2024-032 - Delayed Final Reimbursement Due to Unresolved Agency Requests Federal Programs 23.002 - Appalachian Area Development 14.228 - Community Development Block Grants/State's Program Award Numbers ARC-20698 ARC-20699 CDBG Subgrant: 1137-21-111-PF-01 Federal Agency U.S. Department of Housing and Urban Development (HUD) Appalachian Regional Commission (ARC) Compliance Requirement Reporting and Closeout- 2 CFR §§ 200.302, 200.303, and 200.344 Type of Finding: Internal Control over Compliance - Significant Deficiency Compliance - Noncompliance Questioned Costs: None Criteria: In accordance with 2 CFR §200.302 and §200.303, non-federal entities must maintain effective internal control over federal awards and ensure timely closeout. Additionally, 2 CFR §200.344 requires that closeout be completed within one year of the end of the period of performance. Condition: Final reimbursement requests for the above federal programs were submitted over a year ago. Although the granting agencies have initiated follow-up correspondence requesting additional documentation or clarification, the final payments remain outstanding as of the audit date. No resolution has been reached, and the grants remain open. Cause: The City lacks a formalized process for tracking unresolved reimbursement requests and responding to agency inquiries in a timely and coordinated manner. This has contributed to delays in resolving outstanding issues and receiving final payments. Effect: The City has not received final reimbursement for completed federal programs, resulting in delayed revenue recognition and potential strain on local resources. The extended delay also risks noncompliance with federal closeout requirements and may affect future funding eligibility. Recommendation: Implement a grant closeout protocol that includes: A centralized tracking system for final reimbursement submissions and agency correspondence Defined timelines for follow-up and escalation Clear assignment of responsibility for resolving outstanding issues Views of Responsible Officials: Management concurs with the finding. The City acknowledges that final reimbursement requests for the referenced federal programs were submitted in a timely manner; however, final payments have not been received due to ongoing correspondence and requests for additional information from the granting agencies. While staff have responded to these inquiries, the absence of a formalized tracking and escalation process has contributed to delays in resolution.
2024-044 - Untimely Submission of Required Performance Reports Federal Programs 23.002 - Appalachian Area Development (ARC) Award Numbers ARC MS-20698 ARC MS~20699 Federal Agency Appalachian Regional Commission (ARC) Compliance Requirement Reporting - 2 CFR §200.328 and §200.303 Type of Finding Internal Control over Compliance - Significant Deficiency Compliance - Noncompliance Questioned Costs None. The reporting noncompliance did not affect the allowability of costs charged to the grant. Criteria 2 CFR §200.328(b)(1) requires recipients to submit performance reports at intervals required by the federal awarding agency or pass-through entity. These reports must contain a comparison of actual accomplishments to the objectives of the award and be submitted in accordance with the terms and conditions of the grant. 2 CFR §200.303 requires recipients to establish and maintain effective internal controls over federal awards to ensure compliance with federal statutes, regulations, and the terms and conditions of the award. This includes controls over timely and accurate reporting. Under the ARC grant agreements, semi-annual performance reports are required to be submitted within 15 days following the end of each six-month reporting period. Condition The City did not submit required semi-annual performance reports for ARC grants MS-20698 and MS-20699 within the timeframes established by the grant agreements. Reports were submitted significantly past the 15-day deadline following the end of each six-month reporting period. In some cases, multiple reports were submitted on the same day, and one report due during the audit period had not been filed as of fieldwork completion. Additionally, the reports lacked clear identification of the reporting period covered. Cause The City did not have adequate procedures in place to ensure timely tracking and submission of required performance reports. Internal controls over reporting deadlines were not operating effectively. Effect Failure to submit timely and complete performance reports limits the pass-through entity's and federal awarding agency's ability to monitor project progress and ensure compliance with grant terms. This represents noncompliance with federal reporting requirements and a deficiency in internal control over federal programs. Recommendation We recommend the City implement procedures to ensure timely submission of required performance reports, including: Maintaining a reporting calendar with automated reminders Assigning responsibility for monitoring deadlines Retaining documentation that clearly identifies the reporting period covered Views of Responsible Officials Management concurs with the finding. The City acknowledges that performance reports were submitted late and that documentation lacked clarity regarding the reporting periods. To address this, the City will implement a reporting calendar with automated reminders and assign staff responsibility for monitoring deadlines. A standardized reporting template will be adopted to ensure each submission clearly identifies the reporting period covered. These measures will strengthen internal controls and improve compliance with ARC reporting requirements.
2024-042 - Misallocation of Expenditures Across Federal Awards Federal Program 14.228 - Community Development Block Grants Program 23.002 - Appalachian Area Development 90.210 - Delta Regional Authority (not subject to audit under Uniform Guidance) Award Numbers ARC-20698 ARC-20699 CDBG Subgrant: 1137-21-111-PF-01 Federal Agencies U.S. Department of Housing and Urban Development (HUD) U.S. Department of the Treasury (via Appalachian Regional Commission) Delta Regional Authority (DRA) Compliance Requirements Allowable Costs/Cost Principles - 2 CFR §200.403 and §200.405 Internal Controls - 2 CFR §200.303 Type of Finding Internal Control over Compliance - Significant Deficiency Compliance '- Noncompliance Questioned Costs (TABLE) Per 2 CFR §200.403, costs must be necessary, reasonable, and allocable to the federal award. Under §200.405, costs must be assigned to the federal award in accordance with the relative benefits received. Additionally, §200.303 requires the non-federal entity to maintain effective internal control over federal awards to ensure compliance. Condition During testing of 13 disbursements totaling $1,541,660 charged to the above federal programs, 11 invoices were not allocated in accordance with the approved budget percentages. This resulted in over-reimbursements across multiple federal awards. Known Over (Under) Reimbursements by Program and Fiscal Year (TABLE) *ALN 90.210 was not subject to audit under Uniform Guidance. Amounts shown are for context only. Cause The City did not consistently apply approved budget allocation percentages when charging expenditures to federal awards. This resulted in misclassification of costs and excess reimbursement from federal sources. Effect The City received federal reimbursements in excess of allowable amounts under ALNs 14.228 and 23.002. These errors may result in repayment obligations and indicate a broader weakness in internal controls over grant accounting and drawdown procedures. Recommendation We recommend the City strengthen its internal controls over grant accounting and reimbursement procedures. This should include: Formal review of allocation schedules prior to submission of reimbursement requests Periodic reconciliation of actual expenditures to approved budget allocations Staff training on federal cost principles and grant compliance requirements Views of Responsible Officials Management concurs with the finding. The City acknowledges that allocation errors occurred across multiple federal programs due to inconsistent application of approved budget percentages. To address this, the City will implement a formal review process for allocation schedules and establish reconciliation procedures to ensure expenditures align with approved budgets. Staff will receive training on federal cost principles and grant compliance requirements. The City will also evaluate prior reimbursements and consult with awarding agencies regarding any necessary adjustments.
Segregation of Duties Condition and criteria: During our audit of the Authority’s Schedule of Expenditures of Federal Awards, we noted that the Authority does not have adequate segregation of duties in place. Specifically, the same individual is responsible for initiating and recording journal entries and disbursements and reconciling the bank accounts. In accordance with 2 CFR § 200.303(a), the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Cause and Effect: The Authority is a small entity with limited administrative and accounting staff, which makes it difficult to achieve a complete segregation of duties. Due to resource constraints, individual staff members are assigned multiple roles that overlap key financial processes. Without proper segregation of duties, there is an increased risk that errors or irregularities, including potential misappropriation of assets or fraud, could occur and remain undetected. This condition could lead to noncompliance with applicable federal requirements and inaccuracies in financial reporting. Auditor’s Recommendations: We recommend that the Authority assess the current structure and implement compensating controls where full segregation of duties is not feasible due to staffing limitations. These may include enhanced supervisory review, periodic oversight by the board or executive leadership, documentation of independent reviews, and rotation of duties when possible. Authority’s Response: The board reviews the reports monthly. A printed payroll report and checks written from meeting to meeting are provided and are approved and initialed. Also provided is a report of the bank statements for the board to review what has been received and what has been paid. Before any bills are paid they are approved at the meeting. If an error is made when inputting a deposit received into C/A, the correction is printed and initialed approving the correction.
Finding 2024-004: Allowable Costs Program Title: Defense Nuclear Nonproliferation Research Assistance Listing Number: 81.113 Federal Agency: U.S. Department of Energy Direct Award Identifying Numbers: DE-NA003862, DE-NA004179, DE-NA0004177 Federal Award Year: Year ended September 30, 2024 Program Title: Export Control and Related Border Security Assistance Listing Number: 19.901 Federal Agency: U.S. Department of State Direct Award Identifying Number: SAQMIP23CA0153 Pass-Through Entity Name, Pass-Through Identifying Number: The Research Foundation for SUNY, University at Albany, 3-98939 Federal Award Year: Year ended September 30, 2024 Type of Finding: Material Weakness in Internal Control over Compliance Criteria: According to 2 CFR §200.303, 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). Condition: During our testing over expenditures, we noted that there is no written documentation of the review and approval of transactions that are reimbursed by Federally funded awards. Cause: PFI does not have a formal policy in place with respect to documenting management’s review and approval over expenditures of Federal awards. As such, PFI did not have effective internal controls in place to ensure that approvals were performed and documented as being performed in a timely manner. Effect or Potential Effect: There is the potential that expenditures allocated to the Federal awards were not properly reviewed in a timely manner which could result in unallowable costs being charged to Federal awards and potential noncompliance. Questioned Costs: None. Context: 46 out of 46 salary and wage expenditure transactions and 60 out of 60 expenditure transactions selected for control testing did not have documented review and approval. The sample is deemed representative of the population. Repeat Finding: Not applicable. Recommendation: We recommend that PFI implement a formal expense review and approval policy. This policy should require that management formally document its review and approval all expense transactions on a timely basis.
Finding 2024-005: Period of Performance Program Title: Defense Nuclear Nonproliferation Research Assistance Listing Number: 81.113 Federal Agency: U.S. Department of Energy Direct Award Identifying Numbers: DE-NA003862, DE-NA004179, DE-NA0004177 Federal Award Year: Year ended September 30, 2024 Program Title: Export Control and Related Border Security Assistance Listing Number: 19.901 Federal Agency: U.S. Department of State Direct Award Identifying Number: SAQMIP23CA0153 Pass-Through Entity Name, Pass-Through Identifying Number: The Research Foundation for SUNY, University at Albany, 3-98939 Federal Award Year: Year ended September 30, 2024 Type of Finding: Material Weakness in Internal Control over Compliance Criteria: According to 2 CFR §200.303, 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). Condition: During our testing over expenditures, we noted that there is no written documentation of the review and approval of transactions that are reimbursed by Federally funded awards. Cause: PFI does not have a formal policy in place with respect to documenting management’s review and approval over expenditures of Federal awards. As such, PFI did not have effective internal controls in place to ensure that approvals were performed and documented as being performed in a timely manner. Effect or Potential Effect: There is the potential that expenditures allocated to the Federal awards were not properly reviewed in a timely manner and could have been charged to a Federally funded award outside of the grant’s stated period of performance, thereby creating a potential for being reimbursed for unallowable costs. Questioned Costs: None. Context: 3 out of 3 grants under ALN 81.113 and 2 out of 2 grants under ALN 19.901 selected for control testing did not have documented review and approval for their expenditures. The sample is deemed representative of the population. Repeat Finding: Not applicable. Recommendation: We recommend that PFI implement a formal expense review and approval policy. This policy should require that management formally review and approve all expense transactions on a timely basis.
Finding 2024-006: Cash Management Program Title: Defense Nuclear Nonproliferation Research Assistance Listing Number: 81.113 Federal Agency: U.S. Department of Energy Direct Award Identifying Numbers: DE-NA003862, DE-NA004179, DE-NA0004177 Federal Award Year: Year ended September 30, 2024 Program Title: Export Control and Related Border Security Assistance Listing Number: 19.901 Federal Agency: U.S. Department of State Direct Award Identifying Number: SAQMIP23CA0153 Pass-Through Entity Name, Pass-Through Identifying Number: The Research Foundation for SUNY, University at Albany, 3-98939 Federal Award Year: Year ended September 30, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matter Compliance Finding Criteria: Under 2 CFR § 200.303, organizations that receive Federal funding are required 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). Under 2 CFR § 200.305(b)(3), when using the reimbursement method, entities should request payment as soon as possible after the costs are incurred to minimize the time between expenditure and Federal reimbursement. Condition: PFI does not have documentation of the review and approval of Federal cash drawdown requests prior to submission. During testing, we noted that drawdowns totaling $219,376 for ALN 81.113 and $188,631 for ALN 19.901 were processed without evidence of supervisory review. Additionally, we noted that PFI submitted a late cash drawdown request for Federal expenditures of $74,111 under ALN 81.113 that occurred during prior years but were newly identified and reimbursed during the year under audit. Cause: PFI has not implemented a formal review process for cash drawdowns. Furthermore, PFI lacks written procedures to ensure timely submission of reimbursement requests. Effect or Potential Effect: Lack of review increases the risk of drawing excessive funds, noncompliance with cash management requirements, and potential misuse of Federal funds. Delayed drawdowns resulted in PFI using non-Federal funds for an extended period of time, which may have impacted cash flow and program operations. Questioned Costs: None. Context: 4 out of 4 drawdown requests selected for testing under ALN 81.113 and 3 out of 3 drawdown requests selected for testing under ALN 19.901 did not have documented supervisory review and approval. 1 of 4 drawdown requests tested for ALN 81.113 was submitted late for expenditures that had occurred in prior fiscal years. The samples are representative of the population. Repeat Finding: Not applicable Recommendation: It is recommended that PFI establish and document a formal review and approval process for all cash drawdown requests, including maintaining evidence of supervisory approval. Furthermore, we recommend that PFI implement procedures to ensure reimbursement requests are submitted promptly after costs are incurred, ideally within 30 days.
