2024-003 SUBRECIPIENT MONITORING Federal Program Information: Federal Agency and Program Name Federal Assistance Listing Number U.S. Department of Labor WIOA Cluster 17.258/17.259/17.278 Criteria: 2 CFR 200.303 requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Recipients must ensure that commercial organizations that are subrecipients under WIOA Title I and expend more than the minimum level specified in 2 CFR Part 200, Subpart F, have either an organization-wide audit conducted in accordance with 2 CFR Part 200 or a program-specific financial and compliance audit (20 CFR section 683.210). 2 CFR 200.332(b) requires that all pass-through entities must: Evaluate each subrecipient’s risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in paragraphs (d) and (e) of this section. Condition: The Board did not maintain documentation of monitoring procedures performed on its subrecipient during the fiscal year ended June 30, 2024. The Board obtained the subrecipient’s audit report; however documentation of review of the audit report and risk assessment procedures performed on the subrecipient were not maintained as evidence of subrecipient monitoring performed. Questioned Costs: Unknown Context: Total federal expenditures for the WIOA Cluster were $1,377,447 for the year ended June 30, 2024, which included $293,830 of expenditures to subrecipients. Cause: The Board adopted policies and procedures surrounding the subrecipient monitoring compliance requirements in February 2025; however, no documented evidence of subrecipient monitoring completed during the fiscal year ended June 30, 2024 could be provided. Effect: The Board is not in compliance with the federal statutes, regulations, and terms and conditions of the federal award. Recommendation: We recommend that the Board implement its recently adopted policies and procedures and commit the appropriate personnel to subrecipient monitoring to ensure that the Board is in compliance with all federal requirements. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.
2024-003 SUBRECIPIENT MONITORING Federal Program Information: Federal Agency and Program Name Federal Assistance Listing Number U.S. Department of Labor WIOA Cluster 17.258/17.259/17.278 Criteria: 2 CFR 200.303 requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Recipients must ensure that commercial organizations that are subrecipients under WIOA Title I and expend more than the minimum level specified in 2 CFR Part 200, Subpart F, have either an organization-wide audit conducted in accordance with 2 CFR Part 200 or a program-specific financial and compliance audit (20 CFR section 683.210). 2 CFR 200.332(b) requires that all pass-through entities must: Evaluate each subrecipient’s risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in paragraphs (d) and (e) of this section. Condition: The Board did not maintain documentation of monitoring procedures performed on its subrecipient during the fiscal year ended June 30, 2024. The Board obtained the subrecipient’s audit report; however documentation of review of the audit report and risk assessment procedures performed on the subrecipient were not maintained as evidence of subrecipient monitoring performed. Questioned Costs: Unknown Context: Total federal expenditures for the WIOA Cluster were $1,377,447 for the year ended June 30, 2024, which included $293,830 of expenditures to subrecipients. Cause: The Board adopted policies and procedures surrounding the subrecipient monitoring compliance requirements in February 2025; however, no documented evidence of subrecipient monitoring completed during the fiscal year ended June 30, 2024 could be provided. Effect: The Board is not in compliance with the federal statutes, regulations, and terms and conditions of the federal award. Recommendation: We recommend that the Board implement its recently adopted policies and procedures and commit the appropriate personnel to subrecipient monitoring to ensure that the Board is in compliance with all federal requirements. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.
2024-004 ELIGIBILITY Federal Program Information: Federal Agency and Program Name Federal Assistance Listing Number U.S. Department of Labor WIOA Cluster 17.258/17.259/17.278 Criteria: 2 CFR 200.303 requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Per the provisions of the Workforce Innovation and Opportunity Act (WIOA), “A person is eligible to receive services under Youth Activities if they are an out-of-school youth or an in-school youth (Section 129(a)(1), WIOA, 128 Stat. 1504)”, and meet the definition of such as defined in the Uniform Guidance. To be eligible to receive career services as an adult in the adult and dislocated worker programs, an individual must be 18 years of age or older. To be eligible for any dislocated worker programs, an eligible adult must meet the criteria of 20 CFR 680.130. Eligibility criteria for training services are found at 20 CFR 680.210. Condition: During our testing of WIOA participants, it was noted that for two of the nine youth participants selected for testing the WIOA intake application was not signed by the participant/guardian and/or the case manager. Questioned Costs: Unknown Context: Total federal expenditures for the WIOA Cluster were $1,377,447 for the year ended June 30, 2024. Cause: The Board’s policies and procedures are not sufficient to ensure that all participant applications are complete and approved for eligibility prior to disbursement of federal funds. Effect: Youth Activities participant(s) may be granted access to the Board’s program when they do not meet the prescribed eligibility requirements. Recommendation: We recommend that the Board implement policies and procedures to ensure that the necessary controls are in place to properly verify the eligibility of all Youth Activities participants. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.
2024-004 ELIGIBILITY Federal Program Information: Federal Agency and Program Name Federal Assistance Listing Number U.S. Department of Labor WIOA Cluster 17.258/17.259/17.278 Criteria: 2 CFR 200.303 requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Per the provisions of the Workforce Innovation and Opportunity Act (WIOA), “A person is eligible to receive services under Youth Activities if they are an out-of-school youth or an in-school youth (Section 129(a)(1), WIOA, 128 Stat. 1504)”, and meet the definition of such as defined in the Uniform Guidance. To be eligible to receive career services as an adult in the adult and dislocated worker programs, an individual must be 18 years of age or older. To be eligible for any dislocated worker programs, an eligible adult must meet the criteria of 20 CFR 680.130. Eligibility criteria for training services are found at 20 CFR 680.210. Condition: During our testing of WIOA participants, it was noted that for two of the nine youth participants selected for testing the WIOA intake application was not signed by the participant/guardian and/or the case manager. Questioned Costs: Unknown Context: Total federal expenditures for the WIOA Cluster were $1,377,447 for the year ended June 30, 2024. Cause: The Board’s policies and procedures are not sufficient to ensure that all participant applications are complete and approved for eligibility prior to disbursement of federal funds. Effect: Youth Activities participant(s) may be granted access to the Board’s program when they do not meet the prescribed eligibility requirements. Recommendation: We recommend that the Board implement policies and procedures to ensure that the necessary controls are in place to properly verify the eligibility of all Youth Activities participants. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.
2024-004 ELIGIBILITY Federal Program Information: Federal Agency and Program Name Federal Assistance Listing Number U.S. Department of Labor WIOA Cluster 17.258/17.259/17.278 Criteria: 2 CFR 200.303 requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Per the provisions of the Workforce Innovation and Opportunity Act (WIOA), “A person is eligible to receive services under Youth Activities if they are an out-of-school youth or an in-school youth (Section 129(a)(1), WIOA, 128 Stat. 1504)”, and meet the definition of such as defined in the Uniform Guidance. To be eligible to receive career services as an adult in the adult and dislocated worker programs, an individual must be 18 years of age or older. To be eligible for any dislocated worker programs, an eligible adult must meet the criteria of 20 CFR 680.130. Eligibility criteria for training services are found at 20 CFR 680.210. Condition: During our testing of WIOA participants, it was noted that for two of the nine youth participants selected for testing the WIOA intake application was not signed by the participant/guardian and/or the case manager. Questioned Costs: Unknown Context: Total federal expenditures for the WIOA Cluster were $1,377,447 for the year ended June 30, 2024. Cause: The Board’s policies and procedures are not sufficient to ensure that all participant applications are complete and approved for eligibility prior to disbursement of federal funds. Effect: Youth Activities participant(s) may be granted access to the Board’s program when they do not meet the prescribed eligibility requirements. Recommendation: We recommend that the Board implement policies and procedures to ensure that the necessary controls are in place to properly verify the eligibility of all Youth Activities participants. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.
2024-004 ELIGIBILITY Federal Program Information: Federal Agency and Program Name Federal Assistance Listing Number U.S. Department of Labor WIOA Cluster 17.258/17.259/17.278 Criteria: 2 CFR 200.303 requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Per the provisions of the Workforce Innovation and Opportunity Act (WIOA), “A person is eligible to receive services under Youth Activities if they are an out-of-school youth or an in-school youth (Section 129(a)(1), WIOA, 128 Stat. 1504)”, and meet the definition of such as defined in the Uniform Guidance. To be eligible to receive career services as an adult in the adult and dislocated worker programs, an individual must be 18 years of age or older. To be eligible for any dislocated worker programs, an eligible adult must meet the criteria of 20 CFR 680.130. Eligibility criteria for training services are found at 20 CFR 680.210. Condition: During our testing of WIOA participants, it was noted that for two of the nine youth participants selected for testing the WIOA intake application was not signed by the participant/guardian and/or the case manager. Questioned Costs: Unknown Context: Total federal expenditures for the WIOA Cluster were $1,377,447 for the year ended June 30, 2024. Cause: The Board’s policies and procedures are not sufficient to ensure that all participant applications are complete and approved for eligibility prior to disbursement of federal funds. Effect: Youth Activities participant(s) may be granted access to the Board’s program when they do not meet the prescribed eligibility requirements. Recommendation: We recommend that the Board implement policies and procedures to ensure that the necessary controls are in place to properly verify the eligibility of all Youth Activities participants. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.
