Finding 2025-005 Lack of Internal Controls over Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: U.S. Department of Agriculture, passed through the State of Alaska, Department of Education and Early Development Federal Program: Child Nutrition Cluster Assistance Listing Number: 10.553 and 10.555 Award Year: 2025 Type of Finding: Significant deficiency in internal control over compliance and noncompliance. Criteria: Internal controls and financial policies must be adhered to, to ensure charges to grants are adequately supported. All cash and payroll disbursements must be accompanied by supporting documentation, including invoices, proper approval, and approved PAF’s. 2 CFR Section 200.303 requires entities establish and maintain internal controls over federal awards. Condition and Context: Multiple transactions tested lacked the necessary supporting documentation, including invoices and evidence of approval. During our testing of internal controls over the cash disbursement system, we tested a sample of twenty-five (25) transactions and noted the following errors: six (6) transactions did not have supporting documentation such as bills or invoices. Twenty-three (23) transactions did not have purchase orders or approval. During our testing of internal controls over payroll transactions, we tested a sample of eight (8) payroll transactions and noted that two (2) did not have approved personnel action forms. Cause: Lack of internal controls over cash and payroll disbursements and maintaining related supporting documentation. Effect: This could lead to a material misstatement for cash disbursement and payroll related items in the financial statements. Failure to follow compliance requirements could result in loss of federal funding. Questioned Costs: None noted. Repeat Finding: This is not a repeat finding, therefore we believe it to be an isolated instance. Recommendation: Policies and procedures regarding internal controls over cash and payroll disbursements must be strengthened to ensure disbursements charged to grants are properly approved and accompanied by adequate supporting documentation.
2025-002 – Eligibility Determination Not in Place or Consistently Applied Across all Programs U.S. Department of Human Services Temporary Assistance for Needy Families – AL #93.558 TN Department of Human Services Compliance Requirement – Eligibility Condition: Controls over participant eligibility documentation were not in place or inconsistently applied. Required eligibility documentation was incomplete, missing, or inconsistent with program requirements. Additionally, some eligibility forms were signed by the applicant after year-end, indicating that eligibility was not properly established prior to the period of service. In some cases, limited or no documentation was provided. Criteria: Under 2 CFR 200.303, non-federal entities must establish and maintain effective internal control over federal programs to provide reasonable assurance of compliance with Federal statutes, regulations, and the terms and conditions of the award. The OMB Compliance Supplement for TANF requires recipients to obtain, review, and retain sufficient documentation to verify participant eligibility at the time eligibility is determined. Cause: The Organization does not have formalized, consistently applied procedures in place to ensure that eligibility documentation is collected, verified, and reviewed prior to approving participants for TANF services. The Organization relied on informal practices rather than a formally defined process. Effect: Failure to properly document and verify eligibility increases risk that ineligible individuals may receive TANF-funded services, which could result in questioned costs or return of federal funds to the State. Context: A sample of twenty-five (25) participants were selected for eligibility testing. Exceptions included eight (8) eligibility forms were not signed by program personnel, eleven (11) eligibility forms that were signed by the applicant after year-end, no information was provided for two (2) participants selected, and limited information was provided for one (1) participant selected. Therefore, eligibility could not be determined due to insufficient documentation. Recommendation: We recommend the Organization establish and implement written eligibility determination procedures uniformly across all TANF programs to verify proof of residency, citizenship of the child or expectant mother within the home, income, resources, and, if applicable, work participation. This process should include eligibility documents to be completed, signed, and dated prior to services being provided. A level of review and approval should be performed to verify the above information and eligibility status. All supporting documentation required by Tennessee Department of Human Services should be maintained within the participant eligibility file. Management’s Response: See accompanying management’s corrective action plan.
2025-003 – Inaccurate Eligibility Classification and System Entry U.S. Department of Agriculture Child and Adult Care Food Program (CACFP) – AL #10.558 TN Department of Human Services Condition: We noted multiple instances in which eligibility determinations based on income levels, specifically related to rates at which student meals are reimbursed (paid, reduced, or free), lacked sufficient controls in place to categorize the student accurately. Criteria: Under 2 CFR 200.303, non-federal entities must establish and maintain effective internal control over federal programs to provide reasonable assurance of compliance with Federal statutes, regulations, and the terms and conditions of the award. The OMB Compliance Supplement for CACFP requires recipients to obtain, review, and retain sufficient documentation to verify participant eligilbility at the time eligibility is determined. Cause: Due to the process being heavily manual in nature, the deficiencies ultimately resulted from human error. Despite multiple levels of documented approvals of the application, the control failed as the different levels of review did not catch the participant being classified incorrectly based on income levels. Additionally, there is a lack of defined procedures to ensure that the approved documentation is reconciled with the eligibility category entered into the system, as there were instances where the student was classified correctly on the application form but not within the system. The errors affected both manual documentation review and data-entry classification, indicating a disconnect between approval and system processing. Effect: Due to the eligibility classifications being incorrect, the Organization was reimbursed at lower rates than supported by the documentation. As a result, the errors did not lead to overcharging the federal program, but instead, caused the Organization to claim less reimbursement than that for which it was eligible. Although this reduces the risk of questioned costs for overbillings, the conditions represent a control failure. Such control failures could lead to future noncompliance or incorrect claims in either direction if not addressed. Context: A sample of forty (40) students were selected for eligibility testing. Three (3) CACFP application forms were classified incorrectly as free, reduced, or paid based on income levels. Two (2) participants were entered into the system under the incorrect eligibility category, resulting in a discrepancy between the supporting documentation and the recorded classification. Recommendation: We recommend that management strengthen internal controls over the eligibility process. Management should retain the multi-level review structure; however, each level of review should include a documented verification of income information and eligibility categorization. In addition, management should implement a formal reconciliation process that confirms the eligibility classification approved on the application form matches the classification entered into the system prior to finalization or claim submission. Management’s Response: See accompanying management’s corrective action plan.
2025-004 – Lack of Controls over Reporting Corporation for National and Community Service Americorps Seniors Foster Grandparent Program – AL #94.011 TN Commission of National & Community Service/Americorps State and National Condition: The Organization does not have adequate internal controls in place over the preparation and submission of required program reports. Program reporting is prepared and submitted solely by the grant accountant, with no supervisory review and approval process to ensure accuracy prior to submission. Criteria: Uniform Guidance 2 CFR 200.303 requires non-federal entities to establish and maintain effective internal control over compliance, including controls that provide reasonable assurance that reporting is accurate, complete, and properly supported. Cause: Management has not implemented a control structure to ensure program reports are independently verified for accuracy and compliance. Effect: Although reports were ultimately submitted timely and included the necessary information, there is an increased risk that errors, omissions, or inconsistencies in program reporting may go undetected. The lack of a functioning review control increases the likelihood of future noncompliance or reporting inaccuracies. Context: During testing of reporting, it was noted that program reports were prepared and submitted by a single individual. Management confirmed that no secondary review and approval was performed prior to submitting required reports.
AL# 11.307: COVID-19 Economic Adjustment Assistance, Economic Development Cluster, U.S. Department of Commerce, Federal Award # 05-79-06082 - 2021 Condition: The required performance reports ED-916 and ED-917 were not completed or submitted during the fiscal year. Criteria: 2 CFR 200.303(a) states that the Center is required to establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Questioned Costs: None noted. Context: The Center transitioned to the revolving stage of the program and there was a misunderstanding that the ED-916 and ED-917 had to be filed during the revolving stage. The sample size was determined based upon the guidelines provided by the AICPA which is not a statistically valid sample. Cause: The Center misunderstood that the performance reports were applicable during the revolving stage. Effect: Not reporting performance reports may impact the federal agency’s ability to assess the effectiveness of the federal program. Recommendation: We recommend that the Center work with the EDA to understand when reporting requirements will change during the revolving process and complete and submit the ED-916 and ED- 917 reports as soon as possible. Views of Responsible Officials (Unaudited): All EDA reporting will be completed and submitted to ensure the Center is up to date on required filings. In addition, the Center will work with the EDA to understand when reporting requirements will change during the revolving process.
