control in the Federal Government” (the “Green Book”) 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”) for the federal funding streams it administers. Condition/Context: To assess eligibility, HPD’s policy is to conduct annual recertifications of family income and composition. As part of that process, HPD sends a recertification package to the head of household, which contains documentation that the tenant must complete for verification purposes. HPD then analyzes and verifies all information included in the recertification package to determine if the tenant is eligible to continue to receive HAPs and adjust the tenant rent and HAP amounts as necessary for the following 12-month period. We selected a non-statistical sample of forty (40) tenants who received HAPs under the Housing Voucher Cluster during fiscal year 2024. For thirteen (13) of the tenants tested, HPD was not able to provide documentation to support that an eligibility recertification for the tenant, including a review of the utility allowance and HAP calculation, was performed within the previous 12 months, as required. Cause/Effect: While HPD has a process in place to assess the eligibility of tenants receiving HAPs under the Housing Voucher Cluster, the reexamination of family income and composition and utility allowance was not consistently performed at least once every 12 months to support the tenant’s continued eligibility to receive benefits through this program at the appropriate amounts. Questioned Costs: None identified. Identification as a Repeat Finding: This finding is similar to finding #2023-016, included on pages 254 and 255 of the Fiscal 2023 Single Audit report. Recommendation: We recommend that HPD strengthen their internal controls governing the eligibility requirements, including implementing a control to ensure recertifications of family income and composition are performed at least once every 12 months and the tenants HAP amount and tenant utility allowance is adjusted as necessary to meet the eligibility requirements per 24 CFR sections 5.230, 5.609, 982.201 and 982.516.
New York City Department of Health and Mental Hygiene (“DOHMH”) Finding #: 2024-002 Funding Year(s): 8/1/2019-7/31/2024, 8/1/2019-7/31/2026 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (FAL #93.323) Contract Numbers: 5 NU50CK000517, 6 NU50CK000517 Federal Agency: U.S. Department of Health and Human Services Type of Finding: Reporting - Compliance and Internal Control (Significant Deficiency) Criteria: In accordance with the U.S. Department of Health and Human Services (“HHS”) Grants Policy Statement, reports of expenditures are required as documentation of the financial status of grants according to the official accounting records of the recipient. Financial or expenditure reporting is accomplished using the Financial Status Report (“FSR”) (SF 269 or SF 269A). The FSR is required annually, and the report must be submitted for each budget period no later than 90 days after the close of the budget period or applicable 12-month period. Additionally, performance reports are required by the terms and conditions of the federal awards. As stipulated by 2 CFR Section 200.303, recipients of Federal Awards are required to establish and maintain an internal control environment that complies with either the guidance in “Standards for Internal Control in the Federal Government” (the “Green Book”) 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”) for the federal funding streams it administers. Condition/Context: In the prior year, a significant deficiency in internal controls was identified concerning the lack of sufficient evidence to support the review and approval of performance reports, and the submission of annual FSRs after the required reporting deadline of 90 days following the end of the budget period. For the performance reporting requirements, our inquiries with management during the current year revealed that no improvements were made to the operating effectiveness of this internal control process over compliance. For the FSR reporting requirement, from a non-statistical sample of six (6) annual FSRs subject to testing during fiscal year 2024, we identified four (4) FSRs that were submitted after the required reporting deadline of within 90 days following the end of the budget period. Cause/Effect: Although DOHMH indicated that they have established policies and procedures to ensure the accurate and timely completion and submission of required reports, we observed that appropriate reviews were not consistently performed and documented for both financial and performance reporting to ensure timely submission. Questioned Costs: None noted. Identification as a Repeat Finding: This finding is similar to finding #2023-008, included on pages 238 and 239 of the Fiscal 2023 Single Audit report. Recommendation: We recommend that DOHMH enhance their internal controls over the reporting process by ensuring that all financial and special performance reports undergo documented review and approval before submission within the required timeframe.
