Criteria or specific requirement: In accordance with 29 CFR section 5.5, Davis-Bacon Act (currently known as Wage Rate Requirements) requires that all contractors and subcontractors performing on federal contracts (and contractors or subcontractors performing on federally assisted contracts under the related Acts) in excess of $2,000 pay their laborers and mechanics not less than the prevailing wage rates and fringe benefits listed in the contract’s Davis-Bacon wage determination for corresponding classes of laborers and mechanics employed on similar projects in the area. Each covered contractor and subcontractor must, on a weekly basis, provide the entity with a copy of all payrolls providing the information listed under 29 CFR 5.5(a)(3)(ii)(B) for the preceding weekly payroll period. The contractor, subcontractor or authorized officer or employee of the contractor or subcontractor who supervises the payment of wages must sign the weekly payroll and certification statement. Further 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 receive or review the required weekly certified payrolls from subcontractors and contractors. Questioned Costs: None. Context: During our testing of two contracts with contractors/subcontractors that were subject to the Davis-Bacon wage rate requirements the College did not obtain the certified payrolls from the contactors/subcontractors and document their review and approval of them. Cause: The College was not aware of the requirement to obtain and review weekly certified payrolls prior to processing the vendor payment. Effect: The College was not in compliance with the Department of Commerce’s wage rate requirements under special tests and provisions. Repeat Finding: No. Recommendation: We recommend the College strengthen its process for obtaining certified payrolls and implement procedures to ensure timely receipt, review, and documentation of these reports. Views of responsible officials: There is no disagreement with the finding.
2024-003 Lack of Documentation to Support Distribution of Wages (Material Weakness) Federal Agency: Department of Education Pass-through Agency: New Hampshire Department of Education Cluster/Program: Special Education Cluster Assistance Listing Number(s): 84.027, 84.173, 84.027X, 84.173X Passed-through Identification: 20221035, 20221036, 20230212, 2024188, 20240189, 20240190, 20240191, 20240199, 20240308 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Type of Finding: Internal Control over Compliance – Material Weakness Material Noncompliance Criteria or Specific Requirement: Federal regulations 2 CFR 200.303 states, the School Administrative Unit, as a recipient of Federal funds, must establish and maintain effective internal controls 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 addition, under 2 CFR 200.430, it states that charges to the federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must (1) be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated, (2) be incorporated into the official records of the non-Federal entity, (3) reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities, and (4) support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal ward or a federal award and non-Federal award. Condition: During current year testing, it was noted that the School Administrative Unit did not maintain semi-annual certifications for employees whose salaries were charged in whole or in part to federal programs for the second half of the fiscal year. Cause: The absence of certifications appears to be the result of oversight in the School Administrative Unit’s year-end grant compliance procedures. Specifically, management did not have an established monitoring process to ensure that semi-annual certifications were completed and retained for the full fiscal year. Effect: Without proper semi-annual certifications, the School Administrative Unit cannot fully demonstrate that salaries charged to federal programs were based on actual work performed for those programs. This creates the risk of questioned costs under the Uniform Guidance and may jeopardize the allowability of a portion of payroll expenditures charged to federal awards. Questioned Costs: $355,027 Identification as Repeat Finding: As identified in Schedule III, Summary Schedule of Prior Audit Findings, this is a repeat of finding 2023-002. Recommendation: We recommend the School Administrative Unit strengthen its grant compliance procedures by implementing a process to ensure that all required semi-annual certifications are completed timely and retained for each reporting period. This may include assigning responsibility to a specific individual for collecting certifications, establishing reminders at fiscal mid-year and year-end, and periodically reviewing files to confirm compliance. Views of Responsible Officials: Management’s views and corrective action plan is included at the end of this report.
2024-003: Eligibility – Satisfactory Academic Progress Federal Agency: Department of Education Federal Program Title: Student Financial Aid Cluster Assistance Listing Number: 84.007, 84.033, 84.063, 84.268 Award Number and Year: P007A215801 (March 25, 2021 - August 31, 2027), P033A215801 (July 1, 2021 - August 31, 2027), P063P213807 (March 23, 2021 - August 31, 2027), P268K223807 (January 1, 2021 - July 31, 2043) Award Period: July 1, 2023 – June 30, 2024 Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or Specific Requirement: Internal Control – Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should 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: The Code of Federal Regulations,34 CFRs 668.16, 668.32(f), 668.34, 690.75, 675.9, 676.9, 685.200, 686.11, 20 USC 1070h; 42 CFR57.306; 42 USC 293a(d)(2)) states that students must maintain good standing, or satisfactory academic .progress Condition: 2 students of the 22 students selected for eligibility did not maintain academic satisfactory progress and were on probation but did not receive notifications. Questioned Costs: None. Context: During our audit procedures, it was noted that the University, it was noted that 2 of the 22 students selected for testing did not maintain satisfactory academic progress and probation notices were not completed. Cause: Employee turnover during the 23-24 academic year caused this process to not be completed for all students. Effect: The University is not in compliance with the qualitative aspects of its statisfactory academic progress policy. Repeat Finding: No Recommendation: We recommend that the University review its satisfactory academic progress policy to ensure that all notifications are completed as required. Views of Responsible Officials: There is no disagreement with the audit finding.
2024-004: Special Tests and Provision – Outstanding Checks over 240 Days Federal Agency: Department of Education Federal Program Title: Student Financial Aid Cluster Assistance Listing Number: 84.007, 84.033, 84.063, 84.268 Award Number and Year: P007A215801 (March 25, 2021 - August 31, 2027), P033A215801 (July 1, 2021 - August 31, 2027), P063P213807 (March 23, 2021 - August 31, 2027), P268K223807 (January 1, 2021 - July 31, 2043) Award Period: July 1, 2023 – June 30, 2024 Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or Specific Requirement: Internal Control – Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should 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- The Code of Federal Regulations, 34 CFR 668.164(h)(2) states that an institution that attempts to disburse funds by check and the check is not cashed, the institution must return the funds to the Secretary no later than 240 days after the date it issued that check. Condition: Student checks related to student refunds of Title IV federal financial aid was outstanding more than 240 days as of June 30, 2024. Questioned Costs: $44,315. Context: During our audit procedures, it was noted that the University had 84 Title IV outstanding checks at June 30, 2024 that aged over 240 days. The outstanding checks have not been canceled or the funds returned to the Secretary. Cause: Employee turnover in the finance area caused a lapse in the development and implementation of policies and procedures related to Title IV outstanding checks. Effect: The University is not in compliance with Department of Education requirements that all student refund checks that are outstanding for more than 240 days be returned to the Department. Repeat Finding: Yes – 2023-004. Recommendation: We recommend that the University review its procedures related to outstanding student refund checks to ensure they are being returned to the Department of Education after 240 days. Views of Responsible Officials: There is no disagreement with the audit finding.
2024-005: Reporting – Common Origination and Disbursement (COD) Federal Agency: Department of Education Federal Program Title: Student Financial Aid Cluster Assistance Listing Number: 84.007, 84.033, 84.063, 84.268 Award Number and Year: P007A215801 (March 25, 2021 - August 31, 2027), P033A215801 (July 1, 2021 - August 31, 2027), P063P213807 (March 23, 2021 - August 31, 2027), P268K223807 (January 1, 2021 - July 31, 2043) Award Period: July 1, 2023 – June 30, 2024 Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or Specific Requirement: Internal Control – Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should 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- From the 2022-23 FSA Handbook: to be in compliance with reporting disbursements and disbursement adjustments within 15 days. The date funds are credited to a student’s account in the institution’s general ledger or any subledger of the general ledger or paid to a student directly is the disbursement date the financial aid office reports to COD. The Common Origination and Disbursement (COD) additional requirements are: (1) Schools must use the COD system to request and receive federal student aid funds, including Direct Loans, Pell Grants, and Campus-Based aid programs. Schools must ensure that all disbursements of federal student aid are made through the COD system. (2) Schools must reconcile their records with the COD system to ensure that all disbursements are accurately reported and recorded. (3) Schools must comply with COD reporting requirements, including reporting disbursements, adjustments, and cancellations in a timely and accurate manner. Condition: During audit procedures, we noted the following items were incorrectly reported to the COD: Fall 2023 • For 4 of 16 student disbursements tested, the PELL disbursement date did not match between COD and the student ledgers. • For 4 of 16 student disbursements tested, the PELL applied dates did not fall within the 15 day requirement from the disbursement date. • For 2 of 16 student disbursements tested, the PELL disbursement amount did not match between COD and the student ledgers. • For 1 of 15 student disbursements tested, the Subsidized Direct Loan applied date did not fall within the 15 day requirement from the disbursement date. • For 2 of 8 student disbursements tested, the Unsubsidized Direct Loan applied dates did not fall within the 15 day requirement from the disbursement date. Spring 2024 • For 3 of 16 student disbursements tested, the PELL disbursement dates did not match between COD and the student ledgers. • For 3 of 16 student disbursements tested, the PELL applied dates did not fall within the 15 day requirement from the disbursement date. • For 1 of 16 student disbursements tested, the PELL disbursement amount did not match between COD and the student ledgers. • For 3 of 15 student disbursements tested, the Subsidized Direct Loan applied dates did not fall within the 15 day requirement from the disbursement date. • For 1 of 8 student disbursements tested, the Unsubsidized Direct Loan applied date did not fall within the 15 day requirement from the disbursement date. Summer 2024 • For 1 of 16 student disbursements tested, the PELL disbursement date did not match between COD and the student ledgers. • For 1 of 16 student disbursements tested, the PELL applied dates did not fall within the 15 day requirement from the disbursement date. • For 1 of 16 student disbursements tested, the PELL disbursement amount did not match between COD and the student ledgers. • For 2 of 15 student disbursements tested, the Subsidized Direct Loan applied dates did not fall within the 15 day requirement from the disbursement date. • For 3 of 8 student disbursements tested, the Unsubsidized Direct Loan applied dates did not fall within the 15 day requirement from the disbursement date. • For 1 of 1 student disbursements tested, the Parent Plus Direct Loan applied date did not fall within the 15 day requirement from the disbursement date. Questioned Costs: None. Context: During audit procedures, we noted the following items: Fall 2023 • For 4 of 16 student disbursements tested, the PELL disbursement date per the student ledger compared to COD was as follows: a. 9/1/23 per student ledger and 4/5/24 per COD. b. 9/22/23 per student ledger and 2/15/24 per COD c. 11/10/23 per student ledger and 2/2/24 per COD d. 11/16/23 per student ledger and 6/21/24 per COD • For 4 of 16 student disbursements tested, the PELL applied date per the student ledger compared to COD was as follows: a. 9/1/23 per student ledger and 4/18/24 per COD. b. 9/22/23 per student ledger and 7/8/24 per COD c. 11/10/23 per student ledger and 2/12/24 per COD d. 11/16/23 per student ledger and 7/9/24 per COD • For 2 of 16 student disbursements tested, the PELL disbursement amount per the student ledger compared to COD was as follows: a. $925 per student ledger and $1,848 per COD b. $924 per student ledger and $1,849 per COD • For 1 of 15 student disbursements tested, the Subsidized Direct Loan applied date per the student ledger compared to COD was as follows: a. 11/10/23 per student ledger and 12/12/23 per COD • For 2 of 8 student disbursements tested, the Unsubsidized Direct Loan applied date per the student ledger compared to COD was as follows: a. 9/15/23 per student ledger and 10/2/23 per COD b. 11/10/23 per student ledger and 12/12/23 per COD Spring 2024 • For 3 of 16 student disbursements tested, the PELL disbursement date per the student ledger compared to COD was as follows: a. 2/2/24 per student ledger and 6/21/24 per COD for all 3 students • For 3 of 16 student disbursements tested, the PELL applied date per the student ledger compared to COD was as follows: a. 2/2/24 per student ledger and 11/15/24 per COD for 2 students b. 2/2/24 per student ledger and 7/9/24 per COD for 1 student • For 1 of 16 student disbursements tested, the PELL disbursement amount per the student ledger compared to COD was as follows: a. $1,849 per student ledger and $2,773 per COD • For 3 of 15 student disbursements tested, the Subsidized Direct Loan applied date per the student ledger compared to COD was as follows: a. 3/1/24 per student ledger and 4/17/24 per COD for all 3 students • For 1 of 8 student disbursements tested, the Unsubsidized Direct Loan applied date per the student ledger compared to COD was as follows: a. 3/1/24 per student ledger and 4/17/24 per COD Summer 2024 • For 1 of 16 student disbursements tested, the PELL disbursement date per the student ledger compared to COD was as follows: a. 6/21/24 per student ledger and 7/3/24 per COD • For 1 of 16 student disbursements tested, the PELL applied date per the student ledger compared to COD was as follows: a. 6/21/24 per student ledger and 7/23/24 per COD • For 1 of 16 student disbursements tested, the PELL disbursement amount per the student ledger compared to COD was as follows: a. $372 per student ledger and $1 per COD • For 2 of 15 student disbursements tested, the Subsidized Direct Loan applied date per the student ledger compared to COD was as follows: a. 6/21/24 per student ledger and 7/9/24 per COD b. 7/3/24per student ledger and 7/23/24 per COD • For 3 of 8 student disbursements tested, the Unsubsidized Direct Loan applied date per the student ledger compared to COD was as follows: a. 6/21/24 per student ledger and 7/9/24 per COD for 2 students b. 7/3/24 per student ledger and 1/31/25 per COD for 1 student • For 1 of 1 student disbursements tested, the Parent Plus Direct Loan applied date per the student ledger compared to COD was as follows: a. 8/21/24 per student ledger and 1/31/25 per COD Cause: Employee turnover during the academic year caused this process to not be completed accurately. Effect: The University is not complying with federal requirements of reporting and information-sharing requirements established by the Department of Education. Repeat Finding: Yes – 2023-006. Recommendation: We recommend that the entity strengthen its internal controls to ensure that all disbursement dates are reported to COD accurately and timely. Views of Responsible Officials: There is no disagreement with the audit finding.
2024-006: Special Tests and Provisions – The Gramm-Leach-Bliley Act (GLBA) Federal Agency: Department of Education Federal Program Title: Student Financial Aid Cluster Assistance Listing Number: 84.007, 84.033, 84.063, 84.268 Award Number and Year: P007A215801 (March 25, 2021 - August 31, 2027), P033A215801 (July 1, 2021 - August 31, 2027), P063P213807 (March 23, 2021 - August 31, 2027), P268K223807 (January 1, 2021 - July 31, 2043) Award Period: July 1, 2023 – June 30, 2024 Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or Specific Requirement: Internal Control – Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should 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- The Gramm-Leach-Bliley Act (Public Law 106-102) requires financial institutions to explain their information-sharing practices to their customers and to safeguard sensitive data. (16 CFR 314) The Federal Trade Commission considers Title IV-eligible institutions that participate in Title IV Educational Assistance Programs as “financial institutions” and subject to the Gramm-Leach-Bliley Act (16 CFR 313.3(k)(2)(vi). Condition: Under an institution’s Program Participation Agreement with the Department of Education and the Gramm-Leach-Bliley Act, schools must protect student financial aid information, with particular attention to information provided to institutions by the Department or otherwise obtained in support of the administration of the federal student financial aid programs. Questioned Costs: None Context: During our audit procedures, it was noted that the university did not conduct a risk assessment that addresses (2) and (3) of the 3 areas noted in 16 CFR 314.4 (b) which are (1) Employee training and management; (2) Information systems, including network and software design, as well as information processing, storage, transmission and disposal; and (3) Detecting, preventing and responding to attacks, intrusions, or other systems failures and document safeguards for identified risks. Cause: The University experienced turnover in the department responsible for this process. Effect: The student personal information could be vulnerable. Repeat Finding: Yes – 2023-008. Recommendation: We recommend the University engage a third party or perform the risk assessment for the two areas required by the Gramm-Leach-Bliley Act that have not been completed and documented and ensure that there are documented safeguards for identified risks. Views of Responsible Officials: There is no disagreement with the audit finding.
2024-007: Special Tests and Provisions – Return of Title IV Funds Federal Agency: Department of Education Federal Program Title: Student Financial Aid Cluster Assistance Listing Number: 84.007, 84.033, 84.063, 84.268 Award Number and Year: P007A215801 (March 25, 2021 - August 31, 2027), P033A215801 (July 1, 2021 - August 31, 2027), P063P213807 (March 23, 2021 - August 31, 2027), P268K223807 (January 1, 2021 - July 31, 2043) Award Period: July 1, 2023 – June 30, 2024 Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or Specific Requirement: Internal Control – Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should 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- The financial aid personnel and the accounting department and the management accounting systems of each non-Federal entity must provide for, effective controls over, and accountability for all students the withdraws from the University [2 CFR §668.22]. Condition: The University does not have a process in place to ensure all required return to Title IV funding calculations are identified, completed, and reviewed in a timely manner. The return to Title IV funding calculation performed on students withdrawn from the University did not include a control process to review and approve the calculations for accuracy prior to changes being made to the student’s award. Questioned Costs: $1,849. Context: During our audit procedures, we noted that the 1 student withdrawl did not have a return to Title IV calculation completed timely as the student officially withdrew 8/29/23 and the calculation was not completed until 3/24/25. We also noted that the calculation that was preformed did not include documentation of the control process to review and approve the calculations prior to changes being made to the student’s award. Cause: The University must maintain adequate data and documentation, but due to change in management and turnover in office, there was a lack of conveying institutional knowledge and processes. Effect: The University is not complying with federal requirements of reporting and information-sharing requirements established by the Department of Education. Repeat Finding: No. Recommendation: We recommend the institution maintain proper documentation in accordance with federal grantor requirements and ensure that the documents are readily available for review upon request, including monitoring of students with triggering events that require a return to Title IV calculation to be completed, reviewed, and approved. Views of Responsible Officials: There is no disagreement with the audit finding.
