Finding 2023-001 Identification of the federal program: Federal Agency: Department of Defense and Department of Health and Human Services Assistance Listing No., Award Name, Award Number and Pass-Through Agency: Assistance Listing Award Name Award Number Pass-Through Agency 93.865 Child Health and Human Development Extramural Research 5R00HD096115-05 93.242 Mental Health Research Grants 1R01MH130437-01A1 93.846 Arthritis, Musculoskeletal and Skin Diseases Research 5R01AR078395-02 93.837 Cardiovascular Diseases Research 5R01HL157491-02 93.393 Cancer Cause and Prevention Research 1R01CA272872-01 93.353 21st Century Cures Act - Beau Biden Cancer Moonshot 1U01CA232488-01 93.242 Mental Health Research Grants 1P50MH127476-01A1 93.855 Allergy and Infectious Diseases Research 5R01AI139511-05 93.838 Lung Diseases Research 5R01HL155095-03 93.855 Allergy and Infectious Diseases Research 5R01AI146581-02 93.396 Cancer Biology Research 5R01CA260178-02 93.RD MP2PRT - Cosgrove 21X121F Q2 Leidos Biomedical Research Inc 93.121 Oral Diseases and Disorders Research 5R01DE028296-05 93.865 Child Health and Human Development Extramural Research 5R01HD095976-04 93.847 Diabetes, Digestive, and Kidney Diseases Extramural Research 109938-19114 University of Illinois Champaign 93.396 Cancer Biology Research 5R01CA247941-03 93.846 Arthritis, Musculoskeletal and Skin Diseases Research 5R01AR073908-04 93.273 Alcohol Research Programs 5R01AA027502-04 93.838 Lung Diseases Research 5R01HL155095-03 93.394 Cancer Detection and Diagnosis Research 5U24CA196173-08 93.853 Extramural Research Programs in the Neurosciences and Neurological Disorders 1R01NS129784-01 93.853 Extramural Research Programs in the Neurosciences and Neurological Disorders 1R01NS129784-01 93.855 Allergy and Infectious Diseases Research 5R01AI155501-03 93.859 Biomedical Research and Research Training 5R35GM131875-05 93.855 Allergy and Infectious Diseases Research 5R01AI155501-03 93.353 21st Century Cures Act - Beau Biden Cancer Moonshot 1U01CA232488-01 12.420 Military Medical Research and Development W81XWH2210597 93.846 Arthritis, Musculoskeletal and Skin Diseases Research 5R01AR073908-04 93.121 Oral Diseases and Disorders Research 5R01DE028296-05 93.396 Cancer Biology Research 1R01CA260178-01A1 93.121 Oral Diseases and Disorders Research 5R01DE028296-05 93.393 Cancer Cause and Prevention Research 1R01CA272872-01 93.121 Oral Diseases and Disorders Research ULRF_21-0285-01 University of Louisville Research Foundation, Inc. 93.353 21st Century Cures Act - Beau Biden Cancer Moonshot 1U01CA232488-01 93.RD CCG-BCR HHSN261201700015I 75N91022F000 93.855 Allergy and Infectious Diseases Research 5R21AI156406-02 93.865 Child Health and Human Development Extramural Research 5R01HD100420-03 93.394 Cancer Detection and Diagnosis Research 5U24CA254445-03 93.855 Allergy and Infectious Diseases Research 5R01AI139519-05 93.394 Cancer Detection and Diagnosis Research BSB06-RAMIREZ NRG Oncology Criteria or specific requirement (including statutory, regulatory or other citation): Section 200.303 of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) states the following regarding internal control: “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).” Section 200.214 Suspension and Debarment “Non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities.” Condition: Nationwide Children’s Hospital (the Corporation) uses a third-party to perform its suspension and debarment checks on a monthly basis. However, we noted the following matters: • The Corporation did not retain the monthly supporting documentation related to the monthly suspension and debarment check. The suspension and debarment checks performed at year-end were retained. • The Corporation does not have a process to reconcile the vendor list provided to the third-party vendor with the results received from the third-party vendor after the suspension and debarment checks are performed to ensure the listing is complete. • The third-party vendor does not have a SOC 1 (System and Organization Controls) Report. The Corporation relied on the results of the suspension and debarment checks performed by the third-party vendor without implementing an internal process to ensure the results provided by the third-party vendor were accurate. In addition, the Corporation performs a suspension and debarment check of all new vendors prior to activating them in the procurement system. The Corporation did not consistently maintain supporting documentation to support the vendor was checked for suspension and debarment before the-“new”-vendor was set up in the procurement system. Cause: The Corporation does not have internal controls in place to require supporting documentation be maintained over the monthly suspension and debarment checks including documentation of management’s review and approval. The Corporation does not have internal controls in place to review the accuracy of third-party reports and to require a reconciliation between the vendor list sent to the third-party vendor and the results provided by the third-party vendor. The Corporation does not have internal controls in place to require supporting documentation be maintained over the suspension and debarment check performed on new vendors. Effect or potential effect: The Corporation’s vendors may not be screened for suspension and debarment, or the suspension and debarment results may not be accurate. A vendor may be set up in the procurement system that is suspended or debarred. Questioned costs: None Context: We tested a sample of 40 new vendors set up in the procurement system in 2023 and noted three instances where management did not retain the supporting documents of its review of suspension and debarment for the new vendor set up. The federal portion of procurement expenditures subject to suspension and debarment was $12,965,319 which represents approximately 12.5% of the R&D Cluster federal expenditures. The total amount reported on the schedule of expenditures of federal awards (Schedule) for the R&D cluster is $103,660,603. Identification as a repeat finding, if applicable: This is a repeat finding; see 2022-001. Recommendation: The Corporation should implement the following internal controls: • The monthly suspension and debarment review process • Reconciliation of the number of vendor files sent to the third-party vendor with the number of files received from the third-party vendor with the suspension and debarment results and review of the accuracy of the suspension and debarment results performed by the third-party vendor • Maintenance of the supporting documentation over the suspension and debarment checks performed on new vendors Views of responsible officials: Management agrees with the recommendation. In September 2023, E&Y rendered the same finding and recommendation for the 2022 calendar year audit. The finding has been partially remediated. Management implemented the following remediations between Q4 2023 and Q1 2024: • Retained the monthly supporting documentation related to a monthly suspension and debarment check • Reconciled the vendor list provided to the third-party vendor with the results received from the third-party vendor after the suspension and debarment checks are performed • Verified the accuracy of the results produced by the third-party vendor • Consistently maintained supporting documentation to support the vendor was checked for suspension and debarment before the “new”-vendor is set up in the procurement system. Views of responsible officials: Management agrees with the recommendation. In September 2023, E&Y rendered the same finding and recommendation for the 2022 calendar year audit. The finding has been partially remediated. Management implemented the following remediations between Q4 2023 and Q1 2024: • Retained the monthly supporting documentation related to a monthly suspension and debarment check • Reconciled the vendor list provided to the third-party vendor with the results received from the third-party vendor after the suspension and debarment checks are performed • Verified the accuracy of the results produced by the third-party vendor • Consistently maintained supporting documentation to support the vendor was checked for suspension and debarment before the “new”-vendor is set up in the procurement system.
Finding 2023-001 Identification of the federal program: Federal Agency: Department of Defense and Department of Health and Human Services Assistance Listing No., Award Name, Award Number and Pass-Through Agency: Assistance Listing Award Name Award Number Pass-Through Agency 93.865 Child Health and Human Development Extramural Research 5R00HD096115-05 93.242 Mental Health Research Grants 1R01MH130437-01A1 93.846 Arthritis, Musculoskeletal and Skin Diseases Research 5R01AR078395-02 93.837 Cardiovascular Diseases Research 5R01HL157491-02 93.393 Cancer Cause and Prevention Research 1R01CA272872-01 93.353 21st Century Cures Act - Beau Biden Cancer Moonshot 1U01CA232488-01 93.242 Mental Health Research Grants 1P50MH127476-01A1 93.855 Allergy and Infectious Diseases Research 5R01AI139511-05 93.838 Lung Diseases Research 5R01HL155095-03 93.855 Allergy and Infectious Diseases Research 5R01AI146581-02 93.396 Cancer Biology Research 5R01CA260178-02 93.RD MP2PRT - Cosgrove 21X121F Q2 Leidos Biomedical Research Inc 93.121 Oral Diseases and Disorders Research 5R01DE028296-05 93.865 Child Health and Human Development Extramural Research 5R01HD095976-04 93.847 Diabetes, Digestive, and Kidney Diseases Extramural Research 109938-19114 University of Illinois Champaign 93.396 Cancer Biology Research 5R01CA247941-03 93.846 Arthritis, Musculoskeletal and Skin Diseases Research 5R01AR073908-04 93.273 Alcohol Research Programs 5R01AA027502-04 93.838 Lung Diseases Research 5R01HL155095-03 93.394 Cancer Detection and Diagnosis Research 5U24CA196173-08 93.853 Extramural Research Programs in the Neurosciences and Neurological Disorders 1R01NS129784-01 93.853 Extramural Research Programs in the Neurosciences and Neurological Disorders 1R01NS129784-01 93.855 Allergy and Infectious Diseases Research 5R01AI155501-03 93.859 Biomedical Research and Research Training 5R35GM131875-05 93.855 Allergy and Infectious Diseases Research 5R01AI155501-03 93.353 21st Century Cures Act - Beau Biden Cancer Moonshot 1U01CA232488-01 12.420 Military Medical Research and Development W81XWH2210597 93.846 Arthritis, Musculoskeletal and Skin Diseases Research 5R01AR073908-04 93.121 Oral Diseases and Disorders Research 5R01DE028296-05 93.396 Cancer Biology Research 1R01CA260178-01A1 93.121 Oral Diseases and Disorders Research 5R01DE028296-05 93.393 Cancer Cause and Prevention Research 1R01CA272872-01 93.121 Oral Diseases and Disorders Research ULRF_21-0285-01 University of Louisville Research Foundation, Inc. 93.353 21st Century Cures Act - Beau Biden Cancer Moonshot 1U01CA232488-01 93.RD CCG-BCR HHSN261201700015I 75N91022F000 93.855 Allergy and Infectious Diseases Research 5R21AI156406-02 93.865 Child Health and Human Development Extramural Research 5R01HD100420-03 93.394 Cancer Detection and Diagnosis Research 5U24CA254445-03 93.855 Allergy and Infectious Diseases Research 5R01AI139519-05 93.394 Cancer Detection and Diagnosis Research BSB06-RAMIREZ NRG Oncology Criteria or specific requirement (including statutory, regulatory or other citation): Section 200.303 of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) states the following regarding internal control: “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).” Section 200.214 Suspension and Debarment “Non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities.” Condition: Nationwide Children’s Hospital (the Corporation) uses a third-party to perform its suspension and debarment checks on a monthly basis. However, we noted the following matters: • The Corporation did not retain the monthly supporting documentation related to the monthly suspension and debarment check. The suspension and debarment checks performed at year-end were retained. • The Corporation does not have a process to reconcile the vendor list provided to the third-party vendor with the results received from the third-party vendor after the suspension and debarment checks are performed to ensure the listing is complete. • The third-party vendor does not have a SOC 1 (System and Organization Controls) Report. The Corporation relied on the results of the suspension and debarment checks performed by the third-party vendor without implementing an internal process to ensure the results provided by the third-party vendor were accurate. In addition, the Corporation performs a suspension and debarment check of all new vendors prior to activating them in the procurement system. The Corporation did not consistently maintain supporting documentation to support the vendor was checked for suspension and debarment before the-“new”-vendor was set up in the procurement system. Cause: The Corporation does not have internal controls in place to require supporting documentation be maintained over the monthly suspension and debarment checks including documentation of management’s review and approval. The Corporation does not have internal controls in place to review the accuracy of third-party reports and to require a reconciliation between the vendor list sent to the third-party vendor and the results provided by the third-party vendor. The Corporation does not have internal controls in place to require supporting documentation be maintained over the suspension and debarment check performed on new vendors. Effect or potential effect: The Corporation’s vendors may not be screened for suspension and debarment, or the suspension and debarment results may not be accurate. A vendor may be set up in the procurement system that is suspended or debarred. Questioned costs: None Context: We tested a sample of 40 new vendors set up in the procurement system in 2023 and noted three instances where management did not retain the supporting documents of its review of suspension and debarment for the new vendor set up. The federal portion of procurement expenditures subject to suspension and debarment was $12,965,319 which represents approximately 12.5% of the R&D Cluster federal expenditures. The total amount reported on the schedule of expenditures of federal awards (Schedule) for the R&D cluster is $103,660,603. Identification as a repeat finding, if applicable: This is a repeat finding; see 2022-001. Recommendation: The Corporation should implement the following internal controls: • The monthly suspension and debarment review process • Reconciliation of the number of vendor files sent to the third-party vendor with the number of files received from the third-party vendor with the suspension and debarment results and review of the accuracy of the suspension and debarment results performed by the third-party vendor • Maintenance of the supporting documentation over the suspension and debarment checks performed on new vendors Views of responsible officials: Management agrees with the recommendation. In September 2023, E&Y rendered the same finding and recommendation for the 2022 calendar year audit. The finding has been partially remediated. Management implemented the following remediations between Q4 2023 and Q1 2024: • Retained the monthly supporting documentation related to a monthly suspension and debarment check • Reconciled the vendor list provided to the third-party vendor with the results received from the third-party vendor after the suspension and debarment checks are performed • Verified the accuracy of the results produced by the third-party vendor • Consistently maintained supporting documentation to support the vendor was checked for suspension and debarment before the “new”-vendor is set up in the procurement system. Views of responsible officials: Management agrees with the recommendation. In September 2023, E&Y rendered the same finding and recommendation for the 2022 calendar year audit. The finding has been partially remediated. Management implemented the following remediations between Q4 2023 and Q1 2024: • Retained the monthly supporting documentation related to a monthly suspension and debarment check • Reconciled the vendor list provided to the third-party vendor with the results received from the third-party vendor after the suspension and debarment checks are performed • Verified the accuracy of the results produced by the third-party vendor • Consistently maintained supporting documentation to support the vendor was checked for suspension and debarment before the “new”-vendor is set up in the procurement system.
