FINDING 2023-001 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): CY2021 Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 13 CITY OF NEW ALBANY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Recipients are required quarterly or annually to submit Project and Expenditure (P&E) reports to the U.S. Department of the Treasury (Treasury). The reporting periods, as well as the respective due dates, are based upon type of recipient and its population, as well as the recipient's allocation amount. Information to be reported includes projects funded, expenditures, and contracts for the appropriate reporting period. The City was classified as a metropolitan city with a population below 250,000 residents that received an allocation of more than $10 million in Coronavirus State and Local Fiscal Recovery Funds (SLFRF). As such, the initial P&E report, covering the period from March 3, 2021 to March 31, 2022, was required to be submitted to the Treasury by April 30, 2022. The subsequent quarterly reports were to cover one calendar quarter and must be submitted to the Treasury by the last day of the month following the end of the period covered. The City submitted four P&E reports during the audit period; however, the internal controls in place were not effective to prevent, or detect and correct, errors. As a result, errors in reporting were identified. The current period and cumulative expenditures reported consisted of the amounts expended by the beneficiaries who were awarded funds from the City rather than total amounts expended to the beneficiaries, resulting in current period expenditures and cumulative expenditures being incorrectly reported on all four reports as follows: Quarterly Report: October 1, 2022 to December 31, 2022 Current period expenditures were overstated by $40,350. Cumulative expenditures were understated by $262,057. Quarterly Report: January 1, 2023 to March 31, 2023 Current period expenditures were understated by $2,338,864. Cumulative expenditures were understated by $2,499,656. Quarterly Report: April 1, 2023 to June 30, 2023 Current period expenditures were understated by $1,200,000. Cumulative expenditures were understated by $3,699,656. Quarterly Report: July 1, 2023 to September 30, 2023 Current period expenditures were overstated by $2,126,306. Cumulative expenditures were understated by $1,573,349. The lack of effective internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 14 CITY OF NEW ALBANY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 31 CFR 35.4(c) states in part: "Reporting and requests for other information. During the period of performance, recipients shall provide to the Secretary periodic reports providing detailed accounting of the uses of funds, . . ." 2 CFR 200.1 states in part: ". . . Expenditures means charges made by a non-Federal entity to a project or program for which a Federal award was received. . . . (2) For reports prepared on a cash basis, expenditures are the sum of: (i) Cash disbursements for direct charges for property and services; (ii) The amount of indirect expense charged; (iii) The value of third-party in-kind contribution applied; and (iv) The amount of cash advance payments and payments made to subrecipients . . ." Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, page 10, states in part: ". . . 10. Reporting. All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. . . ." Cause The City's oversight process for filing the P&E reports for the period of October 1, 2022 to September 30, 2023, did not detect errors in the P&E reports. The City's understanding was that the expenditures in its report should be based on when the beneficiaries expended the funds and not when the City disbursed the funds to the beneficiaries. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As such, the City did not report cumulative expenditures and current period expenditures properly when filing the P&E reports for periods from October 1, 2022 to September 30, 2023. INDIANA STATE BOARD OF ACCOUNTS 15 CITY OF NEW ALBANY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. In addition, not meeting the SLFRF reporting requirements increases the likelihood that the public will not have access to transparent and accurate information regarding expenditures of federal awards. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the City develop policies and procedures to ensure the City provides the Treasury with complete and accurate information as it relates to the City in its P&E reports. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding 2023-001 Invoice Submission Information on the Federal Program: Assistance Listing Number 93.958—U.S Department of Health and Human Services, Block Grants for Community Mental Health Services. Compliance Requirements: Allowable Cost and Activities Type of Finding: Significant Deficiency. Criteria: 2 CFR 200.303 requires all non-federal entities 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. 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: Monthly invoices are coded for reimbursement and reviewed by the Controller, however there is not a separate review to ensure costs are supported, allowable and that the monthly indirect cost rate calculation is accurate. Cause: Savio House doesn’t have policies that require secondary invoice review prior to submission. Effect or Potential Effect: Material non-compliance, including submitting expenditures that lack support, or errors in calculating the indirect cost rate each month. Questioned Costs: None. Context: We did not see secondary review on any of the 12 monthly invoices submitted during 2023. Recommendation: We recommend that Savio House adopt a policy to allow for a secondary review of invoices prior to submission for reimbursement. Views of Responsible Official: Management agrees with the finding. See Corrective Action Plan for additional details.
Finding 2023-001 Invoice Submission Information on the Federal Program: Assistance Listing Number 93.958—U.S Department of Health and Human Services, Block Grants for Community Mental Health Services. Compliance Requirements: Allowable Cost and Activities Type of Finding: Significant Deficiency. Criteria: 2 CFR 200.303 requires all non-federal entities 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. 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: Monthly invoices are coded for reimbursement and reviewed by the Controller, however there is not a separate review to ensure costs are supported, allowable and that the monthly indirect cost rate calculation is accurate. Cause: Savio House doesn’t have policies that require secondary invoice review prior to submission. Effect or Potential Effect: Material non-compliance, including submitting expenditures that lack support, or errors in calculating the indirect cost rate each month. Questioned Costs: None. Context: We did not see secondary review on any of the 12 monthly invoices submitted during 2023. Recommendation: We recommend that Savio House adopt a policy to allow for a secondary review of invoices prior to submission for reimbursement. Views of Responsible Official: Management agrees with the finding. See Corrective Action Plan for additional details.
2023-002 Activities Allowed or Unallowed and Allowable Costs/Cost Principles Prior Year Finding Number: 2022-003 Year of Finding Origination: 2022 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Material Weakness and Modified Opinion Federal Agency: U.S. Department of Health and Human Services Program: 93.563 Child Support Enforcement Award Number and Year: 2301MNCEST and 2301MNCSES, 2023 Pass-Through Agency: Minnesota Department of Human Services Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Administrative program costs for Child Support Enforcement are submitted to the Minnesota Department of Human Services (DHS) through the DHS Income Maintenance DHS-2550 report on a quarterly basis. DHS provides reporting instructions, including information regarding eligible and ineligible costs. Condition: The following exceptions were noted in a sample of 40 expenditures tested: • One claim related to employee appreciation and another claim for meals at an all-staff meeting were included in the DHS-2550 report as eligible expenditures but were not eligible for federal reimbursement. • Portions of four claims that were not direct expenditures were incorrectly allocated to Child Support Enforcement. • For three timesheets tested, the payroll costs were incorrectly allocated among programs based on individual job duties rather than the full-time equivalent (FTE) allocation method described by DHS. Questioned Costs: Questioned costs identified were less than $25,000. Context: DHS relies on accurate identification and reporting of program costs to ensure grant funds paid to the Health and Human Services are for allowable federal program activities/costs and provide detailed information necessary for maintaining proper oversight over federal programs. The sample sizes were based on the guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: Errors in the identification and reporting of costs on the quarterly reports can impair DHS’ ability to provide required oversight over federal programs and result in the Heath and Human Services receiving either more or less federal funds than justified based on the actual underlying activity. Cause: The Health and Human Services’ controls over the identification of allowable activities and costs, preparation of the quarterly reports, and maintenance of payroll allocations in the accounting system were not sufficient to identify these errors. Recommendation: We recommend the Health and Human Services implement controls to ensure activities allowed and allowable costs are appropriately identified and reported to DHS in accordance with federal program guidance and DHS instructions. We also recommend reports submitted with unallowable activities or costs or costs allocated incorrectly are corrected and resubmitted. View of Responsible Official: Acknowledge
2023-002 Activities Allowed or Unallowed and Allowable Costs/Cost Principles Prior Year Finding Number: 2022-003 Year of Finding Origination: 2022 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Material Weakness and Modified Opinion Federal Agency: U.S. Department of Health and Human Services Program: 93.563 Child Support Enforcement Award Number and Year: 2301MNCEST and 2301MNCSES, 2023 Pass-Through Agency: Minnesota Department of Human Services Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Administrative program costs for Child Support Enforcement are submitted to the Minnesota Department of Human Services (DHS) through the DHS Income Maintenance DHS-2550 report on a quarterly basis. DHS provides reporting instructions, including information regarding eligible and ineligible costs. Condition: The following exceptions were noted in a sample of 40 expenditures tested: • One claim related to employee appreciation and another claim for meals at an all-staff meeting were included in the DHS-2550 report as eligible expenditures but were not eligible for federal reimbursement. • Portions of four claims that were not direct expenditures were incorrectly allocated to Child Support Enforcement. • For three timesheets tested, the payroll costs were incorrectly allocated among programs based on individual job duties rather than the full-time equivalent (FTE) allocation method described by DHS. Questioned Costs: Questioned costs identified were less than $25,000. Context: DHS relies on accurate identification and reporting of program costs to ensure grant funds paid to the Health and Human Services are for allowable federal program activities/costs and provide detailed information necessary for maintaining proper oversight over federal programs. The sample sizes were based on the guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: Errors in the identification and reporting of costs on the quarterly reports can impair DHS’ ability to provide required oversight over federal programs and result in the Heath and Human Services receiving either more or less federal funds than justified based on the actual underlying activity. Cause: The Health and Human Services’ controls over the identification of allowable activities and costs, preparation of the quarterly reports, and maintenance of payroll allocations in the accounting system were not sufficient to identify these errors. Recommendation: We recommend the Health and Human Services implement controls to ensure activities allowed and allowable costs are appropriately identified and reported to DHS in accordance with federal program guidance and DHS instructions. We also recommend reports submitted with unallowable activities or costs or costs allocated incorrectly are corrected and resubmitted. View of Responsible Official: Acknowledge
2023-003 Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Reporting Prior Year Finding Number: 2022-003 Year of Finding Origination: 2022 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Material Weakness and Modified Opinion Federal Agency: U.S. Department of Health and Human Services Program: 93.778 Medical Assistance Program Award Number and Year: 2305MN5ADM and 2305MN5MAP, 2023 Pass-Through Agency: Minnesota Department of Human Services Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Administrative program costs for the Medical Assistance Program are submitted to DHS through the DHS Income Maintenance (DHS-2550) report, the Social Service Fund Report (DHS-2556), and the Local Collaborative Time Study Cost Schedule Report (DHS-3220) on a quarterly basis. DHS provides reporting instructions, including information regarding eligible and ineligible costs. Condition: The following exceptions were noted in the sample of 40 expenditures tested for activities allowed or unallowed and allowable costs/cost principles, which resulted in the overstatement or understatement of expenditures reported: • One claim related to employee appreciation and another claim for meals at an all-staff meeting were included in the DHS-2550 and DHS-2556 reports as eligible expenditures but were not eligible for federal reimbursement. • Three claims were incorrectly allocated in the DHS-2550 report, which resulted in an understatement of Income Maintenance Administrative Overhead expense. • One claim included costs eligible for reimbursement, but the Health and Human Services did not include the costs in the DHS-2550 or DHS-2556 reports. • For two timesheets tested, the payroll costs were incorrectly allocated among programs based on individual job duties rather than the FTE allocation method described by DHS. In addition, the following exceptions were noted in the DHS reports tested for reporting: • The second and fourth quarter DHS-2550 reports were submitted with expenditures reported in incorrect reporting sections, incorrect categories of expenditures (including those that distinguish between eligible and not eligible expenditures), and payroll expenditures that should have been reported in the subsequent quarterly report. • The second and fourth quarter DHS-2556 reports were submitted with overstated revenues due to an ineligible investment revenue, expenditures reported in the incorrect category of expenditures, and expenditures that should have been reported in the previous quarterly report. • The fourth quarter DHS-3220 report excluded direct charges that were eligible expenditures. Questioned Costs: Questioned costs identified were less than $25,000. Context: DHS relies on accurate identification and reporting of program costs to ensure grant funds paid to the Health and Human Services are for allowable federal program activities/costs and provide detailed information necessary for maintaining proper oversight over federal programs. The sample sizes were based on the guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: Errors in the identification and reporting of costs on the quarterly reports can impair DHS’ ability to provide required oversight over federal programs and result in the Health and Human Services receiving either more or less federal funds than justified based on the actual underlying activity. Cause: The Health and Human Services’ controls over the identification of allowable activities and costs, preparation and review of the quarterly reports, and maintenance of payroll allocations in the accounting system were not sufficient to identify these errors. Recommendation: We recommend the Health and Human Services implement controls to ensure activities allowed and allowable costs are appropriately identified and accurately reported to DHS in accordance with federal program guidance and DHS instructions. We also recommend reports submitted with unallowable activities or costs, costs allocated incorrectly, or activity reported incorrectly are corrected and resubmitted. View of Responsible Official: Acknowledge
