Finding Number: 2024‐001 Repeat Finding: No Program Name/Assistance Listing Title: Child Nutrition Cluster Assistance Listing Numbers: 10.553, 10.555, 10.559 Federal Agency: U.S. Department of Agriculture Federal Award Numbers: 6AZ300400, 7AZ300AZ3 Pass‐Through Agency: Arizona Department of Education Questioned Costs: $58,433 Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Allowable Costs/Cost Principles Criteria Under 2 CFR §200.303, the District is required to establish and maintain effective internal controls over the federal award that provides reasonable assurance that the District is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Additionally, 2 CFR §200.439 requires capital expenditures for special purpose equipment with a unit cost of $5,000 or more to have the prior written approval of the Federal awarding agency or pass‐through entity. This includes ensuring a Capital Expenditure Pre‐Approval Request Form is submitted to Arizona Department of Education (ADE) for approval prior to purchasing equipment that is not included on ADE's Food and Nutrition Service approved equipment list. Condition The District did not submit a Capital Expenditure Pre‐Approval Request Form to ADE for approval prior to purchasing equipment items not on the ADE Pre‐Approved Capital Equipment list. Cause The District was unaware that it was required to get pre‐approval from ADE for this type of purchase. Effect The District charged unallowable costs to the program. Context The District purchased two software systems related to the CNC POS for $20,920 and $29,692, and one garbage disposal for $7,821, without submitting a Capital Expenditure Pre‐Approval Request Form to ADE for approval prior to purchasing items not on the ADE Pre‐Approved Capital Equipment list. The sample was not intended to be, and was not, a statistically valid sample. Recommendation Management should review all transactions to ensure that program costs are allowable and in adherence to applicable federal requirements. Views of Responsible Officials See Corrective Action Plan.
Finding Number: 2024‐001 Repeat Finding: No Program Name/Assistance Listing Title: Child Nutrition Cluster Assistance Listing Numbers: 10.553, 10.555, 10.559 Federal Agency: U.S. Department of Agriculture Federal Award Numbers: 6AZ300400, 7AZ300AZ3 Pass‐Through Agency: Arizona Department of Education Questioned Costs: $58,433 Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Allowable Costs/Cost Principles Criteria Under 2 CFR §200.303, the District is required to establish and maintain effective internal controls over the federal award that provides reasonable assurance that the District is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Additionally, 2 CFR §200.439 requires capital expenditures for special purpose equipment with a unit cost of $5,000 or more to have the prior written approval of the Federal awarding agency or pass‐through entity. This includes ensuring a Capital Expenditure Pre‐Approval Request Form is submitted to Arizona Department of Education (ADE) for approval prior to purchasing equipment that is not included on ADE's Food and Nutrition Service approved equipment list. Condition The District did not submit a Capital Expenditure Pre‐Approval Request Form to ADE for approval prior to purchasing equipment items not on the ADE Pre‐Approved Capital Equipment list. Cause The District was unaware that it was required to get pre‐approval from ADE for this type of purchase. Effect The District charged unallowable costs to the program. Context The District purchased two software systems related to the CNC POS for $20,920 and $29,692, and one garbage disposal for $7,821, without submitting a Capital Expenditure Pre‐Approval Request Form to ADE for approval prior to purchasing items not on the ADE Pre‐Approved Capital Equipment list. The sample was not intended to be, and was not, a statistically valid sample. Recommendation Management should review all transactions to ensure that program costs are allowable and in adherence to applicable federal requirements. Views of Responsible Officials See Corrective Action Plan.
Finding Number: 2024‐001 Repeat Finding: No Program Name/Assistance Listing Title: Child Nutrition Cluster Assistance Listing Numbers: 10.553, 10.555, 10.559 Federal Agency: U.S. Department of Agriculture Federal Award Numbers: 6AZ300400, 7AZ300AZ3 Pass‐Through Agency: Arizona Department of Education Questioned Costs: $58,433 Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Allowable Costs/Cost Principles Criteria Under 2 CFR §200.303, the District is required to establish and maintain effective internal controls over the federal award that provides reasonable assurance that the District is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Additionally, 2 CFR §200.439 requires capital expenditures for special purpose equipment with a unit cost of $5,000 or more to have the prior written approval of the Federal awarding agency or pass‐through entity. This includes ensuring a Capital Expenditure Pre‐Approval Request Form is submitted to Arizona Department of Education (ADE) for approval prior to purchasing equipment that is not included on ADE's Food and Nutrition Service approved equipment list. Condition The District did not submit a Capital Expenditure Pre‐Approval Request Form to ADE for approval prior to purchasing equipment items not on the ADE Pre‐Approved Capital Equipment list. Cause The District was unaware that it was required to get pre‐approval from ADE for this type of purchase. Effect The District charged unallowable costs to the program. Context The District purchased two software systems related to the CNC POS for $20,920 and $29,692, and one garbage disposal for $7,821, without submitting a Capital Expenditure Pre‐Approval Request Form to ADE for approval prior to purchasing items not on the ADE Pre‐Approved Capital Equipment list. The sample was not intended to be, and was not, a statistically valid sample. Recommendation Management should review all transactions to ensure that program costs are allowable and in adherence to applicable federal requirements. Views of Responsible Officials See Corrective Action Plan.
FA 2024-001 Improve Controls over Employee Compensation Compliance Requirement: Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Agriculture Pass-Through Entity: Georgia Department of Education AL Numbers and Title: 10.553 – School Breakfast Program 10.555 – National School Lunch Program COVID-19 – 10.555 – National School Lunch Program Federal Award Number: 245GA324N1199 (Year: 2024) 225GA324N1099 (Year: 2024) Questioned Costs: $102,234 Repeat of Prior Year Finding: 2023-004 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over the employee compensation process as it relates to the Child Nutrition Cluster. Background Information: The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential childcare institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and secondary schools and encourages the domestic consumption of nutritious agricultural commodities. CNC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture. GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the various CNC programs. CNC funds totaling $58,647,091.23 were expended and reported on the DeKalb County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2024. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented…” Furthermore, provisions included in the Uniform Guidance, Section 200.430 – Compensation-Personal Services prescribe standards for documentation of personnel expenses and state, in part, that “(a) … Costs for compensation are allowable to the extent that they satisfy… specific requirements…, and that the total compensation for individual employees: (1) is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i)…, [as follows:] (i) 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…” Condition: A sample of 60 employees was randomly selected for testing using a non-statistical sampling approach. These employees were reviewed to determine if internal controls were properly functioning, and applicable compliance requirements were met. The following deficiencies were noted: • One employee who no longer worked for the School District received salary payments totaling $8,715. • Two employees did not have any of the required certifications, or comparable documentation, to support their salary payments totaling $48,837. • One employee was missing required certifications, or comparable documentation, to support a portion of their salary payments totaling $8,128. • One employee’s salary in the amount of $2,671 was incorrectly charged to the federal program for one pay period. • Documentation of additional pay totaling $33,883 could not be located for 14 employees. Questioned Costs: Upon testing a sample of $1,399,390 in personnel services expenditures, known questioned costs of $102,234 were identified for payroll charges not supported by adequate documentation. Using the total personnel services expenditure population of $18,999,516 (excluding benefits payments), we project the likely questioned costs to be approximately $1,388,035. The following Assistance Listing Numbers were affected by known and likely questioned costs: 10.553 and 10.555. Cause: A lack of oversight by personnel in the Office of Federal Grants and Program Compliance led to noncompliance with the requirements of the Uniform Guidance in relation to charging of personnel costs to a federal program. Effect: The School District is not in compliance with the Uniform Guidance and GaDOE guidance. Failure to pay employees with CNC funds the appropriate amount and/or maintain documentation supporting those payments could result in the expenditure of funds for unallowable purposes. This may also expose the School District to unnecessary financial strains and shortages within the CNC funds as ED or GaDOE may require the School District to return funds associated with improperly documented expenditures. Recommendation: The School District should evaluate their internal control process related to the approval and retention of documentation to support employee compensation payments. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that CNC employees are paid appropriately. Furthermore, management should develop and implement a monitoring process to ensure that these procedures are functioning properly. Views of Responsible Officials: We concur with this finding.
FA 2024-001 Improve Controls over Employee Compensation Compliance Requirement: Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Agriculture Pass-Through Entity: Georgia Department of Education AL Numbers and Title: 10.553 – School Breakfast Program 10.555 – National School Lunch Program COVID-19 – 10.555 – National School Lunch Program Federal Award Number: 245GA324N1199 (Year: 2024) 225GA324N1099 (Year: 2024) Questioned Costs: $102,234 Repeat of Prior Year Finding: 2023-004 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over the employee compensation process as it relates to the Child Nutrition Cluster. Background Information: The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential childcare institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and secondary schools and encourages the domestic consumption of nutritious agricultural commodities. CNC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture. GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the various CNC programs. CNC funds totaling $58,647,091.23 were expended and reported on the DeKalb County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2024. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented…” Furthermore, provisions included in the Uniform Guidance, Section 200.430 – Compensation-Personal Services prescribe standards for documentation of personnel expenses and state, in part, that “(a) … Costs for compensation are allowable to the extent that they satisfy… specific requirements…, and that the total compensation for individual employees: (1) is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i)…, [as follows:] (i) 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…” Condition: A sample of 60 employees was randomly selected for testing using a non-statistical sampling approach. These employees were reviewed to determine if internal controls were properly functioning, and applicable compliance requirements were met. The following deficiencies were noted: • One employee who no longer worked for the School District received salary payments totaling $8,715. • Two employees did not have any of the required certifications, or comparable documentation, to support their salary payments totaling $48,837. • One employee was missing required certifications, or comparable documentation, to support a portion of their salary payments totaling $8,128. • One employee’s salary in the amount of $2,671 was incorrectly charged to the federal program for one pay period. • Documentation of additional pay totaling $33,883 could not be located for 14 employees. Questioned Costs: Upon testing a sample of $1,399,390 in personnel services expenditures, known questioned costs of $102,234 were identified for payroll charges not supported by adequate documentation. Using the total personnel services expenditure population of $18,999,516 (excluding benefits payments), we project the likely questioned costs to be approximately $1,388,035. The following Assistance Listing Numbers were affected by known and likely questioned costs: 10.553 and 10.555. Cause: A lack of oversight by personnel in the Office of Federal Grants and Program Compliance led to noncompliance with the requirements of the Uniform Guidance in relation to charging of personnel costs to a federal program. Effect: The School District is not in compliance with the Uniform Guidance and GaDOE guidance. Failure to pay employees with CNC funds the appropriate amount and/or maintain documentation supporting those payments could result in the expenditure of funds for unallowable purposes. This may also expose the School District to unnecessary financial strains and shortages within the CNC funds as ED or GaDOE may require the School District to return funds associated with improperly documented expenditures. Recommendation: The School District should evaluate their internal control process related to the approval and retention of documentation to support employee compensation payments. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that CNC employees are paid appropriately. Furthermore, management should develop and implement a monitoring process to ensure that these procedures are functioning properly. Views of Responsible Officials: We concur with this finding.