Finding 2024-007: Procurement Program Title: Defense Nuclear Nonproliferation Research Assistance Listing Number: 81.113 Federal Agency: U.S. Department of Energy Direct Award Identifying Numbers: DE-NA003862, DE-NA004179, DE-NA0004177 Federal Award Year: Year ended September 30, 2024 Program Title: Export Control and Related Border Security Assistance Listing Number: 19.901 Federal Agency: U.S. Department of State Direct Award Identifying Number: SAQMIP23CA0153 Pass-Through Entity Name, Pass-Through Identifying Number: The Research Foundation for SUNY, University at Albany, 3-98939 Federal Award Year: Year ended September 30, 2024 Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria: According to 2 CFR §200.303, 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). Per CFR §200.318-§200.326, non-Federal entities must maintain written procurement procedures that comply with Federal standards, including thresholds, methods of procurement, and documentation requirements. Noncompetitive procurements can only be awarded in accordance with §200.320(c). According to 2 CFR §200.320 Procurement Standards, 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: We noted that PFI’s procurement policy does not contain a micropurchase threshold and its threshold for simplified acquisitions is not accurately defined in accordance with the applicable Uniform Guidance requirements. During our testing over procurement, we noted several instances where PFI did not clearly document the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Furthermore, there were instances where review and approval over procurement was evidenced but the reviewer was not included in PFI’s procurement policy list of authorized approvers. Cause: PFI’s procurement policy was out of date and had not been updated to align with the current version of the Uniform Guidance. Effect or Potential Effect: An outdated procurement policy increases the risk of noncompliance with Federal requirements, improper procurement practices, and potential disallowance of costs charged to Federal awards. Questioned Costs: $31,120 of known questioned costs were identified for 2 procurements under ALN 81.113. $15,000 of known questioned costs were identified for ALN 19.901 along with $806 of likely questioned costs based on projecting the known questioned costs to the remaining population of procurement transactions. Context: 2 of 2 samples selected for testing under ALN 81.113 and 1 out of 3 samples selected for testing under 19.901 did not have adequate documentation for the rationale related to the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. For 2 out of 2 samples under ALN 81.113 and 2 out of 3 samples under ALN 19.901, PFI had evidence of review and approval, but the reviewer was not on PFI’s authorized list included in its procurement policy. The samples are representative of the populations. Repeat Finding: Not applicable. Recommendation: We recommend that PFI revise its procurement policy to fully comply with the requirements in the latest version of the Uniform Guidance. In particular, the revised policy should include a micropurchase threshold, an accurate simplified acquisition threshold, and update the authorized list of reviewers for procurement transactions.
Finding No.: 2024-006 Federal Agency: U.S. Department of Education AL Program: 84.027 Special Education Grants to States Area: Period of Performance Questioned Costs: $39,665 Criteria: In accordance with applicable period of performance (POP) requirements, a non-federal entity may charge only allowable costs incurred during a federal award’s period of performance. Unless the federal awarding agency authorizes an extension, a non-federal entity must liquidate all financial obligations incurred under the federal award not later than 120 calendar days after the end date of the period of performance as specified in the terms and conditions of the federal award or in the approved extension. Furthermore, 2 CFR 200.303(a) states that the recipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the 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 COSO. Conditions: Of sixty items, aggregating $384,666 of $3,198,523 of expenditures subjected to period of performance test, deficiencies were noted, as follows: 1. For 4 items or (7%), GDOE charged costs to a federal award after the period of performance ended and liquidated obligations of a federal award after the approved liquidation end date: Federal Award No. Purchase Order/ Invoice No. Invoice Date POP End Date Liquidation End Date Liquidation Date Expenditures Questioned Costs H027A210013 20232230 08/27/2024 09/30/2023 01/28/2024 08/01/2025 3,240 3,240 H027A220013 20233151 01/28/2025 09/30/2024 01/28/2025 Not yet paid 17,953 17,953 H027A220013 20233151 01/28/2025 09/30/2024 01/28/2025 Not yet paid 10,636 10,636 H027A220013 20240021 04/29/2025 09/30/2024 01/28/2025 Not yet paid 7,408 7,408 $39,237 $39,237 Finding No.: 2024-006, continued Federal Agency: U.S. Department of Education AL Program: 84.027 Special Education Grants to States Area: Period of Performance Questioned Costs: $39,665 Conditions, continued: 2. For 1 item or (2%), compliance with period of performance of expenditure (PO# 20241462) amounting to $428 could not be determined as supporting documents such as an invoice or canceled check was not made available for examination. 3. There is no review in place to ensure that liquidation of the obligation occur within the allowable time period. Cause: GDOE did not enforce monitoring controls over compliance with applicable period of performance requirements relating to charging of costs to a federal award within the period of performance. Also, GDOE’s internal control policies and procedures in place are not suitably designed to ensure that liquidation of the obligation occurs within the allowable time period. Effect: GDOE is in noncompliance with applicable period of performance requirements. The reportable questioned cost is $39,665. Identified as a Repeat Finding: 2023-009 Recommendation: Responsible personnel should enforce monitoring controls over compliance with applicable period of performance requirements. Prior to charging costs to a federal award or liquidating obligations incurred under a federal award, responsible personnel should verify that the period of performance, including the liquidation end date, has not expired. Views of Responsible Officials: The Division of Special Education is currently reviewing the details of the finding in order to provide an adequate response and corrective action plan.
Internal Control over Compliance Significant Deficiency Federal Grantor: U.S. Department of Health and Human Services Federal Program: Centers for Independent Living Assistance Listing Number: 93.432 Criteria: 2 CFR 200.303 (Uniform Guidance) – Internal Controls is the regulation that requires Federal entities receiving Federal awards to establish and maintain effective internal controls over those awards to ensure compliance with Federal statutes, regulations, and the award terms. These controls must include processes to monitor compliance, take prompt action on non-compliance, and safeguard sensitive information. Condition and Context: Internal controls designed relating to the major program’s direct and material compliance requirements were not operating effectively. Cause: Management was not following the Organization’s approved control activities for federal awards. Effect: Without effective internal controls, material non-compliance due to error or fraud could occur and not be detected. Questioned Costs: None. Context: We tested internal control over compliance for the direct and material compliance requirements of the Organization’s major program.Recommendation: We recommend management review and reinforce the Organization’s established control activities related to federal awards. This should include comprehensive training for staff involved in federal program administration, regular monitoring to ensure controls are consistently applied, and periodic internal audits to assess the effectiveness of compliance systems. We also recommend documenting all significant control activities and monitoring procedures, including review and approval, for future audit purposes. By strengthening adherence to approved control activities, the Organization will reduce the risk of potential non-compliance with federal requirements. Views of Responsible Official: Immediate Control Reinforcement and Staff Training - The Executive Director and the Program Manager have already started identifying specific areas of each contract and grant for federal awards. The Executive Director will call a meeting between all managers to go over each contract and grants together with information that has already been reviewed. It will be important to observe specific instances when controls were created, and documentation was not accurate. Staff will be trained regarding the agency budget, and each role and responsibility of their program to better understand how their service delivery affects organizational funding. Monthly monitoring of grant funding from all managers will be important for transparency and prudent decision making. All managers will receive frequent training to keep up with any changes or new processes that will impact federal funding. Monitoring and Periodic Internal Auditing - The Executive Director, Program Manager, and Finance manager will meet every month before the Finance Committee meeting to go over the progression of spending. The Executive Director and Finance Manager will keep record of all information that will be helpful for the next audit regarding federal grants. Written corrective action plans will be created for each area of noncompliance. Finance Manager will be responsible for maintaining accurate budget updates and will inform Executive Director of any updates and changes as soon as they happen to ensure full transparency and preparation. Failure to do so will result in disciplinary consequences. All information will be presented to the Board of Directors whether at the monthly Board meeting or at the request for a special meeting. Documentation and Formalization - The Executive Director will meet with the Finance Manager to understand what process is used for quality assurance and documentation the finance staff uses. Any improvements necessary will be implemented as soon as possible after evaluating all processes. An evaluation of the software used for tracking all grant funding will be done and any quality assurance improvements will be implemented as soon as possible. Federal grants compliance adherence will be included in performance reviews and documented.
2024-101: Reimbursement Requests were Not Formally Approved by the City Prior to Submission Assistance Listing Number: 97.036 Program Title: Disaster Grants – Public Assistance (Presidentially Declared Disasters) Compliance Requirement: Special Tests and Provisions Pass-through Entity: Florida Division of Emergency Management Federal Grant/Contract Number and Grant Year Z0894 2019 Finding Type: Significant Deficiency in Internal Control Known Questioned Costs: $0 Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and terms and conditions of the federal awards. Condition: The reimbursement requests to the Florida Division of Emergency Management were prepared by the City’s consultant and acknowledged as approved by them as well. In the two reimbursement requests selected for sampling, one of the requests was both submitted and acknowledged by the third-party administrator. This was not a statistically valid sample. Cause: The City implemented procedures to ensure they are the entity to provide the acknowledgement of approval on the Florida Division of Emergency Management FEMA website for reimbursement requests submitted by the third-party consultants however those processes were not followed by the third-party administrator and subsequently not corrected by the City. Effect: Reimbursement requests could include potential errors and cause the City to be out of compliance with the requirements of the grant Recommendation: The City should consistently be the entity to acknowledge and approve the submission of the request on the Florida Division of Emergency Management FEMA website. If it is not feasible for them to be on the website then email confirmation between the City and the consultant should be obtained which supports the review and approval of the submission by the City. Management Response: See attached Corrective Action Plan
2024-006: Preparation of Schedule of Expenditures of Federal Awards (SEFA) (repeat) Finding Type: Material Weakness in Internal Controls and Noncompliance (Reporting, Cash Management and Allowable Costs/Cost Principles) Federal Program: U.S. Department of Transportation – Airport Improvement Program (AL #20.106); all project numbers and U.S. Department of Treasury – Coronavirus State and Local Fiscal Recovery Funds (AL #21.027) Criteria: The Code of Federal Regulations (CFR) Section 200.303(b) requires 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 terms and conditions of the Federal award. CFR Section 200.502(a) states that the determination of when a Federal award is expended should be based on when the activity related to the Federal award occurs. Generally, the activity pertains to events that require the non-Federal entity to comply with Federal statutes, regulations, and the terms and conditions of Federal awards, such as expenditure/expense transactions associated with grant awards. The County reports expenditures on the SEFA when the expenditure has been incurred, or on the accrual basis of accounting, in accordance with generally accepted accounting principles. CFR Section 200.510(b) requires the auditee to prepare a SEFA for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with CFR Section 200.502(a), as stated above, and must reconcile amounts reported in the SEFA to the amounts reported in the auditee’s financial statements. Condition: The SEFA was not appropriately reconciled to federal grant revenues and expenditures recorded in the financial statements. Changes were made to major program expenditures, as well as expenditures of other programs, during the closing process and during the completion of the single audit to properly report expenditures on the SEFA. Closing procedures should be in place to reconcile grant expenditures incurred at year-end, confirm the amount as eligible with the grantor, claim the grant revenues on a timely basis, reconcile the claim to the general ledger, and ensure the expenditures that will be claimed under federal awards are properly reported on the SEFA and audited financial statements prior to the start of the single audit. If expenditures reported on the SEFA are misstated, the County could fail to have a program appropriately identified as a major program and tested as a major program during the single audit. Failure to have a program audited during the single audit would result in noncompliance with Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Cause: Closing procedures were not in place and management did not effectively communicate with County departments responsible for administering federal awards to identify all federal grant related activity. Effect: The SEFA required material adjustments to include all federal expenditures prior to the single audit beginning, which resulted in a misstated preliminary SEFA and inefficiencies during the single audit. In addition, the lack of closing procedures resulted in audit delays which caused the 2022 through 2024 financial reporting process, including data collection form submission, to be untimely. Questioned Costs: No costs have been questioned as a result of this finding. Recommendation: We recommend that management meet with department heads throughout the year and during the closing process to identify all expenditures under federal awards. Training should be provided to all staff to make sure they are aware of the importance of accurately reconciling and claiming grant expenditures on a timely basis and providing the information to management for inclusion on the SEFA. Views of Responsible Officials: The County will work to improve closing processes and communications with various departments to ensure the SEFA is complete and accurate.
2024-007: Written Policies Required by the Uniform Guidance (repeat) Finding Type: Material Weakness in Internal Controls and Noncompliance (Reporting and Allowable Costs/Cost Principles) Federal Program: U.S. Department of Transportation – Airport Improvement Program (AL #20.106); all project numbers and U.S. Department of Treasury – Coronavirus State and Local Fiscal Recovery Funds (AL #21.027) Criteria: Delta County does not have written policies and procedures to implement the requirements of 2 CFR section 200 for the administration of federal awards. The Uniform Guidance requires a non-federal entity that has expended federal awards for a grant on or after December 26, 2014 to have written policies pertaining to: 1) advance payments and reimbursements; 2) determination of allowable costs; 3) compensation (personnel and benefits policies); 4) travel costs; and 5) procurement procedures. 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal controls over the federal awards that provide assurance that the entity is managing the federal awards in compliance with federal statutes, regulations, and the conditions of the federal award. Condition: The County does not have processes in place to conform to all of the requirements in the Uniform Guidance. Cause: The County has not reviewed and updated its policies and procedures for continued changes in grants and the Uniform Guidance. Certain departmental grants operate outside of the general County processes and internal control system and policies and procedures for these departments have not been maintained. Effect: As a result of this condition, the County did not fully comply with the Uniform Guidance. Questioned Costs: No costs have been questioned as a result of this finding. Recommendation: We recommend that the County adopt formal written policies covering these areas as soon as practical. Views of Responsible Officials: The County will work to update policies and procedures and to formalize responsibilities.