Department of Agriculture Federal Financial Assistance Listing #10.766 Community Facilities Loans and Grants – Guaranteed Loan Special Test and Provisions 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. The commitment letter for the term loan with the bank requires debt service coverage ratio and working capital to be calculated yearly using audited financial statements. Condition: As of June 30, 2025, management did not perform the proper calculations for the debt service coverage ratio in accordance with the commitment letter. Additionally, the required debt service coverage ratio and required working capital amount were not presented to the board to ensure compliance is obtained. Cause: The Health Center did not have the proper understanding of the calculation for the annual debt service coverage ratio as of year‐end. Additionally, the covenant requirements were not presented to the board to ensure compliance is obtained. The board may be unaware of the covenant requirements identified within the commitment letter. Effect: The Health Center had errors in the calculation and may be in violation of the debt service coverage ratio and working capital requirements if calculations are not performed properly and the covenant requirements are not presented alongside the calculations to ensure compliance. Questioned Costs: None reported. Context/Sampling: Sampling was not used. Repeat Finding from Prior Year: Yes, similar Finding 2024‐003 Recommendation: We recommend management use the formulas prescribed by the commitment letter to calculate the debt service coverage ratio and working capital amount and present these alongside the covenant requirements as a part of their year‐end close process to ensure all covenants of the loan are met. Views of Responsible Officials: Management agrees with the finding.
FINDING 2025-001 Information on the federal program: Subject: Special Education Cluster (IDEA) – Internal Controls Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.027X, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 22611-046-PN01, 22611-046-ARP, 22619-046-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirement: Earmarking Audit Findings: Significant Deficiency Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the 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 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards:… (g) Be adequately documented. . . ." 2 CFR 200.208(b) states in part: "The Federal awarding agency or pass-through entity may adjust specific Federal award conditions as needed . . ." 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Condition: An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and earmarking compliance requirement. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the earmarking requirements. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the compliance requirements and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the programs. Questioned Costs: There were no questioned costs identified. Context: The School Corporation is a member of the Porter County Education Services (Cooperative). During fiscal year 2023-2024, the Cooperative operated the special education program and spent the federal money on behalf of all its members. As the grant agreement was between the Indiana Department of Education (IDOE) and each member school, the School Corporation was responsible for ensuring and providing oversight of the Cooperative. The School Corporation did not have internal controls in place to ensure that the Cooperative complied with the earmarking requirements. The Cooperative did not have adequate procedures in place to ensure that the required level of expenditures for non-public school students with disabilities was met for each member school. The Cooperative did not have effective internal controls to ensure non-public school expenditures were appropriately identified and reported. The Non-Public Proportionate Share expenditures for the 22611-046-PN01, 22611-046-ARP, and 22619- 046-ARP grant awards could not be verified for the individual member schools. Total grant expenditures were posted as expended. The non-public proportionate share expenditures were determined by applying a percentage to the non-public school budgeted expenditures. As such, we were unable to identify if the minimum amount per each applicable member schools’ grant award was expended and properly reported to IDOE, as required. The lack of internal controls was isolated to the 22611-046-PN01, 22611-046-ARP, and 22619-046-ARP grant awards which were fully expended during fiscal year 2024. These three grant awards had minimum earmarking requirements for the Non-Public Proportionate Share of $39,016, $9,471, and $533, respectively. Identification as a repeat finding, if applicable: No. Recommendation: We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to monitor the Cooperative and ensure non-public proportionate share funds are appropriately allocated to the member school based on expenditures charged directly on behalf of the member school. Supporting documentation for these expenditures should be retained for audit. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Assistance Listing, Federal Agency, and Program Name - 84.424, U.S. Department of Education, Student Support and Academic Enrichment Program Federal Award Identification Number and Year - 250750; 2025 Pass through Entity - Michigan Department of Education Finding Type - Significant deficiency Repeat Finding - No Criteria - Per 2 CFR § 200.303(a), nonfederal entities must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the guidance in Standards for Internal Control in the Federal Government issued by the Comptroller General of the United States or the Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition - The School District's controls did not prevent, or detect and correct in a timely manner, duplicative costs charged to the grant. 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 - Within a sample of 40 special pay home visit payroll transactions, there was one transaction identified that consisted of duplicative costs where the same payroll costs were charged to the grant twice. The School District determined that duplicative costs were submitted for pay during a time of staffing transition in the department that is responsible for tracking home visits. The costs were submitted to payroll by the former employee responsible for tracking the time, as well as submitted by the new employee within that role. Special pay for home visits does not follow the standard payroll procedures; instead, it is processed and approved manually. The costs submitted did go through a manual review process prior to being charged to the grant, but the review in place did not operate effectively to identify the duplicative costs. The School Districted identified a total of five transactions in total that amounted to $3,023 in duplicative costs. Cause and Effect - Controls in place did not prevent or detect and correct duplicative costs charged to the program. As a result, the School District received reimbursement in excess of the actual amount spent on the grant and the initial SEFA provided to the auditors was overstated by $3,023. The schedule of expenditures of federal awards for the year ended June, 30, 2025 was corrected. Recommendation - We recommend that the School District review the controls in place to ensure that the review control is at a sufficient level to address the risk of duplicative expenses being charged to the grant. Views of Responsible Officials and Planned Corrective Actions - The School District annually processes thousands of supplemental payments for home visits. The audit found only five individual payments were duplicated. The duplication was caused by human error during an internal staff transition within the Family and Community Engagement (FACE) department. This led the new manager to incorrectly report employee home visit logs twice. The FACE team will add internal controls during staff transitions to ensure documentation is not duplicated.
Finding 2025-001 Student Financial Aid Cluster Eligibility Federal Agency: U.S. Department of Education Program: Student Financial Assistance Cluster (ALN #’s - 84.063, 84.033, 84.007, 84.268) Criteria: Uniform Guidance (2 CFR 200.303) requires institutions administering federal programs to establish and maintain effective internal controls to provide reasonable assurance of compliance with federal statutes, regulations, and terms and conditions of awards. Additionally, Title IV regulations further require institutions to accurately calculate and disburse financial aid based on student eligibility These controls should include maintaining documentation on file of the calculations performed to determine eligibility and award amounts. Condition: Our financial aid sample of 40 items tested yielded 33 students who received Pell Grant Funding, 27 students who received Subsidized Direct Loans and 24 students who received Unsubsidized Direct Loans. Of the students tested, we noted five instances where students did not receive the correct amount of aid, per our independent calculations and those performed by WCCC. Please refer to page 80 of the June 30, 2025 audit report for details. Additionally, Of the 40 students selected for testing, the cost of attendance within the student financial aid module maintained within WCCC’s enterprise-wide software, did not agree with calculations done by the auditors and/or financial aid staff and could not be relied upon to reperform calculations to determine proper award amounts. Cause: As a result of calculation errors brought about by the issues with the student financial aid module, aid was not calculated and disbursed correctly. Documented controls were not in place to ensure students received the proper amount of Student Financial Assistance they were entitled to receive. Effect: WCCC is not in compliance with required calculations for student financial assistance funding. WCCC may be liable to return funds to the Department of Education related to overpayments to students or students may not have received the total amount of funding that they were eligible for. Repeat Finding: This is a repeat finding of 2024-002, 2023-003. Questioned costs: Known: $7,045, Likely : $378,420 Based on our testing of student financial aid disbursements, we identified five instances in which students did not receive the correct amount of aid. The differences associated with these items total $7,045 and are reported as known questioned costs. In addition, by projecting known questioned costs identified in the eligibility audit sample to the entire population from which the sample was drawn results in likely questioned costs of $378,420. Recommendation: We recommend that WCCC review policies and procedures to ensure that proper procedures are in place verifying the accuracy of student eligibility for grant funding and that the proper amount is paid to the student based on financial need. Additionally, the calculations prepared to determine award amounts should be maintained on file. Ideally, the enterprise-wide student financial aid module should contain the appropriate information and demonstrate the appropriate calculations. View of Responsible Officials and Planned Corrective Action: Management agrees. See separate Corrective Action Plan.