LACK OF PROCEDURES TO ENSURE PROPER SUSPENSION AND DEBARMENT REQUIREMENTS Program: AL 21.027 – COVID-19 – Coronavirus State and Local Fiscal Recovery Funds – Suspension & Debarment Grant: SLFRP0923, March 3, 2021, through December 31, 2024 Federal Grantor: U.S. Department of the Treasury Criteria: Title 2 of the U.S. Code of Federal Regulations (CFR) § 200.303 (January 1, 2023) states the following, in relevant part: 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). The U.S. Department of the Treasury adopted the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards in 2 CFR § 1000.10 (January 1, 2023), which states the following: Except for the deviations set forth elsewhere in this Part, the Department of the Treasury adopts the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, set forth at 2 CFR part 200. 2 CFR § 200.214 (January 1, 2023) states the following: Non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. 2 CFR § 180.300 (January 1, 2023) requires non-Federal entities to verify that an entity is not excluded or disqualified prior to entering into a covered transaction by: “(a) Checking SAM Exclusions; or (b) Collecting a certification from that . . . [entity]; or (c) Adding a clause or condition to the covered transaction with that . . . [entity].” A good internal control plan requires the County to have proper procedures in place to verify that contractors paid with Federal funds are not suspended, debarred, or otherwise excluded from or ineligible for participation in Federal programs or activities. Condition: The County did not have controls in place to ensure that suspension and debarment requirements were followed and adequately documented. We noted the County used Coronavirus State and Local Fiscal Recovery Funds to pay ten vendors over $25,000 each, totaling $2,788,905, during the fiscal year ended June 30, 2024. The County failed to ensure that these vendors were not excluded or disqualified prior to entering into these covered transactions. Context: The County did not have a system in place to ensure proper application of the federal guidelines for the federal disbursements. Effect: Without adequate procedures to ensure contractors are not suspended, debarred, or otherwise excluded from or ineligible for participation in Federal programs or activities, there is an increased risk for the misuse of Federal funds and noncompliance with Federal regulations, leading to possible Federal sanctions. Cause: Lack of procedures and knowledge regarding suspension and debarment requirements. Questioned Costs: None Repeat Finding: Yes Recommendation: We recommend the County implement procedures to ensure, prior to entering into a covered transaction, that a contractor is not suspended, debarred, or otherwise excluded from or ineligible for participation in Federal programs or activities, and those procedures are adequately documented. View of Officials: The County will implement procedures to ensure when a contractor is paid with federal funds, sam.gov will be utilized to verify the entity has not been suspended or debarred and such procedure will be adequately documented.
Criteria: 2024 Compliance Supplement and 2 CFR 200.303(a) stated that the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and terms and conditions of the federal award. In addition, the eligibility of those individuals who were admitted to the program should be determined by (1) obtaining applications that contain all the information needed to determine eligibility, including diagnosis, documentation of housing need, income, rent, and order of selection; and (2) obtaining third party verifications or documentation of expected income, assets, unusual medical expenses, and any other pertinent information., Condition/Context: As a result of our audit procedures over 9 cases selected for testing, we noted 9 instances where management did not have a review process in place for the intake forms prepared by an employee during the eligibility process. Additionally, in 6 of the 9 instances, some of the information needed to determine eligibility was not retained. This missing information included, but was not limited to, income/employment verification and letter of diagnosis. Repeat Finding from Prior Year(s): No Cause and Effect: Eden did not have adequate controls in place to ensure that eligibility intake forms were reviewed and that the necessary information for eligibility determination was retained. Questioned Cost: None Recommendation: We recommend that management implement policies and procedures requiring eligibility intake forms to be reviewed by appropriate personnel to ensure all required documents are requested and retained in the case file. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding that the internal controls required for this program had material weaknesses. To ensure proper program management, program staff have created appropriate procedures and processes to demonstrate internal controls. These include a manager review of potential clients, a checklist for ensuring that the program collects and maintains required records, and a procedure for collecting and storing third-party documentation for client program intake/eligibility, diagnosis, and income.
2024-009 Excess Food Service Fund Balance (Material Weakness) Federal Agency: U.S. Department of Agriculture Pass-through Agency: New Hampshire Department of Education Cluster/Program: Child Nutrition Cluster Assistance Listing Numbers: 10.553 & 10.555 Passed-through Identification: N/A Compliance Requirement: Special Tests and Provisions Type of Finding: Internal Control over Compliance – Material Weakness Material Noncompliance Criteria or Specific Requirement: Federal regulations 2 CFR 200.303 states, the School District, as a recipient of Federal funds, must establish and maintain effective internal controls 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 addition, under 7 CFR, 210.14(b), Net Cash Resources, “the school food authority shall limit its net cash resources to an amount that does not exceed 3 months average expenditures for its nonprofit school food service.” Condition: During review of the food service unassigned fund balance, it was noted that the balance exceeded three months’ average expenditures. The fund balance in the food service fund amounted to $60,318 whereas three months’ average expenditures is $51,839. This generates excess fund balance of $8,479. Effect: The School District is not in compliance with CFR Title 7, 210.14(b) by maintaining fund balance more than three months average expenditures. Cause: Lack of administrative oversight. Questioned Costs: $8,479. Repeat Finding: As identified in Schedule III, Summary Schedule of Prior Audit Findings, this is a repeat of finding 2023-011. Recommendation: We recommend that the School District take immediate steps to reduce its net cash resources by having an acceptable, approved plan for using surplus fund balance. Since program funds must be used only for program purposes, excess fund balance must be reduced by improving the quality of food served or purchasing needed supplies, services, or equipment unless otherwise directed by the State of New Hampshire Department of Education. Views of Responsible Officials: Management’s views and corrective action plan is included at the end of this report.
U.S. Department of Health and Human Services Federal Financial Assistance Listing 93.217 Family Planning Services Project Grant – FPHPA006544 Allowable Costs Significant Deficiency in Internal Control over Compliance and Immaterial Instance of Noncompliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the Organization is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award, including with respect to allowable costs. Condition: In connection with the audit performed, an instance was noted of funds maintained by the entity’s grants division being used to purchase pharmaceutical products that could be used for abortion purposes (as prohibited by 42 CFR section 59.5(a)(5)). The Organization’s policy is to not purchase such products through the entity’s grants division. Cause: The Organization’s internal controls did not detect the error. Effect: There is an increased risk of noncompliance when internal controls are not adequately established, followed, and documented relating to allowable costs requirements. Questioned Costs: None reported. Context/Sampling: Nonstatistical sampling was used for testing this compliance requirement. Sample size was 60 transactions out of 3,500 total program transactions and included $144,939 out of $7,661,509 expenses. There was one error noted during our testing and it was noted that $1,124 of costs charged to the program were used for costs that could be used for unallowable purposes. Repeat Finding from Prior Year(s): No Recommendation: The Organization should improve its processes and controls for identifying costs that do not meet the criteria to be purchased. Views of Responsible Officials: Management agrees with this finding.
Finding Number: 2024‐001 Repeat Finding: No Program Name/Assistance Listing Title: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Agency: U.S. Department of Treasury Federal Award Number: WC2‐099‐2023 Pass‐Through Agency: Water Infrastructure Finance Authority of Arizona Questioned Costs: N/A Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Reporting Criteria In accordance with 2 CFR Part 200.303, the District is responsible for the 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 term and conditions of the Federal award. Condition The District did not have adequate internal controls in place to ensure eligible expenditures for the Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) were reported on the Schedule of Expenditures of Federal Awards (SEFA). Cause The District was unaware the grant was federal in nature although it was stated so in the final grant agreement. Effect The District did not ensure the grant expenditures were properly reported on the Schedule of Expenditures of Federal Awards, resulting in the need for the single audit report to be reissued. Context The District recorded the CSLFRF revenues and expenditures in a state grant fund. As a result the expenditures were not reported on the SEFA and the single audit had to be reissued. The sample was not intended to be, and was not, a statistically valid sample. Recommendation The District should provide training for those with grant management responsibilities. The District should also have more consistent and timely oversight of grants by higher level management to confirm all Federal awards have been recorded appropriately in the District’s financial records system. Views of Responsible Officials See Corrective Action Plan.
Finding 2024-007 – Lack of Internal Controls Over Major Federal Program – Coronavirus State and Local Fiscal Recovery Fund (Repeat Finding – 2022-007, 2023-007) PASS-THROUGH GRANTOR: Direct Grant FEDERAL AGENCY: U.S. Department of Treasury ASSSITANCE LISTING: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance, Procurement and Suspension and Debarment; Reporting; and Subrecipient Monitoring QUESTIONED COSTS: $0 Condition: During the process of documenting the County’s internal controls regarding federal disbursements, we noted that Comanche County has not established procedures to ensure compliance with the following compliance requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; 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 requirements for this program and implement internal control procedures to ensure compliance with requirements. Management Response: Chairman of the Board of County Commissioners: The Board of County Commissioners will work with all County Officials to go over all grants and federal monies that Comanche County receives to ensure that proper internal controls are implemented. 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, 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.
Finding 2024-014 – Noncompliance with Reporting Requirements Over Federal Grant – Coronavirus State and Local Fiscal Recovery Fund (Repeat Finding – 2022-0014, 2023-0014) PASS THROUGH GRANTOR: Direct Grant FEDERAL AGENCY: U.S. Department of Treasury ASSISTANCE LISTING: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Reporting QUESTIONED COSTS: $0 Condition: In the review of forty-seven (47) expenditures for federal programs, eleven (11) instances were noted where the expenditures were not correctly reported on the Coronavirus State and Local Fiscal Recovery Funds compliance reports. The expenditures were not reported in the correct quarter. Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal expenditures are properly reported in accordance with federal compliance requirements. Effect of Condition: This condition resulted in noncompliance with grant requirements. Recommendation: OSAI recommends the County design and implement a system of internal controls to ensure the accuracy and completeness of information submitted. Management Response: Chairman of the Board of County Commissioners: The Board of County Commissioners have hired a grant administrator to assist with the reporting process. We will ensure that the reports are accurate and reported in the proper period. Criteria: 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. 2 CFR § 200.303(a) Internal Controls 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). Additionally, Compliance and Reporting Guidance, State and Local Fiscal Recovery Funds (10. Reporting.) reads as follows: 10. Reporting. 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.
WRITTEN PROCEDURES AND POLICIES: Criteria – 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over federal awards that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Condition – The Hospital has not established policies and procedures to monitor Federal awards for compliance with Uniform Guidance requirements. Cause – The Hospital has not established specific written policies and procedures relative to the management of federal awards. Effect – The Hospital is not in compliance with Federal regulations pertaining to the management of federal awards as required by the Uniform Guidance. Recommendation – The Hospital should establish written procurement policies and procedures to ensure compliance with the Uniform Guidance requirements. Response – We will develop written procedures and policies as required. Conclusion – Response accepted.
2024-001 – Cash Management Federal Agency: U.S. Department of Education Federal Program: Arts in Education Federal Assistance Listing Number: 84.351A Pass-through Entity: Not applicable. Award Identification Number: S351A210115 Year: 2023 and 2024 Criteria: 2 CFR 200.305 requires recipients and subrecipients to minimize the time elapsing between receipt of federal funds and disbursement, ensuring advance payments are limited to the minimum needed and timed to actual, immediate cash requirements for program or project costs. Additionally, 2 CFR 200.303 requires non-Federal entities to maintain effective internal controls over Federal awards to ensure compliance with Federal laws, regulations, and award terms. Condition: During our audit, we noted instances whereby the basis for the funds drawn down from the G6 system were unsupported. Context: This issue appears to be recurring, as several drawdowns over multiple months exceeded actual expenses and were not identified through the Organization’s internal controls. During the audit period, 100% of drawdowns were tested, with cumulative drawdowns exceeding actual expenses by $260,490 out of $1,118,922 total drawdowns at year-end. Cause: Internal controls were not in place to ensure an accurate basis for drawdowns. Effect: The failure to maintain supporting documentation for draw requests could result in drawing funds in excess of actual expenses incurred. Questioned Costs: Known questioned costs are $260,490, calculated as the excess of cumulative federal drawdowns over allowable program expenses as of June 30, 2024. Repeat Finding: Yes Recommendation: We recommend that the Organization implement procedures to ensure that federal drawdowns are based on allowable program expenditures and are supported by general ledger reports of expenses incurred on the Federal program. Staff responsible for drawdowns should receive training on federal cash management requirements. Views of Responsible Officials: See Corrective Action Plan.
CRITERIA/SPECIFIC REQUIREMENT: The Code of Federal Regulations (Code) (2 CFR § 200.332 (e)) requires the Regional Office of Education No. 39 to monitor the activities of the subrecipient to ensure the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward, and that subaward performance goals are achieved. The Code (2 CFR §200.303 (a)) requires the Regional Office of Education No. 39 to establish and maintain effective internal control over the federal award to provide reasonable assurance the Regional Office of Education No. 39 is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Effective internal controls should include procedures over subrecipient monitoring. CONDITION: The Regional Office of Education No. 39 did not have adequate controls over subrecipient monitoring in compliance with the Code. CONTEXT: During our testing of four subrecipients, we noted the Regional Office of Education No. 39 did not adequately monitor its subrecipients’ grant reporting requirements: • 43 of 48 (90%) monthly expenditure reports were not received. • 4 of 48 (8%) monthly expenditure reports were received five to 183 days late. • 4 of 4 (100%) annual performance reports were received 51 to 114 days late. EFFECT: Lack of controls over subrecipient monitoring may result in subrecipients not properly administering the federal programs in accordance with federal regulations. CAUSE: Management indicated this was due to oversight and staffing limitation. RECOMMENDATION: We recommend the Regional Office of Education No. 39 establish and implement procedures over subrecipient monitoring. MANAGEMENT’S RESPONSE: The Regional Office of Education No. 39 agrees with the audit findings and although some subrecipient monitoring was conducted, not all of the required reports were received, or they were not received in a timely manner. The Regional Office of Education No. 39 is implementing policies and procedures to ensure subrecipient monitoring is not only received but received in a timely manner as well.
CRITERIA/SPECIFIC REQUIREMENT: The grant award agreements between the Regional Office of Education No. 39 and Illinois State Board of Education require the Regional Office of Education No. 39 to complete and submit expenditure reports quarterly. The quarterly expenditure reports are due 20 calendar days after the end of the reporting quarter. The Code of Federal Regulations (Code) (2 CFR. §200.303 (a)) requires the Regional Office of Education No. 39 to establish and maintain effective internal control over the federal award to provide reasonable assurance the Regional Office of Education No. 39 is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Effective internal controls should include procedures to ensure compliance with grant reporting requirements and expenditure reports are properly supported. CONDITION: The Regional Office of Education No. 39 did not submit or timely submit the required reports to the Illinois State Board of Education in compliance with the grant award agreement. CONTEXT: During testing of the Regional Office of Education No. 39’s compliance with the grant reporting requirements, we noted the following: One of 44 (2%) quarterly expenditure reports were submitted 31 days late. Five of 44 (11%) quarterly expenditure reports lacked sufficient documentation to support expenditures reported; therefore, we were unable to determine if the quarterly expenditure reports were accurately reported. EFFECT: Failure to meet grant reporting requirements is a noncompliance with the related grant agreement and could result in loss of grant funding in future years. CAUSE: Management indicated that the required reports were not timely submitted, and supporting documentation was unavailable due to oversight and access limitations under the previous finance staff. RECOMMENDATION: We recommend the Regional Office of Education No. 39 implement procedures to ensure adherence to the grant reporting requirements and to ensure quarterly expenditure reports are properly supported. MANAGEMENT’S RESPONSE: The Regional Office of Education No. 39 agrees with the audit findings and will provide close oversight for the timely submission of grant expenditures and performance reports. Checklist, due dates, and reminders are shared from the Regional Superintendent to the Business Office Manager and Program Directors. Management will review the grant report submissions in Illinois Web Application Security (IWAS) for accuracy and completion before approving and submitting to Illinois State Board of Education.