Finding No.: 2024-014 Federal Agency: U.S. Department of Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Various Area: Equipment and Real Property Management Questioned Costs: $ Undeterminable Criteria: In accordance with 2 CFR 200.313(b), a State must use, manage and dispose of equipment acquired under a Federal award in accordance with State laws and procedures. 2 CFR 200.313(d) states that regardless of whether equipment is acquired in part or its entirety under the Federal award, the recipient must manage equipment (including replacement equipment) utilizing procedures that meet the following requirements: (1) Property records must include a description of the property, a serial number or another identification number, the source of funding for the property (including the FAIN), the title holder, the acquisition date, the cost of the property, the percentage of the Federal agency contribution towards the original purchase, the location, use and condition of the property, and any disposition data including the date of disposal and sale price of the property. The recipient and subrecipient are responsible for maintaining and updating property records when there is a change in the status of the property. (2) A physical inventory of the property must be conducted, and the results must be reconciled with the property records at least once every two years. (3) A control system must be in place to ensure safeguards for preventing property loss, damage, or theft. Any loss, damage, or theft of equipment must be investigated. The recipient or subrecipient must notify the Federal agency or pass-through entity of any loss, damage, or theft of equipment that will have an impact on the program. (4) Regular maintenance procedures must be in place to ensure the property is in proper working condition. (5) If the recipient or subrecipient is authorized or required to sell the property, proper sales procedures must be in place to ensure the highest possible return. Furthermore, 2 CFR 200.303(a) states that the recipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the 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 COSO. Finding No.: 2024-014, continued Federal Agency: U.S. Department of Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Various Area: Equipment and Real Property Management Questioned Costs: $ Undeterminable Conditions: 1. Bureau of Budget and Management Research (BBMR) lacks adequate internal policies and procedures over compliance with the applicable federal property rules and regulations. 2. BBMR’s capital asset records do not meet the criteria above and lacks certain information such as: a. Serial number or asset tag number b. Funding source, including the FAIN c. Title holder d. Percentage of Federal participation in the project costs for the Federal award under which the property was acquired e. Location f. Use and condition g. Date of disposal, if any h. Sale price of the property 3. BBMR’s most recent comprehensive physical inventory of its property was in January 2016; however, the required reconciliation was not completed. As of September 30, 2024, the required biannual physical inventory and reconciliation were not performed. 4. As capital asset records are not effectively maintained, it does not appear that BBMR has effectively developed means to adequately safeguard capital assets from loss, damage, or theft, or to reasonably investigate such occurrences. We are unable to assess the overall cumulative monetary value of these deficiencies. However, the table below summarizes total capital outlays over the past five years. See the Notes to the SEFA for chart/table. Finding No.: 2024-014, continued Federal Agency: U.S. Department of Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Various Area: Equipment and Real Property Management Questioned Costs: $ Undeterminable Cause: The processes over inventory, maintenance and reconciliation of capital assets are not routine. BBMR requires additional funding and human resources to fully implement and develop a useful capital asset management system. Effect: GovGuam is in noncompliance with applicable equipment and real property management requirements. The underlying capital outlays are not considered questioned costs, as we are unable to quantify the extent of noncompliance. Identification as a Repeat Finding: 2023-011 Recommendation: BBMR should complete the required biannual physical inventory and reconciliations and should consider developing a more detailed corrective action plan with timetables for completing planned actions, such as processing required reconciliations and reports, training personnel and coordinating with other governmental units on property management requirements. Views of Responsible Officials: Implementation of a Fixed Assets Module as part of the new FMIS system that will help automate the tracking and reporting of Capital assets, is near completion with final testing in progress. DOA will update the SOP for the Fixed Assets for capital asset reporting accordingly. Review of Assets acquired in FY2024 was completed, with FY2025 in progress. As noted previously, the process is hampered by difficulties in recruiting personnel.
Finding No.: 2024-019 Federal Agency: U.S. Department of the Treasury AL Program: 21.023 Emergency Rental Assistance Federal Award No.: COVID-19 Section 501 of the Consolidated Appropriations Act, 2021 Federal Award No.: COVID-19 Section 3201 of the American Rescue Plan Act, 2021 Area: Matching, Level of Effort, Earmarking Questioned Costs: $ Undeterminable Criteria: In accordance with applicable matching, level of effort, earmarking requirements, under Emergency Rental Assistance (ERA) 1, a grantee may use up to 10 percent of the total award amount for direct and indirect administrative costs. Under ERA 2, a grantee may use up to 15% percent of the total award amount for direct and indirect administrative costs and 10 percent of the total award amount for housing stability purposes. Furthermore, 2 CFR 200.303(a) states that the recipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the 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 COSO. Condition: The Department of Administration (DOA) was unable to demonstrate and provide evidence of compliance with the applicable earmarking requirement due to closure of the program during the fiscal year and expiration of employment contract of personnel responsible for compliance. Cause: DOA lacks established internal control policies and procedures relating to proper turn-over of documents. Remaining DOA personnel managing the program did not have access to internal files of the Program Coordinator whose employment contract expired. Effect: GovGuam is in noncompliance with applicable matching, level of effort, earmarking requirements. No questioned cost is presented as we are unable to quantify the extent of noncompliance. Finding No.: 2024-019, continued Federal Agency: U.S. Department of the Treasury AL Program: 21.023 Emergency Rental Assistance Federal Award No.: COVID-19 Section 501 of the Consolidated Appropriations Act, 2021 Federal Award No.: COVID-19 Section 3201 of the American Rescue Plan Act, 2021 Area: Matching, Level of Effort, Earmarking Questioned Costs: $ Undeterminable Recommendation: DOA management should establish internal control policies and procedures relating to turnover of documents to ensure that all required and supporting documentation are properly maintained and retained for purposes of demonstrating compliance over applicable matching, level of effort, and earmarking requirements. Views of Responsible Officials: The Agency is reviewing the management of Federal Grants to ensure robust handover and succession plans are in place for future programs. The sudden passing of the ERA Program Coordinator directly impacted overall management of the program.
Finding No.: 2024-023 Federal Agency: U.S. Department of the Treasury AL Program: 21.026 Homeowner Assistance Fund Federal Award No.: COVID-19 Section 3206 of the American Rescue Plan Act of 2021 Area: Matching, Level of Effort, Earmarking Questioned Costs: $ Undeterminable Criteria: In accordance with applicable matching, level of effort, earmarking requirements, GovGuam is subject to the following earmarking requirements: a) Counseling or educational efforts by housing counseling agencies approved by Housing and Urban Development (HUD), tribal government (including such efforts by in-house housing counselors who are HUD certified or tribally approved), or legal services, targeted to households eligible to be served with funding from the Homeowner Assistance Fund (HAF) related to foreclosure prevention or displacement, in an aggregate amount up to 5 percent of the funding from the HAF received by the HAF participant. b) Planning, community engagement, needs assessment, and administrative expenses related to the HAF participant’s disbursement of HAF funds for qualified expenses, in an aggregate amount not to exceed 15 percent of the funding from the HAF received by the HAF participant. If the HAF participant has only received the initial 10% of its allocation, no more than 50% of the initial payment is permitted to be used for the expenses mentioned here. c) Participants are providing not less than 60% of funds to homeowners with income less than 100% AMI or 100% of U.S. median income. d) Participants target homeowners that are classified as Socially Disadvantaged Individuals (SDI) and 100 percent AMI or less. Furthermore, 2 CFR 200.303(a) states that the recipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the 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 COSO. Condition: The Department of Administration (DOA) was unable to demonstrate and provide evidence of compliance with the applicable earmarking requirement due to closure of the program during the fiscal year and expiration of employment contract of personnel responsible for compliance. Finding No.: 2024-023, continued Federal Agency: U.S. Department of the Treasury AL Program: 21.026 Homeowner Assistance Fund Federal Award No.: COVID-19 Section 3206 of the American Rescue Plan Act of 2021 Area: Matching, Level of Effort, Earmarking Questioned Costs: $ Undeterminable Cause: DOA lacks established internal control policies and procedures relating to proper turn-over of documents. Remaining DOA personnel managing the program did not have access to internal files of the Program Coordinator whose employment contract expired. Effect: GovGuam is in noncompliance with applicable matching, level of effort, earmarking requirements. No questioned cost is presented as we are unable to quantify the extent of noncompliance. Recommendation: DOA management should establish internal control policies and procedures relating to turnover of documents to ensure that all required and supporting documentation is properly maintained and retained for purposes of demonstrating compliance over applicable matching, level of effort, and earmarking requirements. Views of Responsible Officials: The Agency is reviewing its federal grants management to ensure robust handover and succession plans are in place of future programs.
Finding No.: 2024-037 Federal Agency: U.S. Department of Health and Human Service AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Federal Award No.: Various Area: Equipment and Real Property Management Questioned Costs: $ Undeterminable Criteria: In accordance with 2 CFR 200.313(b), a State must use, manage and dispose of equipment acquired under a Federal award in accordance with State laws and procedures. 2 CFR 200.313(d) states that regardless of whether equipment is acquired in part or its entirety under the Federal award, the recipient must manage equipment (including replacement equipment) utilizing procedures that meet the following requirements: (1) Property records must include a description of the property, a serial number or another identification number, the source of funding for the property (including the FAIN), the title holder, the acquisition date, the cost of the property, the percentage of the Federal agency contribution towards the original purchase, the location, use and condition of the property, and any disposition data including the date of disposal and sale price of the property. The recipient and subrecipient are responsible for maintaining and updating property records when there is a change in the status of the property. (2) A physical inventory of the property must be conducted, and the results must be reconciled with the property records at least once every two years. (3) A control system must be in place to ensure safeguards for preventing property loss, damage, or theft. Any loss, damage, or theft of equipment must be investigated. The recipient or subrecipient must notify the Federal agency or pass-through entity of any loss, damage, or theft of equipment that will have an impact on the program. (4) Regular maintenance procedures must be in place to ensure the property is in proper working condition. (5) If the recipient or subrecipient is authorized or required to sell the property, proper sales procedures must be in place to ensure the highest possible return. Furthermore, 2 CFR 200.303(a) states that the recipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the 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 COSO. Finding No.: 2024-037, continued Federal Agency: U.S. Department of Health and Human Service AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Federal Award No.: Various Area: Equipment and Real Property Management Questioned Costs: $ Undeterminable Conditions: 1. Department of Public Health and Social Services (DPHSS) lacks adequate internal policies and procedures over compliance with the applicable federal property rules and regulations. 2. DPHSS’s capital asset records do not meet the criteria above and certain sources of funding for the property (including the FAIN) information are missing. Furthermore, some assets purchased in prior years (e.g., 2020 through 2023) are tagged as “New”. 3. DPHSS’s most recent comprehensive physical inventory of its property was in January 2016; however, the required reconciliation was not completed. As of September 30, 2024, the required biannual physical inventory and reconciliation were not performed. 4. As capital asset records are not effectively maintained, it does not appear that DPHSS has effectively developed means to adequately safeguard capital assets from loss, damage, or theft, or to reasonably investigate such occurrences. We are unable to assess the overall cumulative monetary value of these deficiencies. However, the table below summarizes total capital outlays over the past five years. See the Notes to the SEFA for chart/table. Cause: The processes over inventory, maintenance and reconciliation of capital assets are not routine. DPHSS requires more funding and human resources to fully implement and develop a useful capital asset management system. Effect: GovGuam is in noncompliance with applicable equipment and real property management requirements. The underlying capital outlays are not considered questioned costs, as we are unable to quantify the extent of noncompliance. Finding No.: 2024-037, continued Federal Agency: U.S. Department of Health and Human Service AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Federal Award No.: Various Area: Equipment and Real Property Management Questioned Costs: $ Undeterminable Identification as a Repeat Finding: 2023-026 Recommendation: DPHSS should complete the required biannual physical inventory and reconciliations and should consider developing a more detailed corrective action plan with timetables for completing planned actions, such as processing required reconciliations and reports, training personnel and coordinating with other governmental units on property management requirements. Views of Responsible Officials: Implementation of a Fixed Assets Module as part of the new FMIS system that will help automate the tracking and reporting of Capital assets, is near completion with final testing in progress. DOA will update the SOP for the Fixed Assets for capital asset reporting accordingly. Review of Assets acquired in FY2024 was completed, with FY2025 in progress. As noted previously, the process is hampered by difficulties in recruiting personnel.