FA 2024-001 Improve Controls over Employee Compensation Compliance Requirement: Allowable Costs/Cost Principles Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Agriculture Pass-Through Entity: Georgia Department of Education AL Numbers and Title: 10.553 – School Breakfast Program 10.555 – National School Lunch Program COVID-19 – 10.555 – National School Lunch Program Federal Award Number: 245GA324N1199 (Year: 2024) 225GA324N1099 (Year: 2024) Questioned Costs: $102,234 Repeat of Prior Year Finding: 2023-004 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over the employee compensation process as it relates to the Child Nutrition Cluster. Background Information: The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential childcare institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and secondary schools and encourages the domestic consumption of nutritious agricultural commodities. CNC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture. GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the various CNC programs. CNC funds totaling $58,647,091.23 were expended and reported on the DeKalb County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2024. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented…” Furthermore, provisions included in the Uniform Guidance, Section 200.430 – Compensation-Personal Services prescribe standards for documentation of personnel expenses and state, in part, that “(a) … Costs for compensation are allowable to the extent that they satisfy… specific requirements…, and that the total compensation for individual employees: (1) is reasonable for the services rendered and conforms to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities; (2) Follows an appointment made in accordance with a non-Federal entity’s laws and/or rules or written policies and meets the requirements of Federal statute, where applicable; and (3) Is determined and supported as provided in paragraph (i)…, [as follows:] (i) 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…” Condition: A sample of 60 employees was randomly selected for testing using a non-statistical sampling approach. These employees were reviewed to determine if internal controls were properly functioning, and applicable compliance requirements were met. The following deficiencies were noted: • One employee who no longer worked for the School District received salary payments totaling $8,715. • Two employees did not have any of the required certifications, or comparable documentation, to support their salary payments totaling $48,837. • One employee was missing required certifications, or comparable documentation, to support a portion of their salary payments totaling $8,128. • One employee’s salary in the amount of $2,671 was incorrectly charged to the federal program for one pay period. • Documentation of additional pay totaling $33,883 could not be located for 14 employees. Questioned Costs: Upon testing a sample of $1,399,390 in personnel services expenditures, known questioned costs of $102,234 were identified for payroll charges not supported by adequate documentation. Using the total personnel services expenditure population of $18,999,516 (excluding benefits payments), we project the likely questioned costs to be approximately $1,388,035. The following Assistance Listing Numbers were affected by known and likely questioned costs: 10.553 and 10.555. Cause: A lack of oversight by personnel in the Office of Federal Grants and Program Compliance led to noncompliance with the requirements of the Uniform Guidance in relation to charging of personnel costs to a federal program. Effect: The School District is not in compliance with the Uniform Guidance and GaDOE guidance. Failure to pay employees with CNC funds the appropriate amount and/or maintain documentation supporting those payments could result in the expenditure of funds for unallowable purposes. This may also expose the School District to unnecessary financial strains and shortages within the CNC funds as ED or GaDOE may require the School District to return funds associated with improperly documented expenditures. Recommendation: The School District should evaluate their internal control process related to the approval and retention of documentation to support employee compensation payments. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that CNC employees are paid appropriately. Furthermore, management should develop and implement a monitoring process to ensure that these procedures are functioning properly. Views of Responsible Officials: We concur with this finding.
Assistance Listing Number, Federal Agency, and Program Name 21.027, U.S. Department of the Treasury, COVID 19 - Coronavirus State and Local Fiscal Recovery Funds, and 93.493, U.S. Department of Health and Human Services, Congressional Directives Federal Award Identification Number and Year 21.027 192908 and 93.493 6 CE2CS52794 01 07 Pass through Entity 21.027 Chicago Department of Public Health; 93.493 N/A Finding Type Material weakness and material noncompliance with laws and regulations Repeat Finding No Criteria Per 2 CFR 200.303(a), nonfederal entities must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in Standards for Internal Control Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.318(i), the nonfederal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Per 2 CFR 200.319(a) All procurement transactions under the federal award must be conducted in a manner that provides full and open competition and is consistent with the standards of this section and § 200.320(b) covering formal procurement methods. Per 2 CFR 200.324(a), the nonfederal entity must perform a cost or price analysis in connection with every procurement action in excess of the simplified acquisition threshold (SAT), including contract modifications. The method and degree of analysis is dependent upon the facts surrounding the particular procurement situation; but, as a starting point, the nonfederal entity must make independent estimates before receiving bids or proposals. Finally, per 2 CFR 180.300, nonfederal entities must verify that outside parties are not suspended or debarred from engaging in federal activity before entering into a covered transaction. Condition Controls were not sufficient to ensure procurement activities were performed in accordance with 2 CFR 200 and management’s internal policies and procedures related to procurement, suspension, and debarment. Questioned Costs $ 237,890 If Questioned Costs are not Determinable, Description of why Known Questioned Costs Were Undetermined or Otherwise Could not be Reported N/A Identification of How Questioned Costs Were Computed Questioned costs represent expenditures under these contracts reported on the SEFA. Context For three contracts in excess of the Organization's formal procurement threshold ($50,000), management did not retain documentation of having obtained the required number of competitive bids or document rationale for sole procurement, did not document the history of procurement decisions, and was unable to provide evidence that contractors were checked for suspension and debarment in advance of entering into a covered transaction. Cause and Effect A lack of controls to ensure required procurement activities were performed could result in material noncompliance with federal procurement standards. Recommendation We recommend that management retain documented evidence that its policies and procedures were followed to ensure compliance with federal procurement standards. Additionally, we recommend management review its internal procurement policy regularly to ensure compliance with federal procurement standards under 2 CFR 200.317 through 200.327. Views of Responsible Officials and Corrective Action Plan Management agrees with the recommendation and will review the relevant guidance to ensure compliance. Careful consideration was done in selecting the vendors to look at obtaining the best cost for the value of the service as IWS was responsible for a portion of the expenses. Necessary revisions will be made to the existing procurement processes and controls in a timely manner to ensure that procurement decisions are documented, as required by 2 CFR Part 200.
Assistance Listing Number, Federal Agency, and Program Name 21.027, U.S. Department of the Treasury, COVID 19 - Coronavirus State and Local Fiscal Recovery Funds, and 93.493, U.S. Department of Health and Human Services, Congressional Directives Federal Award Identification Number and Year 21.027 192908 and 93.493 6 CE2CS52794 01 07 Pass through Entity 21.027 Chicago Department of Public Health; 93.493 N/A Finding Type Material weakness and material noncompliance with laws and regulations Repeat Finding No Criteria Per 2 CFR 200.303(a), nonfederal entities must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in Standards for Internal Control Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.318(i), the nonfederal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Per 2 CFR 200.319(a) All procurement transactions under the federal award must be conducted in a manner that provides full and open competition and is consistent with the standards of this section and § 200.320(b) covering formal procurement methods. Per 2 CFR 200.324(a), the nonfederal entity must perform a cost or price analysis in connection with every procurement action in excess of the simplified acquisition threshold (SAT), including contract modifications. The method and degree of analysis is dependent upon the facts surrounding the particular procurement situation; but, as a starting point, the nonfederal entity must make independent estimates before receiving bids or proposals. Finally, per 2 CFR 180.300, nonfederal entities must verify that outside parties are not suspended or debarred from engaging in federal activity before entering into a covered transaction. Condition Controls were not sufficient to ensure procurement activities were performed in accordance with 2 CFR 200 and management’s internal policies and procedures related to procurement, suspension, and debarment. Questioned Costs $ 237,890 If Questioned Costs are not Determinable, Description of why Known Questioned Costs Were Undetermined or Otherwise Could not be Reported N/A Identification of How Questioned Costs Were Computed Questioned costs represent expenditures under these contracts reported on the SEFA. Context For three contracts in excess of the Organization's formal procurement threshold ($50,000), management did not retain documentation of having obtained the required number of competitive bids or document rationale for sole procurement, did not document the history of procurement decisions, and was unable to provide evidence that contractors were checked for suspension and debarment in advance of entering into a covered transaction. Cause and Effect A lack of controls to ensure required procurement activities were performed could result in material noncompliance with federal procurement standards. Recommendation We recommend that management retain documented evidence that its policies and procedures were followed to ensure compliance with federal procurement standards. Additionally, we recommend management review its internal procurement policy regularly to ensure compliance with federal procurement standards under 2 CFR 200.317 through 200.327. Views of Responsible Officials and Corrective Action Plan Management agrees with the recommendation and will review the relevant guidance to ensure compliance. Careful consideration was done in selecting the vendors to look at obtaining the best cost for the value of the service as IWS was responsible for a portion of the expenses. Necessary revisions will be made to the existing procurement processes and controls in a timely manner to ensure that procurement decisions are documented, as required by 2 CFR Part 200.
