Item 2024-006 Reporting (Significant Deficiency in Internal Control) Assistance Listing Number 93.600 Head Start Cluster Head Start Grant No. 04CH010931-0501 U.S. Department of Health and Human Services Federal Award Year - 2024 Condition – The grantee failed to comply with the terms of the grant award related to the SF-429 – Real Property Status Report and SF-429-A General Reporting (OMC No. 4040-0016) reports. Adequate controls were not in place to ensure reports were being filed accurately and timely. Criteria – The Uniform Guidance requires that the Agency file forms SF-429 – Real Property Status Report and SF-429-A General Reporting (OMB No. 4040-0016) annually based upon the end of the budget period. 2 CFR.200.303a requires the Agency to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations and the terms and conditions of the Federal award. Cause - Management did not have adequate controls in place to ensure the accurate and timely submission of the SF 429 report. Questioned Costs – Not applicable. Effect – Failure to submit the SF-429 – Real Property Status Report and SF-429-A General Reporting (OMB No. 4040-0016) reports accurately and timely results in noncompliance with the federal statute. The report was submitted 14 months late and $18,000 of land was not included in the report. Recommendation – We recommend the Agency implement internal controls, which will ensure the accurate and timely filing of the reports listed under Special Reporting in the Uniform Guidance. Management and the board of directors should continually be aware of the compliance requirements and related changes in the applicable compliance requirements associated with its federal awards programs. Management’s Response – Management has reviewed and accepted the finding. See “Corrective Action Plan”.
2024 – 003 Suspension and Debarment Federal agency: U.S. Department of Treasury Federal program title: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: N/A Award Period: March 3, 2021 – December 31, 2026 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: Uniform Grant Guidance (2 CFR 200.303) requires non-federal entities receiving Federal awards establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Nonfederal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. “Covered transactions” include contracts for goods and services awarded under a nonprocurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220). Condition: The Village did not maintain records the vendor was not suspended or debarred prior to entering into the transactions. Questioned costs: None Context: 5 of 5 tested for suspension and debarment documentation. Cause: The processes for suspension and debarment were not properly followed during the current fiscal year. Proper documentation was not retained. Village policies have not been updated yet. Effect: May result in disallowed cost if grant requirements are not followed. Repeat finding: This is a repeat finding. Prior year finding number was 2023-003. Recommendation: We recommend the Village carefully review federal suspension and debarment requirements for proper documentation needed. The Village should consider use of a Federal procurement checklist. Views of responsible officials: There is no disagreement with the audit finding.
2024 – 004 Reporting Federal agency: U.S. Department of Treasury Federal program title: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: N/A Award Period: March 3, 2021 – December 31, 2026 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include the annual report be reviewed, and this review should be documented. Condition: The Village did not maintain record that the annual report was reviewed and approved by an individual other than the preparer. Questioned costs: None Context: This issues was noted in 1 of 1 reports tested. Cause: The Village does not have a formal control in place to ensure the annual reports are reviewed by an individual other than the preparer. Effect: May result in inaccurate reporting and allowable costs being charged to Federal programs. Repeat finding: The finding is a partial repeat of a finding in the prior year. The prior year finding number was 2023-004. Recommendation: We recommend the Village strengthen internal controls over the review process of the annual grant reporting prior to the report submission. This review should be documented. Views of responsible officials: There is no disagreement with the audit finding.
Special Tests and Provisions Material Weakness in Internal Control Over Compliance and Material 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 entity is managing the federal award in compliance with federal statutes, regulations, terms, and conditions of the federal award. Section 4 of the Loan Resolution Security Agreements dated April 24, 2001, November 26, 2002, and June 1, 2004, state that the Hospital must establish a segregated reserve account or a bookkeeping account. The funds in this account can only be used with USDA Rural Development concurrence. Condition – The Hospital did not fund reserves in a federally insured bank for debt service payments. The Hospital had cash balances on hand exceeding the required reserve amount; as well as board designated investment balances for debt repayment, however, the reserve funds were not segregated in a separate bank account or bookkeeping account in the trial balance. Cause – The Hospital did not have an internal control process in place to ensure that the required debt service reserve fund was established and maintained. Effect – The Hospital could be in violation of the reserve amount requirements if management is not monitoring compliance. Questioned Costs – None reported. Context/Sampling – Sampling was not used. Repeat Finding from Prior Years: Yes. Recommendation – We recommend management transfer the required reserve amount to a separate bank account or establish a bookkeeping account in the trial balance. Controls should be established and documented to monitor compliance with the reserve fund provisions. Views of Responsible Officials – Management agrees with the finding.
Finding 2024-001--Reporting of the Schedule of Expenditure of Federal Awards Federal Agency: U.S. Department of Health and Human Services Federal Program: ALN 93.323 - Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) – Passed through Health Research, Inc. Grant Period: Year ended April 30, 2024 Compliance Requirement: Other – Inaccurate reporting of the Schedule of Expenditures of Federal Awards Condition: The Organization’s internal controls did not identify amounts expended under the ELC program as federal expenditures. The related grant was inadvertently identified as a state grant and was initially excluded from the schedule of expenditures of federal awards (SEFA). As a result, the Organization should have reported ELC expenditures totaling $1,167,015 on the SEFA for the year ended April 30, 2024. Criteria: According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the recipient’s financial statements which must include the total federal awards expended as determined in accordance with 2 CFR 200.502. In addition, 2 CFR 200.303 requires non-Federal entities receiving federal awards to establish and maintain internal controls designated to reasonably ensure compliance with federal laws, regulations and program compliance. Effective internal controls should include procedures to ensure federal expenditures are accurately and completely reported on the SEFA. Cause: The grant was originally coded as a state grant was overlooked when management prepared the SEFA. Effect: The SEFA was understated by $1,167,015. In addition, the inaccurate preparation of the SEFA may prevent the Organization from completing an audit in accordance with the timelines established in the Uniform Guidance. Questioned Costs: Not applicable Statistical Sampling: Not appliable Repeat Finding: No Recommendation: We recommend that the Organization implement additional processes and procedures to ensure that the SEFA is complete and accurate. Views of Responsible Officials: We agree with the finding noted above. Although the grant income was federally sourced, our contract was with a state department and was classified as such in our books and records. As soon as the error was realized, we notified the auditors so the necessary corrections could be made. This incident is isolated and not recurring. The grant for which this finding is associated was a temporary grant that has since ended. To prevent future errors from occurring, all new contracts will be reviewed prior to submitting the summary of federal awards to the auditor to ensure that any federally sourced funding is properly identified regardless of grantor. CARES of NY, Inc. will implement a check and balance procedure where the grants director will review the listing prior to audit submission for accuracy.
Criteria: Nonfederal entities in receipt of federal funds must comply with the requirements of 2 CFR 200.303(a), which require an entity to establish and maintain effective internal control over the federal award to ensure compliance with federal statutes, regulations, and the terms and conditions of the federal award. This includes properly identifying all federal awards subject to the Uniform Guidance and fairly presenting the required information in the schedule of expenditures of federal awards (SEFA). Condition: It was noted that there was an omission of a federal grants with expenditures totaling $66,363 from the original schedule of expenditures of federal awards. Questioned Costs: None noted. Context: The College did not include $66,363 in federal grants on the original schedule of expenditures of federal awards. Effect: The Schedule of Expenditures of Federal Awards of was understated by $66,363, which resulted in an untimely audit of compliance with the types of compliance requirements described in the OMB Compliance Supplement in accordance with the Uniform Guidance. Cause: The College lacked proper internal controls to properly identify the grant funding as federal. Recommendation: The College should develop formally documented internal control procedures to outline a process to review the schedule of expenditures of federal awards for completeness. View of Responsible Officials and Planned Corrective Actions: The College agrees with the above recommendation and is committed to developing and implementing these new procedures.
Criteria: Nonfederal entities in receipt of federal funds must comply with the requirements of 2 CFR 200.303(a), which require an entity to establish and maintain effective internal control over the federal award to ensure compliance with federal statutes, regulations, and the terms and conditions of the federal award. This includes properly identifying all federal awards subject to the Uniform Guidance and fairly presenting the required information in the schedule of expenditures of federal awards (SEFA). Condition: It was noted that there was an omission of a federal grants with expenditures totaling $66,363 from the original schedule of expenditures of federal awards. Questioned Costs: None noted. Context: The College did not include $66,363 in federal grants on the original schedule of expenditures of federal awards. Effect: The Schedule of Expenditures of Federal Awards of was understated by $66,363, which resulted in an untimely audit of compliance with the types of compliance requirements described in the OMB Compliance Supplement in accordance with the Uniform Guidance. Cause: The College lacked proper internal controls to properly identify the grant funding as federal. Recommendation: The College should develop formally documented internal control procedures to outline a process to review the schedule of expenditures of federal awards for completeness. View of Responsible Officials and Planned Corrective Actions: The College agrees with the above recommendation and is committed to developing and implementing these new procedures.
