Finding 2024-010 - Material Weakness - Allowable Costs/Cost Principles Federal Assistance Listing Number: 84.010, 93.600 Federal Program Name: Title I Grants to Local Educational Agencies and Head Start Cluster Federal Agency Name: U.S. Department of Education and U.S. Department of Health and Human Services Pass-Through Entity Name: Wisconsin Department of Public Instruction Pass-Through Entity Identification Number: 2024-403619-DPI-TIA-141, 2024-403619-DPI-CSI-148 Criteria: In accordance with 2 CFR 200.303(a), 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. In accordance with 2 CFR 200.430(i), charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Additionally, 2 CFR 200.403(g) requires that costs are adequately documented to be allowable under Federal awards. Condition/Context: The District supports time charged to federal awards via semi-annual certifications which are approved by the grant administrator or the building principal. In order for a cost to be supported at the time of final reimbursement, the semi-annual certifications should be approved by the grant administrator or the building principal. Title I Grants to Local Educational Agencies (ALN 84.010) The final reimbursement claim for the Title I Grants to Local Educational Agencies (Title I) program were due to Wisconsin Department of Public Instruction (DPI) on September 30, 2024; however, the final reimbursement claim for the Part A award was not submitted to DPI until November 18, 2024, and the CSI award was not submitted to DPI until October 1, 2024, due to an extension. Five of the 40 individuals sampled had their semi-annual certifications not approved timely and were approved after the due date of the final reimbursement claim, but before the date of the actual submission of the final reimbursement claim. An additional two individuals of the 40 sampled had their semi-annual certifications approved after the final reimbursement claims were submitted. Upon further review of all the spring semi-annual certifications for the Title I awards, there were an additional 50 individuals that had their semi-annual certifications approved by the principal after the due date of the final reimbursement claim but before the submission of the final reimbursement. Additionally, nine individuals had their semi-annual certifications approved after the final reimbursement date of the Part A award and another 59 individuals from Part A did not have their semi-annual certifications approved at all. Head Start Cluster (ALN 93.600) The final reimbursement claim for the program was submitted to the Federal agency on November 22, 2024. Four of the 40 individuals sampled had their semi-annual certifications approved by the Head Start administrator after the submission date of the final reimbursement claims. Upon further review of the all the spring semi-annual certifications, there was an additional individual that had their semi-annual certifications approved by the principal after the due date of the final reimbursement claim and another four individuals that did not have their semi-annual certifications approved at all. The samples were not statistically valid. Cause: There was a lack of internal control over the timely approval of the semi-annual certifications. Effect or Potential Effect: By not having an approved semi-annual certification before the date of the final reimbursement claims, unallowable costs may be submitted for reimbursement. Questioned Costs: The payroll costs and related fringe benefits charged at a rate of 52.48% are unallowable. Title I Grants to Local Educational Agencies (ALN 84.010) • 2024-403619-DPI-CSI-148: The two sampled individuals’ payroll and fringe benefits for the particular transaction totaled $507. • 2024-403619-DPI-TIA-141: The additional individuals' payroll and fringe benefits for the spring semi-annual certifications reviewed that were approved after the final reimbursement submission date and those that were not approved at all totaled $2,077,880. Head Start Cluster (ALN 93.600) • 05CH010537: After the additional testing, the total payroll and related fringe benefits for the spring semi-annual certifications that were approved after the final reimbursement request submission date or not approved at all totaled $241,794. Recommendations: We recommend that controls be implemented that will allow costs to be reviewed and fully supported prior to the date the final reimbursement claims are due to DPI. Views of Responsible Official: Management concurs with the finding.
Finding 2024-010 - Material Weakness - Allowable Costs/Cost Principles Federal Assistance Listing Number: 84.010, 93.600 Federal Program Name: Title I Grants to Local Educational Agencies and Head Start Cluster Federal Agency Name: U.S. Department of Education and U.S. Department of Health and Human Services Pass-Through Entity Name: Wisconsin Department of Public Instruction Pass-Through Entity Identification Number: 2024-403619-DPI-TIA-141, 2024-403619-DPI-CSI-148 Criteria: In accordance with 2 CFR 200.303(a), 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. In accordance with 2 CFR 200.430(i), charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Additionally, 2 CFR 200.403(g) requires that costs are adequately documented to be allowable under Federal awards. Condition/Context: The District supports time charged to federal awards via semi-annual certifications which are approved by the grant administrator or the building principal. In order for a cost to be supported at the time of final reimbursement, the semi-annual certifications should be approved by the grant administrator or the building principal. Title I Grants to Local Educational Agencies (ALN 84.010) The final reimbursement claim for the Title I Grants to Local Educational Agencies (Title I) program were due to Wisconsin Department of Public Instruction (DPI) on September 30, 2024; however, the final reimbursement claim for the Part A award was not submitted to DPI until November 18, 2024, and the CSI award was not submitted to DPI until October 1, 2024, due to an extension. Five of the 40 individuals sampled had their semi-annual certifications not approved timely and were approved after the due date of the final reimbursement claim, but before the date of the actual submission of the final reimbursement claim. An additional two individuals of the 40 sampled had their semi-annual certifications approved after the final reimbursement claims were submitted. Upon further review of all the spring semi-annual certifications for the Title I awards, there were an additional 50 individuals that had their semi-annual certifications approved by the principal after the due date of the final reimbursement claim but before the submission of the final reimbursement. Additionally, nine individuals had their semi-annual certifications approved after the final reimbursement date of the Part A award and another 59 individuals from Part A did not have their semi-annual certifications approved at all. Head Start Cluster (ALN 93.600) The final reimbursement claim for the program was submitted to the Federal agency on November 22, 2024. Four of the 40 individuals sampled had their semi-annual certifications approved by the Head Start administrator after the submission date of the final reimbursement claims. Upon further review of the all the spring semi-annual certifications, there was an additional individual that had their semi-annual certifications approved by the principal after the due date of the final reimbursement claim and another four individuals that did not have their semi-annual certifications approved at all. The samples were not statistically valid. Cause: There was a lack of internal control over the timely approval of the semi-annual certifications. Effect or Potential Effect: By not having an approved semi-annual certification before the date of the final reimbursement claims, unallowable costs may be submitted for reimbursement. Questioned Costs: The payroll costs and related fringe benefits charged at a rate of 52.48% are unallowable. Title I Grants to Local Educational Agencies (ALN 84.010) • 2024-403619-DPI-CSI-148: The two sampled individuals’ payroll and fringe benefits for the particular transaction totaled $507. • 2024-403619-DPI-TIA-141: The additional individuals' payroll and fringe benefits for the spring semi-annual certifications reviewed that were approved after the final reimbursement submission date and those that were not approved at all totaled $2,077,880. Head Start Cluster (ALN 93.600) • 05CH010537: After the additional testing, the total payroll and related fringe benefits for the spring semi-annual certifications that were approved after the final reimbursement request submission date or not approved at all totaled $241,794. Recommendations: We recommend that controls be implemented that will allow costs to be reviewed and fully supported prior to the date the final reimbursement claims are due to DPI. Views of Responsible Official: Management concurs with the finding.
Finding 2024-009 - Material Weakness - Allowable Costs/Cost Principles Federal Assistance Listing Number: 84.367, 84.425D, 84.425U and 84.425W Federal Program Name: Supporting Effective Instruction State Grants and COVID-19 - Education Stabilization Fund Federal Agency Name: U.S. Department of Education Pass-Through Entity Name: Wisconsin Department of Public Instruction Pass-Through Entity Identification Number: 2024-403619-DPI-TIIA-365, 2022-403619-DPI-ESSERFII-163 and 2022-403619-DPI-ESSERFIII-165, 2022-403619-DPI-ARPHCYII-173 Criteria: In accordance with 2 CFR 200.303(a), the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations and the terms and conditions of the Federal award. Condition/Context: The District supports time charged to federal awards via semi-annual certifications which are approved by the grant administrator or the building principal. Supporting Effective Instruction State Grants (ALN 84.367) The final reimbursement claim for the program was due to Wisconsin Department of Public Instruction (DPI) on September 30, 2024; however, the final reimbursement claim was not submitted to DPI until January 9, 2025, due to an extension. Thirteen of the 40 individuals sampled did not have their semi-annual certifications approved timely and were approved after the due date of the final reimbursement claim, but before the date of the actual submission of the final reimbursement claim. COVID-19 – Education Stabilization Fund: Elementary and Secondary School Emergency Relief (ESSER II) (ALN 84.425D), American Rescue Plan – Elementary and Secondary School Emergency Relief (ARP ESSER) (ALN 84.425U) and American Rescue Plan - Elementary and Secondary School Emergency Relief - Homelessness Children and Youth (84.425W) The final reimbursement claims for the ESSER II and the ARP ESSER programs were due to DPI on September 30, 2023, and September 30, 2024, respectively; however, the final reimbursement claims were not submitted to DPI until December 8, 2023, for ESSER II and December 6, 2024, for ARP ESSER. Five of the 40 individuals sampled had their semi-annual certifications not approved timely and were approved after the due date of the final reimbursement claims, but before the date of the actual submission of the final reimbursement claim. The samples were not statistically valid. Cause: There was a lack of internal control over the timely approval of the semi-annual certifications. Effect or Potential Effect: By not having an approved semi-annual certification before the date of the final reimbursement claims, unallowable costs may be submitted for reimbursement. Questioned Costs: None noted. Recommendations: We recommend that controls be implemented that will allow costs to be reviewed and fully supported prior to the date the final reimbursement claims are due to DPI. Views of Responsible Official: Management concurs with the finding.
Finding 2024-009 - Material Weakness - Allowable Costs/Cost Principles Federal Assistance Listing Number: 84.367, 84.425D, 84.425U and 84.425W Federal Program Name: Supporting Effective Instruction State Grants and COVID-19 - Education Stabilization Fund Federal Agency Name: U.S. Department of Education Pass-Through Entity Name: Wisconsin Department of Public Instruction Pass-Through Entity Identification Number: 2024-403619-DPI-TIIA-365, 2022-403619-DPI-ESSERFII-163 and 2022-403619-DPI-ESSERFIII-165, 2022-403619-DPI-ARPHCYII-173 Criteria: In accordance with 2 CFR 200.303(a), the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations and the terms and conditions of the Federal award. Condition/Context: The District supports time charged to federal awards via semi-annual certifications which are approved by the grant administrator or the building principal. Supporting Effective Instruction State Grants (ALN 84.367) The final reimbursement claim for the program was due to Wisconsin Department of Public Instruction (DPI) on September 30, 2024; however, the final reimbursement claim was not submitted to DPI until January 9, 2025, due to an extension. Thirteen of the 40 individuals sampled did not have their semi-annual certifications approved timely and were approved after the due date of the final reimbursement claim, but before the date of the actual submission of the final reimbursement claim. COVID-19 – Education Stabilization Fund: Elementary and Secondary School Emergency Relief (ESSER II) (ALN 84.425D), American Rescue Plan – Elementary and Secondary School Emergency Relief (ARP ESSER) (ALN 84.425U) and American Rescue Plan - Elementary and Secondary School Emergency Relief - Homelessness Children and Youth (84.425W) The final reimbursement claims for the ESSER II and the ARP ESSER programs were due to DPI on September 30, 2023, and September 30, 2024, respectively; however, the final reimbursement claims were not submitted to DPI until December 8, 2023, for ESSER II and December 6, 2024, for ARP ESSER. Five of the 40 individuals sampled had their semi-annual certifications not approved timely and were approved after the due date of the final reimbursement claims, but before the date of the actual submission of the final reimbursement claim. The samples were not statistically valid. Cause: There was a lack of internal control over the timely approval of the semi-annual certifications. Effect or Potential Effect: By not having an approved semi-annual certification before the date of the final reimbursement claims, unallowable costs may be submitted for reimbursement. Questioned Costs: None noted. Recommendations: We recommend that controls be implemented that will allow costs to be reviewed and fully supported prior to the date the final reimbursement claims are due to DPI. Views of Responsible Official: Management concurs with the finding.
Finding 2024-009 - Material Weakness - Allowable Costs/Cost Principles Federal Assistance Listing Number: 84.367, 84.425D, 84.425U and 84.425W Federal Program Name: Supporting Effective Instruction State Grants and COVID-19 - Education Stabilization Fund Federal Agency Name: U.S. Department of Education Pass-Through Entity Name: Wisconsin Department of Public Instruction Pass-Through Entity Identification Number: 2024-403619-DPI-TIIA-365, 2022-403619-DPI-ESSERFII-163 and 2022-403619-DPI-ESSERFIII-165, 2022-403619-DPI-ARPHCYII-173 Criteria: In accordance with 2 CFR 200.303(a), the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations and the terms and conditions of the Federal award. Condition/Context: The District supports time charged to federal awards via semi-annual certifications which are approved by the grant administrator or the building principal. Supporting Effective Instruction State Grants (ALN 84.367) The final reimbursement claim for the program was due to Wisconsin Department of Public Instruction (DPI) on September 30, 2024; however, the final reimbursement claim was not submitted to DPI until January 9, 2025, due to an extension. Thirteen of the 40 individuals sampled did not have their semi-annual certifications approved timely and were approved after the due date of the final reimbursement claim, but before the date of the actual submission of the final reimbursement claim. COVID-19 – Education Stabilization Fund: Elementary and Secondary School Emergency Relief (ESSER II) (ALN 84.425D), American Rescue Plan – Elementary and Secondary School Emergency Relief (ARP ESSER) (ALN 84.425U) and American Rescue Plan - Elementary and Secondary School Emergency Relief - Homelessness Children and Youth (84.425W) The final reimbursement claims for the ESSER II and the ARP ESSER programs were due to DPI on September 30, 2023, and September 30, 2024, respectively; however, the final reimbursement claims were not submitted to DPI until December 8, 2023, for ESSER II and December 6, 2024, for ARP ESSER. Five of the 40 individuals sampled had their semi-annual certifications not approved timely and were approved after the due date of the final reimbursement claims, but before the date of the actual submission of the final reimbursement claim. The samples were not statistically valid. Cause: There was a lack of internal control over the timely approval of the semi-annual certifications. Effect or Potential Effect: By not having an approved semi-annual certification before the date of the final reimbursement claims, unallowable costs may be submitted for reimbursement. Questioned Costs: None noted. Recommendations: We recommend that controls be implemented that will allow costs to be reviewed and fully supported prior to the date the final reimbursement claims are due to DPI. Views of Responsible Official: Management concurs with the finding.
Finding 2024-009 - Material Weakness - Allowable Costs/Cost Principles Federal Assistance Listing Number: 84.367, 84.425D, 84.425U and 84.425W Federal Program Name: Supporting Effective Instruction State Grants and COVID-19 - Education Stabilization Fund Federal Agency Name: U.S. Department of Education Pass-Through Entity Name: Wisconsin Department of Public Instruction Pass-Through Entity Identification Number: 2024-403619-DPI-TIIA-365, 2022-403619-DPI-ESSERFII-163 and 2022-403619-DPI-ESSERFIII-165, 2022-403619-DPI-ARPHCYII-173 Criteria: In accordance with 2 CFR 200.303(a), the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations and the terms and conditions of the Federal award. Condition/Context: The District supports time charged to federal awards via semi-annual certifications which are approved by the grant administrator or the building principal. Supporting Effective Instruction State Grants (ALN 84.367) The final reimbursement claim for the program was due to Wisconsin Department of Public Instruction (DPI) on September 30, 2024; however, the final reimbursement claim was not submitted to DPI until January 9, 2025, due to an extension. Thirteen of the 40 individuals sampled did not have their semi-annual certifications approved timely and were approved after the due date of the final reimbursement claim, but before the date of the actual submission of the final reimbursement claim. COVID-19 – Education Stabilization Fund: Elementary and Secondary School Emergency Relief (ESSER II) (ALN 84.425D), American Rescue Plan – Elementary and Secondary School Emergency Relief (ARP ESSER) (ALN 84.425U) and American Rescue Plan - Elementary and Secondary School Emergency Relief - Homelessness Children and Youth (84.425W) The final reimbursement claims for the ESSER II and the ARP ESSER programs were due to DPI on September 30, 2023, and September 30, 2024, respectively; however, the final reimbursement claims were not submitted to DPI until December 8, 2023, for ESSER II and December 6, 2024, for ARP ESSER. Five of the 40 individuals sampled had their semi-annual certifications not approved timely and were approved after the due date of the final reimbursement claims, but before the date of the actual submission of the final reimbursement claim. The samples were not statistically valid. Cause: There was a lack of internal control over the timely approval of the semi-annual certifications. Effect or Potential Effect: By not having an approved semi-annual certification before the date of the final reimbursement claims, unallowable costs may be submitted for reimbursement. Questioned Costs: None noted. Recommendations: We recommend that controls be implemented that will allow costs to be reviewed and fully supported prior to the date the final reimbursement claims are due to DPI. Views of Responsible Official: Management concurs with the finding.