2024-004 ELIGIBILITY Federal Program Information: Federal Agency and Program Name Federal Assistance Listing Number U.S. Department of Labor WIOA Cluster 17.258/17.259/17.278 Criteria: 2 CFR 200.303 requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Per the provisions of the Workforce Innovation and Opportunity Act (WIOA), “A person is eligible to receive services under Youth Activities if they are an out-of-school youth or an in-school youth (Section 129(a)(1), WIOA, 128 Stat. 1504)”, and meet the definition of such as defined in the Uniform Guidance. To be eligible to receive career services as an adult in the adult and dislocated worker programs, an individual must be 18 years of age or older. To be eligible for any dislocated worker programs, an eligible adult must meet the criteria of 20 CFR 680.130. Eligibility criteria for training services are found at 20 CFR 680.210. Condition: During our testing of WIOA participants, it was noted that for two of the nine youth participants selected for testing the WIOA intake application was not signed by the participant/guardian and/or the case manager. Questioned Costs: Unknown Context: Total federal expenditures for the WIOA Cluster were $1,377,447 for the year ended June 30, 2024. Cause: The Board’s policies and procedures are not sufficient to ensure that all participant applications are complete and approved for eligibility prior to disbursement of federal funds. Effect: Youth Activities participant(s) may be granted access to the Board’s program when they do not meet the prescribed eligibility requirements. Recommendation: We recommend that the Board implement policies and procedures to ensure that the necessary controls are in place to properly verify the eligibility of all Youth Activities participants. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.
2024-004 ELIGIBILITY Federal Program Information: Federal Agency and Program Name Federal Assistance Listing Number U.S. Department of Labor WIOA Cluster 17.258/17.259/17.278 Criteria: 2 CFR 200.303 requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Per the provisions of the Workforce Innovation and Opportunity Act (WIOA), “A person is eligible to receive services under Youth Activities if they are an out-of-school youth or an in-school youth (Section 129(a)(1), WIOA, 128 Stat. 1504)”, and meet the definition of such as defined in the Uniform Guidance. To be eligible to receive career services as an adult in the adult and dislocated worker programs, an individual must be 18 years of age or older. To be eligible for any dislocated worker programs, an eligible adult must meet the criteria of 20 CFR 680.130. Eligibility criteria for training services are found at 20 CFR 680.210. Condition: During our testing of WIOA participants, it was noted that for two of the nine youth participants selected for testing the WIOA intake application was not signed by the participant/guardian and/or the case manager. Questioned Costs: Unknown Context: Total federal expenditures for the WIOA Cluster were $1,377,447 for the year ended June 30, 2024. Cause: The Board’s policies and procedures are not sufficient to ensure that all participant applications are complete and approved for eligibility prior to disbursement of federal funds. Effect: Youth Activities participant(s) may be granted access to the Board’s program when they do not meet the prescribed eligibility requirements. Recommendation: We recommend that the Board implement policies and procedures to ensure that the necessary controls are in place to properly verify the eligibility of all Youth Activities participants. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.
2024-004 ELIGIBILITY Federal Program Information: Federal Agency and Program Name Federal Assistance Listing Number U.S. Department of Labor WIOA Cluster 17.258/17.259/17.278 Criteria: 2 CFR 200.303 requires that a non-federal entity must “(a) establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Per the provisions of the Workforce Innovation and Opportunity Act (WIOA), “A person is eligible to receive services under Youth Activities if they are an out-of-school youth or an in-school youth (Section 129(a)(1), WIOA, 128 Stat. 1504)”, and meet the definition of such as defined in the Uniform Guidance. To be eligible to receive career services as an adult in the adult and dislocated worker programs, an individual must be 18 years of age or older. To be eligible for any dislocated worker programs, an eligible adult must meet the criteria of 20 CFR 680.130. Eligibility criteria for training services are found at 20 CFR 680.210. Condition: During our testing of WIOA participants, it was noted that for two of the nine youth participants selected for testing the WIOA intake application was not signed by the participant/guardian and/or the case manager. Questioned Costs: Unknown Context: Total federal expenditures for the WIOA Cluster were $1,377,447 for the year ended June 30, 2024. Cause: The Board’s policies and procedures are not sufficient to ensure that all participant applications are complete and approved for eligibility prior to disbursement of federal funds. Effect: Youth Activities participant(s) may be granted access to the Board’s program when they do not meet the prescribed eligibility requirements. Recommendation: We recommend that the Board implement policies and procedures to ensure that the necessary controls are in place to properly verify the eligibility of all Youth Activities participants. Views of Responsible Officials: We agree with the finding and will take the necessary corrective actions as noted in the corrective action plan attached.
Federal Agency: Department of Health and Human Services Federal Program Name: HeadStart Assistance Listing Number: 93.600 Federal Award Identification Number and Year: 03CH011220-04-00, 2023 03CH011220-05-00, 2024 Award Period: 9/1/2022-8/31/2023 9/1/2023-8/31/2024 Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Criteria or Specific Requirement: Compliance: Per 2 CFR 200 § 200.332(a)1 (d) a non-Federal entity should monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Internal Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Department of Community and Human Services (DCHS) did not provide documentation to support monitoring of the subrecipient’s activities. Questioned Costs: None Context: DCHS has one sub awardee and issued a subaward in the amount of $2,822,089. Cause: DCHS’ procedures did not maintain supporting documentation of subrecipient monitoring activities. Effect: DCHS was unable to provide evidence they were in compliance with subrecipient monitoring requirements. Repeat Finding: No Recommendation: We recommend that DCHS enhance procedures to ensure that sub recipient monitoring activities are documented, and evidence of compliance readily available for review. Views of Responsible Officials: There is no disagreement with the audit finding and new personnel in the Department of Community and Human Services will ensure that all required monitoring is performed and documented in a timely manner.
Federal Agency: Department of Health and Human Services Federal Program Name: HeadStart Assistance Listing Number: 93.600 Federal Award Identification Number and Year: 03CH011220-04-00, 2023 03CH011220-05-00, 2024 Award Period: 9/1/2022-8/31/2023 9/1/2023-8/31/2024 Compliance Requirement: Reporting: Federal Funding Accountability and Transparency Act Type of Finding: Material Weakness in Internal Control over Compliance, Material Noncompliance Criteria or Specific Requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Subawardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $25,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Internal Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Department of Community and Human Services (DCHS) did not report subaward information to the FFATA Subaward Reporting System (FSRS) in accordance with Federal Funding Accountability and Transparency Act (FFATA) requirements. As the prime award recipient DCHS is responsible for ensuring that all reporting requirements are met within the required timeframe. Context: The sole fiscal year 2024 subaward issued by DCHS was not reported to FSRS. In addition, the Department was unable to produce documentation supporting their review and approval of the tested FFATA reports prior to submission in the FSRS system. Transactions Subaward Report not Subaward Subaward Tested not reported timely amount missing key incorrect elements 1 1 0 0 0 Dollar Amount Subaward Report not Subaward Subaward of Tested not reported timely amount missing key Transactions incorrect elements $2,822,089 $2,822,089 0 $0 $0 Cause: DCHS’ procedures and internal controls were not sufficient to ensure that the subaward reporting requirement was performed within the requirement time frame. Effect: DCHS is not in compliance with the FFATA reporting requirement. Questioned costs: None. Recommendation: We recommend that DCHS review procedures and internal controls to ensure that the required subawards are reported timely and accurately to FSRS no later than the end of the month following the month of issuance of each subaward. Documentation of supporting compliance should be readily available for review. Views of Responsible Officials: There is no disagreement with this finding. The reporting has been completed. New employees will be trained in the procedures and internal controls to ensure that the required subawards are reported timely and accurately to FSRS no later than the end of the month following the month of issuance of each subaward. Documentation will be available for review during the audit period.