Criteria: Nonfederal entities in receipt of federal funds must comply with the requirements of 2 CFR 200.303(a), which require an entity to establish and maintain effective internal control over the federal award to ensure compliance with federal statutes, regulations, and the terms and conditions of the federal award. This includes properly identifying all federal awards subject to the Uniform Guidance and fairly presenting the required information in the schedule of expenditures of federal awards (SEFA). Condition: It was noted that there was an omission of a federal grants with expenditures totaling $66,363 from the original schedule of expenditures of federal awards. Questioned Costs: None noted. Context: The College did not include $66,363 in federal grants on the original schedule of expenditures of federal awards. Effect: The Schedule of Expenditures of Federal Awards of was understated by $66,363, which resulted in an untimely audit of compliance with the types of compliance requirements described in the OMB Compliance Supplement in accordance with the Uniform Guidance. Cause: The College lacked proper internal controls to properly identify the grant funding as federal. Recommendation: The College should develop formally documented internal control procedures to outline a process to review the schedule of expenditures of federal awards for completeness. View of Responsible Officials and Planned Corrective Actions: The College agrees with the above recommendation and is committed to developing and implementing these new procedures.
Criteria: Nonfederal entities in receipt of federal funds must comply with the requirements of 2 CFR 200.303(a), which require an entity to establish and maintain effective internal control over the federal award to ensure compliance with federal statutes, regulations, and the terms and conditions of the federal award. This includes properly identifying all federal awards subject to the Uniform Guidance and fairly presenting the required information in the schedule of expenditures of federal awards (SEFA). Condition: It was noted that there was an omission of a federal grants with expenditures totaling $66,363 from the original schedule of expenditures of federal awards. Questioned Costs: None noted. Context: The College did not include $66,363 in federal grants on the original schedule of expenditures of federal awards. Effect: The Schedule of Expenditures of Federal Awards of was understated by $66,363, which resulted in an untimely audit of compliance with the types of compliance requirements described in the OMB Compliance Supplement in accordance with the Uniform Guidance. Cause: The College lacked proper internal controls to properly identify the grant funding as federal. Recommendation: The College should develop formally documented internal control procedures to outline a process to review the schedule of expenditures of federal awards for completeness. View of Responsible Officials and Planned Corrective Actions: The College agrees with the above recommendation and is committed to developing and implementing these new procedures.
2024 – 003 Suspension and Debarment Federal agency: U.S. Department of Treasury Federal program title: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: N/A Award Period: March 3, 2021 – December 31, 2026 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: Uniform Grant Guidance (2 CFR 200.303) requires non-federal entities receiving Federal awards establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Nonfederal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. “Covered transactions” include contracts for goods and services awarded under a nonprocurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220). Condition: The Village did not maintain records the vendor was not suspended or debarred prior to entering into the transactions. Questioned costs: None Context: 5 of 5 tested for suspension and debarment documentation. Cause: The processes for suspension and debarment were not properly followed during the current fiscal year. Proper documentation was not retained. Village policies have not been updated yet. Effect: May result in disallowed cost if grant requirements are not followed. Repeat finding: This is a repeat finding. Prior year finding number was 2023-003. Recommendation: We recommend the Village carefully review federal suspension and debarment requirements for proper documentation needed. The Village should consider use of a Federal procurement checklist. Views of responsible officials: There is no disagreement with the audit finding.
2024 – 004 Reporting Federal agency: U.S. Department of Treasury Federal program title: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Identification Number and Year: N/A Award Period: March 3, 2021 – December 31, 2026 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria or specific requirement: Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include the annual report be reviewed, and this review should be documented. Condition: The Village did not maintain record that the annual report was reviewed and approved by an individual other than the preparer. Questioned costs: None Context: This issues was noted in 1 of 1 reports tested. Cause: The Village does not have a formal control in place to ensure the annual reports are reviewed by an individual other than the preparer. Effect: May result in inaccurate reporting and allowable costs being charged to Federal programs. Repeat finding: The finding is a partial repeat of a finding in the prior year. The prior year finding number was 2023-004. Recommendation: We recommend the Village strengthen internal controls over the review process of the annual grant reporting prior to the report submission. This review should be documented. Views of responsible officials: There is no disagreement with the audit finding.
Special Tests and Provisions Material Weakness in Internal Control Over Compliance and Material 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 entity is managing the federal award in compliance with federal statutes, regulations, terms, and conditions of the federal award. Section 4 of the Loan Resolution Security Agreements dated April 24, 2001, November 26, 2002, and June 1, 2004, state that the Hospital must establish a segregated reserve account or a bookkeeping account. The funds in this account can only be used with USDA Rural Development concurrence. Condition – The Hospital did not fund reserves in a federally insured bank for debt service payments. The Hospital had cash balances on hand exceeding the required reserve amount; as well as board designated investment balances for debt repayment, however, the reserve funds were not segregated in a separate bank account or bookkeeping account in the trial balance. Cause – The Hospital did not have an internal control process in place to ensure that the required debt service reserve fund was established and maintained. Effect – The Hospital could be in violation of the reserve amount requirements if management is not monitoring compliance. Questioned Costs – None reported. Context/Sampling – Sampling was not used. Repeat Finding from Prior Years: Yes. Recommendation – We recommend management transfer the required reserve amount to a separate bank account or establish a bookkeeping account in the trial balance. Controls should be established and documented to monitor compliance with the reserve fund provisions. Views of Responsible Officials – Management agrees with the finding.
Finding 2024-001--Reporting of the Schedule of Expenditure of Federal Awards Federal Agency: U.S. Department of Health and Human Services Federal Program: ALN 93.323 - Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) – Passed through Health Research, Inc. Grant Period: Year ended April 30, 2024 Compliance Requirement: Other – Inaccurate reporting of the Schedule of Expenditures of Federal Awards Condition: The Organization’s internal controls did not identify amounts expended under the ELC program as federal expenditures. The related grant was inadvertently identified as a state grant and was initially excluded from the schedule of expenditures of federal awards (SEFA). As a result, the Organization should have reported ELC expenditures totaling $1,167,015 on the SEFA for the year ended April 30, 2024. Criteria: According to 2 CFR 200.510(b), a recipient of federal awards is required to prepare a schedule of expenditures of federal awards (SEFA) for the period covered by the recipient’s financial statements which must include the total federal awards expended as determined in accordance with 2 CFR 200.502. In addition, 2 CFR 200.303 requires non-Federal entities receiving federal awards to establish and maintain internal controls designated to reasonably ensure compliance with federal laws, regulations and program compliance. Effective internal controls should include procedures to ensure federal expenditures are accurately and completely reported on the SEFA. Cause: The grant was originally coded as a state grant was overlooked when management prepared the SEFA. Effect: The SEFA was understated by $1,167,015. In addition, the inaccurate preparation of the SEFA may prevent the Organization from completing an audit in accordance with the timelines established in the Uniform Guidance. Questioned Costs: Not applicable Statistical Sampling: Not appliable Repeat Finding: No Recommendation: We recommend that the Organization implement additional processes and procedures to ensure that the SEFA is complete and accurate. Views of Responsible Officials: We agree with the finding noted above. Although the grant income was federally sourced, our contract was with a state department and was classified as such in our books and records. As soon as the error was realized, we notified the auditors so the necessary corrections could be made. This incident is isolated and not recurring. The grant for which this finding is associated was a temporary grant that has since ended. To prevent future errors from occurring, all new contracts will be reviewed prior to submitting the summary of federal awards to the auditor to ensure that any federally sourced funding is properly identified regardless of grantor. CARES of NY, Inc. will implement a check and balance procedure where the grants director will review the listing prior to audit submission for accuracy.
Criteria: Nonfederal entities in receipt of federal funds must comply with the requirements of 2 CFR 200.303(a), which require an entity to establish and maintain effective internal control over the federal award to ensure compliance with federal statutes, regulations, and the terms and conditions of the federal award. This includes properly identifying all federal awards subject to the Uniform Guidance and fairly presenting the required information in the schedule of expenditures of federal awards (SEFA). Condition: It was noted that there was an omission of a federal grants with expenditures totaling $66,363 from the original schedule of expenditures of federal awards. Questioned Costs: None noted. Context: The College did not include $66,363 in federal grants on the original schedule of expenditures of federal awards. Effect: The Schedule of Expenditures of Federal Awards of was understated by $66,363, which resulted in an untimely audit of compliance with the types of compliance requirements described in the OMB Compliance Supplement in accordance with the Uniform Guidance. Cause: The College lacked proper internal controls to properly identify the grant funding as federal. Recommendation: The College should develop formally documented internal control procedures to outline a process to review the schedule of expenditures of federal awards for completeness. View of Responsible Officials and Planned Corrective Actions: The College agrees with the above recommendation and is committed to developing and implementing these new procedures.
Criteria: Nonfederal entities in receipt of federal funds must comply with the requirements of 2 CFR 200.303(a), which require an entity to establish and maintain effective internal control over the federal award to ensure compliance with federal statutes, regulations, and the terms and conditions of the federal award. This includes properly identifying all federal awards subject to the Uniform Guidance and fairly presenting the required information in the schedule of expenditures of federal awards (SEFA). Condition: It was noted that there was an omission of a federal grants with expenditures totaling $66,363 from the original schedule of expenditures of federal awards. Questioned Costs: None noted. Context: The College did not include $66,363 in federal grants on the original schedule of expenditures of federal awards. Effect: The Schedule of Expenditures of Federal Awards of was understated by $66,363, which resulted in an untimely audit of compliance with the types of compliance requirements described in the OMB Compliance Supplement in accordance with the Uniform Guidance. Cause: The College lacked proper internal controls to properly identify the grant funding as federal. Recommendation: The College should develop formally documented internal control procedures to outline a process to review the schedule of expenditures of federal awards for completeness. View of Responsible Officials and Planned Corrective Actions: The College agrees with the above recommendation and is committed to developing and implementing these new procedures.