2023-003 Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Reporting Prior Year Finding Number: 2022-003 Year of Finding Origination: 2022 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Material Weakness and Modified Opinion Federal Agency: U.S. Department of Health and Human Services Program: 93.778 Medical Assistance Program Award Number and Year: 2305MN5ADM and 2305MN5MAP, 2023 Pass-Through Agency: Minnesota Department of Human Services Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Administrative program costs for the Medical Assistance Program are submitted to DHS through the DHS Income Maintenance (DHS-2550) report, the Social Service Fund Report (DHS-2556), and the Local Collaborative Time Study Cost Schedule Report (DHS-3220) on a quarterly basis. DHS provides reporting instructions, including information regarding eligible and ineligible costs. Condition: The following exceptions were noted in the sample of 40 expenditures tested for activities allowed or unallowed and allowable costs/cost principles, which resulted in the overstatement or understatement of expenditures reported: • One claim related to employee appreciation and another claim for meals at an all-staff meeting were included in the DHS-2550 and DHS-2556 reports as eligible expenditures but were not eligible for federal reimbursement. • Three claims were incorrectly allocated in the DHS-2550 report, which resulted in an understatement of Income Maintenance Administrative Overhead expense. • One claim included costs eligible for reimbursement, but the Health and Human Services did not include the costs in the DHS-2550 or DHS-2556 reports. • For two timesheets tested, the payroll costs were incorrectly allocated among programs based on individual job duties rather than the FTE allocation method described by DHS. In addition, the following exceptions were noted in the DHS reports tested for reporting: • The second and fourth quarter DHS-2550 reports were submitted with expenditures reported in incorrect reporting sections, incorrect categories of expenditures (including those that distinguish between eligible and not eligible expenditures), and payroll expenditures that should have been reported in the subsequent quarterly report. • The second and fourth quarter DHS-2556 reports were submitted with overstated revenues due to an ineligible investment revenue, expenditures reported in the incorrect category of expenditures, and expenditures that should have been reported in the previous quarterly report. • The fourth quarter DHS-3220 report excluded direct charges that were eligible expenditures. Questioned Costs: Questioned costs identified were less than $25,000. Context: DHS relies on accurate identification and reporting of program costs to ensure grant funds paid to the Health and Human Services are for allowable federal program activities/costs and provide detailed information necessary for maintaining proper oversight over federal programs. The sample sizes were based on the guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: Errors in the identification and reporting of costs on the quarterly reports can impair DHS’ ability to provide required oversight over federal programs and result in the Health and Human Services receiving either more or less federal funds than justified based on the actual underlying activity. Cause: The Health and Human Services’ controls over the identification of allowable activities and costs, preparation and review of the quarterly reports, and maintenance of payroll allocations in the accounting system were not sufficient to identify these errors. Recommendation: We recommend the Health and Human Services implement controls to ensure activities allowed and allowable costs are appropriately identified and accurately reported to DHS in accordance with federal program guidance and DHS instructions. We also recommend reports submitted with unallowable activities or costs, costs allocated incorrectly, or activity reported incorrectly are corrected and resubmitted. View of Responsible Official: Acknowledge
2023-004 Eligibility – MAXIS Prior Year Finding Number: 2022-002 Repeat Finding Since: 2011 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Material Weakness and Modified Opinion Federal Agency: U.S. Department of Health and Human Services Program: 93.778 Medical Assistance Program Award Number and Year: 2305MN5ADM; 2023 Pass-Through Agency: Minnesota Department of Human Services Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: DHS maintains the computer system, MAXIS, which is used by the Health and Human Services to support the eligibility determination process. While periodic supervisory case reviews are performed to monitor compliance with grant requirements for eligibility, not all documentation was available, updated, or input correctly to support participant eligibility. The following exceptions were noted in the sample of 40 case files tested: • Four case files included amounts for client accounts (assets) that were not properly updated and/or supported for the most recent application/certification prior to being automatically renewed during the COVID-19 pandemic. • Four case files did not include support for the income listed in MAXIS. • One case file did not meet the application requirements such as requesting and obtaining the case file information from the previous agency. • One case file did not meet the necessary application requirements for residency as no application or case file information could be provided. Questioned Costs: Not applicable. The Health and Human Services administers the program, but the State of Minnesota pays benefits to program participants. Context: The State of Minnesota and the Health and Human Services split the eligibility determination process. The Health and Human Services performs the “intake function” (meeting with the social services client to determine income and categorical eligibility), while the state maintains the MAXIS system, which supports the eligibility determination process and actually pays the benefits to participants. The sample size was based on the guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: The improper input or updating of information into MAXIS and the lack of verification or follow-up of eligibility-determining factors increases the risk that program participants will receive benefits when they are not eligible. Cause: Program personnel entering case file information into MAXIS did not ensure all required information was input or updated correctly, supported, or retained. Recommendation: We recommend Southwest Health and Human Services implement additional procedures to provide reasonable assurance that all necessary documentation to support eligibility determinations exists and is properly input or updated in MAXIS and issues are followed up in a timely manner. In addition, Southwest Health and Human Services should consider providing further training for program personnel. View of Responsible Official: Acknowledge
2023-005 Eligibility – METS Prior Year Finding Number: 2022-002 Repeat Finding Since: 2022 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Material Weakness and Modified Opinion Federal Agency: U.S. Department of Health and Human Services Program: 93.778 Medical Assistance Program Award Number and Year: 2305MN5ADM; 2023 Pass-Through Agency: Minnesota Department of Human Services Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: DHS maintains the computer system, METS, which is used by the Health and Human Services to support the eligibility determination process. While periodic supervisory case reviews are performed to monitor compliance with grant requirements for eligibility, not all documentation was available, updated, or input correctly to support participant eligibility. In the sample of 40 case files tested, four instances were noted where the category of each case file was originally classified as auto newborn. The case files were not subsequently updated to the correct category and, therefore, not verified by either METS or manually by the Health and Human Services for both social security number or citizenship. Questioned Costs: Not applicable. The Health and Human Services administers the program, but the State of Minnesota pays benefits to program participants. Context: The Health and Human Services performs any “intake function” needed for this program, while the state maintains METS, which supports the eligibility determination process and actually pays the benefits to the participants. The sample size was based on the guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: The improper input or updating of information into METS and the lack of verification or follow-up of eligibility-determining factors increases the risk that program participants will receive benefits when they are not eligible. Cause: The METS verification process was incomplete; the system did not indicate verification for social security number and citizenship was required. Recommendation: We recommend Southwest Health and Human Services implement additional procedures to provide reasonable assurance that all necessary documentation to support eligibility determinations exists and is properly input, updated, or verified in METS and issues are followed up in a timely manner. In addition, Southwest Health and Human Services should consider providing further training for program personnel. View of Responsible Official: Acknowledge
Finding 2023-001 – Internal control deficiency and noncompliance over Procurement. Identification of the federal program: Assistance Listing Number 93.738: • PPHF: Racial and Ethnic Approaches to Community Health Program financed solely by Public Prevention and Health Funds • COVID-19 – PPHF: Racial and Ethnic Approaches to Community Health Program financed solely by Public Prevention and Health Funds • U.S. Department of Health and Human Services • Federal Award Identification Number – NU58DP006604 • Federal Award Year – September 30, 2018 to September 29, 2023 Criteria or specific requirement (including statutory, regulatory or other citation): Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.303 – Internal controls. The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.318(i) – General procurement standards. The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Title 2, Subtitle A, Chapter II, Part 200, Subpart D, 200.320 – Methods of procurement to be followed. The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award: (a) (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity; (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold; (2) The item is available only from a single source; (3) The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; (4) The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or (5) After solicitation of a number of sources, competition is determined inadequate. Condition: Management did not have effective internal controls in place over the compliance requirements as stated in the criteria or specific requirement section above. Management did not maintain records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Cause: Management did not have effective internal controls in place over the compliance requirements as stated in the criteria or specific requirement section above. Effect or potential effect: Small purchase procurements and noncompetitive procurements were not supported by effective internal controls and could potentially include unreasonable prices or rates. Questioned costs: $43,694 – Assistance Listing Number 93.738, Award Identification Number – NU58DP006604 Questioned costs were computed by taking the total small purchase procurements that were not supported by adequate documentation of $43,694. Context: During our testing over small purchase procurements, we obtained a listing of small purchase procurements and selected a sample of 6 which represented the entire population. The total value of the small purchase procurements was $236,269. There were 2 ($43,694) out of 6 ($236,269) selections where management did not maintain records for procurements sufficient to detail the history of procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Identification as a repeat finding, if applicable: No. Recommendation: We recommend management develop and implement effective internal controls to ensure the compliance requirements over procurements are performed. In addition, management should review the items identified as questioned costs to identify if any improper payments were made to the entity. Views of responsible officials: This finding was due to two process failures. The first relates to a lack of adequate documentation whereby PHS entered into a contract with the New Mexico Department of Health to provide services under the REACH immunization program as a sole source procurement. The allowability of this cost is not in question. The scope of work was presented to and approved by the CDC before the procurement was initiated. However, the justification for use of the New Mexico Department of Health as a sole source contractor was not adequately documented. The second failure was due to a lack of awareness and ineffective communication regarding the applicability of Federal procurement requirements to certain advertising services procured for the REACH immunization program. This breakdown occurred as the PHS Communications and Brand Management Department coordinating the procurement of the services does not typically engage with Federally funded projects and was not made aware of the applicable requirements by the Community Health department who had received the funding and was requesting the services. The realization that advertising needs for the REACH immunization project would exceed the micro purchase threshold and trigger the need for a different process for the Communications department was overlooked and not communicated effectively. The advertising costs included in this finding are allowable. The finding occurred because the costs exceeded the micro purchase threshold and were not competitively bid. Presbyterian agrees that the lack of awareness in this situation created a scenario where the required efforts and documentation necessary to justify a sole source procurement were not met. It should be noted, however, that Presbyterian has awareness of the procurement requirements in the code of federal regulations governing such matters and strives to be compliant with those requirements. This is evidenced by the following: • A robust policy governing procurements under federal awards that aligns with the procurement requirements within 2 CFR 200. • Annual required training for all Leaders (Directors and above) that includes risks associated with grant funding and incorporates a link to the federal procurement policy. • A Federal Conflict of Interest policy to mitigate and remediate conflicts of interest that would be associated with procurements under federal awards. • A rigorous process to ensure compliance with subaward and contractual agreements. • No fraud has ever been detected or suspected with any of Presbyterian’s federal awards. • Internal processes in place to approve purchases made directly by programs with grant funding. • Monthly transactions reviews performed to confirm appropriateness and identification of any necessary corrections prior to closing the accounting period as well as budget to actual tracking. Presbyterian acknowledges that despite the processes and policies listed above, additional education and ongoing training and communication of Federal procurement requirements are necessary to mitigate future procurement issues. Presbyterian believes that enhancing training, education and communication as well as process revisions and written procedures will effectively mitigate this risk. A corrective action plan has been developed that will focus on four specific areas: 1) Communication & Awareness of process failures that led to the finding. 2) Training & Education, broadly at an enterprise level and targeted to areas engaged in federal funding. 3) Written Procedures and Toolkits to facilitate actions that result in compliant procurements under Federal funding and updates to the existing policy governing procurements under Federal funding to clarify the responsibilities for communication of applicability of Federal procurement requirements. 4) Collaboration with the Communications department to ensure processes exist to support competitive bids for advertising services as needed.
