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.
Finding Number: 2024-003 Program: Housing Opportunities for Persons with AIDS (HOPWA) ALN #: 14.241 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: Subrecipient Monitoring Type of finding: Material weakness and material noncompliance Criteria The 2 CFR sections 200.332(d) through (f) provide the principles to be applied to monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals. According to 2 CFR 200.303, 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 does not have properly designed controls and documented procedures in place to ensure compliance with the following requirements: • Each subrecipients risk of noncompliance is appropriately evaluated. • Appropriate monitoring of the subrecipient based on their risk of noncompliance. • Verification that subrecipients are audited as required when they are expected to exceed the threshold for having a single audit. Cause The City does not have formal written policies, procedures, and internal controls in place to ensure that all required subrecipient monitoring procedures are performed. Proper perspective During our audit, we noted that four of the four subrecipients selected for testing did not have a completed risk assessment to determine their risk of noncompliance. As such, we were unable to determine that the proper level of monitoring was completed throughout the fiscal year over the contracted subrecipient. Additionally, we noted that the audited financial statements were obtained for the four subrecipients selected for testing, but there was no documentation to evidence the nature and extent of the City’s review of the reports obtained. Possible asserted effect Lack of effective controls and written policies and procedures over subrecipient monitoring could result in the City’s noncompliance with program requirements. Questioned costs None Statistical sampling The sample was not intended to be, and was not, a statistically valid sample. Repeat finding Yes, 2023-005 Recommendation We recommend the City establish a checklist or formal documentation requirements for both risk assessments and review of single audit report procedures. Employees can complete these checklists when obtaining and reviewing the documentation. The City should then conclude on and document the subrecipient’s risk of noncompliance based on the checklist to ensure the proper level of monitoring occurs throughout the year. Views of responsible officials and corrective actions The City has addressed this recommendation. The City has updated policies and procedures in place. A standardized Subrecipient Audit Risk Assessment Checklist is in place and a Monitoring Risk Assessment Checklist has also been developed and implemented to guide and document the evaluation of subrecipient risk, review of single audit reports, monitoring. Federal Grants Division staff will complete this checklist during the initial subrecipient review and update it annually. This will ensure consistent documentation of each subrecipient's risk level and corresponding compliance requirements. The process will enable the City to make informed decisions regarding the appropriate level of monitoring for each subrecipient, based on the risk assessment outcomes. This systematic approach enhances accountability, supports audit readiness, and aligns with federal guidance under 2 CFR Part 200. All the agencies/subrecipients have been informed of the upcoming monitoring.
Finding Number: 2024-004 Program: Housing Opportunities for Persons with AIDS (HOPWA) ALN #: 14.241 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: 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 did not report awards granted to subrecipients for the HOPWA 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 four 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 Statistical sampling The sample was not intended to be, and was not, a statistically valid sample. Repeat finding Yes, 2023-006 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. In response to this audit finding, the City has implemented the following corrective actions: 1.Standardized Data Collection: A 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.
Finding Number: 2024-005 Program: Housing Opportunities for Persons with AIDS (HOPWA) ALN #: 14.241 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 material noncompliance Criteria Performance Reporting for the HOPWA Consolidated Annual Performance and Evaluation Report Per HUD, the Consolidated Annual Performance and Evaluation Report (CAPER) provides annual performance reporting on client outputs and outcomes that enables an assessment of grantee performance in achieving the housing stability outcome measure. The CAPER fulfills statutory and regulatory program reporting requirements and provides the grantee and HUD with the necessary information to assess the overall program performance and accomplishments against planned goals and objectives. Both HOPWA formula and competitive grantees submitting reports after January 1, 2023, must complete and submit the HUD-4155 “Consolidated APR/CAPER” (OMB number 2506-0133). HOPWA Formula Grantees that accept the supplemental funding authorized under the CARES Act should report on the use of supplemental grant funds in the same performance report as their use of entitlement funds. Both formula and competitive grantees are required to submit their completed HUD-4155 no later than 90 days after the close of their program or operating year. Competitive grantees have 120 days after the end of their grant’s last period of performance to submit the final HUD-4155. Grantees should be able to demonstrate that funds disbursed through federal financial systems are traceable in local accounts and accurately reported in Key Line Items in the HUD-4155. 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 does not have properly designed controls and documented procedures in place to ensure compliance with the following requirements: • CAPER report is submitted to HUD within 90 days of the end of the 12-month program year. • Review of subrecipient’s CAPER to ensure complete and accurate reporting over key line items. Cause Subrecipients are required to submit their individual CAPER reports to the City prior to the City submitting its report to HUD. The City has had difficulty in getting the subrecipients to comply with the CAPER reporting, which is primarily due to staffing issues at the subrecipients. As a result, the City did not submit its CAPER to HUD within the required time-frame. Proper perspective The City failed to submit the CAPER that covers the period from July 1, 2022 to June 30, 2023 to HUD by the September 30, 2023 deadline. The City ultimately submitted the CAPER on May 3, 2024. Additionally, the City has been unable to provide documentation that the subrecipients’ CAPER has been reconciled to the Integrated Disbursement and Information System (IDIS). Possible asserted effect Incomplete or inaccurate information from its subrecipients has resulted in the City’s inability to properly comply with HUD’s CAPER reporting requirements. Questioned costs Not determinable Statistical sampling The sample was not intended to be, and was not, a statistically valid sample. Repeat finding Yes, 2023-007 Recommendation We recommend that the City establish policies, procedures, and internal controls to ensure that all subrecipient CAPER reports are reconciled to the IDIS system and submitted to HUD within 90 days of year-end. Views of responsible officials and corrective actions The City will continue to work with all agencies receiving HOPWA to complete their annual CAPER correctly and in a timely manner. This emphasis will be reiterated throughout the awarding process and will be subject to regular status updates to ensure compliance and accuracy. Further, the City will work with HUD to establish a correct methodology in reporting consistency with IDIS, as the annual CAPER and HOPWA contracts do not operate open uniform timelines, nor do they involve consistent financial reporting structures. The City does not believe the simple and direct correlation to IDIS is a reasonable or useful metric for the CAPER, but acknowledges that there should be a consistent standard that can be reconciled to financial activity during the year covered by each CAPER.