Criteria: Nonfederal entities in receipt of federal funds must comply with the requirements of 2 CFR 200.303(a), which require an entity to establish and maintain effective internal control over the federal award to ensure compliance with federal statutes, regulations, and the terms and conditions of the federal award. This includes properly identifying all federal awards subject to the Uniform Guidance and fairly presenting the required information in the schedule of expenditures of federal awards (SEFA). Condition: It was noted that there was an omission of a federal grants with expenditures totaling $66,363 from the original schedule of expenditures of federal awards. Questioned Costs: None noted. Context: The College did not include $66,363 in federal grants on the original schedule of expenditures of federal awards. Effect: The Schedule of Expenditures of Federal Awards of was understated by $66,363, which resulted in an untimely audit of compliance with the types of compliance requirements described in the OMB Compliance Supplement in accordance with the Uniform Guidance. Cause: The College lacked proper internal controls to properly identify the grant funding as federal. Recommendation: The College should develop formally documented internal control procedures to outline a process to review the schedule of expenditures of federal awards for completeness. View of Responsible Officials and Planned Corrective Actions: The College agrees with the above recommendation and is committed to developing and implementing these new procedures.
Criteria: Nonfederal entities in receipt of federal funds must comply with the requirements of 2 CFR 200.303(a), which require an entity to establish and maintain effective internal control over the federal award to ensure compliance with federal statutes, regulations, and the terms and conditions of the federal award. This includes properly identifying all federal awards subject to the Uniform Guidance and fairly presenting the required information in the schedule of expenditures of federal awards (SEFA). Condition: It was noted that there was an omission of a federal grants with expenditures totaling $66,363 from the original schedule of expenditures of federal awards. Questioned Costs: None noted. Context: The College did not include $66,363 in federal grants on the original schedule of expenditures of federal awards. Effect: The Schedule of Expenditures of Federal Awards of was understated by $66,363, which resulted in an untimely audit of compliance with the types of compliance requirements described in the OMB Compliance Supplement in accordance with the Uniform Guidance. Cause: The College lacked proper internal controls to properly identify the grant funding as federal. Recommendation: The College should develop formally documented internal control procedures to outline a process to review the schedule of expenditures of federal awards for completeness. View of Responsible Officials and Planned Corrective Actions: The College agrees with the above recommendation and is committed to developing and implementing these new procedures.
Finding: Suspension and Debarment U.S. Department of the Treasury Passed through Missouri Primary Care Association Assistance Listing No. 21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Fund Award Year: 2022 Award Number: SLFPR4542 Criteria or Specific Requirement In accordance with 2 CFR 200.214, non-federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. "Covered transactions" include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220. Part 2 CFR 200.303, the non-Federal entities receiving federal awards (i.e., auditee management) establish and maintain internal control design to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: Proper verification of vendors was not occurring prior to purchase to determine whether vendors were suspended or debarred. Questioned Costs - None noted. Context: One transaction selected for testing the suspension and debarment verification occurred subsequent to the purchase. Identification of Prior Year Finding: N/A Effect: Federal funds could be paid to entities that are suspended or debarred. Cause: Vendors subject to suspension and debarment requirements are entered into Compilatric, a 3rd party software, to run monthly exclusion checks. Compilatric checks with the OIG, SAM, and GAS, plus about 35 other state and federal databases that host suspended and disbarred lists. The purchase from this vendor was not communicated to the correct department timely and a check was inadvertently missed. Recommendation: We recommend that the Health Center communicate to all departments that purchases using federal funds have suspension and debarment checks completed prior to purchase. View of Responsible Official and Planned Corrective Actions: The Health Center agrees with the finding. See separate report for planned corrective actions.
2024-006– Lack of Independent Review and Approval of Journal Entries in Federal Grant Programs Finding Type. Immaterial Noncompliance. Significant Deficiency in Internal Control over Compliance (Allowable Activities). Program. COVID-19 - Coronavirus State and Local Fiscal Recovery Funds; U.S. Department of Treasury; Assistance Listing Number 21.027, All Award Numbers Criteria. According to 2 CFR 200.303(a), 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. Condition. The Organization does not have a formal review process in place for journal entries related to its federal grant programs. Journal entries are posted without independent review or approval, increasing the risk of errors or misstatements in the financial records. Cause. The lack of a review process is due to insufficient staffing and inadequate segregation of duties within the accounting department. Effect. Without a review process, there is an increased risk of inaccurate financial reporting and potential non-compliance with federal regulations. This could lead to questioned costs, audit findings, and potential loss of federal funding. Questioned Costs. No costs are required to be questioned as a result of this finding, in as much as no unallowable expenditures were noted. Recommendation. The Organization should implement a formal review and approval process for all journal entries related to federal grant programs. View of Responsible Officials. Management agrees with this finding and has prepared a Corrective Action Plan.
2024-006– Lack of Independent Review and Approval of Journal Entries in Federal Grant Programs Finding Type. Immaterial Noncompliance. Significant Deficiency in Internal Control over Compliance (Allowable Activities). Program. COVID-19 - Coronavirus State and Local Fiscal Recovery Funds; U.S. Department of Treasury; Assistance Listing Number 21.027, All Award Numbers Criteria. According to 2 CFR 200.303(a), 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. Condition. The Organization does not have a formal review process in place for journal entries related to its federal grant programs. Journal entries are posted without independent review or approval, increasing the risk of errors or misstatements in the financial records. Cause. The lack of a review process is due to insufficient staffing and inadequate segregation of duties within the accounting department. Effect. Without a review process, there is an increased risk of inaccurate financial reporting and potential non-compliance with federal regulations. This could lead to questioned costs, audit findings, and potential loss of federal funding. Questioned Costs. No costs are required to be questioned as a result of this finding, in as much as no unallowable expenditures were noted. Recommendation. The Organization should implement a formal review and approval process for all journal entries related to federal grant programs. View of Responsible Officials. Management agrees with this finding and has prepared a Corrective Action Plan.
2024-006– Lack of Independent Review and Approval of Journal Entries in Federal Grant Programs Finding Type. Immaterial Noncompliance. Significant Deficiency in Internal Control over Compliance (Allowable Activities). Program. COVID-19 - Coronavirus State and Local Fiscal Recovery Funds; U.S. Department of Treasury; Assistance Listing Number 21.027, All Award Numbers Criteria. According to 2 CFR 200.303(a), 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. Condition. The Organization does not have a formal review process in place for journal entries related to its federal grant programs. Journal entries are posted without independent review or approval, increasing the risk of errors or misstatements in the financial records. Cause. The lack of a review process is due to insufficient staffing and inadequate segregation of duties within the accounting department. Effect. Without a review process, there is an increased risk of inaccurate financial reporting and potential non-compliance with federal regulations. This could lead to questioned costs, audit findings, and potential loss of federal funding. Questioned Costs. No costs are required to be questioned as a result of this finding, in as much as no unallowable expenditures were noted. Recommendation. The Organization should implement a formal review and approval process for all journal entries related to federal grant programs. View of Responsible Officials. Management agrees with this finding and has prepared a Corrective Action Plan.
2024-006– Lack of Independent Review and Approval of Journal Entries in Federal Grant Programs Finding Type. Immaterial Noncompliance. Significant Deficiency in Internal Control over Compliance (Allowable Activities). Program. COVID-19 - Coronavirus State and Local Fiscal Recovery Funds; U.S. Department of Treasury; Assistance Listing Number 21.027, All Award Numbers Criteria. According to 2 CFR 200.303(a), 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. Condition. The Organization does not have a formal review process in place for journal entries related to its federal grant programs. Journal entries are posted without independent review or approval, increasing the risk of errors or misstatements in the financial records. Cause. The lack of a review process is due to insufficient staffing and inadequate segregation of duties within the accounting department. Effect. Without a review process, there is an increased risk of inaccurate financial reporting and potential non-compliance with federal regulations. This could lead to questioned costs, audit findings, and potential loss of federal funding. Questioned Costs. No costs are required to be questioned as a result of this finding, in as much as no unallowable expenditures were noted. Recommendation. The Organization should implement a formal review and approval process for all journal entries related to federal grant programs. View of Responsible Officials. Management agrees with this finding and has prepared a Corrective Action Plan.
2024-006– Lack of Independent Review and Approval of Journal Entries in Federal Grant Programs Finding Type. Immaterial Noncompliance. Significant Deficiency in Internal Control over Compliance (Allowable Activities). Program. COVID-19 - Coronavirus State and Local Fiscal Recovery Funds; U.S. Department of Treasury; Assistance Listing Number 21.027, All Award Numbers Criteria. According to 2 CFR 200.303(a), 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. Condition. The Organization does not have a formal review process in place for journal entries related to its federal grant programs. Journal entries are posted without independent review or approval, increasing the risk of errors or misstatements in the financial records. Cause. The lack of a review process is due to insufficient staffing and inadequate segregation of duties within the accounting department. Effect. Without a review process, there is an increased risk of inaccurate financial reporting and potential non-compliance with federal regulations. This could lead to questioned costs, audit findings, and potential loss of federal funding. Questioned Costs. No costs are required to be questioned as a result of this finding, in as much as no unallowable expenditures were noted. Recommendation. The Organization should implement a formal review and approval process for all journal entries related to federal grant programs. View of Responsible Officials. Management agrees with this finding and has prepared a Corrective Action Plan.