CRITERIA/SPECIFIC REQUIREMENT: The Regional Office of Education No. 39 did not have adequate record keeping over its equipment acquired from federal funds. The Code of Federal Regulations (2 CFR §200.313(d)(1)) requires that procedures for managing equipment acquired with federal funds must maintain property records that include the following information: (i) a description of the property, (ii) manufacturer’s serial number or other identification number, (iii) source of the funding for the property (including the Federal Award Identification Number (FAIN)), (iv) who holds title, (v) acquisition date (vi) cost of the property, (vii) percentage of federal contribution in the project cost for the Federal award under which the property was acquired, (viii) location (ix) use and condition of the property, and (x) and any ultimate disposition data, including date of disposal and sale price of the property. Moreover, the Code (2 CFR §200.303 (a)) requires the Regional Office of Education No. 39 to establish and maintain effective internal control over the federal award to provide reasonable assurance the Regional Office of Education No. 39 is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Effective internal controls should include record keeping and monitoring of equipment acquired from federal funds. CONDITION: The Regional Office of Education No. 39 manually maintains and stores its inventory of property and equipment. Asset details in the property records include only the description of the property, manufacturer’s serial number or other identification number, source of funds, who holds title, acquisition date, and cost of the property. The other minimum requirements specified by the Code including FAIN, location, use and condition of the property are not included in the property records. EFFECT: Inadequate record keeping over equipment acquired from federal funds may result in noncompliance with the Code. CAUSE: Management indicated that the issue was due to oversight and lack of training on requirements. RECOMMENDATION: The Regional Office of Education No. 39 should maintain detailed property records as required by federal regulations to ensure full compliance. MANAGEMENT’S RESPONSE: The Regional Office of Education No. 39 agrees with the audit findings and is implementing documents and procedures to meet requirements in the future
CRITERIA/SPECIFIC REQUIREMENT: The Code of Federal Regulations (Code) (2 CFR §200.510 (b)), establishes criteria and requirements related to the preparation of the schedule of expenditures of federal awards. The Code (2 CFR §200.303 (a)) requires Regional Office of Education No. 39 to establish and maintain effective internal control over the federal award to provide reasonable assurance the Regional Office is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Effective internal controls should include procedures over preparation of the schedule of expenditures of federal awards. CONDITION: The Regional Office of Education No. 39 did not have sufficient internal controls over the preparation of the Schedule of Expenditures of Federal Awards (SEFA) to ensure all federal expenditures during the fiscal year were reported and information in the SEFA was accurately reported. CONTEXT: During our review of the SEFA, we noted the following: Program title descriptions were incorrect. Assistance listing number was incorrectly listed. EFFECT: Failure to report an accurate SEFA affects the required audit coverage to meet federal requirements and can delay an audit beyond the reporting deadline. CAUSE: Management indicated the errors on the SEFA was due to oversight. RECOMMENDATION: The Regional Office of Education No. 39 should establish and implement internal controls over preparation of the SEFA to ensure accurate reporting. MANAGEMENT’S RESPONSE: The Regional Office of Education No. 39 agrees with the audit findings and will work with contracted accounting firm to ensure that the schedule of expenditures of federal awards is accurately reported as required.
Finding 2024-007 – Lack of Internal Controls Over Major Federal Program - Coronavirus State and Local Fiscal Recovery Funds (Repeat Finding – 2022-007, 2023-007) PASS-THROUGH GRANTOR: Direct Grant FEDERAL AGENCY: U.S. Department of Treasury ASSISTANCE LISTING: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Procurement and Suspension and Debarment; Reporting; Subrecipient Monitoring QUESTIONED COSTS: $-0- Condition: During the process of documenting the County’s internal controls regarding federal disbursements, we noted that the County has not established procedures to ensure compliance with the following compliance requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Procurement and Suspension and Debarment; Reporting; 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 with grant requirements and could result in a loss of federal funds to the County. Recommendation: OSAI recommends the County gain an understanding of requirements for this program and implement internal control procedures to ensure compliance with requirements. Management Response: Chairman of the Board of County Commissioners: The Board of County Commissioners will work with all County Officials to go over all grants and federal monies that the County receives to ensure that proper internal controls are implemented. Criteria: OMB 2 CFR 200, Subpart D. 200.303(a) reads as follows: Subpart D-Post Federal Award Requirements §200.303 Internal Controls 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.
Finding 2024-013 – Noncompliance with Reporting Requirements Over Federal Grant Coronavirus State and Local Fiscal Recovery Funds (Repeat Finding – 2022-013, 2023-013) PASS-THROUGH GRANTOR: Direct Grant FEDERAL AGENCY: U.S. Department of Treasury ASSISTANCE LISTING: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Reporting QUESTIONED COSTS: $-0- Condition: The County has not established internal controls to ensure the correct expenditure category is used for reporting payments to the grant administrative contractor. The quarterly reports improperly classified payments totaling $29,578 to a contractor as a ‘Revenue Replacement’ expense instead of using the ‘Administrative’ expense category. Also, the quarterly reports improperly classified payments totaling $513,944 for the Resurrection House as a ‘Revenue Replacement’ expense instead of using the ‘Negative Economic Impact’ expense category as stated in the agreement with the Board of County Commissioners. This entity was also not reflected as a Beneficiary in the quarterly reports. Further, subrecipient agreements for the following pass-through entities were signed and approved by the Board of County Commissioners; however, the entities were not reported as subrecipients in the quarterly reports: • Town of Rush Springs • Grady County Rural Water #6 • Grady County Rural Water #7 • City of Chickasha • City of Minco Additionally, the expense category listed in the quarterly reports differs from the expense category listed in the subrecipient agreements for the following entities: • City of Chickasha • City of Minco 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. Recommendation: OSAI recommends the County gain an understanding of the requirements for this program and implement internal controls to ensure compliance with these requirements. Management Response: Chairman of the Board of County Commissioners: The Board of County Commissioners will take measures to ensure future compliance with all requirements of federal grants. Criteria: 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. Title 2 CFR § 200.303(a) Internal Controls reads (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 Controls 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, your 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.
FA 2024-001 Improve Controls over Wage Rate Requirements Compliance Requirement: Special Tests and Provisions Internal Control Impact: Material Weakness Compliance Impact: Material 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: None Identified Description: A review of construction-related expenditures charged to the Elementary and Secondary School Emergency Relief Fund program revealed that the School District’s internal control procedures were not operating to ensure that Wage Rate Requirements were followed appropriately. Background Information: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the 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 $1,539,170.74 were expended and reported on the Crawford County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2024. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Additionally, the Uniform Guidance, Appendix II to Part 200 – Contract Provisions for Non-Federal Entity Contracts Under Federal Awards, Part D addresses Davis-Bacon Act requirements and states, in part, “When required by Federal program legislation, all prime construction contracts in excess of $2,000 awarded by non-Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, and 3146-3148) as supplemented by Department of Labor regulations (29 CFR Part 5, “Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction”). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor.” Specifically, 29 CFR, Section 5.5 – Contract Provisions and Related Matters requires that these construction contracts contain certain clauses, including minimum wage rate requirements and the submission of certified payrolls. Provisions included in 29 CFR, Section 5.5(a)(3)(ii) state, in part, that “(A) The contractor shall submit weekly for each week in which any contract work is performed a copy of all payrolls… (B) Each payroll submitted shall be accompanied by a “Statement of Compliance,” signed by the contractor or subcontractor.” Condition: Our review of expenditures charged to the ESSER program revealed that the School District entered into construction contracts in excess of $2,000, which required the School District to confirm that these contractors complied with certain Wage Rate Requirements provisions. While it was later noted that the appropriate wage rate was paid to laborers, the School District did not ensure that the contractor submitted the required certified payrolls, which includes a copy of payroll disbursements and a statement of compliance with Wage Rate Requirements, at least weekly during the construction period. Cause: The School District did not appropriately communicate the wage rate requirements to ensure certified payrolls were obtained weekly for each week in which work was performed. Effect: The School District is not in compliance with the Uniform Guidance or ED guidance related to the ESSER program. Failure to ensure that appropriate provisions are included in contracts associated with construction financed in part or in whole with federal funds may expose the School District to unnecessary financial strains and shortages as ED or GaDOE may require the School District to return funds associated with these construction expenditures. Recommendation: The School District should develop policies and procedures to ensure that all construction contracts financed by federal financial assistance reflect appropriate provisions associated with Wage Rate Requirements and that certified payrolls are obtained from contractors as necessary. Furthermore, management should develop and implement a monitoring process to ensure that controls are operating appropriately. Views of Responsible Officials: We concur with this finding.
2024-002 – U.S. Department of Agriculture Assistance Listing #10.553-10.582 School Nutrition Cluster for the period July 1, 2023, through June 30, 2024 Criteria: Per 2 CFR §200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: During our audit of the School Nutrition Cluster, we noted that the Town lacked adequate documentation of internal controls to ensure the accuracy and completeness of required federal reporting. Specifically, the Town did not have documented review procedures in place for the submission of monthly claim forms. Cause: There are no formalized policies and procedures governing the reporting process, including oversight responsibilities and documentation standards. Effect: Without adequate controls, there is an increased risk that reports submitted to the federal awarding agency may contain errors or omissions, potentially leading to improper reimbursement amounts. This could affect funding decisions and compliance with federal requirements. Recommendations: We recommend that the Town implement formal policies and procedures for the preparation and review of federal reports under the School Nutrition Cluster. This should include documented supervisory review, reconciliation to source documentation, and retention of supporting materials to substantiate reported data.
Finding 2024-012 – Lack of Internal Controls Over Major Federal Program – Coronavirus State and Local Fiscal Recovery Funds (Repeat Finding - 2021-012, 2022-012) PASS-THROUGH GRANTOR: Direct Grant FEDERAL AGENCY: U.S. Department of Treasury ASSISTANCE LISTING: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Procurement and Suspension and Debarment; Reporting; Subrecipient Monitoring QUESTIONED COSTS: $-0- Condition: During the process of documenting the County’s internal controls regarding federal disbursements, we noted that the County has not established procedures to ensure compliance with the following compliance requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Procurement and Suspension and Debarment; Reporting; 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 with grant requirements and could result in a loss of federal funds to the County. Recommendation: OSAI recommends the County gain an understanding of requirements for this program and implement internal control procedures to ensure compliance with grant requirements. Management Response: Chairman of the Board of County Commissioners: The Board of County Commissioners will work with all County Officials to go over all grants and federal monies that the County receives to ensure that proper internal controls are implemented. Criteria: OMB 2 CFR 200, Subpart D. 200.303(a) reads as follows: Subpart D-Post Federal Award Requirements §200.303 Internal Controls 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.
Federal Program: Student Financial Aid Cluster – Significant Deficiency Federal Agency: Department of Education ALN Number: 84.063, 84.268, 84.033, 84.007 Criteria: The Code of Federal Regulations (34 CFR 685.309) requires enrollment status changes for students be reported to NSLDS within 30 days or within 60 days if the student with the status change will be reported on a scheduled transmission within 60 days of the change in status. Regulations require the status include an accurate effective date. According to the NSLDS Enrollment Reporting Guide, a student’s Program-Level enrollment status should be reported with the same enrollment status as that student’s campus-level enrollment status for all programs the student is enrolled in at that location, even if the student is not currently taking coursework that applies to a particular program. If the student has withdrawn or graduated from an academic program, a “terminal enrollment status” of ‘W’ or ‘G,’ as appropriate, should be reported for that program, even if the student is still taking coursework applicable to other programs in which the student is enrolled. 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. Effective internal controls should include procedures to ensure enrollment reporting is completed properly. Condition: The College did not properly report the student enrollment change for students who received federal student aid to the NSLDS. The College did not timely report eleven students’ Campus-Level enrollment status change to NSLDS. Context: Out of the 27 students tested, we noted 11 students whose status change at the Program- Level and Campus-Level was not timely reported to NSLDS. Questioned costs There were no questioned costs with respect to this finding. Cause: The College did not have formally documented controls related to the process of enrollment reporting, which is required under Uniform Grant Guidance. Effect: Student status changes exceeded the 60-day period for student enrollment changes reported in roster files. Recommendation: We recommend the College review current processes and implement updated processes and controls for reporting to NSLDS, implementing procedures to ensure submissions are reported timely and accurately. In addition, we recommend the College review the reporting in the system to ensure it can pull accurate reports of student enrollment status. Grantee Comments: See corrective action plan.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Opioid STR; Block Grants for Prevention and Treatment of Substance Abuse Assistance Listing Number: 93.788, 93.959 Federal Award Identification Number and Year: 167552 - 2024 Pass-Through Agency: Oregon Health Authority Pass-Through Number(s): 167552 Award Period: January 4, 2021, through September 29, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Reporting Criteria or specific requirement: 2 CFR 200.303(a) states that a non-federal entity must "Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award." Condition: During our testing we noted that documentation of the review and approval process for indirect costs charged to federal funds, as well as for quarterly reports, was not retained. Questioned costs: None. Context: CLA tested four billing reconciliations that were prepared to recognize the true revenue. For one billing reconciliation, no evidence of review and approval of the indirect cost charged to federal fund (i.e. monthly journal entries) were retained. For all quarterly reporting samples tested (two), no evidence of review and approval was retained to ensure reports are accurate. Cause: Inconsistent application of internal controls procedures. Effect: Without adequate controls in place to ensure costs are accurate, it may result in misappropriation of funds and noncompliance with grant regulations, which could result in penalties or repayment obligations. Repeat Finding: No Recommendation: CLA recommends that additional emphasis of documentary evidence of approvals be made, and such evidence obtained and retained by the Alliance as proof of oversight of expenditure of federal funds. Additionally, CLA recommends increased emphasis and training on the importance of consistent application of procedures and controls. Views of responsible officials: There is no disagreement with the audit finding.
2024-003 Internal Controls System Over Allowable Costs and Allowed Activities. – U.S. Department of Housing and Urban Development, Housing Opportunities for Persons with AIDS, Assistance Listing Number 14.241, Passed Through the City of Las Vegas, Nevada. Criteria: As defined in 2 CFR 200.303, auditee is required to maintain a system of internal control over compliance designed to provide reasonable assurance that federal award transactions executed are in compliance with the terms and conditions of the federal award. Funds utilized under the Housing Opportunities for Persons with AIDS program are required to be expended on costs consistent with those outlined in 2 CRF 200 Subpart E – Cost Principles, and within the core service categories outlined in the grant agreement. Condition: For one pay period selected for testing, two employees charged to the grant did not have an approved grant time sheet which assigns the appropriate time worked by employees to be allocated to the grant. Cause: Internal controls over payroll allocations was not performed consistently to ensure all payroll allocations and related expenses were properly reviewed. Context: Management failed to design and implement consistent internal controls to address the risk of improper payroll amounts being allocated to the grant. Effect: Failure to design and implement controls over the approved payroll allocations could result in the grant being overcharged. Repeat Finding: No Recommendation: We recommend management design and implement a system of internal controls whereby a review of costs and activities and the related supporting schedules being submitted for reimbursement are reviewed on a consistent basis and management ensures proper documentation of this review is maintained to support the performance of the control. Views of Responsible Officials and Planned Corrective Actions: For one of the pay periods selected for testing, two employees charged to the grant did not have an approved grant time sheet which assigns the appropriate time worked by employees to be allocated to the grant. Internal controls over payroll allocations were not performed consistently to ensure all payroll allocations and related expenses were properly reviewed. Management failed to design and implement consistent internal controls to address the risk of improper payroll amounts being allocated to the grant. Failure to design and implement controls over the approved payroll allocations could result in the grant being overcharged. Management intends to put in place additional training for case managers to identify eligibility of clients and ensure proper backup is submitted. Supervisors will ensure all proper back up and supporting documents are included in the case file before submitting.
Finding 2024-018 – Lack of Internal Controls Over Major Federal Program – Highway Planning and Construction Cluster DIRECT GRANT FEDERAL AGENCY: U.S. Department of Transportation ASSISTANCE LISTING: 20.205 FEDERAL PROGRAM CLUSTER: Highway Planning and Construction Cluster FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Procurement and Suspension and Debarment; Special Tests and Provisions QUESTIONED COSTS: $-0- Condition: During the process of documenting the County’s internal controls regarding federal disbursements, we noted that the 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; Special Tests and Provisions. 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 with grant requirements and could result in a loss of federal funds to the County. Recommendation: OSAI recommends the County gain an understanding of requirements for this program and implement internal control procedures to ensure compliance with requirements. Management Response: Chairman of the Board of County Commissioners: The Board of County Commissioners will work with all County Officials to go over all grants and federal monies that the County receives to ensure that proper internal controls are implemented. Criteria: OMB 2 CFR 200, Subpart D. 200.303(a) reads as follows: Subpart D-Post Federal Award Requirements §200.303 Internal Controls 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.