Finding Number: 2024-006 Program: Coronavirus State and Local Fiscal Recovery Funds ALN #: 21.027 Pass-through Entity: N/A- Direct Award Federal Agency: U.S. Department of Treasury Federal Award Year: July 1, 2023–June 30, 2024 Compliance Requirement: Allowability Type of finding: Material weakness and noncompliance Criteria Per the activities allowed or unallowed requirement within Part 4 of the Compliance Supplement, recipients may use payments from CSLFRF to: 1. Respond to the public health and negative economic impacts of the pandemic, by supporting the health of communities, and helping households, small businesses, impacted industries, and the public sector recover from economic impacts of the pandemic. 2. Replace lost public sector revenue to provide government services; recipients may use this funding to provide government services to the extent of the reduction in revenue experienced due to the pandemic. 3. Provide premium pay for essential workers, offering additional support to those who have borne and will bear the greatest health risks because of their service in critical infrastructure sectors; and 4. Invest in water, sewer, and broadband infrastructure, making necessary investments to improve access to clean drinking water, support, vital wastewater and storm water infrastructure, and to expand access to broadband internet. For beneficiary payments (expenditures), evaluate whether the entity's records identify the individual or group as eligible to receive beneficiary payments for the applicable period. Additionally, according to 2 CFR 200.303, 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 set specific requirements for small businesses to be eligible to receive beneficiary payments under the CSLFRF program. Businesses were required to submit an application to the City with supporting documentation to confirm they were eligible for the payment. One of the requirements to be eligible is that the business must show a loss between the years of 2019 and 2021. We noted during our testing that the City awarded beneficiary payments to businesses that did not meet this requirements set by the City. We noted 3 exceptions from a sample selection of 40. Cause Due to improper review and approval, the City approved three business applications to receive a beneficiary payment that were ineligible. Proper perspective During our testing, we noted that 3 of 40 selections did not meet the eligibility criteria to be awarded a beneficiary payment. One exception showed a business loss in 2022, which is outside the period of the program requirements to submit loss documentation (2019-2021). One additional exception relates to a businesses showing an increase in sales/revenue for the 2021-2022 years. The City was unable to provide documentation that this business had a loss in either 2019 or 2020. The last exception relates to an individual that was awarded a small business grant where the business nor the individual is domiciled in Cambridge. As such, the City should not have approved these businesses for payment when reviewing their applications. Possible asserted effect Approving businesses that are not eligible to receive a beneficiary payment could cause the City to be charging the grant unallowable costs. Questioned costs $13,500 Statistical sampling That same 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 the City review applications to ensure only eligible businesses are approved to receive beneficiary payments. Views of responsible officials and corrective actions The City has implemented additional controls over the review of all applicant information related to program funds being disbursed only to eligible applicants.
Finding Number: 2024-007 Program: Coronavirus State and Local Fiscal Recovery Funds ALN #: 21.027 Pass-through Entity: N/A- Direct Award Federal Agency: U.S. Department of Treasury Federal Awar Year: July 1, 2023–June 30, 2024 Compliance Requirement: Procurement Type of finding: Material weakness and noncompliance Criteria Recipients may use awarded funds to enter into contracts to procure goods and services necessary to implement one or more of the eligible purposes outlined in 42 USC sections 802(c) and 803(c) and Treasury’s 2021 Interim Final Rule, and 2022 Final Rule, and 2023 Interim Final Rule. Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.327. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. According to 2 CFR 200.303, 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 For three of seven selections, we noted that the City did not follow the proper procurement policies as outlined in the Massachusetts General Law Chapter 30B. One exception related to a vendor that had cumulative expenditures greater than $10,000 in FY24. This vendor did not have a related contract for these expenditures and therefore the City did not follow procurement policies. Two additional exceptions relate to sole-source procurements with contract values greater than $50,000. Per Chapter 30B, sole-source procurements of more the $50,000 cannot be completed unless the contract relates to software maintenance, library books, and educational materials. These contracts did not relate to any of the beforementioned categories. Additionally, the City did not have documentation to show that a reasonable services. As such, a sole-source procurement method was not in compliance with Chapter 30B of the Massachusetts General Law. Cause The nature and reason for the noncompliance is attributed to oversight error on the City's part for not entering into contracts/maintaining procurement documentation appropriately. The City enters into hundreds of contracts annually funded with the ARPA program, all of which are manually reviewed. Therefore, it is likely that human error caused the noncompliance. Proper perspective The City’s policy is to follow the Massachusetts General Law Chapter 30B when procuring goods and services. Out of a sample size of seven, we noted that three of the vendors were not properly procured, as described in the conditions found. Possible asserted effect Not following the proper procurement policies, as outlined in Chapter 30B, could cause the City to inappropriately award a contract to a vendor. 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 the City to review the procurement policies and ensure that expenditures for vendors that exceed $10,000 follow the correct procurement policies and procedures. Additionally, sole source bids require the City to follow certain policies and procedures. Views of responsible officials and corrective actions The City has updated its procurement process in FY2025 to ensure that expenditures for vendors that exceed $10,000 and sole source contracts follow the correct procurement policies and procedures in accordance with MGL 30B. investigation occurred that showed only one, or all vendors contracted with, could provide the required
Finding Number: 2024-008 Program: Coronavirus State and Local Fiscal Recovery Funds ALN #: 21.027 Pass-through Entity: N/A- Direct Award Federal Agency: U.S. Department of Treasury Federal Award Year: July 1, 2023–June 30, 2024 Compliance Requirement: Suspension and Debarment Type of finding: Material weakness and noncompliance Criteria The 2 CFR sections 180.215 and 180.220 provide the principles to be applied to ensure nonfederal entities are not contracting with or making subawards under covered transactions to parties that are suspended or debarred. Additionally, when a nonfederal entity enters into a covered transaction with an entity at a lower tier, the nonfederal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. According to 2 CFR 200.303, 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 does not have formal policies and procedures for ensuring vendors are not suspended or debarred prior to entering into a contract. However, when establishing contracts for vendors under the Coronavirus State and Local Fiscal Recovery Funds (CSLFRF), the City requires that standard contract language be included to address the applicable suspension and debarment requirements. Additionally, the City requires the program staff check the System of Award Management (SAM) to ensure the vendor is not suspended or debarred from working under a federal contract. If neither of the beforementioned methods are used, the City will require the vendor to submit a self-certification to ensure they are not suspended or debarred. Throughout our testing, we noted the required contract language was not included within all vendor contracts. Additionally, there was no evidence that city verified the vendor on SAM.gov, or that there was a self-certification included as part of the contracting process. Cause The City requires that standard contract language be included in all vendor contracts that addresses the suspension and debarment requirements. The City was unaware that the required language was excluded