Finding 2025-001: Allowable Costs/Cost Principles – Improper expenditure recognition Federal Program Name: Title II, Part A, Teacher & Principal Training and Recruiting Assistance Listing Number: 84.367A Federal Agency Name: U.S. Department of Education Passed-Through Agency Name: Texas Department of Education Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or Specific Requirement Per 2 CFR 200.302 and 200.303, management is responsible for ensuring the accuracy and completeness of all financial records and related information, as well as for establishing and maintaining effective internal controls over grant reporting and compliance. Condition During the current fiscal year, grant expenditures initially included $291,666 for services scheduled to be provided in the subsequent fiscal year. Cause In preparing its financial records for the year ended June 30, 2025, the District did not identify expenditures recorded in the incorrect fiscal year. The failure to detect these errors in a timely manner indicates that closing procedures— specifically the monitoring and review of financial information—were not performed effectively. Effect or Potential Effect The District’s internal control system did not prevent, or timely detect and correct, misstatements in its financial records. Ineffective monitoring and closing procedures increase the risk that errors or irregularities may occur and remain undetected. Questioned Costs None Context or Perspective Information Improper recognition of expenditures could result in misstatements reported to awarding agencies and inaccuracies in the Schedule of Expenditures of Federal Awards, potentially affecting the determination of major programs subject to single audit testing. The expenditures identified above were ultimately removed from current year activity and were excluded from the year-end reimbursement request. Recommendation We recommend that the District provide additional training to staff responsible for preparing year-end grant expenditure reports to strengthen accuracy. Views of Responsible Officials and Planned Corrective Actions See corrective action plan
Finding 2025-001: Child Nutrition Cluster Listing #10.553 & #10.555 Federal Agency: U.S. Department of Agriculture Grant Period: Year ended June 30, 2025 Condition/Criteria: The District bases its monthly meal counts submitted to NYSED on internally kept records. We noted instances in which the NYSED meal count submission did not match the internal reports as required by 2 CFR Section 200.303. Cause: The District did not submit complete meal counts to NYSED for all of the District’s buildings for breakfast and/or lunch. Context: Of the 3 months haphazardly selected (not a statistically valid sample), 1 month had differences between the meal counts that were submitted to NYSED and the internally kept meal count records. While not part of our sample, we did note another instance whereby the submitted meal counts were inaccurate. Proper review was not completed to confirm that the submission was complete and accurate. Effect and Questioned Costs: Based on the current NYSED reimbursement rates, $17,227 and $13,241 of federal reimbursable costs from the month selected and additional month identified, respectively, of federal reimbursable costs were not submitted due to this error. This is considered material to the Child Nutrition Cluster program. Additionally, $30,468 was accrued as part of an audit adjustment to record this federal revenue. Recommendation: We recommend the District implement a process to ensure that the meal count submission to NYSED matches the internally kept records. Management Response: The District agrees with this finding and will be implementing a new policy which includes a Finance Office verification of the meal counts submitted when the deposits come in through Child Nutrition to ensure that the reports match the deposit and the reports match the internal reports for meal counts The District was able to recoup the funds from the missing months by submitting corrected claims.
Finding Number: 2025‐001 Repeat Finding: No Program Name/Assistance Listing Title: Temporary Assistance for Needy Families (TANF) Assistance Listing Number: 93.558 Federal Agency: U.S. Department of Health and Human Services Federal Award Number: CTR066206, CTR064289 Pass‐Through Agency: Arizona Department of Economic Security, Arizona Foundation for Legal Services Questioned Costs: N/A Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Eligibility Criteria Under eligibility guidelines for the Temporary Assistance for Needy Families (TANF) program, only financially needy families that consist of a minor child living with a parent or a pregnant woman may receive TANF assistance. In accordance with 2 CFR 200.303, management is responsible for establishing and maintaining internal controls over federal programs, which includes developing a system to ensure documentation is maintained to support that program participants meet the TANF eligibility requirements. Condition The documentation Emerge maintained for participants reported as TANF eligible did not always include information on whether the participant was pregnant or had children or dependents under the age of 19. Cause Emerge’s internal controls over documenting client information in the client management software were not adequate. Effect Two participants were incorrectly designated as TANF eligible. Context During our review of files for TANF eligible participants, we noted that for two of 21 participants reviewed, Emerge did not maintain documentation that indicated whether the participant was pregnant or had children or dependents under the age of 19. The sample was not intended to be, and was not, a statistically valid sample. Recommendation Management should ensure that intake staff not only inquire whether participants meet TANF eligibility requirements, but also document such information prior to classifying the individual as TANF eligible. Views of Responsible Officials See Corrective Action Plan.
Finding 2025-002 – Return of Title IV Funds Repeat Finding: No Federal Program Title – U.S. Department of Education Student Financial Assistance Cluster Federal Pell Grant: 84.063 Federal Award Year 2024-2025 Award Number: P063P Condition For one out of forty students tested, City Colleges properly recalculated a return of Title IV funds for a student but did not subsequently adjust the student's account to perform the return or notify the student of the adjusted award amount. Criteria Per 34 CFR 668.22, the institution must return, the lesser of—(i) The total amount of unearned title IV assistance to be returned as calculated or an amount equal to the total institutional charges incurred by the student for the payment period or period of enrollment multiplied by the percentage of title IV grant or loan assistance that has not been earned by the student. An institution must return the amount of title IV funds for which it is responsible as soon as possible but no later than 45 days after the date of the institution's determination that the student withdrew. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure that returns are properly adjusted to students' accounts to ensure funds are returned to the Department of Education timely. Questioned Costs Actual questioned costs total $1,192. Based on our sample results, estimated likely questioned costs total $123,879. Cause The lack of return of Title IV funds was an oversight due to human error. Context Infrequent. One out of forty students (2.5%) selected for testing. Effect Failure to return funds to the Department of Education can result in excess cash or loss of future funding. Recommendation We recommend City Colleges enhance monitoring procedures to ensure that returns of federal funds are completed after return of Title IV calculations are performed. Views of responsible officials We agree with this finding. See corrective action plan.
Finding 2025-001 – Direct Loan Disbursement Notifications Repeat Finding: No Federal Program Title – U.S. Department of Education Student Financial Assistance Cluster Federal Direct Student Loans: 84.268 Federal Award Year 2024-2025 Award Number: P268K Condition During our testing over direct loan disbursement notifications, we found that for twenty out of twenty students tested, City Colleges could not provide evidence that notifications were sent within the required timeframe informing the student, or parent, that a credit will be made to the student’s account for a direct loan disbursement. While City Colleges demonstrated that its system was configured to automatically send notification letters and confirmed that notifications were issued, City Colleges could not provide documentation showing the specific date each notification was sent in relation to the loan disbursement. Criteria 34 CFR 668.165 requires institutions who credit a student's account with a direct loan disbursement must notify the student, or parent, in writing of the (1) the date and amount of the disbursement; (2) the student's right, or parent's right, to cancel all or a portion of that loan or loan disbursement and have the proceeds returned..; and (3) the procedure and time by which the student or parent must notify the institution that he or she wishes to cancel the loan. 2 CFR Section 200.303 requires entities receiving Federal awards establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures in place to ensure there is a sufficient audit trail of direct loan disbursement notifications. Questioned Costs None. Cause City Colleges’ system is designed to record the date notifications are sent to students; however, it does not retain a copy of the actual notification content that was transmitted. Context Frequent. Twenty out of twenty students (100%) selected for testing. Effect Failure to maintain documentation of the notifications sent to students regarding their direct loan disbursements may prevent students from exercising their right to cancel awards within the allowable timeframe. This constitutes noncompliance with federal regulations and could jeopardize City Colleges’ eligibility for future funding. Recommendation We recommend City Colleges enhance its system to retain both the date of the notification and a copy of the actual notification sent to students. Views of responsible officials We agree with this finding. See corrective action plan.