Finding 2024-008 – Lack of Internal Controls Over Major Federal Program – Coronavirus State and Local Fiscal Recovery Funds PASS-THROUGH GRANTOR: Direct Grant FEDERAL AGENCY: U.S. Department of Treasury ASSISTANCE LISTING: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Procurement and Suspension and Debarment; Reporting QUESTIONED COSTS: $-0- Condition: During the process of documenting the County’s internal controls regarding federal disbursements, we noted the County has not established procedures to ensure compliance with the following compliance requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Procurement and Suspension and Debarment; Reporting. 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 with grant requirements and could result in a loss of federal funds to the County. Recommendation: OSAI recommends the County gain an understanding of requirements for this program and implement internal control procedures to ensure compliance with requirements. Management Response: Chairman of the Board of County Commissioners: The Board of County Commissioners will work with all County Officials to go over all grants and federal monies that the County receives to ensure that proper internal controls are implemented. Criteria: OMB 2 CFR 200, Subpart D. 200.303(a) reads as follows: Subpart D-Post Federal Award Requirements §200.303 Internal Controls 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.
FA 2024-001 Improve Controls over Financial Reporting Compliance Requirement: Reporting Internal Control Impact: Material Weakness Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Health and Human Services Pass-Through Entity: Direct AL Number and Title: 93.600 – Head Start Federal Award Number: 04CH011758 (Year: 2020) Questioned Costs: None Identified Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over Head Start program reporting requirements. Background Information: The Head Start program promotes school readiness by enhancing the cognitive, physical, behavioral, and social-emotional development of children through the provision of educational, health, nutritional, social, and other services to low-income children and families. The program is designed to involve parents in their child’s learning and development, and to help parents make progress toward their educational, literacy, and employment goals. Head Start funding was granted directly to the Randolph County Board of Education (School District) by the U.S. Department of Health and Human Services (HHS). HHS requires the School District to submit a Federal Financial Report (SF-425) annually to report Head Start expenditure and cash activity for each award period. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Condition: A review of the SF-425 report filed for the period under review was performed to determine if appropriate internal controls were implemented and applicable compliance requirements were met. Though the report was prepared accurately, auditors noted that the report did not reflect evidence of review or approval by management personnel. Cause: Management was unaware of the requirement to document internal control procedures associated with the annual SF-425 reporting. Effect or Potential Effect: The School District is not in compliance with the Uniform Guidance. Failure to review financial reports for accuracy and completeness could lead to missed deadlines, inaccurate reporting, or obtaining more or less federal funding than the School District was eligible to receive. Recommendation: The School District should establish procedures to ensure that annual financial reports submitted to HHS are supported by the accounting records and evidence of review and approval is obtained prior to the submission of the reports. Views of Responsible Officials: We concur with this finding
Finding #SA2024-001 Cash Management and Accuracy of Federal Financial Reports Assistance Listing Number: 20.507 Assistance Listing Title: COVID-19 – Federal Transit Formula Grants (Urbanized Area Formula Program) – Federal Transit Cluster Name of Federal Agency: Department of Transportation Federal Award Identification Number: CA-2022-083-00 Criteria: The 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards establish and maintain internal control designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Related to these requirements, the City should submit drawdown requests to the Department of Transportation throughout the fiscal year as costs are incurred and Federal Financial Reports should agree with those drawdown requests and supporting accounting records. Drawdown requests should be completed at least quarterly, depending on the volume of program activity, to improve the cash management for the program and to match expenditures with associated revenues throughout the fiscal year. In addition, since the grant is on a reimbursement basis, expenditures should generally be incurred prior to requesting reimbursement from the Department of Transportation unless specifically authorized by the grantor, and costs included in the Federal Financial Reports should be the same as those included in requests for reimbursement. Condition: During our review of the Federal Financial Reports related to grant CA-2022-083-00, we noted that for the first quarter of fiscal year 2024, the report included expenditures in the amount of $364,837, but the City only requested reimbursement in the amount of $265,281 during that same time period. In addition to our review of the Federal Financial Reports, we also reviewed the timing of expenditures in relation to the associated reimbursement requests and noted that for both of the grants listed above, the City did not file for and receive reimbursement for the associated grant expenditures until four to over eight months after the activity took place. The grant drawdowns took place as follows: Period of Federal Expenditures Date of Filing for Reimbursement July 1, 2023 to September 30, 2023 May 20, 2024 October 1, 2023 to December 31, 2023 May 20, 2024 January 1, 2024 to March 31, 2024 September 9, 2024 April 1, 2024 to June 30, 2024 November 25, 2024 Cause: We understand that the City fell behind on drawing down grant funds on a timely basis due to employee turnover and this in turn caused the inaccuracies in the Federal Financial Reports. Effect: The City is not in compliance with the internal control requirements of 2 CFR Section 200.303. The City is not matching expenditures with associated grant revenues throughout the fiscal year by filing timely reimbursement requests as expenditures are incurred and is at risk of filing a reimbursement request after the filing deadlines of the grant. In addition, the late filing of reimbursement requests resulted in inaccurate Federal Financial Reporting to the grantor. Recommendation: The City must develop procedures to ensure grant reports are accurate and agree with supporting accounting records prior to being submitted to the grantor. The City must also develop procedures to ensure that all grant-funded expenditures are included on drawdown requests and those requests should be prepared at least quarterly throughout the fiscal year. View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.
FINDING 2024-200 The Commission did not comply with federal Matching, Level of Effort, and Earmarking grant requirements for the Rehabilitation Services-Vocational Rehabilitation Grants to States program. Type of Finding: Material Weakness, Material Noncompliance Assistance Listing Title: Rehabilitation Services - Vocational Rehabilitation Grants to States Assistance Listing Number: 84.126 Federal Award Number: H126A220017, H126A230017, H126A240017 Program Year: October 1, 2021 – September 30, 2023, October 1, 2022 – September 30, 2024, October 1, 2023 – September 30, 2024 Federal Agency: U.S. Department of Education, Rehabilitation Services Administration Compliance Requirement: Matching, Level of Effort and Earmarking Questioned Costs: Matching: $232,813 Known, Earmarking: $278,509 Known Criteria: The Internal Control Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) identifies control activities that help ensure management directives are carried out and risks are mitigated. These activities include things like approvals, authorizations, verifications, reconciliations, and segregation of duties. The U.S. Code of Federal Regulations (CFR) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR 200.303) requires that a nonfederal entity receiving federal awards establish and maintain internal controls that provide reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions in the federal award. Section 34 CFR 361.60(a)(1) states that the federal share for expenditures made by the State under the vocational rehabilitation services portion of the Unified or Combined State Plan, including expenditures for the provision of vocational rehabilitation services and the administration of the vocational rehabilitation services portion of the Unified or Combined State Plan, is 78.7 percent. The State share for expenditures is 21.3 percent. Requirements in 34 CFR 361.62 state that to maintain a level of nonfederal share it provided in the previous federal fiscal year is at least equal to the total nonfederal share provided by the State two years prior. Section 110(d)(1) of the Rehabilitation Act of 1973 (Rehabilitation Act), as amended by the Workforce Innovation and Opportunity Act (WIOA), requires a state to reserve at least 15 percent of its state allotment, under the State Vocational Rehabilitation (VR) Services grant (Assistance Listing 84.126), for the provision of pre–employment transition services to students with disabilities under section 113 of the Rehabilitation Act. Condition: Grants are issued for an initial 12-month period. If State match requirements are met within the initial period, recipients qualify for an additional 12-month carryover period to spend any unobligated federal funds. Including the carryover period, the federal fiscal year 2024 grant period is October 1, 2023, through September 30, 2025. In State fiscal year 2024, there were 3 grants open – federal fiscal years 2022, 2023, and 2024. The federal fiscal year 2022 grant period was October 1, 2021, to September 30, 2023, and was the only grant period that concluded within State fiscal year 2024. We evaluated the Commission’s compliance with the matching, level of effort, and earmarking requirements for the fiscal year 2022 grant. Matching The Commission is required to provide at least 21.3 percent of total rehabilitation program spending from nonfederal sources as a match. We reviewed the amounts reported as federal and State expenditures on the Commission’s final RSA-17 report for the federal fiscal year 2022 grant. The Commission reported the federal share as $2,954,061 and the State matching expenditures as $835,255, which calculates as 22 percent of total program expenditures and meets match requirements. We compared the amounts reported on the RSA-17 report to the expenditures in the former statewide accounting system (STARS) in State fiscal years 2022 and 2023 and the current statewide accounting system (Luma) in State fiscal year 2024. We verified that the federal expenditures matched the RSA-17 report; however, the State expenditures reported internally were only $566,698, which calculates as 16.1 percent of total program expenditures and does not meet match requirements. The Commission could not provide documentation to support the amounts reported in the RSA-17 report. To calculate questioned costs, we verified that the federal share of expenditures matched the amounts reported in Luma. We calculated the matching requirement by dividing the federal expenditures by the federal participation rate, and then subtracting the federal share to arrive at the state share ($2,954,061 / 0.787 = $3,753,571.79 - $2,954,061 = $799,511). We then compared the required state match amount to the state expenditures in Luma and the result was the Commission expended $232,813 less than the required matching amount ($799,511 - $566,698 = $232,813). Level of Effort Maintenance of effort is one part of the level of effort grant requirements. The Commission is required to spend at least the amount of State funds expended in the fiscal year two years prior. We compared State expenditures for the federal fiscal years 2020 and 2022 grants based on amounts reported on the RSA-17 reports. The State expenditures reported for the federal fiscal year 2020 grant on the September 30, 2021, RSA-17 report were $835,255, and the expenditures reported for the federal fiscal year 2022 grant on the September 30, 2023, RSA-17 report were $835,255 indicating that the maintenance of effort requirement was met. We compared the amounts reported on the RSA-17 report to the expenditures in STARS for State fiscal years 2022 and 2023 and Luma for State fiscal year 2024. The State expenditures for the federal fiscal year 2020 grant were $468,147 and for the federal fiscal year 2022 grant were $566,698, which also indicates that the Commission met maintenance of effort requirements, but the Commission could not provide documentation to support the amounts reported in the RSA-17 reports. Earmarking The Commission is required to spend at least 15 percent of the total federal grant expenditures on the Pre-Employment Transition Services (pre-ETS) program. We identified the total federal grant expenditures in Luma as $2,954,061 and the amount spent on pre-ETS as $164,600, which calculates to 5.57 percent of total spending, indicating that the Commission did not meet earmarking requirements. To calculate questioned costs, we multiplied the total federal grant expenditures by 15% and then subtracted the Pre-ETS amount of expenditures in Luma and found that the Commission expended $278,509 less than the required earmarking amount ($2,954,061 * .15 = $443,106 – $164,600 = $278,509). Cause: Each month, the Commission uses a spreadsheet to calculate its cost allocations in accordance with its cost allocation plan (CAP). This spreadsheet includes calculations to track federal and State expenditures and compliance with matching, level of effort, and earmarking requirements. The CAP spreadsheet is prepared by one person and reviewed by a second person. However, this process did not identify the errors indicating that the staff completing these reviews did not have adequate knowledge to ensure this internal control was effective. Effect: Noncompliance with matching and earmarking requirements could result in a reduced federal award amount in future fiscal years. The Commission’s internal control procedures did not include maintaining documentation to support amounts reported for the matching, level of effort, and earmarking requirements which could lead to future errors. Recommendation: We recommend that the Commission design and implement procedures to monitor compliance with matching, level of effort, and earmarking requirements and retain documentation to support compliance. Providing appropriate training and staff recruitment is critical to ensuring that internal controls are effective in preventing or detecting errors. Additionally, we recommend the Commission contact the federal grantor to resolve the noncompliance with matching and earmarking requirements. Management’s View: Agree - The Cost Allocation Plan (CAP) needs to be updated, resubmitted, and approved through RSA. We also agree that ICBVI needs to provide clear documentation to support the numbers in our CAP. ICBVI has reviewed its documentation and believes we met the federal Matching, Level of Effort, and Earmarking requirements for the Rehabilitation Services-Vocational Rehabilitation Grants to States program. Corrective Action: • Matching and Maintenance of Effort (MOE): ICBVI uses a monthly/semi-monthly CAP process to determine the level of federal draw for reimbursement. These draw amounts are based on the necessary monthly amounts (1/12) of the required 21.3% of the total grant award + match, OR the MOE amount from 2 years prior (whichever is greater). This CAP process keeps track of the Grant Total, Draws to Date, To be Drawn, State Portion, and Match/MOE amount YTD. It is through this systematic monthly process that we calculate what the allowable direct and indirect State expenditures are and will make draws that allow us to reach the Match/MOE targets. Based on our documentation, we have made our Match and MOE amounts for the years in question. Documentation supporting the reported amounts can be found in the CAPs from any FFY. • Earmarking: Allowable expenditures for Pre-Employment Transition Services (Pre-ETS) are also tracked in the CAP. Documentation to support amounts reported can be found in the CAPs from any FFY. • CAP Update and Approval: We have a meeting scheduled with the Director of the Indirect Cost Division at the US Dept of Education on 12/10/25. The CAP will be revised to reflect the current chart of accounts and reporting parameters of the Luma system. We will be submitting an updated CAP for review and approval. • Documentation: All expenditure data and supporting documentation will be sourced directly from Luma and retained for verification. • Internal Controls and Training: ICBVI will continue to improve its internal control procedures to include periodic training and cross-training on compliance requirements, ensuring reviews are substantive and error detection is robust. ICBVI will also seek further guidance from the federal grantor and will document all correspondence and remedial efforts. Auditor’s Concluding Remarks: We thank the Commission for its cooperation and assistance throughout the audit. We continue to assert that the Commission did not provide documentation to support the amounts included on the RSA-17 reports and used to calculate compliance with matching and earmarking requirements. As a result, the only available financial information supports that the Commission did not comply with matching and earmarking requirements. We also want to emphasize that the Commission should work with the federal grantor to determine how to rectify the noncompliance.