Federal Agency: Department of Health and Human Services Federal Program Name: Coronavirus State and Local Fiscal Recovery Fund Assistance Listing Number: 21.027 Federal Award Identification Number and Year: N/A, 2024 Award Period: 7/1/2023-6/30/2024 Compliance Requirement: Suspension and Debarment Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or Specific Requirement: Compliance: 2 CFR section 200.318, which include oversight of contractors’ performance, maintaining written standards of conduct for employees involved in contracting, awarding contracts only to responsible contractors, and maintaining records to document history of procurements. 2 CFR 200.213 Suspension and Debarment restricts awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities: a) Checking SAM Exclusions; or b) Collecting a certification from that person; or c) Adding a clause or condition to the covered transaction with that person. Internal Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The City was unable to provide documentation of a vendor’s suspension and debarment status. The City is required to review and document a vendor’s suspension and debarment status prior to contracting with the vendor. We noted that the City did not document the vendor’s status in accordance with the federal requirements. Questioned Costs: None Context: Two of the two vendors selected for the fiscal year 2024 testing did not have evidence of the vendor’s suspension and debarment status prior to the contract date. Cause: The contractors selected for testing were not updated to include the suspension and debarment clause. Effect: The City is unable to document compliance with suspension and debarment status prior to contracting with the vendor. Repeat Finding: No Recommendation: We recommend that the City review and enhance current procedures to ensure that the vendor’s suspension and debarment status is documented prior to contracting with the vendor. Views of Responsible Officials: There is no disagreement with the audit finding and new personnel in the Department of Community and Human Services will ensure that all required monitoring is performed and documented in a timely manner.
Federal Agency: Department of Health and Human Services Federal Program Name: Coronavirus State and Local Fiscal Recovery Fund Assistance Listing Number: 21.027 Federal Award Identification Number and Year: N/A, 2024 Award Period: 7/1/2023-6/30/2024 Compliance Requirement: Suspension and Debarment Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or Specific Requirement: Compliance: 2 CFR section 200.318, which include oversight of contractors’ performance, maintaining written standards of conduct for employees involved in contracting, awarding contracts only to responsible contractors, and maintaining records to document history of procurements. 2 CFR 200.213 Suspension and Debarment restricts awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities: a) Checking SAM Exclusions; or b) Collecting a certification from that person; or c) Adding a clause or condition to the covered transaction with that person. Internal Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The City was unable to provide documentation of a vendor’s suspension and debarment status. The City is required to review and document a vendor’s suspension and debarment status prior to contracting with the vendor. We noted that the City did not document the vendor’s status in accordance with the federal requirements. Questioned Costs: None Context: Two of the two vendors selected for the fiscal year 2024 testing did not have evidence of the vendor’s suspension and debarment status prior to the contract date. Cause: The contractors selected for testing were not updated to include the suspension and debarment clause. Effect: The City is unable to document compliance with suspension and debarment status prior to contracting with the vendor. Repeat Finding: No Recommendation: We recommend that the City review and enhance current procedures to ensure that the vendor’s suspension and debarment status is documented prior to contracting with the vendor. Views of Responsible Officials: There is no disagreement with the audit finding and new personnel in the Department of Community and Human Services will ensure that all required monitoring is performed and documented in a timely manner.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. 2 CFR Part 176 Subpart C requires nonfederal entities to include provisions requiring compliance with the Wage-Rate requirements in federally-funded construction contracts exceeding $2,000, and to collect certified payrolls from contractors and subcontractors for every week in which contract work is performed. Condition: There were no controls over the wage rate compliance requirements which resulted in the District being unaware that two of the contractors did not have the required Davis-Bacon wage rate clause in their contracts and were not submitting the required certified payrolls. Cause: While the District was aware that wage-rate requirements applied to construction type federal grant expenditures, they did not consider whether these requirements were considered in projects originally intended to be paid from non-federal funds. The funding source of certain projects was changed mid process and the District did not have a process in place to review the agreements for compliance with federal grant requirements prior to the change. Effect: The District’s lack of controls over the wage rate compliance requirements led to deficiencies within the compliance requirements resulting in questioned costs of $773,629. Perspective: Errors noted in actual dollar amounts are not material to the grant. The noncompliance was considered at 100% of the amounts paid under the two contracts that did not include the Wage Rate requirements and for which no certified payrolls were obtained. There were two other contractors under which $2,802,969 was paid that were in compliance with the wage rate requirements. Therefore, there are no amounts of unknown questioned costs. In addition, the questioned costs noted stem from control deficiencies rather than intentional noncompliance as management was unaware that contractors were required to have both the Davis-Bacon wage rate clause in their contracts and to submit certified payrolls. Questioned Costs: Questioned costs were considered at 100%. Total questioned costs were $773,629. Recommendation: The District should implement and document standardized processes and procedures to identify that contractors have the required Davis-Bacon wage rate clause in their contracts and to ensure that contractors are submitting certified payrolls. We also recommend general training be completed for all staff regarding this requirement to standardize the process throughout the District and consider when other processes may be more effective and efficient if not specifically required. Management Response: See attached Corrective Action Plan.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. 2 CFR Part 176 Subpart C requires nonfederal entities to include provisions requiring compliance with the Wage-Rate requirements in federally-funded construction contracts exceeding $2,000, and to collect certified payrolls from contractors and subcontractors for every week in which contract work is performed. Condition: There were no controls over the wage rate compliance requirements which resulted in the District being unaware that two of the contractors did not have the required Davis-Bacon wage rate clause in their contracts and were not submitting the required certified payrolls. Cause: While the District was aware that wage-rate requirements applied to construction type federal grant expenditures, they did not consider whether these requirements were considered in projects originally intended to be paid from non-federal funds. The funding source of certain projects was changed mid process and the District did not have a process in place to review the agreements for compliance with federal grant requirements prior to the change. Effect: The District’s lack of controls over the wage rate compliance requirements led to deficiencies within the compliance requirements resulting in questioned costs of $773,629. Perspective: Errors noted in actual dollar amounts are not material to the grant. The noncompliance was considered at 100% of the amounts paid under the two contracts that did not include the Wage Rate requirements and for which no certified payrolls were obtained. There were two other contractors under which $2,802,969 was paid that were in compliance with the wage rate requirements. Therefore, there are no amounts of unknown questioned costs. In addition, the questioned costs noted stem from control deficiencies rather than intentional noncompliance as management was unaware that contractors were required to have both the Davis-Bacon wage rate clause in their contracts and to submit certified payrolls. Questioned Costs: Questioned costs were considered at 100%. Total questioned costs were $773,629. Recommendation: The District should implement and document standardized processes and procedures to identify that contractors have the required Davis-Bacon wage rate clause in their contracts and to ensure that contractors are submitting certified payrolls. We also recommend general training be completed for all staff regarding this requirement to standardize the process throughout the District and consider when other processes may be more effective and efficient if not specifically required. Management Response: See attached Corrective Action Plan.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. 2 CFR Part 176 Subpart C requires nonfederal entities to include provisions requiring compliance with the Wage-Rate requirements in federally-funded construction contracts exceeding $2,000, and to collect certified payrolls from contractors and subcontractors for every week in which contract work is performed. Condition: There were no controls over the wage rate compliance requirements which resulted in the District being unaware that two of the contractors did not have the required Davis-Bacon wage rate clause in their contracts and were not submitting the required certified payrolls. Cause: While the District was aware that wage-rate requirements applied to construction type federal grant expenditures, they did not consider whether these requirements were considered in projects originally intended to be paid from non-federal funds. The funding source of certain projects was changed mid process and the District did not have a process in place to review the agreements for compliance with federal grant requirements prior to the change. Effect: The District’s lack of controls over the wage rate compliance requirements led to deficiencies within the compliance requirements resulting in questioned costs of $773,629. Perspective: Errors noted in actual dollar amounts are not material to the grant. The noncompliance was considered at 100% of the amounts paid under the two contracts that did not include the Wage Rate requirements and for which no certified payrolls were obtained. There were two other contractors under which $2,802,969 was paid that were in compliance with the wage rate requirements. Therefore, there are no amounts of unknown questioned costs. In addition, the questioned costs noted stem from control deficiencies rather than intentional noncompliance as management was unaware that contractors were required to have both the Davis-Bacon wage rate clause in their contracts and to submit certified payrolls. Questioned Costs: Questioned costs were considered at 100%. Total questioned costs were $773,629. Recommendation: The District should implement and document standardized processes and procedures to identify that contractors have the required Davis-Bacon wage rate clause in their contracts and to ensure that contractors are submitting certified payrolls. We also recommend general training be completed for all staff regarding this requirement to standardize the process throughout the District and consider when other processes may be more effective and efficient if not specifically required. Management Response: See attached Corrective Action Plan.
Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. 2 CFR Part 176 Subpart C requires nonfederal entities to include provisions requiring compliance with the Wage-Rate requirements in federally-funded construction contracts exceeding $2,000, and to collect certified payrolls from contractors and subcontractors for every week in which contract work is performed. Condition: There were no controls over the wage rate compliance requirements which resulted in the District being unaware that two of the contractors did not have the required Davis-Bacon wage rate clause in their contracts and were not submitting the required certified payrolls. Cause: While the District was aware that wage-rate requirements applied to construction type federal grant expenditures, they did not consider whether these requirements were considered in projects originally intended to be paid from non-federal funds. The funding source of certain projects was changed mid process and the District did not have a process in place to review the agreements for compliance with federal grant requirements prior to the change. Effect: The District’s lack of controls over the wage rate compliance requirements led to deficiencies within the compliance requirements resulting in questioned costs of $773,629. Perspective: Errors noted in actual dollar amounts are not material to the grant. The noncompliance was considered at 100% of the amounts paid under the two contracts that did not include the Wage Rate requirements and for which no certified payrolls were obtained. There were two other contractors under which $2,802,969 was paid that were in compliance with the wage rate requirements. Therefore, there are no amounts of unknown questioned costs. In addition, the questioned costs noted stem from control deficiencies rather than intentional noncompliance as management was unaware that contractors were required to have both the Davis-Bacon wage rate clause in their contracts and to submit certified payrolls. Questioned Costs: Questioned costs were considered at 100%. Total questioned costs were $773,629. Recommendation: The District should implement and document standardized processes and procedures to identify that contractors have the required Davis-Bacon wage rate clause in their contracts and to ensure that contractors are submitting certified payrolls. We also recommend general training be completed for all staff regarding this requirement to standardize the process throughout the District and consider when other processes may be more effective and efficient if not specifically required. Management Response: See attached Corrective Action Plan.
Criteria Title 2, Code of Federal Regulations (CFR), Subtitle A, Chapter II, Part 200, Subpart D, Cost Principles for Non-Profit Organizations, Section 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 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). (b) Comply with Federal statues, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity’s compliance with statues, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. (e) Take reasonable measures to safeguard protected personally identifiable information and other information the Federal awarding agency or pass-through entity designates as sensitive or the non-Federal entity considers sensitive consistent with applicable Federal, state, local, and tribal laws regarding privacy and obligations of confidentiality.” Additionally, the Subrecipient Agreement, with the County of Santa Barbara, notes NBCC “shall obtain written approval from COUNTY for the use of any funds provided under this Agreement for the reimbursement of any costs incurred for travel outside the County of Santa Barbara.” Condition Two of the 25 expenditures selected for testing, associated with the above award, were related to travel outside of the County of Santa Barbara. We subsequently reviewed the detail of expenditures charged to this award, noting multiple other transactions. Additionally, we noted the client did not have prior approval to allocate funds to this award. Cause NBCC’s internal controls are not properly designed and enforced to be in line with Federal guidelines, or take into account specific requirements of Federal awards. Repeat Finding No. Effect NBCC’s lack of internal controls may allow improper expenditures to be charged to Federal awards. This may impact future funding from Federal awards. Recommendation We recommend NBCC establish and maintain effective internal control over Federal Awards in order to provide reasonable assurance that NBCC is managing the Awards in compliance with Federal statues and regulations, as well as the terms and conditions set forth in the specific Federal Award or subrecipient agreement.
Criteria Title 2, Code of Federal Regulations (CFR), Subtitle A, Chapter II, Part 200, Subpart D, Cost Principles for Non-Profit Organizations, Section 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 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). (b) Comply with Federal statues, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity’s compliance with statues, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. (e) Take reasonable measures to safeguard protected personally identifiable information and other information the Federal awarding agency or pass-through entity designates as sensitive or the non-Federal entity considers sensitive consistent with applicable Federal, state, local, and tribal laws regarding privacy and obligations of confidentiality.” Condition During the course of our eligibility testing, we noted one of the 45 selections where the individual was not part of the program during the fiscal year-under audit. The individual had been incorrectly included in the population, and in various reports for this program. Cause NBCC’s internal controls are not properly designed and enforced to be in line with Federal guidelines, or take into account specific requirements of Federal awards. Repeat Finding No. Effect NBCC’s lack of internal controls may allow for individuals to receive benefits who are not eligibility to participate in Federally funded programs. Additionally, these discrepancies may lead to incorrect Federal reporting. This may impact future funding from Federal awards. Recommendation We recommend NBCC establish and maintain effective internal control over Federal Awards in order to provide reasonable assurance that NBCC is managing the Awards in compliance with Federal statues and regulations, as well as the terms and conditions set forth in the specific Federal Award or subrecipient agreement.
AL No: 20.507 Federal Grantor: U.S. Department of Transportation, Federal Transit Administration, Federal Transit Cluster - Direct Award Compliance Requirements: Activities Allowed or Unallowed and Allowable Costs/Cost Principles. Condition: The District’s internal controls over compliance requirements did not identify ineligible costs applied to two separate Federal Transit Administration (FTA) grants as follows. Section 5307 Grant Award CA-2020-173-01: The District overclaimed Sacramento fixed route operating expenses beyond the amount apportioned for these routes in the grant agreement, resulting in ineligible costs of $183,848 being charged to the program. Questioned Costs: $183,548 Section 5307 Grant Award CA-2023-122-01: The District overclaimed Woodland fixed route operating expenses beyond the amount apportioned for these routes in the grant agreement, resulting in ineligible costs of $175,143 being charged to the program. Questioned Costs: $175,143. In addition to these ineligible costs, there were substantial changes to the Schedule of Expenditures of Federal Awards (SEFA) and federal grant revenue reported in the general ledger (GL) during the course of the audit. These changes and issues are as follows. There was a total of $302,813 removed from the SEFA and GL for claims prepared for expenses incurred after the period of performance end date specified in the grant for the relevant project and therefore would have been ineligible if the claim was submitted to the grantor. These claims were prepared for paratransit and microtransit operating assistance. There was a total of $243,823 removed from the SEFA and GL for claims prepared for an FTA direct program grant that is already past the end date of the period of performance and therefore would have been ineligible if the claim was submitted to the grantor. These claims were drafted for Woodland microtransit operating assistance. There was a total of $354,429 added to the SEFA for federal grant revenues recorded in the GL but not initially included on the SEFA. These claims are for the Yolo County Bike and Pedestrian Trail Network Planning Project and the Yolo 80 Managed Lanes Tolling Advance Planning project. There was a total of $1,106,389 of expenses reported on the SEFA but not recognized as revenue in the GL for amounts previously overclaimed for ineligible expenses but reclaimed and approved for eligible expenses in the current period. Criteria: 2 CFR Part 200, Subpart E (Uniform Guidance) Section 200.303 states that “The nonfederal 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.” Cause:. Grant management procedures are not documented and a schedule of all available grants was not prepared by the District to use when reconciling expenses for inclusion on the SEFA and accruing grant revenue. The errors on the SEFA were not captured by the District’s review procedures due to recent staff turnover, lack of documented procedures on grant management, and/or lack of training. Effect: Expenses were omitted from the SEFA that should have been included and other expenses were included on the SEFA that were not eligible. The SEFA had to be revised for multiple grants over the course of the audit, which delayed the audit testing and major program determination process. Context: The number of grants has increased since the pandemic due to new pandemic related grants becoming available that delayed the use of the District’s regular federal grants. This caused grants to be combined by grantors with different allowable expenses, areas of service, and periods of performance and caused grants to be extended, causing complexity. The District confirmed that there will be no other federal grants used for reimbursement of the expenses that were removed from the SEFA during the audit. Recommendation: We recommend the District develop written procedures to allocate expenses to routes and purposes under federal grants that document the timing of the preparation and review of the allocation schedule. A summary tab should be added to the allocation schedule to reconcile amounts for each route/purpose to total operating expenses, preventive maintenance, insurance, communications and other expenses allocated to the population of expenses in the general ledger. We also recommend the District develop a schedule to summarize all approved and pending grants that includes the amounts available under each grant, each route/purpose within each grant, periods of performance for each amount available, the last date to submit invoices, and amounts claimed and still available for each grant by route/purpose. The District should re-evaluate budgets if changes or delays occur to federal grants and ensure a new federal or local funding source is identified and claimed for the expenses. The SEFA should be prepared after expenses are reconciled to the GL at the invoice level by route/purpose and the allocation schedule is thoroughly reviewed. The SEFA should be reviewed by a knowledgeable member of management to ensure completeness and accuracy. We also recommend the District claim expenses more quickly to allow the granting agency time to review and approve the claims before the audit begins. We recommend the District reconcile expenses within 30 days of quarter end and prepare claims within 45 days of quarter end. If the District is unsure about the period of performance dates or other restrictions on a grant, staff should contact the granting agency for clarification. Finally, we recommend the District discuss the overclaimed amounts of $183,548 and $175,143 described above with the FTA to determine whether these overclaimed funds must be returned or whether they may be used to claim future expenses. View of Responsible Officials and Planned Corrective Action: Management’s response and planned corrective action is included at the Corrective Action Plan end of this report.