New York City Department of Health and Mental Hygiene (“DOHMH”) Finding #: 2024-002 Funding Year(s): 8/1/2019-7/31/2024, 8/1/2019-7/31/2026 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (FAL #93.323) Contract Numbers: 5 NU50CK000517, 6 NU50CK000517 Federal Agency: U.S. Department of Health and Human Services Type of Finding: Reporting - Compliance and Internal Control (Significant Deficiency) Criteria: In accordance with the U.S. Department of Health and Human Services (“HHS”) Grants Policy Statement, reports of expenditures are required as documentation of the financial status of grants according to the official accounting records of the recipient. Financial or expenditure reporting is accomplished using the Financial Status Report (“FSR”) (SF 269 or SF 269A). The FSR is required annually, and the report must be submitted for each budget period no later than 90 days after the close of the budget period or applicable 12-month period. Additionally, performance reports are required by the terms and conditions of the federal awards. As stipulated by 2 CFR Section 200.303, recipients of Federal Awards are required to establish and maintain an internal control environment that complies with either the guidance in “Standards for Internal Control in the Federal Government” (the “Green Book”) 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”) for the federal funding streams it administers. Condition/Context: In the prior year, a significant deficiency in internal controls was identified concerning the lack of sufficient evidence to support the review and approval of performance reports, and the submission of annual FSRs after the required reporting deadline of 90 days following the end of the budget period. For the performance reporting requirements, our inquiries with management during the current year revealed that no improvements were made to the operating effectiveness of this internal control process over compliance. For the FSR reporting requirement, from a non-statistical sample of six (6) annual FSRs subject to testing during fiscal year 2024, we identified four (4) FSRs that were submitted after the required reporting deadline of within 90 days following the end of the budget period. Cause/Effect: Although DOHMH indicated that they have established policies and procedures to ensure the accurate and timely completion and submission of required reports, we observed that appropriate reviews were not consistently performed and documented for both financial and performance reporting to ensure timely submission. Questioned Costs: None noted. Identification as a Repeat Finding: This finding is similar to finding #2023-008, included on pages 238 and 239 of the Fiscal 2023 Single Audit report. Recommendation: We recommend that DOHMH enhance their internal controls over the reporting process by ensuring that all financial and special performance reports undergo documented review and approval before submission within the required timeframe.
New York City Department of Health and Mental Hygiene (“DOHMH”) Finding #: 2024-002 Funding Year(s): 8/1/2019-7/31/2024, 8/1/2019-7/31/2026 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (FAL #93.323) Contract Numbers: 5 NU50CK000517, 6 NU50CK000517 Federal Agency: U.S. Department of Health and Human Services Type of Finding: Reporting - Compliance and Internal Control (Significant Deficiency) Criteria: In accordance with the U.S. Department of Health and Human Services (“HHS”) Grants Policy Statement, reports of expenditures are required as documentation of the financial status of grants according to the official accounting records of the recipient. Financial or expenditure reporting is accomplished using the Financial Status Report (“FSR”) (SF 269 or SF 269A). The FSR is required annually, and the report must be submitted for each budget period no later than 90 days after the close of the budget period or applicable 12-month period. Additionally, performance reports are required by the terms and conditions of the federal awards. As stipulated by 2 CFR Section 200.303, recipients of Federal Awards are required to establish and maintain an internal control environment that complies with either the guidance in “Standards for Internal Control in the Federal Government” (the “Green Book”) 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”) for the federal funding streams it administers. Condition/Context: In the prior year, a significant deficiency in internal controls was identified concerning the lack of sufficient evidence to support the review and approval of performance reports, and the submission of annual FSRs after the required reporting deadline of 90 days following the end of the budget period. For the performance reporting requirements, our inquiries with management during the current year revealed that no improvements were made to the operating effectiveness of this internal control process over compliance. For the FSR reporting requirement, from a non-statistical sample of six (6) annual FSRs subject to testing during fiscal year 2024, we identified four (4) FSRs that were submitted after the required reporting deadline of within 90 days following the end of the budget period. Cause/Effect: Although DOHMH indicated that they have established policies and procedures to ensure the accurate and timely completion and submission of required reports, we observed that appropriate reviews were not consistently performed and documented for both financial and performance reporting to ensure timely submission. Questioned Costs: None noted. Identification as a Repeat Finding: This finding is similar to finding #2023-008, included on pages 238 and 239 of the Fiscal 2023 Single Audit report. Recommendation: We recommend that DOHMH enhance their internal controls over the reporting process by ensuring that all financial and special performance reports undergo documented review and approval before submission within the required timeframe.