(3) Federal Award Findings and Questioned Costs: Finding Number: 2023-001 Program: COVID-19 Disaster Grants – Public Assistance (Presidentially Declared Disasters) Federal Agency Name: Federal Emergency Management Agency Federal Award Number: N/A Federal Award Year: 2023 Federal Assistance Listing Number: 97.036 Compliance Requirement: Criteria Per Title 2, U.S. Code of Federal Regulations Part 200 (2 CFR 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, (Subpart D, Section 200.303), the nonfederal entity must establish and maintain effective internal controls over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Further, Subpart E Section 200.403 states that costs must be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for. Conditions Found In one of 25 selections for testwork over allowability of costs, expenditures related to inventory were submitted for reimbursement to FEMA at an incorrect value. Further, as the expenditures were not properly reviewed, this is an instance of the District’s internal control not operating as designed. Cause The District does not have adequate processes and controls in place to ensure that all inventory expenditures submitted for reimbursement by FEMA under the COVID-19 Disaster Grants – Public Assistance (Presidentially Declared Disasters) program are priced accurately. Effect Without effective controls in place, expenditures could be reimbursed by the program that are considered unallowed or are not at appropriate values, resulting in non-compliance with program requirements. Questioned Costs $21,437, representing the known amount of expenditures incorrectly reimbursed by COVID-19 Disaster Grants – Public Assistance (Presidentially Declared Disasters) program. Statistical Sample The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding This finding is not a repeat finding in the immediate prior audit. Recommendation We recommend that management strengthen processes and controls in place to ensure all inventory expenditures submitted to FEMA for reimbursement under the COVID-19 Disaster Grants – Public Assistance (Presidentially Declared Disasters) program are appropriately reviewed prior to submission to ensure they are allowable and priced accurately. Views of Responsible Officials The District agrees with the finding and accepts the recommendation.
Finding: 2023-006 Debt service reserve fund Program Name Title: Community Facilities Loans and Grants Federal Assistance Listing Number: 10.766 Federal Agency: U.S. Department of Agriculture Type of Finding: Noncompliance, Material weakness Compliance Requirement: Special Tests and Provisions Repeat Finding: Yes Questioned Cost: None Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Condition: The Hospital did not establish a debt reserve fund as required by the federal award agreement. In addition, the Hospital did not meet its debt covenants. Cause: The Hospital has experienced a financial crisis where all available monies were used to fund payroll and pay down immediate debts, resulting in the use of any amounts previously reserved. Effect: The lack of adequate policies governing the monitoring of the required debt covenants and the establishment and funding of reserves increases the risk that employees may not be able to detect and correct noncompliance in a timely manner. Recommendation: We recommend the Hospital establish the required debt reserve fund as soon as possible and provide funds in accordance with the federal award agreement. We also recommend the Hospital create internal controls to monitor debt covenants. View of Responsible Officials: Management agrees with the finding.
Type of Finding: Significant Deficiency in Internal Control over Compliance Federal Agency: U.S. Department of Defense Federal Program Name: Conservation and Rehabilitation of Natural Resources on Military Installations Assistance Listing Number: 12.005 Federal Award Identification Number and Year: H79TI083313 - 2020 Award Period: September 28, 2020, through September 27, 2025 Criteria or specific requirement: The Organization, as part of their stated controls, require that expenditures must be approved by the ED, CFO, or program directors / managers. In addition, § 200.303(a) requires the Organization 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. Condition: During our testing, it was noted that 12 of 60 samples did not include sufficient records to substantiate approval of the disbursement. Questioned costs: None. Context: A sample of 60 was made from a population of over 250 disbursements charged to the major program. Of the 60 sampled costs, 12 did not have sufficient records to substantiate adequate approval. Cause: Approvals are not maintained for ACH transactions. Effect: Without adequate controls in place to ensure costs are reasonable and intended for the program charged, the Organization could incorrectly charge expenditures to the federal program, report fraudulent expenditures, or not request appropriate reimbursement that the Organization is entitled to under the terms of the grant. Repeat Finding: The finding is a repeat of a finding in the immediately prior year. Prior year finding number was 2022-003. Recommendation: CLA recommends that additional emphasis of documentary evidence of approvals be made, and such evidence should be obtained and retained by the Organization as proof of oversight of expenditure of federal funds. CLA would also recommend the use of an AP voucher, or similar, for each type of disbursement that leaves the Organization (check, ACH, EFT, credit card, etc.) to improve documentary evidence that costs are being reviewed and approved for appropriateness. Views of responsible officials: There is no disagreement with the audit finding.
Type of Finding: Significant Deficiency in Compliance and Internal Control over Compliance Federal Agency: U.S. Department of Defense Federal Program Name: Conservation and Rehabilitation of Natural Resources on Military Installations Assistance Listing Number: 12.005 Federal Award Identification Number and Year: H79TI083313 - 2020 Award Period: September 28, 2020, through September 27, 2025 Criteria or specific requirement: 2 CFR 200.303(a) states that a non-Federal entity must "Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)." In addition, 2 CFR 200.329(c)(1) states that “the non-federal entity must submit performance reports at the interval required by the Federal awarding agency or pass-through entity to best inform improvements in program outcomes and productivity”. Per the award agreement for contract W912DW-20-2-0003, "Recipient shall submit to the Agreement Administrator (see paragraph 1.2.1) progress reports on a quarterly basis utilizing the form included in Attachment B of this agreement. Reports are due no later than 30 days following the end of each reporting period. A final performance progress report shall be submitted within 90 days after the expiration date of the award." Condition: During testing it was noted that 3 of the 6 financial reports tested did not include documentary evidence of Executive Director review and approval. In addition, 2 of the 2 performance reports tested were filed after the filing deadline. Questioned costs: None. Context: A sample of 6 was made from a population of 17 financial reports, and a sample of 2 was made from a population of 4 performance reports. Of the 6 financial reports sampled, 3 did not have documentary evidence of Executive Director review and approval. Of the 2 performance reports sampled, both were filed after the submission deadline date. Cause: Late filing is due to a lack of adherence to the due dates as defined within the contract terms. The Organization does not have adequate controls in place to document the Executive Director's review and approval of the Federal Financial Reports (SF-425). Effect: Not filing reports on a timely basis can present risks, such as outdated and unreliable information or the inability to detect potential fraud or irregularities. In addition, delayed reports can impede regulatory authorities' ability to monitor compliance, detect patterns or trends, and assess risks in a timely manner. Without adequate documentary evidence around the review of financial reports, there is an increased risk of errors and fraud in the reporting process, which could result in inaccurate financial reporting and misappropriation of funds. Repeat Finding: The finding is a repeat of a finding in the immediately prior year. Prior year finding number was 2022-004. Recommendation: CLA recommends for the Organization to place emphasis on stronger controls around the timely filing of required reports, such as retaining a monthly checklist of required reconciliations and reports. CLA also recommends implementing a procedure that documents the Executive Director's review and approval of the Federal Financial Reports (SF-425s), whether that be via an email chain or retaining a copy that also includes the Executive Director's signature on the report. Views of responsible officials: There is no disagreement with the audit finding.
Type of Finding: Significant Deficiency in Internal Control over Compliance Federal Agency: U.S. Department of Defense Federal Program Name: Conservation and Rehabilitation of Natural Resources on Military Installations Assistance Listing Number: 12.005 Federal Award Identification Number and Year: H79TI083313 - 2020 Award Period: September 28, 2020, through September 27, 2025 Criteria or specific requirement: 2 CFR 200.303(a) states that a non-federal entity must "Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)." Condition: During testing, 2 of the 60 samples selected had an individual approving their own timecard. Questioned costs: None. Context: A sample of 60 was made from a population of over 250 paychecks processed during the year with costs charged to the major program. Out of the 60 timecards that were sampled, there were two instances where the individual whose timecard was being reviewed also approved their own timecard. Cause: At the time of these payroll runs, the Organization did not have procedures in place to identify an appropriate approver for the Executive Director's timecards. Effect: Without appropriate segregation of duties around the approval of timecards, there is an increased risk of errors and fraud in the timekeeping and payroll process, which could result in inaccurate financial reporting and misappropriation of funds. Repeat Finding: No. Recommendation: CLA recommends that another individual with knowledge of the Executive Director's time and effort on the various programs approve his timecards. The Organization has already identified a member of the executive team to perform such functions and will implement the change going forward. Views of responsible officials: There is no disagreement with the audit finding.