Finding 2025-003 – Reporting Repeat Finding: No Federal Program Title – U.S. Department of Education Higher Education Institutional Aid 84.031C Federal Award Year 2024-2025 Award Number: 21061-210822-1-HWC Pass-Through Entity: Northeastern Illinois University Condition For one of the four reports tested for the Higher Education Institutional Aid Program, City Colleges did not timely submit a quarterly report to the Pass-Through Entity (PTE). A quarterly performance report was due on May 1, 2025 and submitted 14 days late on May 15, 2025. Criteria Per the terms of the PTE's annual Subaward Agreement, City Colleges is required to submit quarterly reports along with annual performance reports. Quarterly reports are required to be submitted within 30 days of the period end. 2 CFR Section 200.303 requires entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures in place to ensure timely reporting of required performance reports. Questioned Costs There were no questioned costs related to testing of reporting. Cause Submission delay was the result of poor time management and breakdowns in communication between PIs and the grantor. Context Frequent. One out of four reports (25%) selected for testing. Effect Failure to submit reports timely is noncompliance with the requirements of the grant award and could result in loss of funding or other penalties. Recommendation We recommend City Colleges implement monitoring procedures to ensure that reports are submitted in a timely manner. Views of responsible officials We agree with this finding. See corrective action plan.
2025-001 Improve Internal Controls Over Matching Federal Program(s) Information Federal Agency: U.S. Department of Health and Human Services Cluster/Program: Aging Cluster Assistance Listing Number: 93.043, 93.044, 93.053 Award Year: 2025 Compliance Requirement: Matching Type of Finding Internal Control over Compliance – Significant Deficiency Criteria or Specific Requirement Per 45 CFR 1321.9(c)(2)(ii), recipients are required to contribute a nonfederal match toward allowable program costs. Match requirements for direct service providers are determined by the State and/or area agency. Per 2 CFR § 200.303, recipients must establish and maintain effective internal controls over federal awards to ensure compliance with applicable requirements. Condition and Context During our audit, we noted that the Organization does not have formal internal controls or documented procedures in place to ensure that the nonfederal match requirement for Aging Cluster programs is adequately monitored and met throughout the fiscal year. Additionally, management was not aware of the specific nonfederal match requirement applicable to the program. Although the Organization provided sufficient nonfederal matching funds for fiscal year 2025, the lack of awareness regarding the required match and the absence of controls represent a significant deficiency in the internal control system over compliance for the matching requirement. Cause Management did not develop or implement written policies and control activities specifically designed to track, review, and verify the matching requirement for Aging Cluster programs. Effect of Potential Effect The absence of controls increases the risk that the required nonfederal match may not be met in future periods, which could result in noncompliance with program requirements. Recommendation We recommend that the Organization establish and implement formal policies and control activities to ensure that the nonfederal match for Aging Cluster programs is adequately tracked, reviewed, and documented on an ongoing basis. This should include periodic reconciliation and management review to ensure compliance with matching requirements. Views of Responsible Official Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.
SIGNIFICANT DEFICIENCY 2025-001 - Allowable Activities/Allowable Costs Federal Program Information: Department of Education: CFDA - 84.010 - Title I Criteria: The following CFR(s) apply to this finding: 2 CFR 200.303), 2 CFR section 200.430(g). Condition: During audit procedures, it was identified that the Unit’s controls over allowable Activities/Allowable Costs were not working adequately for the payroll process. Cause: The Unit does not have the necessary internal controls over compliance. Effect: The Unit’s inadequate controls over coding enables an inherent risk of noncompliance of allowable activities/allowable costs by allowing employees to be incorrectly paid from the wrong account. Lack of contracts from private school employees creates a risk of supplanting funding rather than supplementing. Identification of Questioned Costs: None identified. Context: Eighty payroll charges were tested, results are as follows: timesheets do not include the program code or program name the time should be charged to. Unit has to rely on correct input of coding when the employee is set up in the system and external notes for employees who work in more than one program. No additional check and balance was noted and one non Title I employee was incorrectly paid out of the program, which was corrected during audit. Timesheet program did not have the same employment position as the contracted position for two of the employees reviewed, eight of the employees positions were inconsistent on the timesheets. Contracts or form of employment and wage documentation was not required from the private school for the Title I employees which could result in unallowable costs or supplanting private funds with federal funding. Eighty payroll charges were tested. This is not a statistically valid sample. Repeat Finding: This is not a repeat finding. Recommendation: It is recommended that the Unit implement internal control processes and procedures to ensure that only Allowable Activities/Allowable Costs are charged to the program. Views of Responsible Officials and Corrective Action Plan: Please see the Corrective Action Plan issued by the Maine School Administrative District No. 1.
Finding 2025-001 Payroll Allocation Documentation – Significant Deficiency in Internal Control over Allowable Costs/Cost Principles Identification of the Federal Program Assistance Listing Number 87.371 - US Department of Education Passed through the State of Alaska Department of Education and Early Development -Comprehensive Literacy Development Year – 2024/2025 Criteria or Specific Requirement The Uniform Guidance in 2 CFR Section 200.303, Internal Controls requires that nonfederal entities receiving federal awards establish and maintain internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During our testing of disbursements, we noted the following exceptions: • 6 of the 6 payroll expenditures sampled did not have adequate support for the expense that was recorded to the special revenue fund. The total expense was supported by timesheets and personnel action forms, but the percentage of the total expense charged to the grant did not have adequate documentation that was reviewed and approved. Cause Internal control process for retaining documentation of review and approval over payroll expenditure allocation was not followed. Effect or potential effect Payroll expenses may not be properly supported by reviewed and approved documentation. Questioned Costs None noted. Context For the testwork for allowable activities over the Comprehensive Literacy Development program, we noted 6 out of 6 payroll expenditures selected for testwork did not have documentation that was reviewed supporting the allocation of the time charged to the program. Repeat finding Not a repeat finding. Recommendation We recommend that the District comply with the requirements of 2 CFR section 200.303 and establish proper retention of the review and approval of the payroll allocation between each fund. Views of responsible officials To ensure payroll costs charged to multiple federal funds are properly reviewed, approved, and documented in compliance with federal, state, and institutional regulations. This procedure ensures transparency, accuracy, and appropriate record retention. Reviews allocation documents; ensures proper coding.
Finding 2025-001 U.S. Department of Education Student Financial Aid Cluster (Federal Assistance Listing Numbers 84.007, 84.033, 84.038, 84.063, 84.268 and 84.379) Federal Award Year 2024-2025 Criteria: CFR section 685.309 and 690.83(b)(2) requires the University to notify the NSLDS within 30 days of a change in student status or include the change in status in a response to an enrollment reporting roster within 60 days of the student’s date of determination of withdrawal. Condition: For two out of 25 students tested (8%) for properly reported enrollment changes at the University, the students' status change at the campus level and program level were not accurately reported to the National Student Loan Data System (NSLDS). Of these two students identified with noncompliance (both of which were unofficial withdrawals) one student's status change was not reported to the NSLDS, and one student was reported timely but with improper effective status change dates. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure that enrollment status changes are reported timely. Cause: The University’s controls over unofficial withdrawals failed to either timely identify or identify at all unofficial withdrawals where students don’t go through the formal withdrawal process. This is a manual process primarily related to students that stop attending classes without official notice and the University is dependent on professors providing final date of attendance. Effect: Failure to report status changes accurately is noncompliance with Federal regulation and could result in loss of future funding. Questioned Costs: There were no questioned costs related to testing of enrollment reporting. Context: Two out of 25 students originally selected for testing. The University then reviewed all unofficial withdrawals and identified five additional students with reporting errors. Based on identified errors, an additional seven students were selected for testing and no errors were identified that weren’t already identified by the University. Recommendation: We recommend the University implement review procedures to ensure that the proper effective date is being reported to the NSLDS when a student withdraws or has an enrollment status change. A system of review procedures and/or controls will ensure the University is reporting status changes accurately. Views of responsible officials: We agree with this finding. See corrective action plan.
