FINDING 2023-005 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Numbers and Years (or Other Identifying Numbers): Regular FY2023, Revenue Loss FY2023 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-006. Condition and Context Prior to entering into subawards and covered transactions with COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF), recipients are required to verify that contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (e.g., grant agreement) that are expected to equal or exceed $25,000 and all subawards. The verification is to be done by checking the SAM exclusions list, collection of a certification from that person or entity, or adding a clause or condition to the covered transaction with that person or entity. Upon inquiring of the County to determine its policies and procedures related to suspension and debarment requirements for the SLFRF funds, the County stated procedures were not in place to ensure vendors were not suspended or debarred prior to entering into covered transactions. The County had not performed procedures to ensure the vendors were not suspended or debarred or otherwise excluded or disqualified from participation in federal assistance programs or activities during the audit period on all of the 13 vendors determined to have covered transactions, totaling $4,440,997, that were paid with SLFRF funds. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 25 LA PORTE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Cause Management of the County did not develop a system of internal controls to ensure that policies and procedures were in place and followed, related to suspension and debarment, as they were unaware of the requirements. Effect Without proper implementation of an effectively designed system of internal controls, the County was unable to verify whether contractors and subrecipients were not suspended, debarred, or excluded. Any program funds the County used to pay contractors that have been suspended or debarred would be unallowable, and the funding agency could potentially recover them. Furthermore, noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County develop written policies and procedures to ensure its compliance with requirements related to suspension and debarment. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding 2023-003 – SEFA Reporting Federal Program: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Disaster Grants – Public Assistance ALNs: 21.027 97.036 Federal Agency: U.S. Department of Treasury U.S. Department of Homeland Security Federal Award Years: October 1, 2022 – September 20, 2024 (21.027) January 1, 2023 – December 31, 2023 (97.036) Criteria: 2 CFR, Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart F, §200.510(b) requires that auditees prepare a schedule of expenditures of Federal awards for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with §200.502. Additionally, 2 CFR 200.303 requires non-Federal entities receiving Federal awards to establish and maintain internal controls designated to reasonably ensure compliance with Federal laws, regulations and program compliance requirements. Effective internal controls should include procedures to ensure federal expenditures are accurately and completely reported on the SEFA. Condition Found, Including Perspective: The System did not have adequate controls relating to the reporting of expenditures on the SEFA for the FEMA – Disaster Grants – Public Assistance and the Coronavirus State and Local Fiscal Recovery Funds programs. Specifically, the System did not have a control in place to ensure that all FEMA awards obligated during the year were recorded on the SEFA. Additionally, the System did not have a control in place to ensure that all incurred expenditures were properly accrued on the SEFA. As a result, the expenditures on the SEFA were understated as follows: • Expenditures of $2,038,362 for the FEMA – Disaster Grants – Public Assistance program were obligated and incurred as of December 31, 2023 but not recorded on the SEFA. • Expenditures of $2,790,267 for the Coronavirus State and Local Fiscal Recovery Funds program were incurred but not accrued for at year end. • Expenditures of $7,529,167 for the Coronavirus State and Local Fiscal Recovery Funds program which were incurred during 2023 and subsequently identified by management to be submitted for reimbursement under the federal award. Possible Cause and Effect: While the System performs a review during the compilation of the SEFA, controls were not designed or implemented effectively to ensure that amounts were properly recognized on the SEFA in the period in which they were expended. Failure to establish effective internal controls regarding financial reporting for the preparation of the SEFA may prevent the System from completing an audit in accordance with the timelines of Uniform Guidance. Questioned Costs: None. Statistical Validity: The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding in the Prior Year: This is not a repeat finding. Recommendation We recommend that management implement appropriate controls and processes to ensure that the SEFA is complete and accurate. Views of Responsible Officials: Grady Memorial Hospital Corporation will implement a control and process to ensure that expenditures are properly reflected on the SEFA.
Federal Agency: U.S. Department of the TreasuryFederal Program Name: Emergency Rental Assistance Program (ERAP) Assistance Listing Number: 21.023 Federal Award Identification Number and Year: Various Pass-Through Agency: Pennsylvania Department of Health and Human Services Pass-Through Number(s): ERA-2101060067, ERA2-0391, ERAP2 Award Period: 1/1/2023 – 12/31/23 Type of Finding: Significant Deficiency in Internal Control Over Compliance Criteria or Specific RequirementUniform guidance requires the auditee to prepare a schedule of expenditures of federal awards (SEFA) which must include the total federal awards expended as determined in accordance with sub-section 200.502. 2 CFR 200.510. A non-federal entity must maintain effective internal control over the federal award (2 CFR 200.303).Condition and ContextPolicies and controls in place regarding the completeness of the SEFA were not properly functioning. Within the supporting listing of expenses relating to ERAP expenditures, six transactions were identified as prior fiscal-year expenditures that were included in the unadjusted 2023 expenditure total. The County revised the 2023 SEFA to exclude the 2022 expenditures. Questioned Costs$33,301 Cause Controls ensuring that only federal expenditures incurred in the period from January 1, 2023 to December 31, 2023 were not operating as designed.Effect Potential inaccurate expenditure reporting in the SEFA. Repeat Finding No.Recommendation We recommend management should review the process of recording federal expenditures to determine expenditures are being included in the appropriate fiscal year.Views of Responsible Officials There is no disagreement with the audit finding and the County is in the process of implementing corrective procedures.
Federal Agency: U.S. Department of the Treasury Federal Program Name: American Rescue Plan Act / Coronavirus State Fiscal Recovery Fund (ARPA) Assistance Listing Number: 21.027Federal Award Identification Number and Year: Various Pass-Through Agency: Pennsylvania Department of Health and Human Services Pass-Through Number(s): 2022-CG-01-39297, SLFRP3241, C000084584, 4100095388 Award Period: 1/1/2023 – 12/31/23 Type of Finding: Significant Deficiency in Internal Control Over ComplianceCriteria or Specific Requirement Uniform guidance requires the auditee to prepare a schedule of expenditures of federal awards (SEFA) which must include the total federal awards expended as determined in accordance with sub-section 200.502. 2 CFR 200.510. A non-federal entity must maintain effective internal control over the federal award (2 CFR 200.303).Condition and Context Policies and controls in place regarding the completeness of the SEFA were not properly functioning. Within the supporting listing of expenses relating to ARPA expenditures, multiple transactions were identified as 2022 fiscal year expenditures that were included in the in 2023 expenditure total. The County revised the 2023 SEFA to exclude the 2022 expenditures. Questioned Costs$381,675 Cause Controls ensuring that only federal expenditures incurred in the period from January 1, 2023 to December 31, 2023 were not operating as designed. Effect Potential inaccurate expenditure reporting in the SEFA. Repeat Finding No.Recommendation We recommend management should review the process of recording federal expenditures to determine expenditures are being included in the appropriate fiscal year.Views of Responsible Officials There is no disagreement with the audit finding and the County is in the process of implementing corrective procedures.
Information on the federal program: Subject: Coronavirus State and Local Fiscal Recovery Funds – Internal Controls and Compliance Federal Agency: Department of the Treasury Federal Program: Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Pass-Through Entity: Indiana Finance Authority Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Noncompliance 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 200.303 states in part: "The non-Federal entity must use one of the following methods of procurement… (b) Simplified acquisition thresholds. The non-Federal entity is responsible for determining an appropriate simplified acquisition threshold based on internal controls, an evaluation of risk and its documented procurement procedures which must not exceed the threshold established in the FAR. When applicable, a lower simplified acquisition threshold used by the non-Federal entity must be authorized or not prohibited under State, local, or tribal laws or regulations. Entities must obtain price or rate quotations from an adequate number of qualified sources to ensure full and open competition. In accordance with 2 CFR 200.214 and the government-wide requirements in 2 CFR Part 180, non-Federal entities are prohibited from contracting with or making subawards to parties that are suspended, debarred, or otherwise excluded from federal programs. This requirement applies to all contracts and procurements under federal awards, regardless of dollar amount, including those conducted under simplified acquisition procedures. Verification must be performed by checking the System for Award management (SAM.gov) or obtaining a written certification from the vendor. Condition: An effective internal control system was not in place at the District in order to ensure compliance with requirements related to the grant agreement and the simplified acquisitions procurement method of the Procurement and Suspension and Debarment compliance requirement. Cause: The District's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system placed the District at risk of noncompliance with the grant agreement and the compliance requirements. Questioned Costs: There were no questioned costs identified. Context: There were two contracts subject to procurement and suspension and debarment during the year. For both procurements, the District could only provide final signed contracts and did not have evidence of the full bid process. For the first selection, the District provided the request for proposal but did not provide all bids that were received or a scoring rubric to support why the District selected the vendor. For the second selection, the request for proposal, bids received, and scoring rubric were not provided. Additionally, evidence of a suspension and debarment check for both selections was not available. The District did not have a formal procurement policy documented. Identification as a repeat finding: No Recommendation: We recommend that the District’s management establish controls related to the procurement process. The District should implement a formal procurement and suspension and debarment policy that states the process that is required for procurements based on the procurement amount. The policy should outline the requirement for a request for proposal, number of bids required, scoring rubric, and suspension and debarment check. 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: Water and Waste Disposal Systems for Rural Communities – Equipment and Real Property Management Federal Agency: U.S. Department of Agriculture Assistance Listing Number: 10.760 Federal Award Number: N/A Pass-Through Entity: N/A Compliance Requirements: Equipment and Real Property Management Audit Finding: Material Weakness, Noncompliance, Qualified Opinion Criteria: 2 CFR 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 200.313(d)(1) states in part: "Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property" Condition: An effective internal control system was not in place at the District to ensure compliance with requirements related to the grant agreement and the Equipment and Real Property Management compliance requirement. Cause: Management had not established a system of internal control that would have ensured proper procedures are followed to comply with the Equipment and Real Property Management compliance requirements. Effect: The failure to establish an effective internal control system enabled noncompliance to go undetected and the proper tracking of assets acquired with federal funds was not taking place. Noncompliance with the grant agreement and the Equipment and Real Property Management compliance requirement could have resulted in the loss of federal funds to the District. Questioned Costs: There were no questioned costs identified. Context: The District did not maintain an updated asset listing that reflects the construction in process balance related to the project funded with federal funds. There was approximately $10.9 million of disbursements from federal funds related to the project as of December 31, 2023. Identification as a repeat finding, if applicable: No Recommendation: We recommend that the District’s management establish controls related to the grant agreement and the Equipment and Real Property compliance requirement to ensure that assets being purchased with federal funds are added to the capital asset listing and all required information is maintained on the capital asset listing. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Internal Control over Schedule of Expenditures of Federal Awards Year Ended December 31, 2023 Segregation of Duties Condition and criteria: During our audit of the Borough’s Schedule of Expenditures of Federal Awards, we noted that the Borough does not have adequate segregation of duties in place. Specifically, the same individual is responsible for initiating and recording journal entries and disbursements and reconciling the bank accounts. In accordance with 2 CFR § 200.303(a), the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Cause and Effect: The Borough is a small entity with limited administrative and accounting staff, which makes it difficult to achieve a complete segregation of duties. Due to resource constraints, individual staff members are assigned multiple roles that overlap key financial processes. Without proper segregation of duties, there is an increased risk that errors or irregularities, including potential misappropriation of assets or fraud, could occur and remain undetected. This condition could lead to noncompliance with applicable federal requirements and inaccuracies in financial reporting. Auditor’s Recommendations: We recommend that Eldred Borough assess the current structure and implement compensating controls where full segregation of duties is not feasible due to staffing limitations. These may include enhanced supervisory review, periodic oversight by the board or executive leadership, documentation of independent reviews, and rotation of duties when possible. Borough’s Response: Eldred Borough has board oversight and will continue to do so. The Borough employees do cover duties of the other employee when necessary and will continue to do so. Bank Reconciliations will be signed by Council. Pay Requisitions are signed by Council and will continue to do so.