Finding No.: 2024-047 Federal Agency: U.S. Department of Health and Human Service AL Program: 93.767 Children’s Health Insurance Program Federal Award No.: 2405GQ5021 Area: Special Tests and Provisions - Provider Eligibility (Screening and Enrollment) Questioned Costs: $1,562,177 Criteria: 42 CFR 455.412 states that the State Medicaid Agency must have a method for verifying that any provider purporting to be licensed in accordance with the laws of any State is licensed by such State. Also, State Medicaid Agency must confirm that the provider’s license has not expired and that there are no current limitations on the provider’s license. 42 CFR 455.432 states that the State Medicaid agency must conduct pre-enrollment and post-enrollment site visits of providers who are designated as “moderate” or “high” categorical risks to the Medicaid program. Also, the State Medicaid agency must require any enrolled provider to permit CMS, its agents, its designated contractors, or the Medicaid agency to conduct unannounced on-site inspection of any and all provider locations. 42 CFR 455.434(a) states that the State Medicaid agency, as a condition of enrollment, must require providers to consent to a criminal background checks including fingerprinting when required to do so under State law or by the level of screening based on risk of fraud, waste or abuse as determined for that category of provider. 42 CFR 455.434(b) states that the State Medicaid agency must establish categorical risk levels for providers and provider categories who pose an increased financial risk of fraud, waste or abuse to the Medicaid program. 42 CFR 455.450 states that a State Medicaid agency must screen all initial applications, including applications for a new practice location, and any applications received in response to a re-enrollment or revalidation of enrollment request based on a categorical risk level of “limited,” “moderate,” or “high.” If a provider could fit within more than one risk level described in this section, the highest level of screening is applicable. Finding No.: 2024-047, continued Federal Agency: U.S. Department of Health and Human Service AL Program: 93.767 Children’s Health Insurance Program Federal Award No.: 2405GQ5021 Area: Special Tests and Provisions - Provider Eligibility (Screening and Enrollment) Questioned Costs: $1,562,177 Criteria, continued: 42 CFR 455.460 states that beginning on or after March 25, 2011, States must collect the applicable application fee prior to executing a provider agreement from a prospective or re-enrolling provider other than either of the following: (1) Individual physicians or nonphysician practitioners. (2) (i) Providers who are enrolled in either of the following: (A) Title XVIII of the Act. (B) Another State’s title XIX or XXI plan. (ii) Providers that have paid the applicable application fee to - (A) A Medicare contractor; or (B) Another State. 42 CFR 455.104 states that the Medicaid agency must require that disclosing entities, fiscal agents, and managed care entities provide the following disclosures: (1) (i) The name and address of any person (individual or corporation) with an ownership or control interest in the disclosing entity, fiscal agent, or managed care entity. The address for corporate entities must include as applicable primary business address, every business location, and P.O. Box address. (ii) Date of birth and Social Security Number (in the case of an individual). (iii) Other tax identification number (in the case of a corporation) with an ownership or control interest in the disclosing entity (or fiscal agent or managed care entity) or in any subcontractor in which the disclosing entity (or fiscal agent or managed care entity) has a 5 percent or more interest. (2) Whether the person (individual or corporation) with an ownership or control interest in the disclosing entity (or fiscal agent or managed care entity) is related to another person with ownership or control interest in the disclosing entity as a spouse, parent, child, or sibling; or whether the person (individual or corporation) with an ownership or control interest in any subcontractor in which the disclosing entity (or fiscal agent or managed care entity) has a 5 percent or more interest is related to another person with ownership or control interest in the disclosing entity as a spouse, parent, child, or sibling. Finding No.: 2024-047, continued Federal Agency: U.S. Department of Health and Human Service AL Program: 93.767 Children’s Health Insurance Program Federal Award No.: 2405GQ5021 Area: Special Tests and Provisions - Provider Eligibility (Screening and Enrollment) Questioned Costs: $1,562,177 Criteria, continued: (3) The name of any other disclosing entity (or fiscal agent or managed care entity) in which an owner of the disclosing entity (or fiscal agent or managed care entity) has an ownership or control interest. (4) The name, address, date of birth, and Social Security Number of any managing employee of the disclosing entity (or fiscal agent or managed care entity). Furthermore, 2 CFR 200.303(a) states that the recipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the 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 COSO. Conditions: 1. The Department of Public Health and Social Services (DPHSS) lacks adequate internal policies and procedures over compliance with the applicable special tests and provisions for provider eligibility (screening and enrollment). 2. For twenty-four (or 100%) of twenty-four items, aggregating $1,562,177 of $32,045,067 of expenditures, deficiencies were noted, as follows: See the Notes to the SEFA for chart/table. Finding No.: 2024-047, continued Federal Agency: U.S. Department of Health and Human Service AL Program: 93.767 Children’s Health Insurance Program Federal Award No.: 2405GQ5021 Area: Special Tests and Provisions - Provider Eligibility (Screening and Enrollment) Questioned Costs: $1,562,177 Conditions, continued: See the Notes to the SEFA for chart/table. DPHSS did not establish categorical risk levels for providers and provider categories who pose an increased financial risk of fraud, waste or abuse to the Medicaid program, hence, for all items, we are unable to determine whether screening and enrollment requirements (e.g., pre-enrollment and post-enrollment site visits and consent to a criminal background checks) were performed accordingly based on the categorical risk level of providers. For all items, DPHSS was unable to provide supporting documentation that could demonstrate the basis of not collecting the applicable application fee prior to executing a provider agreement. For items # 8 through 22, the Guam Medicaid and Medically Indigent Program (MIP) Provider Enrollment Disclosure of Ownership and Control Interest Statement form was not on file. For items # 18 through 22, provider’s license or business license was not on file. Finding No.: 2024-047, continued Federal Agency: U.S. Department of Health and Human Service AL Program: 93.767 Children’s Health Insurance Program Federal Award No.: 2405GQ5021 Area: Special Tests and Provisions - Provider Eligibility (Screening and Enrollment) Questioned Costs: $1,562,177 Cause: DPHSS lacks adequate internal policies and procedures over compliance with the applicable special tests and provisions for provider eligibility (screening and enrollment). Responsible personnel managing the program attended off-island trainings during the fiscal year, however, standard operating procedures that specifically address the applicable compliance requirements have not yet been established. Effect: GovGuam is in noncompliance with applicable special tests and provisions for provider eligibility (screening and enrollment). The reportable questioned cost is $1,562,177 based on the items identified in Conditions above. Recommendation: DPHSS management should prioritize to establish internal policies and procedures over compliance with applicable special tests and provisions for provider eligibility (screening and enrollment). Views of Responsible Officials: DPHSS agrees with this finding. DPHSS is aware that deficiencies exist with the Medicaid provider enrolment process. DPHSS’s response to this deficiency is addressed in its modernization plan, which will automate certain provider enrolment functions. In March 2024, DPHSS performed site visits for 21 providers, and since then has continued to perform site visits year-round. Memorandums regarding provider compliance topics have also been communicated to providers and published on the provider portal, including information regarding criminal background checks. DPHSS is currently contracted with a consultant that is assisting in the implementation of compliant provider enrolment operations, which includes policy revisions, updates to provider applications and disclosure forms, development of standard operating procedures, and training for both staff and providers. Finding No.: 2024-047, continued Federal Agency: U.S. Department of Health and Human Service AL Program: 93.767 Children’s Health Insurance Program Federal Award No.: 2405GQ5021 Area: Special Tests and Provisions - Provider Eligibility (Screening and Enrollment) Questioned Costs: $1,562,177 Views of Responsible Officials, continued: In addition, DPHSS is currently in the process of establishing a Medicaid Program Integrity Unit (PI Unit) with a mission to conduct independent and objective Medicaid program integrity functions adherent to federal and local laws. The PI Unit will also assist DPHSS in addressing and managing Medicaid related Corrective Action Plans.
Finding No.: 2024-050 Federal Agency: U.S. Department of Homeland Security AL Program: 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disasters) Federal Award No.: Various Area: Matching, Level of Effort, Earmarking Questioned Costs: $ Undeterminable Criteria: In accordance with 44 CFR 206.65, the Federal share for assistance provided shall not be less than 75 percent of the eligible costs. Per applicable matching requirement, the accountability for meeting the matching requirement resides with the recipient and is determined at the time of project accounting as part of project closeout (i.e., the nonfederal share does not have to be met until the end of the project). In accordance with FEMA Recovery Policy 104-11-2 (B)(2)(a), FEMA provides contribution for management costs based on actual costs incurred up to 7 percent of the total award amount for the disaster or emergency, excluding subrecipient management costs. Furthermore, 2 CFR 200.303(a) states that the recipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the 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 COSO. Conditions: 1. Required non-federal share of matching could not be determined as underlying grant agreements were not made available. 2. Guam Homeland Security (GHS) was unable to demonstrate and provide evidence of compliance with the aforementioned earmarking requirement. 3. GHS lacks adequate internal policies and procedures over compliance with the applicable matching and earmarking requirements. Cause: GHS management did not monitor compliance with applicable matching and earmarking requirements. Finding No.: 2024-050, continued Federal Agency: U.S. Department of Homeland Security AL Program: 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disasters) Federal Award No.: Various Area: Matching, Level of Effort, Earmarking Questioned Costs: $ Undeterminable Effect: We are unable to verify compliance with the requirements for matching. Furthermore, GovGuam is in noncompliance with applicable earmarking requirements. No questioned cost is presented as we are unable to quantify the extent of noncompliance. Recommendation: GHS management should establish internal policies and procedures over compliance with applicable matching and earmarking requirements. Also, GHS management should clearly identify department/ personnel responsible for program’s compliance. Views of responsible officials: GHS will create a Standard Operating Procedure (SOP) to establish internal policies and procedures with applicable matching and earmarking requirements. GHS will also identify department personnel responsible.
Duplicate Payments to Vendors Type of Finding Material Weakness - Internal Control Over Financial Reporting Material Noncompliance - Material to the Financial Statements Material Weakness - Internal Control Over Compliance Material Noncompliance - Material to the Major Program New or Repeat Finding New Federal Program Community Development Block Grant/State's Program (ALN 14.228) Federal Agency U.S. Department of Housing and Urban Development Pass-through Entity and Identifying Number(s) Texas General Land Office (22-119-003-D373, 22-085-017-D253) Compliance Requirement(s) A. Activities allowed or unallowed B. Allowable costs/cost principles Criteria 2 CFR 200.303(a) requires entities to maintain effective internal control over federal awards. 2 CFR 200.302(b)(3) requires entities to maintain accountability over funds to ensure they are used for authorized purposes and safeguarded against loss or misuse. Condition The City paid a vendor twice for the same invoices and also submitted duplicate reimbursement requests to the pass through entity for the same expenditures. These errors resulted in a material misstatement of expenditures recorded in the City’s accounting records and in federal reimbursement requests. Cause The same individual entered invoices and released them for payment without secondary review. Inconsistent invoice naming prevented the accounting system’s duplicate invoice controls from identifying previously processed and paid invoices. Effect or Potential Effect Duplicate payments may occur or go undetected, and duplicate reimbursement requests may be submitted to the grantor. Questioned Costs $721,272 Context During the audit period, the City experienced significant turnover within the finance department. Reduced staffing and inconsistent invoice entry practices prevented system controls from recognizing duplicate invoices, resulting in duplicate vendor payments. Because the City relied on these records when requesting grant reimbursements, duplicate requests were also submitted. The errors were identified by the auditors and corrected by the City prior to September 30, 2024. Recommendation The City should segregate duties so one individual enters invoices and another reviews and releases payments. The City should also adopt a standardized invoice naming convention to allow system controls to identify potential duplicates. Views of Responsible Officials City management agrees with the finding. Duplicate payments and reimbursement requests occurred during a period of financial department turnover, compounded by insufficient segregation of duties and inconsistent invoice referencing. The City has recovered the duplicate payments, returned the duplicate reimbursements, implemented a standardized invoice numbering convention, and revised procedures to ensure appropriate review before payments are released. Management is also evaluating additional system controls to prevent recurrence.
Finding Number: 2024-003, Significant Deficiency ALN # 21.027: Federal Program: Coronavirus State and Local Fiscal Recovery Fund Federal Agency: US Department of Treasury Grant # and Year: Y5065, 2024 Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Earmarking, Period of Performance, Reporting. Questioned Costs: N/A Criteria: In accordance with 2 CFR § 200.303, non-federal entities are required to establish and maintain effective internal controls to provide reasonable assurance of compliance with federal statutes, regulations, and the terms and conditions of federal awards. Condition: The City did not maintain formal documentation surrounding the internal controls over compliance for multiple compliance requirements. Specifically, for 1 of 12 employees tested for pay rate approvals, there was no documentation evidencing approval of the pay rate. In addition, there was no documented review of the payroll registers or of the project and expenditure reports submitted. Cause: Lack of documented controls over compliance primarily attributed to significant operational and personnel changes within the Finance Department. Effect: Potential for noncompliance with federal program requirements. Although there was a lack of internal controls documented, there were no instances of noncompliance noted. Recommendation: The City should evaluate their processes and procedures over internal controls are appropriately documented and maintained. Response: See attached Corrective Action Plan.
2024-001 – Internal Control over Compliance and Compliance with Activities Allowed or Unallowed and Allowable Costs/Cost Principles Information on Federal Program(s) - Department of Education Assistance Listing Number: 84.351 Assistance Listing Name: Arts in Education National Program Grant Award Number: S351A220007 Award Period: October 1, 2023 to September 30, 2024 Criteria or Specific Requirement – The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. In addition, per 2 CFR Section 200.403, “Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP). (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. (g) Be adequately documented. (h) Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to § 200.308(e)(3).” Condition – In evaluating the Center’s compliance with the requirements of Activities Allowed or Unallowed and Allowable Costs Cost Principles, our test work identified one instance out of a sample of sixty payroll transactions, totaling $66,904.92, in which an employee was not paid according to his (her) contract. For the one exception, the employee was underpaid a total of $0.24. Cause – The Center did not adhere to their internal process to ensure approved salary information was accurately applied. Effect or Potential Effect – Without adequate internal controls in place to ensure costs are properly verified and applied, the Center could inaccurately charge expenditures to the federal program. Questioned Costs – N/A Context – This is a condition based on testing of the Center’s compliance. Based on tested samples, we noted a total underpayment of $0.24. The prevalence of the finding is detailed in the condition section above. The samples were selected using a non-statistical method. Repeat Finding – This is a repeat finding from prior year. This was reported as finding 2023-001 in the 2023 report. Recommendation - We recommend management of the Center strengthen their internal process to ensure that employee salary information recorded in the payroll system is approved, supported by salary documentation in the personnel files, and accurately applied. Views of Responsible Officials – After performing a detailed analysis, the Center’s management identified that the likely net underpayment amounted to $1.32. The likely underpayment was determined by management through examination of the total salary charged to the federal program. The Center’s management agrees with the finding and will strengthen the internal process surrounding the activities allowed or unallowed and allowable costs and will ensure adequate documentation is in place and approved salary rates are consistently and properly applied. See the Center’s corrective action for more details.