Finding 2023–002: Internal Controls over Allowable Activities and Costs Federal Department: U.S. Department of Treasury Pass-through Agencies: Cook County, Illinois and Women's Business Development Center COVID-19 - Coronavirus State and Local Fiscal Recovery Funds, Federal Assistance Listing Number 21.027 Criteria 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post-Federal Award Requirements Standards for Financial and Program Management Section 200.303, Internal controls states “The non-Federal” entity must: (1) 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. Section 200.430 (i) Standards for Documentation of Personnel Expenses states (1) Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-federal entity, not exceeding 100% of compensated activities…; (v) Comply with the established accounting policies and practices of the non-federal entity…; (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-federal entity's written policies) are identified and entered into the records in a timely manner. Short-term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-federal entity's system of internal controls includes processes to review after-the-fact interim charges made to a federal award based on budget estimates. All necessary adjustments must be made such that the final amount charged to the federal award is accurate, allowable, and properly allocated. Per Exhibit A, Section D – Program Administration and Process Overview of the Subrecipient Agreement for the American Rescue Plan Act – State and Local Fiscal Recovery Funds dated July 20, 2022 with Cook County, Illinois, SDA was required to perform certain eligibility verification of program participant. The agreement notes that the subrecipient (SDA) has discretion on how to verify participants eligibility but should define and consistently apply an intake policy that includes maintaining documentation on each beneficiary that supports their eligibility, such as signed self-attestation forms from beneficiaries, financial documents that demonstrate economic hardship, geographic data showing that a program participant operates in a region that experienced disproportionate pandemic harm. SDA utilized an eligibility form (formerly panel review form) to document compliance with this requirement. Condition During the current audit period, SDA did not maintain adequate controls over allowable activities and costs related to its federally funded program. Cause SDA implemented the fiscal policy in 2023, which improved data retention and management for grant reporting of federal programs. Due to inconsistency in staffing during 2023, however, some historical gaps in data were found that were unable to be corrected prior to or during the 2023 audit. In addition, with the implementation of SDA’s customized Salesforce data management system, some data was deleted or lost during the transition, resulting in incomplete or missing records. Effect The failure to maintain adequate supporting documentation to ensure all expenditures, including personnel costs, are accurate, reasonable and allowable is a violation of federal regulations. Also, not maintaining support for actual time spent by employees on the program could result in unallowed payroll costs being charged to the federally funded program. Questioned Costs We noted total questioned costs of $36,170. Context During our review of 40 expenditures (from a 547 population) and related payroll activities (from a population of 58 totaling $231,798), we noted the following: For 18 expenditures reviewed, we were not provided with the cost allocation schedule to support the actual charges to the federal program. Following our review of the total invoice amount, we did not note any costs that were deemed to be unallowed per the grantor(s) requirements and federal regulations. During our review of 10 payroll expense items, we noted that payroll expenses charged to the program were based on estimates instead of the actual time and effort of reporting, which totaled $36,170. We were provided with a listing of 244 clients served who were required to undergo an eligibility/intake review as specified in the grant agreement. We were not provided documentation, such as a completed eligibility form, to verify that the eligibility/intake review was performed for 21 of 25 clients served that were tested. It appears data was lost during the Salesforce (electronic system utilized to store eligibility data) system migration. Identification of Repeated Findings Repeated (Prior Finding No. 2022-002). Recommendation We recommend that SDA implement procedures to ensure all expenditures, including personnel costs, are properly reviewed and supporting documentation maintained in accordance with federal regulations. Views of Responsible Officials and Planned Corrective Action SDA agrees with the finding and recommendation. See SDA’s Corrective Action Plan on pages 40 – 44.
Finding 2023–002: Internal Controls over Allowable Activities and Costs Federal Department: U.S. Department of Treasury Pass-through Agencies: Cook County, Illinois and Women's Business Development Center COVID-19 - Coronavirus State and Local Fiscal Recovery Funds, Federal Assistance Listing Number 21.027 Criteria 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart D – Post-Federal Award Requirements Standards for Financial and Program Management Section 200.303, Internal controls states “The non-Federal” entity must: (1) 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. Section 200.430 (i) Standards for Documentation of Personnel Expenses states (1) Charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-federal entity, not exceeding 100% of compensated activities…; (v) Comply with the established accounting policies and practices of the non-federal entity…; (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that: (A) The system for establishing the estimates produces reasonable approximations of the activity actually performed; (B) Significant changes in the corresponding work activity (as defined by the non-federal entity's written policies) are identified and entered into the records in a timely manner. Short-term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term; and (C) The non-federal entity's system of internal controls includes processes to review after-the-fact interim charges made to a federal award based on budget estimates. All necessary adjustments must be made such that the final amount charged to the federal award is accurate, allowable, and properly allocated. Per Exhibit A, Section D – Program Administration and Process Overview of the Subrecipient Agreement for the American Rescue Plan Act – State and Local Fiscal Recovery Funds dated July 20, 2022 with Cook County, Illinois, SDA was required to perform certain eligibility verification of program participant. The agreement notes that the subrecipient (SDA) has discretion on how to verify participants eligibility but should define and consistently apply an intake policy that includes maintaining documentation on each beneficiary that supports their eligibility, such as signed self-attestation forms from beneficiaries, financial documents that demonstrate economic hardship, geographic data showing that a program participant operates in a region that experienced disproportionate pandemic harm. SDA utilized an eligibility form (formerly panel review form) to document compliance with this requirement. Condition During the current audit period, SDA did not maintain adequate controls over allowable activities and costs related to its federally funded program. Cause SDA implemented the fiscal policy in 2023, which improved data retention and management for grant reporting of federal programs. Due to inconsistency in staffing during 2023, however, some historical gaps in data were found that were unable to be corrected prior to or during the 2023 audit. In addition, with the implementation of SDA’s customized Salesforce data management system, some data was deleted or lost during the transition, resulting in incomplete or missing records. Effect The failure to maintain adequate supporting documentation to ensure all expenditures, including personnel costs, are accurate, reasonable and allowable is a violation of federal regulations. Also, not maintaining support for actual time spent by employees on the program could result in unallowed payroll costs being charged to the federally funded program. Questioned Costs We noted total questioned costs of $36,170. Context During our review of 40 expenditures (from a 547 population) and related payroll activities (from a population of 58 totaling $231,798), we noted the following: For 18 expenditures reviewed, we were not provided with the cost allocation schedule to support the actual charges to the federal program. Following our review of the total invoice amount, we did not note any costs that were deemed to be unallowed per the grantor(s) requirements and federal regulations. During our review of 10 payroll expense items, we noted that payroll expenses charged to the program were based on estimates instead of the actual time and effort of reporting, which totaled $36,170. We were provided with a listing of 244 clients served who were required to undergo an eligibility/intake review as specified in the grant agreement. We were not provided documentation, such as a completed eligibility form, to verify that the eligibility/intake review was performed for 21 of 25 clients served that were tested. It appears data was lost during the Salesforce (electronic system utilized to store eligibility data) system migration. Identification of Repeated Findings Repeated (Prior Finding No. 2022-002). Recommendation We recommend that SDA implement procedures to ensure all expenditures, including personnel costs, are properly reviewed and supporting documentation maintained in accordance with federal regulations. Views of Responsible Officials and Planned Corrective Action SDA agrees with the finding and recommendation. See SDA’s Corrective Action Plan on pages 40 – 44.
Assistance Listing Number 93.917 – HIV Care Formula Grants, award numbers: FAIN#X070028 Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs and Cost Principles Criteria: 2 CFR 200.3030 of Subpart D, “Post Federal Award Requirements Standards for Financial Program Management,” of the Uniform Guidance requires a nonfederal entity to establish and maintain effective internal control over the federal award that provides reasonable assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award, including Activities Allowed or Unallowed and Allowable Costs and Cost Principles. Condition: At times in 2023, approval of expenditures did not follow stated polices, or documentation of approval was not retained. Cause: The Executive Director approves expenditures; however, a process was not consistently in place to show documentation of the approval. At times, approval was done verbally and documentation of the approval was not retained. Effect or Potential Effect: Unallowable costs or activities could be charged to federal grants. Questioned Cost: None Context: As of the date of testing, documented approval was not available for twenty-eight of forty items selected for assistance listing 93.917. Recommendation: We recommend the Organization obtain approval of all expenses by a member of management that did not initiate the expense, prior to the expenses being charged to a federal grant. Planned Corrective Action: We agree in part to this finding. The deficiency exists with approval of transactional funds that are utilized for the transportation and food voucher programs. Historically, authorization to purchase has been deemed as approval and this year some of those documentation processes were not consistently followed, as mentioned being done verbally or during other discussions that were not documented. We did not make any food voucher purchases without discussion prior to purchasing. That being said, we can formalize an approval process that is documented. Additionally, we will review our transportation program policies to ensure that a proper approval process is in place and continues to be supported by the processes we have in place. Name of Contact Person: Drayke Standing Bear, Support Services Coordinator (drayke@raan.org or 320-257-3036) and Courtney Eckstein, Medical Case Management Coordinator (courtney@raan.org or 507-720-2224). Anticipated completion date: December 1, 2024
Finding 2023-003: Internal Controls over Cash Management Department of Housing and Urban Development Federal Program: HOME Investment Partnerships Program FALN: 14.239 Significant Deficiency Criteria: 2 CFR section 200.303 states in part: “The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards 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: An effective internal control system was not in place to ensure compliance with requirements related to the grant agreement and the Cash Management compliance requirements. Cause: The Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: There was no formal review/approval of claim reimbursements outside of who prepares them. The failure to establish an effective internal control system places the Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of effective reviews could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by the review process not ensuring there was accurate reporting of the activities of the programs. Recommendation: We recommend that the Corporation establish policies and procedures to ensure that reimbursement claims prepared are reviewed and approved. The reimbursement claim should be compared to supporting documentation to ensure accuracy of the claim reimbursement form. Reimbursement claims should be prepared and submitted timely to help ensure proper period recognition. Views of Responsible Officials and Corrective Actions: Management is working to establish the policies and procedures for reviewing and approving reimbursement claims to ensure that the claims are properly prepared and submitted timely.
Finding 2023-003: Internal Controls over Cash Management Department of Housing and Urban Development Federal Program: HOME Investment Partnerships Program FALN: 14.239 Significant Deficiency Criteria: 2 CFR section 200.303 states in part: “The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards 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: An effective internal control system was not in place to ensure compliance with requirements related to the grant agreement and the Cash Management compliance requirements. Cause: The Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: There was no formal review/approval of claim reimbursements outside of who prepares them. The failure to establish an effective internal control system places the Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of effective reviews could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by the review process not ensuring there was accurate reporting of the activities of the programs. Recommendation: We recommend that the Corporation establish policies and procedures to ensure that reimbursement claims prepared are reviewed and approved. The reimbursement claim should be compared to supporting documentation to ensure accuracy of the claim reimbursement form. Reimbursement claims should be prepared and submitted timely to help ensure proper period recognition. Views of Responsible Officials and Corrective Actions: Management is working to establish the policies and procedures for reviewing and approving reimbursement claims to ensure that the claims are properly prepared and submitted timely.
Finding 2023-003: Internal Controls over Cash Management Department of Housing and Urban Development Federal Program: HOME Investment Partnerships Program FALN: 14.239 Significant Deficiency Criteria: 2 CFR section 200.303 states in part: “The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards 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: An effective internal control system was not in place to ensure compliance with requirements related to the grant agreement and the Cash Management compliance requirements. Cause: The Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: There was no formal review/approval of claim reimbursements outside of who prepares them. The failure to establish an effective internal control system places the Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of effective reviews could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by the review process not ensuring there was accurate reporting of the activities of the programs. Recommendation: We recommend that the Corporation establish policies and procedures to ensure that reimbursement claims prepared are reviewed and approved. The reimbursement claim should be compared to supporting documentation to ensure accuracy of the claim reimbursement form. Reimbursement claims should be prepared and submitted timely to help ensure proper period recognition. Views of Responsible Officials and Corrective Actions: Management is working to establish the policies and procedures for reviewing and approving reimbursement claims to ensure that the claims are properly prepared and submitted timely.
Finding 2023-003: Internal Controls over Cash Management Department of Housing and Urban Development Federal Program: HOME Investment Partnerships Program FALN: 14.239 Significant Deficiency Criteria: 2 CFR section 200.303 states in part: “The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards 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: An effective internal control system was not in place to ensure compliance with requirements related to the grant agreement and the Cash Management compliance requirements. Cause: The Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: There was no formal review/approval of claim reimbursements outside of who prepares them. The failure to establish an effective internal control system places the Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of effective reviews could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by the review process not ensuring there was accurate reporting of the activities of the programs. Recommendation: We recommend that the Corporation establish policies and procedures to ensure that reimbursement claims prepared are reviewed and approved. The reimbursement claim should be compared to supporting documentation to ensure accuracy of the claim reimbursement form. Reimbursement claims should be prepared and submitted timely to help ensure proper period recognition. Views of Responsible Officials and Corrective Actions: Management is working to establish the policies and procedures for reviewing and approving reimbursement claims to ensure that the claims are properly prepared and submitted timely.