FINDING 2024-003 Subject: Child Nutrition Cluster - Internal Controls Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): SY 2022-2023, SY 2023-2024 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Allowable Costs/Cost Principles Audit Finding: Material Weakness Condition and Context An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the Child Nutrition Program and the Allowable Costs/Cost Principles compliance requirements. A sample of 40 vendor and 40 payroll disbursements from the School Lunch fund was selected for testing to determine whether internal control procedures were effective. Supporting documentation of internal control implementation for 2 payroll disbursements and 2 payroll-related vendor disbursements was produced after the sample was requested for testing. Supporting documentation of internal control implementation for 4 payroll disbursements was not presented. The lack of internal controls were systemic throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 20 GOSHEN COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause The School Corporation indicated there was some staff turnover during the audit period and had not developed a system of internal controls for a period of time when management lacked staff to perform all necessary duties. Effect The failure to establish an internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the Allowable Costs/Cost Principles compliance requirement. A lack of segregation of duties within an internal control system could also allow noncompliance with compliance requirements and allow the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the costs of the program. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish and document a system of internal controls, including segregation of duties, related to the grant agreement and the compliance requirement listed above. An internal control system, including segregation of duties, should be designed and operate effectively to provide reasonable assurance that noncompliance with the grant agreement or a compliance requirement of a federal program will be prevented, or detected and corrected, on a timely basis. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-003 Subject: Child Nutrition Cluster - Internal Controls Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): SY 2022-2023, SY 2023-2024 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Allowable Costs/Cost Principles Audit Finding: Material Weakness Condition and Context An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the Child Nutrition Program and the Allowable Costs/Cost Principles compliance requirements. A sample of 40 vendor and 40 payroll disbursements from the School Lunch fund was selected for testing to determine whether internal control procedures were effective. Supporting documentation of internal control implementation for 2 payroll disbursements and 2 payroll-related vendor disbursements was produced after the sample was requested for testing. Supporting documentation of internal control implementation for 4 payroll disbursements was not presented. The lack of internal controls were systemic throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 20 GOSHEN COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause The School Corporation indicated there was some staff turnover during the audit period and had not developed a system of internal controls for a period of time when management lacked staff to perform all necessary duties. Effect The failure to establish an internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the Allowable Costs/Cost Principles compliance requirement. A lack of segregation of duties within an internal control system could also allow noncompliance with compliance requirements and allow the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the costs of the program. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish and document a system of internal controls, including segregation of duties, related to the grant agreement and the compliance requirement listed above. An internal control system, including segregation of duties, should be designed and operate effectively to provide reasonable assurance that noncompliance with the grant agreement or a compliance requirement of a federal program will be prevented, or detected and corrected, on a timely basis. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-003 Subject: Child Nutrition Cluster - Internal Controls Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): SY 2022-2023, SY 2023-2024 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Allowable Costs/Cost Principles Audit Finding: Material Weakness Condition and Context An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the Child Nutrition Program and the Allowable Costs/Cost Principles compliance requirements. A sample of 40 vendor and 40 payroll disbursements from the School Lunch fund was selected for testing to determine whether internal control procedures were effective. Supporting documentation of internal control implementation for 2 payroll disbursements and 2 payroll-related vendor disbursements was produced after the sample was requested for testing. Supporting documentation of internal control implementation for 4 payroll disbursements was not presented. The lack of internal controls were systemic throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 20 GOSHEN COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause The School Corporation indicated there was some staff turnover during the audit period and had not developed a system of internal controls for a period of time when management lacked staff to perform all necessary duties. Effect The failure to establish an internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the Allowable Costs/Cost Principles compliance requirement. A lack of segregation of duties within an internal control system could also allow noncompliance with compliance requirements and allow the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the costs of the program. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish and document a system of internal controls, including segregation of duties, related to the grant agreement and the compliance requirement listed above. An internal control system, including segregation of duties, should be designed and operate effectively to provide reasonable assurance that noncompliance with the grant agreement or a compliance requirement of a federal program will be prevented, or detected and corrected, on a timely basis. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-003 Subject: Child Nutrition Cluster - Internal Controls Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): SY 2022-2023, SY 2023-2024 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Allowable Costs/Cost Principles Audit Finding: Material Weakness Condition and Context An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the Child Nutrition Program and the Allowable Costs/Cost Principles compliance requirements. A sample of 40 vendor and 40 payroll disbursements from the School Lunch fund was selected for testing to determine whether internal control procedures were effective. Supporting documentation of internal control implementation for 2 payroll disbursements and 2 payroll-related vendor disbursements was produced after the sample was requested for testing. Supporting documentation of internal control implementation for 4 payroll disbursements was not presented. The lack of internal controls were systemic throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 20 GOSHEN COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause The School Corporation indicated there was some staff turnover during the audit period and had not developed a system of internal controls for a period of time when management lacked staff to perform all necessary duties. Effect The failure to establish an internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the Allowable Costs/Cost Principles compliance requirement. A lack of segregation of duties within an internal control system could also allow noncompliance with compliance requirements and allow the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the costs of the program. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish and document a system of internal controls, including segregation of duties, related to the grant agreement and the compliance requirement listed above. An internal control system, including segregation of duties, should be designed and operate effectively to provide reasonable assurance that noncompliance with the grant agreement or a compliance requirement of a federal program will be prevented, or detected and corrected, on a timely basis. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-003 Subject: Child Nutrition Cluster - Internal Controls Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): SY 2022-2023, SY 2023-2024 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Allowable Costs/Cost Principles Audit Finding: Material Weakness Condition and Context An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the Child Nutrition Program and the Allowable Costs/Cost Principles compliance requirements. A sample of 40 vendor and 40 payroll disbursements from the School Lunch fund was selected for testing to determine whether internal control procedures were effective. Supporting documentation of internal control implementation for 2 payroll disbursements and 2 payroll-related vendor disbursements was produced after the sample was requested for testing. Supporting documentation of internal control implementation for 4 payroll disbursements was not presented. The lack of internal controls were systemic throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 20 GOSHEN COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause The School Corporation indicated there was some staff turnover during the audit period and had not developed a system of internal controls for a period of time when management lacked staff to perform all necessary duties. Effect The failure to establish an internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the Allowable Costs/Cost Principles compliance requirement. A lack of segregation of duties within an internal control system could also allow noncompliance with compliance requirements and allow the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the costs of the program. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish and document a system of internal controls, including segregation of duties, related to the grant agreement and the compliance requirement listed above. An internal control system, including segregation of duties, should be designed and operate effectively to provide reasonable assurance that noncompliance with the grant agreement or a compliance requirement of a federal program will be prevented, or detected and corrected, on a timely basis. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-003 Subject: Child Nutrition Cluster - Internal Controls Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): SY 2022-2023, SY 2023-2024 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Allowable Costs/Cost Principles Audit Finding: Material Weakness Condition and Context An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the Child Nutrition Program and the Allowable Costs/Cost Principles compliance requirements. A sample of 40 vendor and 40 payroll disbursements from the School Lunch fund was selected for testing to determine whether internal control procedures were effective. Supporting documentation of internal control implementation for 2 payroll disbursements and 2 payroll-related vendor disbursements was produced after the sample was requested for testing. Supporting documentation of internal control implementation for 4 payroll disbursements was not presented. The lack of internal controls were systemic throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 20 GOSHEN COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause The School Corporation indicated there was some staff turnover during the audit period and had not developed a system of internal controls for a period of time when management lacked staff to perform all necessary duties. Effect The failure to establish an internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the Allowable Costs/Cost Principles compliance requirement. A lack of segregation of duties within an internal control system could also allow noncompliance with compliance requirements and allow the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the costs of the program. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish and document a system of internal controls, including segregation of duties, related to the grant agreement and the compliance requirement listed above. An internal control system, including segregation of duties, should be designed and operate effectively to provide reasonable assurance that noncompliance with the grant agreement or a compliance requirement of a federal program will be prevented, or detected and corrected, on a timely basis. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-004 Subject: Child Nutrition Cluster - Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Number and Year (or Other Identifying Number): SY 2022-2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-004. Condition and Context An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the Child Nutrition Program and the Procurement and Suspension and Debarment compliance requirements. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAM exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. During the audit period, the School Corporation had covered transactions over $25,000 from five vendors charged to the School Lunch fund, which required suspension and debarment procedures. For two of the five vendors, there was no evidence provided to verify that the vendor was checked for suspension and debarment prior to entering into the transaction. The covered transactions totaled $61,183. The lack of internal controls and noncompliance were isolated to fiscal year 2022-2023. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 22 GOSHEN COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM.gov Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause The School Corporation's management had not developed a system of internal controls in 2022-2023 that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish internal controls enabled noncompliance to go undetected. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish and implement internal control procedures to ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. This should include performing a suspension and debarment check on an annual basis to verify vendors charged to funds which are federally funded are not suspended or debarred. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-004 Subject: Child Nutrition Cluster - Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Number and Year (or Other Identifying Number): SY 2022-2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-004. Condition and Context An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the Child Nutrition Program and the Procurement and Suspension and Debarment compliance requirements. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAM exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. During the audit period, the School Corporation had covered transactions over $25,000 from five vendors charged to the School Lunch fund, which required suspension and debarment procedures. For two of the five vendors, there was no evidence provided to verify that the vendor was checked for suspension and debarment prior to entering into the transaction. The covered transactions totaled $61,183. The lack of internal controls and noncompliance were isolated to fiscal year 2022-2023. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 22 GOSHEN COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM.gov Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause The School Corporation's management had not developed a system of internal controls in 2022-2023 that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish internal controls enabled noncompliance to go undetected. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish and implement internal control procedures to ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. This should include performing a suspension and debarment check on an annual basis to verify vendors charged to funds which are federally funded are not suspended or debarred. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-004 Subject: Child Nutrition Cluster - Suspension and Debarment Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Number and Year (or Other Identifying Number): SY 2022-2023 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-004. Condition and Context An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the Child Nutrition Program and the Procurement and Suspension and Debarment compliance requirements. Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAM exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. During the audit period, the School Corporation had covered transactions over $25,000 from five vendors charged to the School Lunch fund, which required suspension and debarment procedures. For two of the five vendors, there was no evidence provided to verify that the vendor was checked for suspension and debarment prior to entering into the transaction. The covered transactions totaled $61,183. The lack of internal controls and noncompliance were isolated to fiscal year 2022-2023. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 22 GOSHEN COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM.gov Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause The School Corporation's management had not developed a system of internal controls in 2022-2023 that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish internal controls enabled noncompliance to go undetected. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish and implement internal control procedures to ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. This should include performing a suspension and debarment check on an annual basis to verify vendors charged to funds which are federally funded are not suspended or debarred. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-005 Subject: Special Education Cluster (IDEA) - Internal Controls Federal Agency: Department of Education Federal Programs: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 21611-014-PN01, 22611-014-PN01, 21619-014-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Cash Management Audit Finding: Significant Deficiency INDIANA STATE BOARD OF ACCOUNTS 23 GOSHEN COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-005. Condition and Context The School Corporation had not effectively designed or implemented a system of internal controls to prevent, or detect and correct, noncompliance. Although reimbursement requests were prepared by the Grant Manager and reviewed by the Treasurer, the documentation that accompanied the reimbursement requests did not provide sufficient detail to know if expenses were paid prior to requesting reimbursement. The lack of internal controls was isolated to the 2021 Special Education Grants to States grant award number 21611-014-PN01, 2022 Special Education Grants to States grant award number 22611-014-PN01, and the 2021 Special Education Preschool Grants grant award number 21619-014-PN01. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause Management had not established an effective system of internal controls that would have ensured expenses were paid prior to requesting reimbursement. Management did not maintain all documentation to support the request for reimbursement. Effect Without an effective system of internal controls, the School Corporation is at risk for noncompliance with the grant agreement and the Cash Management compliance requirement. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls related to the grant agreement and the Cash Management compliance requirement to include all documentation to support the request for reimbursement. INDIANA STATE BOARD OF ACCOUNTS 24 GOSHEN COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-005 Subject: Special Education Cluster (IDEA) - Internal Controls Federal Agency: Department of Education Federal Programs: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 21611-014-PN01, 22611-014-PN01, 21619-014-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Cash Management Audit Finding: Significant Deficiency INDIANA STATE BOARD OF ACCOUNTS 23 GOSHEN COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-005. Condition and Context The School Corporation had not effectively designed or implemented a system of internal controls to prevent, or detect and correct, noncompliance. Although reimbursement requests were prepared by the Grant Manager and reviewed by the Treasurer, the documentation that accompanied the reimbursement requests did not provide sufficient detail to know if expenses were paid prior to requesting reimbursement. The lack of internal controls was isolated to the 2021 Special Education Grants to States grant award number 21611-014-PN01, 2022 Special Education Grants to States grant award number 22611-014-PN01, and the 2021 Special Education Preschool Grants grant award number 21619-014-PN01. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause Management had not established an effective system of internal controls that would have ensured expenses were paid prior to requesting reimbursement. Management did not maintain all documentation to support the request for reimbursement. Effect Without an effective system of internal controls, the School Corporation is at risk for noncompliance with the grant agreement and the Cash Management compliance requirement. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls related to the grant agreement and the Cash Management compliance requirement to include all documentation to support the request for reimbursement. INDIANA STATE BOARD OF ACCOUNTS 24 GOSHEN COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-005 Subject: Special Education Cluster (IDEA) - Internal Controls Federal Agency: Department of Education Federal Programs: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.173 Federal Award Numbers and Years (or Other Identifying Numbers): 21611-014-PN01, 22611-014-PN01, 21619-014-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Cash Management Audit Finding: Significant Deficiency INDIANA STATE BOARD OF ACCOUNTS 23 GOSHEN COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-005. Condition and Context The School Corporation had not effectively designed or implemented a system of internal controls to prevent, or detect and correct, noncompliance. Although reimbursement requests were prepared by the Grant Manager and reviewed by the Treasurer, the documentation that accompanied the reimbursement requests did not provide sufficient detail to know if expenses were paid prior to requesting reimbursement. The lack of internal controls was isolated to the 2021 Special Education Grants to States grant award number 21611-014-PN01, 2022 Special Education Grants to States grant award number 22611-014-PN01, and the 2021 Special Education Preschool Grants grant award number 21619-014-PN01. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause Management had not established an effective system of internal controls that would have ensured expenses were paid prior to requesting reimbursement. Management did not maintain all documentation to support the request for reimbursement. Effect Without an effective system of internal controls, the School Corporation is at risk for noncompliance with the grant agreement and the Cash Management compliance requirement. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls related to the grant agreement and the Cash Management compliance requirement to include all documentation to support the request for reimbursement. INDIANA STATE BOARD OF ACCOUNTS 24 GOSHEN COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding No. 2024-004 Procurement Federal Agency: U.S. Department of the Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRFP4547 – 2021 Award Period: 3/3/21 – 12/31/24 Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or Specific Requirement: The Town must comply with procurement standards set out at 2 CFR sections 200.303 and 200.318 through 200.326 within Uniform Guidance. Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). UG §200.318 General procurement standards. (i) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. §200.320 states that the non-Federal entity must use one of the prescribed methods of procurement. (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in §200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: (1) Micro-purchases. Procurement by micro-purchase is the acquisition of supplies or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (See the definition of micro-purchase in §200.1). To the maximum extent practicable, the non-Federal entity should distribute micro-purchases equitably among qualified suppliers. Micro-purchases may be awarded without soliciting competitive price or rate quotations if the non-Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents it files accordingly. Purchase cards can be used for micropurchases if procedures are documented and approved by the non-Federal entity. (2) Small purchase. Procurement by small purchase is the acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a noncompetitive procurement can be used in accordance with §200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate: (1) Sealed bids. Bids are publicly solicited, and a firm fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. (2) Proposals. Either a fixed price or cost-reimbursement type contract is awarded. Proposals are generally used when conditions are not appropriate for the use of sealed bids. (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the allowed circumstances apply. Condition: The Town purchasing policy does not include all elements as outlined in 2 CFR sections 200.303 and 200.318 through 200.326 noted above. Questioned Costs: None Context: Although the Town’s purchasing policies do not include all elements as outlined in 2 CFR sections 200.303 and 200.318 through 200.326, we did not identify transactions where contracts were awarded without proper justification in 7 of 7 procurement transactions tested. Cause: Management was not aware of the procurement standards set out at 2 CFR sections 200.303 and 200.318 through 200.326 within Uniform Guidance. Effect: The Town is at risk for noncompliance with Federal grants as it relates to procurement. Repeat Finding: No Recommendation: We recommend that the Town update its procurement policies to include all elements identified in 2 CFR sections 200.303 and 200.318 through 200.326. Views of Responsible Officials: Management is working with our current auditors to update the Town’s procurement policies to be in compliance with the Uniform Guidance.