2023-001 REPORTING – SIGNIFICANT DEFICIENCY Federal Program Community Development Block Grant/Entitlement Grant Cluster ALN 14.218; passed through the County of Berks Emergency Rental Assistance ALN 21.023; passed through the County of Berks Criteria Per 2 CFR §200.303, non-federal entities must establish and maintain effective internal control over federal awards to provide reasonable assurance of compliance with federal statutes, regulations, and the terms and conditions of the award. The Compliance Supplement for Reporting requires entities to have controls to ensure accurate and timely submission of required reports. Condition/Cause The auditee did not have any documented or implemented internal controls over the review of federal program reporting requirements. Reports were prepared and submitted without documentation of supervisory review or verification of accuracy and completeness. Management did not design or implement procedures to review reports prior to submission, relying solely on preparer knowledge without formal oversight. Effect Without internal controls, there is an increased risk that reports submitted to the federal agency or pass-through entity may contain inaccurate or incomplete information, potentially resulting in noncompliance with reporting requirements. Questioned Costs None. Repeat Finding Yes; 2022-06. Recommendation We recommend that all grant reports are reviewed by a person independent of the preparer who has knowledge of the grant requirements. This review should include comparing the amounts reported to detailed support for accuracy. We also recommend the Authority review their recordkeeping procedures for documentation related to grant reporting. There should be a process in place to ensure all required documentation is maintained and filed in an orderly system that allows the Authority to locate and provide documentation when required. Management Response In general, management agrees with the finding. It should be noted that internal controls for supervisory review of reporting requirements were in place but were not written controls or processes. Reporting for the CDBG Program is accomplished through the preparation of the annual Comprehensive Annual Performance and Evaluation Report (CAPER). Written policies and procedures for the CAPER have been developed. Reporting for the Emergency Rental Assistance Program is accomplished through an online reporting system of the U.S. Treasury and by email to the Pennsylvania Human Services Department. Written policies and procedures have been developed.
Finding 2023-001 - U.S. Department of Housing and Urban Development, Mortgage Insurance Rental and Cooperative Housing for Moderate Income Families and Elderly, Market Interest Rate, ALN #14.135 Statement of Condition: Internal control processes over financial accounting did not ensure that all transactions were properly recorded. Internal control processes over financial accounting did not ensure that key accounts were reconciled or reviewed on a periodic basis. Criteria: The HUD Handbook 4370.2 REV-1, Chapter 2 requires the books and accounts to be complete and accurate. HUD Handbook 4370.2 REV-1, Chapter 2, Section 12 requires monthly reconciliations of all cash accounts. Additionally, 2 CFR Part 200 Section 200.302 Financial Management states that the financial management system of each non-federal entity must provide accurate, current, and complete disclosure of the financial results of each Federal award in accordance with the reporting requirements. Additionally, 2 CFR Part 200 Section 200.303(a), Internal Controls, requires that non-federal entities must establish and maintain effective internal controls over the federal award that provides reasonable assurance that the non-federal entity is managing the award in compliance with federal statutes, regulations and the terms and conditions. Effect: Noncompliance with HUD and Uniform Guidance requirements and the possibility of undetected material misstatements and/or undetected misappropriation of assets. Cause: Prior management oversight. Context: An understanding of processes and internal controls was performed with the Corporation's management and tests were performed to determine if the processes and internal controls were implemented and effective. As part of this process we noted the following processes and internal controls were not effective and/or implemented. 1) Only two of the six bank accounts were reconciled. The outsourced bookkeeper only performed a bank reconciliation for the operating and security deposit cash accounts. 2) The accounts receivable, tenants and accounts receivable, HUD were not reconciled. 3) The monthly review process of the Corporation's financial information is not fully supported by evidence of such review. Questioned Costs: N/A Recommendation: We recommend management review/enhance its accounting and internal control procedures to ensure that all key accounts are reconciled and reviewed with supporting evidence of such review. Views of Responsible Officials and Corrective Action Plan: Management agrees with the finding and will review the accounting and financial procedures, system of internal controls and policies. The Corporation has executed a new management agreement with Remnant Management Inc. effective October 1, 2024. Remnant Management Inc. will ensure that all transactions are properly recorded and that key accounts are reconciled and reviewed on a periodic basis beginning October 1, 2024 and going forward.
Program Information: Assistance Listing #: 93.445 U.S. Department of Health and Human Services I.H.S. Water Tank Replacement Award Numbers: PH12-U35, RN21-15 Award Periods: 7/29/2021-7/29/2025 Criteria: Per 2 CFR section 180.300 and 2 CFR section 200.214, non-federal entities must not enter into covered transactions with parties that are suspended or debarred. Verification must be performed by checking the excluded parties list in the System for Award Management (SAM.gov) or by obtaining a certification from the vendor, and this verification must be documented and retained as part of the procurement record. Additionally, 2 CFR 200.303 requires non-federal entities to establish and maintain effective internal controls over federal awards, including compliance with federal statutes, regulations, and the terms and conditions of the award, which encompasses the requirement to verify and document vendor eligibility. Condition/Context: During testing we noted the following: For 1 of 1 vendors tested, the Tribe did not maintain documentation demonstrating that the vendor was verified as not federally suspended or debarred prior to entering into the contract. [ X ] Compliance Finding [ X ] Significant Deficiency [ ] Material Weakness Cause: The Tribe’s procedures for suspension and debarment verification were not consistently followed or documentation was not retained. Staff turnover and inconsistent application of procurement documentation practices contributed to the exception. Effect: Without documented verification, the Tribe cannot demonstrate that the vendor was eligible to receive federal funds at the time the contract was awarded. This increases the risk of noncompliance with federal procurement requirements and could result in unallowable costs if a vendor were suspended or debarred. Questioned Costs: None noted. The vendor was not found to be suspended or debarred; the issue relates solely to lack of documentation. Repeat Finding: No. Recommendation: We recommend the Tribe strengthen its procurement procedures to ensure suspension and debarment verification is documented for all vendors prior to contract award. This may include requiring a printed SAM.gov verification, a signed vendor certification, or a standard contract clause, and ensuring the documentation is retained in the procurement file. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding and has prepared corrective action as detailed in its Corrective Action Plan.
Finding 2023-001 – Allowable Costs and Reporting U.S. Department of Health and Human Services COVID-19 – Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Assistance Listing # 93.498 Significant Deficiency and Allowable Costs Noncompliance Criteria – 2 CFR 200.303 requires that a 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 and the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition – During our testing of compliance and internal controls over allowability of costs and reporting of expenditures, it was determined that internal controls over reporting are not designed to prevent and detect errors in expenditures being reported on the Department of Health Resources and Services Administration (HRSA) portal (Portal). Consequently, we noted approximately $49,000 of ineligible expenditures related to employee testing were submitted on the Portal for period 5. Cause – Lack of effectively designed and implemented internal controls over allowability of expenditures and reporting of expenditures in the Portal for period 5. Effect – Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be relied upon to effectively prevent or detect noncompliance. Questioned costs – $49,000. Context – Our testing noted approximately $49,000 of ineligible expenditures for employee testing out of a total of approximately $167,000 in expenditures that were reported on the Portal for period 5. Our sample was not intended to be statistically valid. Repeat Finding from Prior Year – Yes. See item 2022-004. Recommendation – Effective supervisory review and approval internal controls over reporting should be implemented to ensure expenditures submitted in the Portal meet the criteria established in the terms and conditions. Furthermore, the review and approval should be formally documented.
Finding 2023-002 – Allowable Costs Research and Development Cluster Significant Deficiency Criteria – 2 CFR 200.303 requires that a 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 and the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition – During our testing of internal controls over allowability of costs, it was determined that internal controls over allowable costs are not designed to prevent and detect errors in employee reimbursed expenditures being reported on certain Group 1 benefited employees’ expense reports for amounts charged to research and development programs. Cause – Lack of effectively designed and implemented internal controls over allowability of expenditures. Effect – Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be relied upon to effectively prevent or detect noncompliance. Context – Our testing noted one transaction out of a total of 40 transactions that did not have documentation of appropriate approval. Our sample was not intended to be statistically valid. Repeat Finding from Prior Year – No. Recommendation – Effective supervisory review and approval internal controls over employee expense reimbursements should be implemented to ensure expenditures charged to federal or state awards meet the criteria established in the terms and conditions. Furthermore, the review and approval should be formally documented.
Finding 2023-003 – Preparation of the Schedule of Expenditures of Federal Awards U.S. Department of Health and Human Services U.S. Department of Agriculture Research and Development (R&D) Cluster Material Weakness Criteria – Title 2 Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) requires the System to prepare a schedule of expenditures of federal awards. 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Condition – Inadequate controls exist over the preparation of the Schedule of Expenditures of Federal and State Awards (the Schedule) specific to research and development (R&D) cluster awards to allow for the timely completion of a complete and accurate Schedule. Consequently, certain R&D cluster expenditures were inadvertently omitted from the previously issued Schedule. Cause – The System did not have adequate controls over identifying all R&D cost reimbursement Federal Acquisition Regulation (FAR) contract related expenditures that should be reported on the Schedule. Effect – Management identified additional reportable R&D cost reimbursement FAR contract related expenditures that were added to the restated Schedule. Questioned Costs – None reported. Context – Approximately $4,800,000 of additional R&D expenditures under cost reimbursement FAR contracts in relation to the restated total expenditures of approximately $23,739,000 under the R&D cluster for the year-ended December 31, 2023, were omitted from the previously issued Schedule. Repeat Finding from Prior Year – No. Recommendation – We recommend that management enhance its controls over the Schedule to ensure they include all R&D expenditures to facilitate timely, accurate completion of the Schedule.