from vendor contracts entered into for the CSLFRF program. There was insufficient review of the contracts prior to execution to ensure all required elements were present. Additionally, the City did not retain any documentation that they checked SAM.gov prior to entering into a control with a vendor. Proper perspective During our audit, we noted five of nine vendors selected for testing did not contain language in the contract regarding suspension and debarment, as evidenced via review of the subrecipient contracts. Additionally, it was communicated to us that the City checked SAM.gov for each vendor’s status, however, they were not able to provide evidence that this occurred. During compliance testing, it was confirmed all subrecipients, except for two, were not suspended or debarred. The engagement team was unable to determine if Margaret Fuller Neighborhood House and Smartcat Platforms Inc. was suspended or debarred as they are not registered with SAM.gov. Possible asserted effect Lack of formal review of subrecipient contracts and review of entities on SAM.gov could result in the City entering into contracts with prohibited entities. Questions costs None noted Statistical sampling The sample was not intended to be, and was not, a statistically valid sample. Repeat finding Yes, 2023-008 Recommendation We recommend the City set formal policies and procedures around ensuring vendors are not suspended or debarred. Documented policies and procedures would ensure that required language is included within all vendor contracts prior to execution and that SAM.gov is checked and documentation is retained. Views of responsible officials and corrective actions The City has taken actions to ensure that the “Suspension and Debarment” clause or vendor selfcertification confirmation statement has been added to the FY2025 contract and grant agreements. Additionally, City staff has adopted a new sign-off process to document the City's staff review of the vendors status in “SAM.gov”.
Finding Number: 2024-009 Program: Coronavirus State and Local Fiscal Recovery Funds ALN #: 21.027 Pass-through Entity: N/A- Direct Award Federal Agency: U.S. Department of Treasury Federal Award Year: July 1, 2023–June 30, 2024 Compliance Requirement: Subrecipient Monitoring Type of finding: Material weakness and material noncompliance Criteria The 2 CFR sections 200.332(d) through (f) provide the principles to be applied to monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals. According to 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the 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 does not have properly designed controls and documented procedures in place to ensure compliance with the following requirements: • Each subrecipients risk of noncompliance is appropriately evaluated. • Verification that subrecipients are audited as required when they are expected to exceed the threshold for having a single audit. • All required elements of the subrecipient contracts are included during execution. Cause The City’s lack of effective internal controls and written policies and procedures have caused the following Proper perspective During the audit, we noted that eight of the nine subrecipient selections did not contain all the required elements of the contract. Additionally, nine of the nine selections completed a risk assessment questionnaire. However, there is no indication that the City reviewed the questionnaires and subsequently concluded on the subrecipient’s risk of noncompliance. We also noted that audited financial statements were obtained for the three subrecipients that required a single audit, but there was no documentation to evidence the nature and extent of the City’s review of the audit reports obtained. Therefore, we were unable to determine if, based on the subrecipient’s risk assessment questionnaire and single audit report, if additional monitoring procedures were required Possible asserted effect Lack of effective controls and written policies and procedures over subrecipient monitoring could result in the City’s noncompliance with program requirements. Questioned costs None Statistical sampling The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding Yes, 2023-009 Recommendation We recommend the City establish a checklist or formal documentation requirements for both risk assessments and review of single audit report procedures. Employees can complete these checklists when obtaining and reviewing the documentation. The City should then conclude on and document the subrecipient’s risk of noncompliance based on the checklist to ensure the proper level of monitoring occurs throughout the year. Views of responsible officials and corrective actions The City has implemented additional controls over subrecipient monitoring by establishing a formal policy to review and document subrecipient qualifications, risk assessments and financial reports and have created subsequent monitoring plans and checklists. noncompliance and control exceptions.
FA 2024-001 Internal Controls over Wage Rate Requirements Compliance Requirement: Special Tests and Provisions Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Number and Title: COVID-19 – 84.425U – American Rescue Plan Elementary and Secondary School Emergency Relief Fund Federal Award Number: S425U210012 (Year: 2022) Questioned Costs: None Identified Description: A review of construction-related expenditures charged to the Elementary and Secondary School Emergency Relief Fund program revealed that the School District’s internal control procedures were not operating to ensure that Wage Rate Requirements were followed appropriately. Background Information: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the American Rescue Plan Elementary and Secondary School Emergency Relief Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $4,308,075.07 were expended and reported on the Meriwether 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. Additionally, the Uniform Guidance, Appendix II to Part 200 – Contract Provisions for Non-Federal Entity Contracts Under Federal Awards, Part D addresses Davis-Bacon Act requirements and states, in part, “When required by Federal program legislation, all prime construction contracts in excess of $2,000 awarded by non-Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, and 3146-3148) as supplemented by Department of Labor regulations (29 CFR Part 5, “Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction”). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor.” Specifically, 29 CFR, Section 5.5 – Contract Provisions and Related Matters requires that these construction contracts contain certain clauses, including minimum wage rate requirements and the submission of certified payrolls. Provisions included in 29 CFR, Section 5.5(a)(3)(ii) state, in part, that “(A) The contractor shall submit weekly for each week in which any contract work is performed a copy of all payrolls… (B) Each payroll submitted shall be accompanied by a “Statement of Compliance,” signed by the contractor or subcontractor.” Condition: Our review of expenditures charged to the ESSER program revealed that the School District entered into construction contracts in excess of $2,000; however, appropriate provisions were not included in the contracts to ensure that Wage Rate Requirements were met by the contractors. In addition, while it was later noted that the appropriate wage rate was paid to all laborers, the School District did not ensure that the contractor submitted the required certified payrolls, which includes a copy of payroll disbursements and a statement of compliance with Wage Rate Requirements, at least weekly during the construction period. Cause: The School District did not appropriately communicate the wage rate requirements to ensure certified payrolls were obtained weekly for each week in which work was performed. Effect: The School District is not in compliance with the Uniform Guidance or ED guidance related to the ESSER program. Failure to ensure that appropriate provisions are included in contracts associated with construction financed in part or in whole with federal funds may expose the School District to unnecessary financial strains and shortages as ED or GaDOE may require the School District to return funds associated with these construction expenditures. Recommendation: The School District should develop policies and procedures to ensure that all construction contracts financed by federal financial assistance reflect appropriate provisions associated with Wage Rate Requirements and that certified payrolls are obtained from contractors as necessary. Furthermore, management should develop and implement a monitoring process to ensure that controls are operating appropriately. Views of Responsible Officials: We concur with this finding