FINDING 2024-201 Multiple errors were identified in the amounts reported on the Rehabilitation Services Administration (RSA) reports required for the Rehabilitation Services-Vocational Rehabilitation Grants to States. Type of Finding: Material Weakness, Material Noncompliance Assistance Listing Title: Rehabilitation Services - Vocational Rehabilitation Grants to States Assistance Listing Number: 84.126 Federal Award Number: H126A220017, H126A230017, H126A240017 Program Year: October 1, 2021 – September 30, 2023, October 1, 2022 – September 30, 2024, October 1, 2023 – September 30, 2024 Federal Agency: U.S. Department of Education, Rehabilitation Services Administration Compliance Requirement: Reporting Questioned Costs: None Criteria: The Code of Federal Regulations (CFR) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR 200.303) requires that a nonfederal entity receiving federal awards establish and maintain internal controls that provide reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions in the federal award. Section 2 CFR 200.400 contains the policy guide for cost principles related to federal grant administration. Paragraph (a) states that the nonfederal entity is responsible for the efficient and effective administration of the federal award through the application of sound management practices. Paragraph (d) states that the accounting practices of the nonfederal entity must be consistent with these cost principles and support the accumulation of costs as required by the principles and must provide for adequate documentation to support costs charged to the federal award. Section CFR 200.302 – Financial Management states that federal award recipient’s financial management system must identify all federal awards received and expended and the federal programs under which they were received. Additionally, they must maintain records that sufficiently identify the amount, source, and expenditure of federal funds for federal awards. These records must contain information necessary to identify federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. Condition: The RSA requires the Commission to submit financial reports quarterly. The reports are cumulative and cover the entire grant period through to the end of the reporting period. The RSA also requires a final report at the end of the grant period. The Vocational Rehabilitation Basic Services (BS) Grants are issued for an initial 12-month period. If State match requirements are met within the initial period, recipients qualify for an additional 12-month carryover period to spend any unobligated federal funds. Including the carryover period, the federal fiscal year 2024 grant period is October 1, 2023, through September 30, 2025. The Commission identifies the grant periods using the initials BS and the last two digits of the grant year. During State fiscal year 2024, there were three grants open: BS22, BS23, and BS24. We tested four quarterly reports that reported on the periods within State fiscal year 2024. We identified errors in 3 of the 4 quarterly reports. We also identified errors in the final report for the federal fiscal year 2022 grant which ended on September 30, 2023. The following errors were identified: BS23 – Report Period July 1, 2023, to September 30, 2023 • Line 21 Total Federal Program Income Received: The reported amount was $47,300, and the supporting documentation showed $43,700, resulting in a $3,600 overstatement. This error carried forward to all subsequent quarterly reports because the amounts reported were cumulative. • Line 38A Required Pre-ETS Services Provided: The amount reported was $47,755. The Commission could not provide any documentation to support that amount or provide an explanation for how the amount was calculated. This error carried forward to all subsequent quarterly reports because the amounts reported were cumulative. • Line 38B Authorized Pre-ETS Services Provided: The amount reported was $73,708. The Commission could not provide any documentation to support that amount or provide an explanation for how the amount was calculated. This error carried forward to all subsequent quarterly reports because the amounts reported were cumulative. • Line 39G Transition Services to Youth and Students: The amount reported was $211,595; however, the supporting schedule showed $199,194 resulting in a $12,401 overstatement. The Commission included expenditures outside of the reporting period. • Line 41 Total Innovation and Expansion Expenditures: The amount reported was $20,943. The Commission could not provide any documentation to support that amount or provide an explanation for how the amount was calculated. BS23 – Report Period October 1, 2023, to December 31, 2023 • Line 39G Transition Services to Youth and Students: The amount reported was $211,594; however, the supporting schedule showed $227,249 resulting in a $15,655 understatement. The Commission included expenditures outside of the reporting period. • Line 41 Total Innovation and Expansion Expenditures: The amount reported was $20,943; however, the supporting schedule showed $10,472 resulting in a $10,471 overstatement. BS23 – Report Period January 1, 2024, to March 31, 2024 • Line 39E Business Enterprise Program (Randolph-Sheppard Program): The reported amount was $383,399; however, the supporting schedule showed $383,399 resulting in a $46,380 overstatement. • Line 39G Transition Services to Youth and Students: The amount reported was $254,977, however, the supporting schedule showed $249,977 resulting in a $4,303 overstatement. The Commission included expenditures outside of the reporting period. BS22 – Report Period October 1, 2021, to September 30, 2023 (Final report for federal fiscal year 2022 grant) • Line 21 Total Federal Program Income Received: The reported amount was $0; however, the supporting schedules showed $43,700 resulting in a $43,700 understatement. • Line 37 Administrative Expenditures: The reported amount was $853,677; however, the supporting schedules showed $1,399,438 resulting in a $545,761 understatement. • Line 38A Required Pre-ETS Services Provided: The reported amount was $302,972; however, the supporting schedules showed $287,258 resulting in a $15,714 overstatement. • Line 38B Authorized Pre-ETS Services Provided: The reported amount was $44,151; however, the supporting schedules showed $75,110 resulting in a $30,959 understatement. • Line 39E Business Enterprise Program (Randolph-Sheppard Program): The reported amount was $372,887; however, the supporting schedule showed $438,558 resulting in a $65,671 understatement. • Line 39G Transition Services to Youth and Students: The amount reported was $91,966; however, the supporting schedule showed $76,407 resulting in a $15,559 overstatement. • Line 41 Total Innovation and Expansion Expenditures: The amount reported was $104,647; however, the supporting schedule showed $83,903 resulting in a $20,744 overstatement. We also noted an error while testing compliance with the Matching and Level of Effort requirements using amounts reported on the final RSA-17 report for the federal fiscal year 2022 grant. The Commission reported $835,255 as total State expenditures; however, the amount recorded in STARS was $566,698, resulting in a $268,557 overstatement. Cause: The Commission has designed a procedure to detect errors in reporting prior to issuance. The reports are compiled by one individual and reviewed by a second individual prior to issuing them to the federal agency. However, the review did not detect the errors indicating that the staff completing these reviews did not have adequate knowledge to ensure this internal control was effective. Our testing found that two of the three quarterly reports with errors were not reviewed prior to submission. The Commission could not provide an explanation for the errors. Effect: The RSA uses the RSA-17 reports to determine compliance with federal statutes, regulations, and the terms and conditions of the federal award. Incorrect reporting can affect both the ability to cover current obligations and the amount of future federal grant awards received by the State of Idaho. The total errors in the quarterly reports were overstatements of $219,561 and understatements of $15,655. The total errors in the final report for the federal fiscal year 2022 grant were overstatements of $271,578 and understatements of $701,746. The aggregated errors are a $229,262 understatement of costs. Recommendation: We recommend that the Commission design and implement procedures to ensure accurate federal grant reporting and retain appropriate documentation to support the amounts reported. We also recommend that the Commission review prior submissions, identify correct reporting, and communicate with the federal grantor about resubmitting corrected reports. Providing appropriate training and staff recruitment is critical to ensuring the internal controls are effective in preventing or detecting errors. Management’s View: Agree - These errors in quarterly and final RSA-17 reports are acknowledged, and immediate measures are being taken to address root causes Corrective Action • Accurate Financial Reporting: ICBVI will develop detailed procedures to ensure all amounts reported on federal forms are reconciled to supporting documentation in the accounting system (Luma) prior to submission. • Review and Oversight: A two-person review process will be formalized, ensuring every report is checked for accuracy by a knowledgeable reviewer before submission. • Documentation and Training: Supporting documentation for all line items will be archived securely. Staff will receive training in federal grant reporting standards. Auditor’s Concluding Remarks: We thank the Commission for its cooperation and assistance throughout the audit.
FINDING 2024-202 The Cost Allocation Plan (CAP) used in fiscal year 2024 was not approved by the RSA as required and contained multiple errors. Type of Finding: Material Weakness, Material Noncompliance Assistance Listing Title: Rehabilitation Services - Vocational Rehabilitation Grants to States Assistance Listing Number: 84.126 Federal Award Number: H126A220017, H126A230017, H126A240017 Program Year: October 1, 2021 – September 30, 2023, October 1, 2022 – September 30, 2024, October 1, 2023 – September 30, 2024 Federal Agency: U.S. Department of Education, Rehabilitation Services Administration Compliance Requirement: Allowable Costs/Cost Principles Questioned Costs: $210,203 Known Criteria: The U.S. Code of Federal Regulations (CFR) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR 200.303) requires that a nonfederal entity receiving federal awards establish and maintain internal controls that provide reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions in the federal award. Section 2 CFR 200.400 contains the policy guide for cost principles related to federal grant administration. Paragraph (a) states that the nonfederal entity is responsible for the efficient and effective administration of the federal award through the application of sound management practices. Paragraph (d) states that the accounting practices of the nonfederal entity must be consistent with these cost principles and support the accumulation of costs as required by the principles and must provide for adequate documentation to support costs charged to the federal award. The U.S. Code of Federal Regulations (CFR) Title 34 contains the regulations of the offices of the U.S. Department of Education, including the Rehabilitation Services Administration (RSA). Title 34 CFR § 76.560 (b) states: A grantee must have a current indirect cost rate agreement to charge indirect costs to a grant. Title 2, Subtitle A contains the Office of Management and Budget Guidance for Grants and Agreements. Title 2 CFR § 200 Appendix VII part 3 states: Indirect Cost Allocations Not Using Rates: In certain situations, governmental departments or agencies (components of the governmental unit), because of the nature of their Federal awards, may be required to develop a cost allocation plan that distributes indirect (and, in some cases, direct) costs to the specific funding sources. In these cases, a narrative cost allocation methodology should be developed, documented, maintained for audit, or submitted, as appropriate, to the cognizant agency for indirect costs for review, negotiation, and approval. Condition: The Commission uses a CAP to allocate indirect costs among its various programs that should be certified annually by the RSA. The CAP used by the Commission in fiscal year 2024 was not submitted to the RSA for recertification until April 2025 after we inquired about the certification process and documentation for the CAP. Additionally, this CAP was created to be used with data from STARS and no changes were made to coincide with changes in the chart of accounts and reporting available in Luma. The Commission uses a spreadsheet to calculate the indirect costs in accordance with its CAP. This spreadsheet is prepared each month and also keeps track of total spending for federal grants and calculates the amount of federal draws. We tested 4 of the 12 (33 percent) CAP spreadsheets from State fiscal year 2024 to verify that the expenditure amounts used in the calculations tied to support in Luma. One of the CAP spreadsheets reported monthly expenditures of $703,475; however, reports from Luma showed expenditures of $454,004, which is a difference of $249,471. The Commission could not provide documentation or an explanation to support the difference. Cause: The Commission did not have a procedure in place to review the CAP and submit it for recertification annually as required. The Commission has used the CAP spreadsheet for many years, and it has been changed and prepared by multiple personnel, many of whom no longer work for the Commission. The spreadsheet includes multiple tabs, many formulas, cells with hard coded amounts, and no restrictions or controls on data entry. This creates an environment where data entry errors could be made, or a formula could be overridden, and the errors would be difficult to detect. The primary internal control that the Commission relies upon is that the CAP spreadsheet is prepared by one person and reviewed by a second person. However, this control has been ineffective in preventing errors from occurring. Effect: The CAP used by the Commission was not properly submitted for recertification, was not properly modified for Luma, and was not reviewed for accuracy resulting in multiple errors. The Commission has drawn excess federal funds due to the reliance on inaccurate spreadsheets that are not supported by Luma. The reported expenditures of $703,474 were adjusted down by $95,065 for a new total of $608,409, which was also not supported by the accounting records. This amount, run through the CAP resulted in a draw calculation of $512,644, which is 84 percent of $608,409. To calculate the possible overdraw, we started the allowable calculation with the expenditures identified in Luma of $454,004, less the $95,065 adjustment equaling $358,839 of allowable costs, multiplied by the 84 percent CAP estimation is $302,441 for a possible overdraw of $210,203 ($512,644 - $302,441). Our estimation of the error is based on total program expenditures in Luma for November 2023. The Commission could not provide documentation to support various amounts included in the November CAP calculation and could not explain the reason for the differences. If support for adjustments made was available, the amount of the error may have been reduced. Recommendation: We recommend that the Commission work with the federal grantor, the Rehabilitation Services Administration (RSA), to establish an indirect cost rate plan based on Luma reporting. We further recommend that the Commission design and implement procedures to ensure the indirect cost rate plan is implemented as designed and to ensure that future plans are submitted and approved timely and appropriate supporting documentation is retained. We also recommend that the Commission work with the federal grantor to resolve the questioned costs due to unsupported expenditures. Management’s View: Agree - ICBVI recognizes it did not submit its Cost Allocation Plan for annual recertification as required and that the CAP contained errors due to transition challenges with the new accounting software (Luma). Corrective Action: • CAP Update and Approval: The CAP will be revised to reflect the current chart of accounts and reporting parameters of the Luma system. We have a meeting scheduled with the Director of the Indirect Cost Division at the US Dept of Education on 12/10/25. We will be submitting an updated CAP for review and approval. Annual submission for federal recertification will be scheduled and tracked. • Documentation: All expenditure data and supporting documentation will be sourced directly from Luma and retained for verification. Auditor’s Concluding Remarks: We thank the Commission for its cooperation and assistance throughout the audit. We would like to clarify that some of the errors in the CAP were related to the transition to Luma, however many errors occurred because of a lack of internal controls such as reviews for accuracy, protected cells, and detailed procedures. It is important that the Commission address all of the reasons the CAP was unreliable to ensure only appropriate supported costs are charged to federal grants.
FINDING 2024-203 The Commission is not following Idaho Administrative Rules for Purchasing as required for compliance with the requirements applicable to the Rehabilitation Services-Vocational Rehabilitation Grants to States program. Type of Finding: Material Weakness, Material Noncompliance Assistance Listing Title: Rehabilitation Services - Vocational Rehabilitation Grants to States Assistance Listing Number: 84.126 Federal Award Number: H126A220017, H126A230017, H126A240017 Program Year: October 1, 2021 – September 30, 2023, October 1, 2022 – September 30, 2024, October 1, 2023 – September 30, 2024 Federal Agency: U.S. Department of Education, Rehabilitation Services Administration Compliance Requirement: Procurement, and Suspension and Debarment Questioned Costs: None Criteria: The U.S. Code of Federal Regulations (CFR) contains guidance that nonfederal entities must follow as a condition of receiving federal awards. This guidance in 2 CFR 200.303 requires that a nonfederal entity receiving federal awards establish and maintain internal controls that provide reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions in the federal award. The Internal Control Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) identifies control activities that help ensure management directives are carried out and risks are mitigated. These activities include approvals, authorizations, verifications, reconciliations, and segregation of duties. The CFR procurement standards at 2 CFR 200.317 state that, when procuring property and services under a federal award, a state must follow the same policies and procedures it uses for procurements from its nonfederal funds. The state of Idaho purchasing rules within the Idaho Administrative Procedures Act (IDAPA) contain the following provisions: IDAPA 38.05.01.32. Total Cost: The acquisition cost of property, including all components, options, and add-ons available under the contract, related services, and, in the case of ongoing services, the cost of the full term of the contract, including all authorized renewals. Unless a different total term is provided in the contract, the term used for purposes of total cost is five (5) years. IDAPA 38.05.01.041. Acquisition Procedures: • Small Purchases: Services with less than $25,000 total cost; software with less than $15,000 total cost; property with less than $15,000 total cost; a mix of property and services less than $15,000. o Small purchases do not require acquisition through competitive solicitation. Agencies must comply with the division’s small purchase policy. Property available under single agency or open contracts shall be purchased under such contracts and are not a small purchase under this rule unless otherwise authorized by the administrator. • Informal Purchases: Acquisition of property with a total cost exceeding the dollar limits established in this rule for a small purchase and less than the formal sealed procedure limit are informal purchases. o Informal Purchases may be made using: An informal solicitation issued through e-procurement, unless exempted by the administrator; or The formal sealed procedure, when the purchasing authority makes a written determination that using a formal solicitation is in the best interest of the state, including where selection based solely on cost is not appropriate. o Agencies procuring property under this rule shall maintain a purchasing file containing: The solicitation document posted and quotes received. If the acquisition was not publicly posted, the agency shall include a statement describing the justification for determining that posting was impractical or impossible, along with the administrator’s authorization. If not using e-procurement, the agency shall document the quotes received (or its attempt to obtain quotes) from at least three (3) vendors having a significant Idaho economic presence as defined in Section 67-2349, Idaho Code. • Formal Sealed Procedure: o The sealed procedure limit is one hundred fifty thousand dollars ($150,000). o Purchases of property in excess of the sealed procedure limit are made using the formal sealed procedure, unless exempted by these rules or the administrator. IDAPA 38.05.01.042.01. Exceptions requiring written administrator approval. The administrator may exempt the following purchases from the requirement for competitive solicitation by issuing a written determination to the purchasing authority. • Rehabilitation Agency Acquisitions. Acquisitions of property that is provided by non-profit corporations and public agencies operating rehabilitation facilities serving the handicapped and disadvantaged and that is offered for sale at fair market price as determined by the administrator in accordance with these rules. The buyer must submit a written request to the administrator to purchase from a rehabilitation agency and a written approval from the administrator. The purchase must comply with the division’s policy for rehabilitation agency acquisitions. Condition: We identified two vendors that the Commission paid more than $25,000 in total expenditures in fiscal year 2024 and would be subject to compliance with procurement requirements. We tested payments to those vendors for compliance with procurement policies and found that the Commission could not provide documentation to show that State procurement policies were followed. Cause: The Commission erroneously believed that the exemption for rehabilitation agencies applied to more vendors than just not-for-profit entities and public agencies. The Commission also believed that the State purchasing policies did not apply to vendors with many small purchases that are individually below, but collectively exceed, the purchasing thresholds. The Commission has control procedures in place to ensure that grant expenditures are for allowable activities and costs at the transactional level but did not have control procedures to ensure that State procurement rules were followed. Effect: The State’s purchasing policies are designed to ensure that State and federal funds are expended efficiently to meet the goals of State and federal programs. By not following these policies, the Commission could be overpaying for products and services. Recommendation: We recommend that the Commission design and implement procedures to ensure that State purchasing policies are followed. We further recommend that the Commission design and implement procedures to ensure that appropriate documentation is retained to demonstrate compliance and internal controls were operating as intended. Management’s View: Agree - ICBVI acknowledges the failure to document compliance with state procurement policies for select vendors. Corrective Action: • Policy Clarification: ICBVI will ensure future purchases above the threshold are fully documented in accordance with state requirements. • Procedural Update: A procurement checklist and documentation template will be added to internal controls to support purchases subject to state policy. We have a training setup with DOP on 12/18/25 to help with correcting this deficiency. Upon completion of this training, we will conduct comprehensive internal training for all ICBVI staff to ensure consistent understanding and compliance with state procurement requirements. Auditor’s Concluding Remarks: We thank the Commission for its cooperation and assistance throughout the audit.
FINDING 2024-204 The Commission did not verify that vendors were not suspended or debarred prior to making federal grant payments. Type of Finding: Material Weakness, Material Noncompliance Assistance Listing Title: Rehabilitation Services - Vocational Rehabilitation Grants to States Assistance Listing Number: 84.126 Federal Award Number: H126A220017, H126A230017, H126A240017 Program Year: October 1, 2021 – September 30, 2023, October 1, 2022 – September 30, 2024, October 1, 2023 – September 30, 2024 Federal Agency: U.S. Department of Education, Rehabilitation Services Administration Compliance Requirement: Procurement, and Suspension and Debarment Questioned Costs: None Criteria: The U.S. Code of Federal Regulations (CFR) contains guidance that nonfederal entities must follow as a condition of receiving federal awards. This guidance in 2 CFR 200.303 requires that a nonfederal entity receiving federal awards establish and maintain internal controls that provide reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions in the federal award. Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR 180.300) requires grantees to verify an entity is not suspended or debarred or otherwise excluded before entering into a covered transaction. The verification is accomplished by (1) checking the System for Award Management (SAM) exclusions maintained by the General Services Administration and available online, (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity. Nonfederal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. Covered transactions, as defined by 2 CFR 180.220, include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria. Condition: We identified two vendors that the Commission paid more than $25,000 in total expenditures in fiscal year 2024. We tested compliance with procurement policies for both vendors and found that the Commission could not provide documentation to show that suspension and debarment verifications were completed as required. Cause: The Commission was not completing the suspension and debarment checks because they incorrectly believed that the checks were already being performed by the Office of the State Controller. Effect: We reviewed all vendors selected as part of our testing and verified that none of the vendors were on the SAM list as suspended or debarred. However, the Commission does not have adequate controls in place to ensure it is not entering into covered transactions with suspended or debarred vendors. Vendors can be suspended or debarred for many reasons including financial crimes such as fraud, embezzlement, or bribery, and other issues such as consistent poor performance on previous contracts or violations of laws. Taking steps to ensure vendors are not suspended or debarred is important to prevent fraud, waste, and abuse. Recommendation: We recommend that the Commission develop and implement procedures to ensure that it is not entering into covered transactions with suspended or debarred vendors and retain documentation to support the procedures performed. Management’s View: Agree - ICBVI recognizes the absence of vendor suspension/debarment verifications prior to payment. Corrective Action: • Verification Process: Procedures will be put in place to check applicable vendors against the SAM.gov database on an annual basis. Documentation of each check will be retained and periodically reviewed. • Staff Training: Relevant staff will be trained on suspension/debarment requirements, and responsibility for checks will be clearly assigned. Auditor’s Concluding Remarks: We thank the Commission for its cooperation and assistance throughout the audit.