2023-002 Compliance and Internal Controls over Procurement (Material Weakness and Material Noncompliance) U.S. Department of Housing and Urban Development 14.267 – Continuum of Care Program 2023 Funding Criteria: Under 2 CFR Section 200.303(a), non-federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally, under 2 CFR Section 200.320, the Organization must have and use documented procurement procedures for acquisition of property and services under a federal award or a sub-award. Condition: While the Organization has approved policies and procedures for procurement, these are not consistently followed and therefore no observable evidence was available to verify that proper procurement procedures were followed for 4 out of 8 selected products and services for our testing. Cause: Majority of the purchases subject to potential procurement were from recurring vendors from prior years for whom documentation was not available at the Organization. For any new vendors, the policies were not applied consistently by the upper management. Effect: Not following procurement policies may result in funds to be returned back to grantor and / or impact future funding. Questioned Costs: Known costs of $169,575 and likely costs of $198,266. Perspective: As a result of not having a devoted, full-time employee in the senior financial management position, required controls and record keeping were not properly established. Repeat Finding: Yes Recommendation: The Organization should establish procedures to ensure that controls related to procurement are consistently implemented and that all written records are maintained to support that the compliance requirement is met. Views of Responsible Officials: We concur with the recommendation, please see Corrective Action Plan.
2023-003 Compliance and Internal Controls over Matching (Material Weakness) Internal Controls over Period of Performance and Earmarking (Material Weakness) U.S. Department of Housing and Urban Development 14.267 – Continuum of Care Program 2023 Funding Criteria: Under 2 CFR Section 200.303(a), non‐federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally, under 24 CFR Section 578.73, the Organization must match all grant funds, except for leasing funds, with no less than 25 percent of funds or in-kind contributions from other sources. Furthermore, under 2 CFR Section 200.403 (g) and (h), the Organization’s expenditures must be adequately documented and incurred during the approved budget period, respectively. Condition: Payroll costs that could be potentially chargeable to the grant but were not, were claimed as a matching contribution under the grant by the Organization. However, as noted in finding 2023-001 above, payroll cost allocated to the grants did not agree to the grant hours reported in the approved timesheets for certain samples selected for testing. Because of this finding, we cannot establish the accuracy of payroll claimed as a match for the grant. Review and approval of each payroll batch was conducted, but in 6 out of 6 instances tested, errors in grant allocation were not detected. Cause: While there is a process in place for upper management to review and approve each payroll batch based on hours incurred per timesheet, it appears that the control was not operating effectively as the payroll cost charged to the grant in several instances exceeded the corresponding hours charged to the grant per the timesheet. Effect: Unmatched funds may be required to be returned back to grantor and / or impact future funding. Questioned Costs: Undeterminable Perspective: Payroll charged to the grants exceeded time incurred in 7 out of the 60 samples tested, including 1 out of the 17 samples for contract TX0275L6E002112 where payroll was used as a match. Repeat Finding: Yes. Recommendation: We recommend that part of the review process for payroll include verification that the cost charged to the grant does not exceed the grant hours reported on employee timesheet. Views of Responsible Officials: We concur with the recommendation, please see Corrective Action Plan.
2023-004 Compliance and Internal Controls over Earmarking (Significant Deficiency) U.S. Department of Housing and Urban Development 14.267 – Continuum of Care Program Contract No. TX0425L6E002106 Criteria: Under 2 CFR Section 200.303(a), non-federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally, under 24 CFR Section 578.59, the Organization may use up to 10 percent of any grant awarded under this part for the payment of project administrative costs related to the planning and execution of Continuum of Care activities. Condition: Administrative costs exceeded 10 percent of the total award spent for one of the grants closed during the year. Cause: While the administrative costs drawn on the grant were below the maximum allowed by the grant, not all program costs were drawn on the grant, resulting in administrative costs to be over 10% of funds drawn on the grant. Additionally, as a result of not having a devoted, full-time employee in the senior financial management position, there was no reconciliation performed to check that the administrative costs were limited to 10% of all funds drawn. Effect: Overdrawn administrative costs may be required to be returned back to grantor and / or impact future funding. Questioned Costs: $1,321 Perspective: Required reconciliations to verify the administrative costs as a percentage of amounts drawn were not performed. Controls over earmarking requirements were not implemented. Repeat Finding: Yes Recommendation: The Organization should establish procedures to ensure that controls related to earmarking are consistently implemented which should include reconciling the administrative costs to all drawn funds on individual grants. Views of Responsible Officials: We concur with the recommendation, please see Corrective Action Plan.
2023-005 Compliance and Internal Controls over Program Income (Significant Deficiency) U.S. Department of Housing and Urban Development 14.267 – Continuum of Care Program 2023 Funding Criteria: Under 2 CFR Section 200.303(a), non-federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally, under 24 CFR Section 578.57, recipients or subrecipients must examine a program participant's income initially, and at least annually thereafter, to determine the amount of the contribution toward rent payable by the program participant. Condition: While the entity has adopted controls over compliance related to program income, these controls have not been consistently implemented during the year. Additionally for a sample of files selected for scattered locations, no evidence of income calculations to support program income was available within the participant’s files. Cause: Turnover / inadequate staffing in the Organization throughout the year and absence of a senior financial management position resulted in these controls not being consistently implemented. Effect: Without internal controls operating effectively, it is possible that the Organization would be at risk to be out of compliance with the compliance requirements. The Organization cannot effectively manage its federal program with controls that do not operate effectively. Questioned Costs: Undeterminable Perspective: No observable evidence of controls being implemented consistently on the above compliance requirement. Additionally, for 5 of the 7 files selected for scattered locations, no evidence of income calculations to support program income was available within the participant’s files. Repeat Finding: Yes Recommendation: The Organization should establish procedures to ensure that controls related to program income are consistently implemented. In addition, documentation should be included in each participant's files to support income calculations and the participant's share of rent payable to the program. Views of Responsible Officials: We concur with the recommendation, please see Corrective Action Plan.
2023-006 Internal Controls and Compliance over Special Tests and Provisions – Reasonable Rental Rates (Significant Deficiency) U.S. Department of Housing and Urban Development 14.267 – Continuum of Care Program 2023 Funding Criteria: Under 2 CFR Section 200.303(a), non-federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally, under 24 CFR Section 578.49, when grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents being charged for comparable units, taking into account the location, size, type, quality, amenities, facilities, and management services. In addition, the rents may not exceed rents currently being charged for comparable units, and the rent paid may not exceed HUD-determined fair market rents. Condition: While the entity has adopted controls over compliance requirements related to special tests and provisions – reasonable rental rates, these controls have not been consistently implemented during the year. Additionally for a sample of files selected for scattered locations, no evidence of current rental reasonableness verification was available within the participant’s files. Cause: Turnover / inadequate staffing in the Organization throughout the year and absence of a senior financial management position resulted in these controls not being consistently implemented. Effect: Without internal controls operating effectively, it is possible that the Organization would be at risk to be out of compliance with the compliance requirements. The Organization cannot effectively manage its federal program with controls that do not operate effectively. Questioned Costs: Undeterminable Perspective: No observable evidence of controls being implemented consistently on the above compliance requirement. Additionally, for 6 of the 7 sample of files selected for scattered locations, no evidence of current year rental reasonableness verification was available within the participant’s files. Repeat Finding: Yes Recommendation: The Organization should establish procedures to ensure that controls related to special tests and provisions – reasonable rental rates are consistently implemented including maintaining documentation of the verification of rental reasonableness in the program participant's file. Views of Responsible Officials: We concur with the recommendation, please see Corrective Action Plan.
2023-007 Internal Controls over Suspension and Debarment (Significant Deficiency) U.S. Department of Housing and Urban Development 14.267 – Continuum of Care Program 2023 Funding Criteria: Under 2 CFR Section 200.303(a), non-federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Condition: While the entity has adopted controls over compliance requirements related to suspension and debarment, these controls have not been consistently implemented during the year. Cause: Turnover / inadequate staffing in the Organization throughout the year and absence of a senior financial management position resulted in these controls not being consistently implemented. Effect: Without internal controls operating effectively, it is possible that the Organization would be at risk to be out of compliance with the compliance requirements. The Organization cannot effectively manage its federal program with controls that do not operate effectively. Questioned Costs: None Perspective: No observable evidence of controls being implemented consistently on the above compliance requirement. Repeat Finding: Yes Recommendation: The Organization should establish procedures to ensure that controls related to suspension and debarment are consistently implemented. Views of Responsible Officials: We concur with the recommendation, please see Corrective Action Plan.
Assistance Listing Number and Program: 21.027 COVID-19 State and Local Fiscal Recovery Funds Federal Agency: U.S. Department of Treasury Pass-Through Entity and Award Number: Wisconsin Public Service Commission / 5-BF-2022 Criteria: Non-federal entities in receipt of federal funds must comply with the requirements of 2 CFR 200.303(a), which requires an entity to establish and maintain effective internal control over the Federal award to ensure compliance with Federal statutes, regulations and the terms and conditions of the federal award. Recipients of COVID-19 State and Local Fiscal Recovery Fund payments from the Wisconsin Public Service Commission (PSC) must also comply with the reporting requirements described in the terms and conditions of the PSC agreement. Condition: The Reedsburg Utility Commission did not have a process to review and approve the quarterly progress reports prior to submission to the PSC by someone other than the preparer. Additionally, estimates were used to report costs incurred in those quarterly reports. We tested four quarterly reports submitted for the Iowa County and Witwen projects. Our sample was not statistically valid. Cause: The Reedsburg Utility Commission did not have a control process in place to ensure that the reports were being reviewed by someone other than the preparer prior to submission to the PSC and that actual costs were used in the reports. Effect: Reports could contain errors due to estimation and lack of review. Questioned Costs: None reported. Recommendation: The Utility Commission should review its internal control procedures to ensure there are proper review and approval processes over completeness and accuracy of reports in place before submissions to state agencies are completed. Actual amounts supported by the financial software should be used in those reports. Management's Response: The Utility Commission General Manager or Communications System Supervisor will review the quarterly progress reports prepared by someone else. Section II of the Project Status Report instructions states “Answer each question to the best of your ability.” The work orders do not include all costs related to labor benefits and taxes, and also the electronics and customer premise equipment associated with the projects. These costs are calculated and added in when the project is completed and is being closed out. Estimating these items for the quarterly Project Status Report is providing the project costs spent through the respective quarter to the best of our ability due to the limitations of the work order reporting process.