Finding 2023-003: Internal Controls over Cash Management Department of Housing and Urban Development Federal Program: HOME Investment Partnerships Program FALN: 14.239 Significant Deficiency Criteria: 2 CFR section 200.303 states in part: “The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards 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: An effective internal control system was not in place to ensure compliance with requirements related to the grant agreement and the Cash Management compliance requirements. Cause: The Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: There was no formal review/approval of claim reimbursements outside of who prepares them. The failure to establish an effective internal control system places the Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of effective reviews could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by the review process not ensuring there was accurate reporting of the activities of the programs. Recommendation: We recommend that the Corporation establish policies and procedures to ensure that reimbursement claims prepared are reviewed and approved. The reimbursement claim should be compared to supporting documentation to ensure accuracy of the claim reimbursement form. Reimbursement claims should be prepared and submitted timely to help ensure proper period recognition. Views of Responsible Officials and Corrective Actions: Management is working to establish the policies and procedures for reviewing and approving reimbursement claims to ensure that the claims are properly prepared and submitted timely.
Finding 2023-003: Internal Controls over Cash Management Department of Housing and Urban Development Federal Program: HOME Investment Partnerships Program FALN: 14.239 Significant Deficiency Criteria: 2 CFR section 200.303 states in part: “The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards 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: An effective internal control system was not in place to ensure compliance with requirements related to the grant agreement and the Cash Management compliance requirements. Cause: The Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: There was no formal review/approval of claim reimbursements outside of who prepares them. The failure to establish an effective internal control system places the Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of effective reviews could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by the review process not ensuring there was accurate reporting of the activities of the programs. Recommendation: We recommend that the Corporation establish policies and procedures to ensure that reimbursement claims prepared are reviewed and approved. The reimbursement claim should be compared to supporting documentation to ensure accuracy of the claim reimbursement form. Reimbursement claims should be prepared and submitted timely to help ensure proper period recognition. Views of Responsible Officials and Corrective Actions: Management is working to establish the policies and procedures for reviewing and approving reimbursement claims to ensure that the claims are properly prepared and submitted timely.
Finding 2023-003: Internal Controls over Cash Management Department of Housing and Urban Development Federal Program: HOME Investment Partnerships Program FALN: 14.239 Significant Deficiency Criteria: 2 CFR section 200.303 states in part: “The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards 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: An effective internal control system was not in place to ensure compliance with requirements related to the grant agreement and the Cash Management compliance requirements. Cause: The Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: There was no formal review/approval of claim reimbursements outside of who prepares them. The failure to establish an effective internal control system places the Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of effective reviews could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by the review process not ensuring there was accurate reporting of the activities of the programs. Recommendation: We recommend that the Corporation establish policies and procedures to ensure that reimbursement claims prepared are reviewed and approved. The reimbursement claim should be compared to supporting documentation to ensure accuracy of the claim reimbursement form. Reimbursement claims should be prepared and submitted timely to help ensure proper period recognition. Views of Responsible Officials and Corrective Actions: Management is working to establish the policies and procedures for reviewing and approving reimbursement claims to ensure that the claims are properly prepared and submitted timely.
Finding 2023-003: Internal Controls over Cash Management Department of Housing and Urban Development Federal Program: HOME Investment Partnerships Program FALN: 14.239 Significant Deficiency Criteria: 2 CFR section 200.303 states in part: “The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards 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: An effective internal control system was not in place to ensure compliance with requirements related to the grant agreement and the Cash Management compliance requirements. Cause: The Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: There was no formal review/approval of claim reimbursements outside of who prepares them. The failure to establish an effective internal control system places the Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of effective reviews could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by the review process not ensuring there was accurate reporting of the activities of the programs. Recommendation: We recommend that the Corporation establish policies and procedures to ensure that reimbursement claims prepared are reviewed and approved. The reimbursement claim should be compared to supporting documentation to ensure accuracy of the claim reimbursement form. Reimbursement claims should be prepared and submitted timely to help ensure proper period recognition. Views of Responsible Officials and Corrective Actions: Management is working to establish the policies and procedures for reviewing and approving reimbursement claims to ensure that the claims are properly prepared and submitted timely.
Finding 2023-003: Internal Controls over Cash Management Department of Housing and Urban Development Federal Program: HOME Investment Partnerships Program FALN: 14.239 Significant Deficiency Criteria: 2 CFR section 200.303 states in part: “The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards 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: An effective internal control system was not in place to ensure compliance with requirements related to the grant agreement and the Cash Management compliance requirements. Cause: The Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: There was no formal review/approval of claim reimbursements outside of who prepares them. The failure to establish an effective internal control system places the Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of effective reviews could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by the review process not ensuring there was accurate reporting of the activities of the programs. Recommendation: We recommend that the Corporation establish policies and procedures to ensure that reimbursement claims prepared are reviewed and approved. The reimbursement claim should be compared to supporting documentation to ensure accuracy of the claim reimbursement form. Reimbursement claims should be prepared and submitted timely to help ensure proper period recognition. Views of Responsible Officials and Corrective Actions: Management is working to establish the policies and procedures for reviewing and approving reimbursement claims to ensure that the claims are properly prepared and submitted timely.
Finding 2023-003: Internal Controls over Cash Management Department of Housing and Urban Development Federal Program: HOME Investment Partnerships Program FALN: 14.239 Significant Deficiency Criteria: 2 CFR section 200.303 states in part: “The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards 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: An effective internal control system was not in place to ensure compliance with requirements related to the grant agreement and the Cash Management compliance requirements. Cause: The Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: There was no formal review/approval of claim reimbursements outside of who prepares them. The failure to establish an effective internal control system places the Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of effective reviews could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by the review process not ensuring there was accurate reporting of the activities of the programs. Recommendation: We recommend that the Corporation establish policies and procedures to ensure that reimbursement claims prepared are reviewed and approved. The reimbursement claim should be compared to supporting documentation to ensure accuracy of the claim reimbursement form. Reimbursement claims should be prepared and submitted timely to help ensure proper period recognition. Views of Responsible Officials and Corrective Actions: Management is working to establish the policies and procedures for reviewing and approving reimbursement claims to ensure that the claims are properly prepared and submitted timely.
Finding 2023-003: Internal Controls over Cash Management Department of Housing and Urban Development Federal Program: HOME Investment Partnerships Program FALN: 14.239 Significant Deficiency Criteria: 2 CFR section 200.303 states in part: “The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards 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: An effective internal control system was not in place to ensure compliance with requirements related to the grant agreement and the Cash Management compliance requirements. Cause: The Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: There was no formal review/approval of claim reimbursements outside of who prepares them. The failure to establish an effective internal control system places the Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of effective reviews could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by the review process not ensuring there was accurate reporting of the activities of the programs. Recommendation: We recommend that the Corporation establish policies and procedures to ensure that reimbursement claims prepared are reviewed and approved. The reimbursement claim should be compared to supporting documentation to ensure accuracy of the claim reimbursement form. Reimbursement claims should be prepared and submitted timely to help ensure proper period recognition. Views of Responsible Officials and Corrective Actions: Management is working to establish the policies and procedures for reviewing and approving reimbursement claims to ensure that the claims are properly prepared and submitted timely.
Finding 2023-003: Internal Controls over Cash Management Department of Housing and Urban Development Federal Program: HOME Investment Partnerships Program FALN: 14.239 Significant Deficiency Criteria: 2 CFR section 200.303 states in part: “The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards 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: An effective internal control system was not in place to ensure compliance with requirements related to the grant agreement and the Cash Management compliance requirements. Cause: The Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: There was no formal review/approval of claim reimbursements outside of who prepares them. The failure to establish an effective internal control system places the Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of effective reviews could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by the review process not ensuring there was accurate reporting of the activities of the programs. Recommendation: We recommend that the Corporation establish policies and procedures to ensure that reimbursement claims prepared are reviewed and approved. The reimbursement claim should be compared to supporting documentation to ensure accuracy of the claim reimbursement form. Reimbursement claims should be prepared and submitted timely to help ensure proper period recognition. Views of Responsible Officials and Corrective Actions: Management is working to establish the policies and procedures for reviewing and approving reimbursement claims to ensure that the claims are properly prepared and submitted timely.
Finding 2023-003: Internal Controls over Cash Management Department of Housing and Urban Development Federal Program: HOME Investment Partnerships Program FALN: 14.239 Significant Deficiency Criteria: 2 CFR section 200.303 states in part: “The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards 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: An effective internal control system was not in place to ensure compliance with requirements related to the grant agreement and the Cash Management compliance requirements. Cause: The Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: There was no formal review/approval of claim reimbursements outside of who prepares them. The failure to establish an effective internal control system places the Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of effective reviews could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by the review process not ensuring there was accurate reporting of the activities of the programs. Recommendation: We recommend that the Corporation establish policies and procedures to ensure that reimbursement claims prepared are reviewed and approved. The reimbursement claim should be compared to supporting documentation to ensure accuracy of the claim reimbursement form. Reimbursement claims should be prepared and submitted timely to help ensure proper period recognition. Views of Responsible Officials and Corrective Actions: Management is working to establish the policies and procedures for reviewing and approving reimbursement claims to ensure that the claims are properly prepared and submitted timely.
Finding 2023-003: Internal Controls over Cash Management Department of Housing and Urban Development Federal Program: HOME Investment Partnerships Program FALN: 14.239 Significant Deficiency Criteria: 2 CFR section 200.303 states in part: “The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards 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: An effective internal control system was not in place to ensure compliance with requirements related to the grant agreement and the Cash Management compliance requirements. Cause: The Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: There was no formal review/approval of claim reimbursements outside of who prepares them. The failure to establish an effective internal control system places the Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of effective reviews could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by the review process not ensuring there was accurate reporting of the activities of the programs. Recommendation: We recommend that the Corporation establish policies and procedures to ensure that reimbursement claims prepared are reviewed and approved. The reimbursement claim should be compared to supporting documentation to ensure accuracy of the claim reimbursement form. Reimbursement claims should be prepared and submitted timely to help ensure proper period recognition. Views of Responsible Officials and Corrective Actions: Management is working to establish the policies and procedures for reviewing and approving reimbursement claims to ensure that the claims are properly prepared and submitted timely.
