Finding No. 2024-027 Federal Awarding Agency: USDA Impact: Significant Deficiency, Noncompliance AL Number and Title: 10.553, 10.555, 10.559, 10.582 Child Nutrition Cluster (CNC) Federal Award Number: 237AKA3N1099, 247AKA3N1099, 237AKAK3N1199, 247AKAK3N1199, 237AKAK3N8903, 237AKAK1L1603 247AKAK1L1603 Applicable Compliance Requirement: Reporting Condition: DEED did not comply with Federal Funding Accountability and Transparency Act (FFATA) reporting requirements applicable to CNC FY 24 subawards. Context: FFATA requires information on federal awards be made available to the public through a single searchable website (www.usaspending.gov). The FFATA Subaward Reporting System (FSRS) is the reporting tool federal awardees, such as the State of Alaska, use to report subaward and executive compensation data for first-tier subawards. A DEED accountant is responsible for preparing and filing monthly FSRS submissions. No CNC FFATA reports were submitted in FY 24. CNC subawards totaling $49,364,912 were subject to FFATA reporting requirements. Cause: According to DEED management, the FSRS help desk was unresponsive in resolving issues with FFATA reporting. In addition, due to turnover within the department, other projects were prioritized over FFATA reporting. Internal controls were not in place to ensure FFATA reports were filed timely. Criteria: Title 2 CFR 200.303 requires the State to establish and maintain effective internal control over the federal award that provides reasonable assurance that the State is managing the federal award in compliance with federal statutes, regulations, and terms and conditions of the grant award. Title 2 CFR 170 states federal award recipients are required to report each subaward that obligates $30,000 or more in federal funds. This information must be reported no later than the end of the month following the month in which the obligation was made; include information about each obligating action in accordance with submission instructions; and include the names and total compensation of each of the subrecipient’s five most highly compensated executives if revenue thresholds are met and the executive compensation is not available to the public. Effect: Failure to comply with FFATA reporting requirements reduces transparency, impairs decision-making, and may potentially jeopardize future federal funding. Questioned Costs: None Recommendation: DEED's Administrative Services director should allocate sufficient staff resources to comply with FFATA reporting requirements, complete outstanding reporting submissions, and implement controls to ensure FFATA reports are filed timely. Views of Responsible Officials: The department partially agrees with Finding 2024-027. While it is accurate that no FFATA reporting was accomplished for the Child Nutrition Cluster in FY2024, the department disagrees with the specific dollar amount. The methodology used for determining the dollar amount is overly simplistic and does not take each award into account, as specified in 2CFR170.220. The methodology also excludes awards to other State agencies when 2CFR170.300 specifically includes State entities. Auditor’s Concluding Remarks: Management’s response did not persuade the auditor to revise the finding. DEED is responsible for submission of federal reports and should allocate sufficient resources and implement controls to ensure compliance with federal reporting requirements.
Finding No. 2024-027 Federal Awarding Agency: USDA Impact: Significant Deficiency, Noncompliance AL Number and Title: 10.553, 10.555, 10.559, 10.582 Child Nutrition Cluster (CNC) Federal Award Number: 237AKA3N1099, 247AKA3N1099, 237AKAK3N1199, 247AKAK3N1199, 237AKAK3N8903, 237AKAK1L1603 247AKAK1L1603 Applicable Compliance Requirement: Reporting Condition: DEED did not comply with Federal Funding Accountability and Transparency Act (FFATA) reporting requirements applicable to CNC FY 24 subawards. Context: FFATA requires information on federal awards be made available to the public through a single searchable website (www.usaspending.gov). The FFATA Subaward Reporting System (FSRS) is the reporting tool federal awardees, such as the State of Alaska, use to report subaward and executive compensation data for first-tier subawards. A DEED accountant is responsible for preparing and filing monthly FSRS submissions. No CNC FFATA reports were submitted in FY 24. CNC subawards totaling $49,364,912 were subject to FFATA reporting requirements. Cause: According to DEED management, the FSRS help desk was unresponsive in resolving issues with FFATA reporting. In addition, due to turnover within the department, other projects were prioritized over FFATA reporting. Internal controls were not in place to ensure FFATA reports were filed timely. Criteria: Title 2 CFR 200.303 requires the State to establish and maintain effective internal control over the federal award that provides reasonable assurance that the State is managing the federal award in compliance with federal statutes, regulations, and terms and conditions of the grant award. Title 2 CFR 170 states federal award recipients are required to report each subaward that obligates $30,000 or more in federal funds. This information must be reported no later than the end of the month following the month in which the obligation was made; include information about each obligating action in accordance with submission instructions; and include the names and total compensation of each of the subrecipient’s five most highly compensated executives if revenue thresholds are met and the executive compensation is not available to the public. Effect: Failure to comply with FFATA reporting requirements reduces transparency, impairs decision-making, and may potentially jeopardize future federal funding. Questioned Costs: None Recommendation: DEED's Administrative Services director should allocate sufficient staff resources to comply with FFATA reporting requirements, complete outstanding reporting submissions, and implement controls to ensure FFATA reports are filed timely. Views of Responsible Officials: The department partially agrees with Finding 2024-027. While it is accurate that no FFATA reporting was accomplished for the Child Nutrition Cluster in FY2024, the department disagrees with the specific dollar amount. The methodology used for determining the dollar amount is overly simplistic and does not take each award into account, as specified in 2CFR170.220. The methodology also excludes awards to other State agencies when 2CFR170.300 specifically includes State entities. Auditor’s Concluding Remarks: Management’s response did not persuade the auditor to revise the finding. DEED is responsible for submission of federal reports and should allocate sufficient resources and implement controls to ensure compliance with federal reporting requirements.
Finding No. 2024-027 Federal Awarding Agency: USDA Impact: Significant Deficiency, Noncompliance AL Number and Title: 10.553, 10.555, 10.559, 10.582 Child Nutrition Cluster (CNC) Federal Award Number: 237AKA3N1099, 247AKA3N1099, 237AKAK3N1199, 247AKAK3N1199, 237AKAK3N8903, 237AKAK1L1603 247AKAK1L1603 Applicable Compliance Requirement: Reporting Condition: DEED did not comply with Federal Funding Accountability and Transparency Act (FFATA) reporting requirements applicable to CNC FY 24 subawards. Context: FFATA requires information on federal awards be made available to the public through a single searchable website (www.usaspending.gov). The FFATA Subaward Reporting System (FSRS) is the reporting tool federal awardees, such as the State of Alaska, use to report subaward and executive compensation data for first-tier subawards. A DEED accountant is responsible for preparing and filing monthly FSRS submissions. No CNC FFATA reports were submitted in FY 24. CNC subawards totaling $49,364,912 were subject to FFATA reporting requirements. Cause: According to DEED management, the FSRS help desk was unresponsive in resolving issues with FFATA reporting. In addition, due to turnover within the department, other projects were prioritized over FFATA reporting. Internal controls were not in place to ensure FFATA reports were filed timely. Criteria: Title 2 CFR 200.303 requires the State to establish and maintain effective internal control over the federal award that provides reasonable assurance that the State is managing the federal award in compliance with federal statutes, regulations, and terms and conditions of the grant award. Title 2 CFR 170 states federal award recipients are required to report each subaward that obligates $30,000 or more in federal funds. This information must be reported no later than the end of the month following the month in which the obligation was made; include information about each obligating action in accordance with submission instructions; and include the names and total compensation of each of the subrecipient’s five most highly compensated executives if revenue thresholds are met and the executive compensation is not available to the public. Effect: Failure to comply with FFATA reporting requirements reduces transparency, impairs decision-making, and may potentially jeopardize future federal funding. Questioned Costs: None Recommendation: DEED's Administrative Services director should allocate sufficient staff resources to comply with FFATA reporting requirements, complete outstanding reporting submissions, and implement controls to ensure FFATA reports are filed timely. Views of Responsible Officials: The department partially agrees with Finding 2024-027. While it is accurate that no FFATA reporting was accomplished for the Child Nutrition Cluster in FY2024, the department disagrees with the specific dollar amount. The methodology used for determining the dollar amount is overly simplistic and does not take each award into account, as specified in 2CFR170.220. The methodology also excludes awards to other State agencies when 2CFR170.300 specifically includes State entities. Auditor’s Concluding Remarks: Management’s response did not persuade the auditor to revise the finding. DEED is responsible for submission of federal reports and should allocate sufficient resources and implement controls to ensure compliance with federal reporting requirements.
Finding No. 2024-053 Prior Year Finding: 2023-034 Federal Awarding Agency: USDA Impact: Material Weakness, Material Noncompliance AL Number and Title: 10.551, 10.561 SNAP Cluster Federal Award Number: 23AK35050292301, 24AK35050292301 Applicable Compliance Requirement: Allowable Costs/Cost Principles, Special Tests and Provisions Condition: The amount of FY 24 SNAP benefits reported to USDA as issued by the State’s EBT contractor, FIS, was $2,628,951 more than the amount of authorized benefits reported in data from DPA’s EIS. Furthermore, FIS could not provide a reliable audit trail of issuances. Context: DPA relies on the legacy eligibility system, EIS, to determine eligibility for SNAP and calculate monthly benefit amounts. Benefit amounts are calculated based on household size, income, and other financial resources of all qualifying members of a household, less specific allowable deductions. Each day EIS transmits an issuance batch file, including authorized beneficiaries and benefit amounts, to the State’s EBT contractor, FIS, which maintains accounts for each beneficiary. When an EBT card is utilized by a beneficiary, FIS functions as the intermediary between the State’s U.S. Treasury benefit account and the retailers by settling SNAP benefit transactions with retailers before drawing down federal reimbursement. The State is required to ensure its automated data processing systems accurately and completely process and store all case file information for eligibility determinations and benefit calculations and provide the data necessary to meet federal issuance and reconciliation reporting requirements. A reconciliation of FIS issuance records with EIS authorized beneficiaries and benefit amounts demonstrates the completeness and accuracy of the EBT process. In FY 24 the EIS benefit data provided by DPA could not be reconciled to the amount of SNAP benefits issued per FIS data or the amounts reported by DPA to USDA. Furthermore, FIS could not provide a detailed list of issuances to support the monthly amounts reconciled by DPA staff and reported to USDA. As a result, the audit could not verify the accuracy and completeness of benefit calculations. Cause: DPA management and FIS staff could not identify the cause of the variances. DPA’s outdated legacy information system and the lack of daily reconciliations (see Finding No. 2024-055) contributed to the deficiencies. Criteria: Title 7 CFR 274.1(h) requires that the State agency create and maintain a master issuance file that consolidates records of all certified SNAP households, record participation activity for each household, and supply all information necessary to fulfill the reporting requirements outlined in Title 7 CFR 274.4. Title 7 CFR 274.4(a) requires the State to reconcile benefits posted to household accounts on the central computer against benefits on the issuance authorization file. Title 2 CFR 200.303(a) requires the State to establish and maintain effective internal controls over federal awards that provide reasonable assurance that the State is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the grant awards. Effect: Significant discrepancies between EIS benefit data and the EBT contractor’s issuance records undermines confidence in the eligibility system and may be indicative of significant unidentified processing errors. Inadequate system processing increases the risk of incorrect or ineligible benefits. Questioned Costs: AL 10.551: $2,628,951 Recommendation: DPA’s director should identify the cause of the discrepancies between EBT contractor issuance data and the State’s eligibility system and take action necessary to ensure SNAP benefit payments are supported by eligibility and benefit data. Views of Responsible Officials: The department agrees with the finding, but not the questioned cost. The Division of Public Assistance performs monthly reconciliations and balancing efforts to ensure accuracy with routine FIS reports, EIS authorization and issuance reports, and federal reporting. However, the division agrees that a new ad hoc report created for this audit by the EBT contractor, FIS, does not match with issuances and reporting. Auditor’s Concluding Remarks: Management’s response did not persuade the auditor to revise the finding. DOH management states the monthly reconciliations of FIS, EIS, and federal reports ensures the accuracy of issuance data; however, DPA management could not provide evidence that eligibility determinations in EIS supported FIS benefit issuances. Furthermore, FIS payment issuance details did not support the summary data used in the monthly reconciliations.