FINDING 2023-003 – Reporting: Significant Deficiency over Internal Controls over Compliance Federal Assistance Listing Number Federal Agency/Pass-through Entity – Program Name Award Year Questioned Costs 64.033 VA Supportive Services for Veteran Families Program 2023 $0 Criteria: The 2 CFR section 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control over federal awards 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 awards. The VA Data Guide (the Guide) and the contract agreements provide instruction on the frequency and data requirements due during the award period. Condition/Context: In a representative sample of monthly, quarterly, and annual reports due during the year ended December 31, 2023, auditors noted six of the six tested annual financial reports did not agree to the underlying profit and loss detail for the related grants. In addition, the certified authorized official was not an employee of the Organization and there was a lack of documentation for how the certifying official was deemed appropriate. In the sample of quarterly reports, the Organization had contradicting responses related to whether reimbursement requests reflect actual spending of designated Supportive Services for Veteran Families (SSVF) funding. Effect: Reporting requirements of the awards were not accurate for certain line items. Cause: There was turnover in the Organization which caused the inability to produce or find supporting documentation on how values were created or how certifying officials outside the Organization were provided authority to certify such reports submitted. Repeat finding: This is not a repeat finding. Recommendation: The Organization should have knowledgeable personnel review and approve reports for completeness and accuracy, including comparing to source documentation and any reconciliations between source data to final reporting. Views of responsible officials and planned corrective actions: Management agrees with the recommendation and has developed a corrective action plan to address the finding.
Condition: During our testing of allowable activities/cost and period of performance it was noted the Organization did not perform or document required approval/review over expenditures and participant applications submitted. Criteria: Per § 200.303 of the Code of Federal Regulations, recipients must establish, document, and maintain internal controls over Federa awards that provides reasonable assurance that the recipient is managing the Federal Award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Cause: The Organization lacked formal policies and procedures to ensure documentation and performance of approval/review over expenditures and applications. The responsibility for oversight along with monitoring activities was not documented. Effect: Failure to establish, document, and maintain internal controls increases the risk that federal funds may not be used in accordance with applicable laws and regulations, potentially resulting in noncompliance with program requirements. Context: This condition was identified in all sampled populations of allowable activities/cost and period of performance. Recommendation: We recommend the Organization develop and implement formal documented review/approval and monitoring procedures which include the written or electronic signature of authorized individuals on invoices and participant applications Views of Responsible Officials: Management agrees with the finding.
Finding 2023-002: Lack of documentation of review and approval - Material Weakness Program name:Office for Coastal Management Assistance Listing: 11.473 Federal award Identification number: 20 NFWF 339630 Federal award year: 9/1/2020 - 9/30/2024 Federal awarding agency: U.S. Department of Commerce Criteria - In accordance with 2 CFR 200.303, recipients and subrecipients must establish, document and maintain effective internal control over Federal awards. These controls should be in compliance with Federal statutes, regulations, and the terms and conditions of the award, and should align with standards such as the “Standards for Internal Control in the Federal Government” (Green Book) or the COSO framework. This includes controls over: Payroll: Ensuring labor charges are accurate, allowable, and properly approved (2 CFR 200.430). Expenses: Ensuring proper documentation and approval. (2 CFR 200.400(d) ) Reporting: Ensuring financial reports are accurate, complete, and reviewed prior to submission (2 CFR 200.328). Condition - The Organization has limited written processes of certain transaction classes. There was a pervasive lack of documentation of approval over transactions, including payroll, expenses, and reporting. Cause - The Organization did not maintain or consistently apply documentation protocols for internal control reviews. Formal documentation practices were not in place during the audit period. Effect - Lack of documentation as evidence that controls over compliance were being performed. Documentation should be maintained as evidence that sufficient control activities are in place and would effectively prevent or detect and correct noncompliance. Controls must be followed for every transaction and documentation of the control being performed must be maintained. Questioned costs - None identified. Perspective - The deficiency was pervasive across multiple compliance areas and was not isolated to a specific transaction or department. The scope indicates a systemic control weakness during the audit period. Identification of Repeat Findings - This is a repeat finding from the prior year (Finding 2022-002). As a result of the 2022 audit report, issued in October 2025, the Organization began the process of developing updated policies for compliance. In 2025, the Organization formally adopted new policies and procedures that align with the internal control standards per 2 CFR Part 200. Recommendation - We recommend that the Organization ensure updated policies and procedures are implemented and consistently applied. This includes: Documented review and approval of all transactions related to payroll, expenses, and reporting. Maintenance of written evidence supporting such reviews. Regular training and internal monitoring to ensure control procedures are consistently followed. Management response - Management agrees with this assessment and has committed to a corrective action plan. Management has also engaged with a new accounting firm to oversee the financial reporting functions at the Organization.
2 CFR § 300 codified in 45 CFR part 75 gives regulatory effect to the Department of Health and Human Services. 2 C.F.R § 200.303(a) provides that 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. The General Health District has established procedures to approve timesheets by requiring the employee and department supervisor to sign the timesheets indicating they are accurate (employee) and approved (supervisor). For 2024, 8% of payroll disbursement timesheets tested over the Community Health Workers for Public Health Response and Resilient Program were not signed by the Health Commissioner and/or Director of Administration to indicate timesheets were accurate. Failure to follow the approved procedures could result in the occurrence of unallowable payroll transactions. The General Health District should ensure that both the employee and department supervisor sign the timesheets. These approvals should be maintained for audit.
2 CFR § 300 codified in 45 CFR part 75 gives regulatory effect to the Department of Health and Human Services. 2 C.F.R § 200.303(a) provides that 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. The General Health District established procedures to approve bills at monthly board meetings. The General Health District failed to approve 19% of nonpayroll disbursements tested in 2023 over the Community Health Workers Federal Program. Failure to follow the approved the disbursements could result in the occurrence of unallowable transactions. The General Health District should ensure that they approve all payments via the edit list and/or hand signed list. These approvals should be listed and maintained for audit.
2023-002 Eligibility - MAXIS Prior Year Finding Number: N/A Year of Finding Origination: 2023 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of Health and Human Services Program: 93.778 Medical Assistance Program Award Number and Year: 2305MN5ADM, 2023 Pass-Through Agency: Minnesota Department of Human Services Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 42 U.S. Code of Federal Regulations §§ 435.911 and 435.945 require the state Medicaid agency to determine and verify eligibility of enrollees in Medicaid. The Minnesota Department of Human Services provides the Minnesota Health Care Programs Eligibility Policy Manual. The manual contains the Minnesota Department of Human Services eligibility policies for the Minnesota Health Care Programs, including the eligibility requirements of Medical Assistance. The manual includes specific eligibility requirements for participants’ citizenship verification, income limits, and asset verification, as well as requirements for adoption assistance cases to include a signed adoption assistance agreement. Minnesota Statutes § 256B.05 requires county agencies to administer Medical Assistance. Condition: The Minnesota Department of Human Services maintains the computer system, MAXIS, which is used by Norman County to support the eligibility determination process. In the case files reviewed for eligibility, not all documentation to support participant eligibility was available, updated, or input correctly into MAXIS. The following exceptions were noted in the sample of 40 case files tested: • One applicant’s citizenship verification method did not match the documentation in the case file. • One case file did not document the participant’s income correctly. • Two case files did not document the participants’ assets correctly. • One case file did not contain the required adoption assistance agreement. Additionally, it was noted that reviews of the case files were not performed during 2023. Questioned Costs: Not applicable. The County administers the program, but the State of Minnesota pays benefits to participants in this program. Context: The State of Minnesota and the County split the eligibility determination process. Pursuant to Minnesota statutes, Norman County performs the "intake function" needed for this program, while the State maintains the MAXIS system, which supports the eligibility determination process. Participants receive benefit payments from the State. The population consisted of 342 active MAXIS cases enrolled in the Medical Assistance Program in 2023; the sample size was 40 case files. The sample size was based on the guidance from chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: The lack of updated information in MAXIS and lack of verification of key eligibility-determining factors increase the risk that program participants will receive benefits when they are not eligible. Cause: Program personnel entering case data into MAXIS did not obtain and update the information in the system. Recommendation: We recommend Norman County implement additional procedures to provide reasonable assurance that all documentation needed to support eligibility determinations exists, the program personnel properly input or update the documentation in MAXIS, and the program personnel follow up on issues in a timely manner. We also recommend the county implement case file review procedures to help maintain accuracy. In addition, Norman County should consider providing further training to program personnel. View of Responsible Official: Concur
2023-003 Reporting Prior Year Finding Number: N/A Year of Finding Origination: 2023 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of Health and Human Services Program: 93.778 Medical Assistance Program Award Number and Year: 2305MN5ADM, 2023 Pass-Through Agency: Minnesota Department of Human Services Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. As part of Norman County’s Local Collaborative Time Study (LCTS) reporting requirements for Schools (DHS-3220.1) and Public Health (DHS-3220.3), LCTS fiscal site contacts are required to verify that the information on the LCTS Fiscal and Cost Schedule is accurate and that it complies with all guidelines set forth in the LCTS Cost Schedule Instructions described in DHS Bulletin #16-32-04 – Local Collaborative Time Study (LCTS) Fiscal Operations. It also states that the County’s LCTS Fiscal Reporting and Payment Agent is required to review all cost schedules from participating agencies. Condition: County staff did not maintain documentation to support that the LCTS Cost Schedules DHS-3220 tested were reviewed by the County’s LCTS Fiscal Reporting and Payment Agent. Questioned Costs: None. Context: Each member of a collaborative submits the LCTS Cost Schedules DHS-3220 to DHS quarterly for reimbursement of LCTS money, which is reimbursed to the County with federal Medical Assistance Program funds. The Norman County Social Services Department acts as the LCTS Fiscal Reporting and Payment Agent for the local collaborative in Norman County. The population consisted of 12 LCTS Cost Schedules DHS-3220 quarterly reports for the three members of the collaborative; the sample size was four reports. The sample size was based on guidance from chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: Lack of a review process increases the risk that reports will not be submitted as required or accurate. Cause: Staff from the County’s Social Services Department indicated they were not aware of the signature requirements for the quarterly reports. Recommendation: We recommend the County implement procedures to ensure the cost schedules are reviewed and evidence of the review is retained. View of Responsible Official: Concur
Finding 2023-003 – Huerfano County - Internal controls over the preparation of the SEFA Criteria: In accordance with 2 CFR Part 200.510(b)(2), the auditee is responsible for preparing a schedule of expenditures of Federal awards (SEFA) for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR Part 200.303(a) and 2 CFR Part 200.502. Condition: The County does not have adequate internal controls to ensure the SEFA accurately reports all federal assistance the county receives. Cause: Grant management at the county is decentralized and departments are responsible for providing the required information to the County’s department of finance to facilitate the preparation of the SEFA. The department of finance was not provided accurate federal program expenditures. Effect: The SEFA did not correctly report all Federal expenditures. The Federal government relies on the SEFA information to be reported accurately. In addition, accurate SEFA information is relied upon by the auditors in order to perform the major program determinations utilized to select the Federal programs subject to Single Audit procedures. Questioned Costs: None reported. Repeat Finding: No. Recommendation: We recommend the County implement a countywide system to allow for a more automated system of tracking federal expenditures, that may include updated processes to be developed to set up new organization codes which would require grant managers to provide the required information needed for accurate SEFA preparation. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has implemented new process to ensure accurate preparation of their SEFA’s.