2024-001 – Internal Control over Compliance and Compliance with Activities Allowed or Unallowed and Allowable Costs/Cost Principles Information on Federal Program(s) - Department of Education Assistance Listing Number: 84.351 Assistance Listing Name: Arts in Education National Program Grant Award Number: S351A220007 Award Period: October 1, 2023 to September 30, 2024 Criteria or Specific Requirement – The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. In addition, per 2 CFR Section 200.403, “Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP). (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. (g) Be adequately documented. (h) Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to § 200.308(e)(3).” Condition – In evaluating the Center’s compliance with the requirements of Activities Allowed or Unallowed and Allowable Costs Cost Principles, our test work identified one instance out of a sample of sixty payroll transactions, totaling $66,904.92, in which an employee was not paid according to his (her) contract. For the one exception, the employee was underpaid a total of $0.24. Cause – The Center did not adhere to their internal process to ensure approved salary information was accurately applied. Effect or Potential Effect – Without adequate internal controls in place to ensure costs are properly verified and applied, the Center could inaccurately charge expenditures to the federal program. Questioned Costs – N/A Context – This is a condition based on testing of the Center’s compliance. Based on tested samples, we noted a total underpayment of $0.24. The prevalence of the finding is detailed in the condition section above. The samples were selected using a non-statistical method. Repeat Finding – This is a repeat finding from prior year. This was reported as finding 2023-001 in the 2023 report. Recommendation - We recommend management of the Center strengthen their internal process to ensure that employee salary information recorded in the payroll system is approved, supported by salary documentation in the personnel files, and accurately applied. Views of Responsible Officials – After performing a detailed analysis, the Center’s management identified that the likely net underpayment amounted to $1.32. The likely underpayment was determined by management through examination of the total salary charged to the federal program. The Center’s management agrees with the finding and will strengthen the internal process surrounding the activities allowed or unallowed and allowable costs and will ensure adequate documentation is in place and approved salary rates are consistently and properly applied. See the Center’s corrective action for more details.
Federal Agency: U.S. Department of Education Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Recurring: No Compliance Requirement: Special tests and Provisions - Enrollment Program Information: Student Financial Aid Cluster (ALN 84.007, 84.003, 84.063, 84.268) Criteria: CFR section 685.309 and 690.83(b)(2) requires Colleges to notify the NSLDS within 30 days of a change in student status or include the change in status in a response to an enrollment reporting roster within 60 days of the student’s date of determination of withdrawal. 2 CFR Section 200.303 requires entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures in place to ensure accurate reporting of enrollment status changes. Condition: Out of 40 students sampled from the College’s roster files, 3 out of 40 did not have updated enrollment statuses reported to NSLDS. Cause: The financial aid office does not have an effective system in place to ensure all official student status changes are reported accurately. Effect: Failure to report status changes timely is noncompliance with Federal regulation and could result in loss of future funding. Questioned Cost: None Recommendations: The College should implement monitoring procedures which will promptly notify the financial aid office of any student status changes. A system of monitoring procedures and/or controls will ensure the College is reporting any status changes accurately. The College should implement a review process to ensure all status changes are addressed by the financial aid office. View of Responsible Officials: The College’s management will address the matter identified as described in the corrective action plan.
Federal Agency: U.S. Department of Education Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Recurring: No Compliance Requirement: Special tests and Provisions - Enrollment Program Information: Student Financial Aid Cluster (ALN 84.007, 84.003, 84.063, 84.268) Criteria: CFR section 685.309 and 690.83(b)(2) requires Colleges to notify the NSLDS within 30 days of a change in student status or include the change in status in a response to an enrollment reporting roster within 60 days of the student’s date of determination of withdrawal. 2 CFR Section 200.303 requires entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures in place to ensure accurate reporting of enrollment status changes. Condition: Out of 40 students sampled from the College’s roster files, 3 out of 40 did not have updated enrollment statuses reported to NSLDS. Cause: The financial aid office does not have an effective system in place to ensure all official student status changes are reported accurately. Effect: Failure to report status changes timely is noncompliance with Federal regulation and could result in loss of future funding. Questioned Cost: None Recommendations: The College should implement monitoring procedures which will promptly notify the financial aid office of any student status changes. A system of monitoring procedures and/or controls will ensure the College is reporting any status changes accurately. The College should implement a review process to ensure all status changes are addressed by the financial aid office. View of Responsible Officials: The College’s management will address the matter identified as described in the corrective action plan.
Federal Agency: U.S. Department of Education Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Recurring: No Compliance Requirement: Special tests and Provisions - Enrollment Program Information: Student Financial Aid Cluster (ALN 84.007, 84.003, 84.063, 84.268) Criteria: CFR section 685.309 and 690.83(b)(2) requires Colleges to notify the NSLDS within 30 days of a change in student status or include the change in status in a response to an enrollment reporting roster within 60 days of the student’s date of determination of withdrawal. 2 CFR Section 200.303 requires entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures in place to ensure accurate reporting of enrollment status changes. Condition: Out of 40 students sampled from the College’s roster files, 3 out of 40 did not have updated enrollment statuses reported to NSLDS. Cause: The financial aid office does not have an effective system in place to ensure all official student status changes are reported accurately. Effect: Failure to report status changes timely is noncompliance with Federal regulation and could result in loss of future funding. Questioned Cost: None Recommendations: The College should implement monitoring procedures which will promptly notify the financial aid office of any student status changes. A system of monitoring procedures and/or controls will ensure the College is reporting any status changes accurately. The College should implement a review process to ensure all status changes are addressed by the financial aid office. View of Responsible Officials: The College’s management will address the matter identified as described in the corrective action plan.
Federal Agency: U.S. Department of Education Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Recurring: No Compliance Requirement: Special tests and Provisions - Enrollment Program Information: Student Financial Aid Cluster (ALN 84.007, 84.003, 84.063, 84.268) Criteria: CFR section 685.309 and 690.83(b)(2) requires Colleges to notify the NSLDS within 30 days of a change in student status or include the change in status in a response to an enrollment reporting roster within 60 days of the student’s date of determination of withdrawal. 2 CFR Section 200.303 requires entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures in place to ensure accurate reporting of enrollment status changes. Condition: Out of 40 students sampled from the College’s roster files, 3 out of 40 did not have updated enrollment statuses reported to NSLDS. Cause: The financial aid office does not have an effective system in place to ensure all official student status changes are reported accurately. Effect: Failure to report status changes timely is noncompliance with Federal regulation and could result in loss of future funding. Questioned Cost: None Recommendations: The College should implement monitoring procedures which will promptly notify the financial aid office of any student status changes. A system of monitoring procedures and/or controls will ensure the College is reporting any status changes accurately. The College should implement a review process to ensure all status changes are addressed by the financial aid office. View of Responsible Officials: The College’s management will address the matter identified as described in the corrective action plan.
PROGRAM DESCRIPTION Reference Number: 2024-004 Proper review of payroll charges to grant funds ALN 84.425U & 84.425W COVID-19 Education Stabilization Fund Pass through identifying number: 21528001245902 Award Year: 2023-2024 Federal Agency: U.S. Department of Education Passed through State Department of Education Criteria: Non-federal entities are required to establish and maintain effective internal controls over compliance in accordance with 2 CFR 200.303(a) and 2 CFR 200.430(g) which requires that compensation charged to federal awards must be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated, of which documentation must be incorporated into the official records of the entity. Condition Found: During our review of payroll charges that were funded through ESSER funds, it was noted that the District did not have adequate controls in place to monitor the payroll transactions charged to the program. Cause: Although the District implemented Skyward in the prior year, the District did not integrate the appropriate approvals into the system in a timely manner. In addition, turnover in the District Chief Financial Officer position caused difficulties in the District obtaining the proper approvals for journal entries. Effect: The District could fail to appropriately support expenditures charged to the program. Questioned Cost: $0 Recommendation: We recommend the District to implement appropriate approvals in the Skyward accounting system to provide for better oversight of transactions. Views of Responsible Officials: Management agrees with the findings. See corrective action plan beginning on page 114.
PROGRAM DESCRIPTION Reference Number: 2024-004 Proper review of payroll charges to grant funds ALN 84.425U & 84.425W COVID-19 Education Stabilization Fund Pass through identifying number: 21528001245902 Award Year: 2023-2024 Federal Agency: U.S. Department of Education Passed through State Department of Education Criteria: Non-federal entities are required to establish and maintain effective internal controls over compliance in accordance with 2 CFR 200.303(a) and 2 CFR 200.430(g) which requires that compensation charged to federal awards must be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated, of which documentation must be incorporated into the official records of the entity. Condition Found: During our review of payroll charges that were funded through ESSER funds, it was noted that the District did not have adequate controls in place to monitor the payroll transactions charged to the program. Cause: Although the District implemented Skyward in the prior year, the District did not integrate the appropriate approvals into the system in a timely manner. In addition, turnover in the District Chief Financial Officer position caused difficulties in the District obtaining the proper approvals for journal entries. Effect: The District could fail to appropriately support expenditures charged to the program. Questioned Cost: $0 Recommendation: We recommend the District to implement appropriate approvals in the Skyward accounting system to provide for better oversight of transactions. Views of Responsible Officials: Management agrees with the findings. See corrective action plan beginning on page 114.
PROGRAM DESCRIPTION Reference Number: 2024-004 Proper review of payroll charges to grant funds ALN 84.425U & 84.425W COVID-19 Education Stabilization Fund Pass through identifying number: 21528001245902 Award Year: 2023-2024 Federal Agency: U.S. Department of Education Passed through State Department of Education Criteria: Non-federal entities are required to establish and maintain effective internal controls over compliance in accordance with 2 CFR 200.303(a) and 2 CFR 200.430(g) which requires that compensation charged to federal awards must be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated, of which documentation must be incorporated into the official records of the entity. Condition Found: During our review of payroll charges that were funded through ESSER funds, it was noted that the District did not have adequate controls in place to monitor the payroll transactions charged to the program. Cause: Although the District implemented Skyward in the prior year, the District did not integrate the appropriate approvals into the system in a timely manner. In addition, turnover in the District Chief Financial Officer position caused difficulties in the District obtaining the proper approvals for journal entries. Effect: The District could fail to appropriately support expenditures charged to the program. Questioned Cost: $0 Recommendation: We recommend the District to implement appropriate approvals in the Skyward accounting system to provide for better oversight of transactions. Views of Responsible Officials: Management agrees with the findings. See corrective action plan beginning on page 114.
PROGRAM DESCRIPTION Reference Number: 2024-004 Proper review of payroll charges to grant funds ALN 84.425U & 84.425W COVID-19 Education Stabilization Fund Pass through identifying number: 21528001245902 Award Year: 2023-2024 Federal Agency: U.S. Department of Education Passed through State Department of Education Criteria: Non-federal entities are required to establish and maintain effective internal controls over compliance in accordance with 2 CFR 200.303(a) and 2 CFR 200.430(g) which requires that compensation charged to federal awards must be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable, and properly allocated, of which documentation must be incorporated into the official records of the entity. Condition Found: During our review of payroll charges that were funded through ESSER funds, it was noted that the District did not have adequate controls in place to monitor the payroll transactions charged to the program. Cause: Although the District implemented Skyward in the prior year, the District did not integrate the appropriate approvals into the system in a timely manner. In addition, turnover in the District Chief Financial Officer position caused difficulties in the District obtaining the proper approvals for journal entries. Effect: The District could fail to appropriately support expenditures charged to the program. Questioned Cost: $0 Recommendation: We recommend the District to implement appropriate approvals in the Skyward accounting system to provide for better oversight of transactions. Views of Responsible Officials: Management agrees with the findings. See corrective action plan beginning on page 114.
Federal Agency: U.S. Department of Education Federal Program Title: Student Financial Aid Cluster ALN Numbers: Multiple Award Period: September 1, 2023 through August 31, 2024 Type of Finding: • Significant Deficiency in Internal Control Over Compliance • Other Matters Criteria or Specific Requirement: The 2 CFR Section 200.303 require that nonfederal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with Federal Statues, regulations, and the term and conditions of the federal awards. Condition: During our testing of Common Origination and Disbursement (COD), Return of Title IV Funds (R2T4) and National Student Loan Data System (NSLDS), we noted there was a review process implemented; however, there was no process in place to retain the review being performed as to provide evidence to ensure the controls are being performed effectively. Questioned Costs: None. Context: During our testing, it was noted the University does not have a process in place to ensure controls are being performed effectively. Cause: The University did not have a process in place to ensure controls implemented are being performed effectively Effect: There is no way to determine who was involved in the process should an error be present. Repeat Finding: No Recommendation: We recommend the University reevaluate its procedures and review policies surrounding controls implemented for Title IV Aid. Views of Responsible Officials: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Education Federal Program Title: Student Financial Aid Cluster ALN Numbers: Multiple Award Period: September 1, 2023 through August 31, 2024 Type of Finding: • Significant Deficiency in Internal Control Over Compliance • Other Matters Criteria or Specific Requirement: The 2 CFR Section 200.303 require that nonfederal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with Federal Statues, regulations, and the term and conditions of the federal awards. Condition: During our testing of Common Origination and Disbursement (COD), Return of Title IV Funds (R2T4) and National Student Loan Data System (NSLDS), we noted there was a review process implemented; however, there was no process in place to retain the review being performed as to provide evidence to ensure the controls are being performed effectively. Questioned Costs: None. Context: During our testing, it was noted the University does not have a process in place to ensure controls are being performed effectively. Cause: The University did not have a process in place to ensure controls implemented are being performed effectively Effect: There is no way to determine who was involved in the process should an error be present. Repeat Finding: No Recommendation: We recommend the University reevaluate its procedures and review policies surrounding controls implemented for Title IV Aid. Views of Responsible Officials: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Education Federal Program Title: Student Financial Aid Cluster ALN Numbers: Multiple Award Period: September 1, 2023 through August 31, 2024 Type of Finding: • Significant Deficiency in Internal Control Over Compliance • Other Matters Criteria or Specific Requirement: The 2 CFR Section 200.303 require that nonfederal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with Federal Statues, regulations, and the term and conditions of the federal awards. Condition: During our testing of Common Origination and Disbursement (COD), Return of Title IV Funds (R2T4) and National Student Loan Data System (NSLDS), we noted there was a review process implemented; however, there was no process in place to retain the review being performed as to provide evidence to ensure the controls are being performed effectively. Questioned Costs: None. Context: During our testing, it was noted the University does not have a process in place to ensure controls are being performed effectively. Cause: The University did not have a process in place to ensure controls implemented are being performed effectively Effect: There is no way to determine who was involved in the process should an error be present. Repeat Finding: No Recommendation: We recommend the University reevaluate its procedures and review policies surrounding controls implemented for Title IV Aid. Views of Responsible Officials: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Education Federal Program Title: Student Financial Aid Cluster ALN Numbers: Multiple Award Period: September 1, 2023 through August 31, 2024 Type of Finding: • Significant Deficiency in Internal Control Over Compliance • Other Matters Criteria or Specific Requirement: The 2 CFR Section 200.303 require that nonfederal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with Federal Statues, regulations, and the term and conditions of the federal awards. Condition: During our testing of Common Origination and Disbursement (COD), Return of Title IV Funds (R2T4) and National Student Loan Data System (NSLDS), we noted there was a review process implemented; however, there was no process in place to retain the review being performed as to provide evidence to ensure the controls are being performed effectively. Questioned Costs: None. Context: During our testing, it was noted the University does not have a process in place to ensure controls are being performed effectively. Cause: The University did not have a process in place to ensure controls implemented are being performed effectively Effect: There is no way to determine who was involved in the process should an error be present. Repeat Finding: No Recommendation: We recommend the University reevaluate its procedures and review policies surrounding controls implemented for Title IV Aid. Views of Responsible Officials: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Education Federal Program Title: Student Financial Aid Cluster ALN Numbers: Multiple Award Period: September 1, 2023 through August 31, 2024 Type of Finding: • Significant Deficiency in Internal Control Over Compliance • Other Matters Criteria or Specific Requirement: The 2 CFR Section 200.303 require that nonfederal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with Federal Statues, regulations, and the term and conditions of the federal awards. Condition: During our testing of Common Origination and Disbursement (COD), Return of Title IV Funds (R2T4) and National Student Loan Data System (NSLDS), we noted there was a review process implemented; however, there was no process in place to retain the review being performed as to provide evidence to ensure the controls are being performed effectively. Questioned Costs: None. Context: During our testing, it was noted the University does not have a process in place to ensure controls are being performed effectively. Cause: The University did not have a process in place to ensure controls implemented are being performed effectively Effect: There is no way to determine who was involved in the process should an error be present. Repeat Finding: No Recommendation: We recommend the University reevaluate its procedures and review policies surrounding controls implemented for Title IV Aid. Views of Responsible Officials: There is no disagreement with the audit finding.