Finding No. 2024-054 Federal Awarding Agency: USDA Impact: Material Weakness, Material Noncompliance AL Number and Title: 10.551, 10.561 SNAP Cluster Federal Award Number: 23AK35050292301, 24AK35050292301 Applicable Compliance Requirement: Allowable Costs/Cost Principles, Special Tests and Provisions Condition: Testing of 42 SNAP recipient cases to verify the completeness and accuracy of benefit calculations found 37 (88 percent) were incorrect or unsupported, including 24 (57 percent) in which the recipients’ application or reports of changes were not processed within federally required timeframes. Testing of 42 SNAP recipient cases to verify the adequacy of case information stored in EIS and DOH’s document management system, ILINX, found 18 (43 percent) had inadequate verifications of required information. Context: The State is required to ensure only eligible households receive supplemental nutrition assistance. Benefit amounts are calculated based on household size, income, and other financial resources of all qualifying members of a household, less specific allowable deductions. The State is required to ensure its automated data processing systems accurately and completely process and store all case file information for eligibility determinations and benefit calculations; automatically cut off households at the end of a certification period unless recertified; and provide the data necessary to meet federal issuance and reconciliation reporting requirements. DPA eligibility technicians (ET) review applications, verify income and resources, and make a determination whether a household is eligible to receive benefits. ETs obtain and upload source documentation into ILINX and manually update EIS with information from source documentation. As part of determining benefit eligibility, the State is required to coordinate the exchange of data with other agencies, such as the federal Social Security Administration, State employment security agency, and current employers, to verify the household’s identity, income, resources, and other eligibility criteria. ET actions taken, verifications performed, and contacts made are recorded using the EIS’s case note screen. Source documentation supporting the eligibility determination is retained in ILINX. To help ensure the accuracy and completeness of EIS information, DPA conducts training and requires supervisors to perform quality control reviews. On November 3, 2023, DOH management submitted a request to FNS to waive federally required interviews and certain verifications of SNAP household eligibility criteria in order to address the ongoing backlog of SNAP cases that built up during the COVID-19 public health emergency. FNS denied the waiver request on November 22, 2023. Disregarding the denial, DOH management informed FNS of the State’s intent to streamline the verification process, whereby ETs, when verifications are not available, authorized SNAP benefits without performing federally required verifications. The EIS legacy system relies on manual processes to adequately support the eligibility and benefit determinations, and ensure the determinations are accurate. Of the 42 SNAP cases tested the following errors were identified, and some cases had multiple errors: • Twenty-two SNAP households’ (52 percent) monthly allotment could not be corroborated by the information in EIS and/or ILINX. • Twenty-four SNAP applications (57 percent) were not processed timely. Fifteen of the 24 were processed 100 or more days after receipt by DPA, including one application that was processed after 295 days. • Nine SNAP applications (21 percent) were certified eligible without an interview at initial application or recertification. Cause: To resolve DPA’s backlog of SNAP applications and recertifications, on December 8, 2023, DOH’s Commissioner directed ETs to process all applications, recertifications and renewals without verifying federally required eligibility information. DPA management informed FNS that the State would reassess these temporary processing procedures after six months or earlier. Furthermore, due to competing priorities, quality control reviews were not consistently performed during FY 24. Criteria: Title 2 CFR 200.303(a) requires the State to establish and maintain effective internal controls over federal awards that provide reasonable assurance that the State is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the grant award. Title 7 CFR 272.10(b) requires the State to use an automated data processing system for SNAP. The system is to be used to determine eligibility and calculate benefits or validate eligibility workers’ calculations by processing and storing all case file information necessary for the eligibility determinations and benefit computations including, but not limited to, all household members’ names, addresses, dates of birth, social security numbers, individual household members’ earned and unearned income by source, deductions, resources, and household size. Also, the system must be used to redetermine or revalidate eligibility and benefits based on notices of change in households’ circumstances. Title 7 CFR 272.8(a)(1) requires the State maintain and use an income and eligibility verification system to request wage and benefit information from various agencies and use that information to verify eligibility for, and the amount of, SNAP benefits due to eligible households. Title 7 CFR 273.2(f)(1) requires the State to verify certain household income, expenses, and circumstances necessary to determine eligibility prior to certifying a household for SNAP benefits. Title 7 CFR 273.2(f)(6) requires that case files be documented to support eligibility, ineligibility, and benefit level determinations. Documentation shall be in sufficient detail to permit a reviewer to determine the reasonableness and accuracy of the determination. Effect: Inadequate, outdated, or unsupported case file information increases the risk of incorrect or ineligible benefits. Errors in SNAP determinations could result in further sanctions and/or penalties imposed on DOH. Questioned Costs: AL 10.551: $59,073 Recommendation: DOH’s commissioner should allocate the resources necessary to administer SNAP in accordance with federal regulations. DPA’s director should increase staff training and quality control reviews to help ensure procedures are followed for determining SNAP eligibility and retaining required documentation, including the documentation to support compliance with verifications of income through required data exchanges. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2024-055 Prior Year Finding: 2023-035 Federal Awarding Agency: USDA Impact: Material Weakness, Material Noncompliance AL Number and Title: 10.551, 10.561 SNAP Cluster Federal Award Number: 23AK35050292301, 24AK35050292301 Applicable Compliance Requirement: Special Tests and Provisions Condition: Daily SNAP EBT reconciliations were not performed in FY 24. Context: A state must have a system in place to reconcile, on a daily basis, all of the funds entering into, exiting from, and remaining in the system each day with a state’s U.S. Treasury benefit account and FIS’s records. States 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 the U.S. Treasury. The reconciliation process ensures that a state only draws federal funds for authorized transactions. In FY 24, required daily reconciliations were not performed. Cause: According to DPA management, daily reconciliations were not performed due to staff turnover, inadequate procedures, and the lack of trained staff. Criteria: Title 2 CFR 200.303(a) requires the State to establish and maintain effective internal controls over federal awards that provide reasonable assurance that the State is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the grant award. Title 7 CFR 274.4(a) requires that State agencies account for all issuance through a reconciliation process. The EBT system must provide reports and documentation pertaining to reconciliation. Reconciliations must be conducted and records kept as follows: • Verification of retailer’s credits against deposit information entered into the automated clearinghouse network; and • Reconciliation of total funds entered into, exiting from, and remaining in the system each day. Effect: The lack of daily reconciliations increases the risk of unidentified processing errors and unallowable costs, including potential non-federal liabilities. States are responsible for efficiently and effectively administering SNAP in accordance with federal laws, regulations, and FNS approved Plan of Operations. A determination by FNS that the State has failed to comply with any of these requirements may result in a suspension or disallowance of the federal share of the State’s administrative funds. Questioned Costs: None Recommendation: DPA’s director should develop and implement daily reconciliation and monitoring procedures and train staff to ensure daily reconciliations are conducted in accordance with federal regulations. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2024-027 Federal Awarding Agency: USDA Impact: Significant Deficiency, Noncompliance AL Number and Title: 10.553, 10.555, 10.559, 10.582 Child Nutrition Cluster (CNC) Federal Award Number: 237AKA3N1099, 247AKA3N1099, 237AKAK3N1199, 247AKAK3N1199, 237AKAK3N8903, 237AKAK1L1603 247AKAK1L1603 Applicable Compliance Requirement: Reporting Condition: DEED did not comply with Federal Funding Accountability and Transparency Act (FFATA) reporting requirements applicable to CNC FY 24 subawards. Context: FFATA requires information on federal awards be made available to the public through a single searchable website (www.usaspending.gov). The FFATA Subaward Reporting System (FSRS) is the reporting tool federal awardees, such as the State of Alaska, use to report subaward and executive compensation data for first-tier subawards. A DEED accountant is responsible for preparing and filing monthly FSRS submissions. No CNC FFATA reports were submitted in FY 24. CNC subawards totaling $49,364,912 were subject to FFATA reporting requirements. Cause: According to DEED management, the FSRS help desk was unresponsive in resolving issues with FFATA reporting. In addition, due to turnover within the department, other projects were prioritized over FFATA reporting. Internal controls were not in place to ensure FFATA reports were filed timely. Criteria: Title 2 CFR 200.303 requires the State to establish and maintain effective internal control over the federal award that provides reasonable assurance that the State is managing the federal award in compliance with federal statutes, regulations, and terms and conditions of the grant award. Title 2 CFR 170 states federal award recipients are required to report each subaward that obligates $30,000 or more in federal funds. This information must be reported no later than the end of the month following the month in which the obligation was made; include information about each obligating action in accordance with submission instructions; and include the names and total compensation of each of the subrecipient’s five most highly compensated executives if revenue thresholds are met and the executive compensation is not available to the public. Effect: Failure to comply with FFATA reporting requirements reduces transparency, impairs decision-making, and may potentially jeopardize future federal funding. Questioned Costs: None Recommendation: DEED's Administrative Services director should allocate sufficient staff resources to comply with FFATA reporting requirements, complete outstanding reporting submissions, and implement controls to ensure FFATA reports are filed timely. Views of Responsible Officials: The department partially agrees with Finding 2024-027. While it is accurate that no FFATA reporting was accomplished for the Child Nutrition Cluster in FY2024, the department disagrees with the specific dollar amount. The methodology used for determining the dollar amount is overly simplistic and does not take each award into account, as specified in 2CFR170.220. The methodology also excludes awards to other State agencies when 2CFR170.300 specifically includes State entities. Auditor’s Concluding Remarks: Management’s response did not persuade the auditor to revise the finding. DEED is responsible for submission of federal reports and should allocate sufficient resources and implement controls to ensure compliance with federal reporting requirements.
Finding No. 2024-034 Federal Awarding Agency: U.S. Department of Defense (USDOD) Impact: Significant Deficiency, Noncompliance AL Number and Title: 12.401 National Guard Military Operations and Maintenance Projects (NGMOMP) Federal Award Number: W91ZRU-20-2-1001, W91ZRU-21-2-1001, W91ZRU-22-2-1001, W91ZRU-23-2-1001, W91ZRU-24-2-1001 Applicable Compliance Requirement: Matching, Level of Effort, Earmarking Condition: The State’s accounting system was not updated for changes to the FFY 24 federally certified Facilities Inventory and Support Plan (FISP), which is used to allocate costs to the NGMOMP program. Context: The FISP is USDOD’s federal registry of real property inventory and includes detailed information of all federal/state owned and state operated Army National Guard (ARNG) facilities within the state. All ARNG facilities are owned by, leased for, or licensed to the State. As a result, the State operates and maintains all ARNG facilities. The FISP identifies the level of federal reimbursement authorized for each real property facility through support codes. National Guard Regulations (NGR) Pamphlet 420-10, Chapter 7, provides the support codes with the corresponding federal funding level percentage (i.e. 100 percent, 75 percent, 50 percent, or no support provided). The FISP is annually updated and certified to identify new facilities, changes in funding support, or facilities no longer supported by USDOD. The certified FISP is provided to DMVA management for tracking of ARNG facilities and determining the appropriate funding levels. DMVA management tracks the facilities using location codes in the State’s accounting system. The appropriate federal and State funding level is assigned to each location code. In FY 24 there were expenditures for 139 facility location codes. The audit reviewed all 139 facilities and found 11 (eight percent) had expenditures allocated at a higher federal rate than authorized in the FISP and one of the 11 locations was not listed on the FISP. Cause: DMVA’s procedures were insufficient to ensure the FISP was reviewed annually to identify changes in the facility support codes that require coding changes in the State’s accounting system. DMVA management also applied a higher reimbursement rate based on misinterpretation of multi-use facilities. Criteria: Title 2 CFR 200.303(a) requires the State to establish and maintain effective internal controls over federal awards that provide reasonable assurance that the State is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Title 2 CFR 200.403 requires costs to be necessary, reasonable, and allocable to the federal award, and to conform to any limitations or exclusions in the federal awards as to types or amount of cost items. NGR 5-1 Section 5-4, dated May 28, 2010, states that when there is an identified cost share in an agreement, the grantor shall reimburse the grantee only for the grantor’s percentage share of the total allowable costs. NGR 420-10, Policy and Guidance for ARNG Facilities Program, dated September 2019, states the rate of reimbursement to the State for all authorized charges shall be based on the FISP support codes for the facility generating the expenditure. Effect: Failing to update the State’s accounting system resulted in DMVA management overcharging expenditures to the federal program. Noncompliance with federal regulations may result in the federal awarding agency imposing additional conditions or taking corrective action, including withholding/terminating funding. Questioned Costs: AL 12.401: $88,984 Recommendation: DMVA’s Division of Administrative Services (DAS) director and the Army Guard Facilities Maintenance director should strengthen procedures to ensure the State’s accounting system is updated annually based on revisions to the certified FISP and ensure the proper codes are used for multi-use facilities. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2024-035 Federal Awarding Agency: USDOD Impact: Significant Deficiency, Noncompliance AL Number and Title: 12.401 NGMOMP Federal Award Number: W91ZRU-23-2-1001, W91ZRU-23-2-1004, W91ZRU-23-2-1005, W91ZRU-23-2-1010, W91ZRU-23-2-1021E, W91ZRU-23-2-1021K, W91ZRU-23-2-1040 Applicable Compliance Requirement: Period of Performance Condition: Six of seven award extensions for the NGMOMP program were untimely. Additionally, one award was not closed timely. Context: National Guard Bureau Grants and Cooperative Agreement Policy Letter 21-07, effective date July 19, 2021, revised the program period of performance requirements for extension requests to be submitted no later than 10 days prior to the end of the 120-day award closeout period. Award extension requests were required to be submitted no later than January 21, 2024. Three of the six extension requests were submitted on January 30, 2024 (nine days late); two were submitted on January 25, 2024 (six days late); and one was submitted on January 22, 2024 (one day late). The policy letter also revised the timeframe for award closeout requiring the grantee to conduct closeout within 120 calendar days from the end of the period of performance. Two awards closed during FY 24, of which one did not have a final accounting submitted within the 120 days. Award closeout was submitted approximately 200 days after the end of the period of performance or approximately 80 days late. Cause: DMVA has written procedures for federal extension requests and award closure. However, competing priorities resulted in untimely submission of extension requests. The final reimbursement requests were submitted to USDOD on January 25, 2024, six days before the end of the closeout period. Federal payment was not received until March 19, 2024. Due, in part, to the untimely receipt of the payments, closeout documentation was not signed by all necessary parties until April 13, 2024. Criteria: Per Title 2 CFR 200.308(e)(2) all requests for one-time extension should be submitted at least 10 calendar days before the conclusion of the period of performance. Title 2 CFR 200.344 prescribes the pass-through entity must close out the federal award when it determines that all administrative actions and required work of the federal award have been completed. A recipient must submit all reports and liquidate all financial obligations no later than 120 days after the conclusion of the period of performance. Title 2 CFR 200.303(a) requires the State to establish and maintain effective internal controls over federal awards that provide reasonable assurance that the State is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Effect: Untimely award extension requests and award closeouts may result in unallowable program expenditures. Questioned Costs: None Recommendation: DMVA’s DAS director should follow procedures to ensure cooperative award extensions and award closeout documents are submitted timely, including requesting final payments timely, given the extended timeframe for federal reimbursement. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2024-043 Federal Awarding Agency: United States Department of the Interior (USDOI) Impact: Significant Deficiency, Noncompliance AL Number and Title: 15.605,15.611 Fish and Wildlife Cluster (FWC) Federal Award Number: F22AF02164, F22AF01666 and F22AF01963 Applicable Compliance Requirement: Activities Allowed or Unallowed Allowable Costs/Cost Principles Condition: Testing a random sample of 60 FY 24 non-personal service expenditures charged to the FWC identified two expenditures that lacked proper approval, and one that charged unallowable costs to the FWC. Context: DFG’s primary internal control over financial transactions is knowledgeable DFG staff review of invoices or other supporting documentation to ensure the costs are allowable, supported, coded to the correct program, and within the period of performance. This review is demonstrated by the approver’s signature on the invoice or other supporting documentation authorizing payment. In FY 22, the processing of DFG transactions transitioned to the Department of Administration’s (DOA) centralized Shared Services of Alaska (SSoA). DFG submits invoices with coding and approval to SSoA to initiate processing. According to SSoA procedures, a final verification of coding and approval by departmental administrative services staff prior to SSoA processing is optional. The audit tested a random sample of 60 non-personal services expenditure transactions. Auditors identified two transactions that lacked DFG staff signature authorization. In addition, one transaction approved by DFG staff totaling $206.24 was not allowable due to the costs being for advertising a big game hunt permit raffle. Cause: DFG management attributed the errors to changes in the internal control environment, specifically the shift in non-personal service expenditure input and certification in the accounting system from DFG staff to SSoA staff. Furthermore, management noted that this transition weakened the control processes and emphasized that unauthorized payments should not have been processed by SSoA staff. DFG management also cited DFG staff turnover and inadequate training as a contributing factor. Criteria: Title 2 CFR 200.303 requires the State to establish and maintain effective internal controls over federal awards that provide reasonable assurance that a state is managing federal awards in compliance with federal statutes, regulations, and terms and conditions of the grant awards. Per Title 50 CFR 80.54, ineligible activities include those conducted for the primary purpose of producing income. Per Title 2 CFR 200.421, the only allowable advertising costs are those which are solely for: staff recruitment, goods and services for the performance of a federal award, disposal of materials acquired in the performance of a federal award, and program outreach (such as recruiting project participants) and other specific purposes necessary to meet federal award requirements. Effect: Inadequate internal controls increase the risk that expenditures may be unallowable, unsupported, or miscoded. Furthermore, noncompliance with federal regulations may result in the federal awarding agency imposing additional conditions or taking corrective action, including adding reporting requirements or withholding/terminating funding. Questioned Costs: ALN 15.611: $206 Recommendation: DFG’s Division of Administrative Service (DAS) director and Division of Wildlife Conservation director should work together to improve training for DFG staff to ensure expenditures charged to FWC are allowable and properly authorized prior to processing by SSoA staff. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2024-044 Federal Awarding Agency: USDOI Impact: Material Weakness AL Number and Title: 15.605, 15.611 FWC Federal Award Number: Multiple Applicable Compliance Requirement: Equipment and Real Property Management Condition: Auditors could not obtain sufficient and appropriate evidence to verify compliance with FWC’s equipment and real property management requirements. Context: DFG is responsible for ensuring equipment, real property, and capital improvements, acquired with FWC funds, are used for an authorized purpose, sufficiently tracked, and appropriately disposed of in accordance with federal regulations. In FY 24, DFG staff did not maintain sufficient evidence to demonstrate compliance with equipment and real property management requirements. DFG equipment and real property records did not reliably catalog the universe of equipment, real property, and capital improvements funded with FWC grant monies. Equipment records were incomplete and not trackable by funding source in the accounting system. As a result, the audit was unable to determine the extent of equipment purchased with FWC funds. Real property records had not been reconciled since 2019 and could not be matched with DFG site visit logs. The audit could not identify the FWC assets to be monitored and the extent of site visits conducted during the audit period, and whether the site visits included monitoring for authorized uses. Cause: DFG management attributed the deficiencies to a lack of department-wide procedures, staff turnover, and insufficient training. Criteria: Title 2 CFR 200.303 requires the State to establish and maintain effective internal controls over the federal award that provides reasonable assurance that the State is managing the federal awards in compliance with federal statutes, regulations, and terms and conditions of the federal award. Title 2 CFR 200.311 and Title 50 CFR 80.134 requires the State to use real property for the purpose authorized in the grant for as long as it is needed for that purpose. When real property is no longer needed for the originally authorized purpose, property must be disposed of in accordance with federal requirements. Title 2 CFR 200.313 requires the State to use, manage and dispose of equipment acquired under a federal award in accordance with State laws and procedures. Such equipment must be used for the project or program for which it was acquired and for as long as needed. The State agency must maintain equipment property records, perform physical inventory of equipment, develop a control system, and perform regular maintenance of equipment. Title 50 CFR 80.133 requires the State to maintain acquired or completed capital improvements under FWC grants to ensure that each capital improvement continues to serve its authorized purpose during its useful life. Effect: The lack of department-wide procedures increases the risk that FWC funded assets are not used for authorized purposes and properly disposed of when no longer needed. Inadequate equipment tracking increases the risk of loss or theft. Further, noncompliance with federal regulations may result in the federal awarding agency imposing additional conditions or taking corrective action, including additional reporting requirements or withholding/terminating funding. Questioned Costs: Indeterminate Recommendation: DFG’s commissioner should ensure procedures are developed and training is implemented so that FWC funded equipment, real property and capital improvements are managed in compliance with federal requirements. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2024-043 Federal Awarding Agency: United States Department of the Interior (USDOI) Impact: Significant Deficiency, Noncompliance AL Number and Title: 15.605,15.611 Fish and Wildlife Cluster (FWC) Federal Award Number: F22AF02164, F22AF01666 and F22AF01963 Applicable Compliance Requirement: Activities Allowed or Unallowed Allowable Costs/Cost Principles Condition: Testing a random sample of 60 FY 24 non-personal service expenditures charged to the FWC identified two expenditures that lacked proper approval, and one that charged unallowable costs to the FWC. Context: DFG’s primary internal control over financial transactions is knowledgeable DFG staff review of invoices or other supporting documentation to ensure the costs are allowable, supported, coded to the correct program, and within the period of performance. This review is demonstrated by the approver’s signature on the invoice or other supporting documentation authorizing payment. In FY 22, the processing of DFG transactions transitioned to the Department of Administration’s (DOA) centralized Shared Services of Alaska (SSoA). DFG submits invoices with coding and approval to SSoA to initiate processing. According to SSoA procedures, a final verification of coding and approval by departmental administrative services staff prior to SSoA processing is optional. The audit tested a random sample of 60 non-personal services expenditure transactions. Auditors identified two transactions that lacked DFG staff signature authorization. In addition, one transaction approved by DFG staff totaling $206.24 was not allowable due to the costs being for advertising a big game hunt permit raffle. Cause: DFG management attributed the errors to changes in the internal control environment, specifically the shift in non-personal service expenditure input and certification in the accounting system from DFG staff to SSoA staff. Furthermore, management noted that this transition weakened the control processes and emphasized that unauthorized payments should not have been processed by SSoA staff. DFG management also cited DFG staff turnover and inadequate training as a contributing factor. Criteria: Title 2 CFR 200.303 requires the State to establish and maintain effective internal controls over federal awards that provide reasonable assurance that a state is managing federal awards in compliance with federal statutes, regulations, and terms and conditions of the grant awards. Per Title 50 CFR 80.54, ineligible activities include those conducted for the primary purpose of producing income. Per Title 2 CFR 200.421, the only allowable advertising costs are those which are solely for: staff recruitment, goods and services for the performance of a federal award, disposal of materials acquired in the performance of a federal award, and program outreach (such as recruiting project participants) and other specific purposes necessary to meet federal award requirements. Effect: Inadequate internal controls increase the risk that expenditures may be unallowable, unsupported, or miscoded. Furthermore, noncompliance with federal regulations may result in the federal awarding agency imposing additional conditions or taking corrective action, including adding reporting requirements or withholding/terminating funding. Questioned Costs: ALN 15.611: $206 Recommendation: DFG’s Division of Administrative Service (DAS) director and Division of Wildlife Conservation director should work together to improve training for DFG staff to ensure expenditures charged to FWC are allowable and properly authorized prior to processing by SSoA staff. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2024-044 Federal Awarding Agency: USDOI Impact: Material Weakness AL Number and Title: 15.605, 15.611 FWC Federal Award Number: Multiple Applicable Compliance Requirement: Equipment and Real Property Management Condition: Auditors could not obtain sufficient and appropriate evidence to verify compliance with FWC’s equipment and real property management requirements. Context: DFG is responsible for ensuring equipment, real property, and capital improvements, acquired with FWC funds, are used for an authorized purpose, sufficiently tracked, and appropriately disposed of in accordance with federal regulations. In FY 24, DFG staff did not maintain sufficient evidence to demonstrate compliance with equipment and real property management requirements. DFG equipment and real property records did not reliably catalog the universe of equipment, real property, and capital improvements funded with FWC grant monies. Equipment records were incomplete and not trackable by funding source in the accounting system. As a result, the audit was unable to determine the extent of equipment purchased with FWC funds. Real property records had not been reconciled since 2019 and could not be matched with DFG site visit logs. The audit could not identify the FWC assets to be monitored and the extent of site visits conducted during the audit period, and whether the site visits included monitoring for authorized uses. Cause: DFG management attributed the deficiencies to a lack of department-wide procedures, staff turnover, and insufficient training. Criteria: Title 2 CFR 200.303 requires the State to establish and maintain effective internal controls over the federal award that provides reasonable assurance that the State is managing the federal awards in compliance with federal statutes, regulations, and terms and conditions of the federal award. Title 2 CFR 200.311 and Title 50 CFR 80.134 requires the State to use real property for the purpose authorized in the grant for as long as it is needed for that purpose. When real property is no longer needed for the originally authorized purpose, property must be disposed of in accordance with federal requirements. Title 2 CFR 200.313 requires the State to use, manage and dispose of equipment acquired under a federal award in accordance with State laws and procedures. Such equipment must be used for the project or program for which it was acquired and for as long as needed. The State agency must maintain equipment property records, perform physical inventory of equipment, develop a control system, and perform regular maintenance of equipment. Title 50 CFR 80.133 requires the State to maintain acquired or completed capital improvements under FWC grants to ensure that each capital improvement continues to serve its authorized purpose during its useful life. Effect: The lack of department-wide procedures increases the risk that FWC funded assets are not used for authorized purposes and properly disposed of when no longer needed. Inadequate equipment tracking increases the risk of loss or theft. Further, noncompliance with federal regulations may result in the federal awarding agency imposing additional conditions or taking corrective action, including additional reporting requirements or withholding/terminating funding. Questioned Costs: Indeterminate Recommendation: DFG’s commissioner should ensure procedures are developed and training is implemented so that FWC funded equipment, real property and capital improvements are managed in compliance with federal requirements. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2024-003 Federal Awarding Agency: U.S. Department of the Treasury (US Treasury) Impact: Significant Deficiency, Noncompliance AL Number and Title: 21.027 Coronavirus State and Local Fiscal Recovery Funds (SLFRF) – COVID-19 Federal Award Number: SLFRP0006, SLFRP2633, SLFRP4544 Applicable Compliance Requirement: Reporting Condition: OMB staff submitted the quarter ended December 31, 2023, FY 24 SLFRF program project and expenditure report to US Treasury with material errors. Context: The SLFRF program project and expenditure reports are filed quarterly. Key line items include current period and cumulative obligations and expenditures for all projects exceeding $50,000. Under an agreed-upon process between OMB and DOF, OMB staff prepared the quarterly report and the DOF state accountant reviewed, certified, and submitted the report in the US Treasury report portal. The audit found that OMB staff submitted the quarter ending December 31, 2023, report directly to US Treasury without review, certification, and submission by the DOF state accountant. The report overstated five projects current period obligations and four projects current period expenditures by $47,668,558 and $47,375,062, respectively. Cause: Auditors noted OMB lacked written procedures for report preparation, review, and submission. OMB staff turnover at the beginning of FY 24 resulted in a lack of understanding of the agreed-upon process for report submission. According to OMB staff, the quarter ending December 31, 2023, report errors were due to a misunderstanding of changes to the US Treasury reporting portal. Criteria: Title 2 CFR 200.303 requires the State to establish and maintain effective internal controls over federal awards that provide reasonable assurance that the State is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 31 CFR 35.4(c) requires the State to submit periodic reports providing detailed accounting of the use of funds and other information that may be required by the Secretary. Effect: Incorrect reports reduce transparency and may impair decision-making. Questioned Costs: None Recommendation: OMB’s director should develop written procedures that outline the process for preparation, review, certification, and submission of federal reports required under the SLFRF program and work with the federal oversight agency to correct errors as needed. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2024-032 Federal Awarding Agency: U.S. Department of the Treasury Impact: Material Weakness, Material Noncompliance AL Number and Title: 21.027 Coronavirus State and Local Fiscal Recovery Funds (SLFRF) – COVID-19 Federal Award Number: SLFRP0006, SLFRP2633, SLFRP4544 Applicable Compliance Requirement: Subrecipient Monitoring Condition: During FY 24, DCCED staff did not sufficiently monitor the subrecipient tasked with administering the SLFRF Tourism and Other Businesses program. Furthermore, DCCED management did not take action with respect to the subrecipient’s noncompliance with requirements to obtain a single audit. Context: One of the purposes of the federal SLFRF program was to provide funding to address the negative economic impacts of the pandemic. For this purpose, DCCED entered into a contract with a subrecipient to administer $90 million in grants to tourism and other businesses. The contract required the subrecipient to determine eligibility, send payments to eligible businesses, and provide disbursement reports to DCCED for monitoring. This activity created a subrecipient relationship. The audit determined that DCCED’s monitoring of the subrecipient was insufficient on two grounds. 