Federal Agency: United States Department of the Treasury Federal Program: COVID-19 – State Small Business Credit Initiative Technical Assistance Grant Program (21.031) Federal Award Number: SSBCI-21031-0037 Federal Award Year: 2024 State Agency: Department of Economic Development and Office of the State Comptroller Reference: 2024-002 Criteria Reporting In accordance with Title 2 U.S. Code of Federal Regulations Part 200 (2 CFR 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, section 200.510(b), The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with section 200.502. For reporting purposes, State Small Business Credit Initiative (SSBCI) capital funds are not considered federal financial assistance. The SSBCI statute, 12 U.S.C. section 5702(c)(5), specifically states that capital funds transferred to jurisdictions are not considered federal financial assistance for the purposes of 31 U.S.C. subtitle V. Funds given to provide technical assistance, however, are considered federal financial assistance. Internal controls Lastly, 2 CFR 200.303(a) states the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control Integrated Framework", issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition The Office of the State Comptroller (OSC) is responsible for the preparation of the schedule of expenditures of federal awards (SEFA). Annually, OSC provides the New York State agencies with a proposed SEFA with their respective expenditures by assistance listing number and each agency is charged with reviewing and providing adjustments and feedback. The proposed agency SEFA subschedule for State fiscal year 2024 provided to the Department of Economic Development (DED) did not include the expenditures for the SSBCI program. Upon DED review of the proposed agency SEFA subschedule, DED did not identify and report any expenditures for the SBBCI program that had been disbursed by DED. OSC utilized information in the Statewide Financial System (SFS) to populate the SEFA and which included expenditures totaling $154,792,221 for the SSBCI program. The amount was comprised of $151,191,199 related to capital funds and $3,601,022 of technical assistance funds. In accordance with 12 U.S.C. § 5702(c)(5), capital funds are not considered Federal financial assistance and therefore for reporting purposes should not be included on the SEFA. The preliminary SEFA including SBBCI expenditures of $154,792,221 was provided to the auditors and the SBBCI program was selected as a high-risk B program to be audited as a major program for State fiscal year 2024. Upon audit inquiry, it was determined that $151,191,199 related to capital funds and should not have been included on the SEFA. OSC appropriately adjusted the SEFA prior to finalizing the audit. DED did not properly review and report expenditures related to the SSBCI program on their SEFA subschedule. The communication between the Agencies was not sufficient to uncover the improper reporting on the SEFA. Cause DED did not properly review and report expenditures related to the SSBCI program to OSC. Possible Asserted Effect The effect was the incorrect reporting of federal expenditures, which necessitated adjustments on the SEFA during the audit process and highlighted potential compliance and oversight issues. Questioned Costs None Statistical Sampling The sample was not intended to be, and was not, a statistically valid sample. Recommendation To address the identified issues and prevent future occurrences of improper reporting on the SEFA, we recommend that DED thoroughly review and report federal expenditures on their SEFA subschedule. We also recommend OSC review and enhance its guidelines provided to the Agencies to specifically highlight the Agencies responsibility to communicate to OSC any specific requirements of the programs, and the classification and reporting of different types of funds, such as capital funds and technical assistance funds, in accordance with relevant statutes and regulations. By implementing these recommendations, the State can enhance the accuracy and reliability of SEFA reporting, ensure compliance with federal regulations, and improve overall internal controls and communication between the Agencies.
Federal Agency: United States Department of Education Federal Program: Rehabilitation Services Vocational Rehabilitation Grants to States (84.126) Federal Award Number: H126A220047(SED) Federal Award Year: 2024 State Agency: State Education Department Reference: 2024-003 Criteria Period of Performance Under section 111(a)(1) of the Rehabilitation Act, the Department pays to each state each federal fiscal year an amount equal to the federal share of the cost of providing VR services and administering the VR program. Consistent with the definition of “period of performance” at 2 CFR section 200.1 and the requirements governing information that must be contained in a GAN at 2 CFR section 200.211, the VR GAN specifies the beginning and end dates for each VR grant award. Therefore, state VR agencies may incur obligations or make expenditures under a grant award if they are incurred during the period of performance for that award. Any obligations or expenditures incurred outside of that period of performance would need to be paid with funds available from a different VR grant award. Internal controls Lastly, 2 CFR 200.303(a) states the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control Integrated Framework", issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition The New York State Education Department (SED) did not maintain complete data along with the supporting documentation to ensure compliance over the period of performance requirements for the VR program. A sample of 40 transactions was selected from SED records. For each case, an invoice, pay period, and/or manual journal entries were tested to verify the data reported in the NYGR0302 report. It was also checked to ensure that the disbursement was properly reviewed, approved, and that the selected amount met the requirement of an allowable activity incurred during the period of performance and liquidated within the required time period. During our review of fiscal year 2024 transactions, we identified that 5 out of the 40 sampled transactions occurred outside the designated period of performance. The grant award period ended on September 30, 2023, with a liquidation period extending 120 days beyond that date, until January 28, 2024. Specifically, for grant number H126A220047, these 5 transactions were incurred in either October or December 2023, which is after the designated period of performance. The review process performed by SED did not detect these transactions were outside the period of performance. Cause The condition related to a deficiency in the operation of the review process not occurring at a precision necessary to identify missing information during the review that is required to be in compliance with the grant’s period of performance. Possible Asserted Effect The identified issue of a transaction occurring outside the period of performance and being liquidated beyond the required liquidation period results in questioned costs of the VR program administered by SED, may result in financial penalties, reduced future federal funding, and potential repayment of misused federal funds. Questioned Costs $12,332 (representing the 5 transactions found to have occurred outside the specified period of performance. The population amounted to $4,448,032, of which forty, totaling $2,081,429, were selected for test work.) Statistical Sampling The sample was not intended to be, and was not, a statistically valid sample. Recommendation We recommend SED implement a new control mechanism for reviewing funds before distribution. This control should include a pre-distribution review process with a dedicated team or staff verifying the period of performance for each VR grant award, ensuring all obligations and expenditures fall within the specified dates. Additionally, an automated system or manual control is recommended to be developed or enhanced to flag any transactions outside the period of performance or liquidation period.
Federal Agency: United States Department of Education Federal Program: Rehabilitation Services Vocational Rehabilitation Grants to States (84.126) Federal Award Numbers: H126A210047 (SED), H126A220047(SED), H126A230047 (SED), H126A240047 (SED) Federal Award Years: 2021, 2022, 2023, 2024 State Agency: State Education Department Reference: 2024-004 Criteria Reporting RSA-911, Case Service Report (RSA-911) (OMB No. 1820 0508). The RSA-911 is a set of data elements that state Vocational Rehabilitation (VR) agencies must submit to ED. The data elements obtained from state VR agency service records and case management systems document the application for and/or provision of VR services to individuals with disabilities, including program outcomes and demographic information. The RSA-911 data set instructions are available at https://rsa.ed.gov/sites/default/files/subregulatory/pd-19-03.pdf. Key Line Items – Supporting documentation must be included in the service record or case management system for the data elements listed below. Dates reported in the case management system must match the supporting documentation. The following data elements contain critical information: 1. Date of Application (element 7) 2. Date of Eligibility Determination (element 38) 3. Date of Most Recent or Amended Individualized Plan for Employment (IPE) (element 398)* 4. Start Date of Employment in Primary Occupation (element 350) 5. Employment Outcome at Exit (element 356) 6. Date of Exit (element 353) 7. Hourly Wage at Exit (element 359) *In accordance with the RSA-911 data set instructions available https://rsa.ed.gov/sites/default/files/subregulatory/pd-19-03.pdf data element 398 above is listed as `Date of Initial IPE'. Internal controls Lastly, 2 CFR 200.303(a) states the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control Integrated Framework", issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition The SED did not maintain complete and accurate data with the quarterly submissions of the RSA-911. A sample of 60 cases was selected from the department. For each case, the seven key line items were tested to verify the data reported in the case management system matched supporting documentation. During the audit we noted an inconsistency between the compliance supplement requirement and the RSA-911 data set instructions for data element 398 as included above in the Criteria. For test-work purposes the RSA-911 data set instructions were utilized. For fiscal year 2024 the 60 cases selected for testing at SED, the list below summarizes the key line elements the department could not provide supporting documentation or discrepancies were noted as follows: • Date of Application (Element 7) - Two cases where the date the underlying application was received did not agree to the date reported on the RSA-911. • Date of Initial IPE (Element 398) - The RSA-911 data instructions policy directive RSA-PD-19-03 Attachment II: provides instructions to report this data element as the date on which the initial IPE was signed by both the VR Counselor and the individual. • Four cases where the date of Initial IPE reported in the RSA-911 did not agree to the date the underlying IPE. Eight cases where there was a date of initial IPE reported in the RSA-911 but a signed IPE could not be provided by management. • Start date of employment in primary occupation (Element 350) - Two cases where the start date of employment on the underlying support provided did not agree to the employment start date that was reported on the RSA-911. • Hourly Wage at Exit (Element 359) - Three cases where the hourly wage at exit on the underlying support provided did not agree to the hourly wage that was reported on the RSA-911. Cause The condition is due to deficiencies in the input and review process, which failed to correctly input information per the supporting documentation or identify missing information required for the RSA-91 Additionally, SED was transitioning to a new case management system and did not perform case reviews for the quarter ended March 31, 2024. This transition created operational challenges and resource constraints, further impacting the review process. Consequently, the combination of an imprecise review process and system transition led to reporting deficiencies. Possible Asserted Effect Failure to perform proper review of the data recorded in the case management system prior to the submission of the RSA-911 report can result in incorrect and/or missing data elements of the seven key line items noted for the RSA-911. Questioned Costs None Statistical Sampling The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding A similar finding was included in the 2023 Single Audit Report as finding number 2023-010 at pages 40-42. Recommendation We recommend SED to ensure its review process of the underlying cases operates at a precision necessary to identify missing and incorrect data to ensure complete and accurate data is submitted on the RSA-911 reports. Additionally, SED should allocate adequate resources and implement review protocols, especially during system transitions, to maintain compliance with federal reporting requirements. This will help mitigate the risk of reporting deficiencies and ensure the reliability of the data used for decision-making and program evaluations.