Finding 2024-010 - Material Weakness - Allowable Costs/Cost Principles Federal Assistance Listing Number: 84.010, 93.600 Federal Program Name: Title I Grants to Local Educational Agencies and Head Start Cluster Federal Agency Name: U.S. Department of Education and U.S. Department of Health and Human Services Pass-Through Entity Name: Wisconsin Department of Public Instruction Pass-Through Entity Identification Number: 2024-403619-DPI-TIA-141, 2024-403619-DPI-CSI-148 Criteria: In accordance with 2 CFR 200.303(a), 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. In accordance with 2 CFR 200.430(i), charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Additionally, 2 CFR 200.403(g) requires that costs are adequately documented to be allowable under Federal awards. Condition/Context: The District supports time charged to federal awards via semi-annual certifications which are approved by the grant administrator or the building principal. In order for a cost to be supported at the time of final reimbursement, the semi-annual certifications should be approved by the grant administrator or the building principal. Title I Grants to Local Educational Agencies (ALN 84.010) The final reimbursement claim for the Title I Grants to Local Educational Agencies (Title I) program were due to Wisconsin Department of Public Instruction (DPI) on September 30, 2024; however, the final reimbursement claim for the Part A award was not submitted to DPI until November 18, 2024, and the CSI award was not submitted to DPI until October 1, 2024, due to an extension. Five of the 40 individuals sampled had their semi-annual certifications not approved timely and were approved after the due date of the final reimbursement claim, but before the date of the actual submission of the final reimbursement claim. An additional two individuals of the 40 sampled had their semi-annual certifications approved after the final reimbursement claims were submitted. Upon further review of all the spring semi-annual certifications for the Title I awards, there were an additional 50 individuals that had their semi-annual certifications approved by the principal after the due date of the final reimbursement claim but before the submission of the final reimbursement. Additionally, nine individuals had their semi-annual certifications approved after the final reimbursement date of the Part A award and another 59 individuals from Part A did not have their semi-annual certifications approved at all. Head Start Cluster (ALN 93.600) The final reimbursement claim for the program was submitted to the Federal agency on November 22, 2024. Four of the 40 individuals sampled had their semi-annual certifications approved by the Head Start administrator after the submission date of the final reimbursement claims. Upon further review of the all the spring semi-annual certifications, there was an additional individual that had their semi-annual certifications approved by the principal after the due date of the final reimbursement claim and another four individuals that did not have their semi-annual certifications approved at all. The samples were not statistically valid. Cause: There was a lack of internal control over the timely approval of the semi-annual certifications. Effect or Potential Effect: By not having an approved semi-annual certification before the date of the final reimbursement claims, unallowable costs may be submitted for reimbursement. Questioned Costs: The payroll costs and related fringe benefits charged at a rate of 52.48% are unallowable. Title I Grants to Local Educational Agencies (ALN 84.010) • 2024-403619-DPI-CSI-148: The two sampled individuals’ payroll and fringe benefits for the particular transaction totaled $507. • 2024-403619-DPI-TIA-141: The additional individuals' payroll and fringe benefits for the spring semi-annual certifications reviewed that were approved after the final reimbursement submission date and those that were not approved at all totaled $2,077,880. Head Start Cluster (ALN 93.600) • 05CH010537: After the additional testing, the total payroll and related fringe benefits for the spring semi-annual certifications that were approved after the final reimbursement request submission date or not approved at all totaled $241,794. Recommendations: We recommend that controls be implemented that will allow costs to be reviewed and fully supported prior to the date the final reimbursement claims are due to DPI. Views of Responsible Official: Management concurs with the finding.
Finding 2024-010 - Material Weakness - Allowable Costs/Cost Principles Federal Assistance Listing Number: 84.010, 93.600 Federal Program Name: Title I Grants to Local Educational Agencies and Head Start Cluster Federal Agency Name: U.S. Department of Education and U.S. Department of Health and Human Services Pass-Through Entity Name: Wisconsin Department of Public Instruction Pass-Through Entity Identification Number: 2024-403619-DPI-TIA-141, 2024-403619-DPI-CSI-148 Criteria: In accordance with 2 CFR 200.303(a), 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. In accordance with 2 CFR 200.430(i), charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Additionally, 2 CFR 200.403(g) requires that costs are adequately documented to be allowable under Federal awards. Condition/Context: The District supports time charged to federal awards via semi-annual certifications which are approved by the grant administrator or the building principal. In order for a cost to be supported at the time of final reimbursement, the semi-annual certifications should be approved by the grant administrator or the building principal. Title I Grants to Local Educational Agencies (ALN 84.010) The final reimbursement claim for the Title I Grants to Local Educational Agencies (Title I) program were due to Wisconsin Department of Public Instruction (DPI) on September 30, 2024; however, the final reimbursement claim for the Part A award was not submitted to DPI until November 18, 2024, and the CSI award was not submitted to DPI until October 1, 2024, due to an extension. Five of the 40 individuals sampled had their semi-annual certifications not approved timely and were approved after the due date of the final reimbursement claim, but before the date of the actual submission of the final reimbursement claim. An additional two individuals of the 40 sampled had their semi-annual certifications approved after the final reimbursement claims were submitted. Upon further review of all the spring semi-annual certifications for the Title I awards, there were an additional 50 individuals that had their semi-annual certifications approved by the principal after the due date of the final reimbursement claim but before the submission of the final reimbursement. Additionally, nine individuals had their semi-annual certifications approved after the final reimbursement date of the Part A award and another 59 individuals from Part A did not have their semi-annual certifications approved at all. Head Start Cluster (ALN 93.600) The final reimbursement claim for the program was submitted to the Federal agency on November 22, 2024. Four of the 40 individuals sampled had their semi-annual certifications approved by the Head Start administrator after the submission date of the final reimbursement claims. Upon further review of the all the spring semi-annual certifications, there was an additional individual that had their semi-annual certifications approved by the principal after the due date of the final reimbursement claim and another four individuals that did not have their semi-annual certifications approved at all. The samples were not statistically valid. Cause: There was a lack of internal control over the timely approval of the semi-annual certifications. Effect or Potential Effect: By not having an approved semi-annual certification before the date of the final reimbursement claims, unallowable costs may be submitted for reimbursement. Questioned Costs: The payroll costs and related fringe benefits charged at a rate of 52.48% are unallowable. Title I Grants to Local Educational Agencies (ALN 84.010) • 2024-403619-DPI-CSI-148: The two sampled individuals’ payroll and fringe benefits for the particular transaction totaled $507. • 2024-403619-DPI-TIA-141: The additional individuals' payroll and fringe benefits for the spring semi-annual certifications reviewed that were approved after the final reimbursement submission date and those that were not approved at all totaled $2,077,880. Head Start Cluster (ALN 93.600) • 05CH010537: After the additional testing, the total payroll and related fringe benefits for the spring semi-annual certifications that were approved after the final reimbursement request submission date or not approved at all totaled $241,794. Recommendations: We recommend that controls be implemented that will allow costs to be reviewed and fully supported prior to the date the final reimbursement claims are due to DPI. Views of Responsible Official: Management concurs with the finding.
Finding 2024-012 - Material Weakness - Maintenance of Effort Federal Assistance Listing Number: 84.010 and 84.367 Federal Program Name: Title I Grants to Local Educational Agencies and Supporting Effective Instruction State Grants Federal Agency Name: U.S. Department of Education Pass-Through Entity Name: Wisconsin Department of Public Instruction Pass-Through Entity Identification Number: 2024-403619-DPI-TI-A-141, 2024-403619-DPI-TID-144, 2024-403619-DPI-CSI-148 and 2024-403619-DPI-TIIA-365 Criteria: In accordance with 2 CFR 200.303(a), 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. In accordance with 2 CFR 200.302(a), the non-Federal entity's financial management systems must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions. Condition/Context: The Maintenance of Effort (MOE) calculation is calculated annually by the Wisconsin Department of Public Instruction (WI DPI) based on the information submitted in the PI-1505 report. There was a $16,977,949 variance between what was reported in the PI-1505 and the District's accounting records for the revenue source code 751. Due to this variance, we recalculated the MOE based on the District's accounting records. The MOE on a per pupil basis would have still been met. Cause: There was turnover related to those previously responsible for preparing the PI-1505 report. The cross-walk between the accounting records and the PI-1505 submission could not be located. Effect or Potential Effect: The PI-1505 report was not fully supported by the District's accounting records for one of the line items used in the calculation of MOE. Questioned Costs: None noted. Recommendations: We recommend the District establish written policies and procedures related to the preparation and submission of the PI-1505 report. The report should be fully supported by the accounting records and any cross-walk documentation should be maintained by the District. Views of Responsible Official: Management concurs with the finding.
Finding 2024-012 - Material Weakness - Maintenance of Effort Federal Assistance Listing Number: 84.010 and 84.367 Federal Program Name: Title I Grants to Local Educational Agencies and Supporting Effective Instruction State Grants Federal Agency Name: U.S. Department of Education Pass-Through Entity Name: Wisconsin Department of Public Instruction Pass-Through Entity Identification Number: 2024-403619-DPI-TI-A-141, 2024-403619-DPI-TID-144, 2024-403619-DPI-CSI-148 and 2024-403619-DPI-TIIA-365 Criteria: In accordance with 2 CFR 200.303(a), 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. In accordance with 2 CFR 200.302(a), the non-Federal entity's financial management systems must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions. Condition/Context: The Maintenance of Effort (MOE) calculation is calculated annually by the Wisconsin Department of Public Instruction (WI DPI) based on the information submitted in the PI-1505 report. There was a $16,977,949 variance between what was reported in the PI-1505 and the District's accounting records for the revenue source code 751. Due to this variance, we recalculated the MOE based on the District's accounting records. The MOE on a per pupil basis would have still been met. Cause: There was turnover related to those previously responsible for preparing the PI-1505 report. The cross-walk between the accounting records and the PI-1505 submission could not be located. Effect or Potential Effect: The PI-1505 report was not fully supported by the District's accounting records for one of the line items used in the calculation of MOE. Questioned Costs: None noted. Recommendations: We recommend the District establish written policies and procedures related to the preparation and submission of the PI-1505 report. The report should be fully supported by the accounting records and any cross-walk documentation should be maintained by the District. Views of Responsible Official: Management concurs with the finding.
Finding 2024-012 - Material Weakness - Maintenance of Effort Federal Assistance Listing Number: 84.010 and 84.367 Federal Program Name: Title I Grants to Local Educational Agencies and Supporting Effective Instruction State Grants Federal Agency Name: U.S. Department of Education Pass-Through Entity Name: Wisconsin Department of Public Instruction Pass-Through Entity Identification Number: 2024-403619-DPI-TI-A-141, 2024-403619-DPI-TID-144, 2024-403619-DPI-CSI-148 and 2024-403619-DPI-TIIA-365 Criteria: In accordance with 2 CFR 200.303(a), 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. In accordance with 2 CFR 200.302(a), the non-Federal entity's financial management systems must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions. Condition/Context: The Maintenance of Effort (MOE) calculation is calculated annually by the Wisconsin Department of Public Instruction (WI DPI) based on the information submitted in the PI-1505 report. There was a $16,977,949 variance between what was reported in the PI-1505 and the District's accounting records for the revenue source code 751. Due to this variance, we recalculated the MOE based on the District's accounting records. The MOE on a per pupil basis would have still been met. Cause: There was turnover related to those previously responsible for preparing the PI-1505 report. The cross-walk between the accounting records and the PI-1505 submission could not be located. Effect or Potential Effect: The PI-1505 report was not fully supported by the District's accounting records for one of the line items used in the calculation of MOE. Questioned Costs: None noted. Recommendations: We recommend the District establish written policies and procedures related to the preparation and submission of the PI-1505 report. The report should be fully supported by the accounting records and any cross-walk documentation should be maintained by the District. Views of Responsible Official: Management concurs with the finding.
Condition: County-wide controls regarding Control Environment, Risk Assessment, Information and Communication and Monitoring have not been designed. Cause of Condition: Policies and procedures have not been designed and implemented to ensure the County complies with grant requirements. Effect of Condition: This condition could result in noncompliance to grant requirements and could lead to a loss of federal funds to the County. Recommendation: OSAI recommends that the County design and implement a system of internal controls to ensure compliance with grant requirements. Management Response: Chairman of the Board of County Commissioners: I plan to communicate with the Budget Board regarding this finding and have already introduced to the Budget Board, a form guideline called “Payne County Grant Administration Plan” to aid in maintaining proper documentation, reporting and proper spending of all grant awards. County Clerk: The Payne County Budget Board has approved and adopted a Federal Funding Checklist as well as Federal Funding Guidelines on agreements and awards. The Payne County Clerk’s Office also communicates with each department and requests that they report to our office any federal grants and awards they receive and report those on their Schedule of Expenditures of Federal Awards (SEFA) annually to our office. We also communicate with the Treasurer’s office and request to know when any federal money has been received. Criteria: 2 CFR 200, Subpart D. 200.303(a) reads as follows: 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. 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). Further, accountability and stewardship should be overall goals in management's accounting of federal funds. Internal controls should be designed to monitor compliance with laws and regulations pertaining to grant contracts.The GAO Standards – Section 1 – Fundamental Concepts of Internal Control – OV1.01 states in part: Definition of Internal Control Internal control is a process effected by an entity’s oversight body, management, and other personnel that provides reasonable assurance that the objectives of an entity will be achieved. Additionally, GAO Standards – Section 2 – Establishing an Effective Internal Control System – OV2.04 states in part: Components, Principles, and Attributes Control Environment - The foundation for an internal control system. It provides the discipline and structure to help an entity achieve its objectives. Risk Assessment - Assesses the risks facing the entity as it seeks to achieve its objectives. This assessment provides the basis for developing appropriate risk responses. Information and Communication - The quality information management and personnel communicate and use to support the internal control system. Monitoring - Activities management establishes and operates to assess the quality of performance over time and promptly resolve the findings of audits and other reviews.
Condition: During the process of documenting the County’s internal controls regarding federal disbursements, we noted that Payne County has not established procedures to ensure compliance with the following compliance requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Procurement and Suspension and Debarment; Reporting; and Subrecipient Monitoring. Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal expenditures are made in accordance with federal compliance requirements.Effect of Condition: This condition could result in noncompliance to grant requirements and could lead to a loss of federal funds to the County. Recommendation: OSAI recommends the County gain an understanding of grant requirements for these programs and implement internal control procedures to ensure compliance with grant requirements. Management Response: Chairman of the Board of County Commissioners: I plan to communicate with the Budget Board regarding this finding and have already introduced to the Budget Board, a form guideline called “Payne County Grant Administration Plan” to aid in maintaining proper documentation, reporting and proper spending of all grant awards. County Clerk: The Payne County Budget Board has approved and adopted a Federal Funding Checklist as well as Federal Funding Guidelines on agreements and awards. The Payne County Clerk’s office also communicates with each department and requests that they report to our office any federal grants and awards they receive and report those on their SEFA annually to our office. We also communicate with the Treasurer’s office and request to know when any federal money has been received. Criteria: 2 CFR § 200.303 Internal Controls (a) reads as follows: 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. 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). Further, GAO Standards – Section 2 – Establishing an Effective Internal Control System – OV2.23 states in part: Objectives of an Entity – Compliance Objectives Management conducts activities in accordance with applicable laws and regulations. As part of specifying compliance objectives, the entity determines which laws and regulations apply to the entity. Management is expected to set objectives that incorporate these requirements. Accountability and stewardship should be overall goals in management's accounting of federal funds. Internal controls should be designed to monitor compliance with laws and regulations pertaining to grant contracts.
Condition: Expenditures for federal programs were not adequately reported on the Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) Compliance Reports. Federal expenditures were understated by $1,227,550. The actual expenditures to vendors were $1,272,002, the County reported $44,452. Cause of Condition: Policies and procedures have not been designed and implemented to ensure compliance with reporting compliance requirements. Effect of Condition: This condition could result in noncompliance to grant requirements and could result in unrecorded transactions, undetected errors, and misappropriation of assets and funds.Recommendation: OSAI recommends the County gain an understanding of the grant requirements for this program and implement internal controls to ensure compliance with these grant requirements. Management Response: Chairman of the Board of County Commissioners: I plan to communicate with the Budget Board regarding this finding and have already introduced to the Budget Board, a form guideline called “Payne County Grant Administration Plan” to aid in proper documentation, reporting and proper spending of all grant awards. I plan to discuss all findings with the Budget Board throughout the year during our Budget Board meetings to get updates on how the findings are actively being addressed by each department and get input on how to best combat future findings. I request that responses by the various departments be forwarded to me to ensure action is taken and for discussion during the meetings. Criteria: 2 CFR § 200.303 Internal Controls (a) reads as follows: 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. 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). Compliance and Reporting Guidance, State and Local Fiscal Recovery Funds (10. Reporting.) reads as follows: All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. In addition, where appropriate, you organization needs to establish controls to ensure completion and timely submission of all mandatory performance and/or compliance reporting. Further, 2 CFR § 200.329 Monitoring and Reporting Program Performance (c)(1) reads as follows: The non-Federal entity must submit performance reports at the interval required by the Federal awarding agency or pass-through entity to best inform improvements in program outcomes and productivity. Intervals must be no less frequent than annually nor more frequent than quarterly except in unusual circumstances, for example where more frequent reporting is necessary for the effective monitoring of the Federal award or could significantly affect program outcomes. Reports submitted annually by the non-Federal entity and/or pass-through entity must be due no later than 90 calendar days after the reporting period. Reports submitted quarterly or semiannually must be due no later than 30 calendar days after the reporting period. Alternatively, the Federal awarding agency or pass-through entity may require annual reports before the anniversary dates of multiple year Federal awards. The final performance report submitted by the non-Federal entity and/or pass-through entity must be due no later than 120 calendar days after the period of performance end date. A subrecipient must submit to the pass-through entity, no later than 90 calendar days after the period of performance end date, all final performance reports as required by the terms and conditions of the Federal award. See also § 200.344. If a justified request is submitted by a non-Federal entity, the Federal agency may extend the due date for any performance report.
2024-006 Improve Internal Controls and Compliance Over Reporting Federal Program(s) Information Federal Agency: Department of Transportation Award Name: National Infrastructure Investments Assistance Listing Number: 20.933 Award Year: 2024 Compliance Requirement: Reporting Federal Agency: Department of Housing and Urban Development Award Name: Lead Hazard Reduction Demonstration Grant Program Assistance Listing Number: 14.905 Award Year: 2024 Compliance Requirement: Reporting Type of Finding Compliance Internal Control over Compliance – Significant Deficiency Criteria or Specific Requirement 2 CFR 200.303 requires non-Federal entities to establish and maintain effective internal control over Federal awards to provide reasonable assurance that the City is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the award. Further, per 2 CFR 200.328 and program instructions, recipients must submit accurate, complete, and timely financial reports (such as the SF-425 Federal Financial Report) that reconcile to supporting accounting records, including the general ledger and Schedule of Expenditures of Federal Awards (SEFA). Condition and Context During our testing of two quarterly SF-425 Federal Financial Reports for both the National Infrastructure Investments program and the Lead Hazard Reduction Demonstration Grant program, we noted that the amounts reported on the reports did not agree to the amounts per the general ledger and ultimately the SEFA. The discrepancies were the result of inaccurate recording of expenditures in the general ledger based on timing as discussed in finding 2024-001, which led to inconsistent reporting on the SF-425 reports. Cause The City’s internal controls over financial reporting were not sufficient to ensure that expenditures were recorded accurately and consistently in the general ledger and SEFA and that reported amounts on the SF-425 matched the underlying accounting records. Effect or Potential Effect Inaccurate reporting of expenditures increases the risk of noncompliance with Federal reporting requirements and impairs the reliability of financial information reported to Federal agencies. No questioned costs are reported as the requirement is procedural in nature and costs reported were ultimately deemed allowable. Recommendation The City should strengthen its controls over financial reporting for Federal awards to ensure all expenditures are recorded accurately in the general ledger and SEFA and reconciled to amounts reported on the SF-425. Management should implement procedures for timely and thorough review and reconciliation of accounting records prior to the submission of required Federal reports. Views of Responsible Official Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.