FA 2024-002 Improve Internal Control Activities Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Period of Performance Procurement and Suspension and Debarment Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 84.027 – Special Education Grants to States 84.173 – Special Education Preschool Grants COVID-19 – 84.027 – American Rescue Plan – Special Education Grants to States COVID-19 – 84.173 – American Rescue Plan – Special Education Preschool Grants Federal Award Numbers: H027A220073 (Year: 2023), H027A230073 (Year: 2024), H173A220081 (Year: 2023), H173A230081 (Year: 2024), H027X210073 (Year: 2022), H173X210081 (Year: 2022) Questioned Costs: None Identified Description: A review of expenditures recorded in and related to the Special Education Cluster revealed that the School District’s internal control procedures were not designed appropriately to ensure that appropriate reviews and approvals occurred. Background Information: The Special Education Cluster (SEC), which is comprised of the Special Education Grants to States (IDEA, Part B) and Special Education Preschool Grants (IDEA Preschool) programs, was authorized under the Individuals with Disabilities Education Act (IDEA). SEC funding is available to ensure that all children with disabilities have available to them a free appropriate public education that emphasizes special education and related services designed to meet their unique needs and prepares them for further education, employment, and independent living; ensure that the rights of children with disabilities and their parents are protected; assist states, localities, educational service agencies, and federal agencies to provide for the education of all children with disabilities; and assess and ensure the effectiveness of efforts to educate children with disabilities. SEC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the expenditure of funds by LEAs. SEC funds totaling $993,921.19 were expended and reported on the Meriwether 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. Condition: Internal controls over various compliance requirements associated with SEC were reviewed by the auditors. During our testing, it was determined the School District’s internal controls were not properly designed as it was discovered that the SEC Bookkeeper was using a stamp of the Program Director’s signature for approval of payment in the Director’s absence. Cause: The deficiency resulted from a lack of awareness that the existence of a stamp bearing the Director's signature could compromise separation of duties controls. Effect: The School District is not in compliance with the Uniform Guidance and GaDOE guidance. Failure to adequately review expenditures for allowability exposes the School District to unnecessary risk of error and misuse of federal funds. Recommendation: The School District should review current internal control procedures related to the SEC programs. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that all expenditures reflect appropriate evidence of review for associated compliance requirements. Furthermore, management should develop and implement a monitoring process to ensure that controls are operating appropriately. Views of Responsible Officials: We concur with this finding. Appropriate review and approval procedures have been consistently followed throughout the expenditure approval process. The use of a signature stamp did not compromise the Director’s thorough review and authorization of expenditures. Under the established process, the Bookkeeper initiates approval by sending a detailed email to the Director. The signature stamp was applied only after the Director responded with explicit approval. Additionally, a printed copy of the Director’s email approval was attached to the corresponding invoice, which the Accounts Payable Clerk verified prior to processing payment. This procedure has been in place and closely monitored to ensure compliance. A sample of this process was provided as evidence to the reviewing auditor during the review. Auditor’s Concluding Remarks: The use of a signature stamp constitutes a significant control weakness and raises concerns regarding the integrity and authenticity of transaction approvals. This practice does not provide an adequate audit trail related to the expenditure approval process and increases the risk of unauthorized approvals and fraudulent transactions. We reaffirm our finding and will review the status of the finding during our next audit.
FA 2024-002 Improve Internal Control Activities Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Period of Performance Procurement and Suspension and Debarment Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 84.027 – Special Education Grants to States 84.173 – Special Education Preschool Grants COVID-19 – 84.027 – American Rescue Plan – Special Education Grants to States COVID-19 – 84.173 – American Rescue Plan – Special Education Preschool Grants Federal Award Numbers: H027A220073 (Year: 2023), H027A230073 (Year: 2024), H173A220081 (Year: 2023), H173A230081 (Year: 2024), H027X210073 (Year: 2022), H173X210081 (Year: 2022) Questioned Costs: None Identified Description: A review of expenditures recorded in and related to the Special Education Cluster revealed that the School District’s internal control procedures were not designed appropriately to ensure that appropriate reviews and approvals occurred. Background Information: The Special Education Cluster (SEC), which is comprised of the Special Education Grants to States (IDEA, Part B) and Special Education Preschool Grants (IDEA Preschool) programs, was authorized under the Individuals with Disabilities Education Act (IDEA). SEC funding is available to ensure that all children with disabilities have available to them a free appropriate public education that emphasizes special education and related services designed to meet their unique needs and prepares them for further education, employment, and independent living; ensure that the rights of children with disabilities and their parents are protected; assist states, localities, educational service agencies, and federal agencies to provide for the education of all children with disabilities; and assess and ensure the effectiveness of efforts to educate children with disabilities. SEC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the expenditure of funds by LEAs. SEC funds totaling $993,921.19 were expended and reported on the Meriwether 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. Condition: Internal controls over various compliance requirements associated with SEC were reviewed by the auditors. During our testing, it was determined the School District’s internal controls were not properly designed as it was discovered that the SEC Bookkeeper was using a stamp of the Program Director’s signature for approval of payment in the Director’s absence. Cause: The deficiency resulted from a lack of awareness that the existence of a stamp bearing the Director's signature could compromise separation of duties controls. Effect: The School District is not in compliance with the Uniform Guidance and GaDOE guidance. Failure to adequately review expenditures for allowability exposes the School District to unnecessary risk of error and misuse of federal funds. Recommendation: The School District should review current internal control procedures related to the SEC programs. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that all expenditures reflect appropriate evidence of review for associated compliance requirements. Furthermore, management should develop and implement a monitoring process to ensure that controls are operating appropriately. Views of Responsible Officials: We concur with this finding. Appropriate review and approval procedures have been consistently followed throughout the expenditure approval process. The use of a signature stamp did not compromise the Director’s thorough review and authorization of expenditures. Under the established process, the Bookkeeper initiates approval by sending a detailed email to the Director. The signature stamp was applied only after the Director responded with explicit approval. Additionally, a printed copy of the Director’s email approval was attached to the corresponding invoice, which the Accounts Payable Clerk verified prior to processing payment. This procedure has been in place and closely monitored to ensure compliance. A sample of this process was provided as evidence to the reviewing auditor during the review. Auditor’s Concluding Remarks: The use of a signature stamp constitutes a significant control weakness and raises concerns regarding the integrity and authenticity of transaction approvals. This practice does not provide an adequate audit trail related to the expenditure approval process and increases the risk of unauthorized approvals and fraudulent transactions. We reaffirm our finding and will review the status of the finding during our next audit.