Finding 2023-003: Significant Deficiency in Internal Control over Compliance: Approval of Non-Typical Payroll Expenditures Information on the Federal Program: Assistance Listing Number 16.526 - Office on Violence Against Women: Technical Assistance Initiative, award number: 2018-TA-AX-K002 Criteria: 2 CFR 200.3030 of Subpart D, “Post Federal Award Requirements Standards for Financial Program Management,” of the Uniform Guidance requires a nonfederal entity to establish and maintain effective internal control over the federal award that provides reasonable assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award, including Activities Allowed or Unallowed and Allowable Costs and Cost Principles. Condition: Processes and procedures in place to approve expenditures did not include approval of expenses for vacation payouts outside of the vacation policy. Cause: The Organization paid out vacation for a terminated employee. This did not agree with the Organization’s vacation policy and documented approval of the decision was not available. Effect or Potential Effect: Unallowable costs or activities could be charged to federal grants. Questioned Costs: None Context: As of the date of testing, documented approval was not available for one of forty items selected ($5,015 of $106,184 expenses tested). Repeat finding: No. Recommendation: We recommend the Organization follow its policies and document any deviations therefrom. We also recommend documenting approval of all expenses charged to federal grants. Planned Corrective Action: During 2023, vacation was paid out for a terminated employee. This payment did not agree with the organization’s vacation policy and documented approval of the decision was not available. Involuntary terminations at MIWSAC are rare. In the case of the terminated employee, vacation was paid out as though the termination was a voluntary resignation. This error was an oversight during payroll processing. As a result of this finding, the current policies & procedures surrounding payout of earned, unused vacation will be reviewed at an upcoming Circle Keepers meeting. Any approved changes to the policy will be documented in the Employee Handbook and distributed to all employees. This corrective action will be completed no later than September 30, 2024
Finding 2023-003: Significant Deficiency in Internal Control over Compliance: Approval of Non-Typical Payroll Expenditures Information on the Federal Program: Assistance Listing Number 16.526 - Office on Violence Against Women: Technical Assistance Initiative, award number: 2018-TA-AX-K002 Criteria: 2 CFR 200.3030 of Subpart D, “Post Federal Award Requirements Standards for Financial Program Management,” of the Uniform Guidance requires a nonfederal entity to establish and maintain effective internal control over the federal award that provides reasonable assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award, including Activities Allowed or Unallowed and Allowable Costs and Cost Principles. Condition: Processes and procedures in place to approve expenditures did not include approval of expenses for vacation payouts outside of the vacation policy. Cause: The Organization paid out vacation for a terminated employee. This did not agree with the Organization’s vacation policy and documented approval of the decision was not available. Effect or Potential Effect: Unallowable costs or activities could be charged to federal grants. Questioned Costs: None Context: As of the date of testing, documented approval was not available for one of forty items selected ($5,015 of $106,184 expenses tested). Repeat finding: No. Recommendation: We recommend the Organization follow its policies and document any deviations therefrom. We also recommend documenting approval of all expenses charged to federal grants. Planned Corrective Action: During 2023, vacation was paid out for a terminated employee. This payment did not agree with the organization’s vacation policy and documented approval of the decision was not available. Involuntary terminations at MIWSAC are rare. In the case of the terminated employee, vacation was paid out as though the termination was a voluntary resignation. This error was an oversight during payroll processing. As a result of this finding, the current policies & procedures surrounding payout of earned, unused vacation will be reviewed at an upcoming Circle Keepers meeting. Any approved changes to the policy will be documented in the Employee Handbook and distributed to all employees. This corrective action will be completed no later than September 30, 2024
Finding 2023-003: Significant Deficiency in Internal Control over Compliance: Approval of Non-Typical Payroll Expenditures Information on the Federal Program: Assistance Listing Number 16.526 - Office on Violence Against Women: Technical Assistance Initiative, award number: 2018-TA-AX-K002 Criteria: 2 CFR 200.3030 of Subpart D, “Post Federal Award Requirements Standards for Financial Program Management,” of the Uniform Guidance requires a nonfederal entity to establish and maintain effective internal control over the federal award that provides reasonable assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award, including Activities Allowed or Unallowed and Allowable Costs and Cost Principles. Condition: Processes and procedures in place to approve expenditures did not include approval of expenses for vacation payouts outside of the vacation policy. Cause: The Organization paid out vacation for a terminated employee. This did not agree with the Organization’s vacation policy and documented approval of the decision was not available. Effect or Potential Effect: Unallowable costs or activities could be charged to federal grants. Questioned Costs: None Context: As of the date of testing, documented approval was not available for one of forty items selected ($5,015 of $106,184 expenses tested). Repeat finding: No. Recommendation: We recommend the Organization follow its policies and document any deviations therefrom. We also recommend documenting approval of all expenses charged to federal grants. Planned Corrective Action: During 2023, vacation was paid out for a terminated employee. This payment did not agree with the organization’s vacation policy and documented approval of the decision was not available. Involuntary terminations at MIWSAC are rare. In the case of the terminated employee, vacation was paid out as though the termination was a voluntary resignation. This error was an oversight during payroll processing. As a result of this finding, the current policies & procedures surrounding payout of earned, unused vacation will be reviewed at an upcoming Circle Keepers meeting. Any approved changes to the policy will be documented in the Employee Handbook and distributed to all employees. This corrective action will be completed no later than September 30, 2024
Finding 2023-003: Significant Deficiency in Internal Control over Compliance: Approval of Non-Typical Payroll Expenditures Information on the Federal Program: Assistance Listing Number 16.526 - Office on Violence Against Women: Technical Assistance Initiative, award number: 2018-TA-AX-K002 Criteria: 2 CFR 200.3030 of Subpart D, “Post Federal Award Requirements Standards for Financial Program Management,” of the Uniform Guidance requires a nonfederal entity to establish and maintain effective internal control over the federal award that provides reasonable assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award, including Activities Allowed or Unallowed and Allowable Costs and Cost Principles. Condition: Processes and procedures in place to approve expenditures did not include approval of expenses for vacation payouts outside of the vacation policy. Cause: The Organization paid out vacation for a terminated employee. This did not agree with the Organization’s vacation policy and documented approval of the decision was not available. Effect or Potential Effect: Unallowable costs or activities could be charged to federal grants. Questioned Costs: None Context: As of the date of testing, documented approval was not available for one of forty items selected ($5,015 of $106,184 expenses tested). Repeat finding: No. Recommendation: We recommend the Organization follow its policies and document any deviations therefrom. We also recommend documenting approval of all expenses charged to federal grants. Planned Corrective Action: During 2023, vacation was paid out for a terminated employee. This payment did not agree with the organization’s vacation policy and documented approval of the decision was not available. Involuntary terminations at MIWSAC are rare. In the case of the terminated employee, vacation was paid out as though the termination was a voluntary resignation. This error was an oversight during payroll processing. As a result of this finding, the current policies & procedures surrounding payout of earned, unused vacation will be reviewed at an upcoming Circle Keepers meeting. Any approved changes to the policy will be documented in the Employee Handbook and distributed to all employees. This corrective action will be completed no later than September 30, 2024
Finding 2023-003: Significant Deficiency in Internal Control over Compliance: Approval of Non-Typical Payroll Expenditures Information on the Federal Program: Assistance Listing Number 16.526 - Office on Violence Against Women: Technical Assistance Initiative, award number: 2018-TA-AX-K002 Criteria: 2 CFR 200.3030 of Subpart D, “Post Federal Award Requirements Standards for Financial Program Management,” of the Uniform Guidance requires a nonfederal entity to establish and maintain effective internal control over the federal award that provides reasonable assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award, including Activities Allowed or Unallowed and Allowable Costs and Cost Principles. Condition: Processes and procedures in place to approve expenditures did not include approval of expenses for vacation payouts outside of the vacation policy. Cause: The Organization paid out vacation for a terminated employee. This did not agree with the Organization’s vacation policy and documented approval of the decision was not available. Effect or Potential Effect: Unallowable costs or activities could be charged to federal grants. Questioned Costs: None Context: As of the date of testing, documented approval was not available for one of forty items selected ($5,015 of $106,184 expenses tested). Repeat finding: No. Recommendation: We recommend the Organization follow its policies and document any deviations therefrom. We also recommend documenting approval of all expenses charged to federal grants. Planned Corrective Action: During 2023, vacation was paid out for a terminated employee. This payment did not agree with the organization’s vacation policy and documented approval of the decision was not available. Involuntary terminations at MIWSAC are rare. In the case of the terminated employee, vacation was paid out as though the termination was a voluntary resignation. This error was an oversight during payroll processing. As a result of this finding, the current policies & procedures surrounding payout of earned, unused vacation will be reviewed at an upcoming Circle Keepers meeting. Any approved changes to the policy will be documented in the Employee Handbook and distributed to all employees. This corrective action will be completed no later than September 30, 2024
Finding 2023-002: Significant Deficiency in Internal Control over Compliance: Approval of Executive Director’s Expenditures Information on the Federal Program: Assistance Listing Number 16.557 - Office on Violence Against Women: Tribal Domestic Violence and Sexual Assault Coalitions Program, award numbers: 15JOVW-22-GG-03618-MUMU, 15JOVW-21-GG-02267-MUMU Criteria: 2 CFR 200.3030 of Subpart D, “Post Federal Award Requirements Standards for Financial Program Management,” of the Uniform Guidance requires a nonfederal entity to establish and maintain effective internal control over the federal award that provides reasonable assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award, including Activities Allowed or Unallowed and Allowable Costs and Cost Principles. Condition: Processes and procedures in place to approve expenditures did not include timely approval of expenses initiated by the Executive Director. Cause: The Executive Director or Operations Director approves all expenditures, however a process was not in place for a Circle Keeper (board member) to regularly review expenditures initiated by the Executive Director during 2022 and most of 2023. Effect or Potential Effect: Unallowable costs or activities could be charged to federal grants. Questioned Cost: None Context: As of the date of testing, documented approval was not available for two of forty items selected ($1,730 of $67,177) for assistance listing 16.557. Repeat finding: Yes, 2022-002 Recommendation: We recommend the Organization obtain approval of Executive Director’s expenses by a Circle Keeper (board member) prior to the expenses being charged to a federal grant. Planned Corrective Action: It was determined during the 2022 audit that expenditures initiated by the Executive Director did not have the required approval. At the time of the 2022-002 finding, an update was made to the procedures in the Financial Policies and Procedures manual Part III, Sections 2 and 4 to address the use of MIWSAC credit/debit cards for expenditures. This update was included with the corresponding corrective action plan in August 2023. The Executive Director’s credit/debit card purchases and expense reimbursement requests are now approved by the Keeper of Finances or the Keeper of Traditional Ways. This corrective action was fully implemented November 1, 2023.