1. DCCED staff did not perform monitoring activities to verify that the subrecipient was correctly determining eligibility, calculating award amounts, or correctly disbursing funds. DCCED staff reviewed reports and participated in meetings regarding issues raised by the subrecipient or participating businesses. However, DCCED staff did not obtain and review detailed FY 24 disbursement reports, or perform a desk review or onsite visit, to verify the subrecipients compliance with SLFRF program requirements. DCCED staff did not reconcile the total amount of funds DCCED advanced to the subrecipient with the total funds disbursed by the subrecipient. 2. Furthermore, DCCED staff did not ensure that the subrecipient obtained a single or program-specific audit. In FY 22 and FY 23 DCCED advanced a total of $77 million to the subrecipient. The Department of Administration, Division of Finance (DOF) compiles the amount of pass-through funds by subrecipient in order to identify and track subrecipients that must obtain a single audit. DOF sent the subrecipient single audit noncompliance letters for FY 22 and FY 23 and added the subrecipient to the State’s “Delinquent Audits” tracking log, which is posted on DOF’s webpage. However, DCCED staff did not verify the subrecipient’s single audit status and took no action to address the noncompliance. The subrecipient did not obtain a single audit for FY 22 and FY 23. Cause: DCCED lacked resources in its Division of Community and Regional Affairs to administer the SLFRF program. As a result, the program was administered by staff within the Commissioner’s Office that lacked adequate training, knowledge, and experience to administer a federal pass-through program. Consequently, DCCED staff administering the program were not fully aware of federal subrecipient monitoring requirements. Criteria: Title 2 CFR 200.303 requires the State to establish and maintain effective internal controls over federal awards that provide reasonable assurance that the State is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 2 CFR 200.332(d) requires pass-through entities to monitor the activities of a subrecipient as necessary to ensure that the subrecipient complies with statutes, regulations, and the terms and conditions of the subaward. The amount of monitoring should be commensurate with the subrecipient’s fraud risk and risk of noncompliance. Title 2 CFR 200.332(f) requires pass-through entities to verify that a subrecipient is audited as required by Uniform Guidance Subpart F - Audit. When a subrecipient is noncompliant with the single audit requirement, Title 2 CFR 200.505 states that pass-through entities "must take appropriate action." Authorized action includes withholding payments from the subrecipient or terminating the grant per Title 2 CFR 200.339. Effect: Inadequate subrecipient monitoring increases the risk of subrecipient noncompliance with federal statutes, regulations, and the terms and conditions of a program. Subrecipient noncompliance with the terms and conditions of the federal award could result in the State having to repay SLFRF monies to the federal government. Questioned Costs: None Recommendation: DCCED’s commissioner should ensure compliance with federal subrecipient monitoring requirements through adoption of written procedures and staff training. Furthermore, the commissioner should ensure the SLFRF subrecipient obtains single or program-specific audits for all required fiscal years. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2024-003 Federal Awarding Agency: U.S. Department of the Treasury (US Treasury) Impact: Significant Deficiency, Noncompliance AL Number and Title: 21.027 Coronavirus State and Local Fiscal Recovery Funds (SLFRF) – COVID-19 Federal Award Number: SLFRP0006, SLFRP2633, SLFRP4544 Applicable Compliance Requirement: Reporting Condition: OMB staff submitted the quarter ended December 31, 2023, FY 24 SLFRF program project and expenditure report to US Treasury with material errors. Context: The SLFRF program project and expenditure reports are filed quarterly. Key line items include current period and cumulative obligations and expenditures for all projects exceeding $50,000. Under an agreed-upon process between OMB and DOF, OMB staff prepared the quarterly report and the DOF state accountant reviewed, certified, and submitted the report in the US Treasury report portal. The audit found that OMB staff submitted the quarter ending December 31, 2023, report directly to US Treasury without review, certification, and submission by the DOF state accountant. The report overstated five projects current period obligations and four projects current period expenditures by $47,668,558 and $47,375,062, respectively. Cause: Auditors noted OMB lacked written procedures for report preparation, review, and submission. OMB staff turnover at the beginning of FY 24 resulted in a lack of understanding of the agreed-upon process for report submission. According to OMB staff, the quarter ending December 31, 2023, report errors were due to a misunderstanding of changes to the US Treasury reporting portal. Criteria: Title 2 CFR 200.303 requires the State to establish and maintain effective internal controls over federal awards that provide reasonable assurance that the State is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 31 CFR 35.4(c) requires the State to submit periodic reports providing detailed accounting of the use of funds and other information that may be required by the Secretary. Effect: Incorrect reports reduce transparency and may impair decision-making. Questioned Costs: None Recommendation: OMB’s director should develop written procedures that outline the process for preparation, review, certification, and submission of federal reports required under the SLFRF program and work with the federal oversight agency to correct errors as needed. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2024-032 Federal Awarding Agency: U.S. Department of the Treasury Impact: Material Weakness, Material Noncompliance AL Number and Title: 21.027 Coronavirus State and Local Fiscal Recovery Funds (SLFRF) – COVID-19 Federal Award Number: SLFRP0006, SLFRP2633, SLFRP4544 Applicable Compliance Requirement: Subrecipient Monitoring Condition: During FY 24, DCCED staff did not sufficiently monitor the subrecipient tasked with administering the SLFRF Tourism and Other Businesses program. Furthermore, DCCED management did not take action with respect to the subrecipient’s noncompliance with requirements to obtain a single audit. Context: One of the purposes of the federal SLFRF program was to provide funding to address the negative economic impacts of the pandemic. For this purpose, DCCED entered into a contract with a subrecipient to administer $90 million in grants to tourism and other businesses. The contract required the subrecipient to determine eligibility, send payments to eligible businesses, and provide disbursement reports to DCCED for monitoring. This activity created a subrecipient relationship. The audit determined that DCCED’s monitoring of the subrecipient was insufficient on two grounds. 1. DCCED staff did not perform monitoring activities to verify that the subrecipient was correctly determining eligibility, calculating award amounts, or correctly disbursing funds. DCCED staff reviewed reports and participated in meetings regarding issues raised by the subrecipient or participating businesses. However, DCCED staff did not obtain and review detailed FY 24 disbursement reports, or perform a desk review or onsite visit, to verify the subrecipients compliance with SLFRF program requirements. DCCED staff did not reconcile the total amount of funds DCCED advanced to the subrecipient with the total funds disbursed by the subrecipient. 2. Furthermore, DCCED staff did not ensure that the subrecipient obtained a single or program-specific audit. In FY 22 and FY 23 DCCED advanced a total of $77 million to the subrecipient. The Department of Administration, Division of Finance (DOF) compiles the amount of pass-through funds by subrecipient in order to identify and track subrecipients that must obtain a single audit. DOF sent the subrecipient single audit noncompliance letters for FY 22 and FY 23 and added the subrecipient to the State’s “Delinquent Audits” tracking log, which is posted on DOF’s webpage. However, DCCED staff did not verify the subrecipient’s single audit status and took no action to address the noncompliance. The subrecipient did not obtain a single audit for FY 22 and FY 23. Cause: DCCED lacked resources in its Division of Community and Regional Affairs to administer the SLFRF program. As a result, the program was administered by staff within the Commissioner’s Office that lacked adequate training, knowledge, and experience to administer a federal pass-through program. Consequently, DCCED staff administering the program were not fully aware of federal subrecipient monitoring requirements. Criteria: Title 2 CFR 200.303 requires the State to establish and maintain effective internal controls over federal awards that provide reasonable assurance that the State is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 2 CFR 200.332(d) requires pass-through entities to monitor the activities of a subrecipient as necessary to ensure that the subrecipient complies with statutes, regulations, and the terms and conditions of the subaward. The amount of monitoring should be commensurate with the subrecipient’s fraud risk and risk of noncompliance. Title 2 CFR 200.332(f) requires pass-through entities to verify that a subrecipient is audited as required by Uniform Guidance Subpart F - Audit. When a subrecipient is noncompliant with the single audit requirement, Title 2 CFR 200.505 states that pass-through entities "must take appropriate action." Authorized action includes withholding payments from the subrecipient or terminating the grant per Title 2 CFR 200.339. Effect: Inadequate subrecipient monitoring increases the risk of subrecipient noncompliance with federal statutes, regulations, and the terms and conditions of a program. Subrecipient noncompliance with the terms and conditions of the federal award could result in the State having to repay SLFRF monies to the federal government. Questioned Costs: None Recommendation: DCCED’s commissioner should ensure compliance with federal subrecipient monitoring requirements through adoption of written procedures and staff training. Furthermore, the commissioner should ensure the SLFRF subrecipient obtains single or program-specific audits for all required fiscal years. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2024-084 Federal Awarding Agency: NASA and USDHHS Impact: Significant Deficiency, Noncompliance AL Number and Title: 43.001, 93.859 RDC Federal Award Number: 80NSSC22K0579, P20GM103395 Applicable Compliance Requirement: Procurement and Suspension and Debarment Condition: Two of the sampled 40 covered transactions did not have checks for suspension or debarment with the external parties prior to entering the contract. Context: During the testing of suspension and debarment, two grants from the UAF campus had covered transactions, one a subrecipient and another a procurement transaction, that did not have evidence federal excluded parties list system checks were performed prior to entering into the covered transaction. Cause: UAF did not perform timely review of suspension and debarment listings prior to entering into a covered transaction. Criteria: Per Uniform Guidance 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. Per 2 CFR 180.300 nonfederal entities entering into a covered transaction are required to verify the entity whom they intend to do business with are not excluded or disqualified. Effect: Potentially suspended or debarred vendor may have been contracted by the University for a covered transaction. Questioned Costs: None Recommendation: UAF management should perform suspension and debarment checks on all covered transactions paid with federal funds. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2024-083 Prior Year Finding: Federal Awarding Agency: National Science Foundation Impact: Significant Deficiency AL Number and Title: 47.076 RDC Federal Award Number: 1839290 Applicable Compliance Requirement: Period of Performance Condition: One of 40 sampled transactions were coded incorrectly to the wrong grant. Context: During testing of period of performance, one transaction was observed that appeared to have been liquidated beyond 120 days after the end of the period of performance. Upon further inspection, we concluded that the transaction was coded to the incorrect grant. The correct grant was still within the 120-day liquidation period after the end of the period of performance. Cause: UAF did not perform timely close out procedures on the grant which resulted in incorrectly coded expenditures to go undetected. Criteria: Per Uniform Guidance 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. Effect: One transaction was incorrectly coded to the wrong grant. Questioned Costs: None Recommendation: UAF management should adhere to their existing requirements for timely grant close out procedures. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2024-085 Federal Awarding Agency: U.S. Department of Education Impact: Significant Deficiency, Noncompliance AL Number and Title: 84.031 Higher Education Institutional Aid Federal Award Number: P031R210002-23 Applicable Compliance Requirement: Matching, Level of Effort, Earmarking Condition: One sample of five grants with level of effort provisions in the grant award notification did not meet the level of effort for key personnel required by the federal agency. Context: During testing of special tests and provisions one grant of a sample of five from UAF was observed to not have met level of effort requirements as stipulated in the award documents. The campus had inadvertently submitted an incorrect budget with different key personnel to the agency and did not correct this with the federal agency upon receipt of the award documents stipulating the incorrect key personnel. Cause: An incorrect budget was submitted with the grant proposal to the Federal agency. Criteria: Per 2 CFR 200.308(f)(3) the Federal Government required a recipient of federal awards must receive prior written approval from the Federal agency for the disengagement of key personnel from a project for more than three months, or a 25% reduction in time and effort devoted to the Federal award. Per Uniform Guidance 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. Effect: Key personnel listed in the award documents did not have time and effort tracked towards the grant project. Questioned Costs: None Recommendation: UAF management should continue to review budgets and key personnel submitted with grant proposals to Federal agencies. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2024-028 Federal Awarding Agency: U.S. Department of Education Impact: Material Weakness, Material Noncompliance AL Number and Title: 84.425 Education Stabilization Fund – COVID-19 Federal Award Number: S425U210020 Applicable Compliance Requirement: Reporting Condition: The Elementary and Secondary School Emergency Relief fund (ESSER) annual report filed by DEED in May 2024 was submitted with incomplete subrecipient expenditure data for key line item 3b.1. Context: ESSER funding is broken out into three different groups: ESSER I, ESSER II and American Rescue Plan (ARP) ESSER. Over 75% of total Education Stabilization Fund expenditures incurred in FY 23 for reporting in FY 24 were grants to subrecipients from ARP ESSER funding. State education agencies are to report on line 3b.1 subaward information, including which agencies received subawards and the funds allocated for and incurred by expenditure category. DEED staff submitted the ARP ESSER amounts awarded to grantees as part of the annual report; however subrecipient expenditure fields were submitted with zeros. Cause: According to DEED management, subrecipients were unresponsive to requests for information and staff assigned to prepare the report had competing priorities and insufficient time. In addition, management reviewed and submitted the report with known errors. Criteria: Title 2 CFR 200.303 requires the State to establish and maintain effective internal control over the federal award that provides reasonable assurance that the State is managing the federal award in compliance with federal statutes, regulations, and terms and conditions of the grant award. Title 34 CFR 76.720 requires states to submit reports required for monitoring and continuous improvement and other reports required by the Secretary and approved by the US Office of Management and Budget (OMB). State education agencies are required by the Secretary to submit an annual performance report (OMB No. 1810-0749) with data on subrecipients, state education agencies and subrecipient expenditures, planned expenditures, and uses of funds. Grant Award Notification S425U210020 Attachment T: Grant Conditions: Part A 13. The state education agencies will comply with, and ensure that local education agencies comply with, all reporting requirements at such time and in such manner and containing such information as the Secretary may reasonably require. Effect: Inaccurate federal reporting reduces transparency and may impair the federal oversight agency’s ability to properly oversee the program. Questioned Costs: None Recommendation: DEED's Innovation and Education Excellence division director should allocate sufficient staff resources to prepare the ESSER annual report and strengthen report review and approval controls to ensure compliance with annual reporting requirements. Views of Responsible Officials: The department partially disagrees with Finding 2024-028. While it is true that the department did initially report zeros in the LEA portion of ESSER III reporting it is untrue that the effect was a reduction in transparency or impaired the federal agency’s oversight ability. No ESSER annual reporting can be submitted if all entered answers do not conform to implemented data validations requirements. Relevant in this instance is that if district level data reported does not match, to the penny, between different reporting categories, data validation errors occur. Including zeros, when accurate data conforming to data validation checks was not able to be entered, allowed the department to enter the data accurately during the first reporting reopen period. Had the department not entered zeros, data validation errors would have prevented the department from submitting the entire FY2023 ESSER annual report. If no report had been entered as of the initial due date the department would not have been allowed to submit any report at all, which would be less accurate than temporary partial inaccuracy. Auditor’s Concluding Remarks: Management’s response did not persuade the auditor to revise the finding. DEED is responsible for timely and accurate submission of federal reports and should allocate sufficient resources and strengthen controls to ensure compliance with federal reporting requirements.