Criteria- According to 2 CFR 200.303, non-federal entities receiving federal awards must establish and maintain internal controls that comply with the guidance in COSO’s "Internal Control Integrated Framework.” This regulation requires management to design control activities to achieve compliance objectives and respond to compliance risks. Additionally, specific program requirements mandate that eligibility determinations must be supported by adequate documentation. This includes verifying that individuals meet all eligibility criteria, such as proof of HIV diagnosis, income status and residency, before granting benefits. Condition-During the testing of eligibility, multiple issues were noted with proper approval and maintaining proper eligibility information within the client files. Specifically, three individuals lacked the proper support in their files to determine eligibility. Additionally, there were three applications that did not include proof of review prior to the notice of eligibility being granted. Cause - The primary cause of the errors identified was lack of administrative oversight and a lack of effective control activities such as effective review procedures and monitoring. Effect - The Organization granted notices of eligibility to individuals without the required supporting documentation and/or proper approval. Questioned Costs - Not applicable Context - Prior to a notice of eligibility (NOE) being granted, it must be verified that the individual has valid proof of HIV diagnosis, be considered low income, and be a resident of the state in which they are applying in. Eligibility documentation should be retained in the client file. Out of the sample of 40 client files tested, we noted three individuals who did not have all requirements within their file. Two individuals did not have proof of HIV, and one individual did not have valid proof of residency. OASIS Florida was able to obtain the proof of HIV from the health department for both individuals in question, but the individual without proof of valid residency was determined to not be a resident of Florida and incorrectly received an NOE. After an eligibility application is completed, it is given to a case manager for review. Prior to eligibility being granted, the case manager is supposed to sign that they have reviewed the eligibility application. Out of the sample of 40 files tested, three applications did not include proof of review prior to the notice of eligibility being granted. Recommendation - We recommend the client implement controls to ensure all eligibility documentation is obtained and properly reviewed before granting eligibility. This includes providing regular staff training and conducting periodic internal audits to ensure compliance. Views of Responsible Officials - We agree with the recommendation offered.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: The Department of Health and Human Services/Centers for Disease Control and Prevention Assistance Listing Number: 93.323 Federal Award Identification Number and Year: NU50CK000515 - 2021 Pass-Through Agency: State of Washington Department of Health Pass-Through Number: CBO28488-0 Award Period: July 1, 2023 through July 31, 2024 Type of Finding: • Material Weakness in Internal Control over Compliance – Subrecipient Monitoring • Other Matters Criteria or specific requirement: CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, §200.303 specifies that a non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: The Organization did not have policies and procedures in place to ensure all the requirements of subrecipient monitoring were being performed. Questioned costs: None. Context: Of the five subrecipients selected for testing (there were seven in the population), we noted that none of them had proper monitoring in place. Cause: Policies and procedures were not in place to provide adequate subrecipient monitoring. Effect: The Organization could pass through federal funding to subrecipients who are not responsible or capable recipients of the funds. Funding could be used by the subrecipients in ways that are incompatible with program goals and compliance requirements. Recommendation: We recommend that the Organization implements policies and procedures to perform subrecipient monitoring and that monitoring is formally documented and approved. Views of responsible officials: There is no disagreement with the audit finding.
Finding 2023-003 Information on the federal program: Subject: Airport Improvement Program, COVID-19 – Airports Program, and Infrastructure Investment and Jobs Act Programs – Special Tests and Provisions - Wage Rate Requirements Federal Agency: Department of Transportation Federal Program: Airport Improvement Program, COVID-19 – Airports Program, and Infrastructure Investment and Jobs Act Programs Assistance Listing Number: 20.106 Federal Award Numbers and Years (or Other Identifying Numbers): AIP16 Compliance Requirement: Special Tests and Provisions - Wage Rate Requirements Audit Findings: Significant Deficiency Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards 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). . . ." 29 CFR 5.5 states in part: a. The Agency head shall cause or require the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part from Federal funds or in accordance with guarantees of a Federal agency or financed from funds obtained by pledge of any contract of a Federal agency to make a loan, grant or annual contribution (except where a different meaning is expressly indicated), and which is subject to the labor standards provisions of any of the acts listed in §5.1, the following clauses… (1) Minimum wages. (i) All laborers and mechanics employed or working upon the site of the work (or under the United States Housing Act of 1937 or under the Housing Act of 1949 in the construction or development of the project), will be paid unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account (except such payroll deductions as are permitted by regulations issued by the Secretary of Labor under the Copeland Act (29 CFR part 3)), the full amount of wages and bona fide fringe benefits (or cash equivalents thereof) due at time of payment computed at rates not less than those contained in the wage determination of the Secretary of Labor which is attached hereto and made a part hereof, regardless of any contractual relationship which may be alleged to exist between the contractor and such laborers and mechanics… (3)(ii)(A) The contractor shall submit weekly for each week in which any contract work is performed a copy of all payrolls to the (write in name of appropriate federal agency) if the agency is a party to the contract, but if the agency is not such a party, the contractor will submit the payrolls to the applicant, sponsor, or owner, as the case may be, for transmission to the (write in name of agency). 2 CFR 200 Appendix II states in part: In addition to other provisions required by the Federal agency or non-Federal entity; all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following, as applicable. . . . (D) Davis-Bacon Act, as amended (40 U.S.C. 3141-3148). When required by Federal program legislation, all prime construction contracts in excess of $2,000 awarded by non-Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, and 3146-3148) as supplemented by Department of Labor regulations (29 CFR Part 5, “Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction”). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor. In addition, contractors must be required to pay wages not less than once a week.. . .” Condition: An effective internal control system was not in place at the City in order to ensure compliance with requirements related to the grant agreement and the Special Tests and Provisions – Wage Rate Requirements compliance requirements. The City did not obtain the weekly payroll reports certifications from a construction company and its subcontractors for a building project. Cause: The City's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The failure to design and implement an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Special Tests and Provisions – Wage Rate Requirements compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: There were two construction contracts funded by the Airport Improvement Program (AIP) with expenditures totaling $4,984,949 during the audit period and subject to federal Davis Bacon wage rate requirements. The first contract tested had expenditures of $4,811,862 over 47 planned construction weeks during the audit period. There were no exceptions to the wage rate testing performed for this contract. The second contract had expenditures of $173,087 over 14 planning construction weeks during the audit period. For this contract, the City’s internal control to collect the weekly payroll reports certifications from the construction company and its subcontractors, as applicable, did not work as designed. The testing noted there was only one certified payroll collected over the fourteen week planned work period. Therefore, insufficient review was performed by management to ensure that pay rates complied with the federal wage rate requirements. These construction payments for this project represented approximately 2.2% of the Airport Improvement Program expenditures for the audit period. Identification as a repeat finding: No. Recommendation: We recommend the City revise their process to ensure the required weekly payroll report certifications are collected and reviewed by management to ensure compliance with the federal wage rate requirements. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Finding 2023-003 Information on the federal program: Subject: Airport Improvement Program, COVID-19 – Airports Program, and Infrastructure Investment and Jobs Act Programs – Special Tests and Provisions - Wage Rate Requirements Federal Agency: Department of Transportation Federal Program: Airport Improvement Program, COVID-19 – Airports Program, and Infrastructure Investment and Jobs Act Programs Assistance Listing Number: 20.106 Federal Award Numbers and Years (or Other Identifying Numbers): AIP16 Compliance Requirement: Special Tests and Provisions - Wage Rate Requirements Audit Findings: Significant Deficiency Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards 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). . . ." 29 CFR 5.5 states in part: a. The Agency head shall cause or require the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part from Federal funds or in accordance with guarantees of a Federal agency or financed from funds obtained by pledge of any contract of a Federal agency to make a loan, grant or annual contribution (except where a different meaning is expressly indicated), and which is subject to the labor standards provisions of any of the acts listed in §5.1, the following clauses… (1) Minimum wages. (i) All laborers and mechanics employed or working upon the site of the work (or under the United States Housing Act of 1937 or under the Housing Act of 1949 in the construction or development of the project), will be paid unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account (except such payroll deductions as are permitted by regulations issued by the Secretary of Labor under the Copeland Act (29 CFR part 3)), the full amount of wages and bona fide fringe benefits (or cash equivalents thereof) due at time of payment computed at rates not less than those contained in the wage determination of the Secretary of Labor which is attached hereto and made a part hereof, regardless of any contractual relationship which may be alleged to exist between the contractor and such laborers and mechanics… (3)(ii)(A) The contractor shall submit weekly for each week in which any contract work is performed a copy of all payrolls to the (write in name of appropriate federal agency) if the agency is a party to the contract, but if the agency is not such a party, the contractor will submit the payrolls to the applicant, sponsor, or owner, as the case may be, for transmission to the (write in name of agency). 2 CFR 200 Appendix II states in part: In addition to other provisions required by the Federal agency or non-Federal entity; all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following, as applicable. . . . (D) Davis-Bacon Act, as amended (40 U.S.C. 3141-3148). When required by Federal program legislation, all prime construction contracts in excess of $2,000 awarded by non-Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, and 3146-3148) as supplemented by Department of Labor regulations (29 CFR Part 5, “Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction”). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor. In addition, contractors must be required to pay wages not less than once a week.. . .” Condition: An effective internal control system was not in place at the City in order to ensure compliance with requirements related to the grant agreement and the Special Tests and Provisions – Wage Rate Requirements compliance requirements. The City did not obtain the weekly payroll reports certifications from a construction company and its subcontractors for a building project. Cause: The City's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The failure to design and implement an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Special Tests and Provisions – Wage Rate Requirements compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: There were two construction contracts funded by the Airport Improvement Program (AIP) with expenditures totaling $4,984,949 during the audit period and subject to federal Davis Bacon wage rate requirements. The first contract tested had expenditures of $4,811,862 over 47 planned construction weeks during the audit period. There were no exceptions to the wage rate testing performed for this contract. The second contract had expenditures of $173,087 over 14 planning construction weeks during the audit period. For this contract, the City’s internal control to collect the weekly payroll reports certifications from the construction company and its subcontractors, as applicable, did not work as designed. The testing noted there was only one certified payroll collected over the fourteen week planned work period. Therefore, insufficient review was performed by management to ensure that pay rates complied with the federal wage rate requirements. These construction payments for this project represented approximately 2.2% of the Airport Improvement Program expenditures for the audit period. Identification as a repeat finding: No. Recommendation: We recommend the City revise their process to ensure the required weekly payroll report certifications are collected and reviewed by management to ensure compliance with the federal wage rate requirements. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Finding 2023-003 Information on the federal program: Subject: Airport Improvement Program, COVID-19 – Airports Program, and Infrastructure Investment and Jobs Act Programs – Special Tests and Provisions - Wage Rate Requirements Federal Agency: Department of Transportation Federal Program: Airport Improvement Program, COVID-19 – Airports Program, and Infrastructure Investment and Jobs Act Programs Assistance Listing Number: 20.106 Federal Award Numbers and Years (or Other Identifying Numbers): AIP16 Compliance Requirement: Special Tests and Provisions - Wage Rate Requirements Audit Findings: Significant Deficiency Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards 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). . . ." 29 CFR 5.5 states in part: a. The Agency head shall cause or require the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part from Federal funds or in accordance with guarantees of a Federal agency or financed from funds obtained by pledge of any contract of a Federal agency to make a loan, grant or annual contribution (except where a different meaning is expressly indicated), and which is subject to the labor standards provisions of any of the acts listed in §5.1, the following clauses… (1) Minimum wages. (i) All laborers and mechanics employed or working upon the site of the work (or under the United States Housing Act of 1937 or under the Housing Act of 1949 in the construction or development of the project), will be paid unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account (except such payroll deductions as are permitted by regulations issued by the Secretary of Labor under the Copeland Act (29 CFR part 3)), the full amount of wages and bona fide fringe benefits (or cash equivalents thereof) due at time of payment computed at rates not less than those contained in the wage determination of the Secretary of Labor which is attached hereto and made a part hereof, regardless of any contractual relationship which may be alleged to exist between the contractor and such laborers and mechanics… (3)(ii)(A) The contractor shall submit weekly for each week in which any contract work is performed a copy of all payrolls to the (write in name of appropriate federal agency) if the agency is a party to the contract, but if the agency is not such a party, the contractor will submit the payrolls to the applicant, sponsor, or owner, as the case may be, for transmission to the (write in name of agency). 