Department of Health and Human Services Federal Financial Assistance Listing #93.498 COVID‐19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year –Period 5 TIN #201209404, Period 5 TIN #262181659 Reporting Significant Deficiency in Internal Control over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Condition: The Organization’s special reports submitted to the Department of Health and Human Services (HHS) for Period 5 were not reviewed and approved by a separate individual outside of the preparer. Cause: The Organization did not have an adequate internal control policy in place to ensure review and approval over the preparation of HHS Period 5 reporting was documented. Effect: The lack of adequate policies governing review and approval increases the risk that employees participating in the federal award administration may not be able to detect and correct noncompliance in a timely manner. Questioned Costs: None reported. Context: Key line items were tested on the Period 5 Department of Health and Human Services special reports. A total of two special reports were submitted and tested. Repeat Finding from Prior Years: Yes – 2021-002 Recommendation: We recommend the Organization implement a control process which includes a secondary review and approval of required reports to be submitted to the federal agency. Views of Responsible Officials: Management agrees with the finding.
FINDING 2023-002 Subject: CDBG - Entitlement Grants Cluster - Program Income Federal Agency: Department of Housing and Urban Development Federal Program: Community Development Block Grants/Entitlement Grants Assistance Listings Number: 14.218 Federal Award Numbers and Years (or Other Identifying Numbers): B-11-UN-18-0002, B-19-UC-18-0016, B-20-UC-18-0016, B-21-UC-18-0016, B-22-UC-18-0016, B-23-UC-18-0016 Compliance Requirement: Program Income Audit Findings: Material Weakness, Modified Opinion This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-003. Condition and Context The County received program income through various loan programs it offered to qualifying individuals. Once the County received a loan payment, the receipt was posted into the financial accounting system of the County and recorded in a grant fund. The amount received was also to be recorded in the Department of Housing and Urban Development's (HUD) Integrated Disbursement and Information System (IDIS) website. The recorded program income in the IDIS website would then appear on the Drawdown Report by Voucher Number report (PR07). One individual was responsible for notifying the County Auditor's office when program income money was received so it could be receipted in the County's financial accounting system. The same individual was also responsible for reporting the information on the IDIS site. No internal controls were established to ensure the program income that was recorded in the financial accounting system was also reported on the IDIS site and the PR07 report. There were 5 out of 38 receipts that were unable to be located on the PR07 report provided for audit. In addition, we were unable to verify the total amount recorded in the receipt ledger to the total reported on the PR07 report. The County's ledger amount was greater than the PR07 report by $54,727 and is primarily attributed to under reporting of program income in the IDIS as identified above. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 20 LAKE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.1 states in part: ". . . Internal controls for non-Federal entities means: (1) Processes designed and implemented by non-Federal entities to provide reasonable assurance regarding the achievement of objectives in the following categories: (i) Effectiveness and efficiency of operations; (ii) Reliability of reporting for internal and external use; . . ." 2 CFR 200.302 states in part: "(a) Each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state's own funds. In addition, the state's and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. . . . (b) The financial management system of each non-Federal entity must provide for the following: . . . (3) Records that identify adequately the source and application of funds for federally funded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. . . ." 24 CFR 570.504 states in part: "(a) Recording program income. The receipt and expenditure of program income as defined in § 570.500(a) shall be recorded as part of the financial transactions of the grant program. (b) Disposition of program income received by recipients. (1) Program income received before grant closeout may be retained by the recipient if the income is treated as additional CDBG funds subject to all applicable requirements governing the use of CDBG funds. (2) If the recipient chooses to retain program income, that program income shall be disposed of as follows: INDIANA STATE BOARD OF ACCOUNTS 21 LAKE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (i) Program income in the form of repayments to, or interest earned on, a revolving fund as defined in § 570.500(b) shall be substantially disbursed from the fund before additional cash withdrawals are made from the U.S. Treasury for the same activity. (This rule does not prevent a lump sum disbursement to finance the rehabilitation of privately owned properties as provided for in § 570.513.) (ii) Substantially all other program income shall be disbursed for eligible activities before additional cash withdrawals are made from the U.S. Treasury. . . ." Cause A turnover of staff in the County's Community Development office and management not ensuring that a system of internal controls that segregated key functions was designed, implemented, and operating effectively contributed to the program income issue identified above. Effect Without the proper implementation of an effectively designed system of internal controls, the County could not ensure that program income was properly reported and used before the drawdown of federal funds as required. The County could be at risk of losing federal funds by the federal awarding agency due to noncompliance with federal regulations. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the management of the County establish a system of internal controls to ensure that all program income received is properly reported in the IDIS system and expended prior to drawing down federal awards. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-003 Subject: COVID-19 - Emergency Rental Assistance Program - Period of Performance Federal Agency: Department of the Treasury Federal Program: COVID-19 - Emergency Rental Assistance Program Assistance Listings Number: 21.023 Federal Award Number and Year (or Other Identifying Number): ERA-0359 Compliance Requirement: Period of Performance Audit Findings: Material Weakness, Modified Opinion INDIANA STATE BOARD OF ACCOUNTS 22 LAKE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The County received a federal Emergency Rental Assistance (ERA) Program grant, that was created during the COVID-19 pandemic, to help provide financial and housing stability assistance to eligible households to help prevent eviction and ensure stable housing. Recipients had a period of performance to incur costs that was between the start of the grant until September 30, 2022, for the Emergency Rental Assistance Program 1 (ERA1) and could be extended until December 29, 2022, if the recipient received reallocated funds from the Department of the Treasury. The County did receive reallocated funds from the Department of the Treasury; therefore, the County had until December 29, 2022, to incur costs for the ERA1 program. The costs that were incurred during the period of performance then had a liquation date of April 28, 2023. The County did not have internal controls in place to ensure costs were incurred within the grant period of performance and those costs incurred were properly paid by the liquidation date. Five out of seven of the expenditures tested, totaling $124,787, were for costs incurred after the period of performance. One expenditure included a December obligation to a subrecipient of $31,026, which was within the period of performance. But, the County did not pay the subrecipient by the liquidation date, so a total of $155,813 was paid after the liquidation date. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (h) Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to § 200.308(e)(3)." Cause Due to turnover in the Economic Development Department and lack of knowledge of the period of performance dates of the ERA1 program, noncompliance went undetected by the County. Effect Noncompliance with the provisions of federal statutes, regulations, and terms and conditions of the federal award resulted in the request by the Department of the Treasury for the County to refund $154,945. INDIANA STATE BOARD OF ACCOUNTS 23 LAKE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs We identified $155,813 in known questioned costs as noted above in the Condition and Context. Recommendation We recommended that management of the County establish a system of internal controls to ensure compliance with period of performance requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-004 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Procurement and Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Numbers and Years (or Other Identifying Numbers): Contract #65873, SLT-3157 Pass-Through Entity: Indiana Department of Natural Resources Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context Procurement The County did adopt an applicable federal purchasing policy. The Lake County Indiana Purchasing Manual for Supplies, Services and Public Works states on page 19 that "Federal funds more than $50,000 but less than $150,000 will invite 3 quotes at an open public meeting . . .", which is the federal requirement for small purchases. However, the County did not follow this policy. In 2023, the County had one vendor that was paid a total of $97,525 from COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) under Contract #65873 from the Indiana Department of Natural Resources. However, the County did not obtain price or rate quotes for the one applicable vendor under the small purchase threshold as required. Suspension and Debarment Prior to entering into subawards and covered transactions with the SLFRF award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000 and all subawards. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person or entity, or adding a clause or condition to the covered transaction with that person or entity. INDIANA STATE BOARD OF ACCOUNTS 24 LAKE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The County did not have policies or procedures in place related to the suspension and debarment requirements for the SLFRF funds. Two covered transactions totaling $1,990,616 paid from SLFRF funds were identified. Documentation to show that suspension and debarment was verified prior to entering into contracts with these two vendors could not be provided by the County. The amounts for which suspension and debarment were not verified for Contract #65873 from the Indiana Department of Natural Resources and the SLT-3157 directly from the Department of the Treasury were $176,711 and $1,813,905, respectively. The lack of internal controls and noncompliance were isolated to the transactions identified above. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(i) states: "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 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or subaward. (a) Informal Procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases - (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . ." INDIANA STATE BOARD OF ACCOUNTS 25 LAKE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause The County's purchasing policy does not provide procedures on how the County will ensure the appropriate number of quotes will be obtained for small purchases or how the County will ensure compliance with the suspension and debarment requirements. Effect Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the repayment or loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. Recommendation Management of the County should develop procedures to ensure the appropriate procurement methods are used for items or services procured that are within the small purchase threshold and to ensure vendors are not suspended or debarred when expending federal funds. Appropriate documentation should be maintained to ensure compliance with procurement and suspension and debarment. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-005 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): SLT-3157 Compliance Requirement: Reporting Audit Finding: Material Weakness INDIANA STATE BOARD OF ACCOUNTS 26 LAKE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context Recipients are required to submit quarterly Project and Expenditures (P&E) reports to the U.S. Department of the Treasury. The reporting periods, as well as the respective due dates, are based upon type of recipient and its population, as well as the recipient's allocation amount. Information to be reported includes projects funded, expenditures, and contracts for the appropriate reporting period. The County was classified as a county with a population above 250,000 residents. As such, the County was required to submit quarterly P&E reports in 2023. The County did not have internal control procedures in place over the quarterly P&E reports. The quarterly P&E reports were generated by one individual without a review or oversight process to detect and correct errors prior to submission. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause A proper system of internal controls was not designed or implemented by management of the County to ensure that policies and procedures were in place related to reporting to ensure the amounts reported were accurate. Effect Without the proper implementation of an effectively designed system of internal controls over reporting, the County cannot ensure that the quarterly P&E reports submitted were materially accurate and correct. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the repayment or loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the management of the County design and implement a proper system of internal controls to ensure the accuracy and correctness of the quarterly P&E reports. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Department of Health and Human Services Federal Financial Assistance Listing #93.829 Section 223 Demonstration Programs to Improve Community Mental Health Services Cash Management Significant Deficiency in Internal Control over Compliance Criteria – 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Condition – There was no evidence retained that the Organization’s cash management requests were reviewed and approved prior to submission. Cause – The Organization did not have an internal control policy in place to ensure documented review and approval of the cash management requests were documented. Effect – The lack of adequate policies governing review and approval increases the risk that employees participating in the federal awards administration may not be able to detect and correct noncompliance in a timely manner. Questioned Costs – None reported. Context/Sampling – A nonstatistical sample of 3 out of 8 cash management requests were selected for detail testing and 3 did not include evidence of a documented review by someone other than the preparer. Repeat Finding from Prior Year(s) – No Recommendation – We recommend the Organization implement an internal control policy to ensure that formal documentation of review and approval is obtained and retained. Views of Responsible Officials – Management agrees with the finding.