Finding No. 2024-082 Federal Awarding Agency: U.S. Department of Health and Human Services (USDHHS) Impact: Significant Deficiency, Noncompliance AL Number and Title: 93.859 RDC Federal Award Number: 5P20GM103395-23 Applicable Compliance Requirement: Equipment and Real Property Management Condition: One of the 40 sampled equipment had a lapse of greater than two years between physical inventories. Context: During the testing of equipment for real property management, one item of equipment was found to have an interval between physical inventories that was greater than two years. Inventory for this equipment was taken May 7, 2021, then again June 4, 2024. Cause: University of Alaska Anchorage (UAA) had a loss of information regarding compliance requirements through employee turnover at the responsible department level. Criteria: Per 2 CFR 200.313(d)(2), a physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. Per Uniform Guidance 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. Effect: The equipment was not inventoried within the two-year timeframe. Questioned Costs: None Recommendation: UAA management should ensure proper policies and procedures are in place to monitor capital asset inventory observations. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2024-084 Federal Awarding Agency: NASA and USDHHS Impact: Significant Deficiency, Noncompliance AL Number and Title: 43.001, 93.859 RDC Federal Award Number: 80NSSC22K0579, P20GM103395 Applicable Compliance Requirement: Procurement and Suspension and Debarment Condition: Two of the sampled 40 covered transactions did not have checks for suspension or debarment with the external parties prior to entering the contract. Context: During the testing of suspension and debarment, two grants from the UAF campus had covered transactions, one a subrecipient and another a procurement transaction, that did not have evidence federal excluded parties list system checks were performed prior to entering into the covered transaction. Cause: UAF did not perform timely review of suspension and debarment listings prior to entering into a covered transaction. Criteria: Per Uniform Guidance 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. Per 2 CFR 180.300 nonfederal entities entering into a covered transaction are required to verify the entity whom they intend to do business with are not excluded or disqualified. Effect: Potentially suspended or debarred vendor may have been contracted by the University for a covered transaction. Questioned Costs: None Recommendation: UAF management should perform suspension and debarment checks on all covered transactions paid with federal funds. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2024-036 Federal Awarding Agency: U.S. Department of Homeland Security (USDHS) Impact: Significant Deficiency, Noncompliance AL Number and Title: 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disasters) 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disasters) – COVID-19 Federal Award Number: 4413DRAKP00000001, 4533DRAKP00000001, 4585DRAKP00000001, 4646DRAKP00000001, 4667DRAKP00000001 Applicable Compliance Requirement: Allowable Costs/Cost Principles Condition: A review of 25 FY 24 Disaster Grants payments found that 14 payments (56 percent) lacked required supporting documentation. Specifically, six payments lacked pay policy and/or fringe benefit calculations and eight payments lacked procurement contracts that included all federal requirements. Additionally, two of the eight payments lacked a complete or signed contract on file. Context: The Federal Emergency Management Agency (FEMA) reimburses force account labor based on actual hourly rates plus the cost of the employee’s actual fringe benefits. The applicant is required to submit the following documentation to support labor costs claimed: summary of actual costs for completed work, individual information (such as name, job title, type of employee, days and hours worked, pay rate and fringe benefit rate, and a description of work performed), fringe benefit calculation, and pay policy. FEMA determines the eligibility of overtime, premium pay, and compensatory time costs based on the applicant’s pre-disaster written pay policy. Six of the 25 transactions included force account labor that was not supported by a pay policy or benefit calculation. FEMA provides public assistance funding for contract costs based on the terms of the contract if the applicant meets federal procurement and contracting requirements. The applicant must include required provisions detailed in Title 2 CFR 200.327 in all contracts awarded and maintain oversight to ensure that contractors perform according to the conditions and specifications of the contract. FEMA reimburses funding for contract costs based on the terms of the contract if the applicant meets federal procurement and contract requirements. Eight of the 25 transactions included contractor payments and, based on review of the contract, not all federally required provisions were included. Two of the eight were not supported by a signed contract. According to DMVA management, contractors were utilized to provide project management of the federal disasters due to an increased workload and a lack of available DMVA staff. Contractors were tasked with gathering the required documents to ensure projects were administered in accordance with FEMA requirements. Cause: Division of Homeland Security and Emergency Management (DHSEM) lacked written procedures for monitoring contractors. Also, due to staff turnover and an increase in workload, DHSEM management did not adequately monitor contractor’s work. Specifically, to ensure the contractor verified the contracts awarded by subrecipients included federal requirements, final signed contracts were provided to the state, and required documentation was received for the reimbursement of subrecipient force account labor costs. Criteria: Title 2 CFR 200.403(g) requires costs to be adequately documented. FEMA’s guidance for administering the program is detailed in the Public Assistance Program and Policy Guide (PAPPG), 2018, which requires labor costs to be supported by specific documentation: summary of actual costs for completed work; for each individual: name, job title and function, type of employee, days and hours worked, pay rates and fringe benefit rate, and description of work performed; fringe benefit calculations; and pay policy. The PAPPG also requires contracts to include the required provisions in Title 2 CFR 200.327 and Homeland Security Acquisition Regulation Class Deviation 15-01 clauses in all contracts awarded. Title 2 CFR 200.303(a) requires the State to establish and maintain effective internal controls over federal awards that provide reasonable assurance that the State is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Effect: Lack of fringe benefit calculations and pay policy may result in FEMA limiting public assistance funding to the applicant non-discretionary, uniformly applied pay rates. Inadequate documentation may result in unallowable costs. Noncompliance with federal regulations may result in the federal awarding agency imposing additional conditions or taking corrective action, including additional reporting requirements or withholding/terminating funding. Questioned Costs: AL - 97.036: $96,758 AL - 97.036 COVID-19: $2,159 Recommendation: DHSEM’s director should develop written procedures for adequately monitoring DMVA contractors to ensure all federally required documentation is obtained to support reimbursements to subrecipients. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2024-039 Federal Awarding Agency: USDHS Impact: Material Weakness, Material Noncompliance AL Number and Title: 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disasters) 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disasters) – COVID-19 Federal Award Number: 4094DRAKP00000001, 4413DRAKP00000001, 4533DRAKP00000001 Applicable Compliance Requirement: Reporting Condition: Four of 12 randomly selected FY 24 Disaster Grants SF-425 reports tested had incorrect matching amounts, one of which also had an incorrect recipient share of expenditures. Context: The SF-425 is a required quarterly federal financial form used for reporting the financial status of federal grant awards. During FY 24, 15 disasters required quarterly SF-425 reports for a total of 58 reports filed. Twelve of the 58 were selected for testing. Due to incorrect calculations, the matching amounts for four reports were understated. One report also reported incorrect recipient share of expenditures. Cause: The errors were due to insufficient procedures over the preparation and review of SF-425 reports. Criteria: Title 44 CFR 206.120(f)(2) prescribes the State shall provide financial status reports. Title 2 CFR 200.303(a) requires the State to establish and maintain effective internal controls over federal awards that provide reasonable assurance that the State is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Effect: The insufficient internal controls resulted in misreported financial data. Inaccurate federal reporting may impair federal decision-making and may result in the federal awarding agency imposing additional conditions or taking corrective action, including additional requirements or withholding/terminating funds. Questioned Costs: None Recommendation: DMVA's finance officer should strengthen written procedures for the preparation and review of the SF-425 report to ensure the reports submitted to FEMA are accurate. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2024-040 Federal Awarding Agency: USDHS Impact: Material Weakness, Material Noncompliance AL Number and Title: 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disasters) 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disasters) – COVID-19 Federal Award Number: 4646DRAKP00000001, 4648DRAKP00000001, 4667DRAKP00000001, 4672DRAKP00000001, 4585DRAKP00000001, 4730DRAKP00000001, 4533DRAKP00000001 Applicable Compliance Requirement: Reporting Condition: The audit identified multiple errors in FY 24 Disaster Grants program subawards key data elements in the Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System (FSRS). Additionally, the names and total compensation of each of the subrecipient’s five most highly compensated executives, if applicable, were not communicated to DMVA’s DAS staff for data entry into FSRS. Context: The FFATA was signed into law on September 26, 2006, with the intent to empower every American with the ability to hold the government accountable for each spending decision. The FFATA legislation requires information on federal awards be made available to the public via a single, searchable website, at www.usaspending.gov. The FFATA FSRS is the reporting tool federal awardees, such as the State of Alaska, use to capture and report subaward and executive compensation data regarding first-tier subawards. To comply with FFATA requirements, DHSEM staff responsible for Disaster Grants program management obtain subawardee information from the OAD and the assurances and agreement document. The OAD is sent to DAS staff for data entry into FSRS. There were 86 Disaster Grants program subawards subject to FFATA reporting during FY 24. The audit reviewed seven randomly and two judgmentally selected subawards, totaling $6,819,071, for compliance and internal controls testing of FFATA reporting requirements. One of the seven (14 percent) subawards, totaling $1,625,735, reported an incorrect subaward project description and three (43 percent) subawards, totaling $369,218, were not reported timely. One judgmentally selected subaward, totaling $164,393, was not reported timely to FSRS, and one, totaling $4,009,660, was not reported at all. An additional 48 subawards were not reported that should have been. Reporting errors are summarized in the table below. Cause: Staff turnover and vacancies contributed to the errors and omissions. Inadequate procedures resulted in highly compensated executive salaries not being communicated to DAS staff. Since the data was entered directly into FSRS, DAS staff stated the system did not allow for review by a supervisor to ensure accuracy of the data prior to submission. Criteria: Title 2 CFR 200.303(a) requires the State to establish and maintain effective internal controls over federal awards that provide reasonable assurance that the State is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Title 2 CFR 170 states federal award recipients are required to report each subaward that obligates $30,000 or more in federal funds. This information must be reported no later than the end of the month following the month in which the obligation was made; include information about each obligating action in accordance with submission instructions; and include the names and total compensation of each of the subrecipient’s five most highly compensated executives if revenue thresholds are met and the executive compensation is not available to the public. Effect: Failure to comply with FFATA reporting requirements reduces transparency and may jeopardize future federal funding. Questioned Costs: None Recommendation: DMVA's finance officer should work with the DHSEM director to strengthen FFATA reporting procedures to ensure required reports are filed timely and key data elements comply with federal reporting requirements. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2024-036 Federal Awarding Agency: U.S. Department of Homeland Security (USDHS) Impact: Significant Deficiency, Noncompliance AL Number and Title: 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disasters) 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disasters) – COVID-19 Federal Award Number: 4413DRAKP00000001, 4533DRAKP00000001, 4585DRAKP00000001, 4646DRAKP00000001, 4667DRAKP00000001 Applicable Compliance Requirement: Allowable Costs/Cost Principles Condition: A review of 25 FY 24 Disaster Grants payments found that 14 payments (56 percent) lacked required supporting documentation. Specifically, six payments lacked pay policy and/or fringe benefit calculations and eight payments lacked procurement contracts that included all federal requirements. Additionally, two of the eight payments lacked a complete or signed contract on file. Context: The Federal Emergency Management Agency (FEMA) reimburses force account labor based on actual hourly rates plus the cost of the employee’s actual fringe benefits. The applicant is required to submit the following documentation to support labor costs claimed: summary of actual costs for completed work, individual information (such as name, job title, type of employee, days and hours worked, pay rate and fringe benefit rate, and a description of work performed), fringe benefit calculation, and pay policy. FEMA determines the eligibility of overtime, premium pay, and compensatory time costs based on the applicant’s pre-disaster written pay policy. Six of the 25 transactions included force account labor that was not supported by a pay policy or benefit calculation. FEMA provides public assistance funding for contract costs based on the terms of the contract if the applicant meets federal procurement and contracting requirements. The applicant must include required provisions detailed in Title 2 CFR 200.327 in all contracts awarded and maintain oversight to ensure that contractors perform according to the conditions and specifications of the contract. FEMA reimburses funding for contract costs based on the terms of the contract if the applicant meets federal procurement and contract requirements. Eight of the 25 transactions included contractor payments and, based on review of the contract, not all federally required provisions were included. Two of the eight were not supported by a signed contract. According to DMVA management, contractors were utilized to provide project management of the federal disasters due to an increased workload and a lack of available DMVA staff. Contractors were tasked with gathering the required documents to ensure projects were administered in accordance with FEMA requirements. Cause: Division of Homeland Security and Emergency Management (DHSEM) lacked written procedures for monitoring contractors. Also, due to staff turnover and an increase in workload, DHSEM management did not adequately monitor contractor’s work. Specifically, to ensure the contractor verified the contracts awarded by subrecipients included federal requirements, final signed contracts were provided to the state, and required documentation was received for the reimbursement of subrecipient force account labor costs. Criteria: Title 2 CFR 200.403(g) requires costs to be adequately documented. FEMA’s guidance for administering the program is detailed in the Public Assistance Program and Policy Guide (PAPPG), 2018, which requires labor costs to be supported by specific documentation: summary of actual costs for completed work; for each individual: name, job title and function, type of employee, days and hours worked, pay rates and fringe benefit rate, and description of work performed; fringe benefit calculations; and pay policy. The PAPPG also requires contracts to include the required provisions in Title 2 CFR 200.327 and Homeland Security Acquisition Regulation Class Deviation 15-01 clauses in all contracts awarded. Title 2 CFR 200.303(a) requires the State to establish and maintain effective internal controls over federal awards that provide reasonable assurance that the State is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Effect: Lack of fringe benefit calculations and pay policy may result in FEMA limiting public assistance funding to the applicant non-discretionary, uniformly applied pay rates. Inadequate documentation may result in unallowable costs. Noncompliance with federal regulations may result in the federal awarding agency imposing additional conditions or taking corrective action, including additional reporting requirements or withholding/terminating funding. Questioned Costs: AL - 97.036: $96,758 AL - 97.036 COVID-19: $2,159 Recommendation: DHSEM’s director should develop written procedures for adequately monitoring DMVA contractors to ensure all federally required documentation is obtained to support reimbursements to subrecipients. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2024-037 Federal Awarding Agency: USDHS Impact: Significant Deficiency, Noncompliance AL Number and Title: 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disasters) Federal Award Number: 4646DRAKP00000001, 4661DRAKP00000001, 4672DRAKP00000001, 4730DRAKP00000001 Applicable Compliance Requirement: Subrecipient Monitoring Condition: A review of 16 FY 24 Disaster Grants program subrecipients’ obligating award documents (OAD) found seven did not include all federally required information and one was also missing a completed assurances and agreement form. Context: Effective April 4, 2022, the unique entity identifier (UEI) replaced the Data Universal Numbering System number as the authoritative identifier for entities doing business with the federal government. All federal award recipients are required to have a UEI. DMVA enters into awards with subrecipients using the OAD as the subgrant agreement. The subrecipient’s name and UEI are recorded on the OAD. An assurances and agreement form accompanies the OAD that includes additional federal requirements not included in the OAD. Subrecipients sign the OAD and the assurances and agreement forms certifying and agreeing to the federal requirements. According to DHSEM management, DMVA contractors assisted division staff in completing the OADs with subrecipients and provided project management for the federal disasters. Contractors were needed due to the increased workload resulting from the 2018 Cook Inlet earthquake, COVID-19 pandemic, and state declared disasters. The audit reviewed a random sample of 16 of 143 subrecipients’ OADs, including assurances and agreement forms, and found seven had the following errors: two included a subrecipient’s name that did not match the UEI number provided, of which one also included a period of performance that did not agree with the federally approved project performance period; one did not include a UEI number; one included a name and UEI number that could not be found in the federal system for award management (sam.gov) and did not have the completed assurances and agreement form; and three included a period of performance that did not agree with the federally approved project performance periods. Cause: Due to staff turnover and an increase in workload, DHSEM staff did not monitor contractors to ensure subrecipient information was accurately documented on the OAD, the assurances and agreement form was complete, and information was in sam.gov before issuing the subaward. Furthermore, DHSEM management and contractors lacked procedures to ensure all required information was obtained and documented on the OAD, including adequate DHSEM review procedures. Criteria: Title 2 CFR 200.332 requires pass-through entities ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the required information at the time of the subaward. Required information includes subaward period of performance start and end dates, subrecipient UEI, and the subrecipient’s name, which must match the name associated with the subrecipient’s UEI. Title 2 CFR 200.303(a) requires the State to establish and maintain effective internal controls over federal awards that provide reasonable assurance that the State is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Effect: Not providing accurate and complete information in the subaward documents increases the risk of subrecipient noncompliance with the terms and conditions of the federal award. Questioned Costs: None Recommendation: DHSEM’s director should develop written procedures and adequately monitor contractors to ensure federally required information is accurately identified on the OAD and completed assurance and agreement forms are received from the subrecipient certifying agreement with federal requirements. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2024-039 Federal Awarding Agency: USDHS Impact: Material Weakness, Material Noncompliance AL Number and Title: 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disasters) 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disasters) – COVID-19 Federal Award Number: 4094DRAKP00000001, 4413DRAKP00000001, 4533DRAKP00000001 Applicable Compliance Requirement: Reporting Condition: Four of 12 randomly selected FY 24 Disaster Grants SF-425 reports tested had incorrect matching amounts, one of which also had an incorrect recipient share of expenditures. Context: The SF-425 is a required quarterly federal financial form used for reporting the financial status of federal grant awards. During FY 24, 15 disasters required quarterly SF-425 reports for a total of 58 reports filed. Twelve of the 58 were selected for testing. Due to incorrect calculations, the matching amounts for four reports were understated. One report also reported incorrect recipient share of expenditures. Cause: The errors were due to insufficient procedures over the preparation and review of SF-425 reports. Criteria: Title 44 CFR 206.120(f)(2) prescribes the State shall provide financial status reports. Title 2 CFR 200.303(a) requires the State to establish and maintain effective internal controls over federal awards that provide reasonable assurance that the State is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Effect: The insufficient internal controls resulted in misreported financial data. Inaccurate federal reporting may impair federal decision-making and may result in the federal awarding agency imposing additional conditions or taking corrective action, including additional requirements or withholding/terminating funds. Questioned Costs: None Recommendation: DMVA's finance officer should strengthen written procedures for the preparation and review of the SF-425 report to ensure the reports submitted to FEMA are accurate. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2024-040 Federal Awarding Agency: USDHS Impact: Material Weakness, Material Noncompliance AL Number and Title: 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disasters) 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disasters) – COVID-19 Federal Award Number: 4646DRAKP00000001, 4648DRAKP00000001, 4667DRAKP00000001, 4672DRAKP00000001, 4585DRAKP00000001, 4730DRAKP00000001, 4533DRAKP00000001 Applicable Compliance Requirement: Reporting Condition: The audit identified multiple errors in FY 24 Disaster Grants program subawards key data elements in the Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System (FSRS). Additionally, the names and total compensation of each of the subrecipient’s five most highly compensated executives, if applicable, were not communicated to DMVA’s DAS staff for data entry into FSRS. Context: The FFATA was signed into law on September 26, 2006, with the intent to empower every American with the ability to hold the government accountable for each spending decision. The FFATA legislation requires information on federal awards be made available to the public via a single, searchable website, at www.usaspending.gov. The FFATA FSRS is the reporting tool federal awardees, such as the State of Alaska, use to capture and report subaward and executive compensation data regarding first-tier subawards. To comply with FFATA requirements, DHSEM staff responsible for Disaster Grants program management obtain subawardee information from the OAD and the assurances and agreement document. The OAD is sent to DAS staff for data entry into FSRS. There were 86 Disaster Grants program subawards subject to FFATA reporting during FY 24. The audit reviewed seven randomly and two judgmentally selected subawards, totaling $6,819,071, for compliance and internal controls testing of FFATA reporting requirements. One of the seven (14 percent) subawards, totaling $1,625,735, reported an incorrect subaward project description and three (43 percent) subawards, totaling $369,218, were not reported timely. One judgmentally selected subaward, totaling $164,393, was not reported timely to FSRS, and one, totaling $4,009,660, was not reported at all. An additional 48 subawards were not reported that should have been. Reporting errors are summarized in the table below. Cause: Staff turnover and vacancies contributed to the errors and omissions. Inadequate procedures resulted in highly compensated executive salaries not being communicated to DAS staff. Since the data was entered directly into FSRS, DAS staff stated the system did not allow for review by a supervisor to ensure accuracy of the data prior to submission. Criteria: Title 2 CFR 200.303(a) requires the State to establish and maintain effective internal controls over federal awards that provide reasonable assurance that the State is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Title 2 CFR 170 states federal award recipients are required to report each subaward that obligates $30,000 or more in federal funds. This information must be reported no later than the end of the month following the month in which the obligation was made; include information about each obligating action in accordance with submission instructions; and include the names and total compensation of each of the subrecipient’s five most highly compensated executives if revenue thresholds are met and the executive compensation is not available to the public. Effect: Failure to comply with FFATA reporting requirements reduces transparency and may jeopardize future federal funding. Questioned Costs: None Recommendation: DMVA's finance officer should work with the DHSEM director to strengthen FFATA reporting procedures to ensure required reports are filed timely and key data elements comply with federal reporting requirements. Views of Responsible Officials: Management agrees with this finding.
Finding No. 2024-083 Prior Year Finding: Federal Awarding Agency: National Science Foundation Impact: Significant Deficiency AL Number and Title: 47.076 RDC Federal Award Number: 1839290 Applicable Compliance Requirement: Period of Performance Condition: One of 40 sampled transactions were coded incorrectly to the wrong grant. Context: During testing of period of performance, one transaction was observed that appeared to have been liquidated beyond 120 days after the end of the period of performance. Upon further inspection, we concluded that the transaction was coded to the incorrect grant. The correct grant was still within the 120-day liquidation period after the end of the period of performance. Cause: UAF did not perform timely close out procedures on the grant which resulted in incorrectly coded expenditures to go undetected. Criteria: Per Uniform Guidance 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. Effect: One transaction was incorrectly coded to the wrong grant. Questioned Costs: None Recommendation: UAF management should adhere to their existing requirements for timely grant close out procedures. Views of Responsible Officials: Management agrees with this finding.
FA 2024-001 Strengthen Controls over Expenditures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Procurement and Suspension and Debarment Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Agriculture Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 10.553 – School Breakfast Program 10.555 – National School Lunch Program Federal Award Numbers: 225GA324N1099 (Year: 2024), 245GA324N1199 (Year 2024) Questioned Costs: $77,285 Repeat of Prior Year Finding: FA 2023-001 Description: A review of expenditures charged to the Child Nutrition Cluster revealed that the School District’s internal control procedures were not operating appropriately to ensure that expenditures were reviewed and approved and that the School District’s procurement and suspension and debarment procedures were followed. Background Information: The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential child care institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and secondary schools and encourages the domestic consumption of nutritious agricultural commodities. CNC funding 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 $2,251,765 were expended and reported on the Berrien 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…” Additionally, provisions included in the Uniform Guidance, Section 200.318 – General Procurement Standards state in part that “(a) the non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations and… (b) non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders.” In addition, provisions included in the Uniform Guidance, Section 200.320 – Methods of Procurement to Be Followed provide guidance for procurement through small purchase procedures and state “If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources.” Condition: A sample of 60 expenditures was randomly selected for testing using a non-statistical sampling approach. These expenditures were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. The following deficiencies were noted: • For three expenditures, evidence of review and approval was not reflected within the voucher package. • For seven expenditures, there was no verification of receipt of goods documented in the voucher package. Additionally, auditor reviewed 40 of these same expenditures and a sample of 20 additional expenditures, which was randomly selected for testing using a non-statistical sampling approach, to determine if procurement transactions complied with the School District’s procurement procedures and proper oversight was maintained to ensure that contractors were performing according to their contracts. The following deficiencies were noted: • Evidence of review and approval was not reflected within the voucher package for five additional expenditures. • For 19 expenditures paid to four different vendors, documentation could not be provided to support the entity’s verification that the vendors were not suspended or debarred or otherwise excluded from participating in the transactions. • One vendor contract expired mid-year and no renewal or extension was initiated. Questioned Costs: Known questioned costs of $77,285 were identified for procurement transactions that did not follow the School District’s procurement procedures and were incurred under an expired contract for which no renewal or extension was initiated. These known questioned costs related to all expenditures occurring after contract expiration, and therefore, should not be projected to a population to determine likely questioned costs. Cause: When discussing the issues noted with management, they said the program director was new and was unaware of the compliance requirements. Effect: The School District is not in compliance with the Uniform Guidance and GaDOE guidance related to CNC. Failure to ensure that expenditures are appropriately approved and procedures to address procurement and suspension and debarment compliance requirements are implemented exposes the School District to unnecessary risk of error and misuse of federal funds and could result in the expenditure of federal funds for unallowable purposes and/or with unqualified vendors. In addition, this deficiency could lead to the return of funding associated with unallowable expenditures. Recommendation: The School District should review current internal control procedures related to CNC. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that all expenditures reflect evidence of review and approval, required procurement methods are properly identified and followed, and required procurement and suspension and debarment documentation is properly identified, safeguarded, and retained. In addition, management should develop a monitoring process to ensure that these procedures are operating appropriately. Views of Responsible Officials: We concur with this finding.