2024-002 INSUFFICIENT WIOA ELIGIBILITY DOCUMENTATION Federal Agency: U.S. Department of Labor Federal Program and Assistance Listing Number: 17.265 Type of Finding: Significant Deficiency, Non-compliance Compliance Area: Eligibility Award Period: National Employment and Training (07/01/2022-06/30/2025) National Employment and Training (06/01/2023-06/30/2026) Questioned Costs: None Condition: 1 out of 40 sampled applications lacked sufficient documentation to support eligibility under WIOA Section 166. Specifically, the file was missing verification of tribal affiliation, proof of residency, and documentation of public assistance status. Criteria: Per 2 CFR §200.303 and §200.430, recipients of federal funds must establish and maintain effective internal controls to ensure compliance with federal statutes, regulations, and the terms and conditions of the award. The NIYC-WIOA Policy Manual requires that eligibility determinations be supported by verifiable documentation, including tribal enrollment records, residency verification, and evidence of low-income or public assistance status. Effect: Failure to maintain complete eligibility documentation may result in noncompliance with federal program requirements, potential disallowed costs, and increased risk of audit findings or funding claw backs. Cause: The missing documentation was attributed to a participant file being misplaced during a staff transition, indicating a lack of centralized and secure file management protocols.
Assistance Listing Number(s): 84.425V Name of Federal Program or Cluster: COVID-19 Education Stabilization Fund (ESF), American Rescue Plan – Emergency Assistance to Non-Public Schools (ARP EANS) Name of Federal Agency: Department of Education Federal Award Identification Number: S425V210042 Federal Award Date: February 26, 2021 and September 24, 2021 Name of Pass-through Entity: State of North Carolina Pass-through Entity Identifying Number: 60-04 and 60-05 Award Period: July 1, 2022 through September 30, 2023 and July 1, 2022 through September 30, 2024 Criteria: Uniform Guidance 2 CFR 200.303(a) requires the non-federal entity to establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: 54 of 60 disbursements sampled did not have documented internal control that supported reasonable assurance of compliance with allowable activities and cost principles requirements. Cause: A written policy and procedures over documenting internal control(s) over allowable activities and cost principles was not designed and implemented. Effect or Potential Effect: Costs charged to the federal award are more likely to be for unallowable activities and not comply with allowable cost principles. These costs may be disallowed. Context: Salesforce is used to document disbursements, but was not set up to document internal control procedures. Repeat Finding: No Recommendation: All disbursements charged to the federal award should have documentation to support internal controls performed for allowable activities and cost principles. Written policies and procedures should be designed and implemented for documentation of internal controls performed for allowable activities and cost principles. Views of Responsible Officials: The organization agrees with the finding.
Assistance Listing Number(s): 84.425V Name of Federal Program or Cluster: COVID-19 Education Stabilization Fund (ESF), American Rescue Plan – Emergency Assistance to Non-Public Schools (ARP EANS) Name of Federal Agency: Department of Education Federal Award Identification Number: S425V210042 Federal Award Date: February 26, 2021 and September 24, 2021 Name of Pass-through Entity: State of North Carolina Pass-through Entity Identifying Number: 60-04 and 60-05 Award Period: July 1, 2022 through September 30, 2023 and July 1, 2022 through September 30, 2024 Criteria: Uniform Guidance 2 CFR 200.303(a) requires the non-federal entity to establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: 2 out of 4 financial reports tested did not have an internal control documented that supported reasonable assurance of compliance with reporting requirements. Cause: A written policy and procedures over documenting internal control(s) over reporting was not designed and implemented. Effect or Potential Effect: Reports may be incomplete or inaccurate. Repeat Finding: No Recommendation: Internal control should be documented to ensure compliance with the reporting compliance requirement. Documentation should include a signed certification by the preparer and a reviewer that the requests for payment, written summaries of reporting-specific meetings with grantors, and any other reporting activities are complete, accurate, and agree to supporting records of expenditures or other accounting or database information. Written policies and procedures should be designed and implemented for documentation of internal controls performed for reporting. Views of Responsible Officials: The organization agrees with the finding.
Assistance Listing Number(s): 84.425V Name of Federal Program or Cluster: COVID-19 Education Stabilization Fund (ESF), American Rescue Plan – Emergency Assistance to Non-Public Schools (ARP EANS) Name of Federal Agency: Department of Education Federal Award Identification Number: S425V210042 Federal Award Date: February 26, 2021 and September 24, 2021 Name of Pass-through Entity: State of North Carolina Pass-through Entity Identifying Number: 60-04 and 60-05 Award Period: July 1, 2022 through September 30, 2023 and July 1, 2022 through September 30, 2024 Criteria: Uniform Guidance 2 CFR 200.303(a) requires the non-federal entity to establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: 54 of 60 disbursements sampled did not have documented internal control that supported reasonable assurance of compliance with allowable activities and cost principles requirements. Cause: A written policy and procedures over documenting internal control(s) over allowable activities and cost principles was not designed and implemented. Effect or Potential Effect: Costs charged to the federal award are more likely to be for unallowable activities and not comply with allowable cost principles. These costs may be disallowed. Context: Salesforce is used to document disbursements, but was not set up to document internal control procedures. Repeat Finding: No Recommendation: All disbursements charged to the federal award should have documentation to support internal controls performed for allowable activities and cost principles. Written policies and procedures should be designed and implemented for documentation of internal controls performed for allowable activities and cost principles. Views of Responsible Officials: The organization agrees with the finding.
Assistance Listing Number(s): 84.425V Name of Federal Program or Cluster: COVID-19 Education Stabilization Fund (ESF), American Rescue Plan – Emergency Assistance to Non-Public Schools (ARP EANS) Name of Federal Agency: Department of Education Federal Award Identification Number: S425V210042 Federal Award Date: February 26, 2021 and September 24, 2021 Name of Pass-through Entity: State of North Carolina Pass-through Entity Identifying Number: 60-04 and 60-05 Award Period: July 1, 2022 through September 30, 2023 and July 1, 2022 through September 30, 2024 Criteria: Uniform Guidance 2 CFR 200.303(a) requires the non-federal entity to establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: 2 out of 4 financial reports tested did not have an internal control documented that supported reasonable assurance of compliance with reporting requirements. Cause: A written policy and procedures over documenting internal control(s) over reporting was not designed and implemented. Effect or Potential Effect: Reports may be incomplete or inaccurate. Repeat Finding: No Recommendation: Internal control should be documented to ensure compliance with the reporting compliance requirement. Documentation should include a signed certification by the preparer and a reviewer that the requests for payment, written summaries of reporting-specific meetings with grantors, and any other reporting activities are complete, accurate, and agree to supporting records of expenditures or other accounting or database information. Written policies and procedures should be designed and implemented for documentation of internal controls performed for reporting. Views of Responsible Officials: The organization agrees with the finding.
Department of Health and Human Services Federal Assistance Listing #93.912 Rural Health Care Services Outreach, Rural Health Network Development and Small Health Care Provider Quality Improvement Cash Management Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria: 2 CFR 200.303 (a) establishes that the auditee must establish and maintain effective internal control over federal awards that provides reasonable assurance that the entity is managing the federal award in compliance with federal statutes, regulations and conditions of the federal award. Condition: During our testing, it was noted that the cash draw requests were done on a prospective basis despite the program requiring that cash draw requests must be for expenditures already incurred or that would be paid within three days. Cause: The Clinic did not have an internal control system designed to ensure that expenditures had been incurred or would be paid within three days of requesting a cash draw on this program. In addition, the Clinic did not have an adequate internal control policy to require the documentation of the cash draw requests’ review and approval. Effect: The lack of adequate policies governing review and approval over the cash draw requests increases the risk that employees participating in the federal award administration may not be able to detect and correct noncompliance in a timely manner. Questioned Costs: None reported Context: Four out of four cash draws totaling $625,000 were tested. Repeat Finding from Prior Years: No Recommendation: We recommend the Clinic enhance internal control policies to cash draw requests are reviewed and approved by someone who is familiar with the program requirements and all of that information is retained to ensure that all cash draw requests are correct, meet the requirements of the federal program, and are properly recorded. View of Responsible Officials: Management agrees with the finding.