2 CFR 200 Appendix II states in part: In addition to other provisions required by the Federal agency or non-Federal entity; all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following, as applicable. . . . (D) Davis-Bacon Act, as amended (40 U.S.C. 3141-3148). When required by Federal program legislation, all prime construction contracts in excess of $2,000 awarded by non-Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, and 3146-3148) as supplemented by Department of Labor regulations (29 CFR Part 5, “Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction”). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor. In addition, contractors must be required to pay wages not less than once a week.. . .” Condition: An effective internal control system was not in place at the City in order to ensure compliance with requirements related to the grant agreement and the Special Tests and Provisions – Wage Rate Requirements compliance requirements. The City did not obtain the weekly payroll reports certifications from a construction company and its subcontractors for a building project. Cause: The City's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The failure to design and implement an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Special Tests and Provisions – Wage Rate Requirements compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: There were two construction contracts funded by the Airport Improvement Program (AIP) with expenditures totaling $4,984,949 during the audit period and subject to federal Davis Bacon wage rate requirements. The first contract tested had expenditures of $4,811,862 over 47 planned construction weeks during the audit period. There were no exceptions to the wage rate testing performed for this contract. The second contract had expenditures of $173,087 over 14 planning construction weeks during the audit period. For this contract, the City’s internal control to collect the weekly payroll reports certifications from the construction company and its subcontractors, as applicable, did not work as designed. The testing noted there was only one certified payroll collected over the fourteen week planned work period. Therefore, insufficient review was performed by management to ensure that pay rates complied with the federal wage rate requirements. These construction payments for this project represented approximately 2.2% of the Airport Improvement Program expenditures for the audit period. Identification as a repeat finding: No. Recommendation: We recommend the City revise their process to ensure the required weekly payroll report certifications are collected and reviewed by management to ensure compliance with the federal wage rate requirements. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Finding 2023-003 Information on the federal program: Subject: Airport Improvement Program, COVID-19 – Airports Program, and Infrastructure Investment and Jobs Act Programs – Special Tests and Provisions - Wage Rate Requirements Federal Agency: Department of Transportation Federal Program: Airport Improvement Program, COVID-19 – Airports Program, and Infrastructure Investment and Jobs Act Programs Assistance Listing Number: 20.106 Federal Award Numbers and Years (or Other Identifying Numbers): AIP16 Compliance Requirement: Special Tests and Provisions - Wage Rate Requirements Audit Findings: Significant Deficiency Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards 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). . . ." 29 CFR 5.5 states in part: a. The Agency head shall cause or require the contracting officer to insert in full in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part from Federal funds or in accordance with guarantees of a Federal agency or financed from funds obtained by pledge of any contract of a Federal agency to make a loan, grant or annual contribution (except where a different meaning is expressly indicated), and which is subject to the labor standards provisions of any of the acts listed in §5.1, the following clauses… (1) Minimum wages. (i) All laborers and mechanics employed or working upon the site of the work (or under the United States Housing Act of 1937 or under the Housing Act of 1949 in the construction or development of the project), will be paid unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account (except such payroll deductions as are permitted by regulations issued by the Secretary of Labor under the Copeland Act (29 CFR part 3)), the full amount of wages and bona fide fringe benefits (or cash equivalents thereof) due at time of payment computed at rates not less than those contained in the wage determination of the Secretary of Labor which is attached hereto and made a part hereof, regardless of any contractual relationship which may be alleged to exist between the contractor and such laborers and mechanics… (3)(ii)(A) The contractor shall submit weekly for each week in which any contract work is performed a copy of all payrolls to the (write in name of appropriate federal agency) if the agency is a party to the contract, but if the agency is not such a party, the contractor will submit the payrolls to the applicant, sponsor, or owner, as the case may be, for transmission to the (write in name of agency). 2 CFR 200 Appendix II states in part: In addition to other provisions required by the Federal agency or non-Federal entity; all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following, as applicable. . . . (D) Davis-Bacon Act, as amended (40 U.S.C. 3141-3148). When required by Federal program legislation, all prime construction contracts in excess of $2,000 awarded by non-Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, and 3146-3148) as supplemented by Department of Labor regulations (29 CFR Part 5, “Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction”). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor. In addition, contractors must be required to pay wages not less than once a week.. . .” Condition: An effective internal control system was not in place at the City in order to ensure compliance with requirements related to the grant agreement and the Special Tests and Provisions – Wage Rate Requirements compliance requirements. The City did not obtain the weekly payroll reports certifications from a construction company and its subcontractors for a building project. Cause: The City's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The failure to design and implement an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Special Tests and Provisions – Wage Rate Requirements compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: There were two construction contracts funded by the Airport Improvement Program (AIP) with expenditures totaling $4,984,949 during the audit period and subject to federal Davis Bacon wage rate requirements. The first contract tested had expenditures of $4,811,862 over 47 planned construction weeks during the audit period. There were no exceptions to the wage rate testing performed for this contract. The second contract had expenditures of $173,087 over 14 planning construction weeks during the audit period. For this contract, the City’s internal control to collect the weekly payroll reports certifications from the construction company and its subcontractors, as applicable, did not work as designed. The testing noted there was only one certified payroll collected over the fourteen week planned work period. Therefore, insufficient review was performed by management to ensure that pay rates complied with the federal wage rate requirements. These construction payments for this project represented approximately 2.2% of the Airport Improvement Program expenditures for the audit period. Identification as a repeat finding: No. Recommendation: We recommend the City revise their process to ensure the required weekly payroll report certifications are collected and reviewed by management to ensure compliance with the federal wage rate requirements. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2023-004 Information on the federal program: Subject: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds – Procurement and Suspension and Debarment Federal Agency: Department of Treasury Federal Program: COVID 19 – Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Numbers and Years (or Other Identifying Numbers): FY2022 Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR section 200.318 states in part: (a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. (b) Non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders… Section III – Federal Award Findings and Questioned Costs (Continued) Finding 2023-003 (Continued) (h) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. 2 CFR section 200.320 states in part: (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate:… (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (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: The City contracted a vendor utilizing federal funds without performing a formal bid process for projects exceeding the simplified acquisition threshold of $150,000 no did the City provide documentation supporting a noncompetitive procurement. There was available history of the procurement process, including a lack of documented City Council approval for the contract. The contract entered into also did not include the required Buy America Build America Provisions. Cause: The City’s management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Also, the City does not have written Procurement Policies that comply with the Federal Uniform Guidance requirements for non-Federal entities. The City’s current policy does not address the following requirements: • Written standards of conduct for employees involved in contracting. • Written standards for solicitations to foster full and open competition. • Micro-purchase threshold of $10,000 (listed at $25k) • Written standards for solicitations requiring a formal bid process • Written standards to rationalize limited competition purchases • Written standards to maintain historical documentation of the procurement process Effect: The failure to establish an effective internal control system placed the City at risk of noncompliance with the grant agreement and the compliance requirements. Questioned Costs: There were no questioned costs identified. Context: The City entered into three contracts funded by the Coronavirus State and Local Fiscal Recovery Funds (SLFRF) grant during the audit period. Two of those contracts were selected for testing and the City was unable to provide any procurement history. Upon inquiry of the City on their purchasing policies and procedures, it was verified the City does not have procurement policies for purchases that conform to the requirements of the Uniform Guidance. There were $237,044 in expenditures incurred on the contracts tested in the current fiscal year. Identification as a repeat finding: No. Recommendation: We recommend that management of the City establish a proper system of internal controls and develop and implement procurement policies and procedures that adheres of the procurement requirements for purchases with federal awards as required by the 2 CFR 200 Uniform Guidance. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Assistance Listing, Federal Agency, and Program Name - 15.507, WaterSMART Sustaining and Manage America’s Resources for Tomorrow Federal Award Identification Number and Year - R22AP00523-00 Pass-through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - Per 2 CFR 200.303(a), a non-federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition - Controls in place were not adequate to ensure expenses were reported in the proper categories on the performance reports. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A Context - During reporting testing, we noted no expenses were reported in the federal expenses line item of the two reports tested. Cause and Effect - While the City did have controls in place around reporting and allowability of expenses, they were not sufficient to ensure expenses were properly reported on the correct lines As a result, reports were not in compliance. Recommendation - We recommend the City ensure the effectiveness of controls to ensure expenditures get reported properly. Views of Responsible Officials and Corrective Action Plan - The City hired a full-time Grants Manager in February 2024 to establish procedures to track grants that are awarded and expended by the City. New procedures will be developed to ensure that financial and performance reports for grants will be reviewed by the Grants Manager prior to submission of the reports to the awarding entities. Documentation of this review will be retained with the grant documents.
Assistance Listing, Federal Agency, and Program Name - 21.027, U.S. Department of the Treasury, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Federal Award Identification Number and Year - 2023; 20-HA4-XC-03002, SLFRP0126 Pass-through Entity - Colorado Department of Transportation; Colorado Department of Local Affairs Finding Type - Material weakness Repeat Finding - No Criteria - Per 2 CFR 200.303(a), a non-federal entity mus 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 - There was no evidence that reports were reviewed for completeness and accuracy prior to submission. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A Context - During reporting testing, of the 3 reports selected for testing, we noted that none of them showed evidence of review for completeness and accuracy prior to submission. Cause and Effect - The City did not have controls in place around reviews of reporting. As a result, reports were not reviewed prior to submission. Recommendation - We recommend the City implement controls to ensure a review of all reports are performed by someone other than the preparer, prior to submission. Views of Responsible Officials and Planned Corrective Actions - The City hired a full-time Grants Manager in February 2024 to establish procedures to track grants that are awarded and expended by the City. New procedures will be developed to ensure that financial and performance reports for grants will be reviewed and approved by the Grants Manager prior to submission of the reports to the awarding entities. Documentation of this review will be retained with the grant documents.
Assistance Listing, Federal Agency, and Program Name - 21.027, U.S. Department of the Treasury, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Federal Award Identification Number and Year - 2023; 20-HA4-XC-03002, SLFRP0126 Pass-through Entity - Colorado Department of Transportation; Colorado Department of Local Affairs Finding Type - Material weakness Repeat Finding - No Criteria - Per 2 CFR 200.303(a), a non-federal entity mus 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 - There was no evidence that reports were reviewed for completeness and accuracy prior to submission. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A Context - During reporting testing, of the 3 reports selected for testing, we noted that none of them showed evidence of review for completeness and accuracy prior to submission. Cause and Effect - The City did not have controls in place around reviews of reporting. As a result, reports were not reviewed prior to submission. Recommendation - We recommend the City implement controls to ensure a review of all reports are performed by someone other than the preparer, prior to submission. Views of Responsible Officials and Planned Corrective Actions - The City hired a full-time Grants Manager in February 2024 to establish procedures to track grants that are awarded and expended by the City. New procedures will be developed to ensure that financial and performance reports for grants will be reviewed and approved by the Grants Manager prior to submission of the reports to the awarding entities. Documentation of this review will be retained with the grant documents.
Assistance Listing, Federal Agency, and Program Name - 21.027, U.S. Department of the Treasury, COVID-19 Coronavirus State and Local Fiscal Recovery Funds Federal Award Identification Number and Year - 2023; 20-HA4-XC-03002, SLFRP0126 Pass-through Entity - Colorado Department of Transportation; Colorado Department of Local Affairs Finding Type - Material weakness Repeat Finding - No Criteria - Per 2 CFR 200.303(a), a non-federal entity mus 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 - There was no evidence that reports were reviewed for completeness and accuracy prior to submission. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A Context - During reporting testing, of the 3 reports selected for testing, we noted that none of them showed evidence of review for completeness and accuracy prior to submission. Cause and Effect - The City did not have controls in place around reviews of reporting. As a result, reports were not reviewed prior to submission. Recommendation - We recommend the City implement controls to ensure a review of all reports are performed by someone other than the preparer, prior to submission. Views of Responsible Officials and Planned Corrective Actions - The City hired a full-time Grants Manager in February 2024 to establish procedures to track grants that are awarded and expended by the City. New procedures will be developed to ensure that financial and performance reports for grants will be reviewed and approved by the Grants Manager prior to submission of the reports to the awarding entities. Documentation of this review will be retained with the grant documents.