FA 2024-001 Strengthen Controls over Expenditures Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Procurement and Suspension and Debarment Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Agriculture Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 10.553 – School Breakfast Program 10.555 – National School Lunch Program Federal Award Numbers: 225GA324N1099 (Year: 2024), 245GA324N1199 (Year 2024) Questioned Costs: $77,285 Repeat of Prior Year Finding: FA 2023-001 Description: A review of expenditures charged to the Child Nutrition Cluster revealed that the School District’s internal control procedures were not operating appropriately to ensure that expenditures were reviewed and approved and that the School District’s procurement and suspension and debarment procedures were followed. Background Information: The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential child care institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and secondary schools and encourages the domestic consumption of nutritious agricultural commodities. CNC funding 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 $2,251,765 were expended and reported on the Berrien 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…” Additionally, provisions included in the Uniform Guidance, Section 200.318 – General Procurement Standards state in part that “(a) the non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations and… (b) non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders.” In addition, provisions included in the Uniform Guidance, Section 200.320 – Methods of Procurement to Be Followed provide guidance for procurement through small purchase procedures and state “If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources.” Condition: A sample of 60 expenditures was randomly selected for testing using a non-statistical sampling approach. These expenditures were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. The following deficiencies were noted: • For three expenditures, evidence of review and approval was not reflected within the voucher package. • For seven expenditures, there was no verification of receipt of goods documented in the voucher package. Additionally, auditor reviewed 40 of these same expenditures and a sample of 20 additional expenditures, which was randomly selected for testing using a non-statistical sampling approach, to determine if procurement transactions complied with the School District’s procurement procedures and proper oversight was maintained to ensure that contractors were performing according to their contracts. The following deficiencies were noted: • Evidence of review and approval was not reflected within the voucher package for five additional expenditures. • For 19 expenditures paid to four different vendors, documentation could not be provided to support the entity’s verification that the vendors were not suspended or debarred or otherwise excluded from participating in the transactions. • One vendor contract expired mid-year and no renewal or extension was initiated. Questioned Costs: Known questioned costs of $77,285 were identified for procurement transactions that did not follow the School District’s procurement procedures and were incurred under an expired contract for which no renewal or extension was initiated. These known questioned costs related to all expenditures occurring after contract expiration, and therefore, should not be projected to a population to determine likely questioned costs. Cause: When discussing the issues noted with management, they said the program director was new and was unaware of the compliance requirements. Effect: The School District is not in compliance with the Uniform Guidance and GaDOE guidance related to CNC. Failure to ensure that expenditures are appropriately approved and procedures to address procurement and suspension and debarment compliance requirements are implemented exposes the School District to unnecessary risk of error and misuse of federal funds and could result in the expenditure of federal funds for unallowable purposes and/or with unqualified vendors. In addition, this deficiency could lead to the return of funding associated with unallowable expenditures. Recommendation: The School District should review current internal control procedures related to CNC. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that all expenditures reflect evidence of review and approval, required procurement methods are properly identified and followed, and required procurement and suspension and debarment documentation is properly identified, safeguarded, and retained. In addition, management should develop a monitoring process to ensure that these procedures are operating appropriately. Views of Responsible Officials: We concur with this finding.
2 CFR section 200.303 requires that non-Federal entities receiving Federal awards establish and maintain internal control over the Federal awards that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards. The School District employs a food service management company to oversee and conduct the activities of the food service department. The School District paid a lump sum to the food service management company each month, but there was no evidence that the School District reviewed any of the supporting invoices to verify amounts paid were for allowable activities and costs. Failure to have policies and procedures over allowable activities and allowable costs could result in unallowable costs and activities being charged to the federal program. The School District should review all detailed invoices from their food service management company. The School District should ensure to only reimburse the food service management company for allowable activities and costs for the Nutrition Cluster Federal Program.
2 CFR section 200.303 requires that non-Federal entities receiving Federal awards establish and maintain internal control over the Federal awards that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards. The School District employs a food service management company to oversee and conduct the activities of the food service department. The School District paid a lump sum to the food service management company each month, but there was no evidence that the School District reviewed any of the supporting invoices to verify amounts paid were for allowable activities and costs. Failure to have policies and procedures over allowable activities and allowable costs could result in unallowable costs and activities being charged to the federal program. The School District should review all detailed invoices from their food service management company. The School District should ensure to only reimburse the food service management company for allowable activities and costs for the Nutrition Cluster Federal Program.
2 CFR section 200.303 requires that non-Federal entities receiving Federal awards establish and maintain internal control over the Federal awards that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards. The School District employs a food service management company to oversee and conduct the activities of the food service department. The School District paid a lump sum to the food service management company each month, but there was no evidence that the School District reviewed any of the supporting invoices to verify amounts paid were for allowable activities and costs. Failure to have policies and procedures over allowable activities and allowable costs could result in unallowable costs and activities being charged to the federal program. The School District should review all detailed invoices from their food service management company. The School District should ensure to only reimburse the food service management company for allowable activities and costs for the Nutrition Cluster Federal Program.
2 CFR section 200.303 requires that non-Federal entities receiving Federal awards establish and maintain internal control over the Federal awards that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards. The School District employs a food service management company to oversee and conduct the activities of the food service department. The School District paid a lump sum to the food service management company each month, but there was no evidence that the School District reviewed any of the supporting invoices to verify amounts paid were for allowable activities and costs. Failure to have policies and procedures over allowable activities and allowable costs could result in unallowable costs and activities being charged to the federal program. The School District should review all detailed invoices from their food service management company. The School District should ensure to only reimburse the food service management company for allowable activities and costs for the Nutrition Cluster Federal Program.
2 CFR section 200.303 requires that non-Federal entities receiving Federal awards establish and maintain internal control over the Federal awards that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards. The School District employs a food service management company to oversee and conduct the activities of the food service department. The School District paid a lump sum to the food service management company each month, but there was no evidence that the School District reviewed any of the supporting invoices to verify amounts paid were for allowable activities and costs. Failure to have policies and procedures over allowable activities and allowable costs could result in unallowable costs and activities being charged to the federal program. The School District should review all detailed invoices from their food service management company. The School District should ensure to only reimburse the food service management company for allowable activities and costs for the Nutrition Cluster Federal Program.
2 CFR section 200.303 requires that non-Federal entities receiving Federal awards establish and maintain internal control over the Federal awards that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards. The School District employs a food service management company to oversee and conduct the activities of the food service department. The School District paid a lump sum to the food service management company each month, but there was no evidence that the School District reviewed any of the supporting invoices to verify amounts paid were for allowable activities and costs. Failure to have policies and procedures over allowable activities and allowable costs could result in unallowable costs and activities being charged to the federal program. The School District should review all detailed invoices from their food service management company. The School District should ensure to only reimburse the food service management company for allowable activities and costs for the Nutrition Cluster Federal Program.
The Cumberland County Fiscal Court failed to implement adequate internal controls over the Disaster Grants – Public Assistance (Presidentially Declared Disaster) (FEMA) program to ensure all compliance requirements are being met and that record keeping was being done correctly. The fiscal court relied on a third-party administrator for the recording of all FEMA project activity. The fiscal court also relied on the third-party to satisfy compliance requirements and failed to establish any review process or independent internal controls that verified that activities performed, and amounts charged to the program were allowable under all applicable compliance requirements. By relying on a third-party administrator’s controls, without enacting any internal controls, the county increased the risk of misappropriation of funds, and noncompliance with federal grant guidelines. This could have potentially led to questioned costs that would have to be repaid, and less federal funding in the future. This also resulted in the county’s Schedule of Federal Awards and Expenditures (SEFA) being misstated and duplication of benefits noted. The county realized they had applied for assistance from FEMA and also from Kentucky Transportation Cabinet for the same projects. This was brought to the state’s attention by the county judge/executive when noted and corrected with repayment by the county on May 14, 2024 for $100,000 to the Kentucky Transportation Cabinet. Strong internal controls dictate that the fiscal court should review all federal expenditure documentation and reports to ensure compliance requirements are being met, and activities are being completed accurately. 2 CFR 200.303 states “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 the guidance in ‘Standards for Internal Control in the Federal Government’ issued by the Comptroller General of the United States [Green Book] or the ‘Internal Control Integrated Framework’, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” We recommend the Cumberland County Fiscal Court strengthen internal controls over the federal expenditure process by ensuring all activity related to federal expenditures is reviewed for accuracy and compliance.
Federal Grantor: Department of Labor Pass-Through: Iowa Workforce Development Program: Workforce Innovation and Opportunity Act (WIOA) Cluster Award No. and Year: 24-N-CI-WI-OA and 2024 Federal Assistance Listing Number: 17.258, 17.259, 17.278 Compliance Requirement: Allowable Activities/Allowable Costs, Period of Performance Type of Finding: Material Weakness in Internal Control over Compliance Criteria: CFR Section 200.303(a), Internal Controls, states that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: During our testing of the County’s compliance with allowable activities, allowable costs and cost principles requirements and period of performance, we noted for thirty-five (35) of thirty-five (35) transactions, there was no review or approval performed by the County over the transaction. Cause: The County entered into a fiscal agency services agreement with Central Iowa Juvenile Detention Center (CIJDC) whereas CIJDC is to primarily administer the program as the fiscal agent. CIJDC operates similarly to that of a third-party administrator. The County was not aware that the compliance requirements were still the County’s responsibilities even though they utilized a third-party administrator to administer the program. Effect: The County’s control was not consistently followed, which requires transactions to be reviewed and approved prior to payment. Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: A nonstatistical sample of thirty-five (35) of one hundred seventy-seven (177) transactions were selected. The condition above was identified during our testwork of the County’s internal controls over allowable activities, allowable costs and cost principles, and period of performance. Repeat Finding from Prior Years: No. Recommendation: We recommend the County adhere to their policies and ensure the review and approval of transactions are performed prior to payment. Views of Responsible Officials: Management agrees with the finding. See separate corrective action plan.
Federal Grantor: Department of Labor Pass-Through: Iowa Workforce Development Program: Workforce Innovation and Opportunity Act (WIOA) Cluster Award No. and Year: 24-N-CI-WI-OA and 2024 Federal Assistance Listing Number: 17.258, 17.259, 17.278 Compliance Requirement: Allowable Activities/Allowable Costs, Period of Performance Type of Finding: Material Weakness in Internal Control over Compliance Criteria: CFR Section 200.303(a), Internal Controls, states that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: During our testing of the County’s compliance with allowable activities, allowable costs and cost principles requirements and period of performance, we noted for thirty-five (35) of thirty-five (35) transactions, there was no review or approval performed by the County over the transaction. Cause: The County entered into a fiscal agency services agreement with Central Iowa Juvenile Detention Center (CIJDC) whereas CIJDC is to primarily administer the program as the fiscal agent. CIJDC operates similarly to that of a third-party administrator. The County was not aware that the compliance requirements were still the County’s responsibilities even though they utilized a third-party administrator to administer the program. Effect: The County’s control was not consistently followed, which requires transactions to be reviewed and approved prior to payment. Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: A nonstatistical sample of thirty-five (35) of one hundred seventy-seven (177) transactions were selected. The condition above was identified during our testwork of the County’s internal controls over allowable activities, allowable costs and cost principles, and period of performance. Repeat Finding from Prior Years: No. Recommendation: We recommend the County adhere to their policies and ensure the review and approval of transactions are performed prior to payment. Views of Responsible Officials: Management agrees with the finding. See separate corrective action plan.
Federal Grantor: Department of Labor Pass-Through: Iowa Workforce Development Program: Workforce Innovation and Opportunity Act (WIOA) Cluster Award No. and Year: 24-N-CI-WI-OA and 2024 Federal Assistance Listing Number: 17.258, 17.259, 17.278 Compliance Requirement: Allowable Activities/Allowable Costs, Period of Performance Type of Finding: Material Weakness in Internal Control over Compliance Criteria: CFR Section 200.303(a), Internal Controls, states that the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: During our testing of the County’s compliance with allowable activities, allowable costs and cost principles requirements and period of performance, we noted for thirty-five (35) of thirty-five (35) transactions, there was no review or approval performed by the County over the transaction. Cause: The County entered into a fiscal agency services agreement with Central Iowa Juvenile Detention Center (CIJDC) whereas CIJDC is to primarily administer the program as the fiscal agent. CIJDC operates similarly to that of a third-party administrator. The County was not aware that the compliance requirements were still the County’s responsibilities even though they utilized a third-party administrator to administer the program. Effect: The County’s control was not consistently followed, which requires transactions to be reviewed and approved prior to payment. Questioned Costs: No questioned costs were identified as a result of our procedures. Context/Sampling: A nonstatistical sample of thirty-five (35) of one hundred seventy-seven (177) transactions were selected. The condition above was identified during our testwork of the County’s internal controls over allowable activities, allowable costs and cost principles, and period of performance. Repeat Finding from Prior Years: No. Recommendation: We recommend the County adhere to their policies and ensure the review and approval of transactions are performed prior to payment. Views of Responsible Officials: Management agrees with the finding. See separate corrective action plan.
2 CFR § 400.1 gives regulatory effect for the U.S. Department of Agriculture to the Office of Management and Budget guidance in subparts A through F of 2 CFR part 200, as supplemented by this part, as USDA policies and procedures for uniform administrative requirements, cost principles, and audit requirement for Federal awards. 2 CFR § 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain effective internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR § 200.320(a)(2) indicates, in part, when the aggregate dollar amount of the procurement transaction is higher than the micro-purchase threshold, but does not exceed the simplified acquisition threshold, simplified acquisition procedures can be used. If simplified acquisition procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined by the recipient or subrecipient. 2 CFR § 200.318(i) indicates the non-Federal entity must maintain records sufficient to detail the history of procurement transaction. These records must 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. Perkins Local School District Board Policy DECA - Administration of Federal Grant Funds indicates all purchases for property and services made using federal funds must be conducted in accordance with all applicable Federal, State and local laws and regulations, the Uniform Guidance, and the District’s written policies and procedures. Purchasing records are sufficiently maintained to detail the history of all procurements and must include at least the rationale for the method of procurement, selection of contract type, and contractor selection or rejection; the basis for the contract price; and verification that the contractor is not suspended or debarred. Furthermore, Perkins Local School District Board Policy DJC - Bidding Requirements states that if feasible, all purchases over $5,000 but under $50,000 will be based on price quotations submitted by at least three vendors. Due to a lack of controls over the procurement process, for one out of four (25%) vendors examined during testing of the Child Nutrition Cluster, the District did not obtain quotes from other vendors. The procurements totaled $9,376; therefore, the District’s bidding policy required the District to obtain “quotations submitted by at least three vendors.” Failure to obtain quotations from a variety of vendors may result in the District not utilizing the most cost effective vendor as well as further noncompliance with Federal requirements. The District should adopt procedures to help ensure records are maintained to document the history of the procurement, including the rationale for the purchase method, selection of vendors, cost/price analysis (if applicable) and the reason for limiting competition (if applicable).