New York City Administration for Children’s Services (“ACS”) and New York City Department of Education (“DOE”) Finding #: 2024-003 Funding Year(s): 4/1/2023 - 9/30/2024 CCDF Cluster: Child Care and Development Block Grant (FAL #93.575) Contract Numbers: 23-OCFS-LCM-12-R3 Pass-Through Agency: NYS Office of Children and Family Services Federal Agency: U.S. Department of Health and Human Services Type of Finding: Eligibility - Material Noncompliance and Internal Control (Material Weakness) Criteria: As stipulated by the 45 CFR Part 98 Subpart C, to be eligible for services under the Child Care and Development Block Grant (“CCDBG”), a child shall (1) be under the age of thirteen (13) years of age or be under the age of nineteen (19) and physically or mentally incapable of caring for himself or herself; (2) Reside with a family whose income does not exceed 85 percent of the State's median income (SMI) and whose family assets do not exceed $1,000,000; and (3) reside with a parent or parents who are working or attending a job training or educational program; or receive, or need to receive, protective services. Additionally, as stipulated by 2 CFR Section 200.303, recipients of federal awards are required to establish and maintain an internal control environment that complies with either the guidance in “Standards for Internal Control in the Federal Government” (the “Green Book”) 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”) for the federal funding streams it administers. Condition/Context: We selected a non-statistical sample of forty (40) individuals who received services under CCDBG during fiscal year 2024 and found that seven (7) of the individuals tested had errors, detailed as follows: • One (1) of the individuals tested from DOE did not meet some or all of the eligibility criteria as stipulated in 45 CFR Part 98 Subpart C; • For six (6) of the individuals tested, ACS paid for hours of care that exceeded the number of hours of care that the individual was eligible to receive based on the authorized hours determined during the eligibility approval process. Total CCDBG Benefits charged to the grant were $813,778,977 and total CCDBG benefits subjected to testing were $36,043. Cause/Effect: While ACS and DOE have a process in place to assess the eligibility of children, a comprehensive review was not consistently performed and documented to ensure the appropriate evidence and related approvals were maintained to support those determinations. This was due to a lack of a process ensuring enrollment and payment for services on behalf of the children were based on and agreed to the authorized hours determined during the eligibility review process. As a result, costs were incurred on behalf of certain children that did not meet all of the eligibility requirements, were not supported by appropriate documentation, or had errors in authorized hours. Questioned Costs: Known questioned costs of $4,199. Identification as a Repeat Finding: This finding is similar to finding #2023-013, included on pages 248 and 249 of the Fiscal 2023 Single Audit report. Recommendation: We recommend that ACS and DOE enhance their internal controls for eligibility requirements. This includes implementing a review checklist to ensure each child meets all eligibility criteria as outlined in 45 CFR Part 98 Subpart C during the eligibility determination process.
New York City Administration for Children’s Services (“ACS”) and New York City Department of Education (“DOE”) Finding #: 2024-003 Funding Year(s): 4/1/2023 - 9/30/2024 CCDF Cluster: Child Care and Development Block Grant (FAL #93.575) Contract Numbers: 23-OCFS-LCM-12-R3 Pass-Through Agency: NYS Office of Children and Family Services Federal Agency: U.S. Department of Health and Human Services Type of Finding: Eligibility - Material Noncompliance and Internal Control (Material Weakness) Criteria: As stipulated by the 45 CFR Part 98 Subpart C, to be eligible for services under the Child Care and Development Block Grant (“CCDBG”), a child shall (1) be under the age of thirteen (13) years of age or be under the age of nineteen (19) and physically or mentally incapable of caring for himself or herself; (2) Reside with a family whose income does not exceed 85 percent of the State's median income (SMI) and whose family assets do not exceed $1,000,000; and (3) reside with a parent or parents who are working or attending a job training or educational program; or receive, or need to receive, protective services. Additionally, as stipulated by 2 CFR Section 200.303, recipients of federal awards are required to establish and maintain an internal control environment that complies with either the guidance in “Standards for Internal Control in the Federal Government” (the “Green Book”) 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”) for the federal funding streams it administers. Condition/Context: We selected a non-statistical sample of forty (40) individuals who received services under CCDBG during fiscal year 2024 and found that seven (7) of the individuals tested had errors, detailed as follows: • One (1) of the individuals tested from DOE did not meet some or all of the eligibility criteria as stipulated in 45 CFR Part 98 Subpart C; • For six (6) of the individuals tested, ACS paid for hours of care that exceeded the number of hours of care that the individual was eligible to receive based on the authorized hours determined during the eligibility approval process. Total CCDBG Benefits charged to the grant were $813,778,977 and total CCDBG benefits subjected to testing were $36,043. Cause/Effect: While ACS and DOE have a process in place to assess the eligibility of children, a comprehensive review was not consistently performed and documented to ensure the appropriate evidence and related approvals were maintained to support those determinations. This was due to a lack of a process ensuring enrollment and payment for services on behalf of the children were based on and agreed to the authorized hours determined during the eligibility review process. As a result, costs were incurred on behalf of certain children that did not meet all of the eligibility requirements, were not supported by appropriate documentation, or had errors in authorized hours. Questioned Costs: Known questioned costs of $4,199. Identification as a Repeat Finding: This finding is similar to finding #2023-013, included on pages 248 and 249 of the Fiscal 2023 Single Audit report. Recommendation: We recommend that ACS and DOE enhance their internal controls for eligibility requirements. This includes implementing a review checklist to ensure each child meets all eligibility criteria as outlined in 45 CFR Part 98 Subpart C during the eligibility determination process.