Finding 2023-002: Significant Deficiency in Internal Control over Compliance: Approval of Executive Director’s Expenditures Information on the Federal Program: Assistance Listing Number 16.557 - Office on Violence Against Women: Tribal Domestic Violence and Sexual Assault Coalitions Program, award numbers: 15JOVW-22-GG-03618-MUMU, 15JOVW-21-GG-02267-MUMU Criteria: 2 CFR 200.3030 of Subpart D, “Post Federal Award Requirements Standards for Financial Program Management,” of the Uniform Guidance requires a nonfederal entity to establish and maintain effective internal control over the federal award that provides reasonable assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award, including Activities Allowed or Unallowed and Allowable Costs and Cost Principles. Condition: Processes and procedures in place to approve expenditures did not include timely approval of expenses initiated by the Executive Director. Cause: The Executive Director or Operations Director approves all expenditures, however a process was not in place for a Circle Keeper (board member) to regularly review expenditures initiated by the Executive Director during 2022 and most of 2023. Effect or Potential Effect: Unallowable costs or activities could be charged to federal grants. Questioned Cost: None Context: As of the date of testing, documented approval was not available for two of forty items selected ($1,730 of $67,177) for assistance listing 16.557. Repeat finding: Yes, 2022-002 Recommendation: We recommend the Organization obtain approval of Executive Director’s expenses by a Circle Keeper (board member) prior to the expenses being charged to a federal grant. Planned Corrective Action: It was determined during the 2022 audit that expenditures initiated by the Executive Director did not have the required approval. At the time of the 2022-002 finding, an update was made to the procedures in the Financial Policies and Procedures manual Part III, Sections 2 and 4 to address the use of MIWSAC credit/debit cards for expenditures. This update was included with the corresponding corrective action plan in August 2023. The Executive Director’s credit/debit card purchases and expense reimbursement requests are now approved by the Keeper of Finances or the Keeper of Traditional Ways. This corrective action was fully implemented November 1, 2023.
Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.267 Program: Continuum of Care Program Award/Pass-Through Entity Identifying Numbers: 202212-01122, 202212-01115, DA-202212-01187, 202210-00966, DA-202212-01319 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-federal entities receiving federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with federal statues, regulations, and the terms and conditions of the federal award. Per 24 CFR §578.49(b)(1), “Where grants are used to pay for rent for all or a part of a structure or structures, the rent paid must be reasonable in relation to rents being charged in the area for comparable space. In addition, the rent may not exceed rents currently being charged by the same owner for comparable unassisted space.” Per 24 CFR §§578.49(b)(2) and 578.51(g), “When grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents being charged for comparable units, taking into account the location, size, type, quality, amenities, facilities, and management services. In addition, the rents may not exceed rents currently being charged for comparable units, and the rent paid may not exceed HUD-determined fair market rents.” “HUD will only provide rental assistance for a unit if the rent is reasonable. The recipient or subrecipient must determine whether the rent charged for the unit receiving rental assistance is reasonable in relation to rents being charged for comparable unassisted units, taking into account the location, size, type, quality, amenities, facilities, and management and maintenance of each unit. Reasonable rent must not exceed rents currently being charged by the same owner for comparable unassisted units.” Condition: For 14 out of 19 clients tested, a comparable unit analysis was not completed for updated Housing and Urban Development (HUD) Fair Market Rates (FMR) or lease modifications prior to move in. Cause: LifeWire did not appropriately retain or produce documentation that rent reasonableness was checked prior to move-in or at changes to lease terms in accordance with its policies. Effect or Potential Effect: Insufficient retention or creation of rent reasonableness forms and supporting documentation resulted in rent reasonableness controls not operating effectively to appropriately identify rental amounts for LifeWire’s clients in need of rental assistance. LifeWire could incorrectly charge expenditures to the federal program as a result. Known Questioned Costs: $74,715 Likely Questioned Costs: $344,707 Context: This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Total costs subject to rent reasonableness were $516,407. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that LifeWire enforce existing policies and procedures and implement additional policies and procedures for maintaining and monitoring rental reasonableness documentation to ensure compliance with HUD-determined FMR requirements. Views of Responsible Officials: Management agrees with the finding that documentation was not appropriately retained or produced regarding rent reasonableness. Management has modified its policies and procedures to ensure completion of rent reasonableness to ensure compliance.
Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.267 Program: Continuum of Care Program Award/Pass-Through Entity Identifying Numbers: 202212-01122, 202212-01115, DA-202212-01187, 202210-00966, DA-202212-01319 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-federal entities receiving federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with federal statues, regulations, and the terms and conditions of the federal award. Per 24 CFR §578.49(b)(1), “Where grants are used to pay for rent for all or a part of a structure or structures, the rent paid must be reasonable in relation to rents being charged in the area for comparable space. In addition, the rent may not exceed rents currently being charged by the same owner for comparable unassisted space.” Per 24 CFR §§578.49(b)(2) and 578.51(g), “When grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents being charged for comparable units, taking into account the location, size, type, quality, amenities, facilities, and management services. In addition, the rents may not exceed rents currently being charged for comparable units, and the rent paid may not exceed HUD-determined fair market rents.” “HUD will only provide rental assistance for a unit if the rent is reasonable. The recipient or subrecipient must determine whether the rent charged for the unit receiving rental assistance is reasonable in relation to rents being charged for comparable unassisted units, taking into account the location, size, type, quality, amenities, facilities, and management and maintenance of each unit. Reasonable rent must not exceed rents currently being charged by the same owner for comparable unassisted units.” Condition: For 14 out of 19 clients tested, a comparable unit analysis was not completed for updated Housing and Urban Development (HUD) Fair Market Rates (FMR) or lease modifications prior to move in. Cause: LifeWire did not appropriately retain or produce documentation that rent reasonableness was checked prior to move-in or at changes to lease terms in accordance with its policies. Effect or Potential Effect: Insufficient retention or creation of rent reasonableness forms and supporting documentation resulted in rent reasonableness controls not operating effectively to appropriately identify rental amounts for LifeWire’s clients in need of rental assistance. LifeWire could incorrectly charge expenditures to the federal program as a result. Known Questioned Costs: $74,715 Likely Questioned Costs: $344,707 Context: This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Total costs subject to rent reasonableness were $516,407. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that LifeWire enforce existing policies and procedures and implement additional policies and procedures for maintaining and monitoring rental reasonableness documentation to ensure compliance with HUD-determined FMR requirements. Views of Responsible Officials: Management agrees with the finding that documentation was not appropriately retained or produced regarding rent reasonableness. Management has modified its policies and procedures to ensure completion of rent reasonableness to ensure compliance.
Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.267 Program: Continuum of Care Program Award/Pass-Through Entity Identifying Numbers: 202212-01122, 202212-01115, DA-202212-01187, 202210-00966, DA-202212-01319 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-federal entities receiving federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with federal statues, regulations, and the terms and conditions of the federal award. Per 24 CFR §578.49(b)(1), “Where grants are used to pay for rent for all or a part of a structure or structures, the rent paid must be reasonable in relation to rents being charged in the area for comparable space. In addition, the rent may not exceed rents currently being charged by the same owner for comparable unassisted space.” Per 24 CFR §§578.49(b)(2) and 578.51(g), “When grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents being charged for comparable units, taking into account the location, size, type, quality, amenities, facilities, and management services. In addition, the rents may not exceed rents currently being charged for comparable units, and the rent paid may not exceed HUD-determined fair market rents.” “HUD will only provide rental assistance for a unit if the rent is reasonable. The recipient or subrecipient must determine whether the rent charged for the unit receiving rental assistance is reasonable in relation to rents being charged for comparable unassisted units, taking into account the location, size, type, quality, amenities, facilities, and management and maintenance of each unit. Reasonable rent must not exceed rents currently being charged by the same owner for comparable unassisted units.” Condition: For 14 out of 19 clients tested, a comparable unit analysis was not completed for updated Housing and Urban Development (HUD) Fair Market Rates (FMR) or lease modifications prior to move in. Cause: LifeWire did not appropriately retain or produce documentation that rent reasonableness was checked prior to move-in or at changes to lease terms in accordance with its policies. Effect or Potential Effect: Insufficient retention or creation of rent reasonableness forms and supporting documentation resulted in rent reasonableness controls not operating effectively to appropriately identify rental amounts for LifeWire’s clients in need of rental assistance. LifeWire could incorrectly charge expenditures to the federal program as a result. Known Questioned Costs: $74,715 Likely Questioned Costs: $344,707 Context: This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Total costs subject to rent reasonableness were $516,407. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that LifeWire enforce existing policies and procedures and implement additional policies and procedures for maintaining and monitoring rental reasonableness documentation to ensure compliance with HUD-determined FMR requirements. Views of Responsible Officials: Management agrees with the finding that documentation was not appropriately retained or produced regarding rent reasonableness. Management has modified its policies and procedures to ensure completion of rent reasonableness to ensure compliance.
Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.267 Program: Continuum of Care Program Award/Pass-Through Entity Identifying Numbers: 202212-01122, 202212-01115, DA-202212-01187, 202210-00966, DA-202212-01319 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-federal entities receiving federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with federal statues, regulations, and the terms and conditions of the federal award. Per 24 CFR §578.49(b)(1), “Where grants are used to pay for rent for all or a part of a structure or structures, the rent paid must be reasonable in relation to rents being charged in the area for comparable space. In addition, the rent may not exceed rents currently being charged by the same owner for comparable unassisted space.” Per 24 CFR §§578.49(b)(2) and 578.51(g), “When grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents being charged for comparable units, taking into account the location, size, type, quality, amenities, facilities, and management services. In addition, the rents may not exceed rents currently being charged for comparable units, and the rent paid may not exceed HUD-determined fair market rents.” “HUD will only provide rental assistance for a unit if the rent is reasonable. The recipient or subrecipient must determine whether the rent charged for the unit receiving rental assistance is reasonable in relation to rents being charged for comparable unassisted units, taking into account the location, size, type, quality, amenities, facilities, and management and maintenance of each unit. Reasonable rent must not exceed rents currently being charged by the same owner for comparable unassisted units.” Condition: For 14 out of 19 clients tested, a comparable unit analysis was not completed for updated Housing and Urban Development (HUD) Fair Market Rates (FMR) or lease modifications prior to move in. Cause: LifeWire did not appropriately retain or produce documentation that rent reasonableness was checked prior to move-in or at changes to lease terms in accordance with its policies. Effect or Potential Effect: Insufficient retention or creation of rent reasonableness forms and supporting documentation resulted in rent reasonableness controls not operating effectively to appropriately identify rental amounts for LifeWire’s clients in need of rental assistance. LifeWire could incorrectly charge expenditures to the federal program as a result. Known Questioned Costs: $74,715 Likely Questioned Costs: $344,707 Context: This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Total costs subject to rent reasonableness were $516,407. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that LifeWire enforce existing policies and procedures and implement additional policies and procedures for maintaining and monitoring rental reasonableness documentation to ensure compliance with HUD-determined FMR requirements. Views of Responsible Officials: Management agrees with the finding that documentation was not appropriately retained or produced regarding rent reasonableness. Management has modified its policies and procedures to ensure completion of rent reasonableness to ensure compliance.
Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.267 Program: Continuum of Care Program Award/Pass-Through Entity Identifying Numbers: 202212-01122, 202212-01115, DA-202212-01187, 202210-00966, DA-202212-01319 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-federal entities receiving federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with federal statues, regulations, and the terms and conditions of the federal award. Per 24 CFR §578.49(b)(1), “Where grants are used to pay for rent for all or a part of a structure or structures, the rent paid must be reasonable in relation to rents being charged in the area for comparable space. In addition, the rent may not exceed rents currently being charged by the same owner for comparable unassisted space.” Per 24 CFR §§578.49(b)(2) and 578.51(g), “When grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents being charged for comparable units, taking into account the location, size, type, quality, amenities, facilities, and management services. In addition, the rents may not exceed rents currently being charged for comparable units, and the rent paid may not exceed HUD-determined fair market rents.” “HUD will only provide rental assistance for a unit if the rent is reasonable. The recipient or subrecipient must determine whether the rent charged for the unit receiving rental assistance is reasonable in relation to rents being charged for comparable unassisted units, taking into account the location, size, type, quality, amenities, facilities, and management and maintenance of each unit. Reasonable rent must not exceed rents currently being charged by the same owner for comparable unassisted units.” Condition: For 14 out of 19 clients tested, a comparable unit analysis was not completed for updated Housing and Urban Development (HUD) Fair Market Rates (FMR) or lease modifications prior to move in. Cause: LifeWire did not appropriately retain or produce documentation that rent reasonableness was checked prior to move-in or at changes to lease terms in accordance with its policies. Effect or Potential Effect: Insufficient retention or creation of rent reasonableness forms and supporting documentation resulted in rent reasonableness controls not operating effectively to appropriately identify rental amounts for LifeWire’s clients in need of rental assistance. LifeWire could incorrectly charge expenditures to the federal program as a result. Known Questioned Costs: $74,715 Likely Questioned Costs: $344,707 Context: This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Total costs subject to rent reasonableness were $516,407. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that LifeWire enforce existing policies and procedures and implement additional policies and procedures for maintaining and monitoring rental reasonableness documentation to ensure compliance with HUD-determined FMR requirements. Views of Responsible Officials: Management agrees with the finding that documentation was not appropriately retained or produced regarding rent reasonableness. Management has modified its policies and procedures to ensure completion of rent reasonableness to ensure compliance.
Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.267 Program: Continuum of Care Program Award/Pass-Through Entity Identifying Numbers: 202212-01122, 202212-01115, DA-202212-01187, 202210-00966, DA-202212-01319 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation- Personal Services: “Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non- Federal entity, not exceeding 100% of compensated activities; (iv) Encompass federally-assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non- Federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity; and (vi) [Reserved] (vii) Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-Federal entity’s written policies) are identified and entered into the records in a timely manner. Short-term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-Federal entity’s system of internal controls includes processes to review after-the-fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Condition: We noted that LifeWire allocated administrative payroll expenditures to Continuum of Care during 2023 based on budget allocation rates. There were no procedures in place to determine if a true-up was necessary from allocated costs. 27 timesheets were tested during the audit, of which five were charged based on budgets for the grant. Cause: LifeWire did not have policies and procedures in place to review and reconcile the estimated amounts of payroll expenditures charged to Continuum of Care to the actual expenditures incurred. Effect or Potential Effect: Without adequate controls in place to ensure costs based on budgeted allocations are reasonable and reconcile to the actual time spent on the program, LifeWire could incorrectly charge expenditures to the federal program, or not request appropriate reimbursement LifeWire is entitle to under the terms of the grant. Questioned Costs: Below reporting threshold. Context: This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Payroll costs for administrative staff selected for testing totaled $1,185. Total payroll costs for the Continuum of Care grants in 2023 were $294,002. Any payroll costs not adequately supported by time and effort reports are considered questioned costs. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that LifeWire implement policies and procedures to review for any necessary budget to actual adjustments, and we recommend that sufficient documentation be maintained to support any adjustments made as required by 2 CFR §200.430. Views of Responsible Officials: Management agrees with the finding. Management has modified policies and procedures to ensure staff time allocated to the grant is properly reviewed and approved.
Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.267 Program: Continuum of Care Program Award/Pass-Through Entity Identifying Numbers: 202212-01122, 202212-01115, DA-202212-01187, 202210-00966, DA-202212-01319 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation- Personal Services: “Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non- Federal entity, not exceeding 100% of compensated activities; (iv) Encompass federally-assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non- Federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity; and (vi) [Reserved] (vii) Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-Federal entity’s written policies) are identified and entered into the records in a timely manner. Short-term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-Federal entity’s system of internal controls includes processes to review after-the-fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Condition: We noted that LifeWire allocated administrative payroll expenditures to Continuum of Care during 2023 based on budget allocation rates. There were no procedures in place to determine if a true-up was necessary from allocated costs. 27 timesheets were tested during the audit, of which five were charged based on budgets for the grant. Cause: LifeWire did not have policies and procedures in place to review and reconcile the estimated amounts of payroll expenditures charged to Continuum of Care to the actual expenditures incurred. Effect or Potential Effect: Without adequate controls in place to ensure costs based on budgeted allocations are reasonable and reconcile to the actual time spent on the program, LifeWire could incorrectly charge expenditures to the federal program, or not request appropriate reimbursement LifeWire is entitle to under the terms of the grant. Questioned Costs: Below reporting threshold. Context: This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Payroll costs for administrative staff selected for testing totaled $1,185. Total payroll costs for the Continuum of Care grants in 2023 were $294,002. Any payroll costs not adequately supported by time and effort reports are considered questioned costs. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that LifeWire implement policies and procedures to review for any necessary budget to actual adjustments, and we recommend that sufficient documentation be maintained to support any adjustments made as required by 2 CFR §200.430. Views of Responsible Officials: Management agrees with the finding. Management has modified policies and procedures to ensure staff time allocated to the grant is properly reviewed and approved.
Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.267 Program: Continuum of Care Program Award/Pass-Through Entity Identifying Numbers: 202212-01122, 202212-01115, DA-202212-01187, 202210-00966, DA-202212-01319 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation- Personal Services: “Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non- Federal entity, not exceeding 100% of compensated activities; (iv) Encompass federally-assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non- Federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity; and (vi) [Reserved] (vii) Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-Federal entity’s written policies) are identified and entered into the records in a timely manner. Short-term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-Federal entity’s system of internal controls includes processes to review after-the-fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Condition: We noted that LifeWire allocated administrative payroll expenditures to Continuum of Care during 2023 based on budget allocation rates. There were no procedures in place to determine if a true-up was necessary from allocated costs. 27 timesheets were tested during the audit, of which five were charged based on budgets for the grant. Cause: LifeWire did not have policies and procedures in place to review and reconcile the estimated amounts of payroll expenditures charged to Continuum of Care to the actual expenditures incurred. Effect or Potential Effect: Without adequate controls in place to ensure costs based on budgeted allocations are reasonable and reconcile to the actual time spent on the program, LifeWire could incorrectly charge expenditures to the federal program, or not request appropriate reimbursement LifeWire is entitle to under the terms of the grant. Questioned Costs: Below reporting threshold. Context: This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Payroll costs for administrative staff selected for testing totaled $1,185. Total payroll costs for the Continuum of Care grants in 2023 were $294,002. Any payroll costs not adequately supported by time and effort reports are considered questioned costs. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that LifeWire implement policies and procedures to review for any necessary budget to actual adjustments, and we recommend that sufficient documentation be maintained to support any adjustments made as required by 2 CFR §200.430. Views of Responsible Officials: Management agrees with the finding. Management has modified policies and procedures to ensure staff time allocated to the grant is properly reviewed and approved.
Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.267 Program: Continuum of Care Program Award/Pass-Through Entity Identifying Numbers: 202212-01122, 202212-01115, DA-202212-01187, 202210-00966, DA-202212-01319 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation- Personal Services: “Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non- Federal entity, not exceeding 100% of compensated activities; (iv) Encompass federally-assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non- Federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity; and (vi) [Reserved] (vii) Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-Federal entity’s written policies) are identified and entered into the records in a timely manner. Short-term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-Federal entity’s system of internal controls includes processes to review after-the-fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Condition: We noted that LifeWire allocated administrative payroll expenditures to Continuum of Care during 2023 based on budget allocation rates. There were no procedures in place to determine if a true-up was necessary from allocated costs. 27 timesheets were tested during the audit, of which five were charged based on budgets for the grant. Cause: LifeWire did not have policies and procedures in place to review and reconcile the estimated amounts of payroll expenditures charged to Continuum of Care to the actual expenditures incurred. Effect or Potential Effect: Without adequate controls in place to ensure costs based on budgeted allocations are reasonable and reconcile to the actual time spent on the program, LifeWire could incorrectly charge expenditures to the federal program, or not request appropriate reimbursement LifeWire is entitle to under the terms of the grant. Questioned Costs: Below reporting threshold. Context: This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Payroll costs for administrative staff selected for testing totaled $1,185. Total payroll costs for the Continuum of Care grants in 2023 were $294,002. Any payroll costs not adequately supported by time and effort reports are considered questioned costs. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that LifeWire implement policies and procedures to review for any necessary budget to actual adjustments, and we recommend that sufficient documentation be maintained to support any adjustments made as required by 2 CFR §200.430. Views of Responsible Officials: Management agrees with the finding. Management has modified policies and procedures to ensure staff time allocated to the grant is properly reviewed and approved.
Federal Agencies: Department of Housing and Urban Development Federal Assistance Listing Numbers: 14.267 Program: Continuum of Care Program Award/Pass-Through Entity Identifying Numbers: 202212-01122, 202212-01115, DA-202212-01187, 202210-00966, DA-202212-01319 Criteria: The Uniform Guidance in 2 CFR §200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200.430 Compensation- Personal Services: “Standards for Documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non- Federal entity, not exceeding 100% of compensated activities; (iv) Encompass federally-assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non- Federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity; and (vi) [Reserved] (vii) Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-Federal entity’s written policies) are identified and entered into the records in a timely manner. Short-term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-Federal entity’s system of internal controls includes processes to review after-the-fact interim charges made to a Federal award based on budget estimates. All necessary adjustment must be made such that the final amount charged to the Federal award is accurate, allowable, and properly allocated.” Condition: We noted that LifeWire allocated administrative payroll expenditures to Continuum of Care during 2023 based on budget allocation rates. There were no procedures in place to determine if a true-up was necessary from allocated costs. 27 timesheets were tested during the audit, of which five were charged based on budgets for the grant. Cause: LifeWire did not have policies and procedures in place to review and reconcile the estimated amounts of payroll expenditures charged to Continuum of Care to the actual expenditures incurred. Effect or Potential Effect: Without adequate controls in place to ensure costs based on budgeted allocations are reasonable and reconcile to the actual time spent on the program, LifeWire could incorrectly charge expenditures to the federal program, or not request appropriate reimbursement LifeWire is entitle to under the terms of the grant. Questioned Costs: Below reporting threshold. Context: This is a condition identified per review of LifeWire’s compliance with specified requirements not using a statistically valid sample. Payroll costs for administrative staff selected for testing totaled $1,185. Total payroll costs for the Continuum of Care grants in 2023 were $294,002. Any payroll costs not adequately supported by time and effort reports are considered questioned costs. Identification as a Repeat Finding: Not a repeat finding. Recommendation: We recommend that LifeWire implement policies and procedures to review for any necessary budget to actual adjustments, and we recommend that sufficient documentation be maintained to support any adjustments made as required by 2 CFR §200.430. Views of Responsible Officials: Management agrees with the finding. Management has modified policies and procedures to ensure staff time allocated to the grant is properly reviewed and approved.