2 CFR § 400.1 gives regulatory effect for the U.S. Department of Agriculture to the Office of Management and Budget guidance in subparts A through F of 2 CFR part 200, as supplemented by this part, as USDA policies and procedures for uniform administrative requirements, cost principles, and audit requirement for Federal awards. 2 CFR § 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain effective internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR § 200.320(a)(2) indicates, in part, when the aggregate dollar amount of the procurement transaction is higher than the micro-purchase threshold, but does not exceed the simplified acquisition threshold, simplified acquisition procedures can be used. If simplified acquisition procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined by the recipient or subrecipient. 2 CFR § 200.318(i) indicates the non-Federal entity must maintain records sufficient to detail the history of procurement transaction. These records must 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. Perkins Local School District Board Policy DECA - Administration of Federal Grant Funds indicates all purchases for property and services made using federal funds must be conducted in accordance with all applicable Federal, State and local laws and regulations, the Uniform Guidance, and the District’s written policies and procedures. Purchasing records are sufficiently maintained to detail the history of all procurements and must include at least the rationale for the method of procurement, selection of contract type, and contractor selection or rejection; the basis for the contract price; and verification that the contractor is not suspended or debarred. Furthermore, Perkins Local School District Board Policy DJC - Bidding Requirements states that if feasible, all purchases over $5,000 but under $50,000 will be based on price quotations submitted by at least three vendors. Due to a lack of controls over the procurement process, for one out of four (25%) vendors examined during testing of the Child Nutrition Cluster, the District did not obtain quotes from other vendors. The procurements totaled $9,376; therefore, the District’s bidding policy required the District to obtain “quotations submitted by at least three vendors.” Failure to obtain quotations from a variety of vendors may result in the District not utilizing the most cost effective vendor as well as further noncompliance with Federal requirements. The District should adopt procedures to help ensure records are maintained to document the history of the procurement, including the rationale for the purchase method, selection of vendors, cost/price analysis (if applicable) and the reason for limiting competition (if applicable).
2 CFR § 400.1 gives regulatory effect for the U.S. Department of Agriculture to the Office of Management and Budget guidance in subparts A through F of 2 CFR part 200, as supplemented by this part, as USDA policies and procedures for uniform administrative requirements, cost principles, and audit requirement for Federal awards. 2 CFR § 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain effective internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR § 200.320(a)(2) indicates, in part, when the aggregate dollar amount of the procurement transaction is higher than the micro-purchase threshold, but does not exceed the simplified acquisition threshold, simplified acquisition procedures can be used. If simplified acquisition procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined by the recipient or subrecipient. 2 CFR § 200.318(i) indicates the non-Federal entity must maintain records sufficient to detail the history of procurement transaction. These records must 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. Perkins Local School District Board Policy DECA - Administration of Federal Grant Funds indicates all purchases for property and services made using federal funds must be conducted in accordance with all applicable Federal, State and local laws and regulations, the Uniform Guidance, and the District’s written policies and procedures. Purchasing records are sufficiently maintained to detail the history of all procurements and must include at least the rationale for the method of procurement, selection of contract type, and contractor selection or rejection; the basis for the contract price; and verification that the contractor is not suspended or debarred. Furthermore, Perkins Local School District Board Policy DJC - Bidding Requirements states that if feasible, all purchases over $5,000 but under $50,000 will be based on price quotations submitted by at least three vendors. Due to a lack of controls over the procurement process, for one out of four (25%) vendors examined during testing of the Child Nutrition Cluster, the District did not obtain quotes from other vendors. The procurements totaled $9,376; therefore, the District’s bidding policy required the District to obtain “quotations submitted by at least three vendors.” Failure to obtain quotations from a variety of vendors may result in the District not utilizing the most cost effective vendor as well as further noncompliance with Federal requirements. The District should adopt procedures to help ensure records are maintained to document the history of the procurement, including the rationale for the purchase method, selection of vendors, cost/price analysis (if applicable) and the reason for limiting competition (if applicable).
2024-002 (2023-001) – Equipment and Real Property Management – Material Weakness in Internal Controls over Compliance (Repeat Finding) Federal Program Information: Funding Agency: U. S. Department of Health and Human Services Title: Head Start CFDA Number: 93.600 Federal Award Identification number: 06CH012005 Pass Through Entity: N/A Award Year: 2024 & 2023 Condition: The Organization did not conduct a physical inventory in current year or prior year and, in additional, requested reimbursement from the Department of Health and Human services for repair costs for which insurance proceeds were received. Criteria: Per Title 2 US Code of Federal Regulations Part 200.303a, non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with 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). Per 2 CFR 200.313(d)(2), a physical inventory of program property must be taken and the results reconciled with the property records at least once every 2 years. 2 CFR 200.406 requires that any recoveries on losses, such as insurance proceeds, be credited to the Federal award as a cost reduction or a cash refund. Questioned costs: $16,033 Effect: The Organization could dispose of, lose, or encumber federally funded equipment without following Federal guidelines. Cause: The Organization does not have policies and procedures to ensure that a physical inventory of equipment is performed at a minimum frequency of every two years. Additionally, the Entity filed a claim for damages to asset(s) purchased with Federal funds and did not offset the insurance proceeds against the repair costs charged to the Federal program, resulting in reimbursement of unallowable costs.
2024-002 (2023-001) – Equipment and Real Property Management – Material Weakness in Internal Controls over Compliance (Repeat Finding) Federal Program Information: Funding Agency: U. S. Department of Health and Human Services Title: Head Start CFDA Number: 93.600 Federal Award Identification number: 06CH012005 Pass Through Entity: N/A Award Year: 2024 & 2023 Condition: The Organization did not conduct a physical inventory in current year or prior year and, in additional, requested reimbursement from the Department of Health and Human services for repair costs for which insurance proceeds were received. Criteria: Per Title 2 US Code of Federal Regulations Part 200.303a, non-federal entities must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with 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). Per 2 CFR 200.313(d)(2), a physical inventory of program property must be taken and the results reconciled with the property records at least once every 2 years. 2 CFR 200.406 requires that any recoveries on losses, such as insurance proceeds, be credited to the Federal award as a cost reduction or a cash refund. Questioned costs: $16,033 Effect: The Organization could dispose of, lose, or encumber federally funded equipment without following Federal guidelines. Cause: The Organization does not have policies and procedures to ensure that a physical inventory of equipment is performed at a minimum frequency of every two years. Additionally, the Entity filed a claim for damages to asset(s) purchased with Federal funds and did not offset the insurance proceeds against the repair costs charged to the Federal program, resulting in reimbursement of unallowable costs.
Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Health Center Program Cluster Assistance Listing Numbers: 93.224 and 93.527 Federal Award Identification Number and Year: H80CS00109-22; H80CS00109-23 Award Period: May 1, 2023 – April 30, 2024; May 1, 2024 – April 30, 2025 Type of Finding: Material Weakness in Internal Control over Compliance Criteria or specific requirement: 2 CFR 200.305(b)(1) requires that recipients of federal funds maintain both written procedures that minimize the time elapsing between the transfer of funds from the Federal agency and the disbursement of funds by the recipient, and financial management systems that meet the standards for fund control and accountability. Furthermore, 2 CFR 200.303 indicates the non-Federal entity must: (a) Establish, document and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Organization did not maintain timely documentation to support an independent review and approval of the drawdowns prior the drawdown occurring. Questioned costs: None Context: This condition occurred in two (2) of six (6) transactions selected for testing. Cause: Turnover in key positions within the finance department. Effect: Drawdowns may occur for the incorrect amount, for the wrong period and for costs that may not have been incurred as of yet. Repeat Finding: No. Recommendation: We recommend management consider developing a contingency plan for when there is turnover in key personnel involved with the drawdown process of federal grants. As part of this plan, if changes need to occur to the primary internal control over drawdowns, those changes should be documented with supporting documentation retained for the revised internal control. Views of responsible officials: There is no disagreement with this finding.
Program: Community Development Block Grant (CDBG) ALN #: 14.218 Pass-through Entity: N/A- Direct Award Federal Agency: Department of Housing and Urban Development Federal Award Year: July 1, 2023–June 30, 2024 Compliance Requirement: Performance Reporting Type of finding: Material weakness and noncompliance Criteria Special Reporting for Federal Funding Accountability and Transparency Act Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No.109-282), as amended by Section 6202 of Public Law 110-252, herein referred to as the “Transparency Act” that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Aspects of the Transparency Act that relate to subaward reporting (1) under grants and cooperative agreements were implemented in OMB in 2 CFR Part 170 and (2) under contracts, by the regulatory agencies responsible for the Federal Acquisition Regulation (FAR at 5 FR 39414 et seq., July 8, 2010). The requirements pertain to recipients (i.e., direct recipients) of grants or cooperative agreements who make first-tier subawards and contractors (i.e., prime contractors) that award first-tier subcontracts. Title 2 US Code of Federal Regulations Part 200 (2 CFR 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, section 200.1 defines subaward as an award provided by a pass-through entity to a subrecipient for the subrecipient to carry out part of a federal award received by the pass through entity. It does not include payments to a contractor or payments to an individual that is a beneficiary of a federal program. A subaward may be provided through any form of legal agreement, including an agreement that the pass-through entity considers a contract. Further, 2 CFR 200.1 defines subrecipient as a nonfederal entity that receives a subaward from a passthrough entity to carry out part of a federal program but does not include an individual that is a beneficiary of such program. A subrecipient may also be a recipient of other federal awards directly from a federal awarding agency. Lastly, 2 CFR 200.303(a) states, the nonfederal entity 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 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 City’s Community Development Department (CDBG) did not report awards granted to subrecipients for the CDBG program by the end of the month following the month in which the City awarded the subrecipient award. FFATA requires the City to report certain identifying information related to awards made to subrecipients in amounts greater than or equal to $30,000. Of the information to be reported, the following key data elements are required to be audited: 1. Subawardee name 2. Subawardee DUNS/UEI number 3. Amount of subaward 4. Subaward obligation/action date 5. Date of report submission 6. Subaward number 7. Subaward project description 8. Subawardee names and compensation of highly compensated officers During our testing, we noted that the City did not establish control procedures to submit FFATA reports for all subawards as required by federal regulations. Cause The condition found was due to the City not reporting amounts passed through to subrecipients for the period from July 2023 to June 2024, as the City typically reports these on a one-year lag due to the timing of when the contract starts and its final execution. Proper perspective During our testing of the three selected subawards, we noted reporting exceptions as subawards were not reported within the one month following the month that the City awarded the subrecipient contract. Additionally, there was a control exception to ensure that the data submitted is complete and accurate. Possible asserted effect Failure to submit subaward amounts passed through to subrecipients and subcontractors under subawards as defined by 2 CFR 200.1 in the City’s FFATA reporting could result in the City reporting inaccurate and incomplete amounts to the federal government. Questioned costs None noted Statistical sampling The sample was not intended to be, and was not, a statistically valid sample. Repeat finding A similar finding was not reported in the prior year. Recommendation We recommend that the City review and enhance its policies, procedures, and internal controls to ensure that all amounts passed through to subrecipients under subawards, as defined in 2 CFR 200.1 are reported in accordance with the FFATA federal regulations. In addition, we recommend that the City use obligation date for FFATA reporting. Views of responsible officials and corrective actions The City has taken several steps to strengthen its FFATA compliance. Historically, FFATA reporting posed challenges for many recipients, including the City, due to legacy reporting systems that did not fully align with the requirements of SAM.gov. As part of its compliance improvement efforts, the City has transitioned to directly reporting subaward data in SAM.gov. This shift necessitated a thorough review of internal processes, particularly because many of the City's subrecipient contracts are designed to begin on July 1 of each fiscal year but are not fully executed until months later, after the HUD-signed grant agreement is received, which generally occurs between late September and November. These timing discrepancies previously made it difficult to consistently identify and use the correct obligation date for FFATA reporting. The Federal Grants team initially used a manual Excel-based system to compile FFATA data from fully executed contracts. Each contract contains the essential elements required for FFATA reporting, including the Assistance Listing (CFDA) number, the City's and subrecipient's UEI numbers, agency name and address, award amount, and a brief program description. This spreadsheet served as the foundation for reporting subawards in SAM.gov. To address these issues, the City has established an updated standardized data collection and tracking mechanism. In response to this audit finding, the City has implemented the following corrective actions: 1.Standardized Data Collection: An updated subrecipient data collection form has been developed to ensure consistent and complete capture of all required FFATA elements prior to contract execution. 2.Formal Tracking System: The City created a FFATA Tracking Spreadsheet to systematically document and monitor all required reporting elements, including the correct obligation date, which is now tied to the legal execution date of the subaward. 3.Policy and Procedure Development: FFATA reporting policy and procedures have been developed to codify roles, timelines, and compliance responsibilities. This includes guidance on identifying the proper obligation date, data verification steps, and the timeline for submission to SAM.gov (within 30 days of obligation). 4.Staff Training and Oversight: Relevant staff will be trained on FFATA compliance requirements, and the Grants Management Division will conduct quarterly spot checks to ensure accuracy and timeliness of reporting. These corrective actions reflect the City's commitment to strengthening its federal grant oversight and ensuring full compliance with FFATA regulations.