Finding 2023-002 Information on the federal program: Subject: Water and Waste Disposal Systems for Rural Communities – Procurement, Suspension and Debarment Federal Agency: Department of Agriculture Federal Program: Water and Waste Disposal Systems for Rural Communities Assistance Listing Number: 10.760 Federal Award Numbers and Years (or Other Identifying Numbers): 2023 Compliance Requirement: Procurement, Suspension and Debarment Audit Findings: Material Weakness, Qualified Opinion Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR section 200.318 states in part: (a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. (b) Non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders… (h) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. 2 CFR section 200.320 states in part: (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate:… (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (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: The Town contracted a vendor utilizing federal funds without performing a formal bid process for projects exceeding the simplified acquisition threshold of $150,000 nor did the City provide documentation supporting a noncompetitive procurement. There was no available history of the procurement process. Cause: The Town’s management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Also, the Town does not have written Procurement Policies that comply with the Federal Uniform Guidance requirements for non-Federal entities. The Town’s current policy does not address the following requirements: • Written standards of conduct for employees involved in contracting. • Written standards for solicitations to foster full and open competition. • Micro-purchase threshold of $10,000 (listed at $25k) • Written standards for solicitations requiring a formal bid process • Written standards to rationalize limited competition purchases • Written standards to maintain historical documentation of the procurement process Effect: The failure to establish an effective internal control system placed the Town at risk of noncompliance with the grant agreement and the compliance requirements. Questioned Costs: There were no questioned costs identified. Context: The Town entered into three contracts funded by the Water and Waste Disposal Systems for Rural Communities (WWTP) grant during the audit period. Two of those contracts were selected for testing. For one of those contracts selected for testing, the Town was unable to provide any procurement history. There were $459,737 in expenditures incurred on the contract tested with exceptions in the current fiscal year. Identification as a repeat finding: No. Recommendation: We recommend that management of the Town establish a proper system of internal controls and develop and implement procurement policies and procedures that adheres of the procurement requirements for purchases with federal awards as required by the 2 CFR 200 Uniform Guidance. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
REPORTING Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Medical Assistance Assistance Listing Number: 93.778 Federal Award Identification Number and Year: 2305MN5MAP and 2305MN5ADM, 2023 Pass-Through Agency: Minnesota Department of Human Services and Meeker-McLeod-Sibley Community Health Services Pass-Through Number: 2305MN5MAP and 2305MN5ADM Award Period: Year Ended December 31, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or Specific Requirement: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee mush establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. The DHS-2550 cost report is used by the Minnesota Department of Human Services (DHS) in conjunction with the county’s Income Maintenance Random Moment Time Study (IMRMS) data to determine allowable costs for reimbursement by various federal programs. Expenditures and revenue must have been disbursed or received during the quarter being reported. Condition and Context: The fourth quarter DHS-2250 cost report did not reflect fourth quarter expenditures and was not formally reviewed and approved. Questioned Costs: None Cause: Turnover within the department. Effect: The County could receive incorrect federal funding for the program if expenditures are not reviewed and reported timely. Repeat Finding: No. Recommendation: We recommend the County design procedures and controls to ensure all reports are formally reviewed and represent actual expenditures incurred during the period being reported. Views of responsible officials: There is no disagreement with the audit finding.
REPORTING Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Medical Assistance Assistance Listing Number: 93.778 Federal Award Identification Number and Year: 2305MN5MAP and 2305MN5ADM, 2023 Pass-Through Agency: Minnesota Department of Human Services and Meeker-McLeod-Sibley Community Health Services Pass-Through Number: 2305MN5MAP and 2305MN5ADM Award Period: Year Ended December 31, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or Specific Requirement: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee mush establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. The DHS-2550 cost report is used by the Minnesota Department of Human Services (DHS) in conjunction with the county’s Income Maintenance Random Moment Time Study (IMRMS) data to determine allowable costs for reimbursement by various federal programs. Expenditures and revenue must have been disbursed or received during the quarter being reported. Condition and Context: The fourth quarter DHS-2250 cost report did not reflect fourth quarter expenditures and was not formally reviewed and approved. Questioned Costs: None Cause: Turnover within the department. Effect: The County could receive incorrect federal funding for the program if expenditures are not reviewed and reported timely. Repeat Finding: No. Recommendation: We recommend the County design procedures and controls to ensure all reports are formally reviewed and represent actual expenditures incurred during the period being reported. Views of responsible officials: There is no disagreement with the audit finding.
REPORTING Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Medical Assistance Assistance Listing Number: 93.778 Federal Award Identification Number and Year: 2305MN5MAP and 2305MN5ADM, 2023 Pass-Through Agency: Minnesota Department of Human Services and Meeker-McLeod-Sibley Community Health Services Pass-Through Number: 2305MN5MAP and 2305MN5ADM Award Period: Year Ended December 31, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or Specific Requirement: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee mush establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. The DHS-2550 cost report is used by the Minnesota Department of Human Services (DHS) in conjunction with the county’s Income Maintenance Random Moment Time Study (IMRMS) data to determine allowable costs for reimbursement by various federal programs. Expenditures and revenue must have been disbursed or received during the quarter being reported. Condition and Context: The fourth quarter DHS-2250 cost report did not reflect fourth quarter expenditures and was not formally reviewed and approved. Questioned Costs: None Cause: Turnover within the department. Effect: The County could receive incorrect federal funding for the program if expenditures are not reviewed and reported timely. Repeat Finding: No. Recommendation: We recommend the County design procedures and controls to ensure all reports are formally reviewed and represent actual expenditures incurred during the period being reported. Views of responsible officials: There is no disagreement with the audit finding.
ELIGIBILITY Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Medical Assistance Assistance Listing Number: 93.778 Federal Award Identification Number and Year: 2305MN5MAP and 2305MN5ADM, 2023 Pass-Through Agency: Minnesota Department of Human Services and Meeker-McLeod-Sibley Community Health Services Pass-Through Number: 2305MN5MAP and 2305MN5ADM Award Period: Year Ended December 31, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition and Context During eligibility testing, it was noted that casefile review was not performed for quarters one and two. Questioned Costs: Not applicable. The County administers the program, but benefits to participants are paid by the State of Minnesota. Cause: Lack of supervisory review of case files. Effect: Errors made in determining eligibility may not be discovered and benefits may be issued to clients who are not eligible. Repeat Finding: The finding is a repeat of a finding in the immediately prior year. Prior year finding number was 2022-005. Recommendation: We recommend the County implement additional procedures to ensure case file reviews are being performed on a regular basis. Views of responsible officials: There is no disagreement with the audit finding.
ELIGIBILITY Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Medical Assistance Assistance Listing Number: 93.778 Federal Award Identification Number and Year: 2305MN5MAP and 2305MN5ADM, 2023 Pass-Through Agency: Minnesota Department of Human Services and Meeker-McLeod-Sibley Community Health Services Pass-Through Number: 2305MN5MAP and 2305MN5ADM Award Period: Year Ended December 31, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition and Context During eligibility testing, it was noted that casefile review was not performed for quarters one and two. Questioned Costs: Not applicable. The County administers the program, but benefits to participants are paid by the State of Minnesota. Cause: Lack of supervisory review of case files. Effect: Errors made in determining eligibility may not be discovered and benefits may be issued to clients who are not eligible. Repeat Finding: The finding is a repeat of a finding in the immediately prior year. Prior year finding number was 2022-005. Recommendation: We recommend the County implement additional procedures to ensure case file reviews are being performed on a regular basis. Views of responsible officials: There is no disagreement with the audit finding.
ELIGIBILITY Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Medical Assistance Assistance Listing Number: 93.778 Federal Award Identification Number and Year: 2305MN5MAP and 2305MN5ADM, 2023 Pass-Through Agency: Minnesota Department of Human Services and Meeker-McLeod-Sibley Community Health Services Pass-Through Number: 2305MN5MAP and 2305MN5ADM Award Period: Year Ended December 31, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition and Context During eligibility testing, it was noted that casefile review was not performed for quarters one and two. Questioned Costs: Not applicable. The County administers the program, but benefits to participants are paid by the State of Minnesota. Cause: Lack of supervisory review of case files. Effect: Errors made in determining eligibility may not be discovered and benefits may be issued to clients who are not eligible. Repeat Finding: The finding is a repeat of a finding in the immediately prior year. Prior year finding number was 2022-005. Recommendation: We recommend the County implement additional procedures to ensure case file reviews are being performed on a regular basis. Views of responsible officials: There is no disagreement with the audit finding.
FINDING 2023-001 Information on the federal program: Subject: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds – Procurement and Suspension and Debarment Federal Agency: Department of Treasury Federal Program: COVID 19 – Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Numbers and Years (or Other Identifying Numbers): 65851, CY2021 Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR section 200.318 states in part: (a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. (b) Non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders… (h) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. 2 CFR section 200.320 states in part: (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate:… (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (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: The City contracted a vendor utilizing federal funds without performing a formal bid process for a project exceeding the simplified acquisition threshold of $150,000 no did the City provide documentation supporting a noncompetitive procurement. There was available history of the procurement process, including a lack of documented City Council approval for the contract. The contract entered into also did not include the required Buy America Build America Provisions. Cause: The City’s management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Also, the City does not have written Procurement Policies that comply with the Federal Uniform Guidance requirements for non-Federal entities. The City’s current policy does not address the following requirements: • Written standards of conduct for employees involved in contracting. • Written standards for solicitations to foster full and open competition. • Micro-purchase threshold of $10,000 (listed at $25k) • No formal written or documented City policy or ordinance regarding the City’s procedures for verifying that an entity with which it plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded. Effect: The failure to establish an effective internal control system placed the City at risk of noncompliance with the grant agreement and the compliance requirements. Questioned Costs: There were no questioned costs identified. Context: During the procurement contract testing, the City was unable to provide any procurement history for a selected vendor contract funded through the Coronavirus State and Local Fiscal Recovery Funds grant. The City had entered into the vendor contract based on previous experience with the vendor. Upon inquiry of the City on their purchasing policies and procedures, it was verify the City does not have procurement policies for purchases that conform to the requirements of the Uniform Guidance. Identification as a repeat finding: See Finding 2022-001 Recommendation: We recommend that management of the City establish a proper system of internal controls and develop and implement procurement policies and procedures that adheres of the procurement requirements for purchases with federal awards as required by the 2 CFR 200 Uniform Guidance. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2023-001 Information on the federal program: Subject: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds – Procurement and Suspension and Debarment Federal Agency: Department of Treasury Federal Program: COVID 19 – Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Federal Award Numbers and Years (or Other Identifying Numbers): 65851, CY2021 Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR section 200.318 states in part: (a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. (b) Non-Federal entities must maintain oversight to ensure that contractors perform in accordance with the terms, conditions, and specifications of their contracts or purchase orders… (h) The non-Federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. 2 CFR section 200.320 states in part: (b) Formal procurement methods. When the value of the procurement for property or services under a Federal financial assistance award exceeds the SAT, or a lower threshold established by a non-Federal entity, formal procurement methods are required. Formal procurement methods require following documented procedures. Formal procurement methods also require public advertising unless a non-competitive procurement can be used in accordance with § 200.319 or paragraph (c) of this section. The following formal methods of procurement are used for procurement of property or services above the simplified acquisition threshold or a value below the simplified acquisition threshold the non-Federal entity determines to be appropriate:… (c) Noncompetitive procurement. There are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: (1) The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold (see paragraph (a)(1) of this section); (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: The City contracted a vendor utilizing federal funds without performing a formal bid process for a project exceeding the simplified acquisition threshold of $150,000 no did the City provide documentation supporting a noncompetitive procurement. There was available history of the procurement process, including a lack of documented City Council approval for the contract. The contract entered into also did not include the required Buy America Build America Provisions. Cause: The City’s management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Also, the City does not have written Procurement Policies that comply with the Federal Uniform Guidance requirements for non-Federal entities. The City’s current policy does not address the following requirements: • Written standards of conduct for employees involved in contracting. • Written standards for solicitations to foster full and open competition. • Micro-purchase threshold of $10,000 (listed at $25k) • No formal written or documented City policy or ordinance regarding the City’s procedures for verifying that an entity with which it plans to enter into a covered transaction is not debarred, suspended, or otherwise excluded. Effect: The failure to establish an effective internal control system placed the City at risk of noncompliance with the grant agreement and the compliance requirements. Questioned Costs: There were no questioned costs identified. Context: During the procurement contract testing, the City was unable to provide any procurement history for a selected vendor contract funded through the Coronavirus State and Local Fiscal Recovery Funds grant. The City had entered into the vendor contract based on previous experience with the vendor. Upon inquiry of the City on their purchasing policies and procedures, it was verify the City does not have procurement policies for purchases that conform to the requirements of the Uniform Guidance. Identification as a repeat finding: See Finding 2022-001 Recommendation: We recommend that management of the City establish a proper system of internal controls and develop and implement procurement policies and procedures that adheres of the procurement requirements for purchases with federal awards as required by the 2 CFR 200 Uniform Guidance. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Finding 2023‐001: Information on the Federal Program: Assistance Listing Number 81.086— Upper Midwest Inter‐Tribal EV Charging Community Network. Compliance Requirement: Allowable Costs and Cost Principles, Activities Allowed or Unallowed Type of Finding: Significant deficiency in internal control over compliance. Criteria: 2 CFR 200.303 of Subpart D, "Post Federal Award Requirements Standards for Financial and Program Management," of the Uniform Guidance requires a nonfederal entity to establish and maintain effective internal control over the federal award that provides reasonable assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award, including Activities Allowed or Unallowed, Allowable Costs and Cost Principles. Condition: Controls were not operating as designed to ensure that all travel reimbursements and payroll expenditures were reviewed and approved prior to payment. Causes: SDK notes that for the two reimbursement draw down dates selected for testing, pay for one of the three workers in each draw down request lacked proper review and approval of hours allocated to the grant. There was not adequate documentation of hours charged to the grant for the executive director as of the date of audit requests. For one of seven remaining non‐payroll transactions tested for allowability, approval documentation did not exist. Effect or Potential Effect: Unallowable costs or activities could be charged to the grant. Questioned Costs: None Context: There was not sufficient documentation available upon request to support a review and approval process of the Executive Director’s pay allocated to the grant nor for a travel reimbursement. Repeat Finding: No Recommendation: We recommend that a process for board review and approval of the executive director’s hours be implemented and performed on a regular (at least quarterly) basis. We additionally recommend approval be documented for all expenditures prior to charging to a federal grant. Views of Responsible Officials: Agree.