FINDING 2023-003 Subject: Highway Planning and Construction - Procurement Federal Agency: Department of Transportation Federal Program: Highway Planning and Construction Assistance Listings Number: 20.205 Federal Award Numbers and Years (or Other Identifying Numbers): DES # 1600727, DES # 1800976, DES # 2101753 Pass-Through Entity: Indiana Department of Transportation Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness Condition and Context The City had two active projects under three DES numbers. The City awarded five contracts under these projects that were active during the audit period. To obtain the Indiana Department of Transportation's (INDOT) approval to begin contract negotiations, the City was required to provide complete and accurate procurement documentation. This documentation included preparation of the Local Public Agency (LPA) Selection Review Checklist and compilation of all items noted in the checklist that were required for the INDOT to issue an approval letter. All five contracts were selected for testing. The Employee in Responsible Charge completed the checklist and compiled all other procurement documentation for each contract with no evidence of a review, oversight, or approval process to ensure that the procurement documentation submitted to the INDOT was complete and accurate. The lack of internal controls was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause A proper system of internal controls was not implemented by management of the City, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the City's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper design or implementation of the components of a system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the City design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-003 Subject: Drinking Water State Revolving Fund (DWSRF) Cluster - Procurement Federal Agency: Environmental Protection Agency Federal Program: Drinking Water State Revolving Fund Assistance Listings Number: 66.468 Federal Award Number (or Other Identifying Number): DW22168902 Pass-Through Entity: Indiana Finance Authority Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a nonfederal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $10,000 or under, and small purchase procedures for those purchases above the micropurchase threshold but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. The Town did not obtain price or rate quotes for the two vendors identified and tested that were less than the simplified acquisition threshold of $150,000 but exceeded the $10,000 micro-purchase threshold. The micro-purchase threshold may be increased, but the Town did not provide documentation that the threshold had been increased. Documentation detailing the history of procurement, which must include the reason for the procurement method used, was not available for audit. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. INDIANA STATE BOARD OF ACCOUNTS 18 TOWN OF CAMBRIDGE CITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases – (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." Cause The Town was unable to provide documentation to demonstrate it had properly procured services. The Town noted they were unaware professional services agreements for consultants were required to follow small purchase procurement guidelines. Effect Without the proper implementation of an effectively designed system of internal controls, the Town could not demonstrate it had obtained an adequate number of price or rate quotations prior to selecting a vendor. Therefore, the Town could have overpaid for the services obtained. Questioned Costs There were no questioned costs identified. Recommendation We recommend that management of the Town strengthen its system of internal controls to ensure that an adequate number of price or rate quotations are obtained for small purchases. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report. INDIANA STATE
FINDING 2023-004 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY 2023 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context Prior to entering into subawards and covered transactions with the State and Local Fiscal Recovery Funds (SLFRF) award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. The County did not have any policies or procedures in place related to the suspension and debarment requirements. A population of 12 covered transactions, totaling $5,894,363, that equaled or exceeded $25,000 paid from SLFRF funds were identified. Four of the transactions, totaling $4,963,562, were selected for testing. For each of the four transactions, the County did not verify the vendor's suspension or debarment status prior to payment due to the County not having polices or procedures in place to verify that contractors were neither suspended nor debarred, or otherwise excluded or disqualified, from participating in federal assistance programs or activities. INDIANA STATE BOARD OF ACCOUNTS 21 HARRISON COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Cause The County was unable to provide documentation to demonstrate it had policies or procedures in place to verify suspension and debarment status for covered transactions it intends to pay with federal funds. The County was unable to provide documentation to demonstrate the County had properly verified that contractors were neither suspended nor debarred, or otherwise excluded or disqualified, from participating in federal assistance programs or activities. Effect Without the proper implementation of an effectively designed system of internal controls, the County cannot ensure that contractors paid with federal funds are eligible to participate in federal programs. Any program funds the County used to pay contractors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 22 HARRISON COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that management of the County strengthen its system of internal controls to ensure that all contractors that are paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before entering into contracts. We also recommended strengthening its policies and procedures to ensure appropriate supporting documentation for federal programs is retained to be presented for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-005 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY 2023 Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-003. Condition and Context Recipients are required to submit quarterly or annually Project and Expenditure (P&E) reports to the U.S. Department of the Treasury (Treasury). The reporting periods, as well as the respective due dates, are based upon type of recipient and its population, as well as recipient's allocation amount. Information to be reported includes projects funded, expenditures, and contracts for the appropriate reporting period. The County was classified as a county with a population below 250,000 residents that received an allocation of less than $10 million in COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF). As such, the initial P&E report, covering the period from March 3, 2021 to March 31, 2022, was required to be submitted to the Treasury by April 30, 2022. The subsequent annual reports are to cover one calendar year and must be submitted to the Treasury by April 30 each year. The County submitted one annual P&E report during the audit period; however, the internal controls in place were not effective to prevent, or detect and correct, errors. As a result, errors in reporting were identified. The current period obligations and cumulative obligations were incorrectly reported. The County was unable to provide supporting documentation for current period and cumulative obligations as reported. The lack of effective internal controls and noncompliance were isolated to the one P&E report due during the audit period. INDIANA STATE BOARD OF ACCOUNTS 23 HARRISON COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, page 10, states in part: ". . . 10. Reporting. All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. . . ." 31 CFR 35.4(c) states in part: "Reporting and requests for other information. During the period of performance, recipients shall provide to the Secretary periodic reports providing detailed accounting of the uses of funds, . . ." Cause The County's oversight process for filing the P&E report for the period of April 1, 2022 to March 31, 2023, did not detect errors. Due to the timing of the P&E report submission and prior audit completion, corrective actions from the previous year's finding, finding number 2022-003, could not be implemented to correct noncompliance. Effect Without the proper implementation of an effectively designed system of internal controls, including policies and procedures the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As such, the County did not report cumulative obligations and current period obligations properly when filing the P&E report for the period April 1, 2022 to March 31, 2023. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. In addition, not meeting the SLFRF reporting requirements increases the likelihood that the public and the Treasury will not have access to transparent and accurate information regarding expenditures of federal awards. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 24 HARRISON COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that management of the County design and implement a proper system of internal controls to provide for a segregation of duties in the preparation and review of federal reports to ensure appropriate reviews, approvals, and oversight are taking place. We also recommended the development of policies and procedures to ensure the County provides the Treasury with complete and accurate information for the P&E report. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-002 Subject: Internal Controls over COVID-19 - Coronavirus State and Local Fiscal Recovery Funds: American Rescue Plan Grant Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY2023 Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/ Cost Principles, Period of Performance, Reporting Audit Finding: Material Weakness INDIANA STATE BOARD OF ACCOUNTS 15 LAWRENCE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Prior to receipt of direct Coronavirus State and Local Fiscal Recovery Funds (SLFRF) award funds, all eligible entities were required to execute a Financial Assistance Agreement (Agreement), which included the Award Terms and Conditions that recipients must comply with in carrying out the objectives of their award. Per the Agreement, the County was responsible for the effective administration of the federal award, as well as the application of sound management practices and administration of federal funds in a manner consistent with program objectives and terms and conditions of the award. Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Period of Performance Recipients may use SLFRF award funds for any eligible expenses subject to the restrictions set forth in sections 602 and 603 of the Social Security Act as added by section 9901 of the American Rescue Plan Act of 2021 and amended by the Consolidated Appropriations Act of 2023. The SLFRF program provides substantial flexibility for each recipient to meet local needs within seven separate eligible use categories. Recipients may use SLFRF award funds to: Respond to the COVID-19 public health emergency and its negative economic impacts; Respond to workers performing essential work during the COVID-19 public health emergency by providing premium pay to eligible workers of eligible employers that have eligible workers who are performing essential work; Provide government services, to the extent COVID-19 caused a reduction in revenues collected in the most recent full fiscal year of the recipient; Make necessary investments in water, sewer, or broadband infrastructure; Provide emergency relief from natural disasters or their negative economic impacts; Fund eligible Surface Transportation projects; and Fund Title I projects that are eligible activities under the Community Development Block Grant and Indiana Community Development Block Grant programs. Pursuant to the Agreement, the period of performance for the award began on the date the funds were disbursed to the County and ends on December 31, 2026. Recipients may only use funds to cover costs incurred during the period that began on June 7, 2021, and ends on December 31, 2024, for the first four eligible uses, and from December 29, 2022 to December 31, 2024, for the remaining three eligible uses. Recipients must liquidate all obligations incurred by December 31, 2024, under the award no later than September 30, 2026, for Surface Transportation and Title I projects and December 31, 2026, for all other projects. As part of sound management of the federal award, the County was responsible for implementing a system of internal controls that would ensure compliance with the applicable requirements. The County had not properly designed or implemented such a system. There was no evidence of segregation of duties, such as an oversight, review, or approval process, that would have ensured that expenditures of award funds were made only for activities and costs that were allowable under the federal award and federal regulations and that expenditures were made only for costs incurred within the period of performance. INDIANA STATE BOARD OF ACCOUNTS 16 LAWRENCE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Reporting Recipients are required to submit quarterly or annually Project and Expenditure (P&E) reports to the U.S. Department of the Treasury (Treasury). The reporting periods, as well as the respective due dates, are based upon type of recipient and its population, as well as recipient's allocation amount. Information to be reported includes projects funded, expenditures, and contracts for the appropriate reporting period. The County was classified as a county with a population below 250,000 residents that received an allocation of less than $10 million in SLFRF award funds. As such, the initial P&E report, covering the period from March 3, 2021 to March 31, 2022, was required to be submitted to the Treasury by April 30, 2022. The subsequent annual reports are to cover one calendar year and must be submitted to the Treasury by April 30 each year. The County submitted the annual P&E report during the audit period; however, the County Auditor prepared and submitted the report without a review or oversight process in place to ensure that the reports were accurate. The lack of internal controls was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause A proper system of internal controls was not designed by management of the County. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the County's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 17 LAWRENCE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that management of the County design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight of federal expenditures and reports are taking place. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-003 Subject: Internal Controls over COVID-19 - Coronavirus State and Local Fiscal Recovery Funds: Lead Reduction Grant Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY23-24 Pass-Through Entity: Indiana State Department of Health Compliance Requirement: Reporting Audit Finding: Material Weakness Condition and Context The County received a secondary award of Coronavirus State and Local Fiscal Recovery Funds (SLFRF) that was passed through from the Indiana State Department of Health for purposes of lead reduction in the County. The invoices submitted to the state to request reimbursement for the deliverables performed by the County were the only reports required under this portion of the SLFRF award funding. The County submitted one invoice for reimbursement to the state during the audit period; however, one employee in the County Health Department prepared and submitted the invoice without evidence of an oversight, review, or approval process to ensure that the report was accurate. The lack of internal controls was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 18 LAWRENCE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause A proper system of internal controls was not designed by management of the County. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the County's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight of federal reports are taking place. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-004 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds: American Resue Plan Grant - Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY2023 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context The County elected to receive the standard revenue loss allowance, allowing the County to claim its total COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) allocation of $8,812,591 as revenue loss to use for government services. As such, all SLFRF program funds during the audit period were expended under the revenue loss eligible use category. The U.S. Department of the Treasury (Treasury) determined that there are no subawards under this eligible use category, and that recipients' use of revenue loss funds would not give rise to subrecipient relationships given that there is no federal program or purpose to carry out in the case of the revenue loss portion of the award. INDIANA STATE BOARD OF ACCOUNTS 19 LAWRENCE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Prior to entering into subawards and covered transactions with SLFRF award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Due to the Treasury's determination that the revenue loss eligible use category does not give rise to subawards, the County was only required to comply with suspension and debarment requirements related to covered transactions. Upon inquiry of the County to determine its policies and procedures related to suspension and debarment requirements, the County stated that they did not have policies or procedures in place for verifying that an entity with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded or disqualified from participating in federal assistance programs or activities. The County entered into covered transactions with four vendors during the audit period for goods or services that equaled or exceeded $25,000 that were paid from SLFRF award funds. All four covered transactions, totaling $1,661,247, were selected for testing. The County did not verify the vendors' suspension and debarment status prior to payment for any of the four vendors. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Cause The County had not established a system of internal controls for suspension and debarment. The County did not verify any covered transactions identified in testing that they were not suspended or debarred prior to entering into the covered transaction. INDIANA STATE BOARD OF ACCOUNTS 20 LAWRENCE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, the County cannot ensure the vendors paid with federal funds are eligible to participate in federal programs. Any program funds the County used to pay vendors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Furthermore, noncompliance with the provisions of federal statutes, regulations, and the terms and conditions or the federal award could result in the loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County establish a proper system of internal controls and develop policies and procedures to ensure contractors, as appropriate, are not suspended, debarred, or otherwise excluded prior to entering into any contracts with those vendors. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report. INDIANA STATE BOARD OF ACCOUNTS 21