Noncompliance with Documentation, Approval, and Time Reporting Requirements for Grant Expenditures Finding Type. Material Noncompliance; Material Weakness in Internal Control over Compliance (Activities Allowed and Unallowed, and Allowable Costs/Cost Principles) Federal program(s). U.S. Department of Education - Title I, Part A - Improving Basic Programs (ALN 84.010); passed through the Michigan Department of Education; All project numbers. Criteria. Per 2 CFR §200.303, the recipient must establish, document, and maintain effective internal controls over federal awards that provides reasonable assurance that the recipient is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the Federal award. Per 2 CFR §200, Subpart E, the District is required to ensure that grant funds are used in compliance with regulatory provisions and spent only for the reasonable and necessary costs of the program. Expenditures charged to grants for purchased services should be supported by documents that demonstrate that services were received for the benefit of the program, in accordance with approved agreements with those vendors providing the services. The District should ensure that payment is supported by details of services provided (by whom, when, and how much). Per 2 CFR §200.430, charges to federal awards for salaries and wages must be based on records that accurately reflect the work performed. Condition. During testing, we identified 1 instance out of 40 disbursement selections tested in which the District was unable to provide supporting documentation for charges incurred under the grant. Additionally, we noted 15 instances out of 40 samples tested where the District could not provide evidence of review and approval for grant expenditures. Finally, we identified 3 instances out of 40 samples tested where the hours reported on timesheets did not agree with the hours charged to the grant. Cause. The District did not have the proper controls in place to ensure that documentation of services provided were being reviewed prior to payment of related invoices. The District also did not maintain a strong system of financial record-keeping during the year which made it difficult for the District to provide invoices in a timely fashion when requested. Finally, the District did not have a system in place to properly review time sheet entry against hours actually charged to the grant. This condition was the result of a lack of internal controls for both payroll and disbursements in place to ensure that expenditures under the grant are independently approved before expenditures are incurred, proper records are maintained and grants are properly charged. Effect. The District’s failure to maintain supporting documentation for certain grant expenditures, provide evidence of review and approval, and accurately report time charged to the grant increases the risk of noncompliance with federal requirements under 2 CFR Part 200. These deficiencies create an increased risk of questioned costs which could ultimately lead to disallowed costs and the potential repayment of grant funds to the granting agency. Additionally, inaccurate reporting and weak internal controls diminish the reliability of financial information submitted to the grantor, reduce accountability, and heighten the risk of errors or fraudulent activity. Questioned Costs: None reported insofar as questioned costs are only required to be disclosed when known or likely questioned costs exceed the threshold of $25,000 established by the Uniform Guidance. Recommendation. We recommend that the District review its written policies and procedures over federal awards to ensure that controls are in place that will require that all expenditures for either payroll or disbursements have the appropriate documentation and evidence of review and approval prior to payment. View of Responsible Officials. The District will review its written policies and procedures over federal awards to ensure that all expenditures have the appropriate documentation and evidence of review and approval prior to payment.
Assistance Listing, Federal Agency, and Program Name 93.778, U.S Department of Health and Human Services, Medical Assistance Program (Medicaid) Federal Award Identification Number and Year N/A Pass through Entity Michigan Department of Community Health Finding Type Material weakness Repeat Finding No Criteria 2 CFR 200.303 requires that recipients and subrecipients receiving federal awards establish, document and maintain effective internal control over the federal awards that provides reasonable assurance that the recipient or subrecipient is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards including internal controls relevant to the allowability compliance category as defined in 2 CFR 200, Subpart E (Cost Principles). Condition The Intermediate School District (ISD) did not have internal controls in place to ensure that all the expenditures included in the quarterly claims for reimbursement were allowable. 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 The Medicaid Administrative Outreach Program (AOP) allows the Intermediate School District (ISD) to include its eligible expenditures and eligible expenditures from all of the Local Educational Authorities (LEAs) in Macomb County in its quarterly cost pool report that is submitted to a state contractor for their calculation of the AOP reimbursement. While the ISD has internal controls to ensure that the expenditures included in the quarterly cost reports that pertain to the ISD, are allowable, the ISD did not have an internal control to ensure that expenditures reported by the LEAs were allowable. For the year ended June 30, 2025, approximately 77 percent of total expenditures included in the quarterly cost pool reports, were incurred by the LEAs. Our compliance sample size was 60 of which 38 were from LEAs. No instances of noncompliance were noted. Cause and Effect The ISD relied on the LEAs and state contractor to ensure that LEA costs were allowable. The ISD did not establish internal controls to ensure that all LEA expenditures included in the quarterly AOP claim calculations were allowable, which is required as the ISD is the recipient of the grant funds. Recommendation We recommend that the ISD develop and implement internal controls to ensure expenditures from LEAs are allowable. Views of Responsible Officials and Corrective Action Plan Management agrees with the finding. The ISD will review the process used by the local districts to report quarterly expenditures for the Administrative Outreach program. We will then create a process that ensures that the local districts provide supporting documentation that allows us to monitor the quarterly submission amounts for accuracy.
Finding 2025-001 Program Name – Capitalization Grants for State Revolving Funds (Assistance Listing #66.468) Federal Award Agency – Environmental Protection Agency (EPA) Criteria Title 31 U.S. Code of Federal Regulations (CFR) Part 205.11(a) provides that a state must minimize the time elapsing between the transfer of funds from the United States Treasury and the state's payout of funds for federal assistance program purposes, whether the transfer occurs before or after the payout of funds. Title 2 CFR Part 200.303 requires the non-federal entity to establish and maintain effective internal control over federal awards that provides reasonable assurance that it is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition The Connecticut Department of Public Health (DPH) has not drawn down approximately $13,600,000 of federal assistance for set-aside expenditures incurred during the last two fiscal years. Context DPH incurred expenditures related to the Drinking Water Fund program for set-aside activity during the year. Cause There were delays in establishing award-specific State Identification Numbers (SIDs) to track new EPA grants awarded under the Infrastructure Investment and Jobs Act (IIJA). Upon subsequent review, reclassification of expenditures to proper SIDs were required. A pause was taken to ensure that drawdown requests and payments reflect properly reconciled and allowable charges and to avoid the risk of requesting reimbursement (improper payment) for incorrectly coded expenditures. Effect Federal drawdowns have not occurred in accordance with DPH’s immediate cash requirements to administer the program. Recommendation DPH should continue its efforts to timely review transactions initially recorded to base grant SIDs, reclassify those expenditures and initiate the drawdown request. DPH should ensure that federal drawdowns align with the immediate cash needs to administer the program. Views of Responsible Officials The Department agrees with the finding. Upon notification of the significant Bipartisan Infrastructure Law (BIL)/Infrastructure Investment and Jobs Act (IIJA) funds to be awarded, the Department proactively established positions necessary to support the implementation of the Drinking Water State Revolving Fund (DWSRF). These newly proposed positions were created under the existing Base Set-Aside chart of accounts to ensure staffing was in place at the onset of the grant period and to allow timely utilization of the anticipated funding. A delay in establishing these positions would have hindered the State’s ability to meet program obligations under the funding agreements. Once the positions were filled and staff began charging time and effort, expenditures were temporarily recorded under the existing chart of accounts with the intent to reallocate them to the appropriate BIL/IIJA accounts once the Notices of Award and corresponding accounts were formally established. Because many of these reallocations affect set-aside and program accounting, the Department placed a temporary hold on drawdowns of set-aside funds. This measure was taken to ensure that drawdown requests reflect properly reconciled and allowable charges and to prevent the risk of requesting reimbursement for incorrectly coded expenditures (improper payment). The Department has since initiated reconciliation of the accounts to ensure that all expenditures are aligned with their proper set-aside awards as well as beginning to drawdown from respective set-aside accounts. Completion of this reconciliation, along with the processing of all d eligible drawdowns, is anticipated on or before June 30, 2026.
Department of Agriculture Federal Financial Assistance Listing #10.766 Community Facilities Loans and Grants Special Tests and Provisions 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. Section 4 of the loan resolution security agreement dated December 1, 2016 states the Center must set aside a reserve amount each month until the specified account balance is reached. Condition: The Center’s reserve account is fully funded per the requirements of the loan resolution security agreement. However, there is no documented secondary monitoring of the reserve balance as compared to the required minimum reserve balance. Cause: The reserve balance is maintained within a separate certificate of deposit account with a bank; therefore, there are no monthly reconciliations, and the reserve balance and reserve requirement are not communicated with the board of directors. Effect: The lack of formal review or approval increases the risk of employees participating in the federal award administration not detecting and correcting noncompliance in a timely manner. Questioned Costs: None reported. Context/Sampling: Sampling was not used. Repeat Finding from Prior Year: No Recommendation: We recommend management implement procedures to ensure individuals in management review and approve the reserve balance when the certificate of deposit is renewed or present the reserve balance and the reserve requirement to the board during board meetings. Views of Responsible Officials: Management agrees with the finding.