Finding 2023‐002: Information on the Federal Program: Assistance Listing Number 81.086— Upper Midwest Inter‐Tribal EV Charging Community Network. Compliance Requirement: Matching Type of Finding: Significant deficiency in internal control over compliance. Criteria: 2 CFR 200.303 of Subpart D, "Post Federal Award Requirements Standards for Financial and Program Management," of the Uniform Guidance requires a nonfederal entity to establish and maintain effective internal control over the federal award that provides reasonable assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award, including Cost Match principles. Condition: Controls were not implemented to monitor cost match partners’ activities to ensure their expenditures comply with allowable cost activities. Causes: For one of three cost matching amounts recorded in 2023, detail of amounts reported as cost match was not available upon request by auditors, and therefore the detail had not been obtained by the Organization. Effect or Potential Effect: Unallowable costs or activities could be counted for cost match by match partners causing Native Sun to fall short of cost match requirements. Questioned Costs: None Context: The Organization did not initially have documentation with sufficient detail for $756,108 of expenses reported by a cost match partner during 2023. Repeat Finding: No Recommendation: We recommend a control be implemented to monitor cost match partners including obtaining, reviewing and retaining support for reported cost match amounts. Views of Responsible Officials: Agree.
Finding 2023-004: Internal Control over Compliance with Allowable Costs/Activities Allowed (Material Weakness) Federal Programs: All programs Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): 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.” Condition: During our audit, we identified a number of instances where there was not sufficient documentation available to support that a precise review over the allowability of certain payroll and non-payroll expenditures was performed. Cause: The Association does not consistently adhere to documented policies and procedures for maintaining internal control over compliance over major programs for federal awards. Federal grant policy and procedure manuals have not been consistently updated, communicated, and enforced for all personnel working on grant related activities. Effect or Potential Effect: In the event formal policies for documentation of review and approval of grant expenditures is not properly maintained, the resulting costs may be disallowed which could materially impact the Association's compliance with its grant agreements. Questioned Costs: Questioned costs totaling $29,598 are comprised of the following: • $22,076 for incorrect benefit rates applied to certain employees (Award ID #1726113 – PhysPort’s Impact on Teaching Practice and Award ID #1907950 – Professional Development for Teaching and Learning about Energy and Equity in High School Physics) • $2,284 in unsupported payroll rate changes for certain employees (Award ID #1726113 – PhysPort’s Impact on Teaching Practice) • $5,238 in unsupported costs related to a modification to a vendor contract (Award ID #2212807 - Advancing Physics Education Where Diversity Resides through Professional Development: Creating the Organization for Physics at Two-Year Colleges (OPTYCs)) Consequence of the Audit Finding: Our procedures consisted of tests of internal control and compliance over an attribute sample of payroll and non-payroll expenditures subjected to the Association's purchasing, payroll, and cash disbursement controls. We consider our sample to be representative of the population. The condition appeared to be systematic in nature. Identification as a Repeat Finding, if Applicable: N/A Recommendation: We recommend the Association update its federal grant policy and procedure manuals, communicate and enforce such policies amongst grant personnel, and implement formal processes to monitor compliance with federal awards. Views of Responsible Officials and Planned Corrective Actions: See corrective action plan. Anticipated Completion Date: December 1, 2024 Responsible Official: Michael Brosnan, Chief Financial Officer
Finding 2023-004: Internal Control over Compliance with Allowable Costs/Activities Allowed (Material Weakness) Federal Programs: All programs Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): 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.” Condition: During our audit, we identified a number of instances where there was not sufficient documentation available to support that a precise review over the allowability of certain payroll and non-payroll expenditures was performed. Cause: The Association does not consistently adhere to documented policies and procedures for maintaining internal control over compliance over major programs for federal awards. Federal grant policy and procedure manuals have not been consistently updated, communicated, and enforced for all personnel working on grant related activities. Effect or Potential Effect: In the event formal policies for documentation of review and approval of grant expenditures is not properly maintained, the resulting costs may be disallowed which could materially impact the Association's compliance with its grant agreements. Questioned Costs: Questioned costs totaling $29,598 are comprised of the following: • $22,076 for incorrect benefit rates applied to certain employees (Award ID #1726113 – PhysPort’s Impact on Teaching Practice and Award ID #1907950 – Professional Development for Teaching and Learning about Energy and Equity in High School Physics) • $2,284 in unsupported payroll rate changes for certain employees (Award ID #1726113 – PhysPort’s Impact on Teaching Practice) • $5,238 in unsupported costs related to a modification to a vendor contract (Award ID #2212807 - Advancing Physics Education Where Diversity Resides through Professional Development: Creating the Organization for Physics at Two-Year Colleges (OPTYCs)) Consequence of the Audit Finding: Our procedures consisted of tests of internal control and compliance over an attribute sample of payroll and non-payroll expenditures subjected to the Association's purchasing, payroll, and cash disbursement controls. We consider our sample to be representative of the population. The condition appeared to be systematic in nature. Identification as a Repeat Finding, if Applicable: N/A Recommendation: We recommend the Association update its federal grant policy and procedure manuals, communicate and enforce such policies amongst grant personnel, and implement formal processes to monitor compliance with federal awards. Views of Responsible Officials and Planned Corrective Actions: See corrective action plan. Anticipated Completion Date: December 1, 2024 Responsible Official: Michael Brosnan, Chief Financial Officer
Finding 2023-004: Internal Control over Compliance with Allowable Costs/Activities Allowed (Material Weakness) Federal Programs: All programs Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): 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.” Condition: During our audit, we identified a number of instances where there was not sufficient documentation available to support that a precise review over the allowability of certain payroll and non-payroll expenditures was performed. Cause: The Association does not consistently adhere to documented policies and procedures for maintaining internal control over compliance over major programs for federal awards. Federal grant policy and procedure manuals have not been consistently updated, communicated, and enforced for all personnel working on grant related activities. Effect or Potential Effect: In the event formal policies for documentation of review and approval of grant expenditures is not properly maintained, the resulting costs may be disallowed which could materially impact the Association's compliance with its grant agreements. Questioned Costs: Questioned costs totaling $29,598 are comprised of the following: • $22,076 for incorrect benefit rates applied to certain employees (Award ID #1726113 – PhysPort’s Impact on Teaching Practice and Award ID #1907950 – Professional Development for Teaching and Learning about Energy and Equity in High School Physics) • $2,284 in unsupported payroll rate changes for certain employees (Award ID #1726113 – PhysPort’s Impact on Teaching Practice) • $5,238 in unsupported costs related to a modification to a vendor contract (Award ID #2212807 - Advancing Physics Education Where Diversity Resides through Professional Development: Creating the Organization for Physics at Two-Year Colleges (OPTYCs)) Consequence of the Audit Finding: Our procedures consisted of tests of internal control and compliance over an attribute sample of payroll and non-payroll expenditures subjected to the Association's purchasing, payroll, and cash disbursement controls. We consider our sample to be representative of the population. The condition appeared to be systematic in nature. Identification as a Repeat Finding, if Applicable: N/A Recommendation: We recommend the Association update its federal grant policy and procedure manuals, communicate and enforce such policies amongst grant personnel, and implement formal processes to monitor compliance with federal awards. Views of Responsible Officials and Planned Corrective Actions: See corrective action plan. Anticipated Completion Date: December 1, 2024 Responsible Official: Michael Brosnan, Chief Financial Officer
Finding 2023-004: Internal Control over Compliance with Allowable Costs/Activities Allowed (Material Weakness) Federal Programs: All programs Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): 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.” Condition: During our audit, we identified a number of instances where there was not sufficient documentation available to support that a precise review over the allowability of certain payroll and non-payroll expenditures was performed. Cause: The Association does not consistently adhere to documented policies and procedures for maintaining internal control over compliance over major programs for federal awards. Federal grant policy and procedure manuals have not been consistently updated, communicated, and enforced for all personnel working on grant related activities. Effect or Potential Effect: In the event formal policies for documentation of review and approval of grant expenditures is not properly maintained, the resulting costs may be disallowed which could materially impact the Association's compliance with its grant agreements. Questioned Costs: Questioned costs totaling $29,598 are comprised of the following: • $22,076 for incorrect benefit rates applied to certain employees (Award ID #1726113 – PhysPort’s Impact on Teaching Practice and Award ID #1907950 – Professional Development for Teaching and Learning about Energy and Equity in High School Physics) • $2,284 in unsupported payroll rate changes for certain employees (Award ID #1726113 – PhysPort’s Impact on Teaching Practice) • $5,238 in unsupported costs related to a modification to a vendor contract (Award ID #2212807 - Advancing Physics Education Where Diversity Resides through Professional Development: Creating the Organization for Physics at Two-Year Colleges (OPTYCs)) Consequence of the Audit Finding: Our procedures consisted of tests of internal control and compliance over an attribute sample of payroll and non-payroll expenditures subjected to the Association's purchasing, payroll, and cash disbursement controls. We consider our sample to be representative of the population. The condition appeared to be systematic in nature. Identification as a Repeat Finding, if Applicable: N/A Recommendation: We recommend the Association update its federal grant policy and procedure manuals, communicate and enforce such policies amongst grant personnel, and implement formal processes to monitor compliance with federal awards. Views of Responsible Officials and Planned Corrective Actions: See corrective action plan. Anticipated Completion Date: December 1, 2024 Responsible Official: Michael Brosnan, Chief Financial Officer