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: 21.023, 21.027 Programs: COVID-19 Emergency Rental Assistance Program, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Award/Pass-Through Entity Identifying Numbers: COVID-19 HCS-21-37-2103-018(7), HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – personal services: (g) Standards for Documentation of Personnel Expenses. (vii) “Budget estimates (meaning, estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Per 2 CFR §200.465 Rental Costs of Real Property and Equipment: (b) “Rental costs under ‘sale and lease back’ arrangements are allowable only up to the amount that would have been allowed if the recipient or subrecipient had continued to own the property. This amount would include expenses such as depreciation, maintenance, taxes, and insurance. (c) Rental costs under “less-than-arm's-length” leases are allowable only up to the amount described in paragraph (b) of this section. For this purpose, a less-than-arm's-length lease is one under which one party to the lease agreement can control or substantially influence the actions of the other...” Condition: Policies and procedures were not adequately established to ensure allowability of rent charges and other cross-charges to federally funded programs. We noted the Organization’s subsidiary charges rent to the Organization’s programs to utilize office spaces for their operations and cross-charges certain other miscellaneous costs. The rent and certain other costs are based on budgeted costs plus a market rate, which is an unallowable method under the Uniform Grant Guidance. Since these transactions are less-than-arm’s-length due to the Organization’s control and significant influence over its subsidiary, costs charged should be based on actual costs incurred. • For the COVID-19 Emergency Rental Assistance Program: o 1 out of 25 selections was charged based on a market rate and budgeted costs. This selection was for a rent expense. • Allocated cost pool of IT costs: o 2 out of 25 selections were charged based on a market rate and/or budgeted costs. One of the selections was for a rent expense and the other was for building maintenance performed by an employee. Cause: The Organization’s policies and procedures lacked a step to reconcile and/or true-up budget and market rates to actual expenditures. Effect or Potential Effect: Without adequate controls in place to ensure expenditures represent actual costs, the Organization could incorrectly charge expenditures to the Federal program, or not request the appropriate reimbursement the Organization is entitled to under the grant. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. • For the COVID-19 Emergency Rental Assistance Program, nonpayroll costs were $1,166,466 and rent charged to the program was $12,743. • IT costs are accumulated and allocated to grants on an allowable basis. The total IT cost pool was $759,731,which was allocated across all programs (federal and nonfederal). Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: We recommend that the Organization implements policies and procedures to timely reconcile and, if necessary, true-up rent charges to actual expenditures incurred. Views of Responsible Officials: Management agrees with the finding. Management is updating procedures for how certain costs are cross-charged to federal programs.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Programs: 21.027 Award/Pass-Through Entity Identifying Numbers: HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – Personal Services: “Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; (iv) Encompass federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non Federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non Federal entity; and (vi) [Reserved] (vii) Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities, which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-Federal entity’s written policies) are identified and entered into the records in a timely manner. Short-term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-Federal entity’s system of internal controls includes processes to review after the fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Condition: We noted that the Organization allocated payroll expenditures using timecards that were not fully reviewed and approved. Two out of 43 selections for the Coronavirus State and Local Fiscal Recovery Funds program did not have employee and/or supervisor approvals. Cause: The Organization did not have adequate policies/procedures in place to ensure timesheet allocations are obtained for all employees charging time to federal grants and that they are appropriately reviewed. Effect or Potential Effect: Without adequate controls to ensure that costs allocated to federal programs are supported, the Organization could incorrectly charge expenditures to the federal program. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. Payroll costs charged to the Coronavirus State and Local Fiscal Recovery Funds program were $1,320,137 in fiscal year 2024. Any costs not adequately supported by approved timesheet or subsequent attestation are considered questioned costs. Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: The Organization should consistently obtain and retain timesheet approvals from both employees and supervisors for each pay period requested for reimbursement. Subsequent attestations of time worked should be timely obtained if detective controls identify missing timesheet approvals. Views of Responsible Officials: Management agrees with the finding. Management is updating and implementing mitigating controls to ensure approvals are sufficiently documented.