U.S. Department of Treasury Federal Assistance Listing #21.027 COVID-19 Coronavirus State and Local Fiscal Recovery Funds Procurement, Suspension, & Debarment Material Weakness in Internal Control Over Compliance and Noncompliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. 2 CFR 200.318 requires the auditee to use its own documented procurement procedures which reflect State, local and tribal laws and regulations, provided that the procurements conform to applicable Federal law and standards. 2 CFR 200.214 restricts making federal awards with certain parties that are debarred, suspended, or otherwise excluded from participating in Federal awards. Condition: The Hospital did not have a written procurement policy in place that aligned with all federal regulations. The Hospital also did not review vendors to ensure that they were not debarred, suspended, or otherwise excluded from participating in federal awards. Cause: While the Hospital did have a policy in place, the policy did not follow all federal regulations, or include policies of determining if vendors are debarred, suspended, or otherwise excluded from participating in Federal awards. Effect: Noncompliance with the Uniform Guidance could jeopardize future federal funding. Questioned Costs: None reported Context: A nonstatistical sample of 3 vendors out of 9 vendors with actual or anticipated expenditures greater than the federal micro purchase threshold were tested for procurement testing. Repeat Finding from Prior Years: No. Recommendation: The Hospital should update their procurement policy to align with all federal requirements outlined in 2 CFR 200.318. We also recommend that the Hospital reviews vendors that are used for federal awards to ensure that they are not debarred, suspended, or otherwise excluded from participating in Federal awards in accordance with 2 CFR 200.214. Views of Responsible Officials: Management agrees with the finding.
2025-002: Supportive Housing for Persons with Disabilities – AL #14.181 – Eligibility Criteria or Specific Requirement (including statutory, regulatory, or other citation) Per Uniform Guidance (2 CFR 200.303), non-federal entities are required to establish and maintain effective internal controls over federal awards. HUD program guidelines also require documentation and supervisory review of tenant eligibility, rent determinations, and related compliance activities. Condition During our audit, we noted that tenant files, which included eligibility determinations, income verifications, and rent calculations, were not consistently reviewed or approved by management. Cause This was the result of an administrative oversight, in which, the property management personnel did not consistently follow the Corporation’s policies and procedures. Effect or Potential Effect The absence of management review increases the risk of noncompliance with federal regulations, incorrect eligibility determinations, and inaccurate rent calculations, which could result in questioned costs or adverse impact on program participants. Questioned Costs - None Identification as a Repeat Finding, if applicable – No Recommendation We recommend that the Corporation comply with established policies and procedures that require the review and approval of all tenant files by a designated supervisor. Views of Responsible Officials See attached response for view of responsible officials and planned corrective actions.
025-003: Supportive Housing for Persons with Disabilities – AL #14.181 – Cash Management Criteria or Specific Requirement (including statutory, regulatory, or other citation) Uniform Guidance (2 CFR 200.303) requires organizations to establish effective internal controls over federal awards. Proper review and approval are key controls to prevent errors and misstatements. Condition Monthly HUD-52670 forms were submitted to HUD for housing assistance payment requests without evidence of review or approval by management. Cause The Corporation didn’t have adequate controls in place to ensure that monthly HUD-52670 forms were reviewed and approved by management. Effect or Potential Effect There is a risk of potential noncompliance with HUD and federal cash management requirements. Questioned Costs - None Identification as a Repeat Finding, if applicable – No Recommendation We recommend that management implement a process for review and approval of all HUD-52670 forms before submission to HUD. Views of Responsible Officials See attached response for view of responsible officials and planned corrective actions.
2025-002: Supportive Housing for Persons with Disabilities – AL #14.181 – Eligibility Criteria or Specific Requirement (including statutory, regulatory, or other citation) Per Uniform Guidance (2 CFR 200.303), non-federal entities are required to establish and maintain effective internal controls over federal awards. HUD program guidelines also require documentation and supervisory review of tenant eligibility, rent determinations, and related compliance activities. Condition During our audit, we noted that tenant files, which included eligibility determinations, income verifications, and rent calculations, were not consistently reviewed or approved by management. Cause This was the result of an administrative oversight, in which, the property management personnel did not consistently follow the Corporation’s policies and procedures. Effect or Potential Effect The absence of management review increases the risk of noncompliance with federal regulations, incorrect eligibility determinations, and inaccurate rent calculations, which could result in questioned costs or adverse impact on program participants. Questioned Costs - None Identification as a Repeat Finding, if applicable – No Recommendation We recommend that the Corporation comply with established policies and procedures that require the review and approval of all tenant files by a designated supervisor. Views of Responsible Officials See attached response for view of responsible officials and planned corrective actions.
2025-003: Supportive Housing for Persons with Disabilities – AL #14.181 – Cash Management Criteria or Specific Requirement (including statutory, regulatory, or other citation) Uniform Guidance (2 CFR 200.303) requires organizations to establish effective internal controls over federal awards. Proper review and approval are key controls to prevent errors and misstatements. Condition Monthly HUD-52670 forms were submitted to HUD for housing assistance payment requests without evidence of review or approval by management. Cause The Corporation didn’t have adequate controls in place to ensure that monthly HUD-52670 forms were reviewed and approved by management. Effect or Potential Effect There is a risk of potential noncompliance with HUD and federal cash management requirements. Questioned Costs - None Identification as a Repeat Finding, if applicable – No Recommendation We recommend that management implement a process for review and approval of all HUD-52670 forms before submission to HUD. Views of Responsible Officials See attached response for view of responsible officials and planned corrective actions.
2025-002: Supportive Housing for Persons with Disabilities – AL #14.181 – Eligibility Criteria or Specific Requirement (including statutory, regulatory, or other citation) Per Uniform Guidance (2 CFR 200.303), non-federal entities are required to establish and maintain effective internal controls over federal awards. HUD program guidelines also require documentation and supervisory review of tenant eligibility, rent determinations, and related compliance activities. Condition During our audit, we noted that tenant files, which included eligibility determinations, income verifications, and rent calculations, were not consistently reviewed or approved by management. Cause This was the result of an administrative oversight, in which, the property management personnel did not consistently follow the Corporation’s policies and procedures. Effect or Potential Effect The absence of management review increases the risk of noncompliance with federal regulations, incorrect eligibility determinations, and inaccurate rent calculations, which could result in questioned costs or adverse impact on program participants. Questioned Costs - None Identification as a Repeat Finding, if applicable – No Recommendation We recommend that the Corporation comply with established policies and procedures that require the review and approval of all tenant files by a designated supervisor. Views of Responsible Officials See attached response for view of responsible officials and planned corrective actions.
2025-003: Supportive Housing for Persons with Disabilities – AL #14.181 – Cash Management Criteria or Specific Requirement (including statutory, regulatory, or other citation) Uniform Guidance (2 CFR 200.303) requires organizations to establish effective internal controls over federal awards. Proper review and approval are key controls to prevent errors and misstatements. Condition Monthly HUD-52670 forms were submitted to HUD for housing assistance payment requests without evidence of review or approval by management. Cause The Corporation didn’t have adequate controls in place to ensure that monthly HUD-52670 forms were reviewed and approved by management. Effect or Potential Effect There is a risk of potential noncompliance with HUD and federal cash management requirements. Questioned Costs - None Identification as a Repeat Finding, if applicable – No Recommendation We recommend that management implement a process for review and approval of all HUD-52670 forms before submission to HUD. Views of Responsible Officials See attached response for view of responsible officials and planned corrective actions.