AL No: 20.507 Federal Grantor: U.S. Department of Transportation, Federal Transit Administration, Federal Transit Cluster - Direct Award Compliance Requirements: Activities Allowed or Unallowed and Allowable Costs/Cost Principles. Condition: The District’s internal controls over compliance requirements did not identify ineligible costs applied to two separate Federal Transit Administration (FTA) grants as follows. Section 5307 Grant Award CA-2020-173-01: The District overclaimed Sacramento fixed route operating expenses beyond the amount apportioned for these routes in the grant agreement, resulting in ineligible costs of $183,848 being charged to the program. Questioned Costs: $183,548 Section 5307 Grant Award CA-2023-122-01: The District overclaimed Woodland fixed route operating expenses beyond the amount apportioned for these routes in the grant agreement, resulting in ineligible costs of $175,143 being charged to the program. Questioned Costs: $175,143. In addition to these ineligible costs, there were substantial changes to the Schedule of Expenditures of Federal Awards (SEFA) and federal grant revenue reported in the general ledger (GL) during the course of the audit. These changes and issues are as follows. There was a total of $302,813 removed from the SEFA and GL for claims prepared for expenses incurred after the period of performance end date specified in the grant for the relevant project and therefore would have been ineligible if the claim was submitted to the grantor. These claims were prepared for paratransit and microtransit operating assistance. There was a total of $243,823 removed from the SEFA and GL for claims prepared for an FTA direct program grant that is already past the end date of the period of performance and therefore would have been ineligible if the claim was submitted to the grantor. These claims were drafted for Woodland microtransit operating assistance. There was a total of $354,429 added to the SEFA for federal grant revenues recorded in the GL but not initially included on the SEFA. These claims are for the Yolo County Bike and Pedestrian Trail Network Planning Project and the Yolo 80 Managed Lanes Tolling Advance Planning project. There was a total of $1,106,389 of expenses reported on the SEFA but not recognized as revenue in the GL for amounts previously overclaimed for ineligible expenses but reclaimed and approved for eligible expenses in the current period. Criteria: 2 CFR Part 200, Subpart E (Uniform Guidance) Section 200.303 states that “The nonfederal 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.” Cause:. Grant management procedures are not documented and a schedule of all available grants was not prepared by the District to use when reconciling expenses for inclusion on the SEFA and accruing grant revenue. The errors on the SEFA were not captured by the District’s review procedures due to recent staff turnover, lack of documented procedures on grant management, and/or lack of training. Effect: Expenses were omitted from the SEFA that should have been included and other expenses were included on the SEFA that were not eligible. The SEFA had to be revised for multiple grants over the course of the audit, which delayed the audit testing and major program determination process. Context: The number of grants has increased since the pandemic due to new pandemic related grants becoming available that delayed the use of the District’s regular federal grants. This caused grants to be combined by grantors with different allowable expenses, areas of service, and periods of performance and caused grants to be extended, causing complexity. The District confirmed that there will be no other federal grants used for reimbursement of the expenses that were removed from the SEFA during the audit. Recommendation: We recommend the District develop written procedures to allocate expenses to routes and purposes under federal grants that document the timing of the preparation and review of the allocation schedule. A summary tab should be added to the allocation schedule to reconcile amounts for each route/purpose to total operating expenses, preventive maintenance, insurance, communications and other expenses allocated to the population of expenses in the general ledger. We also recommend the District develop a schedule to summarize all approved and pending grants that includes the amounts available under each grant, each route/purpose within each grant, periods of performance for each amount available, the last date to submit invoices, and amounts claimed and still available for each grant by route/purpose. The District should re-evaluate budgets if changes or delays occur to federal grants and ensure a new federal or local funding source is identified and claimed for the expenses. The SEFA should be prepared after expenses are reconciled to the GL at the invoice level by route/purpose and the allocation schedule is thoroughly reviewed. The SEFA should be reviewed by a knowledgeable member of management to ensure completeness and accuracy. We also recommend the District claim expenses more quickly to allow the granting agency time to review and approve the claims before the audit begins. We recommend the District reconcile expenses within 30 days of quarter end and prepare claims within 45 days of quarter end. If the District is unsure about the period of performance dates or other restrictions on a grant, staff should contact the granting agency for clarification. Finally, we recommend the District discuss the overclaimed amounts of $183,548 and $175,143 described above with the FTA to determine whether these overclaimed funds must be returned or whether they may be used to claim future expenses. View of Responsible Officials and Planned Corrective Action: Management’s response and planned corrective action is included at the Corrective Action Plan end of this report.
AL No: 20.507 Federal Grantor: U.S. Department of Transportation, Federal Transit Administration, Federal Transit Cluster - Direct Award Compliance Requirements: Activities Allowed or Unallowed and Allowable Costs/Cost Principles. Condition: The District’s internal controls over compliance requirements did not identify ineligible costs applied to two separate Federal Transit Administration (FTA) grants as follows. Section 5307 Grant Award CA-2020-173-01: The District overclaimed Sacramento fixed route operating expenses beyond the amount apportioned for these routes in the grant agreement, resulting in ineligible costs of $183,848 being charged to the program. Questioned Costs: $183,548 Section 5307 Grant Award CA-2023-122-01: The District overclaimed Woodland fixed route operating expenses beyond the amount apportioned for these routes in the grant agreement, resulting in ineligible costs of $175,143 being charged to the program. Questioned Costs: $175,143. In addition to these ineligible costs, there were substantial changes to the Schedule of Expenditures of Federal Awards (SEFA) and federal grant revenue reported in the general ledger (GL) during the course of the audit. These changes and issues are as follows. There was a total of $302,813 removed from the SEFA and GL for claims prepared for expenses incurred after the period of performance end date specified in the grant for the relevant project and therefore would have been ineligible if the claim was submitted to the grantor. These claims were prepared for paratransit and microtransit operating assistance. There was a total of $243,823 removed from the SEFA and GL for claims prepared for an FTA direct program grant that is already past the end date of the period of performance and therefore would have been ineligible if the claim was submitted to the grantor. These claims were drafted for Woodland microtransit operating assistance. There was a total of $354,429 added to the SEFA for federal grant revenues recorded in the GL but not initially included on the SEFA. These claims are for the Yolo County Bike and Pedestrian Trail Network Planning Project and the Yolo 80 Managed Lanes Tolling Advance Planning project. There was a total of $1,106,389 of expenses reported on the SEFA but not recognized as revenue in the GL for amounts previously overclaimed for ineligible expenses but reclaimed and approved for eligible expenses in the current period. Criteria: 2 CFR Part 200, Subpart E (Uniform Guidance) Section 200.303 states that “The nonfederal 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.” Cause:. Grant management procedures are not documented and a schedule of all available grants was not prepared by the District to use when reconciling expenses for inclusion on the SEFA and accruing grant revenue. The errors on the SEFA were not captured by the District’s review procedures due to recent staff turnover, lack of documented procedures on grant management, and/or lack of training. Effect: Expenses were omitted from the SEFA that should have been included and other expenses were included on the SEFA that were not eligible. The SEFA had to be revised for multiple grants over the course of the audit, which delayed the audit testing and major program determination process. Context: The number of grants has increased since the pandemic due to new pandemic related grants becoming available that delayed the use of the District’s regular federal grants. This caused grants to be combined by grantors with different allowable expenses, areas of service, and periods of performance and caused grants to be extended, causing complexity. The District confirmed that there will be no other federal grants used for reimbursement of the expenses that were removed from the SEFA during the audit. Recommendation: We recommend the District develop written procedures to allocate expenses to routes and purposes under federal grants that document the timing of the preparation and review of the allocation schedule. A summary tab should be added to the allocation schedule to reconcile amounts for each route/purpose to total operating expenses, preventive maintenance, insurance, communications and other expenses allocated to the population of expenses in the general ledger. We also recommend the District develop a schedule to summarize all approved and pending grants that includes the amounts available under each grant, each route/purpose within each grant, periods of performance for each amount available, the last date to submit invoices, and amounts claimed and still available for each grant by route/purpose. The District should re-evaluate budgets if changes or delays occur to federal grants and ensure a new federal or local funding source is identified and claimed for the expenses. The SEFA should be prepared after expenses are reconciled to the GL at the invoice level by route/purpose and the allocation schedule is thoroughly reviewed. The SEFA should be reviewed by a knowledgeable member of management to ensure completeness and accuracy. We also recommend the District claim expenses more quickly to allow the granting agency time to review and approve the claims before the audit begins. We recommend the District reconcile expenses within 30 days of quarter end and prepare claims within 45 days of quarter end. If the District is unsure about the period of performance dates or other restrictions on a grant, staff should contact the granting agency for clarification. Finally, we recommend the District discuss the overclaimed amounts of $183,548 and $175,143 described above with the FTA to determine whether these overclaimed funds must be returned or whether they may be used to claim future expenses. View of Responsible Officials and Planned Corrective Action: Management’s response and planned corrective action is included at the Corrective Action Plan end of this report.