FA 2024-002 Improve Internal Control Activities Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Period of Performance Procurement and Suspension and Debarment Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 84.027 – Special Education Grants to States 84.173 – Special Education Preschool Grants COVID-19 – 84.027 – American Rescue Plan – Special Education Grants to States COVID-19 – 84.173 – American Rescue Plan – Special Education Preschool Grants Federal Award Numbers: H027A220073 (Year: 2023), H027A230073 (Year: 2024), H173A220081 (Year: 2023), H173A230081 (Year: 2024), H027X210073 (Year: 2022), H173X210081 (Year: 2022) Questioned Costs: None Identified Description: A review of expenditures recorded in and related to the Special Education Cluster revealed that the School District’s internal control procedures were not designed appropriately to ensure that appropriate reviews and approvals occurred. Background Information: The Special Education Cluster (SEC), which is comprised of the Special Education Grants to States (IDEA, Part B) and Special Education Preschool Grants (IDEA Preschool) programs, was authorized under the Individuals with Disabilities Education Act (IDEA). SEC funding is available to ensure that all children with disabilities have available to them a free appropriate public education that emphasizes special education and related services designed to meet their unique needs and prepares them for further education, employment, and independent living; ensure that the rights of children with disabilities and their parents are protected; assist states, localities, educational service agencies, and federal agencies to provide for the education of all children with disabilities; and assess and ensure the effectiveness of efforts to educate children with disabilities. SEC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the expenditure of funds by LEAs. SEC funds totaling $993,921.19 were expended and reported on the Meriwether 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. Condition: Internal controls over various compliance requirements associated with SEC were reviewed by the auditors. During our testing, it was determined the School District’s internal controls were not properly designed as it was discovered that the SEC Bookkeeper was using a stamp of the Program Director’s signature for approval of payment in the Director’s absence. Cause: The deficiency resulted from a lack of awareness that the existence of a stamp bearing the Director's signature could compromise separation of duties controls. Effect: The School District is not in compliance with the Uniform Guidance and GaDOE guidance. Failure to adequately review expenditures for allowability exposes the School District to unnecessary risk of error and misuse of federal funds. Recommendation: The School District should review current internal control procedures related to the SEC programs. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that all expenditures reflect appropriate evidence of review for associated compliance requirements. Furthermore, management should develop and implement a monitoring process to ensure that controls are operating appropriately. Views of Responsible Officials: We concur with this finding. Appropriate review and approval procedures have been consistently followed throughout the expenditure approval process. The use of a signature stamp did not compromise the Director’s thorough review and authorization of expenditures. Under the established process, the Bookkeeper initiates approval by sending a detailed email to the Director. The signature stamp was applied only after the Director responded with explicit approval. Additionally, a printed copy of the Director’s email approval was attached to the corresponding invoice, which the Accounts Payable Clerk verified prior to processing payment. This procedure has been in place and closely monitored to ensure compliance. A sample of this process was provided as evidence to the reviewing auditor during the review. Auditor’s Concluding Remarks: The use of a signature stamp constitutes a significant control weakness and raises concerns regarding the integrity and authenticity of transaction approvals. This practice does not provide an adequate audit trail related to the expenditure approval process and increases the risk of unauthorized approvals and fraudulent transactions. We reaffirm our finding and will review the status of the finding during our next audit.
FA 2024-002 Improve Internal Control Activities Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Period of Performance Procurement and Suspension and Debarment Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 84.027 – Special Education Grants to States 84.173 – Special Education Preschool Grants COVID-19 – 84.027 – American Rescue Plan – Special Education Grants to States COVID-19 – 84.173 – American Rescue Plan – Special Education Preschool Grants Federal Award Numbers: H027A220073 (Year: 2023), H027A230073 (Year: 2024), H173A220081 (Year: 2023), H173A230081 (Year: 2024), H027X210073 (Year: 2022), H173X210081 (Year: 2022) Questioned Costs: None Identified Description: A review of expenditures recorded in and related to the Special Education Cluster revealed that the School District’s internal control procedures were not designed appropriately to ensure that appropriate reviews and approvals occurred. Background Information: The Special Education Cluster (SEC), which is comprised of the Special Education Grants to States (IDEA, Part B) and Special Education Preschool Grants (IDEA Preschool) programs, was authorized under the Individuals with Disabilities Education Act (IDEA). SEC funding is available to ensure that all children with disabilities have available to them a free appropriate public education that emphasizes special education and related services designed to meet their unique needs and prepares them for further education, employment, and independent living; ensure that the rights of children with disabilities and their parents are protected; assist states, localities, educational service agencies, and federal agencies to provide for the education of all children with disabilities; and assess and ensure the effectiveness of efforts to educate children with disabilities. SEC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the expenditure of funds by LEAs. SEC funds totaling $993,921.19 were expended and reported on the Meriwether 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. Condition: Internal controls over various compliance requirements associated with SEC were reviewed by the auditors. During our testing, it was determined the School District’s internal controls were not properly designed as it was discovered that the SEC Bookkeeper was using a stamp of the Program Director’s signature for approval of payment in the Director’s absence. Cause: The deficiency resulted from a lack of awareness that the existence of a stamp bearing the Director's signature could compromise separation of duties controls. Effect: The School District is not in compliance with the Uniform Guidance and GaDOE guidance. Failure to adequately review expenditures for allowability exposes the School District to unnecessary risk of error and misuse of federal funds. Recommendation: The School District should review current internal control procedures related to the SEC programs. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that all expenditures reflect appropriate evidence of review for associated compliance requirements. Furthermore, management should develop and implement a monitoring process to ensure that controls are operating appropriately. Views of Responsible Officials: We concur with this finding. Appropriate review and approval procedures have been consistently followed throughout the expenditure approval process. The use of a signature stamp did not compromise the Director’s thorough review and authorization of expenditures. Under the established process, the Bookkeeper initiates approval by sending a detailed email to the Director. The signature stamp was applied only after the Director responded with explicit approval. Additionally, a printed copy of the Director’s email approval was attached to the corresponding invoice, which the Accounts Payable Clerk verified prior to processing payment. This procedure has been in place and closely monitored to ensure compliance. A sample of this process was provided as evidence to the reviewing auditor during the review. Auditor’s Concluding Remarks: The use of a signature stamp constitutes a significant control weakness and raises concerns regarding the integrity and authenticity of transaction approvals. This practice does not provide an adequate audit trail related to the expenditure approval process and increases the risk of unauthorized approvals and fraudulent transactions. We reaffirm our finding and will review the status of the finding during our next audit.