Department of Health and Human Services Federal Assistance Listing #93.912 Rural Health Care Services Outreach, Rural Health Network Development and Small Health Care Provider Quality Improvement Activities Allowed or Unallowed and Allowable Costs/Costs Principles and Period of Performance Material Weakness in Internal Control Over Compliance Criteria: 2 CFR 200.303 (a) establishes that the auditee must establish and maintain effective internal control over federal awards that provides reasonable assurance that the entity is managing the federal award in compliance with federal statutes, regulations and conditions of the federal award. Condition: During our testing, it was noted that some expenditures were not fully supported by underlying documentation. In addition, some of the expenditures tested did not have documentation of the review and approval of the allocation of the expenditure to the federal program. The Clinic also calculated their indirect cost rate based on the total grant budget and claimed an equal amount of indirect costs per month instead of calculating the indirect cost rate per direct expenditures for each month. Cause: The Clinic did not have an internal control policy in place to ensure the review and approval of expenditures and the allocation of expenditures to the federal program was documented. In addition, the Clinic did not have an internal control process in place to ensure the correct amounts of indirect costs were requested based on the direct costs for the same period. Effect: The lack of adequate policies governing review and approval over expenditures and the allocation of expenditures to the federal program increases the risk that employees participating in the federal award administration may not be able to detect and correct noncompliance in a timely manner. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 15 expenditures were selected for testing, which accounted for $199,720 of $613,623 direct program expenditures. Eight of the expenditures did not contain evidence of a secondary review to verify that expenditures met the terms and conditions of the program and was properly allocated to the program. A nonstatistical sample of 3 expenditures were selected for testing, which accounted for $11,153 of $22,307 indirect program expenditures. None of the expenditures were calculated based off of actual direct costs or contained evidence of a secondary review to verify that expenditures met the terms and conditions of the program. Repeat Finding from Prior Years: No Recommendation: We recommend the Clinic enhance internal control policies to ensure expenditures and the allocation of expenditures to the federal program are reviewed and approved and all of that information is retained to ensure that all payments are necessary, correct, and meet the requirements of the federal program. View of Responsible Officials: Management agrees with the finding.
Federal Agency: US Department of Education Federal Program Name: Student Financial Assistance Cluster Assistance Listing Number: 84.063, 84.007, & 84.033 Federal Award Identification Number and Year: P063P231353-2024, P063Q231353-2024, P033A231190-2024, & P007A231190-2024 Award Period: July 1, 2023 to June 30, 2024 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: When calculating return to title IV (R2T4), percent completed is calculated by dividing total number of calendar days by amount attended, per 34 CFR 668.22(f)(2)(i), the total number of calendar days in a payment period or period of enrollment includes all days within the period that the student was scheduled to complete, except that scheduled breaks of at least five consecutive days are excluded from the total number of calendar days in a payment period or period of enrollment and the number of calendar days completed in that period. Per 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Condition: The College incorrectly calculated Return to Title IV (R2T4) calculations. Questioned costs: None Context: During our testing of 10 R2T4 calculations, we identified that 8 had mechanically incorrect calculation by using the incorrect number of scheduled break days. Cause: The College was using the incorrect number of scheduled break days for Fall Semester. Effect: The College could return incorrect amounts based off of their calculations, which could effect student repayment amounts based off of amount earned. Repeat Finding: Yes (2023-001) Recommendation: We recommend that the College review policies and procedures related to R2T4 calculations to ensure calculations are performed correctly. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.
Federal Agency: US Department of Education Federal Program Name: Student Financial Assistance Cluster Assistance Listing Number: 84.063, 84.007, & 84.033 Federal Award Identification Number and Year: P063P231353-2024, P063Q231353-2024, P033A231190-2024, & P007A231190-2024 Award Period: July 1, 2023 to June 30, 2024 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: When calculating return to title IV (R2T4), percent completed is calculated by dividing total number of calendar days by amount attended, per 34 CFR 668.22(f)(2)(i), the total number of calendar days in a payment period or period of enrollment includes all days within the period that the student was scheduled to complete, except that scheduled breaks of at least five consecutive days are excluded from the total number of calendar days in a payment period or period of enrollment and the number of calendar days completed in that period. Per 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Condition: The College incorrectly calculated Return to Title IV (R2T4) calculations. Questioned costs: None Context: During our testing of 10 R2T4 calculations, we identified that 8 had mechanically incorrect calculation by using the incorrect number of scheduled break days. Cause: The College was using the incorrect number of scheduled break days for Fall Semester. Effect: The College could return incorrect amounts based off of their calculations, which could effect student repayment amounts based off of amount earned. Repeat Finding: Yes (2023-001) Recommendation: We recommend that the College review policies and procedures related to R2T4 calculations to ensure calculations are performed correctly. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.
Federal Agency: US Department of Education Federal Program Name: Student Financial Assistance Cluster Assistance Listing Number: 84.063, 84.007, & 84.033 Federal Award Identification Number and Year: P063P231353-2024, P063Q231353-2024, P033A231190-2024, & P007A231190-2024 Award Period: July 1, 2023 to June 30, 2024 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: When calculating return to title IV (R2T4), percent completed is calculated by dividing total number of calendar days by amount attended, per 34 CFR 668.22(f)(2)(i), the total number of calendar days in a payment period or period of enrollment includes all days within the period that the student was scheduled to complete, except that scheduled breaks of at least five consecutive days are excluded from the total number of calendar days in a payment period or period of enrollment and the number of calendar days completed in that period. Per 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Condition: The College incorrectly calculated Return to Title IV (R2T4) calculations. Questioned costs: None Context: During our testing of 10 R2T4 calculations, we identified that 8 had mechanically incorrect calculation by using the incorrect number of scheduled break days. Cause: The College was using the incorrect number of scheduled break days for Fall Semester. Effect: The College could return incorrect amounts based off of their calculations, which could effect student repayment amounts based off of amount earned. Repeat Finding: Yes (2023-001) Recommendation: We recommend that the College review policies and procedures related to R2T4 calculations to ensure calculations are performed correctly. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.
Federal Agency: US Department of Education Federal Program Name: Student Financial Assistance Cluster Assistance Listing Number: 84.063, 84.007, & 84.033 Federal Award Identification Number and Year: P063P231353-2024, P063Q231353-2024, P033A231190-2024, & P007A231190-2024 Award Period: July 1, 2023 to June 30, 2024 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: When calculating return to title IV (R2T4), percent completed is calculated by dividing total number of calendar days by amount attended, per 34 CFR 668.22(f)(2)(i), the total number of calendar days in a payment period or period of enrollment includes all days within the period that the student was scheduled to complete, except that scheduled breaks of at least five consecutive days are excluded from the total number of calendar days in a payment period or period of enrollment and the number of calendar days completed in that period. Per 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Condition: The College incorrectly calculated Return to Title IV (R2T4) calculations. Questioned costs: None Context: During our testing of 10 R2T4 calculations, we identified that 8 had mechanically incorrect calculation by using the incorrect number of scheduled break days. Cause: The College was using the incorrect number of scheduled break days for Fall Semester. Effect: The College could return incorrect amounts based off of their calculations, which could effect student repayment amounts based off of amount earned. Repeat Finding: Yes (2023-001) Recommendation: We recommend that the College review policies and procedures related to R2T4 calculations to ensure calculations are performed correctly. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.
Federal Agency: US Department of Education Federal Program Name: Student Financial Assistance Cluster Assistance Listing Number: 84.063, 84.007, & 84.033 Federal Award Identification Number and Year: P063P231353-2024, P063Q231353-2024, P033A231190-2024, & P007A231190-2024 Award Period: July 1, 2023 to June 30, 2024 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: Per 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Additionally, 34 CFR 682.610, states that institutions must report accurately the enrollment status of all students regardless of if they receive aid from the institution or not. Changes to said status are required to be reported within 30 days of becoming aware of the status change, or with the next scheduled transmission of statuses if the scheduled transmission is within 60 days. Condition: The College did not properly report student enrollment changes for students who received federal student aid to the National Student Loan Data System (NSLDS). Questioned costs: None. Context: During our testing of 40 students, we identified 9 students had the incorrect effective date, 4 students were reported past the 60-day reporting timeframe, and 1 student did not have matching status change for Campus and Program enrollment. Cause: The College didn't have proper procedures in place to verify students’ status in NSLDS matched the institutions records in a timely manner. Effect: The College was not in compliance with the requirements to properly report student enrollment data correctly. Incorrect dates submitted to NSLDS may be used to determine the grace period for the repayment and interest of outstanding Title IV student loans. Repeat Finding: No. Recommendation: We recommend the College review current processes for reporting to NSLDS and implement procedures to ensure submissions are reported timely and accurately. Views of responsible officials: Management agrees with this finding.
Federal Agency: US Department of Education Federal Program Name: Student Financial Assistance Cluster Assistance Listing Number: 84.063, 84.007, & 84.033 Federal Award Identification Number and Year: P063P231353-2024, P063Q231353-2024, P033A231190-2024, & P007A231190-2024 Award Period: July 1, 2023 to June 30, 2024 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: Per 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Additionally, 34 CFR 682.610, states that institutions must report accurately the enrollment status of all students regardless of if they receive aid from the institution or not. Changes to said status are required to be reported within 30 days of becoming aware of the status change, or with the next scheduled transmission of statuses if the scheduled transmission is within 60 days. Condition: The College did not properly report student enrollment changes for students who received federal student aid to the National Student Loan Data System (NSLDS). Questioned costs: None. Context: During our testing of 40 students, we identified 9 students had the incorrect effective date, 4 students were reported past the 60-day reporting timeframe, and 1 student did not have matching status change for Campus and Program enrollment. Cause: The College didn't have proper procedures in place to verify students’ status in NSLDS matched the institutions records in a timely manner. Effect: The College was not in compliance with the requirements to properly report student enrollment data correctly. Incorrect dates submitted to NSLDS may be used to determine the grace period for the repayment and interest of outstanding Title IV student loans. Repeat Finding: No. Recommendation: We recommend the College review current processes for reporting to NSLDS and implement procedures to ensure submissions are reported timely and accurately. Views of responsible officials: Management agrees with this finding.
Federal Agency: US Department of Education Federal Program Name: Student Financial Assistance Cluster Assistance Listing Number: 84.063, 84.007, & 84.033 Federal Award Identification Number and Year: P063P231353-2024, P063Q231353-2024, P033A231190-2024, & P007A231190-2024 Award Period: July 1, 2023 to June 30, 2024 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: Per 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Additionally, 34 CFR 682.610, states that institutions must report accurately the enrollment status of all students regardless of if they receive aid from the institution or not. Changes to said status are required to be reported within 30 days of becoming aware of the status change, or with the next scheduled transmission of statuses if the scheduled transmission is within 60 days. Condition: The College did not properly report student enrollment changes for students who received federal student aid to the National Student Loan Data System (NSLDS). Questioned costs: None. Context: During our testing of 40 students, we identified 9 students had the incorrect effective date, 4 students were reported past the 60-day reporting timeframe, and 1 student did not have matching status change for Campus and Program enrollment. Cause: The College didn't have proper procedures in place to verify students’ status in NSLDS matched the institutions records in a timely manner. Effect: The College was not in compliance with the requirements to properly report student enrollment data correctly. Incorrect dates submitted to NSLDS may be used to determine the grace period for the repayment and interest of outstanding Title IV student loans. Repeat Finding: No. Recommendation: We recommend the College review current processes for reporting to NSLDS and implement procedures to ensure submissions are reported timely and accurately. Views of responsible officials: Management agrees with this finding.