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Programs: 21.027 Award/Pass-Through Entity Identifying Numbers: HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – Personal Services: “Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; (iv) Encompass federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non Federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non Federal entity; and (vi) [Reserved] (vii) Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities, which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-Federal entity’s written policies) are identified and entered into the records in a timely manner. Short-term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-Federal entity’s system of internal controls includes processes to review after the fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Condition: We noted that the Organization allocated payroll expenditures using timecards that were not fully reviewed and approved. Two out of 43 selections for the Coronavirus State and Local Fiscal Recovery Funds program did not have employee and/or supervisor approvals. Cause: The Organization did not have adequate policies/procedures in place to ensure timesheet allocations are obtained for all employees charging time to federal grants and that they are appropriately reviewed. Effect or Potential Effect: Without adequate controls to ensure that costs allocated to federal programs are supported, the Organization could incorrectly charge expenditures to the federal program. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. Payroll costs charged to the Coronavirus State and Local Fiscal Recovery Funds program were $1,320,137 in fiscal year 2024. Any costs not adequately supported by approved timesheet or subsequent attestation are considered questioned costs. Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: The Organization should consistently obtain and retain timesheet approvals from both employees and supervisors for each pay period requested for reimbursement. Subsequent attestations of time worked should be timely obtained if detective controls identify missing timesheet approvals. Views of Responsible Officials: Management agrees with the finding. Management is updating and implementing mitigating controls to ensure approvals are sufficiently documented.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Programs: 21.027 Award/Pass-Through Entity Identifying Numbers: HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – Personal Services: “Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; (iv) Encompass federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non Federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non Federal entity; and (vi) [Reserved] (vii) Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities, which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-Federal entity’s written policies) are identified and entered into the records in a timely manner. Short-term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-Federal entity’s system of internal controls includes processes to review after the fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Condition: We noted that the Organization allocated payroll expenditures using timecards that were not fully reviewed and approved. Two out of 43 selections for the Coronavirus State and Local Fiscal Recovery Funds program did not have employee and/or supervisor approvals. Cause: The Organization did not have adequate policies/procedures in place to ensure timesheet allocations are obtained for all employees charging time to federal grants and that they are appropriately reviewed. Effect or Potential Effect: Without adequate controls to ensure that costs allocated to federal programs are supported, the Organization could incorrectly charge expenditures to the federal program. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. Payroll costs charged to the Coronavirus State and Local Fiscal Recovery Funds program were $1,320,137 in fiscal year 2024. Any costs not adequately supported by approved timesheet or subsequent attestation are considered questioned costs. Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: The Organization should consistently obtain and retain timesheet approvals from both employees and supervisors for each pay period requested for reimbursement. Subsequent attestations of time worked should be timely obtained if detective controls identify missing timesheet approvals. Views of Responsible Officials: Management agrees with the finding. Management is updating and implementing mitigating controls to ensure approvals are sufficiently documented.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Programs: 21.027 Award/Pass-Through Entity Identifying Numbers: HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – Personal Services: “Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; (iv) Encompass federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non Federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non Federal entity; and (vi) [Reserved] (vii) Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities, which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-Federal entity’s written policies) are identified and entered into the records in a timely manner. Short-term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-Federal entity’s system of internal controls includes processes to review after the fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Condition: We noted that the Organization allocated payroll expenditures using timecards that were not fully reviewed and approved. Two out of 43 selections for the Coronavirus State and Local Fiscal Recovery Funds program did not have employee and/or supervisor approvals. Cause: The Organization did not have adequate policies/procedures in place to ensure timesheet allocations are obtained for all employees charging time to federal grants and that they are appropriately reviewed. Effect or Potential Effect: Without adequate controls to ensure that costs allocated to federal programs are supported, the Organization could incorrectly charge expenditures to the federal program. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. Payroll costs charged to the Coronavirus State and Local Fiscal Recovery Funds program were $1,320,137 in fiscal year 2024. Any costs not adequately supported by approved timesheet or subsequent attestation are considered questioned costs. Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: The Organization should consistently obtain and retain timesheet approvals from both employees and supervisors for each pay period requested for reimbursement. Subsequent attestations of time worked should be timely obtained if detective controls identify missing timesheet approvals. Views of Responsible Officials: Management agrees with the finding. Management is updating and implementing mitigating controls to ensure approvals are sufficiently documented.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Programs: 21.027 Award/Pass-Through Entity Identifying Numbers: HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – Personal Services: “Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; (iv) Encompass federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non Federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non Federal entity; and (vi) [Reserved] (vii) Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities, which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-Federal entity’s written policies) are identified and entered into the records in a timely manner. Short-term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-Federal entity’s system of internal controls includes processes to review after the fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Condition: We noted that the Organization allocated payroll expenditures using timecards that were not fully reviewed and approved. Two out of 43 selections for the Coronavirus State and Local Fiscal Recovery Funds program did not have employee and/or supervisor approvals. Cause: The Organization did not have adequate policies/procedures in place to ensure timesheet allocations are obtained for all employees charging time to federal grants and that they are appropriately reviewed. Effect or Potential Effect: Without adequate controls to ensure that costs allocated to federal programs are supported, the Organization could incorrectly charge expenditures to the federal program. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. Payroll costs charged to the Coronavirus State and Local Fiscal Recovery Funds program were $1,320,137 in fiscal year 2024. Any costs not adequately supported by approved timesheet or subsequent attestation are considered questioned costs. Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: The Organization should consistently obtain and retain timesheet approvals from both employees and supervisors for each pay period requested for reimbursement. Subsequent attestations of time worked should be timely obtained if detective controls identify missing timesheet approvals. Views of Responsible Officials: Management agrees with the finding. Management is updating and implementing mitigating controls to ensure approvals are sufficiently documented.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Programs: 21.027 Award/Pass-Through Entity Identifying Numbers: HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – Personal Services: “Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; (iv) Encompass federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non Federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non Federal entity; and (vi) [Reserved] (vii) Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities, which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-Federal entity’s written policies) are identified and entered into the records in a timely manner. Short-term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-Federal entity’s system of internal controls includes processes to review after the fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Condition: We noted that the Organization allocated payroll expenditures using timecards that were not fully reviewed and approved. Two out of 43 selections for the Coronavirus State and Local Fiscal Recovery Funds program did not have employee and/or supervisor approvals. Cause: The Organization did not have adequate policies/procedures in place to ensure timesheet allocations are obtained for all employees charging time to federal grants and that they are appropriately reviewed. Effect or Potential Effect: Without adequate controls to ensure that costs allocated to federal programs are supported, the Organization could incorrectly charge expenditures to the federal program. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. Payroll costs charged to the Coronavirus State and Local Fiscal Recovery Funds program were $1,320,137 in fiscal year 2024. Any costs not adequately supported by approved timesheet or subsequent attestation are considered questioned costs. Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: The Organization should consistently obtain and retain timesheet approvals from both employees and supervisors for each pay period requested for reimbursement. Subsequent attestations of time worked should be timely obtained if detective controls identify missing timesheet approvals. Views of Responsible Officials: Management agrees with the finding. Management is updating and implementing mitigating controls to ensure approvals are sufficiently documented.