FA 2024-002 Improve Internal Control Activities Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Period of Performance Procurement and Suspension and Debarment Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 84.027 – Special Education Grants to States 84.173 – Special Education Preschool Grants COVID-19 – 84.027 – American Rescue Plan – Special Education Grants to States COVID-19 – 84.173 – American Rescue Plan – Special Education Preschool Grants Federal Award Numbers: H027A220073 (Year: 2023), H027A230073 (Year: 2024), H173A220081 (Year: 2023), H173A230081 (Year: 2024), H027X210073 (Year: 2022), H173X210081 (Year: 2022) Questioned Costs: None Identified Description: A review of expenditures recorded in and related to the Special Education Cluster revealed that the School District’s internal control procedures were not designed appropriately to ensure that appropriate reviews and approvals occurred. Background Information: The Special Education Cluster (SEC), which is comprised of the Special Education Grants to States (IDEA, Part B) and Special Education Preschool Grants (IDEA Preschool) programs, was authorized under the Individuals with Disabilities Education Act (IDEA). SEC funding is available to ensure that all children with disabilities have available to them a free appropriate public education that emphasizes special education and related services designed to meet their unique needs and prepares them for further education, employment, and independent living; ensure that the rights of children with disabilities and their parents are protected; assist states, localities, educational service agencies, and federal agencies to provide for the education of all children with disabilities; and assess and ensure the effectiveness of efforts to educate children with disabilities. SEC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the expenditure of funds by LEAs. SEC funds totaling $993,921.19 were expended and reported on the Meriwether 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. Condition: Internal controls over various compliance requirements associated with SEC were reviewed by the auditors. During our testing, it was determined the School District’s internal controls were not properly designed as it was discovered that the SEC Bookkeeper was using a stamp of the Program Director’s signature for approval of payment in the Director’s absence. Cause: The deficiency resulted from a lack of awareness that the existence of a stamp bearing the Director's signature could compromise separation of duties controls. Effect: The School District is not in compliance with the Uniform Guidance and GaDOE guidance. Failure to adequately review expenditures for allowability exposes the School District to unnecessary risk of error and misuse of federal funds. Recommendation: The School District should review current internal control procedures related to the SEC programs. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that all expenditures reflect appropriate evidence of review for associated compliance requirements. Furthermore, management should develop and implement a monitoring process to ensure that controls are operating appropriately. Views of Responsible Officials: We concur with this finding. Appropriate review and approval procedures have been consistently followed throughout the expenditure approval process. The use of a signature stamp did not compromise the Director’s thorough review and authorization of expenditures. Under the established process, the Bookkeeper initiates approval by sending a detailed email to the Director. The signature stamp was applied only after the Director responded with explicit approval. Additionally, a printed copy of the Director’s email approval was attached to the corresponding invoice, which the Accounts Payable Clerk verified prior to processing payment. This procedure has been in place and closely monitored to ensure compliance. A sample of this process was provided as evidence to the reviewing auditor during the review. Auditor’s Concluding Remarks: The use of a signature stamp constitutes a significant control weakness and raises concerns regarding the integrity and authenticity of transaction approvals. This practice does not provide an adequate audit trail related to the expenditure approval process and increases the risk of unauthorized approvals and fraudulent transactions. We reaffirm our finding and will review the status of the finding during our next audit.