Federal Agency: US Department of Education Federal Program Name: Student Financial Assistance Cluster Assistance Listing Number: 84.063, 84.007, & 84.033 Federal Award Identification Number and Year: P063P231353-2024, P063Q231353-2024, P033A231190-2024, & P007A231190-2024 Award Period: July 1, 2023 to June 30, 2024 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: Per 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Additionally, 34 CFR 682.610, states that institutions must report accurately the enrollment status of all students regardless of if they receive aid from the institution or not. Changes to said status are required to be reported within 30 days of becoming aware of the status change, or with the next scheduled transmission of statuses if the scheduled transmission is within 60 days. Condition: The College did not properly report student enrollment changes for students who received federal student aid to the National Student Loan Data System (NSLDS). Questioned costs: None. Context: During our testing of 40 students, we identified 9 students had the incorrect effective date, 4 students were reported past the 60-day reporting timeframe, and 1 student did not have matching status change for Campus and Program enrollment. Cause: The College didn't have proper procedures in place to verify students’ status in NSLDS matched the institutions records in a timely manner. Effect: The College was not in compliance with the requirements to properly report student enrollment data correctly. Incorrect dates submitted to NSLDS may be used to determine the grace period for the repayment and interest of outstanding Title IV student loans. Repeat Finding: No. Recommendation: We recommend the College review current processes for reporting to NSLDS and implement procedures to ensure submissions are reported timely and accurately. Views of responsible officials: Management agrees with this finding.
Reference Number: 2024-003 Prior Year Finding: No Federal Agency: U.S. Department of Agriculture State Agency: Department of Transitional Assistance Federal Program: SNAP Cluster Assistance Listing Number: 10.551, 10.561 Award Number and Year: 244MA402S25 (10/1/2023 – 9/30/2024) 244MA441Q7503 (10/1/2023 – 9/30/2024) Compliance Requirement: Special Tests and Provisions – EBT Reconciliation Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: States must have systems in place to reconcile all funds entering into, exiting from, and remaining in the system each day with the state’s benefit account with Treasury and EBT contractor records. This includes a reconciliation of the state’s issuance files of postings to recipient accounts with the EBT contractor. States (generally through the EBT contractor that operates the EBT system) must also have systems in place to reconcile retailer credit activity as reported into the banking system to client transactions maintained by the processor and to the funds drawn down from the EBT benefit account with Treasury. States’ EBT system processors should maintain audit trails that document the cycle of client transactions from posting to point-of-sale transactions at retailers through settlement of retailer credits. The financial and management data that comes from the EBT processor is reconciled by the state to the SNAP issuance files and settlement data to ensure that benefits are authorized by the state and funds have been properly drawn down. States’ may only draw federal funds for authorized transactions (e.g., electronic point-of-sale purchases supported by entry of a valid personal identification number (PIN) or purchases using manual vouchers with telephone verification supported by a client signature and an EBT contractor authorization number) (7 CFR sections 274.3(a)(1) and 274.4(a)). Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Department of Transitional Assistance (Department) did not maintain proper documentation to support the required EBT Reconciliations. Context: The Department receives daily reconciliations from its third party vendor and performs monthly internal reconciliations. For four of four EBT Reconciliations sampled, the completed reconciliations did not have the proper reviewer signatures. Cause: The Department’s procedures were not sufficient to ensure that it maintained proper support over the EBT reconciliation process. Internal controls did not detect or prevent the error. Effect: The Department is not compliant with the EBT Reconciliation requirement and may be subject to disallowed program costs by the grantor. Improper controls over the EBT reconciliation process could result in ineligible costs being charged to the program. Questioned costs: Undetermined. Recommendation: We recommend the Department review and enhance procedures and controls to ensure that documentation for EBT reconciliations is maintained in accordance with the federal program requirements. Views of responsible officials: There is no disagreement with the finding.
Reference Number: 2024-004 Prior Year Finding: 2023-005 Federal Agency: U.S. Department of Agriculture State Agency: Department of Elementary and Secondary Education Federal Program: Child and Adult Care Food Program Assistance Listing Number: 10.558 Award Number and Year: 202323N202044 (10/1/2022 – 9/30/2023) 202323N202044 (10/1/2022 – 9/30/2023) 202323N105044 (10/1/2022 – 9/30/2024) 202423N115044 (10/1/2023 – 9/30/2025) Compliance Requirement: Subrecipient Monitoring Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: 2 CFR section 200.332(a) - Requirements for Pass-Through Entities states, in part, that all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes the subrecipient's unique entity identifier. Per 2 CFR section 200.332(e), pass-through entities must monitor the activities of a subrecipient as necessary to ensure that the subrecipient complies with Federal statutes, regulations, and the terms and conditions of the subaward. The pass-through entity is responsible for monitoring the overall performance of a subrecipient to ensure that the goals and objectives of the subaward are achieved. Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Department of Elementary and Secondary Education (Department) was unable to provide documentation that it issued subawards in compliance with federal regulations. Context: For five of sixty subawards selected for testing, the Department was unable to provide documentation that it had obtained the subrecipient’s Unique Entity Identifier prior to the issuance of the subaward. Questioned costs: Undetermined. Cause: The Department’s procedures were not sufficient to ensure that subawards were issued in compliance with federal regulations. Internal controls did not prevent or detect the exceptions. Effect: Failure to ensure subrecipients have a registered unique entity identification number could result in unauthorized entities receiving program funding. Recommendation: The Department should review and enhance internal controls and procedures to ensure that required information is obtained prior to entering into a subrecipient agreement. Views of responsible officials: There is no disagreement with the finding.
Reference Number: 2024-003 Prior Year Finding: No Federal Agency: U.S. Department of Agriculture State Agency: Department of Transitional Assistance Federal Program: SNAP Cluster Assistance Listing Number: 10.551, 10.561 Award Number and Year: 244MA402S25 (10/1/2023 – 9/30/2024) 244MA441Q7503 (10/1/2023 – 9/30/2024) Compliance Requirement: Special Tests and Provisions – EBT Reconciliation Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: States must have systems in place to reconcile all funds entering into, exiting from, and remaining in the system each day with the state’s benefit account with Treasury and EBT contractor records. This includes a reconciliation of the state’s issuance files of postings to recipient accounts with the EBT contractor. States (generally through the EBT contractor that operates the EBT system) must also have systems in place to reconcile retailer credit activity as reported into the banking system to client transactions maintained by the processor and to the funds drawn down from the EBT benefit account with Treasury. States’ EBT system processors should maintain audit trails that document the cycle of client transactions from posting to point-of-sale transactions at retailers through settlement of retailer credits. The financial and management data that comes from the EBT processor is reconciled by the state to the SNAP issuance files and settlement data to ensure that benefits are authorized by the state and funds have been properly drawn down. States’ may only draw federal funds for authorized transactions (e.g., electronic point-of-sale purchases supported by entry of a valid personal identification number (PIN) or purchases using manual vouchers with telephone verification supported by a client signature and an EBT contractor authorization number) (7 CFR sections 274.3(a)(1) and 274.4(a)). Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Department of Transitional Assistance (Department) did not maintain proper documentation to support the required EBT Reconciliations. Context: The Department receives daily reconciliations from its third party vendor and performs monthly internal reconciliations. For four of four EBT Reconciliations sampled, the completed reconciliations did not have the proper reviewer signatures. Cause: The Department’s procedures were not sufficient to ensure that it maintained proper support over the EBT reconciliation process. Internal controls did not detect or prevent the error. Effect: The Department is not compliant with the EBT Reconciliation requirement and may be subject to disallowed program costs by the grantor. Improper controls over the EBT reconciliation process could result in ineligible costs being charged to the program. Questioned costs: Undetermined. Recommendation: We recommend the Department review and enhance procedures and controls to ensure that documentation for EBT reconciliations is maintained in accordance with the federal program requirements. Views of responsible officials: There is no disagreement with the finding.
Reference Number: 2024-007 Prior Year Finding: 2023-007 Federal Agency: U.S. Department of Labor State Agency: Executive Office of Labor and Workforce Development Federal Program: Employment Service Cluster Assistance Listing Number: 17.207, 17.801 Award Number and Year: ES387362255A25 (7/1/2022 – 9/30/2025), 23555DV000008 (10/1/2022 – 12/31/2024), 23555DV000005 (7/1/2023 - 9/30/2026) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Section III – Findings and Questioned Costs – Major Federal Programs (Continued) Condition: The Executive Office of Labor and Workforce Development (Department) did not report subaward information to FSRS in accordance with FFATA requirements. Context: Eight of eight subawards selected for testing were not reported timely to FSRS. In addition, the Department was unable to produce documentation supporting their review and approval of the tested FFATA reports prior to submission in the FSRS system. Specifically, we noted the following timely reporting exceptions: • Seven of eight subawards were issued 10/31/2023 and were due to be reported by 11/30/2023. o Four of seven were reported on 9/5/2024, or ten months late. o Three of seven were reported on 10/22/2024, or eleven months late. • One of eight subawards was issued on 1/31/2024 and was due to be reported by 2/28/2024. It was reported on 9/5/2024, or seven months late. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Department’s procedures and controls were not sufficient to ensure that subawards were reviewed, approved and submitted timely to FSRS. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None. Recommendation: The Department should implement procedures and internal controls to ensure that all required subawards are reviewed, approved, and subsequently timely submitted to FSRS no later than the end of the month following the month of issuance. Documentation of implemented controls should be readily available for auditors. Views of Responsible Officials: There is no disagreement with the finding.
Reference Number: 2024-007 Prior Year Finding: 2023-007 Federal Agency: U.S. Department of Labor State Agency: Executive Office of Labor and Workforce Development Federal Program: Employment Service Cluster Assistance Listing Number: 17.207, 17.801 Award Number and Year: ES387362255A25 (7/1/2022 – 9/30/2025), 23555DV000008 (10/1/2022 – 12/31/2024), 23555DV000005 (7/1/2023 - 9/30/2026) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Section III – Findings and Questioned Costs – Major Federal Programs (Continued) Condition: The Executive Office of Labor and Workforce Development (Department) did not report subaward information to FSRS in accordance with FFATA requirements. Context: Eight of eight subawards selected for testing were not reported timely to FSRS. In addition, the Department was unable to produce documentation supporting their review and approval of the tested FFATA reports prior to submission in the FSRS system. Specifically, we noted the following timely reporting exceptions: • Seven of eight subawards were issued 10/31/2023 and were due to be reported by 11/30/2023. o Four of seven were reported on 9/5/2024, or ten months late. o Three of seven were reported on 10/22/2024, or eleven months late. • One of eight subawards was issued on 1/31/2024 and was due to be reported by 2/28/2024. It was reported on 9/5/2024, or seven months late. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Department’s procedures and controls were not sufficient to ensure that subawards were reviewed, approved and submitted timely to FSRS. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None. Recommendation: The Department should implement procedures and internal controls to ensure that all required subawards are reviewed, approved, and subsequently timely submitted to FSRS no later than the end of the month following the month of issuance. Documentation of implemented controls should be readily available for auditors. Views of Responsible Officials: There is no disagreement with the finding.