Rural eConnectivity Pilot Program U.S. Department of Agriculture Loan ID MO1704-A59, April 2, 2020 – April 1, 2043 Criteria or Specific Requirement – Internal Controls over Compliance (2 CFR 200.303(a). non‑federal entities must establish and maintain effective internal controls over Federal awards, including segregation of duties to reasonably ensure reports submitted to the federal awarding agency or a pass-through entity include all activity of the reporting period, are supported by underlying accounting or performance records, and are fairly presented in accordance with governing requirements. Condition – The Cooperative did not maintain appropriate segregation of duties for approval of quarterly reports. Specifically, reports were not separately reviewed for completeness and accuracy by an individual in management at the appropriate level, the same individual prepared and approved the quarterly reports. Cause – The Cooperative’s internal controls were not adequate to ensure reports submitted were reviewed by a separate individual. The Cooperative had not assigned separate personnel to perform the preparation and approval functions for required quarterly reports. Effect or Potential Effect – A lack of segregation of duties increases the risk that errors or omissions in quarterly reports may not be prevented or detected in a timely manner. As a result, reports submitted to USDA may be inaccurate or incomplete. Questioned Costs – None Context – We selected a sample of two out of four quarterly reports submitted during the year for detailed testing. For both reports documentation showed the same individual was responsible for both preparing and approving the submissions. The sampling methodology used is not, and is not intended to be, statistically valid. Identification of a Repeat Finding, if Applicable – Not a repeat finding. Recommendation – The Cooperative should implement internal control procedures that ensure adequate segregation of duties for the preparation and approval of quarterly reports. At a minimum, report preparation and approval responsibilities should be assigned to different individuals. Views of Responsible Officials and Planned Corrective Actions – The Cooperative concurs with the finding and management will implement procedures to ensure appropriate segregation of duties are in place for reporting requirements.
Reference Number: 2023-02 Finding: Finding Type: Significant Deficiency in Internal Control Over Compliance Title and ALN of Federal Program: 21.027 - Coronavirus State and Local Fiscal Recovery Funds Criteria or Specific Requirement: A. Activities Allowed or Unallowed – 2 CFR section 200.303 of the Uniform Guidance requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards 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 awards. Condition: During the audit, it was noted that the Organization was unable to provide formal support for the internal review of costs submitted to the pass-through grantor under the major program. Cause: The Organization lacks established procedures which provide formal evidence that the allowability, accuracy and completeness of transactions were verified before submission. Effect or Potential Effect: Without adequate internal controls in place to ensure that all charges to the federal program are properly reviewed for allowability, the Organization faces increased risk of noncompliance with the allowability requirement and could request funds for unallowed costs. Questioned costs: None Identification as a Repeat Finding: N/A – this was not reported as a finding in the prior audit report. Context: There is no formal approval for costs submitted to the pass-through grantor under the major program. Recommendation: We recommend that the Organization implement a formal process for approval of charges to federal programs before submission. Views of Responsible Officials: Management agrees with the finding and recommendation.
Reference Number: 2023-04 Finding: Finding Type: Significant Deficiency in Internal Control Over Compliance Title and ALN of Federal Program: 21.027 - Coronavirus State and Local Fiscal Recovery Funds Criteria or Specific Requirement: L. Reporting – 2 CFR section 200.303 of the Uniform Guidance requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards 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 awards. Condition: During the audit, it was noted that the Organization was unable to provide formal support for the internal review of required reports under the major program before they were submitted to the pass-through grantor. Cause: The Organization lacks established procedures which provide formal evidence that the accuracy and completeness of required reports was verified before submission. Effect or Potential Effect: Without formal review controls in place, the Organization is more susceptible to reporting errors and/or noncompliance with federal requirements. Questioned costs: None Identification as a Repeat Finding: N/A – this was not reported as a finding in the prior audit report. Context: Of two monthly invoices selected for testing, neither contained formal support that an internal review took place prior to submission to the pass-through grantor. Recommendation: We recommend that the Organization implement a formal process for verifying the accuracy and completeness of required reports before submission. Views of Responsible Officials: Management agrees with the finding and recommendation.
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 93.558, Partnership, Accountability, Training, Hope (PATH) Federal Award Identification Number and Year: 2201MITANF & 2301MITANF Finding Type – Significant deficiency in internal control over compliance Repeat Finding - No Criteria – Per 2 CFR § 200.303, the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition – During our testing for Reporting compliance, it was noted the client failed to submit the quarterly expenditures report for the period ended March 31, 2023 within the required time frame. Context – The required report was not submitted by the due date. Identification of How Questioned Costs Were Computed – N/A Questioned Costs – None Cause – Management noted that the accounting staff were not completing necessary accounting tasks in a timely manner and, therefore required reports were not submitted on time. Effect – The report was submitted late. Recommendation – We recommend management increase awareness of federal program compliance requirements and monitor compliance with the requirements on regular basis. In addition, we recommend that management review its procedures and controls in place to ensure that reports are completed and submitted by the required due dates. View of Responsible Officials and Corrective Action Plan – Management agrees with finding. See corrective action plan.
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 93.568, Low-Income Home Energy Assistance Federal Award Identification Number and Year: E20230849-001, E2024242910-00, E20230808-00, E2024-1887-00 Finding Type – Significant deficiency in internal control over compliance Repeat Finding - No Criteria – Per 2 CFR § 200.303, the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition – During our testing for reporting compliance, it was noted the client failed to submit the monthly Statement of Expenditures for six months between two programs and the final Statement of Expenditures within the required time frame. Context – The required reports were not submitted by the due date. Identification of How Questioned Costs Were Computed – N/A Questioned Costs – None Cause – Management noted that the accounting staff were not completing necessary accounting tasks in a timely manner and, therefore required reports were not submitted on time. Effect – The reports were submitted late. Recommendation – We recommend management increase awareness of federal program compliance requirements and monitor compliance with the requirements on regular basis. In addition, we recommend that management review its procedures and controls in place to ensure that reports are completed and submitted by the required due dates. View of Responsible Officials and Corrective Action Plan – Management agrees with finding. See corrective action plan.
Assistance Listing Number, Federal Agency, and Program Name: Assistance Listing Number 93.569, Community Services Block Grant Federal Award Identification Number and Year: E20234456-001, E20242464-001, E20230048-001, E20241850-001 Finding Type – Significant deficiency in internal control over compliance Repeat Finding - No Criteria – Per 2 CFR § 200.303, the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition – During our testing for reporting compliance, it was noted the client failed to submit the monthly Statement of Expenditures for four months and the final Statement of Expenditures within the required time frame. Context – The required reports were not submitted by the due date. Identification of How Questioned Costs Were Computed – N/A Questioned Costs – None Cause – The management noted that the accounting staff were not completing necessary accounting tasks in a timely manner and, therefore required reports were not submitted on time. Effect – The reports were submitted late. Recommendation – We recommend management increase awareness of federal program compliance requirements and monitor compliance with the requirements on regular basis. In addition, we recommend that management review its procedures and controls in place to ensure that reports are completed and submitted by the required due dates. View of Responsible Officials and Corrective Action Plan – Management agrees with finding. See corrective action plan.
"reports or supporting documentation, nor could they demonstrate that reporting requirements were consistently tracked, reviewed, or completed in a timely manner. As a result, we were unable to verify whether required reports were prepared accurately, submitted timely, or submitted at all during the audit period. Criteria Under 2 CFR 200.328 (Financial Reporting) and 2 CFR 200.329 (Monitoring and Reporting Program Performance), non-federal entities are required to submit accurate, complete, and timely financial and performance reports as specified in the terms and conditions of the federal award. Additionally, 2 CFR 200.303 (Internal Controls) requires that organizations maintain effective internal controls to ensure compliance with federal statutes, regulations, and award requirements, including reporting obligations. Cause These deficiencies appear to result from the absence of a formal reporting process, lack of oversight and monitoring of reporting requirements, and insufficient internal controls to ensure that required reports are prepared, reviewed, and submitted in accordance with federal guidelines. Effect The failure to prepare and submit required reports results in: ▪ Noncompliance with federal award requirements ▪ Increased risk that financial and program information reported to the granting agency is incomplete or inaccurate ▪ Potential for funding delays, suspension, or termination ▪ Increased exposure to regulatory scrutiny and audit findings ▪ Impaired ability of the awarding agency to monitor program performance and financial activity Questioned Costs Likely Questioned Costs: Undeterminable CARESTL HEALTH SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED DECEMBER 31, 2022 46 SECTION III – FEDERAL AWARD FINDINGS AND QUESTION COSTS (Continued) The failure to prepare and submit required financial and performance reports constitutes a material weakness in internal control over compliance and results in noncompliance with federal reporting requirements. Recommendation We recommend that management: ▪ Establish a formal reporting calendar outlining all required financial and performance reports, including due dates ▪ Implement procedures to ensure reports are prepared accurately, reviewed, and submitted timely ▪ Maintain documentation of submitted reports, including confirmation of submission and supporting schedules ▪ Assign clear responsibility for reporting compliance and implement supervisory review controls ▪ Provide training to relevant personnel on federal reporting requirements Strengthening reporting processes will improve compliance, enhance transparency, and ensure that the organization meets its obligations under federal awards. Management Response Management respectfully disagrees with the conclusion that CareSTL Health failed to submit required financial and performance reports. All required federal grant reports, financial reports, and performance submissions were uploaded in full to the auditor portal on April 13, 2026. The documentation was downloaded directly from the Electronic Handbook in which the documents were originally submitted to HRSA. The circumstances described in the finding do not reflect a lack of internal controls or noncompliance with 2 CFR 200.328, 200.329, or 200.303. Rather, the perception of non submission appears to have resulted from timing constraints during the audit fieldwork period and the volume of overlapping federal requests occurring simultaneously. As noted in our financial management response to HRSA, the organization was navigating significant operational strain, including: ▪ An unexpected, unannounced full operational site visit that diverted key personnel ▪ Reimbursement only funding constraints that limited staffing capacity ▪ Multiple concurrent federal deadlines that compressed the audit preparation window Despite these challenges, CareSTL Health did submit all required reports, and documentation confirming submission was made available through the auditor portal. CARESTL HEALTH SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED DECEMBER 31, 2022 47 SECTION III – FEDERAL AWARD FINDINGS AND QUESTION COSTS (Continued) Management agrees with the recommendations provided and views them as aligned with improvements already underway. To further strengthen reporting processes, the organization will: ▪ Establish a formal reporting calendar with all required federal due dates ▪ Implement procedures to ensure reports are prepared, reviewed, and submitted timely ▪ Maintain documentation of all submissions, including confirmations and supporting schedules ▪ Assign clear responsibility for reporting compliance and supervisory review ▪ Provide training to relevant personnel on federal reporting requirements These enhancements will reinforce our existing controls and ensure continued compliance, transparency, and timely reporting under all federal awards."