FA 2024-002 Improve Internal Control Activities Compliance Requirements: Activities Allowed or Unallowed Allowable Costs/Cost Principles Period of Performance Procurement and Suspension and Debarment Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 84.027 – Special Education Grants to States 84.173 – Special Education Preschool Grants COVID-19 – 84.027 – American Rescue Plan – Special Education Grants to States COVID-19 – 84.173 – American Rescue Plan – Special Education Preschool Grants Federal Award Numbers: H027A220073 (Year: 2023), H027A230073 (Year: 2024), H173A220081 (Year: 2023), H173A230081 (Year: 2024), H027X210073 (Year: 2022), H173X210081 (Year: 2022) Questioned Costs: None Identified Description: A review of expenditures recorded in and related to the Special Education Cluster revealed that the School District’s internal control procedures were not designed appropriately to ensure that appropriate reviews and approvals occurred. Background Information: The Special Education Cluster (SEC), which is comprised of the Special Education Grants to States (IDEA, Part B) and Special Education Preschool Grants (IDEA Preschool) programs, was authorized under the Individuals with Disabilities Education Act (IDEA). SEC funding is available to ensure that all children with disabilities have available to them a free appropriate public education that emphasizes special education and related services designed to meet their unique needs and prepares them for further education, employment, and independent living; ensure that the rights of children with disabilities and their parents are protected; assist states, localities, educational service agencies, and federal agencies to provide for the education of all children with disabilities; and assess and ensure the effectiveness of efforts to educate children with disabilities. SEC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the expenditure of funds by LEAs. SEC funds totaling $993,921.19 were expended and reported on the Meriwether 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. Condition: Internal controls over various compliance requirements associated with SEC were reviewed by the auditors. During our testing, it was determined the School District’s internal controls were not properly designed as it was discovered that the SEC Bookkeeper was using a stamp of the Program Director’s signature for approval of payment in the Director’s absence. Cause: The deficiency resulted from a lack of awareness that the existence of a stamp bearing the Director's signature could compromise separation of duties controls. Effect: The School District is not in compliance with the Uniform Guidance and GaDOE guidance. Failure to adequately review expenditures for allowability exposes the School District to unnecessary risk of error and misuse of federal funds. Recommendation: The School District should review current internal control procedures related to the SEC programs. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that all expenditures reflect appropriate evidence of review for associated compliance requirements. Furthermore, management should develop and implement a monitoring process to ensure that controls are operating appropriately. Views of Responsible Officials: We concur with this finding. Appropriate review and approval procedures have been consistently followed throughout the expenditure approval process. The use of a signature stamp did not compromise the Director’s thorough review and authorization of expenditures. Under the established process, the Bookkeeper initiates approval by sending a detailed email to the Director. The signature stamp was applied only after the Director responded with explicit approval. Additionally, a printed copy of the Director’s email approval was attached to the corresponding invoice, which the Accounts Payable Clerk verified prior to processing payment. This procedure has been in place and closely monitored to ensure compliance. A sample of this process was provided as evidence to the reviewing auditor during the review. Auditor’s Concluding Remarks: The use of a signature stamp constitutes a significant control weakness and raises concerns regarding the integrity and authenticity of transaction approvals. This practice does not provide an adequate audit trail related to the expenditure approval process and increases the risk of unauthorized approvals and fraudulent transactions. We reaffirm our finding and will review the status of the finding during our next audit.
Federal Agency: U.S. Department of Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP4374, 2021 Pass-Through Agency: Iowa Economic Development Authority Pass-Through Number: 23-INIA-023 Award Period: September 14, 2022 – September 30, 2026 Type of Finding: Material Weakness in Internal Control over Compliance Criteria: 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award Section 200.303 requires entities to establish and maintain effective internal controls over Federal Awards. Condition: During our testing we noted internal controls over expenditures were not properly followed. Questioned Costs: None Context: 2 of the 25 expenditures selected for testing did not have documented review. Cause: Project Manager was not in place from July 2023 – August 2023 to properly review pay applications. Effect: The auditor noted no instances of noncompliance with the allowability of costs or support for costs; the lack of internal controls over expenditures provides an opportunity for noncompliance. Repeat Finding: Not a repeat finding. Recommendation: We recommend the Organization ensure proper review and approval over expenditures. Views of Responsible Officials: There is no disagreement with the finding.
Federal Agency: U.S. Department of Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP4374, 2021 Pass-Through Agency: Iowa Economic Development Authority Pass-Through Number: 23-INIA-023 Award Period: September 14, 2022 – September 30, 2026 Type of Finding: Material Weakness in Internal Control over Compliance Criteria: 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award Section 200.303 requires entities to establish and maintain effective internal controls over Federal Awards. Condition: During our testing we noted internal controls over expenditures were not properly followed. Questioned Costs: None Context: 2 of the 25 expenditures selected for testing did not have documented review. Cause: Project Manager was not in place from July 2023 – August 2023 to properly review pay applications. Effect: The auditor noted no instances of noncompliance with the allowability of costs or support for costs; the lack of internal controls over expenditures provides an opportunity for noncompliance. Repeat Finding: Not a repeat finding. Recommendation: We recommend the Organization ensure proper review and approval over expenditures. Views of Responsible Officials: There is no disagreement with the finding.
Federal Agency: U.S. Department of Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP4374, 2021 Pass-Through Agency: Iowa Economic Development Authority Pass-Through Number: 23-INIA-023 Award Period: September 14, 2022 – September 30, 2026 Type of Finding: Material Weakness in Internal Control over Compliance Criteria: 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award Section 200.303 requires entities to establish and maintain effective internal controls over Federal Awards. Condition: During our testing we noted internal controls over expenditures were not properly followed. Questioned Costs: None Context: 2 of the 25 expenditures selected for testing did not have documented review. Cause: Project Manager was not in place from July 2023 – August 2023 to properly review pay applications. Effect: The auditor noted no instances of noncompliance with the allowability of costs or support for costs; the lack of internal controls over expenditures provides an opportunity for noncompliance. Repeat Finding: Not a repeat finding. Recommendation: We recommend the Organization ensure proper review and approval over expenditures. Views of Responsible Officials: There is no disagreement with the finding.
Criteria: According to Uniform Guidance 2 CFR 200.303, the non-federal entity must establish and maintain effective internal controls over compliance for federal awards to provide reasonable assurance of compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Condition: As allowed under program requirements, the City determined its’ eligible actual revenue for the calendar year December 31, 2023. The calendar year approach has been consistently used since calendar year 2020. The amount of actual revenue for the calendar year ended December 31, 2023, was $900,087,916; however, when completing the Project & Expenditure Report for the calendar year ended December 31, 2023, the City only reported actual revenue of $795,459,017. The difference in calculation did not impact amounts claimed as lost revenue. Cause: The deficiency was a result of a misinterpretation of program requirements when reporting the amount of actual revenue on the Project & Expenditure report. The City should have reported the actual revenue used in the revenue loss calculation but only reported the General Fund portion of the actual revenue. Effect: Incorrect reporting can effect the administration of the program by the grantor. Questioned Costs: None. Context: The program instruction were misinterpreted. The revenues spanned multiple funds rather than just the general fund which led to the inaccurate reporting regarding this specific award. Recommendation: We recommend that the City enhance their internal controls over the requirements of this program to ensure those preparing and reviewing the reports have the appropriate understanding and information needed to ensure completeness and accuracy of information being reported.