FINDING 2023-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): TRSW220818 Pass-Through Entity: Indiana Finance Authority Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context Procurement - Policy The Town did not have an approved procurement policy that reflected applicable state laws and regulations, including procedures to avoid acquisition of unnecessary or duplicative items and procedures, to ensure that all solicitations incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured. The Town is required to have and use documented procurement procedures, which are consistent with state, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a federal award or subaward. Suspension and Debarment The Town received $1,578,280 in State Water Infrastructure Fund distributions, which were funded with State and Local Fiscal Recovery Funds (SLFRF) dollars and were subject to the suspension and debarment requirements. Prior to entering into subawards and covered transactions with SLFRF award funds, recipients are required to verify that such contracts and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under procurement and nonprocurement transactions (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Upon inquiry of the Town to determine its policies and procedures related to suspension and debarment requirements, the Town stated that it did not have policies or procedures in place for verifying that an entity with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded or disqualified from participating in federal assistance programs or activities. Six covered transactions, totaling $1,578,280, to one vendor for goods or services that equaled or exceeded $25,000 that were paid from SLFRF funds were identified. Each transaction was examined to determine whether the Town verified the suspension and debarment status prior to payment. The Town had not verified the vendor's suspension and debarment status for any of the covered transactions prior to issuing payment. The lack of internal controls and noncompliance were systematic issues throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 18 TOWN OF DALEVILLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) states: "The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non- Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Cause A proper system of internal controls was not designed by the management of the Town. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the Town's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. The Town had not received federal funds for several years. The Clerk-Treasurer was not knowledgeable on the compliance requirements of the federal award. Although the Town contracted with outside engineers to manage the compliance requirement, there was no documentation that they included a suspension or debarment clause. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded. INDIANA STATE BOARD OF ACCOUNTS 19 TOWN OF DALEVILLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Any program funds the Town used to pay vendors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Additionally, noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the Town. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the Town adopt a procurement policy that is reflective of state laws and regulations. We also recommended that the Town strengthen its system of internal controls to ensure that all vendors that are paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before entering into any covered transactions. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-004 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): CY2021 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context The Town elected to receive the standard revenue loss allowance, allowing the Town to claim its total direct State and Local Fiscal Recovery Funds (SLFRF) allocation of $441,409 as revenue loss to use for government services. As such, all SLFRF program funds to date were expended under the revenue loss eligible use category. The U.S. Department of the Treasury (Treasury) determined that there are no subawards under this eligible use category, and that recipients' use of revenue loss funds would not give rise to subrecipient relationships as there is no federal program or purpose to carry out in the case of the revenue loss portion of the award. Prior to entering into subawards and covered transactions with SLFRF award funds, recipients are required to verify that such contracts and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under procurement and nonprocurement transactions (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. Due to the Treasury's determination that the revenue loss eligible use category does not give rise to subawards, the Town was only required to comply with suspension and debarment requirements related to covered transactions for revenue replacement. INDIANA STATE BOARD OF ACCOUNTS 20 TOWN OF DALEVILLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Upon inquiry of the Town to determine its policies and procedures related to suspension and debarment requirements, the Town stated that it did not have policies or procedures in place for verifying that an entity with which it plans to enter into a covered transaction is not suspended, debarred, or otherwise excluded or disqualified from participating in federal assistance programs or activities. Five covered transactions, totaling $138,219, to three different vendors for goods or services that equaled or exceeded $25,000 that were paid from SLFRF funds were identified. Each transaction was examined to determine whether the Town verified the suspension and debarment status prior to payment. The Town had not verified the vendor's suspension and debarment status for any of the covered transactions prior to issuing payment. The lack of internal controls and noncompliance were systematic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Cause A proper system of internal controls was not designed by the management of the Town. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the Town's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. The Town had not received federal funds for several years. The Clerk-Treasurer was not knowledgeable on the compliance requirements of the federal award. INDIANA STATE BOARD OF ACCOUNTS 21 TOWN OF DALEVILLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, vendors to whom payments equal to or in excess of $25,000 were not verified to be not suspended, debarred, or otherwise excluded. Any program funds the Town used to pay vendors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Additionally, noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the Town. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the Town strengthen its system of internal controls to ensure that all vendors that are paid $25,000 or more, all or in part with federal funds, are not suspended or debarred from participating in federal programs before entering into any covered transactions. In addition, we recommended that the Town ensure all applicable contracts contain the required Buy America, Build America provisions. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-005 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): CY2021 Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Condition and Context Recipients of State and Local Fiscal Recovery Funds (SLFRF) grants are required to submit quarterly or annually Project and Expenditure (P&E) reports to the U.S. Department of the Treasury (Treasury). The reporting periods, as well as the respective due dates, are based upon type of recipient and its population, as well as the recipient's allocation amount. Information to be reported includes projects funded, expenditures, and contracts for the appropriate reporting period. The Town was classified as a Tier 5 auditee - a metropolitan city with a population below 250,000 residents which received less than $10 million in SLFRF funding. Tier 5 auditees are required to submit an annual P&E report due in April of each year. INDIANA STATE BOARD OF ACCOUNTS 22 TOWN OF DALEVILLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The Town was required to file one annual P&E report on April 30, 2023. The report was to cover the period of April 1, 2022 to March 31, 2023. The Town submitted this report for audit. However, there was no documented internal control in place over the report to ensure it was complete and accurate. The lack of internal controls allowed the Town to submit incorrect amounts in the P&E report for March 2023: For revenue replacement, cumulative expenditures/obligations were understated by $45,298. For revenue replacement, current expenditures/obligations were overstated by $61,703. For essential pay, cumulative expenditures/obligations were understated by $24,189. For essential pay, current expenditures/obligations were understated by $1,885. For the solar project, cumulative expenditures/obligations were overstated by $1,560. For the solar project, current expenditures/obligations were overstated by $22,981. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 31 CFR 35.4(c) states in part: "Reporting and requests for other information. During the period of performance, recipients shall provide to the Secretary periodic reports providing detailed accounting of the uses of funds . . ." Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, Page 10, states in part: ". . . 10. Reporting. All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. . . ." INDIANA STATE BOARD OF ACCOUNTS 23 TOWN OF DALEVILLE SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause A proper system of internal controls was not designed or implemented by management of the Town to ensure that policies and procedures were in place related to reporting. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the Town's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, noncompliance. As such, the P&E report contained the errors, and accurate information was not provided to the Treasury. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the Town. In addition, not meeting the SLFRF reporting requirements increases the likelihood that the public will not have access to transparent and accurate information regarding expenditures of federal awards. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the Town's management establish a proper system of internal controls and develop policies and procedures over the preparation and review of federal reports. Additionally, management should develop policies and procedures to ensure that the Town provides the Treasury with complete and accurate information for the P&E report. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Criteria Part 2, CFR 200, 200.303 states “The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” Condition While performing tests of the Garden’s internal controls over compliance, specifically related to cash management, we noted that although the Garden operated on a reimbursement basis, supporting schedules provided did not reconcile to amounts drawn on Federal awards during the year. Two instances were noted where the Garden drawing for more on the award than had been incurred, as evidenced by the general ledger. Cause of Condition The Garden has not implemented proper internal control policies to adhere to the requirements of the Uniform Guidance. Effect of Condition Noncompliance may impact future funding from Federal awards. Recommendation We recommend the Garden implement proper internal control procedures including properly documenting expenditures included in reimbursements and/or draws from Federal awards.
Criteria Part 2, CFR 200, 200.303 states “The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.” Condition While performing tests of the Garden’s internal controls over compliance, specifically related to cash management, we noted that although the Garden operated on a reimbursement basis, supporting schedules provided did not reconcile to amounts drawn on Federal awards during the year. Two instances were noted where the Garden drawing for more on the award than had been incurred, as evidenced by the general ledger. Cause of Condition The Garden has not implemented proper internal control policies to adhere to the requirements of the Uniform Guidance. Effect of Condition Noncompliance may impact future funding from Federal awards. Recommendation We recommend the Garden implement proper internal control procedures including properly documenting expenditures included in reimbursements and/or draws from Federal awards.
Federal Program Information: Funding Agency: U.S Department of Health and Human Services FALN: 93.926 Federal Award Identification Number: H49MC00119‐19‐00 Pass Through Entity: State of Georgia Department of Human Services Award Year: 2018‐2020 Criteria: Under 2 CFR Section 200.303(a), non‐federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally, regulations require that in order for activities and costs to be allowed under Federal awards, 45CFR, part 75 all costs must be adequately documented. Condition: The Organization lacked supporting documentation for non‐payroll expenses. Due to lack of supporting documentation and evidence of approval for payment could not be verified. Of the sixty (60) transactions examined, twelve (12) lacked supporting documentation for review, and approval for payment by a Manager. Effect: Management possibly did not expend funds in accordance with the approved detailed lineitem budget and grant agreement and possibly expended funds which did not contribute to the objective set forth for the program. (lack of approved invoices, lack of supporting documentation). Cause: Expenses including approved invoices and/or supporting documentation were not properly maintained in part due to several changes in personnel within the accounting area and overall limited number of personnel for certain functions and lack of board oversight. Questioned Costs: Known questioned costs of $3,931 and likely questioned costs of $17,477 for Healthy Start. Recommendation: We recommend that internal controls be strengthened and processes implemented to ensure all expenses include supporting documentation/invoice indicating nature of expense, amount, authorization and approval for payment.
Federal Program Information: Funding Agency: U.S Department of Health and Human Services FALN: 93.926 Federal Award Identification Number: H49MC00119‐19‐00 Pass Through Entity: State of Georgia Department of Human Services Award Year: 2018‐2020 Criteria: Under 2 CFR Section 200.303(a), non‐federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally, regulations require that in order for activities and costs to be allowed under Federal awards, 45CFR, part 75 all costs must be adequately documented. Condition: We noted no evidence of review and approval of payroll expenses including time sheets, payroll registers, and payroll reconciliations. Of the forty (40) employees tested, twenty three (23) employees lacked approval by management. Effect: Management possibly did not expend funds in accordance with the approved detailed lineitem budget and grant agreement and possibly expended funds which did not contribute to the objective set forth for the program or correct period of performance (lack of approved time sheets, payroll registers and reconciliations). Cause: Payroll expenses lacked approved timesheets, approved payroll registers and approved reconciliations between budgeted payroll expenses per grant agreement and internal payroll reports. This was due in part due to several changes in personnel within the accounting area and overall limited number of personnel for certain functions and lack of board oversight. Questioned Costs: None Recommendation: We recommend that internal controls be strengthened and processes implemented to ensure all payroll expenses include evidence of review and approval for payment.