2025-002: Supportive Housing for Persons with Disabilities – AL #14.181 – Eligibility Criteria or Specific Requirement (including statutory, regulatory, or other citation) Per Uniform Guidance (2 CFR 200.303), non-federal entities are required to establish and maintain effective internal controls over federal awards. HUD program guidelines also require documentation and supervisory review of tenant eligibility, rent determinations, and related compliance activities. Condition During our audit, we noted that tenant files, which included eligibility determinations, income verifications, and rent calculations, were not consistently reviewed or approved by management. Cause This was the result of an administrative oversight, in which, the property management personnel did not consistently follow the Corporation’s policies and procedures. Effect or Potential Effect The absence of management review increases the risk of noncompliance with federal regulations, incorrect eligibility determinations, and inaccurate rent calculations, which could result in questioned costs or adverse impact on program participants. Questioned Costs - None Identification as a Repeat Finding, if applicable – No Recommendation We recommend that the Corporation comply with established policies and procedures that require the review and approval of all tenant files by a designated supervisor. Views of Responsible Officials See attached response for view of responsible officials and planned corrective actions.
2025-003: Supportive Housing for Persons with Disabilities – AL #14.181 – Cash Management Criteria or Specific Requirement (including statutory, regulatory, or other citation) Uniform Guidance (2 CFR 200.303) requires organizations to establish effective internal controls over federal awards. Proper review and approval are key controls to prevent errors and misstatements. Condition Monthly HUD-52670 forms were submitted to HUD for housing assistance payment requests without evidence of review or approval by management. Cause The Corporation didn’t have adequate controls in place to ensure that monthly HUD-52670 forms were reviewed and approved by management. Effect or Potential Effect There is a risk of potential noncompliance with HUD and federal cash management requirements. Questioned Costs - None Identification as a Repeat Finding, if applicable – No Recommendation We recommend that management implement a process for review and approval of all HUD-52670 forms before submission to HUD. Views of Responsible Officials See attached response for view of responsible officials and planned corrective actions.
2025-001: Supportive Housing for Persons with Disabilities – AL #14.181 – Eligibility Criteria or Specific Requirement (including statutory, regulatory, or other citation) Per Uniform Guidance (2 CFR 200.303), non-federal entities are required to establish and maintain effective internal controls over federal awards. HUD program guidelines also require documentation and supervisory review of tenant eligibility, rent determinations, and related compliance activities. Condition During our audit, we noted that tenant files, which included eligibility determinations, income verifications, and rent calculations, were not consistently reviewed or approved by management. Cause This was the result of an administrative oversight, in which, the property management personnel did not consistently follow the Corporation’s policies and procedures. Effect or Potential Effect The absence of management review increases the risk of noncompliance with federal regulations, incorrect eligibility determinations, and inaccurate rent calculations, which could result in questioned costs or adverse impact on program participants. Questioned Costs - None Identification as a Repeat Finding, if applicable – No Recommendation We recommend that the Corporation comply with established policies and procedures that require the review and approval of all tenant files by a designated supervisor. Views of Responsible Officials See attached response for view of responsible officials and planned corrective actions.
025-002: Supportive Housing for Persons with Disabilities – AL #14.181 – Cash Management Criteria or Specific Requirement (including statutory, regulatory, or other citation) Uniform Guidance (2 CFR 200.303) requires organizations to establish effective internal controls over federal awards. Proper review and approval are key controls to prevent errors and misstatements. Condition Monthly HUD-52670 forms were submitted to HUD for housing assistance payment requests without evidence of review or approval by management. Cause The Corporation didn’t have adequate controls in place to ensure that monthly HUD-52670 forms were reviewed and approved by management. Effect or Potential Effect There is a risk of potential noncompliance with HUD and federal cash management requirements. Questioned Costs - None Identification as a Repeat Finding, if applicable – No Recommendation We recommend that management implement a process for review and approval of all HUD-52670 forms before submission to HUD. Views of Responsible Officials See attached response for view of responsible officials and planned corrective actions.
2025-001: Supportive Housing for Persons with Disabilities – AL #14.181 – Eligibility Criteria or Specific Requirement (including statutory, regulatory, or other citation) Per Uniform Guidance (2 CFR 200.303), non-federal entities are required to establish and maintain effective internal controls over federal awards. HUD program guidelines also require documentation and supervisory review of tenant eligibility, rent determinations, and related compliance activities. Condition During our audit, we noted that tenant files, which included eligibility determinations, income verifications, and rent calculations, were not consistently reviewed or approved by management. Cause This was the result of an administrative oversight, in which, the property management personnel did not consistently follow the Corporation’s policies and procedures. Effect or Potential Effect The absence of management review increases the risk of noncompliance with federal regulations, incorrect eligibility determinations, and inaccurate rent calculations, which could result in questioned costs or adverse impact on program participants. Questioned Costs - None Identification as a Repeat Finding, if applicable – No Recommendation We recommend that the Corporation comply with established policies and procedures that require the review and approval of all tenant files by a designated supervisor. Views of Responsible Officials See attached response for view of responsible officials and planned corrective actions.
2025-002: Supportive Housing for Persons with Disabilities – AL #14.181 – Cash Management Criteria or Specific Requirement (including statutory, regulatory, or other citation) Uniform Guidance (2 CFR 200.303) requires organizations to establish effective internal controls over federal awards. Proper review and approval are key controls to prevent errors and misstatements. Condition Monthly HUD-52670 forms were submitted to HUD for housing assistance payment requests without evidence of review or approval by management. Cause The Corporation didn’t have adequate controls in place to ensure that monthly HUD-52670 forms were reviewed and approved by management. Effect or Potential Effect There is a risk of potential noncompliance with HUD and federal cash management requirements. Questioned Costs - None Identification as a Repeat Finding, if applicable – No Recommendation We recommend that management implement a process for review and approval of all HUD-52670 forms before submission to HUD. Views of Responsible Officials See attached response for view of responsible officials and planned corrective actions.
2025-001: Supportive Housing for Persons with Disabilities – AL #14.181 – Eligibility Criteria or Specific Requirement (including statutory, regulatory, or other citation) Per Uniform Guidance (2 CFR 200.303), non-federal entities are required to establish and maintain effective internal controls over federal awards. HUD program guidelines also require documentation and supervisory review of tenant eligibility, rent determinations, and related compliance activities. Condition During our audit, we noted that tenant files, which included eligibility determinations, income verifications, and rent calculations, were not consistently reviewed or approved by management. Cause This was the result of an administrative oversight, in which, the property management personnel did not consistently follow the Corporation’s policies and procedures. Effect or Potential Effect The absence of management review increases the risk of noncompliance with federal regulations, incorrect eligibility determinations, and inaccurate rent calculations, which could result in questioned costs or adverse impact on program participants. Questioned Costs - None Identification as a Repeat Finding, if applicable – No Recommendation We recommend that the Corporation comply with established policies and procedures that require the review and approval of all tenant files by a designated supervisor. Views of Responsible Officials See attached response for view of responsible officials and planned corrective actions.
2025-002: Supportive Housing for Persons with Disabilities – AL #14.181 – Cash Management Criteria or Specific Requirement (including statutory, regulatory, or other citation) Uniform Guidance (2 CFR 200.303) requires organizations to establish effective internal controls over federal awards. Proper review and approval are key controls to prevent errors and misstatements. Condition Monthly HUD-52670 forms were submitted to HUD for housing assistance payment requests without evidence of review or approval by management. Cause The Corporation didn’t have adequate controls in place to ensure that monthly HUD-52670 forms were reviewed and approved by management. Effect or Potential Effect There is a risk of potential noncompliance with HUD and federal cash management requirements. Questioned Costs - None Identification as a Repeat Finding, if applicable – No Recommendation We recommend that management implement a process for review and approval of all HUD-52670 forms before submission to HUD. Views of Responsible Officials See attached response for view of responsible officials and planned corrective actions.
2025-002: Supportive Housing for Persons with Disabilities – AL #14.181 – Eligibility Criteria or Specific Requirement (including statutory, regulatory, or other citation) Per Uniform Guidance (2 CFR 200.303), non-federal entities are required to establish and maintain effective internal controls over federal awards. HUD program guidelines also require documentation and supervisory review of tenant eligibility, rent determinations, and related compliance activities. Condition During our audit, we noted that tenant files, which included eligibility determinations, income verifications, and rent calculations, were not consistently reviewed or approved by management. Cause This was the result of an administrative oversight, in which, the property management personnel did not consistently follow the Corporation’s policies and procedures. Effect or Potential Effect The absence of management review increases the risk of noncompliance with federal regulations, incorrect eligibility determinations, and inaccurate rent calculations, which could result in questioned costs or adverse impact on program participants. Questioned Costs - None Identification as a Repeat Finding, if applicable – No Recommendation We recommend that the Corporation comply with established policies and procedures that require the review and approval of all tenant files by a designated supervisor. Views of Responsible Officials See attached response for view of responsible officials and planned corrective actions.