Reference Number: 2024-008 Prior Year Finding: 2023-008 Federal Agency: U.S. Department of Labor State Agency: Executive Office of Labor and Workforce Development Federal Program: Employment Service Cluster Assistance Listing Number: 17.207, 17.801 Award Number and Year: ES387362255A25 (7/1/2022 – 9/30/2025) Compliance Requirement: Earmarking Type of Finding: Material Weakness in Internal Control Over Compliance Criteria or specific requirement: Compliance: Earmarking requirements for Statewide Activities include the following: (1) The governor shall reserve not more than 15 percent of each of the amounts allotted to the state Adult, Dislocated Worker, and Youth Activities for a fiscal year to carry out statewide activities under Section 129(b) or statewide employment and training activities for adults or dislocated workers under section 134(a) (Section 128(a), WIOA, 128 Stat. 1502). (2) Not more than 5 percent of the funds allotted to a state under Section 127(b)(1)(C) of WIOA shall be used by the state for administrative activities related to youth workforce investment and employment and training activities (Section 129(b)(3), WIOA, 128 Stat 1508). (3) The state must reserve for rapid response activities a portion of funds, up to 25 percent, allotted for dislocated workers. The funds are used to plan and deliver services to enable dislocated workers to transition to new employment as quickly as possible, following either a permanent closure or mass layoff, or a natural or other disaster resulting in a mass job relocation (20 CFR section 682.350; sections 133(a)(2) and 134(a)(2)(A), WIOA, 128 Stat. 1516 and 1520). Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Executive Office of Labor and Workforce Development (the Department) was unable to provide documentation of internal controls used to ensure compliance with the program’s earmarking requirements. Context: Auditors obtained the Department’s earmarking calculation, which is shown in the allotment per the State Allotments (WIOA Title I & ES Federal to State Allocations) report. Auditors reviewed the report which supports that the earmarking requirements were met. For the one report selected for testing, the Department prepared the State Allotments report; however, the Department was unable to provide evidence that the report was reviewed and approved by program management. Therefore, auditors were unable to test the internal controls over the earmarking requirement. Cause: The Department’s internal controls are not sufficient to ensure that the earmark calculation is reviewed and approved by program management. Effect: Insufficient controls over earmarking requirements can result in undetected reporting errors and noncompliance with earmarking requirements. Questioned costs: None. Recommendation: We recommend the Department develop and document internal controls over reporting earmarking requirements to ensure that reports are accurate and that earmarking requirements are met. Views of Responsible Officials: There is no disagreement with the finding.
Reference Number: 2024-008 Prior Year Finding: 2023-008 Federal Agency: U.S. Department of Labor State Agency: Executive Office of Labor and Workforce Development Federal Program: Employment Service Cluster Assistance Listing Number: 17.207, 17.801 Award Number and Year: ES387362255A25 (7/1/2022 – 9/30/2025) Compliance Requirement: Earmarking Type of Finding: Material Weakness in Internal Control Over Compliance Criteria or specific requirement: Compliance: Earmarking requirements for Statewide Activities include the following: (1) The governor shall reserve not more than 15 percent of each of the amounts allotted to the state Adult, Dislocated Worker, and Youth Activities for a fiscal year to carry out statewide activities under Section 129(b) or statewide employment and training activities for adults or dislocated workers under section 134(a) (Section 128(a), WIOA, 128 Stat. 1502). (2) Not more than 5 percent of the funds allotted to a state under Section 127(b)(1)(C) of WIOA shall be used by the state for administrative activities related to youth workforce investment and employment and training activities (Section 129(b)(3), WIOA, 128 Stat 1508). (3) The state must reserve for rapid response activities a portion of funds, up to 25 percent, allotted for dislocated workers. The funds are used to plan and deliver services to enable dislocated workers to transition to new employment as quickly as possible, following either a permanent closure or mass layoff, or a natural or other disaster resulting in a mass job relocation (20 CFR section 682.350; sections 133(a)(2) and 134(a)(2)(A), WIOA, 128 Stat. 1516 and 1520). Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Executive Office of Labor and Workforce Development (the Department) was unable to provide documentation of internal controls used to ensure compliance with the program’s earmarking requirements. Context: Auditors obtained the Department’s earmarking calculation, which is shown in the allotment per the State Allotments (WIOA Title I & ES Federal to State Allocations) report. Auditors reviewed the report which supports that the earmarking requirements were met. For the one report selected for testing, the Department prepared the State Allotments report; however, the Department was unable to provide evidence that the report was reviewed and approved by program management. Therefore, auditors were unable to test the internal controls over the earmarking requirement. Cause: The Department’s internal controls are not sufficient to ensure that the earmark calculation is reviewed and approved by program management. Effect: Insufficient controls over earmarking requirements can result in undetected reporting errors and noncompliance with earmarking requirements. Questioned costs: None. Recommendation: We recommend the Department develop and document internal controls over reporting earmarking requirements to ensure that reports are accurate and that earmarking requirements are met. Views of Responsible Officials: There is no disagreement with the finding.
Reference Number: 2024-009 Prior Year Finding: 2023-009 Federal Agency: U.S. Department of Labor State Agency: Executive Office of Labor and Workforce Development Federal Program: Employment Service Cluster Assistance Listing Number: 17.207, 17.801 Award Number and Year: DV378592255525 (10/1/2021 – 12/31/2023) 2355DV000008 (10/1/2022 – 12/31/2024) Compliance Requirement: Reporting – VETS-402(A/B) Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: VETS-402 (A/B), Expenditure Detail Report – This expenditure and staff utilization report separately identifies Jobs for Veterans State Grant-expenditures each quarter and year-to-date as a supplement to the DVOP and LVER SF 425, Federal Financial Reports. Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: Reports submitted by the Executive Office of Labor and Workforce Development (the Department) did not agree with supporting documentation. Context: Three of four quarterly reports did not agree with supporting documentation. Two reports for the 9/30/2023 and two reports for the 3/31/2024 quarters were selected for testing and we noted the following exceptions: • Two of two reports for the 9/30/2023 quarter did not agree with supporting documentation. In the reports for grant numbers DV-12345-20-55-5-1 and 2355DV000008-01-00, errors were noted in several line items in sections C.1 and C.3. • One of two reports for the 3/31/2024 quarters did not agree with supporting documentation. In the report for grant number 2355DV000008-01-00, errors were noted in all amounts reported in sections C.1, C.3, and C.5. Cause: The Department’s procedures were not sufficient to ensure that reports agreed with supporting documentation. Internal controls did not prevent or detect the errors. Auditors noted that the Department has not completed implementation of their corrective action plan from the prior year. Effect: Submitted reports were inaccurate. Questioned costs: Undetermined. Recommendation: We recommend the Department implement its corrective action plan from the prior year. Procedures and internal controls over reporting should be sufficient to ensure that reports are accurate and supported by documentation. Views of Responsible Officials: There is no disagreement with the finding.
Reference Number: 2024-009 Prior Year Finding: 2023-009 Federal Agency: U.S. Department of Labor State Agency: Executive Office of Labor and Workforce Development Federal Program: Employment Service Cluster Assistance Listing Number: 17.207, 17.801 Award Number and Year: DV378592255525 (10/1/2021 – 12/31/2023) 2355DV000008 (10/1/2022 – 12/31/2024) Compliance Requirement: Reporting – VETS-402(A/B) Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: VETS-402 (A/B), Expenditure Detail Report – This expenditure and staff utilization report separately identifies Jobs for Veterans State Grant-expenditures each quarter and year-to-date as a supplement to the DVOP and LVER SF 425, Federal Financial Reports. Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: Reports submitted by the Executive Office of Labor and Workforce Development (the Department) did not agree with supporting documentation. Context: Three of four quarterly reports did not agree with supporting documentation. Two reports for the 9/30/2023 and two reports for the 3/31/2024 quarters were selected for testing and we noted the following exceptions: • Two of two reports for the 9/30/2023 quarter did not agree with supporting documentation. In the reports for grant numbers DV-12345-20-55-5-1 and 2355DV000008-01-00, errors were noted in several line items in sections C.1 and C.3. • One of two reports for the 3/31/2024 quarters did not agree with supporting documentation. In the report for grant number 2355DV000008-01-00, errors were noted in all amounts reported in sections C.1, C.3, and C.5. Cause: The Department’s procedures were not sufficient to ensure that reports agreed with supporting documentation. Internal controls did not prevent or detect the errors. Auditors noted that the Department has not completed implementation of their corrective action plan from the prior year. Effect: Submitted reports were inaccurate. Questioned costs: Undetermined. Recommendation: We recommend the Department implement its corrective action plan from the prior year. Procedures and internal controls over reporting should be sufficient to ensure that reports are accurate and supported by documentation. Views of Responsible Officials: There is no disagreement with the finding.
Reference Number: 2024-005 Prior Year Finding: 2023-006 Federal Agency: U.S. Department of Labor State Agency: Executive Office of Labor and Workforce Development Federal Program: Unemployment Insurance, COVID-19 – Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: UI372292255A25 (10/1/2021 – 12/31/2024), UI393282355A25 (10/1/2022 – 12/31/2025), 24A55UI00054 (10/1/2023 – 12/31/2026) Compliance Requirement: Special Tests and Provisions – UI Benefit Payments Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or Specific Requirement: Compliance: The State Workforce Agency (SWA) is required by 20 CFR section 602.11(d) to operate and maintain a quality control system. The Benefits Accuracy Measurement (BAM) program is DOL’s quality control system designed to assess the accuracy of UI benefit payments and denied claims, unless the SWA is exempted from such requirement (20 CFR section 602.22). BAM estimates error rates, number of claims improperly paid or denied, and dollar amounts of benefits improperly paid or denied, by projecting the results from investigations of statistically sound random samples to the universe of all claims paid and denied in a state. Specifically, the SWA’s BAM unit is required to draw a weekly sample of payments and denied claims, complete prompt, and in-depth investigations to determine if the administration of the UC program is consistent with state and federal law (20 CFR section 602.21(d)). As presented in the ET Handbook No. 395, the investigation involves a review of state agency records, as well as contacting the claimant, employers, and third parties (either in-person, by telephone, or by fax) to conduct new and original fact-finding related to all of the information pertinent to the paid or denied claim that was sampled. BAM investigators review cases for adherence to federal and state law as well as official policy. The following time limits are established for completion of all cases for the year. (The "year" includes all batches of weeks ending in the calendar year.): • a minimum of 70 percent of cases must be completed within 60 days of the week ending date of the batch; • 95 percent of cases must be completed within 90 days of the week ending date of the batch; • a minimum of 98 percent of cases for the year must be completed within 120 days of the ending date of the calendar year. Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Executive Office of Labor and Workforce Development (Department) did not complete BAM case investigations within the time limits established in the ET Handbook No. 395. Context: Sixty cases were selected for testing. The Department did not meet the required time limits for closing cases within 120 days. We noted that 97% of cases tested (58 of 60 cases) were closed within 120 days, which is less than the required 98%. Questioned costs: Undetermined. Cause: The Department’s procedures and controls were not sufficient to ensure it met the required BAM investigation time limits for closing cases. Effect: Noncompliance with BAM case investigation time limits could delay the detection and correction of inaccurate benefit payments and denied claims. Recommendation: We recommend the Department review and enhance procedures and controls to ensure that BAM case investigations are completed timely in accordance with the time limits established in the ET Handbook No. 395. Views of Responsible Officials: There is no disagreement with the finding.