Federal Program Information: Funding Agency: U.S Department of Health and Human Services FALN: 93.926 Federal Award Identification Number: H49MC00119‐19‐00 Pass Through Entity: State of Georgia Department of Human Services Award Year: 2018‐2020 Criteria: Under 2 CFR Section 200.303(a), non‐federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally, under 2 CFR sections 200.308 200.309 and 200.403(h)), the Organization may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass‐through entity made the federal award that were authorized by the federal awarding agency or pass‐through entity. Condition: The Organization lacked supporting documentation for non‐payroll expenses. Due to lack of supporting documentation, period of performance could not be verified. Of the sixty (60) nonpayroll transactions examined, ten (10) lacked supporting documentation for review, and 1 expense was for services performed in a prior period. Effect: Management possibly did not expend funds in accordance with the approved detailed lineitem budget and grant agreement and possibly expended funds in the incorrect period of performance. Cause: Expenses including approved invoices and/or supporting documentation were not properly maintained in part due to several changes in personnel within the accounting area and overall limited number of personnel for certain functions and lack of board oversight. Questioned costs: Known questioned costs of $7,674 and likely questioned costs of $34,117 for Healthy Start. Recommendation: We recommend that internal controls be strengthened and processes implemented to ensure all expenses include supporting documentation/invoice indicating period of performance.
Federal Program Information: Funding Agency: U.S Department of Health and Human Services FALN: 93.926 Federal Award Identification Number: H49MC00119‐19‐00 Pass Through Entity: State of Georgia Department of Human Services Award Year: 2018‐2020 Criteria: Under 2 CFR Section 200.303(a), non‐federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally regulations require the reimbursement payment method may be used on a Federal award for activities as specified in 2 CFR section 200.305(b)(3), program costs must be paid by non‐ Federal entity funds before submitting a payment request (2 CFR section 200.305(b)(3)), i.e., the non‐ Federal entity must disburse funds for program purposes before requesting payment from the Federal awarding agency or pass‐through entity. Condition: The Organization has a policy which in includes thee Fiscal/Grant Manager and/or the CEO review all drawdown requests to ensure costs are paid before reimbursement is requested. However of the seventeen (17) drawdown requests that we tested, there was no evidence of review and approval for payment. Effect: Management possibly did not expend funds in accordance with the federal award due to lack of evidence of oversight/review of drawdowns and after reimbursable expenses have been incurred. Cause: Management did not document evidence of review and approval of drawdown requests. This was due in part to lack of oversight. Also there were several changes in personnel within the accounting area and overall limited number of personnel for certain functions and lack of board oversight. Questioned costs: None Recommendation: We recommend that internal controls be strengthened and processes implemented to ensure all draw down requests are reviewed and approved to ensure costs were accurately reported and paid before requesting reimbursement.
Federal Program Information: Funding Agency: U.S Department of Health and Human Services FALN: 93.926 Federal Award Identification Number: H49MC00119‐19‐00 Pass Through Entity: State of Georgia Department of Human Services Award Year: 2018‐:2020 Criteria: Under 2 CFR Section 200.303(a), non‐federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally, under 2 CFR Section 200.320, the Organization must have and use documented procurement procedures for acquisition of property and services under a federal award or a sub‐award. Condition: The Organization does have approved policies and procedures over procurement that meet the requirements of the Uniform Guidance. However the Organization is not following its prescribed policies and procedures. The Organization lacked supporting documentation verifying procurement policies and procedures were followed. Due to lack of supporting documentation, procurement could not be verified. Of the sixty (60) transactions examined, ten (10) lacked supporting documentation for review of procurement. Effect: Not following procurement policies and procedures may result in funds to be returned back to grantor and/or impact future funding. Cause: Supporting procurement documentation for acquisition of property and services were not properly maintained in part due to several changes in personnel within the accounting area and overall limited number of personnel for certain functions and lack of board oversight. Questioned Costs: Known questioned costs of $3,870 and likely questioned costs of $17,206 for Healthy Start. Recommendation: We recommend the Organization strengthen its policies and procedures to ensure procurement is adequately documented for that goods and services purchased in accordance with Uniform Guidance and other federal guidelines.
Federal Program Information: Funding Agency: U.S Department of Health and Human Services FALN: 93.926 Federal Award Identification Number: H49MC00119‐19‐00 Pass Through Entity: State of Georgia Department of Human Services Award Year: 2018‐2020 Criteria: Under 2 CFR Section 200.303(a), non‐federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Under 2 CFR part 180, the Organization is required to verify suspension or debarment from the excluded parties list system regarding compliance. Condition: Under 2 CFR part 180, the Organization is required to verify suspension or debarment from the excluded parties list system regarding compliance. Though the Organization did not have a policy for suspension and debarment, the Organization complied with the requirements. Effect: Not having a suspension and debarment policy may result in funds to be returned back to grantor and/or impact future funding. Cause: Supporting suspension and debarment documentation for acquisition of property and services were not properly established in part due to several changes in personnel within the accounting area and overall limited number of personnel for certain functions and lack of board oversight. Questioned Costs: None Recommendation: We recommend the Organization strengthen its policies and procedures to ensure procurement and suspension and debarment is adequately documented for that goods and services purchased in accordance with Uniform Guidance and other federal guidelines. In addition, the Organization should verify that all vendors under covered transactions are not listed on the excluded parties list system by performing a search on sam.gov and maintaining the results of such search in the vendor’s file.
Federal Program Information: Funding Agency: U.S Department of Health and Human Services FALN: 93.926 Federal Award Identification Number: H49MC00119‐19‐00 Pass Through Entity: State of Georgia Department of Human Services Award Year: 2018‐2020 Criteria: Under 2 CFR Section 200.303(a), non‐federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally, regulations require that in order for activities and costs to be allowed under Federal awards, 45CFR, part 75 all costs must be adequately documented. Condition: The Organization lacked supporting documentation for non‐payroll expenses. Due to lack of supporting documentation and evidence of approval for payment could not be verified. Of the sixty (60) transactions examined, twelve (12) lacked supporting documentation for review, and approval for payment by a Manager. Effect: Management possibly did not expend funds in accordance with the approved detailed lineitem budget and grant agreement and possibly expended funds which did not contribute to the objective set forth for the program. (lack of approved invoices, lack of supporting documentation). Cause: Expenses including approved invoices and/or supporting documentation were not properly maintained in part due to several changes in personnel within the accounting area and overall limited number of personnel for certain functions and lack of board oversight. Questioned Costs: Known questioned costs of $3,931 and likely questioned costs of $17,477 for Healthy Start. Recommendation: We recommend that internal controls be strengthened and processes implemented to ensure all expenses include supporting documentation/invoice indicating nature of expense, amount, authorization and approval for payment.
Federal Program Information: Funding Agency: U.S Department of Health and Human Services FALN: 93.926 Federal Award Identification Number: H49MC00119‐19‐00 Pass Through Entity: State of Georgia Department of Human Services Award Year: 2018‐2020 Criteria: Under 2 CFR Section 200.303(a), non‐federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally, regulations require that in order for activities and costs to be allowed under Federal awards, 45CFR, part 75 all costs must be adequately documented. Condition: We noted no evidence of review and approval of payroll expenses including time sheets, payroll registers, and payroll reconciliations. Of the forty (40) employees tested, twenty three (23) employees lacked approval by management. Effect: Management possibly did not expend funds in accordance with the approved detailed lineitem budget and grant agreement and possibly expended funds which did not contribute to the objective set forth for the program or correct period of performance (lack of approved time sheets, payroll registers and reconciliations). Cause: Payroll expenses lacked approved timesheets, approved payroll registers and approved reconciliations between budgeted payroll expenses per grant agreement and internal payroll reports. This was due in part due to several changes in personnel within the accounting area and overall limited number of personnel for certain functions and lack of board oversight. Questioned Costs: None Recommendation: We recommend that internal controls be strengthened and processes implemented to ensure all payroll expenses include evidence of review and approval for payment.
Federal Program Information: Funding Agency: U.S Department of Health and Human Services FALN: 93.926 Federal Award Identification Number: H49MC00119‐19‐00 Pass Through Entity: State of Georgia Department of Human Services Award Year: 2018‐2020 Criteria: Under 2 CFR Section 200.303(a), non‐federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally, under 2 CFR sections 200.308 200.309 and 200.403(h)), the Organization may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass‐through entity made the federal award that were authorized by the federal awarding agency or pass‐through entity. Condition: The Organization lacked supporting documentation for non‐payroll expenses. Due to lack of supporting documentation, period of performance could not be verified. Of the sixty (60) nonpayroll transactions examined, ten (10) lacked supporting documentation for review, and 1 expense was for services performed in a prior period. Effect: Management possibly did not expend funds in accordance with the approved detailed lineitem budget and grant agreement and possibly expended funds in the incorrect period of performance. Cause: Expenses including approved invoices and/or supporting documentation were not properly maintained in part due to several changes in personnel within the accounting area and overall limited number of personnel for certain functions and lack of board oversight. Questioned costs: Known questioned costs of $7,674 and likely questioned costs of $34,117 for Healthy Start. Recommendation: We recommend that internal controls be strengthened and processes implemented to ensure all expenses include supporting documentation/invoice indicating period of performance.
Federal Program Information: Funding Agency: U.S Department of Health and Human Services FALN: 93.926 Federal Award Identification Number: H49MC00119‐19‐00 Pass Through Entity: State of Georgia Department of Human Services Award Year: 2018‐2020 Criteria: Under 2 CFR Section 200.303(a), non‐federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally regulations require the reimbursement payment method may be used on a Federal award for activities as specified in 2 CFR section 200.305(b)(3), program costs must be paid by non‐ Federal entity funds before submitting a payment request (2 CFR section 200.305(b)(3)), i.e., the non‐ Federal entity must disburse funds for program purposes before requesting payment from the Federal awarding agency or pass‐through entity. Condition: The Organization has a policy which in includes thee Fiscal/Grant Manager and/or the CEO review all drawdown requests to ensure costs are paid before reimbursement is requested. However of the seventeen (17) drawdown requests that we tested, there was no evidence of review and approval for payment. Effect: Management possibly did not expend funds in accordance with the federal award due to lack of evidence of oversight/review of drawdowns and after reimbursable expenses have been incurred. Cause: Management did not document evidence of review and approval of drawdown requests. This was due in part to lack of oversight. Also there were several changes in personnel within the accounting area and overall limited number of personnel for certain functions and lack of board oversight. Questioned costs: None Recommendation: We recommend that internal controls be strengthened and processes implemented to ensure all draw down requests are reviewed and approved to ensure costs were accurately reported and paid before requesting reimbursement.
Federal Program Information: Funding Agency: U.S Department of Health and Human Services FALN: 93.926 Federal Award Identification Number: H49MC00119‐19‐00 Pass Through Entity: State of Georgia Department of Human Services Award Year: 2018‐:2020 Criteria: Under 2 CFR Section 200.303(a), non‐federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally, under 2 CFR Section 200.320, the Organization must have and use documented procurement procedures for acquisition of property and services under a federal award or a sub‐award. Condition: The Organization does have approved policies and procedures over procurement that meet the requirements of the Uniform Guidance. However the Organization is not following its prescribed policies and procedures. The Organization lacked supporting documentation verifying procurement policies and procedures were followed. Due to lack of supporting documentation, procurement could not be verified. Of the sixty (60) transactions examined, ten (10) lacked supporting documentation for review of procurement. Effect: Not following procurement policies and procedures may result in funds to be returned back to grantor and/or impact future funding. Cause: Supporting procurement documentation for acquisition of property and services were not properly maintained in part due to several changes in personnel within the accounting area and overall limited number of personnel for certain functions and lack of board oversight. Questioned Costs: Known questioned costs of $3,870 and likely questioned costs of $17,206 for Healthy Start. Recommendation: We recommend the Organization strengthen its policies and procedures to ensure procurement is adequately documented for that goods and services purchased in accordance with Uniform Guidance and other federal guidelines.