Compliance Requirement: 2 CFR 200.303 Internal Controls Name of Federal Agency: Corporation for National and Community Service Pass-through Agency: State of Louisiana/Volunteer Louisiana Questioned Costs: None. Condition: During our audit, we obtained an understanding and tested LDSC’s internal control for purposes of planning and performing our audit procedures. In obtaining our understanding and testing LDSC’s internal controls, we determined there were inadequate segregation of duties involving certain aspects of the financial reporting cycle. Criteria: As noted in 2 CFR 200.303 “The non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 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: Due to the size of LDSC’s administrative staff, certain duties are performed by the same individual, as follows: • Initiate and approve vendor invoices for payment, • Write checks or initiating electronic disbursements, • Review and approve payroll, including the approver’s payroll • Initiate and approve reimbursements to themselves as the agency head, • Access to check stock, check signing authority, and approval authorization. The following responsibilities over cash receipts are performed by the same individual: • Receive and open mail, • Prepare bank deposits and deposit monies received, • Invoices customers for services provided (host sites). Effect: There is not adequate segregation of duties. Recommendation: We recommend LDSC to continue its practice of involving members of the board and its contract accountant to be involved in the financial reporting process to the extent practical to mitigate the risks related to limited segregation of duties. Views of Responsible Officials: See views of responsible officials on page 27.
Compliance Requirement: 2 CFR 200.303 Internal Controls Name of Federal Agency: Corporation for National and Community Service Pass-through Agency: State of Louisiana/Volunteer Louisiana Questioned Costs: None. Condition: During our audit, we obtained an understanding and tested LDSC’s internal control for purposes of planning and performing our audit procedures. In obtaining our understanding and testing LDSC’s internal controls, we determined there were inadequate segregation of duties involving certain aspects of the financial reporting cycle. Criteria: As noted in 2 CFR 200.303 “The non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 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: Due to the size of LDSC’s administrative staff, certain duties are performed by the same individual, as follows: • Initiate and approve vendor invoices for payment, • Write checks or initiating electronic disbursements, • Review and approve payroll, including the approver’s payroll • Initiate and approve reimbursements to themselves as the agency head, • Access to check stock, check signing authority, and approval authorization. The following responsibilities over cash receipts are performed by the same individual: • Receive and open mail, • Prepare bank deposits and deposit monies received, • Invoices customers for services provided (host sites). Effect: There is not adequate segregation of duties. Recommendation: We recommend LDSC to continue its practice of involving members of the board and its contract accountant to be involved in the financial reporting process to the extent practical to mitigate the risks related to limited segregation of duties. Views of Responsible Officials: See views of responsible officials on page 27.
Assistance Listing Number, Federal Agency, and Program Name -93.233/93.837, U.S. Department of Health and Human Services, Research and Development Cluster 93.323, U.S. Department of Health and Human Services, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Federal Award Identification Number and Year - 93.233 - R01HL142116; 93.837 - U01HL146245 93.323 - 22680258J; 32680012K Pass-through Entity - 93.233 N/A (direct); 93.837 N/A (direct) 93.323 Illinois Department of Public Health (IDPH) Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - Per 2 CFR 200.303(a), nonfederal entities must establish and maintain effective internal controls over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with the guidance in Standards for Internal Control in the Federal Government, issued by the Comptroller General of the United States, or the Internal Control Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.318(a), the nonfederal entity must have and use documented 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 nonfederal entity's documented procurement procedures must conform to the procurement standards identified in §§200.317 through 200.327. Per 2 CFR 200.318(i), the nonfederal 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. Per 2 CFR 200.324(a), the nonfederal entity must perform a cost or price analysis in connection with every procurement action in excess of the SAT, including contract modifications. The method and degree of analysis is dependent upon the facts surrounding the particular procurement situation; but, as a starting point, the nonfederal entity must make independent estimates before receiving bids or proposals. Condition - Controls were not sufficient to establish written policies and procedures surrounding procured contracts and to ensure that the history of procurement decisions was documented, as required by 2 CFR 200. Questioned Costs - Research and Development Cluster - unknown ELC - unknown Identification of How Questioned Costs Were Computed - N/A Context - Research and Development Cluster - For the four contracts tested, management did not maintain records sufficient to detail the history of procurement, rationale for the method of procurement, selection of the contract type, or basis of the contract price. Additionally, for the largest of the four contracts with activity of approximately $375,000, which is above the SAT established by FAR, management did not document its rationale for limiting competition, nor was management able to provide evidence that a cost-price analysis was performed. Finally, management has not formally documented an appropriate micropurchase or SAT threshold. ELC - For the three of the four contracts tested that were procured under noncompetitive means, management did not maintain records sufficient to detail the history of procurement, rationale for the method of procurement, selection of the contract type, or basis of the contract price. Further, for three out of four contracts tested under the Research and Development Cluster and all four contracts tested under ELC, management was unable to provide evidence that contractors were checked for suspension and debarment in advance of entering into a covered transaction. Because there was evidence that these contractors were not suspended or debarred, no questioned costs related to this noncompliance were identified. Cause and Effect - A lack of formal procurement policies and procedures, internally established procurement thresholds, or records in support of procurement decisions could result in material noncompliance with federal procurement standards. Recommendation - We recommend that management formalize procurement policies and procedures to demonstrate how the Institute will achieve compliance with standards identified in §§200.317 through 200.327. Additionally, we recommend management retain documented evidence that its policies and procedures were followed to ensure compliance with procurement standards. Views of Responsible Officials and Corrective Action Plan – Management agrees with the recommendation and will review the relevant guidance to ensure compliance. Necessary revisions will be made to the existing procurement policies and procedures in a timely manner to ensure that procurement decisions are documented, as required by 2 CFR Part 200.
Assistance Listing Number, Federal Agency, and Program Name -93.233/93.837, U.S. Department of Health and Human Services, Research and Development Cluster 93.323, U.S. Department of Health and Human Services, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Federal Award Identification Number and Year - 93.233 - R01HL142116; 93.837 - U01HL146245 93.323 - 22680258J; 32680012K Pass-through Entity - 93.233 N/A (direct); 93.837 N/A (direct) 93.323 Illinois Department of Public Health (IDPH) Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - Per 2 CFR 200.303(a), nonfederal entities must establish and maintain effective internal controls over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with the guidance in Standards for Internal Control in the Federal Government, issued by the Comptroller General of the United States, or the Internal Control Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.318(a), the nonfederal entity must have and use documented 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 nonfederal entity's documented procurement procedures must conform to the procurement standards identified in §§200.317 through 200.327. Per 2 CFR 200.318(i), the nonfederal 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. Per 2 CFR 200.324(a), the nonfederal entity must perform a cost or price analysis in connection with every procurement action in excess of the SAT, including contract modifications. The method and degree of analysis is dependent upon the facts surrounding the particular procurement situation; but, as a starting point, the nonfederal entity must make independent estimates before receiving bids or proposals. Condition - Controls were not sufficient to establish written policies and procedures surrounding procured contracts and to ensure that the history of procurement decisions was documented, as required by 2 CFR 200. Questioned Costs - Research and Development Cluster - unknown ELC - unknown Identification of How Questioned Costs Were Computed - N/A Context - Research and Development Cluster - For the four contracts tested, management did not maintain records sufficient to detail the history of procurement, rationale for the method of procurement, selection of the contract type, or basis of the contract price. Additionally, for the largest of the four contracts with activity of approximately $375,000, which is above the SAT established by FAR, management did not document its rationale for limiting competition, nor was management able to provide evidence that a cost-price analysis was performed. Finally, management has not formally documented an appropriate micropurchase or SAT threshold. ELC - For the three of the four contracts tested that were procured under noncompetitive means, management did not maintain records sufficient to detail the history of procurement, rationale for the method of procurement, selection of the contract type, or basis of the contract price. Further, for three out of four contracts tested under the Research and Development Cluster and all four contracts tested under ELC, management was unable to provide evidence that contractors were checked for suspension and debarment in advance of entering into a covered transaction. Because there was evidence that these contractors were not suspended or debarred, no questioned costs related to this noncompliance were identified. Cause and Effect - A lack of formal procurement policies and procedures, internally established procurement thresholds, or records in support of procurement decisions could result in material noncompliance with federal procurement standards. Recommendation - We recommend that management formalize procurement policies and procedures to demonstrate how the Institute will achieve compliance with standards identified in §§200.317 through 200.327. Additionally, we recommend management retain documented evidence that its policies and procedures were followed to ensure compliance with procurement standards. Views of Responsible Officials and Corrective Action Plan – Management agrees with the recommendation and will review the relevant guidance to ensure compliance. Necessary revisions will be made to the existing procurement policies and procedures in a timely manner to ensure that procurement decisions are documented, as required by 2 CFR Part 200.
Assistance Listing Number, Federal Agency, and Program Name -93.233/93.837, U.S. Department of Health and Human Services, Research and Development Cluster 93.323, U.S. Department of Health and Human Services, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Federal Award Identification Number and Year - 93.233 - R01HL142116; 93.837 - U01HL146245 93.323 - 22680258J; 32680012K Pass-through Entity - 93.233 N/A (direct); 93.837 N/A (direct) 93.323 Illinois Department of Public Health (IDPH) Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - Per 2 CFR 200.303(a), nonfederal entities must establish and maintain effective internal controls over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with the guidance in Standards for Internal Control in the Federal Government, issued by the Comptroller General of the United States, or the Internal Control Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.318(a), the nonfederal entity must have and use documented 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 nonfederal entity's documented procurement procedures must conform to the procurement standards identified in §§200.317 through 200.327. Per 2 CFR 200.318(i), the nonfederal 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. Per 2 CFR 200.324(a), the nonfederal entity must perform a cost or price analysis in connection with every procurement action in excess of the SAT, including contract modifications. The method and degree of analysis is dependent upon the facts surrounding the particular procurement situation; but, as a starting point, the nonfederal entity must make independent estimates before receiving bids or proposals. Condition - Controls were not sufficient to establish written policies and procedures surrounding procured contracts and to ensure that the history of procurement decisions was documented, as required by 2 CFR 200. Questioned Costs - Research and Development Cluster - unknown ELC - unknown Identification of How Questioned Costs Were Computed - N/A Context - Research and Development Cluster - For the four contracts tested, management did not maintain records sufficient to detail the history of procurement, rationale for the method of procurement, selection of the contract type, or basis of the contract price. Additionally, for the largest of the four contracts with activity of approximately $375,000, which is above the SAT established by FAR, management did not document its rationale for limiting competition, nor was management able to provide evidence that a cost-price analysis was performed. Finally, management has not formally documented an appropriate micropurchase or SAT threshold. ELC - For the three of the four contracts tested that were procured under noncompetitive means, management did not maintain records sufficient to detail the history of procurement, rationale for the method of procurement, selection of the contract type, or basis of the contract price. Further, for three out of four contracts tested under the Research and Development Cluster and all four contracts tested under ELC, management was unable to provide evidence that contractors were checked for suspension and debarment in advance of entering into a covered transaction. Because there was evidence that these contractors were not suspended or debarred, no questioned costs related to this noncompliance were identified. Cause and Effect - A lack of formal procurement policies and procedures, internally established procurement thresholds, or records in support of procurement decisions could result in material noncompliance with federal procurement standards. Recommendation - We recommend that management formalize procurement policies and procedures to demonstrate how the Institute will achieve compliance with standards identified in §§200.317 through 200.327. Additionally, we recommend management retain documented evidence that its policies and procedures were followed to ensure compliance with procurement standards. Views of Responsible Officials and Corrective Action Plan – Management agrees with the recommendation and will review the relevant guidance to ensure compliance. Necessary revisions will be made to the existing procurement policies and procedures in a timely manner to ensure that procurement decisions are documented, as required by 2 CFR Part 200.