Reference Number: 2024-005 Prior Year Finding: 2023-006 Federal Agency: U.S. Department of Labor State Agency: Executive Office of Labor and Workforce Development Federal Program: Unemployment Insurance, COVID-19 – Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: UI372292255A25 (10/1/2021 – 12/31/2024), UI393282355A25 (10/1/2022 – 12/31/2025), 24A55UI00054 (10/1/2023 – 12/31/2026) Compliance Requirement: Special Tests and Provisions – UI Benefit Payments Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or Specific Requirement: Compliance: The State Workforce Agency (SWA) is required by 20 CFR section 602.11(d) to operate and maintain a quality control system. The Benefits Accuracy Measurement (BAM) program is DOL’s quality control system designed to assess the accuracy of UI benefit payments and denied claims, unless the SWA is exempted from such requirement (20 CFR section 602.22). BAM estimates error rates, number of claims improperly paid or denied, and dollar amounts of benefits improperly paid or denied, by projecting the results from investigations of statistically sound random samples to the universe of all claims paid and denied in a state. Specifically, the SWA’s BAM unit is required to draw a weekly sample of payments and denied claims, complete prompt, and in-depth investigations to determine if the administration of the UC program is consistent with state and federal law (20 CFR section 602.21(d)). As presented in the ET Handbook No. 395, the investigation involves a review of state agency records, as well as contacting the claimant, employers, and third parties (either in-person, by telephone, or by fax) to conduct new and original fact-finding related to all of the information pertinent to the paid or denied claim that was sampled. BAM investigators review cases for adherence to federal and state law as well as official policy. The following time limits are established for completion of all cases for the year. (The "year" includes all batches of weeks ending in the calendar year.): • a minimum of 70 percent of cases must be completed within 60 days of the week ending date of the batch; • 95 percent of cases must be completed within 90 days of the week ending date of the batch; • a minimum of 98 percent of cases for the year must be completed within 120 days of the ending date of the calendar year. Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Executive Office of Labor and Workforce Development (Department) did not complete BAM case investigations within the time limits established in the ET Handbook No. 395. Context: Sixty cases were selected for testing. The Department did not meet the required time limits for closing cases within 120 days. We noted that 97% of cases tested (58 of 60 cases) were closed within 120 days, which is less than the required 98%. Questioned costs: Undetermined. Cause: The Department’s procedures and controls were not sufficient to ensure it met the required BAM investigation time limits for closing cases. Effect: Noncompliance with BAM case investigation time limits could delay the detection and correction of inaccurate benefit payments and denied claims. Recommendation: We recommend the Department review and enhance procedures and controls to ensure that BAM case investigations are completed timely in accordance with the time limits established in the ET Handbook No. 395. Views of Responsible Officials: There is no disagreement with the finding.
Reference Number: 2024-006 Prior Year Finding: No Federal Agency: U.S. Department of Labor State Agency: Executive Office of Labor and Workforce Development Federal Program: Unemployment Insurance, COVID-19 – Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: UI359502160A25 (1/1/2021 – 9/30/2023) UI379852260A25 (1/1/2021 – 9/30/2023) 23A60UR000009 (1/1/2023 – 9/30/2024) 24A60UR000073 (1/1/2024 – 9/30/2025) Compliance Requirement: Special Tests and Provisions: UI Reemployment Programs: RESEA Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per 42 U.S. Code § 506 (a) The Secretary of Labor (in this section referred to as the “Secretary”) shall award grants under this section for a fiscal year to eligible States to conduct a program of reemployment services and eligibility assessments for individuals referred to reemployment services as described in section 503(j) of this title for weeks in such fiscal year for which such individuals receive unemployment compensation. Further, per 42 U.S. Code § 506 (c) (1), In carrying out a State program of reemployment services and eligibility assessments using grant funds awarded to the State under this section, a State shall use such funds only for interventions demonstrated to reduce the number of weeks for which program participants receive unemployment compensation by improving employment outcomes for program participants. The UI program serves as one of the principal “gateways” to the workforce system. It is often the first workforce program accessed by individuals who need workforce services. The Worker Profiling and Reemployment Services (WPRS) and Reemployment Services and Eligibility Assessments (RESEA) programs serve as UI’s primary programs that facilitate the reemployment needs of UI claimants. RESEA is authorized by Section 306 of the Social Security Act and builds on the success of RESEA’s predecessor, the former UI Reemployment and Eligibility Assessment (REA) program. RESEA uses an evidence-based integrated approach that combines an eligibility assessment for continuing UI eligibility and the provision of reemployment services. State administration of the RESEA is voluntary and under certain circumstances may be designed to also satisfy WPRS requirements. Operating guidance for the RESEA program is updated annually. UIPL 10-22 provides RESEA operating Guidance for FY 2022. RESEA-related performance reports are due on the 20th day of the second month following the end of the reporting quarter. A state UI staff member must review these reports for accuracy each calendar quarter and prior to submission, in addition to being reviewed by the RESEA program lead (if a different staff member). Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Executive Office of Labor and Workforce Development (Department) was unable to provide a copy of a claimant’s RESEA letter. In addition, the Department did not review performance reports prior to submission. Context: For one of sixty RESEA cases selected for testing, the Department was unable to furnish a copy of the RESEA letter sent to the claimant. Additionally, the Department lacks a formalized process for validating the accuracy of quarterly performance reports. Consequently, there was no documentation available to confirm that these reports were reviewed prior to submission. Questioned costs: Undetermined. Cause: The Department’s procedures and controls were not sufficient to ensure it met RESEA program and reporting requirements. The Department does not have a formal process to validate the accuracy of quarterly performance reports. Effect: The Department was unable to demonstrate that it was operating the RESEA program in accordance with federal requirements. Recommendation: We recommend the Department review and enhance procedures and controls to ensure that RESEA program requirements are met. We further recommend the Department develop a formal process to review quarterly performance reports for accuracy prior to submission. Views of Responsible Officials: There is no disagreement with the finding.
Reference Number: 2024-006 Prior Year Finding: No Federal Agency: U.S. Department of Labor State Agency: Executive Office of Labor and Workforce Development Federal Program: Unemployment Insurance, COVID-19 – Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: UI359502160A25 (1/1/2021 – 9/30/2023) UI379852260A25 (1/1/2021 – 9/30/2023) 23A60UR000009 (1/1/2023 – 9/30/2024) 24A60UR000073 (1/1/2024 – 9/30/2025) Compliance Requirement: Special Tests and Provisions: UI Reemployment Programs: RESEA Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per 42 U.S. Code § 506 (a) The Secretary of Labor (in this section referred to as the “Secretary”) shall award grants under this section for a fiscal year to eligible States to conduct a program of reemployment services and eligibility assessments for individuals referred to reemployment services as described in section 503(j) of this title for weeks in such fiscal year for which such individuals receive unemployment compensation. Further, per 42 U.S. Code § 506 (c) (1), In carrying out a State program of reemployment services and eligibility assessments using grant funds awarded to the State under this section, a State shall use such funds only for interventions demonstrated to reduce the number of weeks for which program participants receive unemployment compensation by improving employment outcomes for program participants. The UI program serves as one of the principal “gateways” to the workforce system. It is often the first workforce program accessed by individuals who need workforce services. The Worker Profiling and Reemployment Services (WPRS) and Reemployment Services and Eligibility Assessments (RESEA) programs serve as UI’s primary programs that facilitate the reemployment needs of UI claimants. RESEA is authorized by Section 306 of the Social Security Act and builds on the success of RESEA’s predecessor, the former UI Reemployment and Eligibility Assessment (REA) program. RESEA uses an evidence-based integrated approach that combines an eligibility assessment for continuing UI eligibility and the provision of reemployment services. State administration of the RESEA is voluntary and under certain circumstances may be designed to also satisfy WPRS requirements. Operating guidance for the RESEA program is updated annually. UIPL 10-22 provides RESEA operating Guidance for FY 2022. RESEA-related performance reports are due on the 20th day of the second month following the end of the reporting quarter. A state UI staff member must review these reports for accuracy each calendar quarter and prior to submission, in addition to being reviewed by the RESEA program lead (if a different staff member). Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Executive Office of Labor and Workforce Development (Department) was unable to provide a copy of a claimant’s RESEA letter. In addition, the Department did not review performance reports prior to submission. Context: For one of sixty RESEA cases selected for testing, the Department was unable to furnish a copy of the RESEA letter sent to the claimant. Additionally, the Department lacks a formalized process for validating the accuracy of quarterly performance reports. Consequently, there was no documentation available to confirm that these reports were reviewed prior to submission. Questioned costs: Undetermined. Cause: The Department’s procedures and controls were not sufficient to ensure it met RESEA program and reporting requirements. The Department does not have a formal process to validate the accuracy of quarterly performance reports. Effect: The Department was unable to demonstrate that it was operating the RESEA program in accordance with federal requirements. Recommendation: We recommend the Department review and enhance procedures and controls to ensure that RESEA program requirements are met. We further recommend the Department develop a formal process to review quarterly performance reports for accuracy prior to submission. Views of Responsible Officials: There is no disagreement with the finding.
Reference Number: 2024-010 Prior Year Finding: 2023-013 Federal Agency: U.S. Department of Labor State Agency: Executive Office of Labor and Workforce Development Federal Program: WIOA Cluster Assistance Listing Number: 17.258, 17.259, 17.278 Award Number and Year: 23A55AY000020 (4/1/2023 – 6/30/2026), 23A55AT000036 (7/1/2023 – 6/30/2026), 23A55AW000048 (7/1/2023 – 6/30/2026), AA-38535-22-55-A-25 (7/1/2022 – 6/30/2025) Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Material Weakness in Internal Control Over Compliance, Material Noncompliance Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Section III – Findings and Questioned Costs – Major Federal Programs (Continued) Condition: The Executive Office of Labor and Workforce Development (Department) did not report subaward information to FSRS timely or accurately. Context: Nine subawards were selected for testing and several of these subawards were modified multiple times after the initial award, for a total of seventeen report transmissions tested. Exceptions were noted for 17 of 17 transactions tested, and multiple exceptions were noted for several subawards. Specifically, we noted: • 8 of 17 subawards were not reported to FSRS until after they were selected for testing by auditors. The subawards were issued in December 2023 but were not reported to FSRS until December 2024. • 9 of 17 subawards were not reported to FSRS timely. The subawards were reported from one month to one year after the due date. • 2 of 17 subawards were reported inaccurately. The total of these subawards was $104,998, but $7,237,554 was reported. • 1 of 17 subawards was reported inaccurately. The amount reported for this subaward was revised in December 2024, but the revised amount did not agree with the subaward amount. In addition, the Department was unable to produce documentation supporting their review and approval of the tested FFATA reports prior to submission in the FSRS system. SEE SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR CHART/TABLE Cause: The Department’s procedures and controls were not sufficient to ensure that subawards were reported timely or accurately to FSRS nor that reports were reviewed and approved prior to submission. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None. Recommendation: The Department should implement procedures and internal controls to ensure that all required subawards are reviewed, approved and subsequently reported timely to FSRS no later than the end of the month following the month of issuance. Documentation of implemented controls should be readily available for auditors. Views of Responsible Officials: There is no disagreement with the finding.