2024-006 Improve Internal Controls and Compliance Over Reporting Federal Program(s) Information Federal Agency: Department of Transportation Award Name: National Infrastructure Investments Assistance Listing Number: 20.933 Award Year: 2024 Compliance Requirement: Reporting Federal Agency: Department of Housing and Urban Development Award Name: Lead Hazard Reduction Demonstration Grant Program Assistance Listing Number: 14.905 Award Year: 2024 Compliance Requirement: Reporting Type of Finding Compliance Internal Control over Compliance – Significant Deficiency Criteria or Specific Requirement 2 CFR 200.303 requires non-Federal entities to establish and maintain effective internal control over Federal awards to provide reasonable assurance that the City is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the award. Further, per 2 CFR 200.328 and program instructions, recipients must submit accurate, complete, and timely financial reports (such as the SF-425 Federal Financial Report) that reconcile to supporting accounting records, including the general ledger and Schedule of Expenditures of Federal Awards (SEFA). Condition and Context During our testing of two quarterly SF-425 Federal Financial Reports for both the National Infrastructure Investments program and the Lead Hazard Reduction Demonstration Grant program, we noted that the amounts reported on the reports did not agree to the amounts per the general ledger and ultimately the SEFA. The discrepancies were the result of inaccurate recording of expenditures in the general ledger based on timing as discussed in finding 2024-001, which led to inconsistent reporting on the SF-425 reports. Cause The City’s internal controls over financial reporting were not sufficient to ensure that expenditures were recorded accurately and consistently in the general ledger and SEFA and that reported amounts on the SF-425 matched the underlying accounting records. Effect or Potential Effect Inaccurate reporting of expenditures increases the risk of noncompliance with Federal reporting requirements and impairs the reliability of financial information reported to Federal agencies. No questioned costs are reported as the requirement is procedural in nature and costs reported were ultimately deemed allowable. Recommendation The City should strengthen its controls over financial reporting for Federal awards to ensure all expenditures are recorded accurately in the general ledger and SEFA and reconciled to amounts reported on the SF-425. Management should implement procedures for timely and thorough review and reconciliation of accounting records prior to the submission of required Federal reports. Views of Responsible Official Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.
2024-007 Improve Internal Controls Over Reporting Federal Program(s) Information Federal Agency: Department of Justice Award Name: Public Safety Partnership and Community Policing Grants Assistance Listing Number: 16.710 Award Year: 2024 Compliance Requirement: Reporting Type of Finding Internal Control over Compliance – Significant Deficiency Criteria or Specific Requirement 2 CFR 200.303 requires non-Federal entities to establish and maintain effective internal controls over Federal awards to provide reasonable assurance of compliance with Federal statutes, regulations, and the terms and conditions of the award. Effective internal control includes appropriate segregation of duties to prevent and detect errors and irregularities in financial reporting, including the preparation and review of Federal Financial Reports (such as the SF-425). Condition and Context During our testing of two quarterly SF-425 Federal Financial Reports submitted under the Public Safety Partnership and Community Policing Grants program, we noted that although the amounts reported agreed to the general ledger, there was no segregation of duties between the individual who prepared the reports and the individual responsible for review and approval prior to submission. The same individual performed both preparation and submission duties without a documented independent review. Cause The City did not establish adequate internal control procedures to ensure that reports under the program are subject to independent review and approval prior to submission. Effect or Potential Effect The lack of segregation of duties increases the risk that errors or misstatements in the reports could go undetected. No questioned costs are reported as the requirement is procedural in nature. Recommendation The City should implement procedures to ensure appropriate segregation of duties in the preparation and review of all Federal reports. The process should include a documented, independent review and approval of reports prior to their submission to ensure accuracy and compliance with grant requirements. Views of Responsible Official Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.
Finding - Contrary to Federal regulations, District records did not always accurately reflect employee work performed for, and support the distribution of employee salaries and benefits charged to, the SEC. Criteria - Title 2, Section 200.430(i), CFR, requires that charges for Federal awards for salaries be based on records that accurately reflect the work performed and support the distribution of employee salaries among specific activities or cost objectives if the employee works on more than one Federal award or a Federal award and non-Federal award. In addition, Title 2, Section 200.303(a), CFR, requires the District to maintain effective internal controls over the SEC. To ensure that charges are allowable, an appropriate system of internal controls requires that review and approval of program or grant expenditures be performed by personnel (e.g., the Exceptional Student Education Director) who possess adequate knowledge and experience of program requirements. Condition - For the 2023-24 fiscal year the District reported SEC expenditures totaling $1.8 million, including $1.5 million for salaries and benefits for 83 employees. To determine the propriety and allowability of SEC expenditures, we requested for examination District records supporting salaries and benefits totaling $628,953 charged to the SEC for 16 employees. Although we requested, District records were not provided to identify the work that the 16 employees performed to support the salaries and benefits charged to the SEC. Cause - The District did not always maintain records to identify the work employees performed to support the salaries and benefits charged to the SEC, and an employee with knowledge and experience of the SEC requirements was not required to, and did not, document review and approval of the salary and benefit charges. Effect - Absent effective procedures to document support for the distribution of employee salaries and benefits to the SEC, including the documented review and approval of those charges by the Exceptional Student Education Director or other personnel with knowledge and experience of SEC requirements, there is an increased risk that expenditures may be inappropriately charged to the SEC. We expanded our procedures to interview the 16 employees and determined that their salaries and benefits were appropriately charged to the SEC. However, our procedures cannot substitute the District’s responsibility to ensure that salaries and benefits charged to the SEC are properly supported. Recommendation - The District should establish procedures to ensure that District records accurately reflect the work performed to support the distribution of employee salaries and benefits charged to the SEC. Such procedures should require that the Exceptional Student Education Director or other personnel with appropriate knowledge and experience document review and approval of those charges. District Response - The District is in the process of reviewing and updating controls to ensure required time and effort logs are kept in the District's fiscal management system and routine submission of forms is enforced by the grant managers.
Finding - Contrary to Federal regulations, District records did not always accurately reflect employee work performed for, and support the distribution of employee salaries and benefits charged to, the SEC. Criteria - Title 2, Section 200.430(i), CFR, requires that charges for Federal awards for salaries be based on records that accurately reflect the work performed and support the distribution of employee salaries among specific activities or cost objectives if the employee works on more than one Federal award or a Federal award and non-Federal award. In addition, Title 2, Section 200.303(a), CFR, requires the District to maintain effective internal controls over the SEC. To ensure that charges are allowable, an appropriate system of internal controls requires that review and approval of program or grant expenditures be performed by personnel (e.g., the Exceptional Student Education Director) who possess adequate knowledge and experience of program requirements. Condition - For the 2023-24 fiscal year the District reported SEC expenditures totaling $1.8 million, including $1.5 million for salaries and benefits for 83 employees. To determine the propriety and allowability of SEC expenditures, we requested for examination District records supporting salaries and benefits totaling $628,953 charged to the SEC for 16 employees. Although we requested, District records were not provided to identify the work that the 16 employees performed to support the salaries and benefits charged to the SEC. Cause - The District did not always maintain records to identify the work employees performed to support the salaries and benefits charged to the SEC, and an employee with knowledge and experience of the SEC requirements was not required to, and did not, document review and approval of the salary and benefit charges. Effect - Absent effective procedures to document support for the distribution of employee salaries and benefits to the SEC, including the documented review and approval of those charges by the Exceptional Student Education Director or other personnel with knowledge and experience of SEC requirements, there is an increased risk that expenditures may be inappropriately charged to the SEC. We expanded our procedures to interview the 16 employees and determined that their salaries and benefits were appropriately charged to the SEC. However, our procedures cannot substitute the District’s responsibility to ensure that salaries and benefits charged to the SEC are properly supported. Recommendation - The District should establish procedures to ensure that District records accurately reflect the work performed to support the distribution of employee salaries and benefits charged to the SEC. Such procedures should require that the Exceptional Student Education Director or other personnel with appropriate knowledge and experience document review and approval of those charges. District Response - The District is in the process of reviewing and updating controls to ensure required time and effort logs are kept in the District's fiscal management system and routine submission of forms is enforced by the grant managers.
Finding - Contrary to Federal regulations, District records did not always accurately reflect employee work performed for, and support the distribution of employee salaries and benefits charged to, the SEC. Criteria - Title 2, Section 200.430(i), CFR, requires that charges for Federal awards for salaries be based on records that accurately reflect the work performed and support the distribution of employee salaries among specific activities or cost objectives if the employee works on more than one Federal award or a Federal award and non-Federal award. In addition, Title 2, Section 200.303(a), CFR, requires the District to maintain effective internal controls over the SEC. To ensure that charges are allowable, an appropriate system of internal controls requires that review and approval of program or grant expenditures be performed by personnel (e.g., the Exceptional Student Education Director) who possess adequate knowledge and experience of program requirements. Condition - For the 2023-24 fiscal year the District reported SEC expenditures totaling $1.8 million, including $1.5 million for salaries and benefits for 83 employees. To determine the propriety and allowability of SEC expenditures, we requested for examination District records supporting salaries and benefits totaling $628,953 charged to the SEC for 16 employees. Although we requested, District records were not provided to identify the work that the 16 employees performed to support the salaries and benefits charged to the SEC. Cause - The District did not always maintain records to identify the work employees performed to support the salaries and benefits charged to the SEC, and an employee with knowledge and experience of the SEC requirements was not required to, and did not, document review and approval of the salary and benefit charges. Effect - Absent effective procedures to document support for the distribution of employee salaries and benefits to the SEC, including the documented review and approval of those charges by the Exceptional Student Education Director or other personnel with knowledge and experience of SEC requirements, there is an increased risk that expenditures may be inappropriately charged to the SEC. We expanded our procedures to interview the 16 employees and determined that their salaries and benefits were appropriately charged to the SEC. However, our procedures cannot substitute the District’s responsibility to ensure that salaries and benefits charged to the SEC are properly supported. Recommendation - The District should establish procedures to ensure that District records accurately reflect the work performed to support the distribution of employee salaries and benefits charged to the SEC. Such procedures should require that the Exceptional Student Education Director or other personnel with appropriate knowledge and experience document review and approval of those charges. District Response - The District is in the process of reviewing and updating controls to ensure required time and effort logs are kept in the District's fiscal management system and routine submission of forms is enforced by the grant managers.
Finding Number: 2024‐001 Repeat Finding: Yes – 2023‐001 Program Names/Assistance Listing Titles: Assistance Listing Numbers: Federal Award Numbers: Questioned Costs: Title I Grants to Local Educational Agencies 84.010 S010A230003 $0 Education Stabilization Fund 84.425C S425D200038 $0 Education Stabilization Fund 84.425D S425D200038 $0 Education Stabilization Fund 84.425D S425D210038 $0 Education Stabilization Fund 84.425U S425U210038 $2,477 Education Stabilization Fund 84.425W S425W210003 $0 Federal Agency: U.S. Department of Education Pass‐Through Agency: Arizona Department of Education Type of Finding: Noncompliance, Material Weakness Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Criteria In accordance with 2 CFR Part 200.303, the District is responsible for establishing and maintaining effective internal control over the Federal award that provides reasonable assurance that the non‐ Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition The District did not maintain effective internal control over activities allowed or unallowed and allowable costs/cost principles for several grants. Cause The District’s grant budgets were not approved until well after the beginning of each grant’s period of performance. Additionally, the District did not verify actual spending was within approved budgets, and, therefore, did not submit for budget revisions or manage available resources in a timely or effective manner. Effect The District was not in compliance with 2 CFR Part 200.303.Context Journal entries reviewed for the Title I Grants to Local Educational Agencies program and the American Rescue Plan ‐ Elementary and Secondary School Emergency Relief (ARP ESSER) grant within the Education Stabilization Fund were to correct consistent, pervasive, and material grant overexpenditures. In particular, for ARP ESSER, the District posted 533 adjusting journal entries totaling in excess of $25.0 million during fiscal year 2023‐24 moving expenditures to and from the grant, and at times, not identifying specific underlying transactions during such movement. The volume and dollar value of the entries indicate a severe internal control deficiency this late in the lifecycle of the ARP ESSER grant. There was no consistent plan, budget, or management of the ARP ESSER monies. The sample was not intended to be, and was not, a statistically valid sample. Recommendation The District should provide training for those with grants management responsibilities. In particular, the District should provide training on the relationship between the District’s accounting records and the State’s grants management enterprise to ensure grant budgets are not overexpended going forward. The District should also have more consistent and timely oversight of grants by higher level management. Views of Responsible Officials See Corrective Action Plan.
Finding Number: 2024‐001 Repeat Finding: Yes – 2023‐001 Program Names/Assistance Listing Titles: Assistance Listing Numbers: Federal Award Numbers: Questioned Costs: Title I Grants to Local Educational Agencies 84.010 S010A230003 $0 Education Stabilization Fund 84.425C S425D200038 $0 Education Stabilization Fund 84.425D S425D200038 $0 Education Stabilization Fund 84.425D S425D210038 $0 Education Stabilization Fund 84.425U S425U210038 $2,477 Education Stabilization Fund 84.425W S425W210003 $0 Federal Agency: U.S. Department of Education Pass‐Through Agency: Arizona Department of Education Type of Finding: Noncompliance, Material Weakness Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Criteria In accordance with 2 CFR Part 200.303, the District is responsible for establishing and maintaining effective internal control over the Federal award that provides reasonable assurance that the non‐ Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition The District did not maintain effective internal control over activities allowed or unallowed and allowable costs/cost principles for several grants. Cause The District’s grant budgets were not approved until well after the beginning of each grant’s period of performance. Additionally, the District did not verify actual spending was within approved budgets, and, therefore, did not submit for budget revisions or manage available resources in a timely or effective manner. Effect The District was not in compliance with 2 CFR Part 200.303.Context Journal entries reviewed for the Title I Grants to Local Educational Agencies program and the American Rescue Plan ‐ Elementary and Secondary School Emergency Relief (ARP ESSER) grant within the Education Stabilization Fund were to correct consistent, pervasive, and material grant overexpenditures. In particular, for ARP ESSER, the District posted 533 adjusting journal entries totaling in excess of $25.0 million during fiscal year 2023‐24 moving expenditures to and from the grant, and at times, not identifying specific underlying transactions during such movement. The volume and dollar value of the entries indicate a severe internal control deficiency this late in the lifecycle of the ARP ESSER grant. There was no consistent plan, budget, or management of the ARP ESSER monies. The sample was not intended to be, and was not, a statistically valid sample. Recommendation The District should provide training for those with grants management responsibilities. In particular, the District should provide training on the relationship between the District’s accounting records and the State’s grants management enterprise to ensure grant budgets are not overexpended going forward. The District should also have more consistent and timely oversight of grants by higher level management. Views of Responsible Officials See Corrective Action Plan.
Finding Number: 2024‐001 Repeat Finding: Yes – 2023‐001 Program Names/Assistance Listing Titles: Assistance Listing Numbers: Federal Award Numbers: Questioned Costs: Title I Grants to Local Educational Agencies 84.010 S010A230003 $0 Education Stabilization Fund 84.425C S425D200038 $0 Education Stabilization Fund 84.425D S425D200038 $0 Education Stabilization Fund 84.425D S425D210038 $0 Education Stabilization Fund 84.425U S425U210038 $2,477 Education Stabilization Fund 84.425W S425W210003 $0 Federal Agency: U.S. Department of Education Pass‐Through Agency: Arizona Department of Education Type of Finding: Noncompliance, Material Weakness Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Criteria In accordance with 2 CFR Part 200.303, the District is responsible for establishing and maintaining effective internal control over the Federal award that provides reasonable assurance that the non‐ Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition The District did not maintain effective internal control over activities allowed or unallowed and allowable costs/cost principles for several grants. Cause The District’s grant budgets were not approved until well after the beginning of each grant’s period of performance. Additionally, the District did not verify actual spending was within approved budgets, and, therefore, did not submit for budget revisions or manage available resources in a timely or effective manner. Effect The District was not in compliance with 2 CFR Part 200.303.Context Journal entries reviewed for the Title I Grants to Local Educational Agencies program and the American Rescue Plan ‐ Elementary and Secondary School Emergency Relief (ARP ESSER) grant within the Education Stabilization Fund were to correct consistent, pervasive, and material grant overexpenditures. In particular, for ARP ESSER, the District posted 533 adjusting journal entries totaling in excess of $25.0 million during fiscal year 2023‐24 moving expenditures to and from the grant, and at times, not identifying specific underlying transactions during such movement. The volume and dollar value of the entries indicate a severe internal control deficiency this late in the lifecycle of the ARP ESSER grant. There was no consistent plan, budget, or management of the ARP ESSER monies. The sample was not intended to be, and was not, a statistically valid sample. Recommendation The District should provide training for those with grants management responsibilities. In particular, the District should provide training on the relationship between the District’s accounting records and the State’s grants management enterprise to ensure grant budgets are not overexpended going forward. The District should also have more consistent and timely oversight of grants by higher level management. Views of Responsible Officials See Corrective Action Plan.