Assistance Listing Number, Federal Agency, and Program Name -93.233/93.837, U.S. Department of Health and Human Services, Research and Development Cluster 93.323, U.S. Department of Health and Human Services, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Federal Award Identification Number and Year - 93.233 - R01HL142116; 93.837 - U01HL146245 93.323 - 22680258J; 32680012K Pass-through Entity - 93.233 N/A (direct); 93.837 N/A (direct) 93.323 Illinois Department of Public Health (IDPH) Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - Per 2 CFR 200.303(a), nonfederal entities must establish and maintain effective internal controls over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with the guidance in Standards for Internal Control in the Federal Government, issued by the Comptroller General of the United States, or the Internal Control Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.318(a), the nonfederal entity must have and use documented 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 nonfederal entity's documented procurement procedures must conform to the procurement standards identified in §§200.317 through 200.327. Per 2 CFR 200.318(i), the nonfederal 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. Per 2 CFR 200.324(a), the nonfederal entity must perform a cost or price analysis in connection with every procurement action in excess of the SAT, including contract modifications. The method and degree of analysis is dependent upon the facts surrounding the particular procurement situation; but, as a starting point, the nonfederal entity must make independent estimates before receiving bids or proposals. Condition - Controls were not sufficient to establish written policies and procedures surrounding procured contracts and to ensure that the history of procurement decisions was documented, as required by 2 CFR 200. Questioned Costs - Research and Development Cluster - unknown ELC - unknown Identification of How Questioned Costs Were Computed - N/A Context - Research and Development Cluster - For the four contracts tested, management did not maintain records sufficient to detail the history of procurement, rationale for the method of procurement, selection of the contract type, or basis of the contract price. Additionally, for the largest of the four contracts with activity of approximately $375,000, which is above the SAT established by FAR, management did not document its rationale for limiting competition, nor was management able to provide evidence that a cost-price analysis was performed. Finally, management has not formally documented an appropriate micropurchase or SAT threshold. ELC - For the three of the four contracts tested that were procured under noncompetitive means, management did not maintain records sufficient to detail the history of procurement, rationale for the method of procurement, selection of the contract type, or basis of the contract price. Further, for three out of four contracts tested under the Research and Development Cluster and all four contracts tested under ELC, management was unable to provide evidence that contractors were checked for suspension and debarment in advance of entering into a covered transaction. Because there was evidence that these contractors were not suspended or debarred, no questioned costs related to this noncompliance were identified. Cause and Effect - A lack of formal procurement policies and procedures, internally established procurement thresholds, or records in support of procurement decisions could result in material noncompliance with federal procurement standards. Recommendation - We recommend that management formalize procurement policies and procedures to demonstrate how the Institute will achieve compliance with standards identified in §§200.317 through 200.327. Additionally, we recommend management retain documented evidence that its policies and procedures were followed to ensure compliance with procurement standards. Views of Responsible Officials and Corrective Action Plan – Management agrees with the recommendation and will review the relevant guidance to ensure compliance. Necessary revisions will be made to the existing procurement policies and procedures in a timely manner to ensure that procurement decisions are documented, as required by 2 CFR Part 200.
Assistance Listing Number, Federal Agency, and Program Name -93.233/93.837, U.S. Department of Health and Human Services, Research and Development Cluster 93.323, U.S. Department of Health and Human Services, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Federal Award Identification Number and Year - 93.233 - R01HL142116; 93.837 - U01HL146245 93.323 - 22680258J; 32680012K Pass-through Entity - 93.233 N/A (direct); 93.837 N/A (direct) 93.323 Illinois Department of Public Health (IDPH) Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - Per 2 CFR 200.303(a), nonfederal entities must establish and maintain effective internal controls over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with the guidance in Standards for Internal Control in the Federal Government, issued by the Comptroller General of the United States, or the Internal Control Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.318(a), the nonfederal entity must have and use documented 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 nonfederal entity's documented procurement procedures must conform to the procurement standards identified in §§200.317 through 200.327. Per 2 CFR 200.318(i), the nonfederal 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. Per 2 CFR 200.324(a), the nonfederal entity must perform a cost or price analysis in connection with every procurement action in excess of the SAT, including contract modifications. The method and degree of analysis is dependent upon the facts surrounding the particular procurement situation; but, as a starting point, the nonfederal entity must make independent estimates before receiving bids or proposals. Condition - Controls were not sufficient to establish written policies and procedures surrounding procured contracts and to ensure that the history of procurement decisions was documented, as required by 2 CFR 200. Questioned Costs - Research and Development Cluster - unknown ELC - unknown Identification of How Questioned Costs Were Computed - N/A Context - Research and Development Cluster - For the four contracts tested, management did not maintain records sufficient to detail the history of procurement, rationale for the method of procurement, selection of the contract type, or basis of the contract price. Additionally, for the largest of the four contracts with activity of approximately $375,000, which is above the SAT established by FAR, management did not document its rationale for limiting competition, nor was management able to provide evidence that a cost-price analysis was performed. Finally, management has not formally documented an appropriate micropurchase or SAT threshold. ELC - For the three of the four contracts tested that were procured under noncompetitive means, management did not maintain records sufficient to detail the history of procurement, rationale for the method of procurement, selection of the contract type, or basis of the contract price. Further, for three out of four contracts tested under the Research and Development Cluster and all four contracts tested under ELC, management was unable to provide evidence that contractors were checked for suspension and debarment in advance of entering into a covered transaction. Because there was evidence that these contractors were not suspended or debarred, no questioned costs related to this noncompliance were identified. Cause and Effect - A lack of formal procurement policies and procedures, internally established procurement thresholds, or records in support of procurement decisions could result in material noncompliance with federal procurement standards. Recommendation - We recommend that management formalize procurement policies and procedures to demonstrate how the Institute will achieve compliance with standards identified in §§200.317 through 200.327. Additionally, we recommend management retain documented evidence that its policies and procedures were followed to ensure compliance with procurement standards. Views of Responsible Officials and Corrective Action Plan – Management agrees with the recommendation and will review the relevant guidance to ensure compliance. Necessary revisions will be made to the existing procurement policies and procedures in a timely manner to ensure that procurement decisions are documented, as required by 2 CFR Part 200.
Assistance Listing Number, Federal Agency, and Program Name -93.233/93.837, U.S. Department of Health and Human Services, Research and Development Cluster 93.323, U.S. Department of Health and Human Services, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Federal Award Identification Number and Year - 93.233 - R01HL142116; 93.837 - U01HL146245 93.323 - 22680258J; 32680012K Pass-through Entity - 93.233 N/A (direct); 93.837 N/A (direct) 93.323 Illinois Department of Public Health (IDPH) Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - Per 2 CFR 200.303(a), nonfederal entities must establish and maintain effective internal controls over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with the guidance in Standards for Internal Control in the Federal Government, issued by the Comptroller General of the United States, or the Internal Control Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.318(a), the nonfederal entity must have and use documented 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 nonfederal entity's documented procurement procedures must conform to the procurement standards identified in §§200.317 through 200.327. Per 2 CFR 200.318(i), the nonfederal 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. Per 2 CFR 200.324(a), the nonfederal entity must perform a cost or price analysis in connection with every procurement action in excess of the SAT, including contract modifications. The method and degree of analysis is dependent upon the facts surrounding the particular procurement situation; but, as a starting point, the nonfederal entity must make independent estimates before receiving bids or proposals. Condition - Controls were not sufficient to establish written policies and procedures surrounding procured contracts and to ensure that the history of procurement decisions was documented, as required by 2 CFR 200. Questioned Costs - Research and Development Cluster - unknown ELC - unknown Identification of How Questioned Costs Were Computed - N/A Context - Research and Development Cluster - For the four contracts tested, management did not maintain records sufficient to detail the history of procurement, rationale for the method of procurement, selection of the contract type, or basis of the contract price. Additionally, for the largest of the four contracts with activity of approximately $375,000, which is above the SAT established by FAR, management did not document its rationale for limiting competition, nor was management able to provide evidence that a cost-price analysis was performed. Finally, management has not formally documented an appropriate micropurchase or SAT threshold. ELC - For the three of the four contracts tested that were procured under noncompetitive means, management did not maintain records sufficient to detail the history of procurement, rationale for the method of procurement, selection of the contract type, or basis of the contract price. Further, for three out of four contracts tested under the Research and Development Cluster and all four contracts tested under ELC, management was unable to provide evidence that contractors were checked for suspension and debarment in advance of entering into a covered transaction. Because there was evidence that these contractors were not suspended or debarred, no questioned costs related to this noncompliance were identified. Cause and Effect - A lack of formal procurement policies and procedures, internally established procurement thresholds, or records in support of procurement decisions could result in material noncompliance with federal procurement standards. Recommendation - We recommend that management formalize procurement policies and procedures to demonstrate how the Institute will achieve compliance with standards identified in §§200.317 through 200.327. Additionally, we recommend management retain documented evidence that its policies and procedures were followed to ensure compliance with procurement standards. Views of Responsible Officials and Corrective Action Plan – Management agrees with the recommendation and will review the relevant guidance to ensure compliance. Necessary revisions will be made to the existing procurement policies and procedures in a timely manner to ensure that procurement decisions are documented, as required by 2 CFR Part 200.
Assistance Listing Number, Federal Agency, and Program Name -93.233/93.837, U.S. Department of Health and Human Services, Research and Development Cluster 93.323, U.S. Department of Health and Human Services, Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Federal Award Identification Number and Year - 93.233 - R01HL142116; 93.837 - U01HL146245 93.323 - 22680258J; 32680012K Pass-through Entity - 93.233 N/A (direct); 93.837 N/A (direct) 93.323 Illinois Department of Public Health (IDPH) Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - Per 2 CFR 200.303(a), nonfederal entities must establish and maintain effective internal controls over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with the guidance in Standards for Internal Control in the Federal Government, issued by the Comptroller General of the United States, or the Internal Control Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.318(a), the nonfederal entity must have and use documented 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 nonfederal entity's documented procurement procedures must conform to the procurement standards identified in §§200.317 through 200.327. Per 2 CFR 200.318(i), the nonfederal 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. Per 2 CFR 200.324(a), the nonfederal entity must perform a cost or price analysis in connection with every procurement action in excess of the SAT, including contract modifications. The method and degree of analysis is dependent upon the facts surrounding the particular procurement situation; but, as a starting point, the nonfederal entity must make independent estimates before receiving bids or proposals. Condition - Controls were not sufficient to establish written policies and procedures surrounding procured contracts and to ensure that the history of procurement decisions was documented, as required by 2 CFR 200. Questioned Costs - Research and Development Cluster - unknown ELC - unknown Identification of How Questioned Costs Were Computed - N/A Context - Research and Development Cluster - For the four contracts tested, management did not maintain records sufficient to detail the history of procurement, rationale for the method of procurement, selection of the contract type, or basis of the contract price. Additionally, for the largest of the four contracts with activity of approximately $375,000, which is above the SAT established by FAR, management did not document its rationale for limiting competition, nor was management able to provide evidence that a cost-price analysis was performed. Finally, management has not formally documented an appropriate micropurchase or SAT threshold. ELC - For the three of the four contracts tested that were procured under noncompetitive means, management did not maintain records sufficient to detail the history of procurement, rationale for the method of procurement, selection of the contract type, or basis of the contract price. Further, for three out of four contracts tested under the Research and Development Cluster and all four contracts tested under ELC, management was unable to provide evidence that contractors were checked for suspension and debarment in advance of entering into a covered transaction. Because there was evidence that these contractors were not suspended or debarred, no questioned costs related to this noncompliance were identified. Cause and Effect - A lack of formal procurement policies and procedures, internally established procurement thresholds, or records in support of procurement decisions could result in material noncompliance with federal procurement standards. Recommendation - We recommend that management formalize procurement policies and procedures to demonstrate how the Institute will achieve compliance with standards identified in §§200.317 through 200.327. Additionally, we recommend management retain documented evidence that its policies and procedures were followed to ensure compliance with procurement standards. Views of Responsible Officials and Corrective Action Plan – Management agrees with the recommendation and will review the relevant guidance to ensure compliance. Necessary revisions will be made to the existing procurement policies and procedures in a timely manner to ensure that procurement decisions are documented, as required by 2 CFR Part 200.
Allowable Costs/Activities Allowed – Personal Services Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Epidemiology and Laboratory Capacity for Infectious Diseases ALN: 93.323 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 6 NU50CK000501-01-08, 6 NU50CK000501-02-17 August 1, 2019 – July 31, 2024, August 1, 2019 – July 31, 2027 Statistically Valid Sample: No, and not intended to be a statistically valid sample. Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR section 200.303(a), the Texas Department of State Health Services (DSHS) must establish and maintain effective internal control over the Federal award that provides reasonable assurance that it 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). Per 2 CFR 200.430 Standards for Documentation of Personnel Expenses, 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 an internal control system that ensures 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; (vi) 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. (vii) Budget estimates (meaning, 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 performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated. Condition: DSHS requires its employees to complete monthly time and leave reporting, regardless of whether the employee works solely on a single federal award or cost objective, or on multiple activities or cost objectives. Each employee has a default task profile based on their position in the agency that determines how their payroll and payroll-related dollars are allocated. Employees are instructed and given training on how to report any deviations from their profile as well as report any vacation time, sick time, leave of absence, etc. Employees are required to certify their time by the 10th of the month for the previous months’ time. Like all DSHS employees, supervisors are required to certify their time monthly. However, their time certification includes an additional affirmation which states the supervisor has performed the following: Reviewed the default task profile/labor account code for each of their direct reports. Reviewed the timesheets for all direct reports as compared to the default task profiles/labor account codes for accuracy of time worked and adjusted if necessary. For direct reports who have reported deviations, reviewed and verified the deviations reported and approved the respective timesheet. This documented affirmation provides sufficient documentation to indicate that the supervisors have reviewed after the fact interim payroll and payroll-related charges made to federal awards based on budget estimates. Audit procedures included a selection of 40 payroll-related expenditures incurred during the fiscal year totaling $191,809. For five of the 40 samples selected, the employee supervisor did not certify their monthly timesheet, and thus did not acknowledge neither the review of the employees’ default task profile/account labor code or their timesheets. Questioned costs: None. Context: See “Condition.” Cause: All five of the exceptions noted were directly reporting to the same supervisor. The monthly timesheets selected were during the months of July and August 2024. The supervisor was recently hired in April 2024 and was unaware of the requirement to certify monthly. Effect: Without the supervisor timesheet certification, there is a lack of sufficient documentation to indicate that they have reviewed after-the-fact interim payroll and payroll-related charges made to the federal awards based on budget estimates. Repeat Finding: No Recommendation: DSHS should enhance new hire training policies and procedures to ensure all new hire trainings clearly address labor account codes, monthly time reporting, and task profiles. Views of responsible officials: DSHS has robust timekeeping controls but recognizes this opportunity to enhance training with reinforcement for new supervisors.