AL No: 20.507 Federal Grantor: U.S. Department of Transportation, Federal Transit Administration, Federal Transit Cluster - Direct Award Compliance Requirements: Activities Allowed or Unallowed and Allowable Costs/Cost Principles. Condition: The District’s internal controls over compliance requirements did not identify ineligible costs applied to two separate Federal Transit Administration (FTA) grants as follows. Section 5307 Grant Award CA-2020-173-01: The District overclaimed Sacramento fixed route operating expenses beyond the amount apportioned for these routes in the grant agreement, resulting in ineligible costs of $183,848 being charged to the program. Questioned Costs: $183,548 Section 5307 Grant Award CA-2023-122-01: The District overclaimed Woodland fixed route operating expenses beyond the amount apportioned for these routes in the grant agreement, resulting in ineligible costs of $175,143 being charged to the program. Questioned Costs: $175,143. In addition to these ineligible costs, there were substantial changes to the Schedule of Expenditures of Federal Awards (SEFA) and federal grant revenue reported in the general ledger (GL) during the course of the audit. These changes and issues are as follows. There was a total of $302,813 removed from the SEFA and GL for claims prepared for expenses incurred after the period of performance end date specified in the grant for the relevant project and therefore would have been ineligible if the claim was submitted to the grantor. These claims were prepared for paratransit and microtransit operating assistance. There was a total of $243,823 removed from the SEFA and GL for claims prepared for an FTA direct program grant that is already past the end date of the period of performance and therefore would have been ineligible if the claim was submitted to the grantor. These claims were drafted for Woodland microtransit operating assistance. There was a total of $354,429 added to the SEFA for federal grant revenues recorded in the GL but not initially included on the SEFA. These claims are for the Yolo County Bike and Pedestrian Trail Network Planning Project and the Yolo 80 Managed Lanes Tolling Advance Planning project. There was a total of $1,106,389 of expenses reported on the SEFA but not recognized as revenue in the GL for amounts previously overclaimed for ineligible expenses but reclaimed and approved for eligible expenses in the current period. Criteria: 2 CFR Part 200, Subpart E (Uniform Guidance) Section 200.303 states that “The nonfederal 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.” Cause:. Grant management procedures are not documented and a schedule of all available grants was not prepared by the District to use when reconciling expenses for inclusion on the SEFA and accruing grant revenue. The errors on the SEFA were not captured by the District’s review procedures due to recent staff turnover, lack of documented procedures on grant management, and/or lack of training. Effect: Expenses were omitted from the SEFA that should have been included and other expenses were included on the SEFA that were not eligible. The SEFA had to be revised for multiple grants over the course of the audit, which delayed the audit testing and major program determination process. Context: The number of grants has increased since the pandemic due to new pandemic related grants becoming available that delayed the use of the District’s regular federal grants. This caused grants to be combined by grantors with different allowable expenses, areas of service, and periods of performance and caused grants to be extended, causing complexity. The District confirmed that there will be no other federal grants used for reimbursement of the expenses that were removed from the SEFA during the audit. Recommendation: We recommend the District develop written procedures to allocate expenses to routes and purposes under federal grants that document the timing of the preparation and review of the allocation schedule. A summary tab should be added to the allocation schedule to reconcile amounts for each route/purpose to total operating expenses, preventive maintenance, insurance, communications and other expenses allocated to the population of expenses in the general ledger. We also recommend the District develop a schedule to summarize all approved and pending grants that includes the amounts available under each grant, each route/purpose within each grant, periods of performance for each amount available, the last date to submit invoices, and amounts claimed and still available for each grant by route/purpose. The District should re-evaluate budgets if changes or delays occur to federal grants and ensure a new federal or local funding source is identified and claimed for the expenses. The SEFA should be prepared after expenses are reconciled to the GL at the invoice level by route/purpose and the allocation schedule is thoroughly reviewed. The SEFA should be reviewed by a knowledgeable member of management to ensure completeness and accuracy. We also recommend the District claim expenses more quickly to allow the granting agency time to review and approve the claims before the audit begins. We recommend the District reconcile expenses within 30 days of quarter end and prepare claims within 45 days of quarter end. If the District is unsure about the period of performance dates or other restrictions on a grant, staff should contact the granting agency for clarification. Finally, we recommend the District discuss the overclaimed amounts of $183,548 and $175,143 described above with the FTA to determine whether these overclaimed funds must be returned or whether they may be used to claim future expenses. View of Responsible Officials and Planned Corrective Action: Management’s response and planned corrective action is included at the Corrective Action Plan end of this report.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
Criteria: 2 CFR 200.303(a) requires the non-Federal entity to establish and maintain effective internal control over the Federal award that provides reasonable assurance the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.305 requires the non-federal entity must minimize the time elapsing between the transfer of funds from the U.S. Treasury and disbursement of funds by the recipient. Condition: The University drew down funds related to an expenditure that had previously been drawn down. Context: We selected a non-statistical sample of 60 expenditures, totaling $471,734, for which reimbursement was requested and received. We noted one expenditure for $80,996 was previously reimbursed through a prior reimbursement request. Cause: Despite the University’s established policies and procedures for cash management, an error occurred in the original posting of the invoice, necessitating a journal entry correction. During the correction process, Business Office accounting staff inadvertently recorded the journal entry as an expense to the grant for the second time. Typically, transactions to the grant are posted through subledgers and reviewed by the Office of Sponsored Projects (OSP) for accuracy. However, the error was not detected during the OSP review process, as their review does not encompass journal entries posted directly to the general ledger. Consequently, the expenditure was charged to the grant twice and erroneously included in a reimbursement request. Effect: Failure to adequately review the cash drawdown requests resulted in a duplicate draw down for an expenditure that was previously drawn down and noncompliance with the cash management requirement. Questioned Costs: $80,996 Identification of a repeat finding: N/A Recommendations: We recommend the University modify or revise its review process to ensure that the reviews conducted by the Business Office and Office of Sponsored Projects take into consideration journal entry postings. Views of responsible officials: The University has policies and procedures to ensure the review of expenditures charged to federal grants prior to draw downs. However, the University failed to identify a mistake in a journal entry which resulted in a duplicate expense posting to the grant until after the draw down request had been made. Specifically, the University charged prepaid amortization to a grant fund, although the expenditure had already been fully recorded to the grant fund. This resulted in a duplicated expense posting, one for the actual payment, and a second for the expense amortization. The University discovered the mistake after the duplicated expense had been drawn down. To correct this error, the University initiated the process to reduce a subsequent draw for the grant to ensure that overall, the grant is not overdrawn. Management reviewed the conditions which contributed to this error and is establishing the following controls to address this error: 1. The University will incorporate an additional review step for any journal entries posted to federal grants. The Office of Sponsored Projects and Business Office management will sign off on any journal entries which are posted to federal grants prior to the posting taking place. 2. The Business Office will reinforce existing procedures to all accounting staff responsible for prepaid expense accounting to ensure that prepaid expense is not recorded to federal grant funds. 3. The Office of Sponsored Projects will adjust its review process and train staff to ensure thorough review of all activities impacting grants, including journal entries made by the Business Office, before authorizing drawdowns.