Finding Number: 2024‐001 Repeat Finding: Yes – 2023‐001 Program Names/Assistance Listing Titles: Assistance Listing Numbers: Federal Award Numbers: Questioned Costs: Title I Grants to Local Educational Agencies 84.010 S010A230003 $0 Education Stabilization Fund 84.425C S425D200038 $0 Education Stabilization Fund 84.425D S425D200038 $0 Education Stabilization Fund 84.425D S425D210038 $0 Education Stabilization Fund 84.425U S425U210038 $2,477 Education Stabilization Fund 84.425W S425W210003 $0 Federal Agency: U.S. Department of Education Pass‐Through Agency: Arizona Department of Education Type of Finding: Noncompliance, Material Weakness Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Criteria In accordance with 2 CFR Part 200.303, the District is responsible for establishing and maintaining effective internal control over the Federal award that provides reasonable assurance that the non‐ Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition The District did not maintain effective internal control over activities allowed or unallowed and allowable costs/cost principles for several grants. Cause The District’s grant budgets were not approved until well after the beginning of each grant’s period of performance. Additionally, the District did not verify actual spending was within approved budgets, and, therefore, did not submit for budget revisions or manage available resources in a timely or effective manner. Effect The District was not in compliance with 2 CFR Part 200.303.Context Journal entries reviewed for the Title I Grants to Local Educational Agencies program and the American Rescue Plan ‐ Elementary and Secondary School Emergency Relief (ARP ESSER) grant within the Education Stabilization Fund were to correct consistent, pervasive, and material grant overexpenditures. In particular, for ARP ESSER, the District posted 533 adjusting journal entries totaling in excess of $25.0 million during fiscal year 2023‐24 moving expenditures to and from the grant, and at times, not identifying specific underlying transactions during such movement. The volume and dollar value of the entries indicate a severe internal control deficiency this late in the lifecycle of the ARP ESSER grant. There was no consistent plan, budget, or management of the ARP ESSER monies. The sample was not intended to be, and was not, a statistically valid sample. Recommendation The District should provide training for those with grants management responsibilities. In particular, the District should provide training on the relationship between the District’s accounting records and the State’s grants management enterprise to ensure grant budgets are not overexpended going forward. The District should also have more consistent and timely oversight of grants by higher level management. Views of Responsible Officials See Corrective Action Plan.
Finding Number: 2024‐001 Repeat Finding: Yes – 2023‐001 Program Names/Assistance Listing Titles: Assistance Listing Numbers: Federal Award Numbers: Questioned Costs: Title I Grants to Local Educational Agencies 84.010 S010A230003 $0 Education Stabilization Fund 84.425C S425D200038 $0 Education Stabilization Fund 84.425D S425D200038 $0 Education Stabilization Fund 84.425D S425D210038 $0 Education Stabilization Fund 84.425U S425U210038 $2,477 Education Stabilization Fund 84.425W S425W210003 $0 Federal Agency: U.S. Department of Education Pass‐Through Agency: Arizona Department of Education Type of Finding: Noncompliance, Material Weakness Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Criteria In accordance with 2 CFR Part 200.303, the District is responsible for establishing and maintaining effective internal control over the Federal award that provides reasonable assurance that the non‐ Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition The District did not maintain effective internal control over activities allowed or unallowed and allowable costs/cost principles for several grants. Cause The District’s grant budgets were not approved until well after the beginning of each grant’s period of performance. Additionally, the District did not verify actual spending was within approved budgets, and, therefore, did not submit for budget revisions or manage available resources in a timely or effective manner. Effect The District was not in compliance with 2 CFR Part 200.303.Context Journal entries reviewed for the Title I Grants to Local Educational Agencies program and the American Rescue Plan ‐ Elementary and Secondary School Emergency Relief (ARP ESSER) grant within the Education Stabilization Fund were to correct consistent, pervasive, and material grant overexpenditures. In particular, for ARP ESSER, the District posted 533 adjusting journal entries totaling in excess of $25.0 million during fiscal year 2023‐24 moving expenditures to and from the grant, and at times, not identifying specific underlying transactions during such movement. The volume and dollar value of the entries indicate a severe internal control deficiency this late in the lifecycle of the ARP ESSER grant. There was no consistent plan, budget, or management of the ARP ESSER monies. The sample was not intended to be, and was not, a statistically valid sample. Recommendation The District should provide training for those with grants management responsibilities. In particular, the District should provide training on the relationship between the District’s accounting records and the State’s grants management enterprise to ensure grant budgets are not overexpended going forward. The District should also have more consistent and timely oversight of grants by higher level management. Views of Responsible Officials See Corrective Action Plan.
Finding Number: 2024‐001 Repeat Finding: Yes – 2023‐001 Program Names/Assistance Listing Titles: Assistance Listing Numbers: Federal Award Numbers: Questioned Costs: Title I Grants to Local Educational Agencies 84.010 S010A230003 $0 Education Stabilization Fund 84.425C S425D200038 $0 Education Stabilization Fund 84.425D S425D200038 $0 Education Stabilization Fund 84.425D S425D210038 $0 Education Stabilization Fund 84.425U S425U210038 $2,477 Education Stabilization Fund 84.425W S425W210003 $0 Federal Agency: U.S. Department of Education Pass‐Through Agency: Arizona Department of Education Type of Finding: Noncompliance, Material Weakness Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Criteria In accordance with 2 CFR Part 200.303, the District is responsible for establishing and maintaining effective internal control over the Federal award that provides reasonable assurance that the non‐ Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition The District did not maintain effective internal control over activities allowed or unallowed and allowable costs/cost principles for several grants. Cause The District’s grant budgets were not approved until well after the beginning of each grant’s period of performance. Additionally, the District did not verify actual spending was within approved budgets, and, therefore, did not submit for budget revisions or manage available resources in a timely or effective manner. Effect The District was not in compliance with 2 CFR Part 200.303.Context Journal entries reviewed for the Title I Grants to Local Educational Agencies program and the American Rescue Plan ‐ Elementary and Secondary School Emergency Relief (ARP ESSER) grant within the Education Stabilization Fund were to correct consistent, pervasive, and material grant overexpenditures. In particular, for ARP ESSER, the District posted 533 adjusting journal entries totaling in excess of $25.0 million during fiscal year 2023‐24 moving expenditures to and from the grant, and at times, not identifying specific underlying transactions during such movement. The volume and dollar value of the entries indicate a severe internal control deficiency this late in the lifecycle of the ARP ESSER grant. There was no consistent plan, budget, or management of the ARP ESSER monies. The sample was not intended to be, and was not, a statistically valid sample. Recommendation The District should provide training for those with grants management responsibilities. In particular, the District should provide training on the relationship between the District’s accounting records and the State’s grants management enterprise to ensure grant budgets are not overexpended going forward. The District should also have more consistent and timely oversight of grants by higher level management. Views of Responsible Officials See Corrective Action Plan.
FA 2024-001 Improve Budgetary Controls over Expenditures Compliance Requirement: Activities Allowed or Unallowed Allowable Costs/Cost Principes Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Number and Title: COVID-19 – 84.425U – American Rescue Plan Elementary and Secondary School Emergency Relief Fund Federal Award Number: S425U210012 (Year: 2021) Questioned Costs: $21,615.33 Description: A review of expenditures charged to the Elementary and Secondary School Emergency Relief Fund program revealed instances in which expenditures had not been properly approved by the pass-through entity. Background Information: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $11,379,058.14 were expended and reported on the Sumter County School District’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2024. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented…” Furthermore, to assist school districts in improving their financial management systems and associated compliance over federal programs, GaDOE published the Financial Management for Georgia Local Units of Administration (FMGLUA) manual. The FMGLUA manual requires that LEAs submit a budget as part of each federal program’s Consolidated Application process. The program budget reflects details regarding the manner in which each school district intends to expend the program funds. The Consolidated Application, including the budget, for each program must be reviewed and approved by GaDOE personnel before the LEA is authorized to expend program funds. Amendments to the budget are to be submitted to and approved by GaDOE when a school district intends to spend funds in a manner not initially reported. Lastly, LEA personnel must also provide program-specific assurances related to the ESSER program within the Consolidated Application system. These assurances are reflected in the Uniform Guidance, Section 200.415 – Required Certifications, and include provisions that require LEAs “to assure that expenditures are proper and in accordance with the terms and conditions of the Federal award and approved project budgets...” Condition: A sample of 40 nonpersonal services expenditures was randomly selected for testing using a non-statistical sampling approach. These expenditures were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. It was noted that prior approval was not obtained from GaDOE for two expenditures totaling $21,615.33 as these expenditures were not reflected in the approved budget or subsequent amendment within the Consolidated Application system, as required. Questioned Costs: Upon testing a sample of $3,582,721.30 in nonpersonal service expenditures, known questioned costs of $21,615.33 were identified for expenditures that were not approved through the Consolidated Application process. Using the population being sampled, which totaled $6,624,968.03, we project the likely questioned costs to be approximately $39,969.86. Cause: The School District did not follow its policies and procedures that govern the nonpersonal services expenditure process for federal programs. The Elementary and Secondary School Emergency Relief Coordinator did not ensure that all expenditures were included on the related consolidated application for the federal program. Effect: The School District is not in compliance with the Uniform Guidance or GaDOE guidance related to the ESSER program. Failure to accurately develop and amend budget information through the Consolidated Application process and verify compliance with applicable policies and regulations prior to the expenditure of federal program funds may expose the School District to unnecessary financial strains and shortages as GaDOE may require the School District to return funds associated with unapproved and unallowable expenditures. Recommendation: The School District should review current internal control procedures related to the ESSER program. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that all potential expenditures are approved through the Consolidated Application process and deemed allowable before spending federal funds. In addition, management should develop and implement a monitoring process to ensure that controls procedures are being followed. Views of Responsible Officials: The School District concurs with this finding per discussion with Jannie Carter, Finance Director, and Walter Knighton, Superintendent, on July 9, 2025.
2024-001: Department of Health and Human Services - Temporary Assistance for Needy Families (TANF), Federal Assistance Listing #93.558; Pass Through Virginia Department of Social Services, Pass Through Entity Identifying Number BEN-21-054. Criteria: The Organization should have processes and procedures in place to keep and maintain client eligibility records, per 2 CFR 200.303 and 2 CFR 200.334. Condition: During our audit, we noted that the Organization was unable to locate records substantiating the eligibility of clients served. Context: During testing, the Organization was unable to find supporting eligibility records for 31 out of the 60 samples that received services as part of a federal program. The sample was not intended to be, and was not, a statistically valid sample. Cause/Effect: Internal control processes over proper maintenance of clients’ records were not operating effectively, causing documentation to not be located. Questioned Costs: Unknown. Identification of Repeat Finding: Repeat Finding 2023-003. Recommendation: We recommend procedures are implemented to ensure proper maintenance of client records. Views of Responsible Officials: Management agrees with the recommendation and will implement stronger processes to ensure that records confirming the eligibility of program participants are obtained and properly maintained. All program staff will receive updated training on eligibility requirements, supporting documents to track such requirements, and supports throughout the year to ensure eligibility requirements are met and documented. Documents will also be reviewed regularly to ensure completeness against eligibility requirements. This process will be led by the Vice President of Family Empowerment and Self Sufficiency with support from operational and compliance staff.
2024-002: Department of Health and Human Services - Temporary Assistance for Needy Families (TANF), Federal Assistance Listing # 93.558; Pass Through Virginia Department of Social Services, Pass Through Entity Identifying Number BEN-21-054. Criteria: The Organization should have effective policies and procedures in place to ensure there is proper documentation supporting funds were used in compliance with the federal award, per 2 CFR 200.303 and 2 CFR 200.334. Condition: During our audit, it was noted that there was not an effective process in place to keep and maintain the required records to support pay-for-performance outputs and outcomes. Context: The Organization was unable to provide documentation supporting the allowability of 6 of the 60 samples selected for testing. Cause/Effect: Internal control processes over maintenance of records supporting pay-for-performance outcomes and ouputs were not operating effectively from July 2023 through June 2024. Questioned Costs: $6,800 Identification of Repeat Finding: N/A Recommendation: We recommend that the Organization implements a review process to ensure that documentation is retained to support pay-for-performance outputs and outcomes submitted to the grantor. Views of Responsible Officials: Management agrees with the recommendation and will implement stronger review processes to ensure proper documentation is in place to support program activities and reports submitted to the grantor. All staff charged with maintaining client documentation will receive updated training on recordkeeping requirements, supporting documents specifying such requirements, and supports throughout the year to ensure documents are properly maintained and verified. Documents will be reviewed regularly for completeness and specifically cross-checked with quarterly report and invoice information directly by program leadership prior to submission. This process will be led by the Vice President of Family Empowerment and Self Sufficiency with support from operational and compliance staff.
Condition and Context Bebashi failed to maintain an accurate trial balance and general ledger to support certain account balances resulting in auditor journal entries at year-end which were material to the current year financial statements and audit delays due to support not reconciling and multiple versions of the trial balance being provided. Criteria Accounting principles generally accepted in the United States of America and Government Auditing Standards require that the design or operation of internal control over financial reporting should allow management or employees in the normal course of performing their assigned functions to prevent, or detect and correct, misstatements on a timely basis. 2 CFR 200.303 states, “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 statues, 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.” 2 CFR 200.302 states, “The financial management system of each non-Federal entity must provide for the following… accurate, current, and complete disclosure of each Federal award or program in accordance with the reporting requirements set forth in sections 200.328 and 200.329.” Cause As a result of financial constraints, and corresponding staffing challenges, the accounting and finance team at Bebashi was unable to prepare its accounting records on a timely and thorough basis. At the same time, the accounting and finance team was faced with other administrative and operational matters requiring immediate attention to help ensure Bebashi remained operational. The financial and staffing constraints resulted in lack of timely preparation and detailed review of accounting records and analysis which resulted in material audit adjustments. Effect or Potential Effect The accounting records of certain account balances and transactions provided to the auditors were inaccurate for a period of time during the fiscal year and for the year ended June 30, 2024. In certain instances, the related reconciliations and analysis were not performed on a timely basis. This caused adjustments proposed by the auditors that were material to the financial statements. Recommendation We recommend that management implements a more detailed and adequate review of the accounting records including strong processes and internal controls surrounding financial reporting. This process should identify the required accounting records and reconciliations, ensure the existence of preparer and reviewer requirements for the accounting records and reconciliations, and implement an appropriate time frame for the completion of accounting records and reconciliations. We recommend that management implements processes and procedures to identify the required financial reporting deadlines and controls to ensure compliance with the deadlines. Views of Responsible Officials Management agrees with the finding above. Management will review the existing accounting policies and procedures and implement additional steps and controls to incorporate the recommendations above. Subsequent to year-end, management of Bebashi hired a new Director of Finance. Management will review the operational resources available to further expand the finance team and do so accordingly.
Federal Agency: United States Department of Agriculture (USDA) Federal Program: 10.553 School Breakfast Program 2022 - 223MO304N1099 2023 - 233MO304N1099 2024 - 243MO304N1099 10.555 COVID-19 - National School Lunch Program 2020 - 203MO531N8503 10.555 National School Lunch Program 2022 - 223MO304N1099 2023 - 233MO304N1099 2024 - 243MO304N1099 10.556 Special Milk Program for Children 2022 - 223MO304N1099 2023 - 233MO304N1099 2024 - 243MO304N1099 10.582 Fresh Fruit and Vegetable Program 2022 - 223MO375L1903 2023 - 233MO375L1903 2024 - 243MO375L1903 State Agency: Department of Elementary and Secondary Education (DESE) Type of Finding: Internal Control (Significant Deficiency) and Nonmaterial Noncompliance Compliance Requirement: Reporting As similarly noted in our 3 previous audits, during state fiscal year 2024, the DESE did not comply with Federal Funding Accountability and Transparency Act (FFATA) reporting requirements for any of the 1,398 first-tier subawards, totaling approximately $330 million, for the Child Nutrition Cluster programs administered by the DESE. First-tier subaward payments accounted for 84 percent of the DESE Child Nutrition Cluster expenditures. The DESE needs to strengthen internal controls related to FFATA reporting for the Child Nutrition Cluster to help ensure compliance with the reporting requirements. The FFATA requires comprehensive reporting for certain federal awards to promote transparency and accountability over the use of the federal funds. Regulation 2 CFR Part 170, Appendix A, requires the DESE to report first-tier subawards of $30,000 or more to the FFATA Subaward Reporting System (FSRS) no later than the end of the month following the month in which the subaward was made. Information entered into the FSRS is publicly available at USASpending.gov. FFATA reporting The DESE did not comply with FFATA reporting requirements for the Child Nutrition Cluster. DESE personnel did not report any of the 1,398 first-tier subawards, totaling approximately $330 million, requiring FFATA reporting during state fiscal year 2024, in the FSRS. After we brought this to their attention, DESE personnel began the process of preparing and submitting the FFATA reports. DESE personnel indicated the FFATA reporting errors occurred due to an oversight. In addition to noncompliance with federal requirements, not reporting subawards to the FSRS accurately and timely increases the risk that those using the reports could rely on incomplete information. Internal controls During state fiscal year 2024, DESE personnel did not ensure the Child Nutrition Cluster FFATA information was prepared and uploaded to the FSRS. The DESE's FFATA reporting policies and procedures require the Chief Operating Officer (COO) to verify information is accurately uploaded to the FSRS. The COO delegated these duties for some programs to various program liaisons within the DESE. For state fiscal year 2024, the Child Nutrition Cluster FFATA reporting responsibilities were delegated to the Nutrition Finance Manager and the Food and Nutrition Services Coordinator. The Nutrition Finance Manager was responsible for preparing the FFATA reporting information and the Food and Nutrition Services Coordinator was responsible for reviewing and uploading the information to the FSRS. However, as previously noted, the required FFATA reporting was not performed for the Child Nutrition Cluster programs administered by the DESE during the state fiscal year 2024. None of the individuals responsible ensured this information was prepared and uploaded to the FSRS. Adherence to policies and procedures is necessary to ensure FFATA reporting is completed accurately and timely. Regulation 2 CFR Section 200.303(a) requires the non-federal entity to "[e]stablish 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." Recommendation The DESE complete FFATA reporting in accordance with the applicable requirements and strengthen internal controls to ensure information is accurately uploaded to the FSRS for the Child Nutrition Cluster. Auditee's Response We agree with the auditor's finding. Our Corrective Action Plan includes our planned actions to address the finding.