2024-004 – Written Policies Required by the Uniform Guidance (repeat) Finding Type: Material Weakness in Internal Controls and Noncompliance (Allowable Costs/Cost Principles, Cash Management, Procurement and Suspension & Debarment) Federal Program: U.S. Environmental Protection Agency – Capitalization Grants for Clean Water State Revolving Funds (AL #66.458) Criteria: The City does not have written policies and procedures to implement the requirements of 2 CFR section 200 for the administration of federal awards. The Uniform Guidance requires a non-federal entity that has expended federal awards for a grant on or after December 26, 2014 to have written policies pertaining to: 1) advance payments and reimbursements; 2) determination of allowable costs; 3) compensation (personnel and benefits policies); 4) travel costs; and 5) procurement procedures. 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal controls over the federal awards that provide assurance that the entity is managing the federal awards in compliance with federal statutes, regulations, and the conditions of the federal award. Condition: Although the City has processes in place to conform to the requirements in the Uniform Guidance, there are no formal written policies in place. Cause: This condition appears to be the result of a time lag in developing a plan for compliance. After initially receiving this finding in the 2023 audit, the City started the process of writing policies, but was unable to finalize them prior to the end of the year. Effect: As a result of this condition, the City did not fully comply with the Uniform Guidance. Questioned Costs: No costs have been questioned as a result of this finding. Recommendation: We recommend that the City the City proceed with implementing written policies and procedures as soon as practicable. Views of Responsible Officials: The City was in the process of preparing written policies that are in compliance with Uniform Guidance throughout the year and formally adopted a policy document in April 2024.
Award Period: April 1, 2023, to March 31, 2024 Compliance Requirement Affected: Eligibility Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: According to §200.303 Internal Controls of 2 CFR Part 200, the non‐Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non‐Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: Income thresholds, on HUD-50059 tenant recertification forms, were not properly updated to the applicable period, using available income limits published by HUD for the County of Santa Cruz. Questioned costs: None noted. Context: A nonstatistical sample of 12 out of 100 tenant files were selected for testing for the Section 8 Housing Assistance Payments Program. The discrepancy, in the maximum income limit, was identified during the auditor's testing of tenant eligibility to participate in the affordable housing program. Cause: Management oversight on properly updating the income limit thresholds. Effect: Noncompliance results in possible exclusion of eligible applicants as the income limits increased from the income limits used.
Award Period: April 1, 2023, to March 31, 2024 Compliance Requirement Affected: Eligibility Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: According to §200.303 Internal Controls of 2 CFR Part 200, the non‐Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non‐Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: Initial certification and/or recertification HUD-50059 tenant eligibility forms lacked proper review by a management agent or an acting management agent. Questioned costs: None noted. Context: A nonstatistical sample of 12 out of 100 tenant files were selected for testing for the Section 8 Housing Assistance Payments Program. The lack of proper review of tenant certification and/or tenant recertification forms was identified during the auditor's testing of tenant eligibility. Cause: Lack of a management agent or acting management agent in place at the time of tenant certification or recertification. Effect: Noncompliance results in the potential for mathematical errors in accuracy of calculation of tenant rent portion or identification of proper income limit thresholds (see finding 2024-001).
Award Period: April 1, 2023, to March 31, 2024 Compliance Requirement Affected: Cash Management Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: According to §200.303 Internal Controls of 2 CFR Part 200, the non‐Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non‐Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: HUD Housing Assistance Payment forms lacked proper review by a management agent or an acting management agent. Questioned costs: None noted. Context: A nonstatistical sample of 3 out of 12 HUD Housing Assistance Payment forms were selected for testing for the Section 8 Housing Assistance Payments Program. The lack of proper review of HUD Housing Assistance Payment forms was identified during the auditor's testing of cash management. Cause: Lack of a management agent or acting management agent in place at the time of preparing HUD Housing Assistance Payment forms. Effect: Noncompliance results in the potential for mathematical errors in accuracy of calculation of request for payment on the HUD Housing Assistance Payment forms.
Finding: Suspension and Debarment U.S. Department of the Treasury Passed through Missouri Primary Care Association Assistance Listing No. 21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Fund Award Year: 2022 Award Number: SLFPR4542 Criteria or Specific Requirement In accordance with 2 CFR 200.214, non-federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. "Covered transactions" include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220. Part 2 CFR 200.303, the non-Federal entities receiving federal awards (i.e., auditee management) establish and maintain internal control design to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: Proper verification of vendors was not occurring prior to purchase to determine whether vendors were suspended or debarred. Questioned Costs - None noted. Context: One transaction selected for testing the suspension and debarment verification occurred subsequent to the purchase. Identification of Prior Year Finding: N/A Effect: Federal funds could be paid to entities that are suspended or debarred. Cause: Vendors subject to suspension and debarment requirements are entered into Compilatric, a 3rd party software, to run monthly exclusion checks. Compilatric checks with the OIG, SAM, and GAS, plus about 35 other state and federal databases that host suspended and disbarred lists. The purchase from this vendor was not communicated to the correct department timely and a check was inadvertently missed. Recommendation: We recommend that the Health Center communicate to all departments that purchases using federal funds have suspension and debarment checks completed prior to purchase. View of Responsible Official and Planned Corrective Actions: The Health Center agrees with the finding. See separate report for planned corrective actions.
2024-006– Lack of Independent Review and Approval of Journal Entries in Federal Grant Programs Finding Type. Immaterial Noncompliance. Significant Deficiency in Internal Control over Compliance (Allowable Activities). Program. COVID-19 - Coronavirus State and Local Fiscal Recovery Funds; U.S. Department of Treasury; Assistance Listing Number 21.027, All Award Numbers Criteria. According to 2 CFR 200.303(a), 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. Condition. The Organization does not have a formal review process in place for journal entries related to its federal grant programs. Journal entries are posted without independent review or approval, increasing the risk of errors or misstatements in the financial records. Cause. The lack of a review process is due to insufficient staffing and inadequate segregation of duties within the accounting department. Effect. Without a review process, there is an increased risk of inaccurate financial reporting and potential non-compliance with federal regulations. This could lead to questioned costs, audit findings, and potential loss of federal funding. Questioned Costs. No costs are required to be questioned as a result of this finding, in as much as no unallowable expenditures were noted. Recommendation. The Organization should implement a formal review and approval process for all journal entries related to federal grant programs. View of Responsible Officials. Management agrees with this finding and has prepared a Corrective Action Plan.
2024-006– Lack of Independent Review and Approval of Journal Entries in Federal Grant Programs Finding Type. Immaterial Noncompliance. Significant Deficiency in Internal Control over Compliance (Allowable Activities). Program. COVID-19 - Coronavirus State and Local Fiscal Recovery Funds; U.S. Department of Treasury; Assistance Listing Number 21.027, All Award Numbers Criteria. According to 2 CFR 200.303(a), 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. Condition. The Organization does not have a formal review process in place for journal entries related to its federal grant programs. Journal entries are posted without independent review or approval, increasing the risk of errors or misstatements in the financial records. Cause. The lack of a review process is due to insufficient staffing and inadequate segregation of duties within the accounting department. Effect. Without a review process, there is an increased risk of inaccurate financial reporting and potential non-compliance with federal regulations. This could lead to questioned costs, audit findings, and potential loss of federal funding. Questioned Costs. No costs are required to be questioned as a result of this finding, in as much as no unallowable expenditures were noted. Recommendation. The Organization should implement a formal review and approval process for all journal entries related to federal grant programs. View of Responsible Officials. Management agrees with this finding and has prepared a Corrective Action Plan.
2024-006– Lack of Independent Review and Approval of Journal Entries in Federal Grant Programs Finding Type. Immaterial Noncompliance. Significant Deficiency in Internal Control over Compliance (Allowable Activities). Program. COVID-19 - Coronavirus State and Local Fiscal Recovery Funds; U.S. Department of Treasury; Assistance Listing Number 21.027, All Award Numbers Criteria. According to 2 CFR 200.303(a), 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. Condition. The Organization does not have a formal review process in place for journal entries related to its federal grant programs. Journal entries are posted without independent review or approval, increasing the risk of errors or misstatements in the financial records. Cause. The lack of a review process is due to insufficient staffing and inadequate segregation of duties within the accounting department. Effect. Without a review process, there is an increased risk of inaccurate financial reporting and potential non-compliance with federal regulations. This could lead to questioned costs, audit findings, and potential loss of federal funding. Questioned Costs. No costs are required to be questioned as a result of this finding, in as much as no unallowable expenditures were noted. Recommendation. The Organization should implement a formal review and approval process for all journal entries related to federal grant programs. View of Responsible Officials. Management agrees with this finding and has prepared a Corrective Action Plan.