U.S. Department of Housing and Urban Development Section 8 Housing Choice Vouchers 14.871 – IA125V08001 for FY24 Housing Voucher Cluster Reporting Material Weakness in Internal Control Over Compliance and Material Noncompliance Criteria – Per 2 CFR 200.303, the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. This includes internal controls over maintaining records of the preparer and approver of required reports. Condition – We identified three (3) instances in which the City did not use accurate financial information or retain evidence to document the individual who reviewed the Voucher Management System (VMS) reports prior to submission. Cause – The City’s internal controls did not include separate management review of the VMS reports prior to submission. Effect – Ineffective controls over this area of compliance could result in reports that are inaccurate or incomplete being submitted to the granting agency. Questioned Costs – None reported. Context – The population consists of twelve (12) monthly VMS reports. The sample consisted of three (3) monthly VMS reports. Repeat Finding From Prior Years – No. Recommendation – We recommend that the City revise its procedures to include evidence to document the individual who reviewed required reports prior to submission. Views of Responsible Officials – We agree with the auditor’s recommendation.
2024 – 007 Procurement and Suspension and Debarment Federal Agency: Department of the Treasury Department of Interior Federal Program Title: Coronavirus State and Local Fiscal Recovery Funds (ARPA) Outdoor Recreation Acquisition, Development and Planning ALN: 21.027 15.916 Pass-Through Agency: Coronavirus State and Local Fiscal Recovery Funds (ARPA) N/A Outdoor Recreation Acquisition, Development and Planning Arizona State Park Trails Pass-Through Number(s): Coronavirus State and Local Fiscal Recovery Funds (ARPA) N/A Outdoor Recreation Acquisition, Development and Planning 04-007-652304 Award Number and Period: Coronavirus State and Local Fiscal Recovery Funds (ARPA) 1505-0271 3/3/2021 – 12/31/2024 Outdoor Recreation Acquisition, Development and Planning 04/18/2022-12/31/24 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Material Weakness in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), the City of Nogales must establish and maintain effective internal control over the Federal award that provides reasonable assurance that it 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 the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.324, the non-Federal entity must perform a cost or price analysis in connection with every procurement action in excess of the Simplified Acquisition Threshold including contract modifications. The method and degree of analysis is dependent on the facts surrounding the particular procurement situation, but as a starting point, the non-Federal entity must make independent estimates before receiving bids or proposals. Non-federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. “Covered transactions” include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220). All non-procurement transactions entered into by a pass-through entity (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR section 180.215. When a non-Federal entity enters into a covered transaction with an entity at a lower tier, the non- Federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by: (1) checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA) and available at SAM.gov | Home (click on Search Record, then click on Advanced Search-Exclusions) (Note: The OMB guidance at 2 CFR part 180 and agency implementing regulations still refer to the SAM Exclusions as the Excluded Parties List System (EPLS)), (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR section 180.300). Condition: The following is a summary results for each audited program. Coronavirus State and Local Fiscal Recovery Funds (ARPA) - Audit procedures included selection and testing of five competitively procured vendor contracts. Three out of five vendors tested for procurement did not provide support for the procurement method used, price/bid comparison, and cost analysis performed. One out of five vendors tested did not have a valid contract on file. Five out of five vendors tested did not provide support for the SAMS verification check that the winning vendor was not suspended nor debarred from receiving federal funds prior to awarding the contract. Outdoor Recreation Acquisition, Development and Planning – Audit procedures included selection and testing of five competitively procured vendor contracts. • Five out of five vendors tested for procurement did not provide sample support requested to test procurement method selected, price/bid comparison, and cost analysis performed. • Five out of five vendors tested did not provide support for the SAMS verification check that the winning vendor was not suspended nor debarred from receiving federal funds prior to awarding the contract. Questioned costs: Unknown Context: See “Condition.” Cause: The City’s written procurement, suspension and debarment policies and procedures are in compliance with Uniform Grant Guidance but were not properly adhered to. Effect: The City is not in compliance with uniform grant guidance requirements related to procurement, suspension, and debarment. Repeat Finding: Yes. See 2024-005. Recommendation: The City of Nogales should enhance and/or modify existing controls over procurement, suspension and debarment policies and procedures to ensure adherence to all uniform grant guidance requirements. This could include implementing a more robust checklist that should be completed, signed off by management and included with each procurement which has all required items noted such as cost/price analysis and verification of suspension and debarment of vendors. Views of responsible officials: See corrective action plan. Corrective action plan: See corrective action plan.
2024 – 009 Special Tests and Provisions – Wage Rate Federal Agency: Department of Interior Federal Program Title: Outdoor Recreation Acquisition, Development and Planning ALN: 15.916 Pass-Through Agency: Arizona State Park Trails Pass-Through Number(s): 04-007-652304 Award Number and Period: 04/18/2022-12/31/24 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Material Weakness in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), the City of Nogales (City) must establish and maintain effective internal control over the Federal award that provides reasonable assurance that it 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 the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 40 USC 3141–3144, 3146, and 3147 All laborers and mechanics employed by contractors or subcontractors to work on construction contracts in excess of $2,000 financed by federal assistance funds must be paid wages not less than those established for the locality of the project (prevailing wage rates) by the Department of Labor (DOL). Per 29 CFR Part 5, Labor Standards Provisions Applicable to Contacts Governing Federally Financed and Assisted Construction: Nonfederal entities shall include in their construction contracts subject to the Wage Rate Requirements (which still may be referenced as the Davis-Bacon Act) a provision that the contractor or subcontractor comply with those requirements and the DOL regulations. This includes a requirement for the contractor or subcontractor to submit to the nonfederal entity weekly, for each week in which any contract work is performed, a copy of the payroll and a statement of compliance (certified payrolls) (29 CFR sections 5.5 and 5.6; the A-102 Common Rule (section 36(i)(5)); OMB Circular A-110 (2 CFR Part 215, Appendix A, Contract Provisions); 2 CFR Part 176, Subpart C; and 2 CFR section 200.326). Condition: There was no support provided for the three out of three contractor vendors with construction work noted on their purchase orders. Questioned costs: None. Context: See “Condition.” Cause: Current process and controls are not at the correct precision level to ensure special provisions regarding the Wage Rate compliances are being met. Effect: Ineffective internal controls may result in questioned costs and noncompliance with the terms of the grant award. Repeat Finding: No Recommendation: The City of Nogales should refine its current process and associated controls surrounding the requirements in 40 USC 3141–3144, 3146, and 3147 to ensure they are met. Views of responsible officials: See corrective action plan. Corrective action plan: See corrective action plan.