Federal Agency: United States Department of Agriculture (USDA) Federal Program: 10.558 Child and Adult Care Food Program (CACFP) 2022, 2023, 2024 - CACFP 2022, 2023, 2024 - CACFP-CIL 2023 and 2024 - CACFP-SPON State Agency: Department of Health and Senior Services (DHSS) - Bureau of Community Food and Nutrition Assistance (BCFNA) Type of Finding: Internal Control (Material Weakness) and Material Noncompliance Questioned Costs: $0 Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Subrecipient Monitoring As noted in our previous audit, during the year ended June 30, 2024, the BCFNA did not have sufficient controls and procedures to ensure CACFP reimbursements to subrecipients were allowable and supported with sufficient documentation, as required by federal regulations. As a result, significant unallowable and unsupported reimbursements were made without being prevented or detected timely. The BCFNA administers the CACFP through contracts with child and adult care centers and sponsors of centers (subrecipients) that provide meals to eligible children and adults under their care. The facilities/sponsors determine eligibility of each participant for free or reduced price meals, and are reimbursed at fixed rates for the number and type of meals served. During the year ended June 30, 2024, the BCFNA paid over 780 facilities/sponsors approximately $67.6 million for meal services. Disbursements to facilities/sponsors represented approximately 98 percent of the program's expenditures. To receive reimbursement for meals provided to eligible participants, CACFP facilities/sponsors submit monthly claims through the CNPWeb (CNP) claim system. The CNP system has edit checks to prevent and detect certain claim errors, such as meal claims that exceed facility/sponsor total enrollment and/or license capacity, or claims for types of meals the facility/sponsor was not approved to serve. Claims that pass the edit checks are reviewed by a BCFNA Public Health Program Associate, while claims that do not pass the edit checks are returned to the facility/sponsor for revision. Facilities/sponsors are not required to provide supporting documentation with their claim but are required to maintain and retain detailed records, including meal count, attendance, enrollment and eligibility determination records, receipt slips, menus, and other documentation to support meals claimed. Facility/sponsor records are maintained on a monthly basis, thus reviews or verifications of those records generally cover the entire month as opposed to a shorter period of time. BCFNA nutritionists perform periodic monitoring reviews of the facilities/sponsors and disallow costs associated with claim errors identified. These reviews have identified significant issues and claim errors, including some potentially fraudulent activity, and led to over 15 contract terminations in recent years. Since meal reimbursements are made without any supporting documentation, the BCFNA relies on system edit checks and subrecipient monitoring procedures to prevent and detect meal reimbursement claim errors. However, these edits and procedures alone were not sufficient to prevent and detect unallowable and unsupported meal reimbursement claims on a timely basis. The BCFNA has not implemented procedures to review supporting documentation, on a test basis, except for testing performed during routine monitoring reviews generally conducted once every 1 to 3 years for each facility/sponsor, and technical assistance reviews performed at the request of the facility/sponsor. Additionally, as noted in finding number 2024-009, weaknesses in the BCFNA monitoring procedures and noncompliance with subrecipient monitoring requirements were identified. Our review of documentation supporting a randomly-selected sample of 60 BCFNA monitoring reviews conducted for 60 CACFP facilities/sponsors during the year ended June 30, 2024, noted BCFNA disallowances (overclaims/underclaims) in 43 of 59 (73 percent) reviews for which meal reimbursement claims were tested. Overclaims totaled $48,508 (40 reviews) and underclaims totaled $10,144 (3 reviews), with a net overclaim of $38,364, or at least 7 percent of claims tested by the BCFNA. Disallowances resulted from various errors including incorrect or unsupported eligibility determinations, meal counts, attendance records, or noncompliance associated with menus and food purchases. The BCFNA adjusted subsequent claims to recoup or reimburse for the identified overclaims/underclaims. Erroneous and unsupported reimbursements represent at least 7 percent of meal reimbursements tested. If similar errors were made on the remaining population of CACFP meal reimbursements totaling approximately $67 million, unallowable costs could be significant. Without sufficient controls to ensure the accuracy of facility/sponsor meal reimbursement claims, the BCFNA cannot demonstrate adequate internal controls to ensure CACFP costs are allowable and supported, and the risk of paying unsupported and unallowable claims will continue. Regulation 7 CFR Section 226.7(k) requires the BCFNA to establish procedures for institutions to properly submit claims for reimbursement. Such procedures must include edit checks, including but not limited to, ensuring payments are made only for approved meal types and that the number of meals for which reimbursement is provided does not exceed the product of the total enrollment times operating days times approved meal types. Regulation 2 CFR Section 200.403 (within 2 CFR Part 200, known as the Uniform Guidance), provides that costs charged to federal programs should be necessary and reasonable for the performance of the federal award and adequately documented. Furthermore, 2 CFR Section 200.303(a) requires the non-federal entity to "[e]stablish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-federal entity is managing that 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." The DHSS Summary Schedule of Prior Audit Findings for prior audit finding number 2023-012, submitted in July 2025, states the DHSS disagreed with the finding and did not take corrective action. However, an April 2025 email from a USDA - Food and Nutrition Service (USDA-FNS) official to the DHSS regarding the prior audit finding, provided to auditors by DHSS officials, indicates some corrective action was taken. The email states to prevent overclaims, the USDA-FNS expects the BCFNA to have internal controls that focus on the areas of subrecipient screening during the application process and training; and the USDA-FNS validated the DHSS's actions to improve internal control processes in these specific areas. The April 2025, USDA-FNS email also states the prior audit finding was not sustained by the FNS because (1) the FNS does not require or expect the BCFNA to validate claims at the time of claim submission, and (2) the BCFNA was in compliance with edit check requirements. While the prior audit finding neither recommended the BCFNA validate claims at the time of submission nor noted noncompliance with edit check requirements, it did recommend the BCFNA strengthen internal controls over meal reimbursements, such as those recommended and validated by the USDA-FNS. Finding classification This finding is classified as a material weakness in internal control and material noncompliance with the federal activities allowed, allowable costs, and subrecipient monitoring requirements. The noncompliance identified in the finding is material based on the results of our audit sample, which identified at least 7 percent of subrecipient meal reimbursements tested by the BCFNA were not in compliance with federal requirements. The 7 percent error rate exceeds our audit materiality threshold of 4 percent. While the errors identified in the finding were corrected, similar material noncompliance in the remainder of the payments not tested is likely. Our decisions regarding the classification of the internal control deficiencies were made in accordance with AU-C Section 935, Compliance Audits, and the AICPA Audit Guide: Government Auditing Standards and Single Audits (Audit Guide). The Audit Guide provides the following definitions regarding internal control deficiencies: "A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis." "A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis." "A reasonable possibility exists when the likelihood of the event is either reasonably possible or probable …" Reasonably possible is "[t]he chance of the future event or events occurring is more than remote but less than likely." Probable means "[t]he future event or events are likely to occur." The failure to design and implement adequate controls and procedures to ensure CACFP reimbursements to subrecipients are allowable and supported led to material noncompliance with the applicable requirements. The BCFNA's controls failed to prevent the material noncompliance identified. While the BCFNA's controls detected and corrected the payment errors identified, the detection and correction was not timely, occurring up to 3 years after the payments were made. Also, the detection and correction was limited to only 1 test month per subrecipient without any attempt to identify and correct noncompliance that occurred beyond the test month because, as noted at finding number 2024-009, the BCFNA's controls do not provide for expanded testing when significant errors are identified. Therefore, similar, material noncompliance in the remainder of the payments not tested is likely. Further, because the internal control deficiencies have not been corrected, similar, material noncompliance in future payments is likely. For these reasons, the deficiencies are considered a material weakness. Recommendation The DHSS through the BCNFA continue to strengthen internal controls over meal reimbursements to CACFP facilities/sponsors to ensure costs are allowable and supported. Auditee's Response We disagree with the auditor's finding. Our Corrective Action Plan includes an explanation and specific reasons for our disagreement. Auditor's Comment The DHSS Corrective Action Plan (CAP) states the DHSS disagrees with the finding and believes no corrective action is required because the prior year finding (finding number 2023-012) was not sustained by the USDA-FNS. However, as noted in the finding, an April 2025 email from a USDA-FNS official to the DHSS regarding the prior audit finding indicates some corrective action was made and validated by the USDA-FNS. Such corrective action was made after the current (fiscal year 2024) audit period. As noted in the finding, the prior audit finding recommended the BCFNA strengthen internal controls over meal reimbursements, such as those recommended and validated by the USDA-FNS. While the DHSS did not provide the State Auditor's Office information regarding the corrective action taken, any new procedures would have been implemented after the audit period, and will be subject to subsequent audits. Because the DHSS took no corrective action prior to or during the audit period, this finding is valid.
Federal Agency: United States Department of Agriculture (USDA) Federal Program: 10.558 Child and Adult Care Food Program (CACFP) 2022, 2023, 2024 - CACFP 2022, 2023, 2024 - CACFP-CIL 2023 and 2024 - CACFP-SPON State Agency: Department of Health and Senior Services (DHSS) - Bureau of Community Food and Nutrition Assistance (BCFNA) Type of Finding: A - Internal Control (Significant Deficiency) and Nonmaterial Noncompliance B - Internal Control (Material Weakness) and Material Noncompliance Questioned Costs: Unknown Compliance Requirement: Subrecipient Monitoring As noted in our previous audit, during the year ended June 30, 2024, BCFNA subrecipient risk assessment and monitoring procedures were not in compliance with subrecipient monitoring requirements and were not sufficient to ensure CACFP subrecipient compliance with program requirements. During the year ended June 30, 2024, the BCFNA disbursed approximately $67.6 million to over 780 CACFP subrecipients, which consist of child and adult care centers and sponsors of centers. Disbursements to subrecipients represented approximately 98 percent of the program's expenditures. As part of its pass-through responsibilities, 7 CFR Section 226.6(a)(5), the BCFNA is required to ensure subrecipients effectively operate the program. Regulation 2 CFR Section 200.332(b) requires pass-through entities to 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. Regulation 2 CFR Section 200.332(d) requires pass-through entities to monitor the activities of the subrecipient as necessary to ensure the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals. The BCFNA's subrecipient monitoring process, outlined in the Internal Nutritionist Manual, provides the requirements for monitoring the CACFP facilities/sponsors. The manual provides the planned frequency and type of monitoring activities, monitoring methods, and corrective action requirements. The manual requires the preparation of a risk assessment at the end of each monitoring review that assigns a grade of A, B, B-, or C to the facility/sponsor based on the number and severity of deficiencies and findings. Facilities/sponsors that receive a C grade are determined to be "seriously deficient." The assigned grade determines the required timing of future monitoring reviews of the facility/sponsor. Facilities/sponsors with an A grade will be next monitored in 3 years, a B grade within 2 years, a B- grade within 6 months to 1 year, and a C grade within 90 days. During each monitoring review, BCFNA personnel review documentation supporting a sample of claims during a test month. Any identified errors and associated overclaims/underclaims exceeding established thresholds are recouped/reimbursed in the facility's/sponsor's future claims. When reviews identify noncompliance, facilities/sponsors are required to prepare and submit a Corrective Action Plan (CAP) to the BCFNA. In addition, as noted at finding number 2024-008, the BCFNA relies on these subrecipient monitoring procedures to prevent and detect meal reimbursement claim errors. Monitoring reviews have identified significant issues and claim errors, including some potentially fraudulent activity, and led to over 15 contract terminations in recent years. To test compliance with subrecipient monitoring requirements, and to evaluate the effectiveness of BCFNA monitoring procedures, we reviewed and analyzed a randomly-selected sample of 60 BCFNA monitoring reviews conducted for 60 CACFP facilities/sponsors during the year ended June 30, 2024. While our review found the sample monitoring reviews were performed in accordance with the policies and procedures outlined in the Internal Nutritionist Manual, we identified areas in which these policies and procedures could be strengthened and improved to ensure facilities/sponsors comply with program requirements and submit proper claims. Our review and analysis of the 60 sampled monitoring reviews noted the monitoring reviews identified significant errors, noncompliance, disallowances, and overclaims. Our comparison of the sampled reviews to prior reviews noted deficient facilities/sponsors generally had continued deficiencies and little improvement from prior reviews, as follows: • Of the 60 sampled, 32 facilities/sponsors received an A grade, while 28 received grades of B, B-, or C. • Of the 24 facilities/sponsors that received grades of B, B-, or C, and had a prior review, 21 (88 percent) received the same or lower grade than the prior review. • Of the 4 facilities/sponsors that received a C grade and had a prior review, 2 (50 percent) received the same grade as the prior review, and 2 (50 percent) received a lower grade. • Of the 7 facilities/sponsors that received a C grade, 4 were terminated as a result of the review or as a result of a subsequent 90-day follow-up review. • For 43 of 59 (73 percent) monitoring reviews for which the BCFNA tested claims (with claims totaling $537,466 during the test months), the BCFNA identified overclaims totaling $48,508 and underclaims totaling $10,144, netting to $38,364, or at least 7 percent of the reimbursements tested. A. Risk Assessments The BCFNA prepares and uses risk assessments to determine the extent of monitoring necessary for each facility/sponsor. However, the risk assessments prepared during the year ended June 30, 2024, considered only the previous monitoring review grade (conducted up to 3 years previously), and did not consider other pertinent risk factors outlined in federal regulations. Regulation 2 CFR Section 200.332(b) suggests risk assessments should consider the subrecipient's prior experience with the same or similar subawards, the results of previous audits, whether the subrecipient has new personnel or new or substantially-changed systems, and the extent and results of federal awarding agency monitoring. While federal regulations provide the BCFNA discretion in selecting risk factors to consider, limiting risk assessments to only one risk factor and ignoring other relevant factors hinders the BCFNA's ability to identify red flags and fraud risk factors and properly assess facility/sponsor risk of noncompliance. Sufficient risk assessments are necessary to ensure monitoring reviews are conducted with adequate frequency to help ensure subrecipient compliance with program requirements. Finding classification This finding is classified as a significant deficiency in internal control and nonmaterial noncompliance with the federal subrecipient monitoring requirements regarding risk assessments. As noted in the finding, BCFNA risk assessments prepared during the year ended June 30, 2024, do not meet the spirit of the federal regulation, which suggests the extent and level of monitoring for each subrecipient be based on various risk factors. As a result, there is a risk that monitoring reviews will not be performed as frequently and thoroughly as needed to identify and address subrecipient noncompliance. Because the BCFNA does perform risk assessments for each subrecipient and does monitor the subrecipients with lower grades with more frequency, the finding did not rise to a level of material noncompliance, and was therefore considered nonmaterial noncompliance. Our decisions regarding the classification of the internal control deficiencies were made in accordance with AU-C Section 935, Compliance Audits and the AICPA Audit Guide: Government Auditing Standards and Single Audits (Audit Guide). In addition to the definitions outlined in part B of this finding, the Audit Guide states "[a] significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance." Our evaluation of the deficiencies for the possibility and magnitude of potential noncompliance determined the deficiencies are considered a significant deficiency. B. Subrecipient Monitoring Procedures Our review of BCFNA subrecipient monitoring procedures during the year ended June 30, 2024, noted areas that should be strengthened and improved. Corrective action plans BCFNA CAP review procedures were not adequate to ensure facilities/sponsors made and/or planned sufficient corrective actions to address noncompliance, as required by federal regulations. The Internal Nutritionist Manual requires nutritionists to review subrecipient CAPs outlining corrective actions taken or planned for completeness and to ensure the required action items are adequately addressed. However, during the year ended June 30, 2024, this review was generally performed without verifying the accuracy of the CAP information through review of supporting documentation, testing, or other methods. The BCFNA did not require submission of supporting documentation of corrective actions taken or planned. BCFNA officials indicated they may request supporting documentation on occasion depending on the complexity of the finding, and they verify the CAP during 90-day follow-up reviews of "seriously deficient" facilities/sponsors. Of the 60 monitoring reviews in our sample, 49 required a CAP. The monitoring review documentation indicated the CAP was verified during 7 of the 90-day follow-up reviews, but there was no documentation that the nutritionist verified the CAP information for any of the remaining 42 reviews (86 percent of the 49 reviews that required a CAP). Furthermore, our review of monitoring review documentation noted numerous instances in which the prior year CAP indicated a specific deficiency was addressed, but the same deficiency was again noted in the subsequent review. Regulation 2 CFR Section 200.332(d) provides that monitoring must include following up and ensuring the subrecipient takes timely and appropriate action on all deficiencies identified. The USDA CACFP handbook, Monitoring Handbook for State Agencies (USDA Monitoring Handbook), provides that follow-up reviews (on-site or desk reviews of paperwork) may be conducted any time corrective action is required to ensure the facility/sponsor has completely corrected the review findings, according to its approved corrective action response. Example CAP forms included in the USDA Handbook require facilities/sponsors to submit supporting documentation along with the CAP to verify corrections were made or will be implemented. The USDA CACFP handbook, Serious Deficiency, Suspension, & Appeals for State Agencies & Sponsoring Organizations, provides that facilities/sponsors deemed "seriously deficient," must submit additional supporting documentation with the CAP to document that corrective actions have occurred; this might include copies of income eligibility forms, enrollment rosters, staff training documentation, site monitoring reports, menus, child nutrition labels or manufacturers' product analysis sheets or recipes, attendance records, meal count forms, and itemized food receipts. Without verifying information in CAPs submitted, the BCFNA cannot demonstrate compliance with federal regulations and it lacks assurance the facilities/sponsors took timely and appropriate action on all deficiencies identified during monitoring reviews. In addition, there is increased risk that deficiencies will not be corrected and will continue without detection. In August 2024, the BCFNA implemented an electronic system for facilities/sponsors to upload documentation supporting their CAPs. In May 2025, the BCFNA updated the Internal Nutritionist Manual to provide for reviews of the supporting documentation to verify facilities/sponsors implemented corrective action. Claims testing The Internal Nutritionist Manual and monitoring practices provide for testing of a sample of claims within only 1 test month during each monitoring review, and do not provide for expanded testing when significant errors are identified. BCFNA personnel indicated monitoring reviews are limited to only 1 test month because the USDA Monitoring Handbook does not require expanded testing of records beyond 1 month. While the BCFNA performs additional testing during 90-day follow-up reviews for facilities/sponsors deemed "seriously deficient," additional testing is not performed in any other situation. For example, one facility had a 33 percent overpayment rate and received a B grade while another facility had a 100 percent overpayment rate and received a B- grade; however, additional testing was not performed for either facility. The USDA Monitoring Handbook suggests testing activities during 1 test month, and also suggests the state agency may determine additional review is warranted and review records beyond the test month to determine the extent of the noncompliance. When significant errors are identified, additional testing would help BCFNA nutritionists determine the extent that instances of noncompliance are isolated versus pervasive. Such information would be valuable to the overall conclusions and grade assigned to the review, and in decisions regarding subsequent monitoring. Overclaim recoupment BCFNA subrecipient monitoring procedures do not provide for identification and pursuit of recoupment of all overpayments associated with errors identified during monitoring reviews. When overclaims due to noncompliance with eligibility requirements are identified during monitoring reviews, the BCFNA only identifies and seeks recoupment for the overclaims made during the test month. Overclaims associated with eligibility errors begin at the time the eligibility determination was made and continue until the error is discovered. Although the BCFNA is aware