FINDING 2024-205 The Commission could not provide documentation to support the review of the Schedule of Expenditures of Federal Awards (SEFA) Closing Package. Type of Finding: Material Weakness Assistance Listing Title: Rehabilitation Services - Vocational Rehabilitation Grants to States Assistance Listing Number: 84.126 Federal Award Number: H126A220017, H126A230017, H126A240017 Program Year: October 1, 2021 – September 30, 2023, October 1, 2022 – September 30, 2024, October 1, 2023 – September 30, 2024 Federal Agency: U.S. Department of Education, Rehabilitation Services Administration Compliance Requirement: U.S. Code of Federal Regulations (CFR) 200.510(b ) Questioned Costs: None Criteria: The U.S. Code of Federal Regulations (CFR), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) included in 2 CFR 200.303 requires that a nonfederal entity receiving federal awards establish and maintain internal controls that provide reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions in the federal award. Additionally, 2 CFR 200.510 requires the State to prepare the SEFA, which must include the total federal awards expended for each individual federal award program. The Office of the State Controller requires agencies to complete the SEFA closing package and uses this information to compile the statewide SEFA. Condition: The Commission prepared the SEFA closing package as required but could not provide documentation to show that the closing package was reviewed for accuracy prior to submission. Cause: One Commission employee was listed as the preparer and submitter for the SEFA closing package. Luma did not prevent the same person from preparing and submitting the closing package. The Commission was under pressure to submit the closing package timely and did not document a review process. Effect: We did not detect any errors in the SEFA closing package; however, without a detailed and documented review, errors could be made and remain undetected. Recommendation: We recommend that the Commission design and implement procedures to accurately record, compile, and document the amounts reported in the SEFA closing package and to retain documentation supporting the amounts reported. Management’s View: Agree - ICBVI acknowledges that it did not document the review process for the SEFA closing package. Corrective Action: • Review Documentation: Procedures will be implemented requiring a documented review prior to submission, with signatures from both preparer and reviewer and archiving of supporting schedules. • Procedural Update: We will ensure that the preparer and reviewer/approver are assigned to different individuals for closing packages going forward. This separation of duties will be incorporated into our procedures to strengthen internal controls and enhance the accuracy and integrity of our financial reporting. Auditor’s Concluding Remarks: We thank the Commission for its cooperation and assistance throughout the audit.
FINDING 2024-206 The Department did not complete required reports for the Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Significant Deficiency, Noncompliance Assistance Listing Title: Coronavirus Capital Projects Fund Assistance Listing Number: 21.029 Federal Award Number: CPFFN0170 Program Year: February 4, 2022 – December 31, 2026 Federal Agency: Department of the Treasury Compliance Requirement: Reporting Questioned Costs: None Criteria: The U.S. Code of Federal Regulations (CFR) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR 200.303) states that non-federal entities must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. The Internal Control Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) identifies control activities that help ensure management directives are carried out and risks are mitigated. These activities include reliable financial reporting and compliance with applicable laws and regulations. In addition, the FFATA, as codified in 2 CFR Part 170, requires that subawards of $30,000 or more be reported to the FFATA Subaward Reporting System (FSRS). Condition: The FFATA was developed to provide better transparency over management of federal grants and contracts. Reporting is required for subawards or contracts in excess of $30,000 through the FSRS website. The Department issued 15 subawards for the Capital Projects Fund program (Assistance Listing # 21.029) in fiscal year 2024 with anticipated expenditures in excess of $30,000 each. The Department presumed the Capital Projects Fund program was exempt from FFATA reporting because guidance for this program was provided in conjunction with guidance for another federal program that was exempt from FFATA reporting. Additionally, the FSRS was inaccessible for reporting purposes due to a technical configuration problem until August 2023. However, the configuration problem was corrected in August 2023, and the U.S. Department of the Treasury requested all recipients complete their FFATA reports by June 30, 2024. The Department did not comply with this request. Cause: The Department staff were not aware of the FFATA reporting requirements for the Capital Projects Fund program, nor did they implement internal controls to ensure the accurate and timely submission of the FFATA reports. Effect: The FFATA reports are required to be submitted to the FSRS, which makes the information available to the public in a searchable database. Late reporting, or non-reporting, impacts the integrity of the federal transparency information. Additionally, ineffective internal controls increase the risk that errors or noncompliant reporting could occur and remain undetected. Recommendation: We recommend that the Department design and implement internal controls procedures to ensure an understanding of compliance requirements applicable to grants received and with FFATA requirements for submitting accurate and timely FFATA reports. Management’s View: The Department agrees with this finding. Corrective Action: 1. Multiple RFPs were issued to obtain subject matter experts support for Grant Accounting Support and Grant Administration Support. Internal discussions determined the need for more accounting, administration, and grant management support. Below is our status for support through public procurement. a. The Grant Accounting support was awarded October 2025. b. Procurement of Grant Administration support is in the end stages of award. 2. Updated Procedures (Implemented – April 2025) a. The Department has updated its Notice of Award procedures to explicitly include FFATA reporting as a required step once a Federal grant agreement is fully executed. This requirement is now documented in agency procedures, internal checklists, and award processing workflows. 3. Assignment of Responsibility (Implemented – April 2025) a. Responsibility for FFATA compliance has been formally assigned to the Grants and Contracts Officer with the contracted administrative grant support, with assistance provided from the contracted accounting support when necessary. Their duties now include: i. Completing required FFATA submissions following award execution, and ii. The process has now been added to our internal processes and procedures and updated with staff. 4. Quarterly Monitoring and Verification (April - 2025) a. To prevent recurrence, Grants and Contracts Officer will conduct a quarterly review of all Federal Grant programs to ensure: i. All applicable awards are listed in the FFATA, ii. No required submissions have been omitted. iii. Any discrepancies are corrected promptly. iv. These quarterly reviews will be documented and retained for audit and internal monitoring purposes. 5. Training and Staff Communication (In Progress — Completion in February 2026 a. Training began in April 2025 and was expanded in October 2025 with support from our Grant Accounting Contractor. The contractor assists in finalizing accounting, reporting, and compliance with OMB guidance. They provide training, updated procedures, and staff guidance. Updated procedures and training will be completed in conjunction with our contractor’s subject matter expertise. Updated policies, training materials, and procedural guidance will be completed and fully implemented in February 2026, with training documented and provided to all Grants and Contracts Officers, contracted services, and relevant program personnel. The training includes but is not limited to: a. All Federal reporting requirements (including FFATA) b. Applicable CFR compliance obligations. c. Newly implemented internal controls and review procedures. Auditor’s Concluding Remarks: We thank the Department for its cooperation and assistance throughout the audit.
FINDING 2024-208 The Department does not have documented internal controls functioning as intended for the Title I Grants to Local Educational Agencies (Title I) annual allocation process increasing the risk of errors occurring and going undetected. Type of Finding: Significant Deficiency Assistance Listing Title: Title I Grants to Local Educational Agencies Assistance Listing Number: 84.010 Federal Award Number: 170ED2102:170ED2202; 170ED2302; 500ED2002; 500ED2102; 500ED2202; 500ED2302 Program Year: July 1, 2021 – September 30, 2024; July 1, 2022 – September 30, 2024; July 1, 2023 – September 30, 2025; July 1, 2020 – September 30, 2023 Federal Agency: U.S. Department of Education Compliance Requirement: Eligibility; Matching, Level of Effort, Earmarking; Special Tests and Provisions Questioned Costs: None Criteria: The U.S. Code of Federal Regulations (CFR), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) included in 2 CFR 200.303 requires that a nonfederal entity receiving federal awards establish and maintain internal controls that provide reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions in the federal award. The Internal Control Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) identifies control activities that help ensure management directives are carried out and risks are mitigated. These activities include items such as approvals, authorizations, verifications, reconciliations, and segregation of duties. Condition: Title I is a formula program to States. The U.S. Department of Education (USED) allocates Title I funds to State educational agencies (SEAs) through four statutory formulas (Basic Grants, Concentration Grants, Targeted Grants, and Education Finance Incentive Grants) that are based primarily on the annually updated census poverty local educational agency (LEA) data adjusted for the cost of education in each State. SEAs in turn distribute Title I funds to their LEAs in accordance with Title I requirements. The annual allocation process used by the Department for the Title I program includes steps to determine eligibility of the LEAs, calculate federal earmarking requirements, and ensure funding for new and expanding charter schools. The Department must also ensure that new or significantly expanded charter schools receive the appropriate level of funds under each program for which they are eligible. The new and expanding charter school allocations are determined as part of the annual allocation process. The annual allocation process includes factors for two earmarking requirements. The first requirement is that at least 95 percent of the total Title I funding is passed through to LEAs. The second requirement is that no LEA allocation is below 85 to 95 percent of their prior-year funding. The allocation amounts calculated for distribution to the LEAs and charter schools are maintained using Excel spreadsheet templates. The Department director typically completes a review of the calculations and allocations to each LEA and charter school. Allocations are determined with the initial USED calculations, then with a final allocation, and again if there are revised final allocations. However, the Department’s director and financial principal completed the eligibility and allocation process together during the current audit period. There was no separate documented review completed of the annual allocation calculation in fiscal year 2024. Cause: The Department experienced significant turnover in the financial specialist position since 2022 that made it difficult to completely train staff to perform the annual allocation calculations independently from the standard reviewers; the director and financial principal. No alternative procedures were completed to ensure accuracy. Effect: No errors were noted in the eligibility determinations, earmarking requirements, or funding levels for new and expanding charter schools. However, without a separate documented review, there is an increased risk of errors occurring and going undetected. Recommendation: We recommend that the Department implement internal control procedures that include a separate, documented review process for the annual allocation calculations. Management’s View: The Department agrees with this finding. Corrective Action: Immediately following discussions with the auditors on site, allocations, earmarking, and eligibility summary reports were generated as companions to the regular Title I-A allocations process. These three documents are printed, reviewed by the Federal Programs Director, signed and dated by both the Financial Specialist, Principal and Director, then scanned and uploaded to the shared Department drive. This process is completed with both preliminary allocations and final allocations after LEAs have had the opportunity to complete new and significant expansion-related data uploads, if applicable. Auditor’s Concluding Remarks: We thank the Department for its cooperation and assistance throughout the audit. We want to emphasize that the Department needs to create procedures that include documenting and retaining the information related to the review processes completed.
FINDING 2024-209 The Department does not have documented internal controls functioning as intended for the Title I Grants to Local Educational Agencies (Title I) Assessment and Integrity Guide increasing the risk of errors occurring and going undetected. Type of Finding: Significant Deficiency Assistance Listing Title: Title I Grants to Local Educational Agencies Assistance Listing Number: 84.010 Federal Award Number: 170ED2102:170ED2202; 170ED2302; 500ED2002; 500ED2102; 500ED2202; 500ED2302 Program Year: July 1, 2021 – September 30, 2024; July 1, 2022 – September 30, 2024; July 1, 2023 – September 30, 2025; July 1, 2020 – September 30, 2023; July 1, 2022 – September 30, 2024; July 1, 2023 – September 30, 2025 Federal Agency: U.S. Department of Education Compliance Requirement: Special Tests and Provisions Questioned Costs: None Criteria: The U.S. Code of Federal Regulations (CFR), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) included in 2 CFR 200.303 requires that a nonfederal entity receiving federal awards establish and maintain internal controls that provide reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions in the federal award. The Internal Control Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) identifies control activities that help ensure management directives are carried out and risks are mitigated. These activities include items such as approvals, authorizations, verifications, reconciliations, and segregation of duties. The Department is required to establish and maintain an assessment system that is valid, reliable, and consistent with relevant professional and technical standards. The assessment system must include policies and procedures to maintain test security and ensure that LEAs implement those policies and procedures (Title I, Section 1111(b)(2)(B)(iii) of the Elementary and secondary Education Act (ESEA) (20 U.S. Code 6311(b)(2)(B)(iii))). Condition: As part of complying with the requirements for receiving the Title I grants, the Department is required to maintain a policy manual regarding test security. The Department uses an assessment and accountability team to review and update policies and procedures for test security on an annual basis. The team then meets with the assessment and accountability director; however, there was no documented review of the policy updates in the current audit period. Cause: The Department did not formally document the review process over updates on the test security policy manual. There were changes in personnel, and internal control procedures were not designed effectively to document the review and approval process. Effect: We identified no errors in compliance with the Assessment and Integrity Guide. However, the lack of a documented review process for updates to the test security manual increases the risk of errors or misinformation in test security guidance occurring and going undetected. Further, the lack of review controls could lead to questions about the integrity and effectiveness of the policy changes. Recommendation: We recommend that the Department implement internal control procedures that include a documented review process over updates to the policies of procedures for test security. Management’s View: The Department agrees with this finding. Corrective Action: The Assessment and Accountability team has implemented a process whereby the staff documents their approval in writing, and then the Director documents her approval in writing as well. Those approvals were taking place previously, and now there is a formalized, written process. Auditor’s Concluding Remarks: We thank the Department for its cooperation and assistance throughout the audit.