2024-006– Lack of Independent Review and Approval of Journal Entries in Federal Grant Programs Finding Type. Immaterial Noncompliance. Significant Deficiency in Internal Control over Compliance (Allowable Activities). Program. COVID-19 - Coronavirus State and Local Fiscal Recovery Funds; U.S. Department of Treasury; Assistance Listing Number 21.027, All Award Numbers Criteria. According to 2 CFR 200.303(a), 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. Condition. The Organization does not have a formal review process in place for journal entries related to its federal grant programs. Journal entries are posted without independent review or approval, increasing the risk of errors or misstatements in the financial records. Cause. The lack of a review process is due to insufficient staffing and inadequate segregation of duties within the accounting department. Effect. Without a review process, there is an increased risk of inaccurate financial reporting and potential non-compliance with federal regulations. This could lead to questioned costs, audit findings, and potential loss of federal funding. Questioned Costs. No costs are required to be questioned as a result of this finding, in as much as no unallowable expenditures were noted. Recommendation. The Organization should implement a formal review and approval process for all journal entries related to federal grant programs. View of Responsible Officials. Management agrees with this finding and has prepared a Corrective Action Plan.
2024-006– Lack of Independent Review and Approval of Journal Entries in Federal Grant Programs Finding Type. Immaterial Noncompliance. Significant Deficiency in Internal Control over Compliance (Allowable Activities). Program. COVID-19 - Coronavirus State and Local Fiscal Recovery Funds; U.S. Department of Treasury; Assistance Listing Number 21.027, All Award Numbers Criteria. According to 2 CFR 200.303(a), 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. Condition. The Organization does not have a formal review process in place for journal entries related to its federal grant programs. Journal entries are posted without independent review or approval, increasing the risk of errors or misstatements in the financial records. Cause. The lack of a review process is due to insufficient staffing and inadequate segregation of duties within the accounting department. Effect. Without a review process, there is an increased risk of inaccurate financial reporting and potential non-compliance with federal regulations. This could lead to questioned costs, audit findings, and potential loss of federal funding. Questioned Costs. No costs are required to be questioned as a result of this finding, in as much as no unallowable expenditures were noted. Recommendation. The Organization should implement a formal review and approval process for all journal entries related to federal grant programs. View of Responsible Officials. Management agrees with this finding and has prepared a Corrective Action Plan.
Federal Agency: United States Department of the Treasury Federal Program: COVID-19 – State Small Business Credit Initiative Technical Assistance Grant Program (21.031) Federal Award Number: SSBCI-21031-0037 Federal Award Year: 2024 State Agency: Department of Economic Development and Office of the State Comptroller Reference: 2024-002 Criteria Reporting In accordance with Title 2 U.S. Code of Federal Regulations Part 200 (2 CFR 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, section 200.510(b), The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with section 200.502. For reporting purposes, State Small Business Credit Initiative (SSBCI) capital funds are not considered federal financial assistance. The SSBCI statute, 12 U.S.C. section 5702(c)(5), specifically states that capital funds transferred to jurisdictions are not considered federal financial assistance for the purposes of 31 U.S.C. subtitle V. Funds given to provide technical assistance, however, are considered federal financial assistance. Internal controls Lastly, 2 CFR 200.303(a) states the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control Integrated Framework", issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition The Office of the State Comptroller (OSC) is responsible for the preparation of the schedule of expenditures of federal awards (SEFA). Annually, OSC provides the New York State agencies with a proposed SEFA with their respective expenditures by assistance listing number and each agency is charged with reviewing and providing adjustments and feedback. The proposed agency SEFA subschedule for State fiscal year 2024 provided to the Department of Economic Development (DED) did not include the expenditures for the SSBCI program. Upon DED review of the proposed agency SEFA subschedule, DED did not identify and report any expenditures for the SBBCI program that had been disbursed by DED. OSC utilized information in the Statewide Financial System (SFS) to populate the SEFA and which included expenditures totaling $154,792,221 for the SSBCI program. The amount was comprised of $151,191,199 related to capital funds and $3,601,022 of technical assistance funds. In accordance with 12 U.S.C. § 5702(c)(5), capital funds are not considered Federal financial assistance and therefore for reporting purposes should not be included on the SEFA. The preliminary SEFA including SBBCI expenditures of $154,792,221 was provided to the auditors and the SBBCI program was selected as a high-risk B program to be audited as a major program for State fiscal year 2024. Upon audit inquiry, it was determined that $151,191,199 related to capital funds and should not have been included on the SEFA. OSC appropriately adjusted the SEFA prior to finalizing the audit. DED did not properly review and report expenditures related to the SSBCI program on their SEFA subschedule. The communication between the Agencies was not sufficient to uncover the improper reporting on the SEFA. Cause DED did not properly review and report expenditures related to the SSBCI program to OSC. Possible Asserted Effect The effect was the incorrect reporting of federal expenditures, which necessitated adjustments on the SEFA during the audit process and highlighted potential compliance and oversight issues. Questioned Costs None Statistical Sampling The sample was not intended to be, and was not, a statistically valid sample. Recommendation To address the identified issues and prevent future occurrences of improper reporting on the SEFA, we recommend that DED thoroughly review and report federal expenditures on their SEFA subschedule. We also recommend OSC review and enhance its guidelines provided to the Agencies to specifically highlight the Agencies responsibility to communicate to OSC any specific requirements of the programs, and the classification and reporting of different types of funds, such as capital funds and technical assistance funds, in accordance with relevant statutes and regulations. By implementing these recommendations, the State can enhance the accuracy and reliability of SEFA reporting, ensure compliance with federal regulations, and improve overall internal controls and communication between the Agencies.
Federal Agency: United States Department of Education Federal Program: Rehabilitation Services Vocational Rehabilitation Grants to States (84.126) Federal Award Number: H126A220047(SED) Federal Award Year: 2024 State Agency: State Education Department Reference: 2024-003 Criteria Period of Performance Under section 111(a)(1) of the Rehabilitation Act, the Department pays to each state each federal fiscal year an amount equal to the federal share of the cost of providing VR services and administering the VR program. Consistent with the definition of “period of performance” at 2 CFR section 200.1 and the requirements governing information that must be contained in a GAN at 2 CFR section 200.211, the VR GAN specifies the beginning and end dates for each VR grant award. Therefore, state VR agencies may incur obligations or make expenditures under a grant award if they are incurred during the period of performance for that award. Any obligations or expenditures incurred outside of that period of performance would need to be paid with funds available from a different VR grant award. Internal controls Lastly, 2 CFR 200.303(a) states the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control Integrated Framework", issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition The New York State Education Department (SED) did not maintain complete data along with the supporting documentation to ensure compliance over the period of performance requirements for the VR program. A sample of 40 transactions was selected from SED records. For each case, an invoice, pay period, and/or manual journal entries were tested to verify the data reported in the NYGR0302 report. It was also checked to ensure that the disbursement was properly reviewed, approved, and that the selected amount met the requirement of an allowable activity incurred during the period of performance and liquidated within the required time period. During our review of fiscal year 2024 transactions, we identified that 5 out of the 40 sampled transactions occurred outside the designated period of performance. The grant award period ended on September 30, 2023, with a liquidation period extending 120 days beyond that date, until January 28, 2024. Specifically, for grant number H126A220047, these 5 transactions were incurred in either October or December 2023, which is after the designated period of performance. The review process performed by SED did not detect these transactions were outside the period of performance. Cause The condition related to a deficiency in the operation of the review process not occurring at a precision necessary to identify missing information during the review that is required to be in compliance with the grant’s period of performance. Possible Asserted Effect The identified issue of a transaction occurring outside the period of performance and being liquidated beyond the required liquidation period results in questioned costs of the VR program administered by SED, may result in financial penalties, reduced future federal funding, and potential repayment of misused federal funds. Questioned Costs $12,332 (representing the 5 transactions found to have occurred outside the specified period of performance. The population amounted to $4,448,032, of which forty, totaling $2,081,429, were selected for test work.) Statistical Sampling The sample was not intended to be, and was not, a statistically valid sample. Recommendation We recommend SED implement a new control mechanism for reviewing funds before distribution. This control should include a pre-distribution review process with a dedicated team or staff verifying the period of performance for each VR grant award, ensuring all obligations and expenditures fall within the specified dates. Additionally, an automated system or manual control is recommended to be developed or enhanced to flag any transactions outside the period of performance or liquidation period.