noncompliance occurred during the month(s) before the test month, the BCFNA does not attempt to identify those overclaims. In addition, when a facility/sponsor is terminated, the BCFNA does not always identify or seek recoupment of overclaim amounts. In our sample of 60 monitoring reviews, the contract for 1 sponsor was terminated as a result of a 90-day follow-up review. For this sponsor, in the review prior to the 90-day follow-up review, the BCFNA identified and recouped overclaims totaling $2,278, or 100 percent of total claims tested. In the subsequent 90-day follow-up review significant claim errors were identified in the test month claims, which totaled $1,961; however, the test month claims were not fully tested, and overclaims were not identified or recouped. Any overclaims not identified and recouped from this terminated sponsor would be considered questioned costs; however, those questioned costs are unknown. BCFNA officials indicated they do not pursue recoupment of overclaims beyond the test month because this practice is allowed by the USDA. They indicated they pursue recoupment of overclaims for facilities/sponsors with terminated contracts on a case-by-case basis, considering various factors. However, 7 CFR Section 226.14 provides that state agencies shall disallow and recover any portion of a claim for reimbursement not properly payable, including claims not made in accordance with recordkeeping requirements. Pursuing full recoupment would hold facilities/sponsors accountable for all overclaims and would serve as a deterrent to future errors, noncompliance, and overclaims. Furthermore, without procedures to identify and recoup all overclaims, there is a risk that significant overclaims will go undetected and unrecouped, and questioned costs could be significant. Conclusions In addition to complying with federal requirements, strong subrecipient monitoring procedures are necessary to ensure facilities/sponsors comply with program requirements, submit proper claims, and address deficiencies identified. Without strong internal controls, there is increased risk of noncompliance, errors, fraud, waste, and abuse of federal funds. Strong monitoring procedures would ensure facilities/sponsors are held accountable for, and correct, errors and noncompliance identified. Regulation 2 CFR Section 200.332(g) requires pass-through entities to consider whether the results of the subrecipient's audits, on-site reviews, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity's own records. Furthermore, 2 CFR Section 200.303(a) requires the non-federal entity to "[e]stablish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-federal entity is managing that 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." Finding classification This finding is classified as a material weakness in internal control and material noncompliance with the federal subrecipient monitoring requirements. Our audit of the BCFNA's compliance with federal subrecipient monitoring requirements concluded the BCFNA did not materially comply with federal requirements to ensure subrecipients effectively operate the CACFP and to monitor the activities of the subrecipient as necessary to ensure the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals. This conclusion is based on the facts, deficiencies, and noncompliance stated in the finding, including the following: (1) Disbursements to subrecipients represented approximately 98 percent of the CACFP expenditures. (2) BCFNA subrecipient monitoring reviews identified significant errors, noncompliance, disallowances, and overclaims; and deficiencies identified often continued for years with little improvement from review to review. The 7 percent subrecipient payment error rate identified by the BCFNA, which exceeds our audit materiality threshold of 4 percent, along with the high rate of continued noncompliance, serve as indicators of the ineffectiveness of the BCFNA monitoring process. (3) The BCFNA did not comply with specific components of federal subrecipient monitoring requirements, including properly following up and ensuring subrecipients take timely and appropriate action on all deficiencies identified and disallowing and recovering improper payments. (4) Multiple deficiencies in monitoring procedures were identified, including the previously-listed deficiencies and inadequate payment testing. In conducting a single audit in accordance with 2 CFR Part 200 (Uniform Guidance), auditors are required by 2 CFR Section 200.514(d)(1)(2), to determine whether the auditee has complied with federal statutes, regulations, and the terms and conditions of federal awards that may have a direct and material effect on each of its major programs, as outlined in the OMB Compliance Supplement. While compliance with the USDA CACFP handbooks was considered in the our audit, our conclusion on compliance is based on the BCFNA's compliance with the federal statutes and regulations, as required. Our decisions regarding the classification of the internal control deficiencies were made in accordance with AU-C Section 935, Compliance Audits and the Audit Guide. The Audit Guide provides the following definitions regarding internal control deficiencies: A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. "A reasonable possibility exists when the likelihood of the event is either reasonably possible or probable…" Reasonably possible is "[t]he chance of the future event or events occurring is more than remote but less than likely." Probable means "[t]he future event or events are likely to occur." The failure to design and implement adequate controls and procedures over subrecipient monitoring led to material noncompliance with the subrecipient monitoring requirements. The BCFNA's controls failed to develop an effective subrecipient monitoring process that ensures subrecipients use subawards for authorized purposes, comply with the terms and conditions of the subawards, and achieve performance goals. Because the internal control deficiencies have not been corrected, it is probable that the material noncompliance will continue. For these reasons, the deficiencies are considered a material weakness. Recommendations The DHSS through the BCFNA: A. Implement a CACFP subrecipient risk assessment process that is consistent with federal regulations. B. Review, strengthen, and enforce subrecipient monitoring procedures to ensure CACFP facilities/sponsors comply with program requirements, submit proper claims, and address deficiencies identified. The BCFNA should enhance procedures to provide for identification and recoupment of overclaims associated with all errors identified during monitoring reviews, as required by federal regulations; expand testing when significant errors are identified; and continue to verify CAP information. The DHSS should identify and recoup the overclaims for the terminated sponsor noted in this finding. Auditee's Response A. We disagree with the auditor's finding. Our Corrective Action Plan includes an explanation and specific reasons for our disagreement. B. We disagree with the auditor's finding. Our Corrective Action Plan includes an explanation and specific reasons for our disagreement. Auditor's Comment The DHSS Corrective Action Plan (CAP) states the DHSS disagrees with the finding because, while the prior year finding (finding number 2023-013) was partially sustained by the USDA - Food and Nutrition Service (USDA-FNS), a corrective action plan was accepted and deemed adequate by the USDA-FNS. The CAP also states in April 2025, the USDA-FNS recommended final action to close the prior year finding. These statements are not accurate. April and June 2025 emails from USDA-FNS officials to the DHSS regarding the prior audit finding, provided to auditors by DHSS officials, indicate the finding was sustained; corrective action was required, taken, and validated by the USFA-FNS; and final action was approved by the USDA-FNS on June 10, 2025. It is unclear why the DHSS considers the prior year finding to be only partially sustained when the Summary Schedule of Prior Audit Findings, which was also prepared by the DHSS, states the finding was sustained. Except for the information mentioned in the audit finding regarding subrecipient corrective action plans, the DHSS did not provide the State Auditor's Office information regarding corrective action taken. Any new procedures would have been implemented after the audit period, and will be subject to subsequent audits. Because the DHSS took no corrective action prior to or during the audit period, this finding is valid.
Federal Agency: Department of Labor (DOL) Federal Program: 17.258 WIOA Adult Program 2023 - 23A55AT000005 17.259 WIOA Youth Activities 2023 - 23A55AY000048 17.278 WIOA Dislocated Worker Formula Grants 2023 - 23A55AW000007 State Agency: Department of Higher Education and Workforce Development (DHEWD) Type of Finding: Internal Control (Significant Deficiency) and Nonmaterial Noncompliance Compliance Requirement: Reporting The DHEWD needs to strengthen internal controls related to Federal Funding Accountability and Transparency Act (FFATA) reporting for the Workforce Innovation and Opportunity Act (WIOA) Cluster. During state fiscal year 2024, the DHEWD did not comply with FFATA reporting requirements for 4 of 10 subawards reviewed. During state fiscal year 2024, the DHEWD disbursed approximately $26.3 million in first-tier subawards to 13 subrecipients (local workforce development boards) of the WIOA Cluster. First-tier subaward payments accounted for approximately 80 percent of the program's expenditures. The FFATA requires comprehensive reporting for certain federal awards to promote transparency and accountability over the use of the federal funds. Regulation 2 CFR Part 170, Appendix A, requires the DHEWD to report first-tier subawards of $30,000 or more to the FFATA Subaward Reporting System (FSRS) no later than the end of the month following the month in which the subaward was made. Information entered into the FSRS is publicly available at USASpending.gov. On a monthly basis, DHEWD procedures provide that DHEWD personnel download information pertaining to subrecipient awards from the DHEWD document system, filter the information to identify subawards that require FFATA reporting, enter the information into a spreadsheet, upload the data to the FSRS, notify the supervisor, and subsequently verify the entry appears at USASpending.gov. Various subaward data is uploaded to the FSRS, including the entity name, award amount, and the date issued. DHEWD procedures also require DHEWD personnel record on the spreadsheet the date of FSRS entry and the date the entry was verified at USASpending.gov. Internal controls The DHEWD's policies and procedures over the FFATA reporting process do not require a documented supervisory review of the information uploaded to the FSRS. Procedures require that the supervisor be notified of the FSRS entry, but do not require that a review be documented. Without adequate supervisory review over FFATA reporting, the DHEWD has less assurance the information included in the FFATA reporting for the WIOA Cluster is complete and accurate. Procedures, at a minimum, should define the responsibilities of various program personnel and include procedures for ensuring the accuracy and completeness of all FFATA reporting elements. Regulation 2 CFR Section 200.303(a) requires the non-federal entity to "[e]stablish 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." FFATA reporting The DHEWD did not comply with FFATA reporting requirements for the WIOA Cluster. To test compliance with FFATA reporting requirements, we haphazardly selected for review 2 of the 13 subrecipients, and reviewed the 10 subawards to those 2 subrecipients, totaling approximately $2.2 million, awarded during state fiscal year 2024. Of the 10 subawards reviewed, the DHEWD did not upload to the FSRS 4 subawards totaling approximately $987,000. After we brought this to their attention, DHEWD personnel prepared and uploaded information for these subawards in the FSRS. DHEWD personnel indicated the FFATA reporting errors occurred because personnel newly assigned to the process were unfamiliar with the FFATA reporting requirements. In addition to noncompliance with federal requirements, not reporting subawards to the FSRS accurately and timely increases the risk that those using the reports could rely on incomplete information. Recommendation The DHEWD strengthen internal controls related to FFATA reporting to require documented supervisory reviews of the information reported to the FSRS and complete FFATA reporting timely and accurately for the WIOA Cluster, as required. Auditee's Response We agree with the auditor's finding. Our Corrective Action Plan includes our planned actions to address the finding.
Federal Agency: Department of Transportation Federal Program: 20.205 Highway Planning and Construction (HPC) Various awards State Agency: Missouri Department of Transportation (MoDOT) Type of Finding: Internal Control (Significant Deficiency) and Nonmaterial Noncompliance Compliance Requirement: Procurement and Suspension and Debarment The MoDOT did not establish policies and procedures to monitor contractor and subrecipient compliance with Build America, Buy America (BABA) domestic preference provisions for Infrastructure Investment and Jobs Act (IIJA)-funded projects of the HPC program. As a result, the MoDOT did not ensure contractors and subrecipients complied with these provisions. During the year ended June 30, 2024, the MoDOT expended approximately $922 million in IIJA funding for the HPC program, which represents approximately 68 percent of total program spending. The MoDOT is responsible for ensuring compliance with BABA domestic preference provisions for all IIJA-funded infrastructure projects. Section 70914(a) of the BABA Act, enacted as part of the IIJA, requires all iron, steel, manufactured products, and construction materials used in IIJA-funded infrastructure projects to be produced in the United States. Regulation 2 CFR Section 200.318(a) requires the MoDOT to maintain documented procurement procedures, and 2 CFR Section 200.318(b) requires the MoDOT to monitor contractor and subrecipient compliance with the terms and conditions of project agreements, including BABA provisions. The MoDOT includes BABA provisions in every contractor and subrecipient project agreement, including IIJA-funded projects. However, the MoDOT did not develop monitoring policies and procedures and did not verify contractors and subrecipients complied with these provisions. MoDOT officials stated specific monitoring procedures had not yet been developed because the requirements were relatively new and took effect in May 2022. In addition to noncompliance with federal requirements, without adequate monitoring policies and procedures, the MoDOT lacks assurance its contractors and subrecipients are in compliance with BABA requirements. Regulation 2 CFR Section 200.303(a) requires the non-federal entity to "[e]stablish 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." Recommendation The MoDOT implement and enforce policies and procedures to monitor HPC program IIJA-funded projects to ensure contractor and subrecipient compliance with BABA domestic preference provisions, as required. Auditee's Response We agree with the auditor's finding. Our Corrective Action Plan includes our planned actions to address the finding.
Federal Agency: Department of the Treasury (Treasury) Federal Program: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds SLFRP4542 State Agency: Office of Administration (OA) Type of Finding: A - Internal Control (Material Weakness) and Material Noncompliance B - Internal Control (Material Weakness) and Material Noncompliance Compliance Requirement: Subrecipient Monitoring As noted in our previous audit, the OA has not established policies and procedures regarding monitoring subrecipients of the Coronavirus State and Local Fiscal Recovery Funds (SLFRF) program. As a result, the OA did not comply with the Uniform Guidance (UG) requirements regarding identifying and monitoring subrecipients of the SLFRF program. The OA is the lead agency responsible for administering the SLFRF program. The purpose of the SLFRF program is to provide funding to respond to the COVID-19 public health emergency (PHE) or its negative impacts; respond to workers performing essential work during the PHE; provide government services, to the extent of the reduction in revenue due to the PHE (revenue replacement); make necessary investments in water, sewer, or broadband infrastructure; provide emergency relief from natural disasters or the negative economic impacts of natural disasters; and finance certain surface transportation and housing projects. The OA and various state agencies designed projects within the various allowable SLFRF program categories, and are responsible for administering the projects. The OA developed the American Rescue Plan Act Grant Management Portal (portal) to serve as the official repository of information and documentation supporting each SLFRF program project. The state agencies upload supporting documentation to the portal, including contracts, payment requests, and other supporting documentation. Most payments are made on a reimbursement basis. The OA reviews each payment request and processes the payments. Some SLFRF program projects are administered through subawards. The OA establishes contracts with each subrecipient that outline various SLFRF program requirements, terms, and conditions. In the Schedule of Expenditures of Federal Awards (SEFA), the OA reported approximately $186 million was passed through to subrecipients of the SLFRF program during the year ended June 30, 2024. This amount represents approximately 30 percent of the SLFRF program expenditures. These awards were administered through the OA and 7 other state agencies. However, as noted in finding point A., the amounts are not accurate due to subrecipient determination errors. In response to our prior audit finding, the OA held a training for state agency personnel in August 2024 and sent a letter to state agencies in January 2025 (after the current audit period), covering agency responsibilities related to certain SLFRF program subrecipient monitoring requirements, such as subrecipient determinations and single audits. Of the 7 state agencies that administered subawards reported in the SEFA during the year ended June 30, 2024, 4 administered the majority of the subawards, with payments totaling approximately $181 million, or 97 percent of the total subrecipient payments reported in the SEFA. These 4 state agencies were the Department of Mental Health (DMH), Department of Higher Education and Workforce Development (DHEWD), Department of Natural Resources (DNR), and the Department of Economic Development (DED). Our review and testing of subrecipient monitoring procedures focused on the OA and the 4 state agencies. For the 4 state agencies, a total of 212 recipients were identified as subrecipients in the SEFA. However, as noted in finding point A., this count is not accurate due to subrecipient determination errors. To understand the OA and state agency procedures, and to test compliance with subrecipient monitoring requirements, we randomly selected a sample of payments to 21 subrecipients for the 4 state agencies. In addition, we judgmentally selected an additional subrecipient at one of the agencies because we had received citizen concerns regarding the administration of the subrecipient project. The 22 subrecipients were awarded a total of approximately $230 million in SLFRF program funding and were paid a total of approximately $77.9 million during the year ended June 30, 2024. We reviewed records in the portal supporting the subawards and 1 payment for each of the 22 subrecipients. We reviewed payments totaling approximately $5.9 million. For the judgmentally-selected subrecipient, we reviewed documentation of the state agency's monitoring of the subrecipient, including documentation of decisions to terminate (June 2024), not reinstate (December 2024), and reinstate (June 2025) the project. No significant issues were identified in this review. A. Subrecipient Determination The OA has not established policies and procedures to determine whether recipients of the SLFRF program funds are subrecipients or contractors. As a result, some recipients were incorrectly classified, and the OA lacks a complete and accurate listing of subrecipients. Subrecipient monitoring requirements are outlined in the UG. Regulation 2 CFR Section 200.331 states a pass-through entity must make case-by-case determinations whether each agreement it makes for the disbursement of federal program funds casts the party receiving the funds in the role of a subrecipient or a contractor. The classification of a subrecipient is dependent on whether the entity is responsible for making eligibility determinations for assistance, has its performance measured in relation to whether the objectives of the federal program were met, has responsibility for programmatic decision-making, is responsible for adherence to federal program requirements, and uses the federal funds to carry out a program for its public purpose. The OA did not evaluate each SLFRF program recipient for the UG criteria, and did not make a determination of whether the entity was a subrecipient or contractor. OA officials assigned responsibility for making these determinations and identifying subrecipients to the applicable state agencies, but did not provide clear guidance to the state agencies or ensure the state agencies properly performed and documented the determinations. One of the 4 state agencies had not documented their determinations for any of their sampled subrecipients and another state agency had not documented its determinations for 2 of 4 sampled subrecipients. Our analysis and review of the population of 212 subrecipients identified in the SEFA for the 4 state agencies revealed 1 state agency incorrectly recorded 2 contractors (office supply and electrical supply companies), with payments totaling $6,509, as subrecipients. The OA is the lead agency responsible for administering the SLFRF program. Without adequate procedures over subrecipient or contractor determinations, the OA lacks assurance that its subrecipients have been identified for subrecipient monitoring purposes. The OA Corrective Action Plan and Summary Schedule of Prior Audit Findings for prior audit finding number 2023-010 state the OA disagrees that it needs to develop policies and procedures regarding subrecipient determinations since the requirements are already stated in the Uniform Guidance and SLFRF program regulations. However, documented policies and procedures are necessary to clearly communicate responsibilities to the state agencies, prevent misunderstandings, and demonstrate adequate internal controls over compliance with subrecipient monitoring requirements. Regulation 2 CFR Section 200.303(a) requires the non-federal entity to "[e]stablish 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." Paragraph 3.10 of the Standards for Internal Control in the Federal Government, also known as the Green Book, states, "[e]ffective documentation assists in management's design of internal control by establishing and communicating the who, what, when, where, and why of internal control execution to personnel. Documentation also provides a means to retain organizational knowledge and mitigate the risk of having that knowledge limited to a few personnel, as well as a means to communicate that knowledge as needed to external parties, such as external auditors." Paragraph 12.01 states, "[m]anagement should implement control activities through policies." B. Subrecipient Monitoring The OA did not implement an effective subrecipient monitoring program to monitor the SLFRF subrecipients. As a result, some subrecipient monitoring procedures were not performed as required by the UG. Regulation 2 CFR Section 200.332(b) states that 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. Risk assessments may consider factors such as the subrecipient's prior experience with the same or similar subawards, the results of previous audits, whether the subrecipient has new personnel or new or substantially-changed systems, and the extent and results of federal awarding agency monitoring. Regulation 