FINDING 2024-210 The Department did not complete sufficient subrecipient monitoring for the Individuals with Disabilities Education Act (IDEA) program during fiscal year 2024. Type of Finding: Significant Deficiency, Noncompliance Assistance Listing Title: Special Education Cluster Assistance Listing Number: 84.027; 84.173 Federal Award Number: 170ED2131; 170ED2231; 500ED2131; 500ED2141; 500ED2231; 500ED2241; 500ED2331; 500ED2341 Program Year: July 1, 2021 – September 30, 2023; July 1, 2022 – September 30, 2024; July 1, 2021 – September 30, 2023; July 1, 2023 – September 30, 2025 Federal Agency: U.S. Department of Education Compliance Requirement: Subrecipient Monitoring Questioned Costs: None Criteria: The U.S. Code of Federal Regulations (CFR) Uniform Administration Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR 200.303) states that nonfederal entities must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations and the terms and conditions of the federal award. The requirements for pass-through entities are in 2 CFR 200.332, which states that all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and include the following information at the time of the subaward or if information changes. The required information includes: • Federal Award Identification. 1. Subrecipient’s name (which must match the name associated with its unique entity identifier) 2. Subrecipient’s unique entity identifier 3. Federal Award Identification Number (FAIN) 4. Federal award date of award to the recipient by the federal agency 5. Subaward period of performance start and end date 6. Subaward budget period start and end date 7. Amount of federal funds obligated by this action by the pass-through entity to the subrecipient 8. Total amount of federal funds obligated to the subrecipient by the pass-through entity to the subrecipient 9. Total amount of the federal award committed to the subrecipient by the pass-through entity 10. Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA) 11. Name of awarding agency, pass-through entity, and contact information for awarding official of the pass-through entity 12. Assistance Listings (AL) number and title 13. Identification of whether the award is research and development (R&D) 14. Indirect cost rate for the federal award • All requirements imposed by the pass-through entity on the subrecipient so that the federal award is used in accordance with federal statutes, regulations, and the terms and conditions of the federal award. • Any additional requirements that the pass-through entity imposes on the subrecipient in order for the pass-through entity to meet its own responsibility to the federal awarding agency, included identification of any required financial and performance reports. Pass-through entities must also: • Evaluate each subrecipient’s risk of noncompliance with federal statutes, regulations, and the terms and conditions of the subaward for the purpose of determining the appropriate subrecipient monitoring. • Consider imposing specific subaward conditions upon a subrecipient, if appropriate. • Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with federal statutes, regulations, and the terms and conditions of the subawards, and that subaward performance goals are achieved. • Verify that every subrecipient is audited as required by 2 CFR 200, Subpart F, and follow up on the results of those audits. Further guidance is provided by the U.S. Department of Education in the State General Supervision Responsibilities Under Parts B and C of the IDEA, Monitoring, Technical Assistance, and Enforcement, which states that a state should monitor all LEAs within a reasonable period of time and at least once within a six-year period. Condition: The Department has designed a monitoring plan to meet the IDEA subrecipient monitoring requirements that includes reviewing all LEAs in the State within a five-year period. The USED guidelines indicate reviews should occur within a reasonable amount of time and at least once within a six-year period. The annual award notification letters to LEAs contain the required grant award information. The program administrators perform an annual risk assessment of all LEAs and subrecipients receiving IDEA Funds. The risk assessment dictates the frequency of completed monitoring. The LEAs are scheduled to be reviewed every year for high risk, every two years for medium risk, and every four to five years for low risk. There are approximately 180 LEAs receiving IDEA funding each year; therefore, between 36 and 45 subrecipients should be monitored each year. Fiscal year 2022 was the first year in the monitoring cycle, and monitoring was completed during calendar year 2022 for 35 LEAs. Fiscal year 2023 activity monitoring included 5 LEAs monitored in calendar year 2023, 8 LEAs monitored in calendar year 2024, and 14 LEAs monitored in calendar year 2025. Based on the number of reviews completed in the prior four years, it is unlikely that the Department could complete those remaining 118 reviews in calendar year 2026 to be compliant with the Department’s internal policy or at the conclusion of calendar year 2027 to be compliant with USED monitoring guidelines. Cause: The Department does not have effective written policies and procedures to ensure all LEAs are monitored for IDEA activity within an appropriate amount of time. Further, the Department has not implemented appropriate procedures to ensure monitoring is completed at a sufficient level to ensure compliance with federal program requirements. Effect: Monitoring for fiscal year 2023 activity took three years to complete. This created a significant backlog of monitoring to be completed for activity in fiscal years 2024, 2025, and 2026 that ensures every LEA is reviewed at least once in a six-year period to be compliant with federal monitoring requirements. Monitoring LEAs is a critical requirement in accepting federal funds and ensuring that those funds are spent in compliance with allowable costs and other guidelines provided by the grantor. Lack of monitoring of LEAs increases the risk that LEAs may not comply with the grant terms. Recommendation: We recommend that the Department implement robust written procedures outlining monitoring activities so that an appropriate number of LEAs are monitored annually to help ensure compliance with federal requirements. Management’s View: The Department disagrees with this finding. Corrective Action: Although the Department agrees that not as many LEAs were monitored as might normally be in a given year, the Department is on track to have monitoring activities completed for all LEAs within the five-year cycle and in accordance with the US Department of Education’s six-year cycle. There is no statute that states a certain amount of monitoring must take place each year. Rather, states are required to monitor all LEAs within a six-year period. In Office of Special Education Programs (OSEP) QA 23-01, State General Supervision Responsibilities under Parts B and C of the IDEA, it states: “States should ensure all LEAs or EIS programs are monitored at least once within the six-year cycle of the State’s SPP/APR, presumptively implementing a reasonable timeframe for monitoring.” (See also Q A-11). The special education fiscal monitoring process includes robust written policies and procedures to meet federal requirements, and the Department underwent thorough federal on-site monitoring by OSEP in FY 2024 and passed without any fiscal findings. The LEA fiscal monitoring is assigned and takes place throughout the state fiscal year. The Department has completed or is in the process of completing 88 LEA monitors for the first three years in the cycle before the end of calendar year 2025. Corrective actions will be forthcoming, and LEAs have 365 days to complete any state monitoring and enforcement corrective actions under 34 CFR 300.600(e). This program-specific rule complements the Uniform Grant Guidance of 2 CFR 200.332(d) in which passthrough entities (SEAs) “must ensure subrecipients take ‘timely and appropriate action’ to correct deficiencies.” The Department is currently transitioning to year four of the five-year cycle for FY 2025-26 (reviewing FY 2024-25 records). With the support of five contracted staff, 60 LEAs are scheduled between December 2025 and June 2026 to review FY 2024-25 fiscal records (made available in November 2025 when CPA audits are due to the state). The Department is also continuing to close out corrective action plans for LEAs from prior reviews. Year five (FY 2026-27) of the cycle will evaluate the FY 2025-26 fiscal records of remaining LEAs. Those LEAs will not be available to monitor until November 2026 when LEA CPA audits are finalized and available. The Department will conduct those reviews in FY 2026-27 (after November 2026). The Department will continue to conduct other monitoring activities throughout the year for all LEAs including through claim reimbursement reviews, the annual IDEA Part B Application, and the risk assessment activities in alignment with Idaho’s Special Education System of General Supervision. Auditor’s Concluding Remarks: We thank the Department for its cooperation and assistance throughout the audit. We continue to assert that the Department’s documented progress monitoring LEAs through the end of fiscal year 2024 does not indicate it will comply with federal monitoring requirements. As stated in the finding, documentation reviewed shows that only 62 out of 180 LEAs have been monitored over three and ¾ years, between January 2022 and October 2025. Approximately 63% of the available 6 year monitoring period has elapsed and the Department has only completed approximately 34% of the required reviews. While the Department indicates its intention to catch up the completed reviews, it is unlikely to occur until the Department not only outline a well-defined schedule of monitoring to be completed that complies with the requirements, but also tracks its performance of monitoring completed each year to ensure that each LEA is monitored at least once every six years in accordance with federal monitoring guidelines.
FINDING 2024-211 The Department did not consistently document compliance with federal suspension and debarment requirements for the Coronavirus State and Local Fiscal Recovery Funds program. Type of Finding: Material Weakness, Noncompliance Assistance Listing Title: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Number: SLFRP0142 Program Year: March 3, 2021 – December 31, 2024 Federal Agency: Department of the Treasury Compliance Requirement: Procurement, and Suspension and Debarment Questioned Costs: None Criteria: The U.S. Code of Federal Regulations (CFR) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) (2 CFR Part 180.300) requires grantees to verify an entity is not suspended or debarred or otherwise excluded before entering into a covered transaction. The verification is accomplished by (1) checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration and available online, (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity. Nonfederal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. Covered transactions, as defined by 2 CFR 180.220, include contracts for goods and services awarded under a non-procurement transaction (for example, grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria. The Uniform Guidance included in 2 CFR 200.303 requires that a nonfederal entity receiving federal awards establish and maintain internal controls that provide reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulation, and the terms and conditions in the federal award. Condition: During fiscal year 2024, the Department procedures utilized the process for routing a contract to verify that a vendor was not suspended and debarred. The routing slip includes necessary bidding documents, solicitation documents, bidder evaluations, SAM check on vendor, and the notice of award, as documented in the Department’s DEQ Contract Officer Desk Manual. Contracts 2495 and 2392, solicited to respective contractors Amplifund and Energy Laboratories, did not include evidence of the required SAM check for the vendor on the routing slip. This resulted in two deviations out of a sample of four, reporting a 50 percent exception rate. The Department’s fiscal officer informed us that these contracts were solicited through the State Division of Purchasing; however, the Department was unable to provide information from the State Division of Purchasing that the SAM check was done prior to funds being sent to the vendor. The responsibility to ensure compliance with federal requirements remains with the Department issuing the contract. Cause: Department staff did not verify that all steps required on the routing slip were appropriately completed when a contract was solicited by the State Division of Purchasing. Effect: We did not identify suspended or debarred vendors receiving federal funds during our testing. However, the requirement is to ensure that funds do not go to a contractor that is suspended or disbarred and without a consistently applied and documented internal control the Department increases the risk of paying funds to a contractor who is suspended or disbarred Recommendation: We recommend that the Department strengthen control procedures to include procedures to document the Department’s verification that vendors are not suspended or debarred prior to entering into a covered transaction whether the contract is solicited by the Department or by the State Division of Purchasing. Management’s View: We agree with and acknowledge the finding presented and are committed to addressing it with the following corrective action plan. Corrective Action: The agency utilizes a routing slip or checklist that includes a suspension and debarment check, which will be used and reviewed prior to entering into a covered transaction. This check will be done regardless of whether the solicitation is through our Department, or the State Division of Purchasing. DEQ has had significant turnover in the fiscal office, which has resulted in gaps of knowledge of policies and practices. In summer 2025, DEQ leadership reorganized the fiscal department to improve efficiency, enhance oversight of grants and contracts, and strengthen financial controls. The fiscal office is currently in a rebuilding phase and is dedicated to training and developing staff, implementing best practices, and documenting processes and procedures, including those for federal grant compliance. Auditor’s Concluding Remarks: We thank the Department for its cooperation and assistance throughout the audit.
FINDING 2024-212 The Department’s Indirect Cost Rate Proposal (ICRP) contained multiple errors. Type of Finding: Material Weakness, Material Noncompliance Assistance Listing Title: Drinking Water State Revolving Fund; Clean Water State Revolving Fund Assistance Listing Number: 66.468; 66.458 Federal Award Number: Various Program Year: Various Federal Agency: Environmental Protection Agency Compliance Requirement: Activities and Costs Allowed Questioned Costs: Undetermined Criteria: The U.S. Code of Federal Regulations (CFR) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR 200.303) requires that a nonfederal entity receiving federal awards establish and maintain internal controls that provide reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions in the federal award. Section 2 CFR 200.400 contains the policy guide for cost principles related to federal grant administration. Paragraph (a) states that the nonfederal entity is responsible for the efficient and effective administration of the federal award through the application of sound management practices. Paragraph (d) states that the accounting practices of the nonfederal entity must be consistent with these cost principles and support the accumulation of costs as required by the principles and must provide for adequate documentation to support costs charged to the federal award. Condition: The Department uses an Indirect Cost Rate Agreement to charge indirect costs to its programs. We reviewed the ICRP used to calculate the indirect cost rate in place in fiscal year 2024 and found multiple errors: • The direct cost base was reported as $27,355,390; however, the ICRP did not define the methodology used to calculate that amount, the amount reported was also not defined in a detailed schedule in the ICRP, and the Department could not provide documentation to support that it was correct. • The indirect departmental cost was reported as $9,685,891 however, the ICRP did not define the methodology used to calculate that amount nor was the amount reported or supported by a detailed schedule in the ICRP, and the Department could not provide documentation to support that it was correct. • The rate calculation did not include a carryforward amount from the prior year, as required. • The schedules in the proposal contained multiple mathematical errors, including the total sum of the fiscal year 2024 indirect cost pool. The sum was reported as $9,543,761; however, the amounts in the schedule sum to $9,696,805. The difference, $153,044, was the carryover amount from the fiscal year 2022 ICRP, which was incorrect. Cause: The Department’s procedures require the ICRP to be compiled by the fiscal staff and reviewed by separate staff to identify errors. The Department provided documentation to verify that the review occurred; however, it was not performed at a level of detail necessary to identify the errors. The Department also did not include a procedure to retain documentation to support the amounts reported in the ICRP. Effect: We were unable to determine if the indirect cost rate used in fiscal year 2024 was correctly calculated because the methodology and documentation to support the amounts used in the calculation were unavailable. Further, Department staff could not explain or recreate what had been calculated. Even if we make assumptions about what the direct cost base was intended to include, typically direct salary, wages, and fringe benefits, there is no support available to identify which salaries were included or how fringe benefits were calculated. Additionally, formula errors within the schedule used to calculate the rate increase the risk of an incorrect calculation. Recommendation: We recommend that the Department provide training for the staff preparing and reviewing the ICRP to ensure compliance with applicable regulations. We further recommend that the Department design and implement procedures to retain documentation of the methods used to compile the ICRP and the basis for the amounts reported in the ICRP. Management’s View: We agree with and acknowledge the finding presented and are committed to addressing it with the following corrective action plan. Corrective Action: The agency has new staff that will be preparing and submitting the indirect cost rate proposal this year and will take the auditor’s recommendations very seriously in our development and preparation. We have reached out to our federal oversight agency for assistance and direction and are committed to maintaining a file with all supporting documentation used to compile and prepare the proposal, as required by 2 CFR 200. DEQ has had significant turnover in the fiscal office, which has resulted in gaps of knowledge of policies and practices. In summer 2025, DEQ leadership reorganized the fiscal department to improve efficiency, enhance oversight of grants and contracts, and strengthen financial controls. The fiscal office is currently in a rebuilding phase and is dedicated to training and developing staff, implementing best practices, and documenting processes and procedures, including those for federal grant compliance. Auditor’s Concluding Remarks: We thank the Department for its cooperation and assistance throughout the audit.
FINDING 2024-213 The Department did not have documentation to support the verification that grant subrecipients were not suspended or debarred. Type of Finding: Material Weakness, Noncompliance Assistance Listing Title: Drinking Water State Revolving Fund Assistance Listing Number: 66.468 Federal Award Number: Various Program Year: Various Federal Agency: Environmental Protection Agency Compliance Requirement: Procurement, and Suspension and Debarment Questioned Costs: None Criteria: The U.S. Code of Federal Regulations (CFR) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards contains guidance that nonfederal entities must follow as a condition of receiving federal awards. Section 2 CFR 200.303 requires that a nonfederal entity receiving federal awards establish and maintain internal controls that provide reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions in the federal award. Section 2 CFR 180.300 requires grantees to verify an entity is not suspended or debarred or otherwise excluded before entering into a covered transaction. The verification is accomplished by (1) checking the System for Award Management (SAM) exclusions maintained by the General Services Administration and available online, (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity. Nonfederal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. Covered transactions, as defined by 2 CFR 180.220, include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria. Condition: Loan recipients from the Drinking Water State Revolving Fund (DWSRF) are considered subrecipients for federal grant compliance purposes. We tested 7 of the 46 identified subrecipients (or 15 percent) to determine if the Department verified that the subrecipients were not suspended or debarred. The Department could not provide documentation to support that suspension and debarment checks were performed for 2 subrecipients (or 28.57 percent). Cause: The Department did not have procedures in place to maintain documentation to support the checks for suspended or debarred subrecipients. Effect: We reviewed all subrecipients selected as part of our testing and verified that none were on the SAM list as suspended or debarred. However, the Department does not have adequate controls in place to ensure that they are not entering into covered transactions with suspended or debarred subrecipients. Subrecipients can be suspended or debarred for many reasons including financial crimes such as fraud, embezzlement, or bribery, and other issues such as consistent poor performance on previous contracts or violations of laws. Taking steps to ensure vendors are not suspended or debarred is important to prevent fraud, waste, and abuse. Recommendation: We recommend that the Department develop and implement procedures to ensure that they are not entering into covered transactions with suspended or debarred parties and retain documentation to support compliance with suspension and debarment requirements. Management’s View: We agree with and acknowledge the three findings presented and are committed to addressing them with the following corrective actions being taken by DEQ. Corrective Action: The agency utilizes a routing slip or checklist that includes a suspension and debarment check, which will be used and reviewed prior to entering into a covered transaction. This check will be done, and documented, regardless of whether the solicitation is through our Department, or the State Division of Purchasing. DEQ has had significant turnover in the fiscal office, which has resulted in gaps of knowledge of policies and practices. In summer 2025, DEQ leadership reorganized the fiscal department to improve efficiency, enhance oversight of grants and contracts, and strengthen financial controls. The fiscal office is currently in a rebuilding phase and is dedicated to training and developing staff, implementing best practices, and documenting processes and procedures. Along with these changes, the grants and contracts teams have been combined to help with oversight and consistency. This is particularly valuable when contracting or procuring goods or services with grant or federal funds. Auditor’s Concluding Remarks: We thank the Department for its cooperation and assistance throughout the audit.