Finding 2022-02 – Inability to Support Allowable Activities Program Number: 93.224, 93.225, 93.493, 93.527 Type of Finding: Internal Control, Compliance and Material Weakness Condition During our audit of compliance with federal requirements, we were unable to perform sufficient testing of allowable activities due to a significant lack of supporting documentation. Management was unable to provide adequate evidence demonstrating that expenditures and program activities were conducted in accordance with the terms and conditions of the federal award. Specifically: ▪ Documentation supporting program activities was not maintained or not provided upon request ▪ Only general ledger entries and limited journal supports were made available ▪ Supporting evidence of programmatic execution (e.g., participant records, activity reports, eligibility documentation, or service delivery evidence) was largely absent ▪ As a result, we could not determine whether expenditures were incurred for authorized program purposes This lack of documentation prevented us from verifying that funds were used for allowable activities under the federal program. Criteria Under 2 CFR 200.303 (Internal Controls) and 2 CFR 200.302 (Financial Management), nonfederal entities must maintain effective internal control over federal awards and provide accurate, current, and complete disclosure of financial results, supported by records that adequately demonstrate compliance. Additionally, program-specific requirements require that expenditures be incurred only for activities that are allowable and aligned with the objectives of the federal award. Cause These deficiencies appear to result from inadequate recordkeeping practices, lack of formal documentation requirements, and insufficient oversight of program-level activities. Management did not implement procedures to ensure that programmatic and financial documentation was retained and accessible for audit purposes. Effect Due to the absence of adequate documentation: ▪ We were unable to determine whether expenditures were used for allowable program activities
2023-001 REPORTING U.S. Department of Treasury Passed through the City of Palm Bay, Florida ALN 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Award No. SLT-5031 2021 Funding Criteria: Per 2 CFR 200.303, non-Federal entities must establish and maintain effective internal controls to provide reasonable assurance of compliance with the Uniform Guidance and the Coronavirus State and Local Fiscal Recovery Funds program. The Subrecipient Contract between the City of Palm Bay and Community of Hope, Inc. requires quarterly reports and a close out report. Condition: The following reports were not reviewed prior to submission to the City of Palm Bay, Florida: - Quarterly Reporting (Expenditure Summary and Performance Success Summary) - Project Close Out Report Additionally, two out of the three quarterly reports tested and the close out report were submitted to the pass-through agency late. Cause: Procedures are not in place internally for the review and approval of reports required by the Department of Treasury for Coronavirus State and Local Fiscal Recovery funding. Effect: Potential for unintended errors to occur without being immediately identified and corrected. The Organization was not in compliance with the Uniform Guidance and the Coronavirus State and Local Fiscal Recovery Funds program. Questioned Costs: None. Perspective: All reports identified above were not reviewed. Recommendation: Reports prepared by the Executive Director should be reviewed by an independent person to ensure completeness and accuracy. Additionally, the Organization should design a control to ensure reports are submitted in a timely manner in accordance with compliance requirements. Management Response: Community of Hope recognizes that our expansion and growth have made it difficult to maintain full and timely compliance with some reporting criteria. As such, we have created a compliance calendar that will alert staff to impending deadlines and requirements. In addition, we recently hired a staff member with compliance being a primary function. She is reviewing grant and policy compliance, making recommendations, and instituting changes to enhance compliance.
Assistance Listing, Federal Agency, and Program Name - 93.224, U.S. Department of Health and Human Services, Health Center Program, COVID-19 Health Center Program; 93.527, U.S. Department of Health and Human Services, COVID-19 Grants to New and Expanded Services Under the Health Center Program Federal Award Identification Number and Year - H80CS24134, 2020; H8FCS40356, 2021; H8GCS48255, 2022 Pass through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - Yes 2022-004 Criteria - Per 2 CFR 200.303(a), nonfederal entities must establish and maintain effective internal controls over the Federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with the guidance in Standards for Internal Control in the Federal Government, issued by the Comptroller General of the United States, or the Internal Control Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In accordance with 42 CFR Section 51c 303(f), health centers must prepare and apply a sliding fee discount schedule (SFDS) so that the amounts owed for health center services by eligible patients are adjusted (discounted) based on the patient's ability to pay. Condition - The Organization lacked sufficient internal controls to ensure sliding fee discount applications were on file and included all of the necessary information regarding family size and income to support discount determinations made. Further, controls were not sufficient to ensure the correct sliding fee discount was applied. Questioned Costs - None If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported - N/A Identification of How Questioned Costs Were Computed - N/A Context - During testing of 60 patients for compliance with special tests and provisions for sliding fee discounts, we noted 14 instances where the patient was undercharged for dental services, resulting in the program being overcharged. In addition, we noted 4 instances where patients were provided a sliding fee discount without an application on file or with key information for determining the discount, such as family size or income, missing from the application. Finally, we noted 4 patients who were overcharged for medical services provided based on family size and family income compared to the SFDS. Cause and Effect - An appropriate review of sliding fee applications and adjustments was not completed to ensure valid applications were maintained and the correct adjustment was applied. As a result, not all patients received the correct adjustment, and thus, the Organization did not comply with the related compliance requirement. Recommendation - We recommend the Organization implement controls, including levels of review, to ensure sliding fee applications are maintained and sliding fee adjustments are accurate based on correct family income and size. Views of Responsible Officials and Planned Corrective Actions - The Organization will implement controls to ensure sliding fee applications are maintained and sliding fee adjustments are based on correct family income and size.
Assistance Listing, Federal Agency, and Program Name - 93.224, U.S. Department of Health and Human Services, Health Center Program, COVID-19 Health Center Program; 93.527, U.S. Department of Health and Human Services, COVID-19 Grants to New and Expanded Services Under the Health Center Program Federal Award Identification Number and Year - H80CS24134, 2020; H8FCS40356, 2021; H8GCS48255, 2022 Pass through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - Yes 2022-005 Criteria - Per 2 CFR 200.303(a), nonfederal entities must establish and maintain effective internal controls over the Federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with the guidance in Standards for Internal Control in the Federal Government, issued by the Comptroller General of the United States, or the Internal Control Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In accordance with the declaration and certification made to the U.S. Department of Health and Human Services at the time of drawdown and the Organization's internal policy, the Organization must either: a) (reimbursement method) ensure the request is accurate and complete, all obligations, expenditures, and cash receipts are supported by the requisite accounting records, and all costs included in the requisition are reasonable, allowable, and allocable to the award, or b) (advance method) disburse funds for costs that are reasonable, allowable, and allocable to the award within three business days or immediately return the funds. Condition - The Organization maintains and tracks Federal expenditures incurred for the year in totality; however, it does not maintain adequate records to track the costs applied to each individual drawdown made throughout the year. Without this linkage, the timeliness between drawdown and either when the expenditures for goods or services were incurred or when the disbursement occurred in relation to the drawdown cannot be validated. Questioned Costs - None If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported - N/A Identification of How Questioned Costs Were Computed - N/A Context - During cash management testing, supporting documentation to identify the costs applied to each drawdown was not maintained for 4 samples tested. During allowability testing, none of the payroll costs for 9 individuals charged to the grant nor the 10 nonpayroll transactions tested could be traced to a specific drawdown to validate that the cost was incurred prior to the date of reimbursement or paid within 3 days of advanced funding. However, in total for the year, the Organization was able to support the draws received with a detailed listing of Federal expenditures as reported on the SEFA. Cause and Effect - Insufficient controls are in place over cash management. As a result, cash drawdowns were made throughout the year with no linkage to specific Federal expenditures, and thus, the Organization cannot demonstrate compliance with Federal payment requirements, as certified to the funding agency. Recommendation - We recommend the Organization implement a set of internal controls over cash management, including layers of review, to ensure supporting documentation can be linked to Federal expenditures. Views of Responsible Officials and Planned Corrective Actions - The Organization will implement controls, including layers of review, to ensure supporting documentation to link Federal expenditures to each drawdown is maintained and the timely disbursement of funds received.
Assistance Listing, Federal Agency, and Program Name - 93.224, U.S. Department of Health and Human Services, Health Center Program, COVID-19 Health Center Program; 93.527, U.S. Department of Health and Human Services, COVID-19 Grants to New and Expanded Services Under the Health Center Program Federal Award Identification Number and Year - H80CS24134, 2020; H8FCS40356, 2021; H8GCS48255, 2022 Pass through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - Yes 2022-008 Criteria - Per 2 CFR 200.303(a), nonfederal entities must establish and maintain effective internal controls over the Federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with the guidance in Standards for Internal Control in the Federal Government, issued by the Comptroller General of the United States, or the Internal Control Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In accordance with notice of awards and the Uniform Data System Health Center Data Reporting Requirements, the health center is required to submit an annual performance report that includes data that reflects all activities in the HRSA health center project. The Health Resources and Services Administration (HRSA) of the U.S. Department of Health and Human Services requires the grantee to submit Federal financial reports with a complete and accurate reporting of cash received, disbursed, total funds authorized, the Federal share expended, and program income earned under the program for period reported. Condition - A lack of effectively designed and implemented internal controls over the accounting records resulted in material entries identified and recorded during the 2023 financial statement audit of the Organization. Additionally, as the result of a lack of effectively designed and implemented controls over financial and performance reporting for the Health Center Program cluster grants, inaccurate performance data and Federal share of expenditures were submitted to HRSA. Questioned Costs - None If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported - N/A Identification of How Questioned Costs Were Computed - N/A Context - In gaining an understanding of management's processes and controls over financial and performance reporting, there was no evidence of a review to ensure required financial reports were prepared in accordance with the applicable accounting basis and supported by underlying records. In addition, there was no evidence of a review to ensure performance data was accumulated and summarized in accordance with the required methodology and agreed to underlying records. Cause and Effect - The Organization did not have controls in place to ensure that the preparation of account reconciliation occurred appropriately in a timely manner (see Finding 2023-001 for entries identified). In addition, subsequent to starting our audit procedures, the Organization provided us with a significant amount of adjusting journal entries. The entries provided by the Organization subsequent to the commencement of the audit impacted several balance sheet accounts impact to decrease the change in net assets without donor restrictions as summarized in finding 2023-001. As a result, the reports filed with HRSA were materially incorrect, and therefore the Organization did not comply with performance reporting requirements. Additionally, within the two Federal Financial Reports (FFRs) tested, we noted that the Federal share of expenditures reflected Federal cash reimbursement received rather than expenditures incurred during the period under audit. As a result one financial report was understated by approximately $3,070,000 and the other financial report was overstated by approximately $50,000. Recommendation - We recommend that controls be put in place to prepare and review accurate reconciliation with supporting information over all accounting cycles in a timely fashion. Views of Responsible Officials and Planned Corrective Actions - Management agrees with the finding and is evaluating options to implement a timely reconciliation process.