Allowable Costs/Activities Allowed – Personal Services Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Epidemiology and Laboratory Capacity for Infectious Diseases ALN: 93.323 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 6 NU50CK000501-01-08, 6 NU50CK000501-02-17 August 1, 2019 – July 31, 2024, August 1, 2019 – July 31, 2027 Statistically Valid Sample: No, and not intended to be a statistically valid sample. Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR section 200.303(a), the Texas Department of State Health Services (DSHS) must establish and maintain effective internal control over the Federal award that provides reasonable assurance that it 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). Per 2 CFR 200.430 Standards for Documentation of Personnel Expenses, 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 an internal control system that ensures 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; (vi) 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. (vii) Budget estimates (meaning, 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 performed; (B) Significant changes in the related work activity (as defined by the recipient's or subrecipient's written policies) are promptly identified and entered into the records. Short-term (such as one or two months) fluctuations between workload categories do not need to be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The recipient's or subrecipient's system of internal controls includes processes to perform periodic after-the-fact reviews of interim charges made to a Federal award based on budget estimates. All necessary adjustments must be made so that the final amount charged to the Federal award is accurate, allowable, and properly allocated. Condition: DSHS requires its employees to complete monthly time and leave reporting, regardless of whether the employee works solely on a single federal award or cost objective, or on multiple activities or cost objectives. Each employee has a default task profile based on their position in the agency that determines how their payroll and payroll-related dollars are allocated. Employees are instructed and given training on how to report any deviations from their profile as well as report any vacation time, sick time, leave of absence, etc. Employees are required to certify their time by the 10th of the month for the previous months’ time. Like all DSHS employees, supervisors are required to certify their time monthly. However, their time certification includes an additional affirmation which states the supervisor has performed the following: Reviewed the default task profile/labor account code for each of their direct reports. Reviewed the timesheets for all direct reports as compared to the default task profiles/labor account codes for accuracy of time worked and adjusted if necessary. For direct reports who have reported deviations, reviewed and verified the deviations reported and approved the respective timesheet. This documented affirmation provides sufficient documentation to indicate that the supervisors have reviewed after the fact interim payroll and payroll-related charges made to federal awards based on budget estimates. Audit procedures included a selection of 40 payroll-related expenditures incurred during the fiscal year totaling $191,809. For five of the 40 samples selected, the employee supervisor did not certify their monthly timesheet, and thus did not acknowledge neither the review of the employees’ default task profile/account labor code or their timesheets. Questioned costs: None. Context: See “Condition.” Cause: All five of the exceptions noted were directly reporting to the same supervisor. The monthly timesheets selected were during the months of July and August 2024. The supervisor was recently hired in April 2024 and was unaware of the requirement to certify monthly. Effect: Without the supervisor timesheet certification, there is a lack of sufficient documentation to indicate that they have reviewed after-the-fact interim payroll and payroll-related charges made to the federal awards based on budget estimates. Repeat Finding: No Recommendation: DSHS should enhance new hire training policies and procedures to ensure all new hire trainings clearly address labor account codes, monthly time reporting, and task profiles. Views of responsible officials: DSHS has robust timekeeping controls but recognizes this opportunity to enhance training with reinforcement for new supervisors.
Cash Management – Cash Management Improvement Act Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Epidemiology and Laboratory Capacity for Infectious Diseases ALN: 93.323 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 6 NU50CK000501, 6 NU51CK000353 August 1, 2019 – July 31, 2024, August 1, 2019 – July 31, 2027, August 1, 2024 – July 31, 2029 Statistically Valid Sample: No, and not intended to be a statistically valid sample. Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR section 200.303(a), the Texas Department of State Health Services (DSHS) must establish and maintain effective internal control over the Federal award that provides reasonable assurance that it 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). Per 31 CFR Part 205, a Federal assistance program must abide by the rules in Subpart A, interest calculation procedures, if it falls within the funding threshold set forth by the Federal government. The dollar threshold is calculated using the most recent Single Audit data. Programs not subject to these rules are considered under Subpart B. Rather than incurring an interest liability for programs in Subpart B, the funds transferred to the State will be limited to the immediate cash needs of the agency and should be times so as to minimize the period between drawdown and disbursement. Condition: The State determines each major program subject to interest liability calculations every year and communicates the covered programs to each agency. Funding techniques and clearance patterns are set out in the Treasury-State Agreement. Per the Texas Cash Management Improvement Act (CMIA) Handbook (based on the Treasury-State agreement), each state agency that administers a major program has the following responsibilities including but not limited to the following: Review flow of funds for affected programs and determine appropriate funding technique. Develop sample data and calculate clearance days on federal funds from the time of deposit in the State Treasury until warrants are issued on the funds (Period 1). Comply with the Subpart B requirements for programs not covered by Subpart A. Per the 2024 Texas Treasury-State Agreement, DSHS was required to submit a Period 1 calculation for the Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) program. Audit procedures included selecting a sample of federal cash draws and verifying that the timing of the federal cash draws was in compliance with the applicable funding techniques specified in the Treasury-State Agreement. Cash draws included in the Period 1 calculation submitted to the Texas Comptroller of Public Accounts’ web application totaled $89,236,255; however, the final amount of expenditures reported on the Schedule of Expenditures of Federal Awards (SEFA) for the program was $289,534,627. Accordingly, the Period 1 calculation submission was understated by $200,298,372 and the calculation of the interest obligation owed to or by the federal government was incorrect. Questioned costs: None. Context: See “Condition.” Cause: DSHS made significant adjustments to the SEFA subsequent to the submission of the Period 1 calculation in the Texas Comptroller of Public Accounts’ web application. Once submitted, the web application is locked and DSHS must request for it to be unlocked in order to make revisions. Due to the timing of the adjustments to the SEFA and the conclusion of audit work, DSHS did not have sufficient time to request and submit the revisions. Effect: The calculation of the interest obligation owed to or by the federal government may be misstated if the Period 1 calculation is incorrect. Repeat Finding: No Recommendation: DSHS should enhance reviews of its SEFA to avoid significant adjustments subsequent to the submission of its Period 1 calculation. Views of responsible officials: DSHS acknowledges and agrees with the finding as stated.
Cash Management – Cash Management Improvement Act Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Epidemiology and Laboratory Capacity for Infectious Diseases ALN: 93.323 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 6 NU50CK000501, 6 NU51CK000353 August 1, 2019 – July 31, 2024, August 1, 2019 – July 31, 2027, August 1, 2024 – July 31, 2029 Statistically Valid Sample: No, and not intended to be a statistically valid sample. Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR section 200.303(a), the Texas Department of State Health Services (DSHS) must establish and maintain effective internal control over the Federal award that provides reasonable assurance that it 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). Per 31 CFR Part 205, a Federal assistance program must abide by the rules in Subpart A, interest calculation procedures, if it falls within the funding threshold set forth by the Federal government. The dollar threshold is calculated using the most recent Single Audit data. Programs not subject to these rules are considered under Subpart B. Rather than incurring an interest liability for programs in Subpart B, the funds transferred to the State will be limited to the immediate cash needs of the agency and should be times so as to minimize the period between drawdown and disbursement. Condition: The State determines each major program subject to interest liability calculations every year and communicates the covered programs to each agency. Funding techniques and clearance patterns are set out in the Treasury-State Agreement. Per the Texas Cash Management Improvement Act (CMIA) Handbook (based on the Treasury-State agreement), each state agency that administers a major program has the following responsibilities including but not limited to the following: Review flow of funds for affected programs and determine appropriate funding technique. Develop sample data and calculate clearance days on federal funds from the time of deposit in the State Treasury until warrants are issued on the funds (Period 1). Comply with the Subpart B requirements for programs not covered by Subpart A. Per the 2024 Texas Treasury-State Agreement, DSHS was required to submit a Period 1 calculation for the Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) program. Audit procedures included selecting a sample of federal cash draws and verifying that the timing of the federal cash draws was in compliance with the applicable funding techniques specified in the Treasury-State Agreement. Cash draws included in the Period 1 calculation submitted to the Texas Comptroller of Public Accounts’ web application totaled $89,236,255; however, the final amount of expenditures reported on the Schedule of Expenditures of Federal Awards (SEFA) for the program was $289,534,627. Accordingly, the Period 1 calculation submission was understated by $200,298,372 and the calculation of the interest obligation owed to or by the federal government was incorrect. Questioned costs: None. Context: See “Condition.” Cause: DSHS made significant adjustments to the SEFA subsequent to the submission of the Period 1 calculation in the Texas Comptroller of Public Accounts’ web application. Once submitted, the web application is locked and DSHS must request for it to be unlocked in order to make revisions. Due to the timing of the adjustments to the SEFA and the conclusion of audit work, DSHS did not have sufficient time to request and submit the revisions. Effect: The calculation of the interest obligation owed to or by the federal government may be misstated if the Period 1 calculation is incorrect. Repeat Finding: No Recommendation: DSHS should enhance reviews of its SEFA to avoid significant adjustments subsequent to the submission of its Period 1 calculation. Views of responsible officials: DSHS acknowledges and agrees with the finding as stated.
Matching and Reporting Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Aging Cluster ALN: 93.044 93.045 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 2101TXOACM, 2101TXOAHD, 2101TXOASS 10/1/2020 – 9/30/2023 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Per 2 CFR 200.303(a), Health and Human Services Commission (HHSC) must establish and maintain effective internal control over the Federal award that provides reasonable assurance that it 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 the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 42 USC 3029(b) Matching funds; percentage limitation (1) For each fiscal year, not less than 25 percent of the non-Federal share of the total expenditures under the State plan which is required by section 3024(d) of this title shall be met from funds from State or local public sources. (2) Funds required to meet the non-Federal share required by section 3024(d)(1)(D) of this title, in amounts exceeding 10 percent of the cost of the services specified in such section 3024(d)(1)(D) of this title, shall be met from State sources. Condition: During our testing of the program’s matching requirements, we noted the following: HHSC’s required match under 42 USC 3029(b)(1) for the fiscal year 2021 grant, which ended on September 30, 2023, was $979,430. State administration expenditures totaled $3,917,721, of which 25%, or 979,430 must be from non-Federal sources. HHSC provided a population of $1,206,534 of administration expenditures paid from non-Federal sources used to meet the matching requirement. Of this amount, audit procedures included testing 159 expenditures, totaling $771,585 that were paid from non-Federal sources used to meet the 25% matching requirement. We noted that 134 of the expenditures, totaling $744,159 were not administrative costs incurred by the State. Rather these were amounts paid to subrecipients. Accordingly, allowable non-federal expenditures were $462,376, which is less than the required match amount of $979,430 or 13.6% of the of the cost of state plan administration. HHSC did not meet the matching requirement per 42 USC 3029(b)(1). Additionally, the recipient share of expenditures (line j) and the remaining recipient share to be provided (line k) on the corresponding SF_x0002_425 report for 2101TXOASS was incorrectly reported. HHSC reported the recipient share of expenditures of $7,452,949; however, allowable non-federal expenditures were only $6,708,790. HHSC calculates its required recipient share of expenditures related to the state and Area Agencies on Aging (AAA’s) costs of administration of area plans and reports it on line i of the SF-425 report. For the fiscal year 2021 grant, we noted that while the match amount was met, the required match as reported on the SF-425 was calculated incorrectly as follows: See chart or table in the Schedule of Findings and Questioned Costs. HHSC’s required match under 42 USC 3029(b)(2) for the fiscal year 2021 grant, which ended on September 30, 2023, was $11,355,969. Of this amount, $3,785,323 was required to be funded from state sources, while the remaining $7,570,646, would be met by amounts paid by the AAA’s. HHSC provided a calculation of $30,107,759 of expenditures incurred to meet the AAA portion of the requirement. However, CLA was unable to substantiate that amount based on supporting documentation as final expenditures submitted by the AAA’s had been revised, however, HHSC did not revise their calculations. Questioned costs: Unknown Context: See “Condition.” Cause: Management calculates matching requirements and identifies actual expenditures to meet these requirements. For the exceptions noted for 42 USC 3029(b)(1), management failed to exclude unallowable expenditures when identifying expenditures incurred to meet the matching requirements. For the exception noted for 42 USC 3029(b)(2), management did not revise the matching calculation based on final amounts received from the AAA’s. Effect: Failure to meet matching requirements may result in a reduction in federal funding. Furthermore, failure to calculate, review, and approve final matching expenditures may lead to noncompliance with the terms of the grant and questioned costs. Repeat Finding: No. Recommendation: We recommend management enhance existing controls around the review of all expenditures that are used to meet the minimum required matching requirements. Views of responsible officials: HHSC concurs with the finding.