2 CFR Section 200.332(d) requires pass-through entities to monitor the activities of the subrecipient as necessary to ensure the subrecipient is in compliance with federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity; (2) following up and ensuring the subrecipient takes timely and appropriate action on all deficiencies pertaining to the federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient, highlighting the status of actions planned or taken to address single audit findings related to the particular subaward; and (3) issuing a management decision for applicable findings pertaining only to the federal award provided to the subrecipient from the pass-through entity. Regulation 2 CFR Section 200.332(f) requires pass-through entities to verify that every subrecipient had a single audit when it is expected that the subrecipient spent $750,000 or more during the subrecipient's fiscal year. To monitor subrecipients of the SLFRF program, the OA relies on its pre-payment monitoring process. The OA does not perform any post-payment monitoring procedures, and relies on the state agencies to perform these procedures. The OA did not establish policies and procedures over the pre-payment review process and these reviews were not always clearly documented. In addition, the OA did not sufficiently communicate with the state agencies regarding subrecipient monitoring responsibilities or ensure the state agencies performed monitoring reviews. The information communicated to the state agencies in memos, emails, and periodic meetings and trainings with state agency personnel were not formalized in a policy and did not cover all relevant compliance requirements. In addition, the OA did not ensure risk assessments were performed or that subrecipients received single audits as required by the UG. Risk assessments The OA did not ensure required risk assessments for subrecipients of the SLFRF program were performed to determine the nature, timing, and extent of monitoring procedures necessary. Two of the 4 state agencies did not perform any risk assessments for the sampled subrecipients. OA officials indicated risk assessment procedures are the responsibility of the state agencies; however, the OA did not provide clear guidance to the state agencies or ensure the state agencies performed and used risk assessments as required. In addition to complying with federal requirements, risk assessments are necessary to ensure monitoring reviews are conducted with adequate frequency to help ensure subrecipient compliance with program requirements. OA pre-payment monitoring procedures The OA has not developed policies and procedures outlining its pre-payment monitoring procedures and did not always clearly document monitoring performed prior to making payments. In their review and approval of each SLFRF subrecipient payment request, OA officials stated they thoroughly review supporting documentation uploaded to the portal by the state agencies, including contracts, bid documentation, invoices, and other supporting documentation. OA officials further stated they review for compliance with certain types of SLFRF program compliance requirements, including allowable activities and allowable costs, procurement, and period of performance. However, the OA does not clearly document review procedures performed. For each of the 22 subrecipients sampled, the portal included documentation pertaining to some, but not all of the applicable compliance requirements. For example, for 5 subrecipient payments reviewed (for 2 state agencies), the portal included summary invoices, but did not include sufficiently detailed documentation showing compliance with the allowable activities and allowable costs and period of performance compliance requirements. Without documented policies and procedures and documentation of prepayment monitoring procedures performed, the OA cannot demonstrate subrecipient monitoring procedures were performed. Additional monitoring procedures The OA does not monitor subrecipients beyond the pre-payment monitoring process previously described. OA officials stated post-payment monitoring procedures are the responsibility of the state agencies; however, the OA did not sufficiently communicate with the agencies regarding subrecipient monitoring responsibilities or ensure the agencies performed monitoring reviews. Our review of subrecipient monitoring procedures at the 4 state agencies noted 3 agencies had developed written policies or procedures regarding subrecipient monitoring. We also noted state agency review procedures varied significantly, did not cover all significant compliance requirements, and were not always documented. While officials of some state agencies indicated they perform detailed pre-payment reviews for compliance with allowable activities and allowable costs, period of performance, and/or local match requirements, officials of some agencies explained they and the OA sometimes review only summary invoices of expenditures from the subrecipients prior to payment. Additionally, officials of all state agencies described various post-payment review procedures such as reviews for compliance with certain requirements, reviews of documentation supporting expenditures of funds advanced to the subrecipient, billing reviews of documentation supporting summary invoices, and/or reviews of the final work product; however, none of the agencies performed all of these procedures. In addition, the agencies could not always provide documentation such reviews had been performed for the sampled items. In addition to noncompliance with subrecipient monitoring requirements, the failure to ensure sufficient monitoring procedures were performed and documented increases the risk that subrecipient noncompliance will not be prevented or detected timely. Subrecipient audits The OA did not ensure the required reviews of single audit reports for applicable SLFRF program subrecipients were conducted. OA officials indicated the state agencies are responsible for ensuring subrecipients had a single audit, and reviewing and following up on the audit reports; however, the OA did not ensure the state agencies performed these procedures. All 4 agencies described procedures to monitor and follow up on single audit reports. Each subrecipient that spent in excess of $750,000 in federal awards during its fiscal year must obtain a single audit in accordance with the UG within 9 months after the end of the fiscal year. In addition to noncompliance with subrecipient monitoring requirements, the failure to ensure subrecipients received required audits and to review and follow up on the related audit reports, increases the risk that subrecipient noncompliance will not be identified and addressed. Conclusions The following table summarizes the results of our sampling at the 4 state agencies, presented in finding points A. and B. Instances in which a criterion was partially met are shown as the applicable number of items sampled. The OA is the lead agency responsible for administering the SLFRF program. OA officials indicated the state agencies were responsible for some of the subrecipient monitoring requirements. However, without clear communication and monitoring of these responsibilities, the OA lacks assurance of compliance with all subrecipient monitoring requirements. Without an established subrecipient monitoring program, the OA cannot provide assurance subrecipients are complying with SLFRF program requirements and there is increased risk that noncompliance with program requirements or subaward terms and conditions will go undetected, or that subaward performance goals will not be achieved. In addition, a subrecipient monitoring program is necessary to demonstrate adequate internal controls over compliance with subrecipient monitoring requirements. Regulation 2 CFR Section 200.303(a) requires the non-federal entity to "[e]stablish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-federal entity is managing that 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." Paragraph 3.10 of the Standards for Internal Control in the Federal Government, also known as the Green Book, states, "[e]ffective documentation assists in management's design of internal control by establishing and communicating the who, what, when, where, and why of internal control execution to personnel. Documentation also provides a means to retain organizational knowledge and mitigate the risk of having that knowledge limited to a few personnel, as well as a means to communicate that knowledge as needed to external parties, such as external auditors." Paragraph 12.01 states, "[m]anagement should implement control activities through policies." Recommendations The OA: A. Develop policies and procedures to determine whether recipients of SLFRF program funds are subrecipients or contractors. Continue to work with the state agencies to ensure accurate and documented determinations are prepared for all recipients, and modify subrecipient records as needed. B. Develop a subrecipient monitoring program in accordance with the Uniform Guidance that includes performing risk assessments for each subrecipient for the purposes of determining the appropriate subrecipient monitoring procedures; monitoring for compliance with federal requirements and subaward terms and conditions, and ensuring subaward performance goals are achieved; and reviewing subrecipient single audit reports. Ensure tasks delegated to state agencies are adequately communicated and establish procedures to ensure those tasks are appropriately completed. Auditee's Response A. We partially agree with the auditor's finding. Our Corrective Action Plan includes an explanation and specific reasons for our disagreement and any planned actions to address the finding. B. We agree with the auditor's finding. Our Corrective Action Plan includes our planned actions to address the finding. Auditor's Comment The OA Corrective Action Plan states the OA partially agrees with Finding point A. because the OA completed training for all agencies regarding agency subrecipient monitoring responsibilities and distributed a memo instructing the agencies to develop subrecipient monitoring policies and procedures. However, as noted in the audit finding, the training was held and letter was sent to state agencies after the current audit period. Because the OA took no corrective action prior to or during the audit period, the internal control weaknesses and noncompliance occurred again in the current audit period.
Federal Agency: Department of the Treasury (Treasury) Federal Program: 21.029 COVID-19 - Coronavirus Capital Projects Fund CPFFN0151 State Agency: Department of Economic Development (DED) Type of Finding: Internal Control (Significant Deficiency) and Nonmaterial Noncompliance Compliance Requirement: Reporting During state fiscal year 2024, the DED did not comply with Federal Funding Accountability and Transparency Act (FFATA) reporting requirements for any of the 47 first-tier subawards, totaling approximately $196.7 million, for the Coronavirus Capital Projects Fund (CPF) program. First-tier subaward payments accounted for 100 percent of the program's expenditures. In addition, the DED has not established internal controls over FFATA reporting for the CPF program. The FFATA requires comprehensive reporting for certain federal awards to promote transparency and accountability over the use of the federal funds. Regulation 2 CFR Part 170, Appendix A, requires the DED to report first-tier subawards of $30,000 or more to the FFATA Subaward Reporting System (FSRS) no later than the end of the month following the month in which the subaward was made. Information entered into the FSRS is publicly available at USASpending.gov. Due to initial technical difficulties with the FSRS, the Treasury requested CPF program recipients to complete their outstanding FFATA reports by no later than June 30, 2024. The DED is responsible for administering the CPF program. The CPF program grant was initially awarded to the Office of Administration (OA). The DED was authorized under an interagency spending delegation agreement with the OA to access and expend CPF program funds. FFATA reporting The DED did not comply with FFATA reporting requirements for the CPF program. DED personnel did not report any of the 47 subawards, totaling approximately $196.7 million, that required FFATA reporting by June 30, 2024, as required by the Treasury. DED officials indicated they did not complete FFATA reporting because they initially believed the OA would complete FFATA reporting for the DED. Once the DED realized they were responsible for FFATA reporting, in November 2024, DED personnel prepared and uploaded information for these subawards in the FSRS. In addition to noncompliance with federal requirements, not reporting subawards to the FSRS accurately and timely increases the risk that those using the reports could rely on inaccurate information. Internal controls The DED has not established internal controls over FFATA reporting for the CPF program. As a result, the required FFATA reporting was not performed for the CPF program during the year ended June 30, 2024. Without internal controls over the FFATA reporting process, there is less assurance the reporting will be completed accurately and timely. Regulation 2 CFR Section 200.303(a) requires the non-federal entity to "[e]stablish 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." Recommendation The DED complete FFATA reporting in accordance with the applicable requirements, and establish internal controls related to FFATA reporting for the CPF program. Auditee's Response We agree with the auditor's finding. Our Corrective Action Plan includes our planned actions to address the finding.
Federal Agency: Department of Homeland Security - Federal Emergency Management Agency (FEMA) Federal Program: 97.036 Disaster Grants - Public Assistance (Presidentially Declared Disasters) 2017 - FEMA-4317-DR-MO 2019 - FEMA-4435-DR-MO and FEMA-4551-DR-MO 2020 - FEMA-4490-DR-MO and FEMA-4452-DR-MO 2021 - FEMA-4612-DR-MO and FEMA-4636-DR-MO 2022 - FEMA-4665-DR-MO 2023 - FEMA-4741-DR-MO 2024 - FEMA-4803-DR-MO State Agency: Department of Public Safety - State Emergency Management Agency (SEMA) Type of Finding: Internal Control (Material Weakness) and Material Noncompliance Compliance Requirement: Subrecipient Monitoring During state fiscal year 2024, the SEMA did not perform subrecipient monitoring reviews or review subrecipient single audit reports for the Disaster Grants - Public Assistance (Presidentially Declared Disasters) (DGPA) as required. The SEMA disbursed approximately $180 million to 320 DGPA program subrecipients during the year ended June 30, 2024. Regulation 2 CFR Section 200.332(b) requires pass-through entities to 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. Regulation 2 CFR section 200.332(d) requires pass-through entities to monitor the activities of the subrecipient as necessary to ensure the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals. Pass-through entities are required to follow up and ensure the subrecipient takes timely and appropriate action on all deficiencies detected through audits, on-site reviews, and other means. Regulation 2 CFR Section 200.332(f) requires pass-through entities to verify that every subrecipient has a single audit when it is expected that the subrecipient spent $750,000 or more during the subrecipient's fiscal year. The SEMA's tiered monitoring process, outlined in the SEMA's Risk Assessment Form and Recovery Division Monitoring Policy, requires risk assessments be performed 24 months after the disaster declaration for each subrecipient. Risk assessments are to evaluate various risk indicators and categorize each subrecipient as high, medium, or low risk. The risk category determines the required type and nature of monitoring required for the subrecipient. The policy requires on-site monitoring reviews for all high-risk subrecipients and desk reviews of 20 percent of medium-risk subrecipients. No additional action is required for low-risk subrecipients. The monitoring policy requires the SEMA to generate reports listing any deficiencies noted during on-site and desk monitoring reviews. The Monitoring Report will, if applicable, reflect any notice given to the subrecipient about delinquent reports, failure to submit proper documentation, and any issues noted during the review. The monitoring report also identifies the SEMA's and subrecipient's actions and plans to resolve the issue(s), by documenting a brief written plan and timeline for the resolution of the issues identified. When all issues have been resolved, the policy requires a follow-up letter and updated review report to be provided to the subrecipient. The monitoring policy further requires the SEMA during both the desk and on-site monitoring to review the subrecipient's financial and compliance audit reports. The SEMA's single audit compliance policy requires the SEMA to verify every subrecipient had a single audit when required. Once the single audit is reviewed and additional documentation is obtained, the SEMA will issue a Management Decision Letter. Monitoring reviews During state fiscal year 2024, the SEMA's Monitoring Specialist performed risk assessments for all 890 subrecipients of open projects; however, the SEMA did not perform the 190 monitoring reviews of these subrecipients as required by the monitoring policy. The following table shows the results of the risk assessments performed for that fiscal year, and the supervisory monitoring reviews required by federal regulation and SEMA policy. When subrecipient monitoring reviews are not performed as required by federal regulation and SEMA policy, there is increased risk that noncompliance with program requirements will go undetected. Subrecipient audits During state fiscal year 2024, the SEMA did not conduct the required review of single audit reports for applicable DGPA program subrecipients as required by SEMA policies and federal regulations. During September 2023, the SEMA sent letters to all subrecipients asking if they were required to have a single audit; but performed no further procedures such as ensuring subrecipients obtained the audits or reviewing and following up on audit reports. Each subrecipient that spent in excess of $750,000 in federal awards during its fiscal year must obtain a single audit in accordance with federal regulations within 9 months after the end of the fiscal year. In addition to noncompliance with subrecipient monitoring requirements, the failure to ensure subrecipients received required audits and to review and follow up on the related audit reports, increases the risk that subrecipient noncompliance will not be identified and addressed. Conclusions SEMA personnel indicated the monitoring reviews and single audit reviews were not performed due to turnover and shortages in staff. Adherence to policies and procedures is necessary to ensure compliance with subrecipient monitoring requirements. Regulation 2 CFR Section 200.303(a) requires the non-federal entity to "[e]stablish 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 regulations, SEMA policies and the terms and conditions of the Federal award." Recommendation The SEMA strengthen controls and procedures to ensure subrecipients of the DGPG are monitored in accordance with the monitoring policies and ensure policies are followed to ensure compliance with the monitoring requirements. Auditee's Response We agree with the auditor's finding. Our Corrective Action Plan includes our planned actions to address the finding.
2024-004 Reserve Account (NOT A MAJOR PROGRAM) Compliance Requirement Cash Management Category Material weakness in Internal Control and Material Noncompliance ALN 10.770 Program Water and Waste Disposal Loans and Grants (Section 306C) Agency US Department of Agriculture (Rural Development) Criteria 2 CFR § 200.303 – Internal Controls, 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).” Water and Waste System Grant Agreement, Section 4, Protection and Disposition of the Funds outlines the reserve account requirements: (c) Reserve Account - From the remaining funds in the General Account, after transfers and payments required in (b) and (c), there shall be set aside into an account(s) designated as the Reserve Account(s) the sum of $1,684 each month until the sum of $201,982 is reached. With the prior written approval of the Government, funds may be withdrawn and used for such things as loan installments, emergency maintenance, extensions to facilities and replacement of short-lived assets, subject to conditions established by the Government. RUS Bulletin 1780-12, Exhibit A – Water and Waste System Grant Agreement, the grantee is required to comply with all terms and conditions of the grant agreement. Specially, Section I – Default and Termination Clause: Default by the Grantee will constitute termination of the grant thereby causing cancellation of Federal assistance under the grant. Condition The Authority has a deposit deficiency of $151,462 in the Reserve Account. The balance of the debt service reserve as of June 30, 2024, shall be $201,982. Cause Lack of oversight controls to comply with the cash management compliance requirement. Effect Default by the Authority constitutes a violation of the grant agreement and may result in termination of federal assistance under RUS Bulletin 1780-12. Additionally, under 2 CFR § 200.339, the federal awarding agency may temporarily withhold cash payments pending correction of the deficiency. The noncompliance also exposes the Authority to potential enforcement actions, including repayment of grant funds with interest and restrictions on future federal funding. Questioned Costs None Repeated Finding This finding has been present since fiscal year 2020. However, it was not disclosed in the Schedule of Prior Audit Findings included in the Single Audit reporting packages for fiscal years 2021, 2022, and 2023, as required by 2 CFR §200.511(c). The omission of this repeated finding from the reporting packages represents a departure from federal audit follow-up requirements and may hinder transparency and accountability in the entity’s corrective action process. Recommendation We recommend that management implement a formal review process to ensure that all prior year findings are properly tracked and disclosed in future Single Audit reporting packages. Additionally, we recommend that the understatement in the reserve debt account be addressed through an appropriate deposit to reconcile the balance. Views of Responsible Official (Unaudited) Refer to Corrective Action Plan
Item 2024-007: Eligibility Identification of federal programs: Commodity Food Supplemental Program, Assistance Listing Number 10.565 (a program included in the Food Distribution Cluster) Federal award grant number: 204645 Federal agency: U.S. Department of Agriculture Pass-through entity: Minnesota Department of Health Criteria: The Uniform Guidance (2 CFR 200.303) requires that nonfederal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to maintain documentation to support eligibility requirements for program recipients. Condition: During our testing of eligibility requirements, we noted that proper documentation was not available to provide proof of eligibility for program recipients. Cause: Management did not retain or maintain appropriate documentation. Effect: Improper control procedures can lead to individuals receiving food distributions when not meeting eligibility criteria. Questioned costs: None Context: The population subject to commodity supplemental food program eligibility requirements included over 250 individuals. The sample size of 60 was determined using the guidance in the AICPA Audit and Accounting Guide—Government Auditing Standards and Single Audits. We noted one application that was not on file, one application that was out of date, and one application that was not signed. We noted 19 applications where there was no indication that eligibility requirements were reevaluated on an annual basis. Repeat finding: No Recommendation: We recommend that SHN unify the procedures from pre-merger entities to have one set of controls and procedures as all findings relate to only one of the pre-merger entities. Views of responsible officials of the auditee: SHN concurs with this finding and a response is included in the corrective action plan.