Assistance Listing, Federal Agency, and Program Name - 93.224, U.S. Department of Health and Human Services, Health Center Program, COVID-19 Health Center Program; 93.527, U.S. Department of Health and Human Services, COVID-19 Grants to New and Expanded Services Under the Health Center Program Federal Award Identification Number and Year - H80CS24134, 2020; H8FCS40356, 2021; H8GCS48255, 2022 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), nonfederal entities must establish and maintain effective internal controls over the Federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with the guidance in Standards for Internal Control in the Federal Government, issued by the Comptroller General of the United States, or the Internal Control Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per 2 CFR 200.430(i), charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed, where those records reasonably reflect the total activity for which the employee is compensated by the non Federal entity, not exceeding 100% of compensated activities. Condition - Due to a lack of effectively designed and implemented controls to ensure compliance with allowable cost principles, management requested reimbursement based upon employment contract agreements rather than actual payroll costs incurred for the individuals working under the grant. Questioned Costs - $192,677 If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported - N/A Identification of How Questioned Costs Were Computed - Questioned costs represent payroll costs reimbursed by HRSA which were not supported by payroll records reflecting costs incurred during the period under audit. Context - During our understanding of management’s processes and controls over grant related expenditures, we noted the absence of formal, documented review procedures to ensure costs charged to the grant were allowable and in compliance with applicable cost principles. Additionally, in reviewing the linkage between cash drawdowns and underlying federal expenditures (as noted in 2023 005), we determined that reimbursement requests for grant H80CS24134 were based on employment agreements for 10 of 14 individuals, rather than actual payroll costs supported by payroll records for expenses incurred during the grant period. Cause and Effect - Inadequately designed and implemented internal controls over payroll transactions resulted in material noncompliance with applicable cost principles. As a result, payroll related drawdowns for the referenced grant exceeded actual payroll costs incurred by approximately $193,000. The SEFA has since been adjusted to reflect allowable payroll and non payroll federal expenditures incurred during the fiscal period. Recommendation - We recommend the Organization implement controls, including levels of review, to ensure all costs conform with cost principles under 2 CFR 200, Subpart E. Views of Responsible Officials and Planned Corrective Actions - The Organization will implement controls, including levels of review, to ensure compliance with allowable cost principles.
2023-006 – CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS – IMPROPER AND UNTIMELY REPORTING OF EXPENDITURES & OBLIGATIONS – ALN 21.027 – MATERIAL WEAKNESS & MATERIAL NONCOMPLIANCE FINDING TYPE: MATERIAL WEAKNESS & MATERIAL NONCOMPLIANCE Finding 2023-005 Federal Program: FAIN: CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS SLFRP4360, 2023 ALN: 21.027 Year(s): 2023 Federal Agency: U.S. Department of Treasury Questioned Cost: $0 Condition Mercer County did not properly report total cumulative and current period expenditures and obligations on the March 31, 2023, Project and Expenditure Report for the Coronavirus State and Local Fiscal Recovery Funds program. The total reported cumulative expenditures and obligations were overstated by $37,577 and $484,435. The total reported current period expenditures were understated by $345,365, and the total current period obligations were overstated by $780,000. In addition, the 2023 report was submitted on May 15, 2023, roughly two weeks after the April 30, 2023 deadline. Effect The amounts reported as cumulative and current expenditures and obligations on the March 31, 2023, Project and Expenditure Report were inaccurate. Cause Mercer County did not ensure that all expenditures and obligations were in agreement with their ledger when completing reporting for the March 31, 2023 Project and Expenditure Report. Criteria Page 19 of the Coronavirus State and Local Fiscal Recovery Funds: Project and Expenditure Report User Guide Version 12 (September 30, 2024) states: • An expenditure is the amount that has been incurred as a liability of the entity (the service has been rendered or the good has been delivered to the entity). • An obligation is an order placed for property and services, contracts and subawards made, and similar transactions that require payment. An obligation also means a requirement under federal law or regulation or provision of the award terms and conditions to which a recipient becomes subject as a result of receiving or expending funds. 2 CFR 200.303 states that 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. Page 22 of the U.S. Department of the Treasury Compliance and Reporting Guidance over the Coronavirus State and Local Fiscal Recovery Funds program states that for "metropolitan cities and counties with a population below 250,000 residents that are allocated less than $10 million in SLFRF funding.....the initial Project and Expenditure Report covered from March 3, 2021 to March 31, 2022 and was required to be submitted to Treasury by April 30, 2022. The subsequent annual reports cover one calendar year and must be submitted to Treasury by April 30." Context As stated in the SLFRF Compliance and Reporting Guidance, for counties allocated less than $10 million with a population below 250,000 residents such as Mercer, "the initial Project and Expenditure Report covered the period from March 3, 2021 to March 31, 2022 and was required to be submitted to Treasury by April 30, 2022. The subsequent annual reports will cover one calendar year and must be submitted to Treasury by April 30 each year." Therefore, each year after March 31, 2022, Mercer County must then submit an annual P&E report for the period covering April 1 202X - March 31, 202Y. Mercer County did not submit the 2023 (period covering April 1, 2022-March 31, 2023) report by April 30, 2023, and did not properly include the current and cumulative expenses and obligations on the 2023 P&E report. Repeat Finding No. Recommendation We recommend Mercer County review and comply with all reporting requirements of the Coronavirus State and Local Fiscal Recovery Funds program by properly reporting all expenditures and obligations in the Project and Expenditure Reports. We also recommend Mercer County ensure that the Project and Expenditure Reports are submitted on or before the April 30th deadline. Mercer County’s Response See Corrective Action Plan.
2023-002 Improve Internal Controls Over Reporting Federal Program(s) Information Federal Agency: U.S. Department of the Treasury Award Name: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Award Year: 2021 Compliance Requirement: Reporting Type of Finding Compliance Internal Control over Compliance – Material Weakness Criteria or Specific Requirement 2 CFR 200.303 requires the County to establish and maintain effective internal controls over federal awards to ensure compliance with federal statutes, regulations, and the terms and conditions of the award. Per U.S. Department of the Treasury’s Coronavirus State and Local Fiscal Recovery Funds: Compliance and Reporting Guidance, recipients are required to accurately report project-level information, including the breakdown of expenditures by individual project, and to avoid duplicative or misclassified reporting of expenditures across reporting periods. Condition and Context During our audit, it was determined that the County prepared and submitted its quarterly performance and evaluation reports to Treasury within the required timeline. However, there is no documented review of the project and expenditure reports by an individual that is not involved with preparing the reports. Additionally, key line items, specifically current period expenditures and total cumulative expenditures, included on the project and expenditure reports for quarters 2 and 4 of 2023 (April-June and October-December) did not agree to the general ledger, as required by the terms of the grant agreement. Cause The County’s internal controls over federal award reporting did not ensure expenditures were accurately reported. Effect or Potential Effect Inaccurate reporting of project-level and current period expenditure information increases the risk of noncompliance with federal reporting requirements and impairs the transparency and oversight expected by the Treasury. No questioned costs are reported as the requirement is procedural in nature and costs reported were ultimately deemed allowable. Recommendation The County should address the weakness in internal controls noted above by requiring two individuals to be involved in preparing and reviewing reports submitted to federal agencies to ensure the reports are complete and accurate. Views of Responsible Official Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.
Federal Agency: U.S. Department of the Treasury Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds (Eviction Rental Assistance Program 2.0) Assistance Listing Number: 21.027 Federal Award Identification Number and Year: SLFRP0002 2021 Pass-Through Agency: Washington State Department of Commerce Pass-Through Number(s): 21-4619C-104 Award Period: 10/1/2021 - 6/30/2023 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Uniform Guidance requires the auditee to prepare a complete and accurate Schedule of Expenditures of Federal Awards, including the identification of all federal awards expended during the period (2 CFR §200.508(b)). In addition, Uniform Guidance requires the auditee to establish and maintain effective internal control over compliance to provide reasonable assurance that federal awards are identified, tracked, and reported in accordance with applicable statutes, regulations, and the terms and conditions of the federal award (2 CFR §200.303). Condition: The auditee did not have effective internal control over compliance related to the preparation of the Schedule of Expenditures of Federal Awards (SEFA). Specifically, controls were not sufficient to ensure that all federal awards subject to Uniform Guidance requirements were properly identified, Assistance Listing Numbers were accurately determined, and federal expenditures were completely and accurately reported on the SEFA. As a result, material federal awards were omitted from the auditee‑prepared SEFA and errors in federal program identification occurred, which required identification and correction by the auditors. Context: The Schedule of Expenditures of Federal Awards is used to determine major programs and the scope of compliance testing under the Single Audit. Complete and accurate identification of federal awards is critical to ensure appropriate major program determination and compliance coverage. Cause: The auditee had not established formal procedures or an effective review process to ensure that all federal awards were identified and accurately reported on the SEFA. In addition, prior‑year omissions of federal awards were not adequately remediated, contributing to continued deficiencies in SEFA preparation and review. Effect: This significant deficiency resulted in a reasonable possibility that material noncompliance with federal reporting requirements would not be prevented or detected on a timely basis. An incomplete or inaccurate SEFA increases the risk of improper major program determination, inappropriate audit scope, and increased risk of material noncompliance with federal award requirements. Repeat Finding: Yes. Recommendation: We recommend that management design and implement effective internal controls over compliance related to SEFA preparation, including assigning responsibility to personnel with appropriate training in federal award requirements. Management should also implement a documented review process, performed by a knowledgeable individual, to ensure the SEFA is complete, accurate, and compliant with Uniform Guidance prior to submission for audit. Views of responsible officials: Management agrees with the finding and has prepared a Corrective Action Plan.