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Programs: 21.027 Award/Pass-Through Entity Identifying Numbers: HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – Personal Services: “Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; (iv) Encompass federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non Federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non Federal entity; and (vi) [Reserved] (vii) Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities, which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-Federal entity’s written policies) are identified and entered into the records in a timely manner. Short-term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-Federal entity’s system of internal controls includes processes to review after the fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Condition: We noted that the Organization allocated payroll expenditures using timecards that were not fully reviewed and approved. Two out of 43 selections for the Coronavirus State and Local Fiscal Recovery Funds program did not have employee and/or supervisor approvals. Cause: The Organization did not have adequate policies/procedures in place to ensure timesheet allocations are obtained for all employees charging time to federal grants and that they are appropriately reviewed. Effect or Potential Effect: Without adequate controls to ensure that costs allocated to federal programs are supported, the Organization could incorrectly charge expenditures to the federal program. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. Payroll costs charged to the Coronavirus State and Local Fiscal Recovery Funds program were $1,320,137 in fiscal year 2024. Any costs not adequately supported by approved timesheet or subsequent attestation are considered questioned costs. Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: The Organization should consistently obtain and retain timesheet approvals from both employees and supervisors for each pay period requested for reimbursement. Subsequent attestations of time worked should be timely obtained if detective controls identify missing timesheet approvals. Views of Responsible Officials: Management agrees with the finding. Management is updating and implementing mitigating controls to ensure approvals are sufficiently documented.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Programs: 21.027 Award/Pass-Through Entity Identifying Numbers: HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – Personal Services: “Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; (iv) Encompass federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non Federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non Federal entity; and (vi) [Reserved] (vii) Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities, which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-Federal entity’s written policies) are identified and entered into the records in a timely manner. Short-term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-Federal entity’s system of internal controls includes processes to review after the fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Condition: We noted that the Organization allocated payroll expenditures using timecards that were not fully reviewed and approved. Two out of 43 selections for the Coronavirus State and Local Fiscal Recovery Funds program did not have employee and/or supervisor approvals. Cause: The Organization did not have adequate policies/procedures in place to ensure timesheet allocations are obtained for all employees charging time to federal grants and that they are appropriately reviewed. Effect or Potential Effect: Without adequate controls to ensure that costs allocated to federal programs are supported, the Organization could incorrectly charge expenditures to the federal program. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. Payroll costs charged to the Coronavirus State and Local Fiscal Recovery Funds program were $1,320,137 in fiscal year 2024. Any costs not adequately supported by approved timesheet or subsequent attestation are considered questioned costs. Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: The Organization should consistently obtain and retain timesheet approvals from both employees and supervisors for each pay period requested for reimbursement. Subsequent attestations of time worked should be timely obtained if detective controls identify missing timesheet approvals. Views of Responsible Officials: Management agrees with the finding. Management is updating and implementing mitigating controls to ensure approvals are sufficiently documented.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Programs: 21.027 Award/Pass-Through Entity Identifying Numbers: HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – Personal Services: “Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; (iv) Encompass federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non Federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non Federal entity; and (vi) [Reserved] (vii) Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities, which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-Federal entity’s written policies) are identified and entered into the records in a timely manner. Short-term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-Federal entity’s system of internal controls includes processes to review after the fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Condition: We noted that the Organization allocated payroll expenditures using timecards that were not fully reviewed and approved. Two out of 43 selections for the Coronavirus State and Local Fiscal Recovery Funds program did not have employee and/or supervisor approvals. Cause: The Organization did not have adequate policies/procedures in place to ensure timesheet allocations are obtained for all employees charging time to federal grants and that they are appropriately reviewed. Effect or Potential Effect: Without adequate controls to ensure that costs allocated to federal programs are supported, the Organization could incorrectly charge expenditures to the federal program. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. Payroll costs charged to the Coronavirus State and Local Fiscal Recovery Funds program were $1,320,137 in fiscal year 2024. Any costs not adequately supported by approved timesheet or subsequent attestation are considered questioned costs. Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: The Organization should consistently obtain and retain timesheet approvals from both employees and supervisors for each pay period requested for reimbursement. Subsequent attestations of time worked should be timely obtained if detective controls identify missing timesheet approvals. Views of Responsible Officials: Management agrees with the finding. Management is updating and implementing mitigating controls to ensure approvals are sufficiently documented.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Programs: 21.027 Award/Pass-Through Entity Identifying Numbers: HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – Personal Services: “Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; (iv) Encompass federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non Federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non Federal entity; and (vi) [Reserved] (vii) Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities, which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-Federal entity’s written policies) are identified and entered into the records in a timely manner. Short-term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-Federal entity’s system of internal controls includes processes to review after the fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Condition: We noted that the Organization allocated payroll expenditures using timecards that were not fully reviewed and approved. Two out of 43 selections for the Coronavirus State and Local Fiscal Recovery Funds program did not have employee and/or supervisor approvals. Cause: The Organization did not have adequate policies/procedures in place to ensure timesheet allocations are obtained for all employees charging time to federal grants and that they are appropriately reviewed. Effect or Potential Effect: Without adequate controls to ensure that costs allocated to federal programs are supported, the Organization could incorrectly charge expenditures to the federal program. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. Payroll costs charged to the Coronavirus State and Local Fiscal Recovery Funds program were $1,320,137 in fiscal year 2024. Any costs not adequately supported by approved timesheet or subsequent attestation are considered questioned costs. Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: The Organization should consistently obtain and retain timesheet approvals from both employees and supervisors for each pay period requested for reimbursement. Subsequent attestations of time worked should be timely obtained if detective controls identify missing timesheet approvals. Views of Responsible Officials: Management agrees with the finding. Management is updating and implementing mitigating controls to ensure approvals are sufficiently documented.
Federal Agencies: Department of the Treasury Federal Assistance Listing Numbers: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Programs: 21.027 Award/Pass-Through Entity Identifying Numbers: HCS-23-AR-2111-018, ARPA - HCS-22-AR-2104-018, COVID-19 - EL-22-AR-27-018, ARPA - EL-22-AR-35-018(1), ARPA - EL-21-AR-03-018(4), ARPA - EL-21-AR-04-018(5), ARPA - EL-22-AR-29-018(2), ARPA - HS-21-AR-01-018(2), BH-22-AR-02-018(1), HCS-23-67-2301-018, HCS-23-AR-2107-018, ARP – 19911, CRF-2024-01, Agreement, 3733, COVID-19 – Agreement, K501, K4893, K4786, K4560, K4862 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation – Personal Services: “Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities; (iv) Encompass federally assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non Federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non Federal entity; and (vi) [Reserved] (vii) Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities, which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-Federal entity’s written policies) are identified and entered into the records in a timely manner. Short-term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-Federal entity’s system of internal controls includes processes to review after the fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Condition: We noted that the Organization allocated payroll expenditures using timecards that were not fully reviewed and approved. Two out of 43 selections for the Coronavirus State and Local Fiscal Recovery Funds program did not have employee and/or supervisor approvals. Cause: The Organization did not have adequate policies/procedures in place to ensure timesheet allocations are obtained for all employees charging time to federal grants and that they are appropriately reviewed. Effect or Potential Effect: Without adequate controls to ensure that costs allocated to federal programs are supported, the Organization could incorrectly charge expenditures to the federal program. Questioned Costs: None above the $25,000 reporting threshold. Context: This is a condition identified per review of the Organization’s compliance with specified requirements not using a statistically valid sample. Payroll costs charged to the Coronavirus State and Local Fiscal Recovery Funds program were $1,320,137 in fiscal year 2024. Any costs not adequately supported by approved timesheet or subsequent attestation are considered questioned costs. Identification as a Repeat Finding: No similar finding noted in the prior year. Recommendation: The Organization should consistently obtain and retain timesheet approvals from both employees and supervisors for each pay period requested for reimbursement. Subsequent attestations of time worked should be timely obtained if detective controls identify missing timesheet approvals. Views of Responsible Officials: Management agrees with the finding. Management is updating and implementing mitigating controls to ensure approvals are sufficiently documented.