Federal Agency: United States Department of Education Federal Program: Rehabilitation Services Vocational Rehabilitation Grants to States (84.126) Federal Award Numbers: H126A210047 (SED), H126A220047(SED), H126A230047 (SED), H126A240047 (SED) Federal Award Years: 2021, 2022, 2023, 2024 State Agency: State Education Department Reference: 2024-004 Criteria Reporting RSA-911, Case Service Report (RSA-911) (OMB No. 1820 0508). The RSA-911 is a set of data elements that state Vocational Rehabilitation (VR) agencies must submit to ED. The data elements obtained from state VR agency service records and case management systems document the application for and/or provision of VR services to individuals with disabilities, including program outcomes and demographic information. The RSA-911 data set instructions are available at https://rsa.ed.gov/sites/default/files/subregulatory/pd-19-03.pdf. Key Line Items – Supporting documentation must be included in the service record or case management system for the data elements listed below. Dates reported in the case management system must match the supporting documentation. The following data elements contain critical information: 1. Date of Application (element 7) 2. Date of Eligibility Determination (element 38) 3. Date of Most Recent or Amended Individualized Plan for Employment (IPE) (element 398)* 4. Start Date of Employment in Primary Occupation (element 350) 5. Employment Outcome at Exit (element 356) 6. Date of Exit (element 353) 7. Hourly Wage at Exit (element 359) *In accordance with the RSA-911 data set instructions available https://rsa.ed.gov/sites/default/files/subregulatory/pd-19-03.pdf data element 398 above is listed as `Date of Initial IPE'. Internal controls Lastly, 2 CFR 200.303(a) states the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in "Standards for Internal Control in the Federal Government" issued by the Comptroller General of the United States or the "Internal Control Integrated Framework", issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition The SED did not maintain complete and accurate data with the quarterly submissions of the RSA-911. A sample of 60 cases was selected from the department. For each case, the seven key line items were tested to verify the data reported in the case management system matched supporting documentation. During the audit we noted an inconsistency between the compliance supplement requirement and the RSA-911 data set instructions for data element 398 as included above in the Criteria. For test-work purposes the RSA-911 data set instructions were utilized. For fiscal year 2024 the 60 cases selected for testing at SED, the list below summarizes the key line elements the department could not provide supporting documentation or discrepancies were noted as follows: • Date of Application (Element 7) - Two cases where the date the underlying application was received did not agree to the date reported on the RSA-911. • Date of Initial IPE (Element 398) - The RSA-911 data instructions policy directive RSA-PD-19-03 Attachment II: provides instructions to report this data element as the date on which the initial IPE was signed by both the VR Counselor and the individual. • Four cases where the date of Initial IPE reported in the RSA-911 did not agree to the date the underlying IPE. Eight cases where there was a date of initial IPE reported in the RSA-911 but a signed IPE could not be provided by management. • Start date of employment in primary occupation (Element 350) - Two cases where the start date of employment on the underlying support provided did not agree to the employment start date that was reported on the RSA-911. • Hourly Wage at Exit (Element 359) - Three cases where the hourly wage at exit on the underlying support provided did not agree to the hourly wage that was reported on the RSA-911. Cause The condition is due to deficiencies in the input and review process, which failed to correctly input information per the supporting documentation or identify missing information required for the RSA-91 Additionally, SED was transitioning to a new case management system and did not perform case reviews for the quarter ended March 31, 2024. This transition created operational challenges and resource constraints, further impacting the review process. Consequently, the combination of an imprecise review process and system transition led to reporting deficiencies. Possible Asserted Effect Failure to perform proper review of the data recorded in the case management system prior to the submission of the RSA-911 report can result in incorrect and/or missing data elements of the seven key line items noted for the RSA-911. Questioned Costs None Statistical Sampling The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding A similar finding was included in the 2023 Single Audit Report as finding number 2023-010 at pages 40-42. Recommendation We recommend SED to ensure its review process of the underlying cases operates at a precision necessary to identify missing and incorrect data to ensure complete and accurate data is submitted on the RSA-911 reports. Additionally, SED should allocate adequate resources and implement review protocols, especially during system transitions, to maintain compliance with federal reporting requirements. This will help mitigate the risk of reporting deficiencies and ensure the reliability of the data used for decision-making and program evaluations.
2024-004 – Written Policies Required by the Uniform Guidance (repeat) Finding Type: Material Weakness in Internal Controls and Noncompliance (Allowable Costs/Cost Principles, Cash Management, Procurement and Suspension & Debarment) Federal Program: U.S. Environmental Protection Agency – Capitalization Grants for Clean Water State Revolving Funds (AL #66.458) Criteria: The City does not have written policies and procedures to implement the requirements of 2 CFR section 200 for the administration of federal awards. The Uniform Guidance requires a non-federal entity that has expended federal awards for a grant on or after December 26, 2014 to have written policies pertaining to: 1) advance payments and reimbursements; 2) determination of allowable costs; 3) compensation (personnel and benefits policies); 4) travel costs; and 5) procurement procedures. 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal controls over the federal awards that provide assurance that the entity is managing the federal awards in compliance with federal statutes, regulations, and the conditions of the federal award. Condition: Although the City has processes in place to conform to the requirements in the Uniform Guidance, there are no formal written policies in place. Cause: This condition appears to be the result of a time lag in developing a plan for compliance. After initially receiving this finding in the 2023 audit, the City started the process of writing policies, but was unable to finalize them prior to the end of the year. Effect: As a result of this condition, the City did not fully comply with the Uniform Guidance. Questioned Costs: No costs have been questioned as a result of this finding. Recommendation: We recommend that the City the City proceed with implementing written policies and procedures as soon as practicable. Views of Responsible Officials: The City was in the process of preparing written policies that are in compliance with Uniform Guidance throughout the year and formally adopted a policy document in April 2024.
Award Period: April 1, 2023, to March 31, 2024 Compliance Requirement Affected: Eligibility Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: According to §200.303 Internal Controls of 2 CFR Part 200, the non‐Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non‐Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: Income thresholds, on HUD-50059 tenant recertification forms, were not properly updated to the applicable period, using available income limits published by HUD for the County of Santa Cruz. Questioned costs: None noted. Context: A nonstatistical sample of 12 out of 100 tenant files were selected for testing for the Section 8 Housing Assistance Payments Program. The discrepancy, in the maximum income limit, was identified during the auditor's testing of tenant eligibility to participate in the affordable housing program. Cause: Management oversight on properly updating the income limit thresholds. Effect: Noncompliance results in possible exclusion of eligible applicants as the income limits increased from the income limits used.
Award Period: April 1, 2023, to March 31, 2024 Compliance Requirement Affected: Eligibility Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: According to §200.303 Internal Controls of 2 CFR Part 200, the non‐Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non‐Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: Initial certification and/or recertification HUD-50059 tenant eligibility forms lacked proper review by a management agent or an acting management agent. Questioned costs: None noted. Context: A nonstatistical sample of 12 out of 100 tenant files were selected for testing for the Section 8 Housing Assistance Payments Program. The lack of proper review of tenant certification and/or tenant recertification forms was identified during the auditor's testing of tenant eligibility. Cause: Lack of a management agent or acting management agent in place at the time of tenant certification or recertification. Effect: Noncompliance results in the potential for mathematical errors in accuracy of calculation of tenant rent portion or identification of proper income limit thresholds (see finding 2024-001).
Award Period: April 1, 2023, to March 31, 2024 Compliance Requirement Affected: Cash Management Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: According to §200.303 Internal Controls of 2 CFR Part 200, the non‐Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non‐Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition: HUD Housing Assistance Payment forms lacked proper review by a management agent or an acting management agent. Questioned costs: None noted. Context: A nonstatistical sample of 3 out of 12 HUD Housing Assistance Payment forms were selected for testing for the Section 8 Housing Assistance Payments Program. The lack of proper review of HUD Housing Assistance Payment forms was identified during the auditor's testing of cash management. Cause: Lack of a management agent or acting management agent in place at the time of preparing HUD Housing Assistance Payment forms. Effect: Noncompliance results in the potential for mathematical errors in accuracy of calculation of request for payment on the HUD Housing Assistance Payment forms.
2024-001: Crime Victim Assistance - Significant Deficiency in Internal Controls over Compliance Condition: While the Organization does have policies/controls in place to establish and maintain effective internal controls over allowable costs. It was noted while testing key controls over allowable costs that there were expenses reimbursed twice, leading to ineffective internal controls. Criteria: As defined in the Code of Federal Regulations the Organization must establish and maintain effective internal controls over the financial award that provides reasonable assurance that the non-Federal entity is managing the Federal Award in compliance with Federal statutes, regulation, and the terms and conditions of the Federal award per § 200.303. These requirements detail all the information that must be included in the Organization’s internal controls. Cause: Expenses were submitted and reimbursed twice due to an isolated instance of internal control failure. Effect: The deficiency of controls over allowable costs leads to an increase risk of errors, misstatements, or omissions in the financials statements which could misrepresent the Organization’s financial statements. Questioned costs of $13,019 were computed for duplicate expenses reimbursed. Context: During our audit procedures, we identified an isolated instance of expenses being submitted for reimbursement in July 2023. Recommendation: We recommend that the Organization reassess the invoice submission process and reimbursement request review process to ensure duplicate reimbursements do not continue to happen. Views of Responsible Officials: Management agrees with the finding. OTHER ISSUES The Summary Schedule of Prior Audit Findings is not included in this report because there were no prior audit findings related to federal award programs. See the following page for the Corrective Action Plan.
2024-002 U.S. Department of Health and Human Services Federal Financial Assistance Listing #93.526 Grants for Capital Development in Health Centers Procurement, Suspension and Debarment Significant Deficiency In Internal Control Over Compliance 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 entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Condition – There was no evidence retained that the Community Health Center reviewed vendors to determine their status in regards to the suspension and debarment requirement. Furthermore, the Community Health Center did not have written suspension and debarment policies. Cause – The Community Health Center did not have an internal control policy in place to ensure a documented review and approval of the vendors for suspension and debarment took place prior to utilizing under the federal funds. Effect – The lack of adequate policies governing review and approval increases the risk that employees participating in the federal awards administration may not be able to detect and correct noncompliance in a timely manner. Questioned Costs – None reported. Context/Sampling – A nonstatistical sample of 2 out of 4 vendors were selected for detail testing and did not include evidence of a review for suspension and debarment. The Procurement Policy was reviewed in its entirety. Repeat Finding from Prior Years – No. Recommendation – We recommend the development of a Suspension and Debarment Policy as either a separate policy or part of the Procurement Policy which would require that vendors are investigated to ensure they have not been declared ineligible to receive federal dollars. The policy should include guidance on the need to maintain that documentation. Views of Responsible Officials – Management agrees with the finding.