2024-004 CASH MANAGEMENT Federal agency: U.S. Department of Homeland Security/FEMA Federal Program Title & Assistance Listing Number: Disaster Grants – Public Assistance (Presidentially Declared Disasters) - 97.036 Hazard Mitigation Grant Program – 97.039 Emergency Management Performance Grants – 97.042 Homeland Security Grant Program – 97.067 Award Period: Various Type of Finding: Material Weakness in Internal Control over Compliance Material Non-compliance Compliance Areas: Cash Management Questioned Costs: None Condition Management has been unable to provide sufficient appropriate audit evidence relating to the completeness, existence, accuracy, and valuation of the Department’s federal revenue, accounts receivable/payable and related deferred inflows of resources reported as of June 30, 2024. This was included in our basis for qualifying opinion on Governmental Activities and the Federal Grants Fund. The Department lacked effective processes and controls for determining the amount Due From Federal Government as part of its year-end close process. The Department did not consistently apply its process for recording the Due From amount for all federal grants throughout the year. The Federal Grants Fund (Fund 40280) has a deficit fund balance of $24,515,842 and a $31,837,546 balance related to deferred inflows for FEMA grant funds that were not received within the 90-day period of availability after fiscal year-end. Subsequent drawdowns/collections on the June 30, 2024 amount Due From Federal Government of $37,384,520 were poor, with the Department drawing down or receiving $10,160,346 from July 1, 2024 through November 22, 2024. The accounts receivable summary by grant as of June 30, 2024 contained abnormal credit balances in the amount of $328,175, which the Department will need to research to determine if there are any overdrawn amounts. Management’s Progress for Repeated Finding: Management did make progress implementing adequate controls to resolve the finding from the prior years, by billing and receiving amounts from previous fiscal years. However, a material weakness still exists over controls over these account balances. Criteria According to §200.303 Internal controls of 2 CFR Part 200, 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. Specific to the Department, federal reimbursement requests are completed quarterly with the reporting process. According to NMSA 1978 §6.-5-2, the Financial Control Division (the division) shall issue a manual of model accounting practices containing the procedures and policies. State agencies shall comply with the model accounting practices established by the division, and the administrative head of each state agency shall ensure that the model accounting practices are followed. According to FIN 16 General Accounting Practices in the Manual of Model Accounting Practices, all reporting of financial information must be timely, complete, and accurate, to the state agency’s management and to oversight agencies and entities. Effect State agency’s management and other agencies and entities may not be able to rely on the financial information presented by the Department due to untimely, incomplete, and inaccurate financial reporting. The Federal Government may place the Department on controlled draws. Cause While the Department has made improvements from prior year related to the reconciliation and draw down of all federal receivables, the Department continues to lack an effective control environment that allows for timely and accurate drawdowns, financial reporting, and accounting of the Department’s Federal accounts receivable/payable balance and related deferred inflows of resources.
2024-004 CASH MANAGEMENT Federal agency: U.S. Department of Homeland Security/FEMA Federal Program Title & Assistance Listing Number: Disaster Grants – Public Assistance (Presidentially Declared Disasters) - 97.036 Hazard Mitigation Grant Program – 97.039 Emergency Management Performance Grants – 97.042 Homeland Security Grant Program – 97.067 Award Period: Various Type of Finding: Material Weakness in Internal Control over Compliance Material Non-compliance Compliance Areas: Cash Management Questioned Costs: None Condition Management has been unable to provide sufficient appropriate audit evidence relating to the completeness, existence, accuracy, and valuation of the Department’s federal revenue, accounts receivable/payable and related deferred inflows of resources reported as of June 30, 2024. This was included in our basis for qualifying opinion on Governmental Activities and the Federal Grants Fund. The Department lacked effective processes and controls for determining the amount Due From Federal Government as part of its year-end close process. The Department did not consistently apply its process for recording the Due From amount for all federal grants throughout the year. The Federal Grants Fund (Fund 40280) has a deficit fund balance of $24,515,842 and a $31,837,546 balance related to deferred inflows for FEMA grant funds that were not received within the 90-day period of availability after fiscal year-end. Subsequent drawdowns/collections on the June 30, 2024 amount Due From Federal Government of $37,384,520 were poor, with the Department drawing down or receiving $10,160,346 from July 1, 2024 through November 22, 2024. The accounts receivable summary by grant as of June 30, 2024 contained abnormal credit balances in the amount of $328,175, which the Department will need to research to determine if there are any overdrawn amounts. Management’s Progress for Repeated Finding: Management did make progress implementing adequate controls to resolve the finding from the prior years, by billing and receiving amounts from previous fiscal years. However, a material weakness still exists over controls over these account balances. Criteria According to §200.303 Internal controls of 2 CFR Part 200, 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. Specific to the Department, federal reimbursement requests are completed quarterly with the reporting process. According to NMSA 1978 §6.-5-2, the Financial Control Division (the division) shall issue a manual of model accounting practices containing the procedures and policies. State agencies shall comply with the model accounting practices established by the division, and the administrative head of each state agency shall ensure that the model accounting practices are followed. According to FIN 16 General Accounting Practices in the Manual of Model Accounting Practices, all reporting of financial information must be timely, complete, and accurate, to the state agency’s management and to oversight agencies and entities. Effect State agency’s management and other agencies and entities may not be able to rely on the financial information presented by the Department due to untimely, incomplete, and inaccurate financial reporting. The Federal Government may place the Department on controlled draws. Cause While the Department has made improvements from prior year related to the reconciliation and draw down of all federal receivables, the Department continues to lack an effective control environment that allows for timely and accurate drawdowns, financial reporting, and accounting of the Department’s Federal accounts receivable/payable balance and related deferred inflows of resources.
2024-004 CASH MANAGEMENT Federal agency: U.S. Department of Homeland Security/FEMA Federal Program Title & Assistance Listing Number: Disaster Grants – Public Assistance (Presidentially Declared Disasters) - 97.036 Hazard Mitigation Grant Program – 97.039 Emergency Management Performance Grants – 97.042 Homeland Security Grant Program – 97.067 Award Period: Various Type of Finding: Material Weakness in Internal Control over Compliance Material Non-compliance Compliance Areas: Cash Management Questioned Costs: None Condition Management has been unable to provide sufficient appropriate audit evidence relating to the completeness, existence, accuracy, and valuation of the Department’s federal revenue, accounts receivable/payable and related deferred inflows of resources reported as of June 30, 2024. This was included in our basis for qualifying opinion on Governmental Activities and the Federal Grants Fund. The Department lacked effective processes and controls for determining the amount Due From Federal Government as part of its year-end close process. The Department did not consistently apply its process for recording the Due From amount for all federal grants throughout the year. The Federal Grants Fund (Fund 40280) has a deficit fund balance of $24,515,842 and a $31,837,546 balance related to deferred inflows for FEMA grant funds that were not received within the 90-day period of availability after fiscal year-end. Subsequent drawdowns/collections on the June 30, 2024 amount Due From Federal Government of $37,384,520 were poor, with the Department drawing down or receiving $10,160,346 from July 1, 2024 through November 22, 2024. The accounts receivable summary by grant as of June 30, 2024 contained abnormal credit balances in the amount of $328,175, which the Department will need to research to determine if there are any overdrawn amounts. Management’s Progress for Repeated Finding: Management did make progress implementing adequate controls to resolve the finding from the prior years, by billing and receiving amounts from previous fiscal years. However, a material weakness still exists over controls over these account balances. Criteria According to §200.303 Internal controls of 2 CFR Part 200, 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. Specific to the Department, federal reimbursement requests are completed quarterly with the reporting process. According to NMSA 1978 §6.-5-2, the Financial Control Division (the division) shall issue a manual of model accounting practices containing the procedures and policies. State agencies shall comply with the model accounting practices established by the division, and the administrative head of each state agency shall ensure that the model accounting practices are followed. According to FIN 16 General Accounting Practices in the Manual of Model Accounting Practices, all reporting of financial information must be timely, complete, and accurate, to the state agency’s management and to oversight agencies and entities. Effect State agency’s management and other agencies and entities may not be able to rely on the financial information presented by the Department due to untimely, incomplete, and inaccurate financial reporting. The Federal Government may place the Department on controlled draws. Cause While the Department has made improvements from prior year related to the reconciliation and draw down of all federal receivables, the Department continues to lack an effective control environment that allows for timely and accurate drawdowns, financial reporting, and accounting of the Department’s Federal accounts receivable/payable balance and related deferred inflows of resources.