Item 2024-006: Cash Management Identification of federal programs: Food Distribution Cluster, Assistance Listing Number 10.565, 10.568 and 10.569 Federal award grant number: 204645, 244603, 244590 Federal agency: U.S. Department of Agriculture Pass-through entity: Minnesota Department of Health and Minnesota Department of Human Services Criteria: The Uniform Guidance (2 CFR 200.303) requires that nonfederal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to review and approve reimbursement requests. Condition: During our testing of cash management requirements, we noted that a review and an approval of the reimbursement requests were not performed prior to submission. Cause: Management did not perform a review and an approval of the reimbursement requests under this federal award program. Effect: Likelihood of inaccurate reimbursement requests is increased when there is no review and approval. Questioned costs: None Context: The population subject to cash management requirements included 11 reimbursement requests. The sample size of two was determined using the guidance in the AICPA Audit and Accounting Guide—Government Auditing Standards and Single Audits. We noted two instances in our sample size of two where there was no documentation showing that the reimbursement requests were reviewed and approved. There was no segregation of duties as one individual prepared, reviewed and submitted the requests for payment. Repeat finding: No Recommendation: We recommend that SHN implement a procedure to review and approve reimbursement requests to ensure they are accurately submitted. Views of responsible officials of the auditee: SHN concurs with this finding and a response is included in the corrective action plan.
FA 2024-001 Strengthen Controls over Expenditures Compliance Requirement: Procurement and Suspension and Debarment Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Agriculture Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 10.553 – School Breakfast Program 10.555 – National School Lunch Program Federal Award Numbers: 235GA324N1099 (Year: 2024), 245GA324N1199 (Year: 2024) Questioned Costs: $46,877.67 Description: A review of expenditures charged to the Child Nutrition Cluster revealed that the School District’s internal control procedures were not operating appropriately to ensure that the School District’s procurement procedures were followed. Background Information: The Child Nutrition Cluster (CNC) is comprised of various programs that are intended to assist states in administering and overseeing food service program operators that provide healthful, nutritious meals to eligible children in public and non-profit private schools, residential child care institutions, and summer programs. This Cluster of programs also fosters healthy eating habits in children by providing fresh fruits and fresh vegetables to children attending elementary and secondary schools and encourages the domestic consumption of nutritious agricultural commodities. CNC funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Agriculture. GaDOE is responsible for distributing funds to local educational agencies (LEAs) and overseeing the various CNC programs. CNC funds totaling $1,204,722 were expended and reported on the Terrell County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2024. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, provisions included in the Uniform Guidance, Section 200.318 – General Procurement Standards state in part that “(a) the non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations and… (b) non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders.” In addition, provisions included in the Uniform Guidance, Section 200.320 – Methods of Procurement to Be Followed provide guidance for procurement through small purchase procedures and state “If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources.” Condition: A sample of 47 procurement transactions was randomly selected for testing using a non-statistical sampling approach. These transactions were reviewed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. The School District could not provide evidence that an adequate number of rate or price quotations were obtained from qualified sources for 18 small purchase expenditures reviewed. Questioned Costs: Upon testing a sample of $192,188.67 in procurement transactions, known questioned costs of $46,877.67 were identified for expenditures that did not follow the School District’s procurement procedures. Using the total population of $681,669.21 in procurement transactions, we project the likely questioned costs to be approximately $166,269.24. The following Assistance Listing Numbers were affected by known and likely questioned costs: 10.553 and 10.555. Cause: When discussing the issues noted with management, they indicated that School District personnel did not maintain sufficient documentation to support that multiple quotations were obtained. Effect: The School District is not in compliance with the Uniform Guidance and GaDOE guidance. Failure to appropriately implement procedures to address procurement compliance requirements exposes the School District to unnecessary risk of error and misuse of federal funds and could result in the expenditure of federal funds with unqualified vendors. In addition, this deficiency could lead to the return of funding associated with unallowable expenditures. Recommendation: The School District should evaluate and improve internal control procedures to ensure that required procurement methods are properly identified and followed. In addition, management should develop a monitoring process to ensure that these procedures are operating appropriately. Views of Responsible Officials: We concur with this finding.
Finding 2024-003: Improve Controls and Documentation Over Reporting Federal Program Information Federal Agency: U.S. Department of the Treasury Award Name(s): Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number(s): 21.027 Award Year: 2024 Compliance Requirement: Reporting Type of Finding: Compliance Internal Control over Compliance – Significant Deficiency Criteria or Specific Requirement: Per 2 CFR 200.303, the City is required to establish and maintain effective internal controls over Federal awards that provide reasonable assurance of compliance with Federal statutes, regulations, and the terms and conditions of the award. SLFRF program guidance requires project and expenditure reports to be submitted by the required deadlines, and reported expenditures must be supported by underlying accounting records. Since the City is a Metropolitan City with a population below 250,000 residents that was allocated more than $10.0 million in funding, the City is required to submit a project and expenditure report 30 days after the end of each quarter. Condition and Context: During our audit, we tested a sample of two quarterly reports to determine that they were submitted timely and were supported by underlying documentation. As a result of our testing, it was identified that the City did not submit the quarterly SLFRF project and expenditure report for the quarter ended 3/31/2024 by the required deadline of 4/30/2024. Furthermore, current period and cumulative expenditures reported for the quarters ended 9/30/2023 and 3/31/2024 did not agree to the amounts recorded in the City’s general ledger. The City did not provide the auditor with documentation to support the discrepancies. Cause: The City did not have adequate controls in place to ensure timely submission of required reports or reconciliation of current period and cumulative reported expenditures to the general ledger prior to submission. Effect or Potential Effect: Due to the weakness in internal controls and compliance finding noted above, the City did not comply with the requirements of the Uniform Guidance and SLFRF program regarding timely and accurate reporting of quarterly project and expenditure reports. No questioned costs are reported as expenditures were tested for allowability during the audit, however, reporting inaccuracies were noted. Recommendation: The City should enhance internal controls over the reporting process for SLFRF funds, including timely preparation and submission of the reports and reconciliation of reported expenditures to the general ledger prior to report submission. Views of Responsible Official: See Corrective Action Plan
Criteria or specific requirement: The Code of Federal Regulations, 34 CFR 682.610, states that institutions must accurately report the enrollment status of all students regardless of whether they receive aid from the institution or not. This includes the enrollment effective date and related enrollment status, which must be reporting for both the Campus-Level and the Program-Level, as well as the program begin date. Changes to said status are required to be reported within 30 days of becoming aware of the status change, or with the next scheduled transmission of statuses if the scheduled transmission is within 60 days. In addition, Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Condition: The College did not properly report student enrollment changes for students who received federal student aid to the National Student Loan Data System (NSLDS). Additionally, the College did not have a control process in place to ensure timely and accurate reporting. Questioned Costs: None. Context: In our statistically valid sample of 60 students selected for National Student Loan Data System (NSLDS) enrollment reporting testing, we identified 22 students that had the campus enrollment status reported incorrectly, 24 students had incorrect enrollment effective date, 60 students were reported past the 60-day reporting timeframe, 60 students were not certified every 60 days, five students had no record listed in NSLDS, three students where NSLDS Program enrollment effective date did not match the institutions records, two students where the students NSLDS Program enrollment status did not match the institutions records, one student had incorrect program length, and one student had a program begin date that did not match institutional records. Additionally, there was no review process to ensure timely and accurate reporting to NSLDS. Cause: The College did not have proper controls or procedures in place to verify students' status in NSLDS matched the institution’s records in a timely manner. Effect: The College was not in compliance with the requirements to properly report student enrollment data correctly. Incorrect dates submitted to NSLDS may be used to determine the grace period for the repayment and interest of outstanding Title IV student loans. Repeat Finding: Yes. 2023-004. Recommendation: We recommend the College review current processes and procedures for NSLDS enrollment reporting and implement an internal control that ensures reporting is both timely and accurate as well as retaining evidence of this control being performed. Views of responsible officials: There is no disagreement with the finding.
Criteria or specific requirement: 2 CFR part 200 section 200.303 requires that non-Federal entities receiving federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the federal award. The Code of federal Regulations, 34 CFR 688.164, requires any Title IV federal funds disbursed to a student or parent that are not received or negotiated must be returned to the appropriate federal financial aid program no later than 240 days after the check or electronic fund transfer (EFT) was issued. If a check or an EFT is returned, the College may make additional attempts to deliver the funds, provided that those attempts are made no later than 45 days after the funds were returned or rejected. In cases where the College does not make another attempt, the funds must be returned before the end of the initial 45-day period. The College must cease all attempts to disburse the funds and return them no later than 240 days after the date it issued the first check. Unclaimed Title IV FSA funds must not escheat to the state, revert to the College, or be transferred to any other third party. Any Title IV, HEA credit balance must be paid directly to the student or parent promptly, within 14 days of its occurrence, whether before or after the first day of class for a given payment period. Condition: The College does not have a control in place to specifically monitor outstanding Title IV federal funded checks issued to students. This absence of oversight prevents the College from ensuring that these funds are returned within 240 days of check issuance. Additionally, the College does not have a control in place to monitor that student refunds are disbursed within 14 days of its occurrence. Questioned Costs: None. Context: During our testing, it was noted the College did not have a control in place to ensure the return of outstanding Title IV federally funded checks that were old and needed to be returned to the U.S. Department of Education prior to 240 days after issuance. It was also noted that the College did not have a control in place to ensure student refunds are disbursed to students within 14 days of its occurrence. Cause: The College does not have a control in place to ensure federal refunds are sent to students within 14 days and that any uncashed federal checks over 240 days are sent back to the Department of Education. Effect: The College is not in compliance with Department of Education requirements to establish internal controls over outstanding checks and refunds of disbursements to students. Repeat Finding: No. Recommendation: We recommend the College review the requirements and implement a control to specifically monitor the outstanding Title IV funded checks and the refunds of disbursements to students throughout the year. Views of responsible officials: There is no disagreement with the finding.
Criteria or specific requirement: Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements over direct loan reconciliations as well as the reconciliation of Pell, Federal Supplemental Educational Opportunity Grant (FSEOG), and Federal Work Study (FWS) Condition: The College did not have an internal control in place to ensure the direct loan monthly reconciliations were completed timely and accurately. In addition, the College also did not have a control in place to ensure the Pell, FSEOG, and FWS funds were reconciled timely and accurately. Questioned Costs: None. Context: During our testing, we noted the College did not have a formal review process in place to ensure the direct loan reconciliations were completed timely and accurately in accordance with federal regulations. The College also did not have formal review processes for reconciliations over other Title IV funding like Pell, FSEOG and FWS. Cause: The College did not have an internal control in place to review and approve direct loan, Pell, FSEOG, and FWS reconciliations. Effect: The College is not in compliance with Department of Education requirements to establish internal controls over the direct loan, Pell, FSEOG, and FWS reconciliations. Repeat Finding: No. Recommendation: We recommend the College implement procedures to ensure direct loan, Pell, FSEOG, and FWS reconciliations are reviewed and such review properly documented. Views of responsible officials: There is no disagreement with the finding.
Criteria or specific requirement: 34 CFR 668.22(a)(1) states that when a recipient of Title IV grant or loan assistance withdraws from an institution during a period of enrollment that the recipient began attendance in, the institution must determine the amount of Title IV assistance that the student earned in accordance with 34 CFR 668.22(e) which states that the calculation to determine this is equal to the percentage of the period of enrollment that the student completed as of the withdrawal date if this date occurs before completion of 60% of the period of enrollment. The amount unearned by the student is the complement of this percentage and is required to be returned as soon as possible but no later than 45 days after the date of the institution’s determination that the student withdrew as described in 34 CFR 668.22(j)(1). The withdrawal date is the date by which the student began the withdrawal process or provided official notification to the institution of intent to withdraw. If the student ceased attendance without providing notification to the institution the midpoint of the period of enrollment should be used. If the student’s ceasing attendance is due to illness, accident, or other circumstance beyond the students control the withdrawal date is date the institution becomes aware of these circumstances, as described in 668.22(c). Further (j)(2) states an institution not required to take attendance must determine the withdraw date for students who withdraw without providing notification to the institution no later than 30. Criteria or specific requirement (continued): days after the end of the earlier of the period of enrollment, academic year in which withdrawal occurred, or education program for which the student withdrew. Additionally, per 2 CFR 200.303, nonfederal entities receiving federal awards are required to establish and maintain effective internal controls designed to reasonably ensure compliance with federal laws, regulations, and program requirements related to these awards. Condition: The College did not accurately determine student withdrawal dates, leading to incorrect Return of Title IV (R2T4) calculations. Additionally, withdrawals were not identified in a timely manner, and funds were not returned within the required 45-day period. The College also lacked internal controls to ensure the R2T4 process complied with federal regulations and guidelines. Questioned Costs: None. Context: During our testing, we identified exceptions in 7 out of 16 sampled student records. Specifically: • 5 students had incorrect withdrawal dates recorded. • 2 students had Return of Title IV (R2T4) calculations that were not accurately performed. • 3 students experienced delays in withdrawal determination beyond 30 days of their enrollment period, and for these same students, funds were not returned to COD within the required 45-day timeframe. Furthermore, the College lacks a formal review process to ensure adherence to federal laws, regulations, and program compliance requirements. Cause: The College did not establish precise controls to ensure compliance with federal laws, regulation and program compliance requirements over R2T4. Effect: The lack of an internal control to ensure compliance with federal requirements could result in errors going undetected by the College. Repeat Finding: Yes, 2023-005, 2023-008. Recommendation: We recommend the College review its current procedures for Title IV funds and implement a control that prevents and detects errors in this process. Additionally, we recommend the College implement a formal review process to ensure the R2T4 calculations being prepared timely and correctly to minimize the likelihood that errors may go undetected and not corrected in a timely manner. Views of responsible officials: There is no disagreement with the finding.
Criteria or specific requirement: The Code of Federal Regulations (34 CFR § 668.34(a)) requires institutions to establish a reasonable satisfactory academic progress (SAP) policy for determining whether an otherwise eligible student is making satisfactory academic progress in his or her educational program and may receive assistance under Title IV, HEA programs. Per 2 CFR 200.303, nonfederal entities receiving federal awards must establish and maintain effective internal control designed to reasonably ensure compliance with federal laws, regulations, and the terms and conditions of the award. Condition: The College did not properly identify students on Satisfactory Academic Progress (SAP) suspension, resulting in disbursement of aid to ineligible students. Questioned Costs: $21,381 Context: During our testing of 60 students, we noted 8 students who did not meet SAP requirements and were not placed on SAP suspension. Cause: The students' SAP statuses were not being calculated within the College’s system due to a known system issue and notifications of a change in SAP standing were not sent out to students. Effect: Ineligible students received Title IV funds. Repeat Finding: 2023-008. Recommendation: We recommend the College strengthen its internal controls to ensure timely identification of students not meeting SAP standards. Additionally, the College should work with its system administrator to resolve the SAP calculation issue or implement an alternative method for tracking SAP compliance. Views of responsible officials: There is no disagreement with the finding.
Criteria or specific requirement: The Code of Federal Regulations, 34 CFR 676.10(a)(1) and (2) states “In selecting among eligible students for FSEOG awards in each award year, an institution shall select those students with the lowest expected family contributions who will also receive Federal Pell Grants in that year. If the institution has FSEOG funds remaining after giving FSEOG awards to all such students who will receive Pell Grants, the institution may award the remaining funds to other eligible students.” Furthermore, institutions are required to ensure that only eligible recipients receive Federal Pell Grants. In addition, Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, statutes, regulations and terms and conditions of the federal award. Condition: The College awarded FSEOG funds to students with Expected Family Contributions (EFCs) above zero, while eligible students with zero EFCs were not awarded. Questioned Costs: None. Context: Out of 8 FSEOG recipients tested, one FSEOG recipient had an EFC greater than zero while eligible students with zero EFCs were not awarded FSEOG. Cause: A reporting error in the financial aid system misclassified a student’s EFC, leading to incorrect award decisions. Effect: The College did not comply with FSEOG awarding guidelines, which prioritize students with the lowest EFCs. Repeat Finding: No. Recommendation: We recommend the College review its FSEOG awarding procedures and strengthen controls to ensure accurate identification and prioritization of eligible students based on EFC. Views of responsible officials: There is no disagreement with the finding.
Criteria or specific requirement: In accordance with 2 CFR 200.358 the recipient must submit financial reports as required by the Federal award. The grant requirements state that the recipient must submit form SF-425 on a semi-annual basis for the periods ending March 31 and September 30, or any portion thereof. 2 CFR 200.328(c) requires these semi-annual reports be submitted no later than 30 days after the reporting period. Per Uniform Guidance 2 CFR 200.303, non-federal entities receiving federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Condition: The College did not submit the required SF-425 report for the period ending March 31, 2024. Questioned Costs: None. Context: During our testing of financial reports, the College was unable to provide the SF-425 report for the period ending March 31, 2024. Cause: The College was not aware that this report had not been submitted. Effect: The College was not in compliance with the Department of Commerce regulations for timely and accurate reporting of the SF-425 report. Repeat Finding: No. Recommendation: We recommend the College review its reporting procedures to ensure all reports are completed and submitted timely. Views of responsible officials: There is no disagreement with the finding.