2024-002 U.S. Department of Health and Human Services Federal Financial Assistance Listing #93.526 Grants for Capital Development in Health Centers Procurement, Suspension and Debarment Significant Deficiency In Internal Control Over Compliance 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 entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Condition – There was no evidence retained that the Community Health Center reviewed vendors to determine their status in regards to the suspension and debarment requirement. Furthermore, the Community Health Center did not have written suspension and debarment policies. Cause – The Community Health Center did not have an internal control policy in place to ensure a documented review and approval of the vendors for suspension and debarment took place prior to utilizing under the federal funds. Effect – The lack of adequate policies governing review and approval increases the risk that employees participating in the federal awards administration may not be able to detect and correct noncompliance in a timely manner. Questioned Costs – None reported. Context/Sampling – A nonstatistical sample of 2 out of 4 vendors were selected for detail testing and did not include evidence of a review for suspension and debarment. The Procurement Policy was reviewed in its entirety. Repeat Finding from Prior Years – No. Recommendation – We recommend the development of a Suspension and Debarment Policy as either a separate policy or part of the Procurement Policy which would require that vendors are investigated to ensure they have not been declared ineligible to receive federal dollars. The policy should include guidance on the need to maintain that documentation. Views of Responsible Officials – Management agrees with the finding.
Department of Homeland Security, State of Iowa Department of Homeland Security and Emergency Management, 97.036, 4642DRIAP00000501 Disaster Grants – Public Assistance Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Period of Performance Material Weakness in Internal Control over Compliance 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 entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: Materials and transportation costs were claimed for reimbursement with no documented formal review and approval. Cause: The Cooperative did not have any formally documented review and approval over the material and transportation costs claimed for reimbursement under the program. Effect: Without a formal documentation of review of expenses, demonstrating the expenditures comply with federal regulations is difficult. Questioned Costs: No questioned costs over $25,000. Context/Sampling: A nonstatistical sample of 60 transactions were selected for testing, which accounted for $963,000 of $1,310,794 of federal program expenditures. Repeat Finding form Prior Year: No Recommendation: We recommend the Cooperative review the process for documenting the review and approval over material and transportation costs. Views of Responsible Officials: Management agrees with the finding.
U.S. Department of Housing and Urban Development Federal Financial Assistance Listing #14.134 Mortgage Insurance Rental Housing Project Number: 091-11022 HUD Regulatory Agreement Dated July 1, 2016 Procurement, Suspension, and Debarment Significant Deficiency in Internal Control over Compliance Criteria: 2 CRF 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. The non-Federal entity’s documented procurement procedures must conform to the procurement standards identified in 2 CFR 200.317 through 200.327 which also requires documentation to be retained to detail the history of procurements. In addition, as outlined in 2 CFR 180, recipients must not utilize any vendor which is suspended or debarred or is otherwise excluded from the central contactor registry. Condition: There was one vendor with expenditures in excess of $25,000 and the Project did not verify the vendor against the central contractor registry prior to entering into the transaction or on a periodic basis to ensure that the vendor was not suspended or debarred. Prior to adoption of a procurement policy, management entered into a transaction over the micropurchase threshold with a vendor and documentation was unable to be provided to support procurement compliance for the vendor. Cause: The Project adopted a written procurement policy which conforms to Uniform Guidance during May 2023 and therefore, the Project did not have a policy in place to follow from January through May. Management overlooked the requirement to verify the vendor against the central contractor registry for a vendor. Effect: Inadequate controls over this area of compliance result in a reasonable possibility that the Project would not have the required documentation in place and would not be able to detect and correct noncompliance in a timely manner. Questioned Costs: $23,335 Context/Sampling: A nonstatistical sample of 4 of 8 transactions applicable to procurement requirements were selected for testing, which accounted for $95,590 of $199,971 of transactions. In addition, there was one vendor in which suspension and debarment requirements were applicable and the vendor was tested. Repeat Finding from Prior Year: Yes Recommendation: Management implemented formal procedures over procurement during May 2023 and we recommend management continue following those formal procedures. In addition, we recommend management implement formal procedures over suspension and debarment and retain sufficient documentation to support the process was followed. Views of Responsible Officials: Management agrees with the finding and recommendation.
2023-001 Lack of Review Department of Housing and Urban Development AL #14.181 - Supportive Housing for Persons with Disabilities (Section 811) Material Weakness Category of Finding – Eligibility Condition – For most of 2023, Home Share did not have controls in place to ensure that eligibility criteria and rent calculations were being reviewed and/or approved by someone other than the individual making the initial determination or annual recertification. Criteria – 2 CFR section 200.303 requires that organizations who receive federal awards establish and maintain effective internal controls over the federal award that provides reasonable assurance that the organization is managing the federal award in compliance with the federal statues, regulations, and terms and conditions of the award. It also states that controls "should" be in compliance with guidance in "standards for Internal Control in the Federal Government" issued by the Comptroller General of the United State (the Green Book) or the "Internal Control Integrated Framework", issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Illustrative specific design and implementation of control activates over eligibility include the following (excerpt from the Green Book): • Proper design of control activities to ensure program compliance should include a process for management to identify and put into effect actions need to carry out specific responses to risks identified in the risk assessment process such as providing benefits to ineligible individuals, calculating amounts to be received for or on behalf of individuals incorrectly, unauthorized changes to system configurations, fraud, unauthorized payments, etc. • Segregations of duties should exist between those determining a participant's eligibility and those reviewing/approving eligibility. Where segregation of duties is not practical, management should select and develop alternative control activities. • Management should establish responsibility and accountability for control activities with management (or other designated personnel) of the unit or function in which the relevant risks reside. Responsible personnel should perform control activities in a timely manner as defined by policies and procedures. Cause – Due to the limited number of staff employed by the Organization in the Housing department there is a lack of adequate segregation of duties in regards to the review of eligibility and rent calculations. This service was contracted out during 2023, but the contractor also only involved a limited number of staff in the process for there was still a lack of adequate segregation of duties in regards to the review. Effect – By not having proper implementation of controls to ensure that recertifications and rent calculations are reviewed and/or approved, there is a risk that individuals are allowed to continue in the program after becoming ineligible and that rent calculations do not determine the proper split between the tenant payment and the project rental assistance payment. Questioned Costs – None. Recommendation – We recommend controls be put in place to ensure the eligibility determinations and rent calculations (initial or recertifications) be reviewed and/or approved by someone other than the individual making the determination. Management’s Response and Corrective Action – Management agrees with this finding. Beginning in September 2023, management has changed contractors. The contract with the new contractor includes a process by which the contractor acts one part of the preparation and review process and that staff members at Accord act of the other half, so that there is always a review occurring by on individual other than the preparer. Responsible party for corrective action: Robert Pickering, Chief Financial Officer Repeat Finding: This is a repeat finding. A similar finding was reported as 2022-001
2023-001 Lack of Review Department of Housing and Urban Development AL #14.181 - Supportive Housing for Persons with Disabilities (Section 811) Material Weakness Category of Finding – Eligibility Condition – For most of 2023, Home Share did not have controls in place to ensure that eligibility criteria and rent calculations were being reviewed and/or approved by someone other than the individual making the initial determination or annual recertification. Criteria – 2 CFR section 200.303 requires that organizations who receive federal awards establish and maintain effective internal controls over the federal award that provides reasonable assurance that the organization is managing the federal award in compliance with the federal statues, regulations, and terms and conditions of the award. It also states that controls "should" be in compliance with guidance in "standards for Internal Control in the Federal Government" issued by the Comptroller General of the United State (the Green Book) or the "Internal Control Integrated Framework", issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Illustrative specific design and implementation of control activates over eligibility include the following (excerpt from the Green Book): • Proper design of control activities to ensure program compliance should include a process for management to identify and put into effect actions need to carry out specific responses to risks identified in the risk assessment process such as providing benefits to ineligible individuals, calculating amounts to be received for or on behalf of individuals incorrectly, unauthorized changes to system configurations, fraud, unauthorized payments, etc. • Segregations of duties should exist between those determining a participant's eligibility and those reviewing/approving eligibility. Where segregation of duties is not practical, management should select and develop alternative control activities. • Management should establish responsibility and accountability for control activities with management (or other designated personnel) of the unit or function in which the relevant risks reside. Responsible personnel should perform control activities in a timely manner as defined by policies and procedures. Cause – Due to the limited number of staff employed by the Organization in the Housing department there is a lack of adequate segregation of duties in regards to the review of eligibility and rent calculations. This service was contracted out during 2023, but the contractor also only involved a limited number of staff in the process for there was still a lack of adequate segregation of duties in regards to the review. Effect – By not having proper implementation of controls to ensure that recertifications and rent calculations are reviewed and/or approved, there is a risk that individuals are allowed to continue in the program after becoming ineligible and that rent calculations do not determine the proper split between the tenant payment and the project rental assistance payment. Questioned Costs – None. Recommendation – We recommend controls be put in place to ensure the eligibility determinations and rent calculations (initial or recertifications) be reviewed and/or approved by someone other than the individual making the determination. Management’s Response and Corrective Action – Management agrees with this finding. Beginning in September 2023, management has changed contractors. The contract with the new contractor includes a process by which the contractor acts one part of the preparation and review process and that staff members at Accord act of the other half, so that there is always a review occurring by on individual other than the preparer. Responsible party for corrective action: Robert Pickering, Chief Financial Officer Repeat Finding: This is a repeat finding. A similar finding was reported as 2022-001