FINDING 2024-214 The Department does not have documented internal controls for cash draws and requested reimbursement for the same $175,500 grant expenditure twice. Type of Finding: Material Weakness, Noncompliance Assistance Listing Title: Clean Water State Revolving Fund Assistance Listing Number: 66.458 Federal Award Number: EB25020-22 Program Year: November 1, 2022 – October 31, 2027 Federal Agency: Environmental Protection Agency Compliance Requirement: Cash Management Questioned Costs: $175,500 Known Criteria: The U.S. Code of Federal Regulations (CFR) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR 200.303) requires that a nonfederal entity receiving federal awards establish and maintain internal controls that provide reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions in the federal award. Section 2 CFR 200.400 contains the policy guide for cost principles related to federal grant administration. Paragraph (a) states that the nonfederal entity is responsible for the efficient and effective administration of the federal award through the application of sound management practices. Paragraph (d) states that the accounting practices of the nonfederal entity must be consistent with these cost principles and support the accumulation of costs as required by the principles and must provide for adequate documentation to support costs charged to the federal award. Condition: The Department draws grant funds for reimbursement of allowed costs such as loan disbursements and set-aside funds which may be used for administrative expenses, technical assistance to small water systems, and State program management. One employee uses reports from the statewide accounting system, Luma, to prepare the draw request, accesses the Environmental Protection Agency’s (EPA) Automated Standard Application for Payments (ASAP) system to request the draw, and enters the receivable amount into Luma. The Department does not have a procedure in place for a second person to verify the amounts requested in the grant draws are correct. We tested the following cash draws for the Drinking Water State Revolving Fund (DWSRF) and the Clean Water State Revolving Fund (CWSRF) to verify they were made in compliance with applicable requirements and were recorded in the correct amount: • The Department made five cash draws for reimbursement of loan disbursements for the DWSRF. We tested all five and found no errors. • The Department made four cash draws for reimbursement of loan disbursements for the CWSRF. We tested all four and found one $175,500 draw that was a duplicate of a previously drawn amount. • The Department made six draws for set-aside amounts. These draws were made for multiple EPA programs including the CWSRF and DWSRF. We tested all six and found no errors. Cause: The Department relied on the expenditure controls in Luma to identify the grant expenditures used to determine the amount of the cash draws and did not believe additional controls were necessary. However, these controls would not be effective for ensuring that errors in the draw process would be detected or prevented. Effect: The Department did not have controls in place to identify a duplicate cash draw request for $175,500, resulting in questioned costs. Without control procedures in place to ensure the correct grant expenditures are identified for cash draw requests, additional errors could be made and remain undetected. Recommendation: We recommend that the Department design and implement control procedures to ensure cash draw requests are correct and supported. Management’s View: We agree with and acknowledge the three findings presented and are committed to addressing them with the following corrective actions being taken by DEQ. Corrective Action: The duplicate payment in question was issued but not redeemed. The issuance was to a similar, but incorrect, vendor name and was caught by staff before it was sent to the vendor. The transaction was cancelled in Luma but was not properly recorded in the following draw request. Fiscal staff now perform a thorough review of transactions before a loan draw is finalized in Luma, reconciling the transactions from the Loans and Grants Tracking System (LGTS) to the information generated in the Luma draw invoice. The reconciling and supporting documentation from LGTS is attached to the Luma draw invoice. DEQ has had significant turnover in the fiscal office, which has resulted in gaps of knowledge of policies and practices. In summer 2025, DEQ leadership reorganized the fiscal department to improve efficiency, enhance oversight of grants and contracts, and strengthen financial controls. The fiscal office is currently in a rebuilding phase and is dedicated to training and developing staff, implementing best practices, and documenting processes and procedures, including those for federal grant compliance. Auditor’s Concluding Remarks: We thank the Department for its cooperation and assistance throughout the audit. We agree that a more stringent review process and reconciliation control in place would likely prevent or detect an error of this nature in the future, however we would also like to emphasize that the Department should contact the federal grantor to resolve the overdraw of $175,500.
FINDING 2024-215 The Department did not document subrecipient risk assessments or ensure subrecipient audits were received for the Coronavirus State and Local Fiscal Recovery Fund. Type of Finding: Significant Deficiency, Noncompliance Assistance Listing Title: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Number: SLFRP0142 Program Year: March 3, 2021 – December 31, 2024 Federal Agency: Department of the Treasury Compliance Requirement: Subrecipient Monitoring Questioned Costs: None Criteria: The U.S. Code of Federal Regulations (CFR) Uniform Administration Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR 200.303) states that nonfederal entities must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. The requirements for pass-through entities are in 2 CFR 200.332, which states that all pass-through entities must: • Evaluate each subrecipient’s risk of noncompliance with federal statutes, regulations and the terms and conditions of the subaward for the purpose of determining the appropriate subrecipient monitoring. • Consider imposing specific subaward conditions upon a subrecipient, if appropriate. • Verify that every subrecipient is audited as required by 2 CFR 200, Subpart F, and follow up on the results of those audits. A non-Federal entity that expends $750,000 or more during the non-Federal entity’s fiscal year in Federal awards must have a single or program-specific audit conducted for that year. Condition: The Department received funds for the Coronavirus State and Local Fiscal Recovery Fund (Assistance Listing Number 21.027) from the U.S. Department of Treasury through the Idaho Department of Financial Management. The funds were for two specific program areas within the Department: planning and construction grants for the clean and drinking water infrastructure projects and waste management projects. During fiscal year 2024, there were 128 subrecipients for these funds. The Department established oversight for these funds under the Grant Loan Bureau (planning and infrastructure grants) and the Waste Management Group (various waste management projects). The Department complied with some, but not all, of the pass-through entity requirements. Noncompliance was identified in the following areas: 1) The Department did not adequately document their evaluation of each subrecipient’s risk of noncompliance with federal statutes, regulations, and terms and conditions of the subaward for 13 out of 13 (100 percent) of the sample tested. The Department completes thorough reviews throughout the project timeline to ensure that subrecipients are complying, but those reviews do not adequately assess the subrecipients risk of noncompliance with a subaward, prior to award, as required by 2 CFR 200.332(c). While the Department’s review does ensure each subrecipient has financial review controls in place, the Department does not document a formal risk assessment that evaluates each subrecipient’s risk of noncompliance based on the subrecipient’s prior experience with the same or similar awards, the results of previous awards including whether the subrecipient receives a Single Audit, whether the subrecipient has new personnel, or the extent and results of any Federal agency monitoring. 2) The Department does not have a process in place to ensure that subrecipients are audited, as required by 2 CFR 200, Subpart F for 1 out of 13 (7.69 percent) of the contracts tested. In the prior-year audit, it was stated that the planning/construction group in the Grants Loans Bureau were aware of this issue and have procedures in place within their Loan Grant Tracking Software (LGTS) and that the Waste Program was aware that the subrecipients also required procedures; however, no procedures are in place. During this year’s audit, however, no documentation was submitted in support of the Grants Loan Bureau or the Waste Program. Cause: The Department did not have a formal documented risk assessment process in place as they believed the application process and monitoring during the actual grant award period met the requirements. The Department has procedures in place to check the Federal Audit Clearinghouse for Single Audit Act (SAA) grant audits to see if a subrecipient has a recent audit, however, this procedure alone does not satisfy the requirement. The Department did not deem it necessary to implement additional procedures to ensure an audit was completed for subrecipients meeting the threshold because the grant makes up more than 50 percent of the total project cost and are reimbursement grants. The fact that these are reimbursement grants does not exempt the Department from ensuring that the subrecipient is audited as required by 2 CFR 200, Subpart F. Effect: Subrecipient monitoring is a critical requirement when accepting federal funds and ensuring that those funds are spent in compliance with allowable costs and other guidelines provided by the grantor. Assessing the risk of subrecipient noncompliance enables a pass-through entity to determine the proper level of monitoring procedures. Without completing the risk assessment process, a pass-thought entity may increase the risk that appropriate monitoring procedures will not be performed, and noncompliance may occur and go undetected. Subrecipient audit reports may identify internal control issues and noncompliance with federal award requirements. Reviewing these reports and ensuring that potential issues are addressed decreases the overall risk of noncompliance with the federal award requirements. Recommendation: We recommend that the Department design and implement appropriate procedures to ensure that subrecipient risk assessments are properly completed and documented and subrecipient audits are completed and reviewed in accordance with federal grant regulations. Management’s View: We agree with and acknowledge the three findings presented and are committed to addressing them with the following corrective actions being taken by DEQ. Corrective Action: The Department created a Subrecipient Monitoring Policy that will be implemented by the end of this calendar year, December 31, 2025. This policy includes a risk assessment checklist that will be used prior to issuing a subaward. The results of the risk assessment, the overall risk level, and the level of monitoring will be included in the subaward agreement. The risk assessment and the process will be documented with each subaward request. DEQ has had significant turnover in the fiscal office, which has resulted in gaps of knowledge of policies and practices. In summer 2025, DEQ leadership reorganized the fiscal department to improve efficiency, enhance oversight of grants and contracts, and strengthen financial controls. The fiscal office is currently in a rebuilding phase and is dedicated to training and developing staff, implementing best practices, and documenting processes and procedures. Along with these changes, the grants and contracts teams have been combined to help with oversight and consistency. This is particularly valuable when contracting or procuring goods or services with grant or federal funds. Auditor’s Concluding Remarks: We thank the Department for its cooperation and assistance throughout the audit.
FINDING 2024-216 Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) project and expenditure reports (P&E) contained material overstatements. Type of Finding: Material Weakness, Material Noncompliance Assistance Listing Title: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Number: SLFRP0142 Program Year: March 3, 2021 – December 31, 2024 Federal Agency: Department of Treasury Compliance Requirement: Reporting Questioned Costs: None Criteria: The U.S. Code of Federal Regulations (CFR), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) included in 2 CFR 200.303 requires that a nonfederal entity receiving federal awards establish and maintain internal controls that provide reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions in the federal award. The Internal Control Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) identifies control activities that help ensure management directives are carried out and risks are mitigated. These activities include items such as approvals, authorizations, verifications, reconciliations, and segregation of duties. The CSLFRF grant award from the U.S. Department of the Treasury requires recipients to provide quarterly P&E reports that contain related costs incurred during the covered period. The recipient’s quarterly P&E report submissions should be supported by the data in the recipient’s accounting system. Condition: During fiscal year 2024, the CSLFRF program was required to submit four P&E reports to the federal government. The agency’s state financial officer compiles and submits the reports to the U.S. Department of the Treasury. The report for the quarter ending March 31, 2024, was overstated by $36.5 million, and the report for the quarter ending June 30, 2024, was overstated by $1.3 million. Cause: The Division’s controls are not performed at the level of detail necessary to prevent or detect errors in the reports before they are submitted to the U.S. Department of the Treasury. The Division compiles P&E reports based off information provided by State agencies. In the prior year, the Division pulled queries to ensure accuracy of agency reported amounts. This process was not performed in the current year as the Division encountered difficulties when attempting to pull reports from the newly implemented accounting system, Luma, to verify agency reported amounts. Effect: The report for the quarter ending March 31, 2024, was overstated by $36.5 million, and the report for the quarter ending June 30, 2024, was overstated by $1.3 million. Recommendation: We recommend that the Division design and implement internal controls to ensure CSLFRF P&E reports are accurate. We also recommend that the Division e-mail the U.S. Department of the Treasury to correct erroneous information in the Treasury Portal as suggested in the Project and Expenditure Report User Guide published by the U.S. Department of the Treasury. Management’s View: The agency agrees with this finding. With significant turnover at DFM, and the implantation of a new statewide accounting system it was difficult to identify expenditure data that was provided by agencies to the division. Additionally, it was difficult to get responses from the US Department of Treasury when identifying errors to be correct in prior periods. Currently there is no option to update prior quarter errors when they are identified. Corrective Action: DFM is currently training other staff members to add to the bench of support for SLFRF quarterly reporting. This training includes matching expenditures in Luma. We are also going to engage with SCO to see if we can get a report built to identify agency expenditures and match them to the reports provided by the agencies. Additionally, we will continue to work with the US Treasury to see if we can update previous reporting periods. Auditor’s Concluding Remarks: We thank the Division for its cooperation and assistance throughout the audit.
FINDING 2024-217 The Department lacked documentation to support continued eligibility for providers within the Medicaid program. Type of Finding: Material Weakness, Material Noncompliance AL Title: State Survey and Certification of Health Care Providers and Suppliers (Title XVIII) Medicare, Medical Assistance Program AL Number: 93.777, 93.778 Federal Award Number: 2305ID5000, 2405ID5000, 2305ID5CAA, 2405ID5CAA, 2305ID50C3, 2305ID5MAP, 2305ID5ADM, 2405ID5MAP, 2405ID5ADM, NH23IP922633, NU51PS005169 Program Year: July 1, 2019 – June 30, 2025, May 1, 2021 – April 30, 2026, October 1, 2022 – September 30, 2023, October 1, 2023 – September 30, 2024 Federal Agency: Department of Health and Human Services Requirement: Special Tests and Provisions Questioned Costs: Undetermined Criteria The U.S. Code of Federal Regulations (CFR), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) included in 2 CFR 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. The Internal Control Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) identifies control activities that help ensure management directives are carried out and risks are mitigated. These activities include approvals, authorizations, verifications, reconciliations, and segregation of duties. The Uniform Guidance included in 42 CFR 431.107 states that providers must be licensed in accordance with federal, state and local laws, and regulations to participate in the Medicaid program and receive payments. Additionally, the Uniform Guidance included in 42 CFR 455.412 states that the state Medicaid agency must: (a) Have a method for verifying that any provider purporting to be licensed in accordance with the laws of any state is licensed by such state. (b) Confirm that the provider’s license has not expired and that there are no current limitations on the provider’s license. Condition: The Department could not provide documentation to support the eligibility for 14 of the 62 MCO providers tested (or 22.6 percent) and could not provide documentation that 9 of the 14 noted providers (or 64.3 percent) had applicable licenses and certifications. Also, 4 out of 14 noted providers (or 28.6 percent) did not have an active contract with the MCO during the applicable period. The Department also could not provide documentation for 1 out of the 14 noted providers (or 7.1 percent) that the provider entered into an agreement and made the required disclosures to the State. We were unable to verify if the MCOs paid claims to ineligible providers. The Department should have been tracking and verifying payments were not made to ineligible providers by the MCOs. All providers noted were included in the rosters as of December 2024, indicating they were eligible to participate in the Medicaid program. Cause: The Department did not review the documentation supporting eligibility for 14 providers at a level of detail sufficient to properly identify the required missing support, despite the providers being included in the provider roster reports. Effect: Without supporting documentation, we are unable to confirm that the noted providers were eligible to participate in the Medicaid program. In addition, there is an increased risk that a Medicaid recipient could utilize an ineligible provider from the roster and claim payments could be processed by an MCO and go undetected by the Department. Recommendation: We recommend that the Department strengthen internal controls to ensure required documentation is maintained by MCOs to support the eligibility of contracted providers, including applicable licenses and certifications, provider agreements, and required disclosures to the State. In addition, we recommend that the Department determines if payments were made to ineligible providers. Management’s View: The Department Agrees with this Finding. Corrective Action: As part of the Provider Enrollment project, the division will audit provider payments starting in 2026. The health plans will be required to validate that the providers are fully enrolled with Medicaid prior to enrolling with the health plan in early 2026. These are [sic] audits will begin in May 2026 and continue through the end of the year depending on when provider reports are due to Medicaid. This is also part of the Corrective Action Plan mentioned in finding #5. The information required to validate that no payment was made inappropriately is part of the audits that will be conducted this year with the provider rosters. Auditor’s Concluding Remarks: We thank the Department for its cooperation and assistance throughout the audit.
FINDING 2024-218 The Department did not ensure compliance with federal requirements that Managed Care Organizations (MCO) were submitting provider roster reports annually to verify that all providers are properly licensed and in good standing. Type of Finding: Material Weakness, Noncompliance AL Title: State Survey and Certification of Health Care Providers and Suppliers (Title XVIII) Medicare, Medical Assistance Program AL Number: 93.777, 93.778 Federal Award Number: 2305ID5000, 2405ID5000, 2305ID5CAA, 2405ID5CAA, 2305ID50C3, 2305ID5MAP, 2305ID5ADM, 2405ID5MAP, 2405ID5ADM, NH23IP922633, NU51PS005169 Program Year: July 1, 2019 – June 30, 2025, May 1, 2021 – April 30, 2026, October 1, 2022 – September 30, 2023, October 1, 2023 – September 30, 2024 Federal Agency: Department of Health and Human Services Requirement: Special Tests and Provisions Questioned Costs: None Criteria: The U.S. Code of Federal Regulations (CFR), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) included in 2 CFR 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. The Internal Control Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) identifies control activities that help ensure management directives are carried out and risks are mitigated. These activities include approvals, authorizations, verifications, reconciliations, and segregation of duties. The Uniform Guidance included in 42 CFR Section 431.107 states that providers must be licensed in accordance with federal, state and local laws, and regulations to participate in the Medicaid program and receive payments. Additionally, the Uniform Guidance included in 42 CFR 455.412 states that the state Medicaid agency must: (a) Have a method for verifying that any provider purporting to be licensed in accordance with the laws of any state is licensed by such state. (b) Confirm that the provider’s license has not expired and that there are no current limitations on the provider’s license. Condition: The Department has contracts with 4 MCOs; 2 of the Department’s MCOs submitted provider roster reports as required. We confirmed that the Department received 4 provider roster reports for the applicable Managed Care Plans. The receipt of the provider roster reports for each plan, the review of the plan, and the approval of the plan are documented on a tracking spreadsheet. We noted that 3 out of 4 managed care plans (or 75 percent) did not have the receipt, the review, or the approval information documented on the tracking spreadsheet for fiscal year 2024. Cause: It appears that while the Department had established internal controls to document the receipt, review, and approval of the provider roster reports on the tracking spreadsheet, it was not consistently performed due to the Division of Medicaid oversight. The Department is updating the tracking spreadsheet to ensure proper documentation is maintained in the future. Effect: In the absence of internal controls over the provider roster reports, an MCO could be enrolling and maintaining ineligible providers. Recommendation: We recommend that the Department strengthen internal controls over the MCO provider roster reports and properly document the receipts, reviews, and approval information. Management’s View: The Department Agrees with this Finding. Corrective Action: Starting early 2026 most providers will be required to enroll with Medicaid prior enrollment with the health plans. Health plans have been receiving a daily file with the provider enrollment information and are working on their own system changes to intake that information. This is part of the Corrective Action Plan that is mentioned in finding #5. The report trackers that the Medicaid teams use will document when these reports are received, whether or not they meet metric criteria. The audit of those provider rosters will occur annually. Auditor’s Concluding Remarks: We thank the Department for its cooperation and assistance throughout the audit.