2024-004 CASH MANAGEMENT Federal agency: U.S. Department of Homeland Security/FEMA Federal Program Title & Assistance Listing Number: Disaster Grants – Public Assistance (Presidentially Declared Disasters) - 97.036 Hazard Mitigation Grant Program – 97.039 Emergency Management Performance Grants – 97.042 Homeland Security Grant Program – 97.067 Award Period: Various Type of Finding: Material Weakness in Internal Control over Compliance Material Non-compliance Compliance Areas: Cash Management Questioned Costs: None Condition Management has been unable to provide sufficient appropriate audit evidence relating to the completeness, existence, accuracy, and valuation of the Department’s federal revenue, accounts receivable/payable and related deferred inflows of resources reported as of June 30, 2024. This was included in our basis for qualifying opinion on Governmental Activities and the Federal Grants Fund. The Department lacked effective processes and controls for determining the amount Due From Federal Government as part of its year-end close process. The Department did not consistently apply its process for recording the Due From amount for all federal grants throughout the year. The Federal Grants Fund (Fund 40280) has a deficit fund balance of $24,515,842 and a $31,837,546 balance related to deferred inflows for FEMA grant funds that were not received within the 90-day period of availability after fiscal year-end. Subsequent drawdowns/collections on the June 30, 2024 amount Due From Federal Government of $37,384,520 were poor, with the Department drawing down or receiving $10,160,346 from July 1, 2024 through November 22, 2024. The accounts receivable summary by grant as of June 30, 2024 contained abnormal credit balances in the amount of $328,175, which the Department will need to research to determine if there are any overdrawn amounts. Management’s Progress for Repeated Finding: Management did make progress implementing adequate controls to resolve the finding from the prior years, by billing and receiving amounts from previous fiscal years. However, a material weakness still exists over controls over these account balances. Criteria According to §200.303 Internal controls of 2 CFR Part 200, 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. Specific to the Department, federal reimbursement requests are completed quarterly with the reporting process. According to NMSA 1978 §6.-5-2, the Financial Control Division (the division) shall issue a manual of model accounting practices containing the procedures and policies. State agencies shall comply with the model accounting practices established by the division, and the administrative head of each state agency shall ensure that the model accounting practices are followed. According to FIN 16 General Accounting Practices in the Manual of Model Accounting Practices, all reporting of financial information must be timely, complete, and accurate, to the state agency’s management and to oversight agencies and entities. Effect State agency’s management and other agencies and entities may not be able to rely on the financial information presented by the Department due to untimely, incomplete, and inaccurate financial reporting. The Federal Government may place the Department on controlled draws. Cause While the Department has made improvements from prior year related to the reconciliation and draw down of all federal receivables, the Department continues to lack an effective control environment that allows for timely and accurate drawdowns, financial reporting, and accounting of the Department’s Federal accounts receivable/payable balance and related deferred inflows of resources.
2024-006 REPORTING Federal Agency: U.S. Department of Homeland Security/FEMA Federal Program Title & Assistance Listing Number: Disaster Grants - Public Assistance (Presidentially Declared Disasters) - 97.036 Emergency Management Performance Grants - 97.042 Award Period: Various Type of Finding: Significant Deficiency in Internal Control over Compliance Other Non-compliance Questioned Costs: Unknown Condition: We noted the Department was not in compliance with requirements related to the reporting of grants. ALN 97.042 The Department did not complete the recipient share section of the federal financial reports for 4 out of 4 reports tested. ALN 97.036 We reviewed files for 5 subrecipients, from which there were 16 ongoing projects during fiscal year 2024. Of these, 4 of the 16 projects did not have evidence of the required reporting for Federal Funding Accountability and Transparency Act (FFATA). Criteria According to §200.302 Financial management of 2 CFR Part 200, the State's, and the other non- Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions. Further, the financial management system of each non-Federal entity must provide accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements. According to §200.303 Internal controls of 2 CFR Part 200, 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. Effect. The auditor noted instances of noncompliance. Non-compliance may result in delayed reimbursement of eligible federal expenditures or the potential loss of federal funding. Cause The Department lacks established internal controls and procedures over financial grant management to ensure submitted reports are complete, agree to supporting spreadsheets, submitted timely, and properlv maintained in the files of the Department.
2024-006 REPORTING Federal Agency: U.S. Department of Homeland Security/FEMA Federal Program Title & Assistance Listing Number: Disaster Grants - Public Assistance (Presidentially Declared Disasters) - 97.036 Emergency Management Performance Grants - 97.042 Award Period: Various Type of Finding: Significant Deficiency in Internal Control over Compliance Other Non-compliance Questioned Costs: Unknown Condition: We noted the Department was not in compliance with requirements related to the reporting of grants. ALN 97.042 The Department did not complete the recipient share section of the federal financial reports for 4 out of 4 reports tested. ALN 97.036 We reviewed files for 5 subrecipients, from which there were 16 ongoing projects during fiscal year 2024. Of these, 4 of the 16 projects did not have evidence of the required reporting for Federal Funding Accountability and Transparency Act (FFATA). Criteria According to §200.302 Financial management of 2 CFR Part 200, the State's, and the other non- Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions. Further, the financial management system of each non-Federal entity must provide accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements. According to §200.303 Internal controls of 2 CFR Part 200, 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. Effect. The auditor noted instances of noncompliance. Non-compliance may result in delayed reimbursement of eligible federal expenditures or the potential loss of federal funding. Cause The Department lacks established internal controls and procedures over financial grant management to ensure submitted reports are complete, agree to supporting spreadsheets, submitted timely, and properlv maintained in the files of the Department.
Special Tests – Enrollment Reporting Federal Agency: Department of Education Federal Program Title: Student Financial Assistance Cluster ASSISTANCE LISTING Number: 84.268 – Federal Direct Student Loans 84.063 – Federal Pell Grant Program Federal Award Identification Number and Year: P063P230362 2024 and P268K240362 2024 Award Period: June 1, 2023 to June 30, 2024 Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matter Criteria or specific requirement: Institutions are required to report enrollment information under the Pell grant and the Direct loan programs via the National Student Loan Data System (NSLDS) (OMB No. 1845-0035) (Pell, 34 CFR 690.83(b)(2); Direct Loan, 34 CFR 685.309). Institutions must review, update, and verify student enrollment statuses, program information, and effective dates that appear on the Enrollment Reporting Roster file or on the Enrollment Maintenance page of the NSLDS Professional Access (NSLDSFAP) website. There are two categories of enrollment information; “Campus Level” and “Program Level,” both of which need to be reported accurately and have separate record types. The NSLDS Enrollment Reporting Guide provides the requirements and guidance for reporting enrollment details using the NSLDS Enrollment Reporting Process. Institutions must report enrollment changes within 30 days; however, if a roster file is expected within 60 days, you may provide the updated data on that roster file. The University must also have an adequate process to internally review submissions to either the third-party servicer or directly to NSLDS. Additionally, Institutions are required to ensure adequate internal controls over compliance are established and maintained in accordance with 2 CFR 200.303. Condition: During our testing of the Direct Loan and Pell Grant programs, we selected a sample of 40 student enrollment changes to test for timeliness and accurate reporting of student status changes to the National Student Loan Data System (NSLDS). Our testing resulted in the following items of noncompliance. 1. 10 individual students where a student's campus-level enrollment effective date was not correctly reported to NSLDS. 34 CFR 685.309 (b)(1) and 34 CFR 690.83(b)(2) 2. 13 instances where a student’s enrollment status change was not reported timely to NSLDS. 34 CFR 685.309(b)(1) and 34 CFR 690.83(b)(2) Questioned costs: N/A Context: Out of a sample of 40 enrollment changes selected for testing for the requirement noted above, we noted 21 students with exceptions. 2 students had multiple instances of noncompliance. Cause: Turnover at the university did not lead to adequate corrective action taken after the prior year audit. The University was unaware of the errors which were caused by the transmission of data between there student information system and the third-party servicer. Effect: The NSLDS system could not be updated accurately or timely with student enrollment information. Repeat finding: Yes 2023-001 Recommendation: We recommend that the University ensure it has enhanced its policies and procedures regarding enrollment reporting including additional monitoring over the third-party service provider to ensure that reporting is completed accurately and timely. View of responsible official: The University agrees with the finding.