2025-003: Supportive Housing for Persons with Disabilities – AL #14.181 – Cash Management Criteria or Specific Requirement (including statutory, regulatory, or other citation) Uniform Guidance (2 CFR 200.303) requires organizations to establish effective internal controls over federal awards. Proper review and approval are key controls to prevent errors and misstatements. Condition Monthly HUD-52670 forms were submitted to HUD for housing assistance payment requests without evidence of review or approval by management. Cause The Corporation didn’t have adequate controls in place to ensure that monthly HUD-52670 forms were reviewed and approved by management. Effect or Potential Effect There is a risk of potential noncompliance with HUD and federal cash management requirements. Questioned Costs - None Identification as a Repeat Finding, if applicable – No Recommendation We recommend that management implement a process for review and approval of all HUD-52670 forms before submission to HUD. Views of Responsible Officials See attached response for view of responsible officials and planned corrective actions.
Department of Agriculture Federal Assistance Listing #10.766 Community Facilities Loans and Grants Special Tests and Provisions 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 federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal awards. Condition - During our testing, there was no formal review separate from the preparer over the reserve fund reconciliations for the federal program. Cause - The Home did not have an adequate internal control policy in place to ensure review and approval over the reserve fund reconciliations. Effect - The lack of adequate policies governing review 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/Sampling – A nonstatistical sample of three months out of twelve months were selected for testing. A lack of documented review was noted for all three months tested. Repeat Finding from Prior Years - Yes - 2024-003 Recommendation - We recommend that the Home enhance internal control policies to ensure that formal documentation of reviews is present. Views of Responsible Officials - Management agrees with the finding.
FINDING 2025-002 Subject: Child Nutrition Cluster - Internal Controls Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program Assistance Listings Numbers: 10.553, 10.555 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2024, FY 2025 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Eligibility, Special Tests and Provisions - Non-Profit School Food Service Accounts Audit Finding: Material Weakness INDIANA STATE BOARD OF ACCOUNTS 14 BATESVILLE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance with the Eligibility and the Special Tests and Provisions - Non-Profit School Food Service Accounts compliance requirements. Eligibility Any child enrolled in a participating school who meets the applicable program's definition of "child," may receive meals under the applicable program. In the case of the National School Lunch Program and the School Breakfast Program, children belonging to households meeting nationwide income eligibility requirements may receive meals at no charge or at reduced price. Children who have been determined ineligible for free or reduced-price school meals pay the full price, set by the School Food Authority, for their meals. Children attending meal service sites of the Summer Food Service Program receive their meals at no charge. As a general rule, a child's eligibility for free or reduced-price meals under a Child Nutrition Cluster program may be established by the submission of an annual application or a statement which furnishes such information as family income and family size. Local educational agencies, institutions, and sponsors then determine eligibility by comparing the data reported by the child's household to published income eligibility guidelines. Additionally, a child may be direct-certified. For a direct certification, annual eligibility determinations are based on the child's household receiving benefits under the Supplemental Nutrition Assistance Program, the Food Distribution Program on Indiana Reservations, the Head Start Program (ALN 93.600), or, under most circumstances, the Temporary Assistance for Needy Families program (ALN 93.558). A household may furnish documentation of its participation in one of these programs, or the school, institution, or sponsor may obtain the information directly from the state or local agency that administers these programs. Certain foster, runaway, homeless, and migrant children are categorically eligible for free school lunches and breakfasts. Direct-certified households do not need to complete an application. Free and reduced-price applications were completed online. The information entered in the applications was then automatically uploaded into the School Corporation's child nutrition software system. The software system calculated a student's eligibility for free and reducedprice meals based on the parameters within the system. The system parameters were entered by the Food Service Director, without a documented review or oversight process to ensure the parameters entered were accurate. Additionally, there was not a review process in place to ensure that the eligibility determinations made by the software system were in compliance with the requirements of the programs. School Food Accounts The School Corporation did not have internal controls in place to ensure that federal reimbursements received by electronic funds transfers (EFT) for meals served were properly credited to the School Lunch fund. The Treasurer was responsible for posting federal reimbursements to the School Lunch fund without an oversight, review, or approval process in place to ensure they were properly posted. The lack of internal controls was systemic throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 15 BATESVILLE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause Management of the School Corporation had not established a proper system of internal controls over income parameters entered annually into the food service software or over the verification of free and reduced-price applications. Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, errors. Management of the School Corporation had established a proper system of internal controls over non-EFT receipts; however, a proper system of internal controls had not been established for EFT receipts. Without the proper implementation of an effectively designed system of internal controls over EFT receipts, the internal control system cannot be capable of effectively preventing, or detecting and correcting, errors. Effect Without the proper design or implementation of the components of a system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation implement policies and procedures to ensure that eligibility determinations are made properly and that federal reimbursements for meals served are credited to the School Lunch fund. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-003 Subject: COVID-19 - Education Stabilization Fund - Special Tests and Provisions - Wage Rate Requirements Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425U Federal Award Number and Year (or Other Identifying Number): S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Tests and Provisions - Wage Rate Requirements Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-003. Condition and Context Construction contracts in excess of $2,000 financed by federal assistance funds must pay wages not less than those established for the locality of the project (prevailing wage rates) by the Department of Labor (DOL) to its laborers and mechanics. Nonfederal entities are to include in their construction contracts that are subject to the wage rate requirements a provision that the contractor or subcontractor comply with these requirements and the DOL regulations. This would include a requirement to submit a copy of the payroll and statement of compliance to the entity for each week in which contract work was performed. The School Corporation had not designed nor implemented a system of internal controls to ensure that construction contracts in excess of $2,000 paid from federal grant funds included a prevailing wage rate clause and that a copy of the payroll was submitted for each week in which contract work was performed. Two construction projects were paid for from the Elementary and Secondary School Emergency Relief Fund grant funds during the audit period. Both contracts were tested. One of the two contracts contained the required prevailing wage rate clause; however, a copy of the payroll was not submitted for either of the contracts for any week in which work was performed. 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 17 BATESVILLE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 29 CFR 5.5 states in part: "(a) Required contract clauses. The Agency head will cause or require the contracting officer to require the contracting officer to [sic] insert in full, or (for contracts covered by the Federal Acquisition Regulation (48 CFR chapter 1)) by reference, in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part from Federal funds or in accordance with guarantees of a Federal agency or financed from funds obtained by pledge of any contract of a Federal agency to make a loan, grant or annual contribution (except where a different meaning is expressly indicated), and which is subject to the labor standards provisions of any of the laws referenced by § 5.1, the following clauses . . . (1) Minimum wages — (i) Wage rates and fringe benefits. All laborers and mechanics employed or working upon the site of the work (or otherwise working in construction or development of the project under a development statute), will be paid unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account (except such payroll deductions as are permitted by regulations issued by the Secretary of Labor under the Copeland Act (29 CFR part 3)), the full amount of basic hourly wages and bona fide fringe benefits (or cash equivalents thereof) due at time of payment computed at rates not less than those contained in the wage determination of the Secretary of Labor which is attached hereto and made a part hereof, regardless of any contractual relationship which may be alleged to exist between the contractor and such laborers and mechanics. . . . (3) Records and certified payrolls — . . . (ii) Certified payroll requirements — (A) Frequency and method of submission. The contractor or subcontractor must submit weekly, for each week in which any DBA- or Related Acts-covered work is performed, certified payrolls to the [write in name of appropriate Federal agency] if the agency is a party to the contract, but if the agency is not such a party, the contractor will submit the certified payrolls to the applicant, sponsor, owner, or other entity, as the case may be, that maintains such records, for transmission to the [write in name of agency]. . . ." 2 CFR 200 Appendix II states in part: "In addition to other provisions required by the Federal agency or non-Federal entity; all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following, as applicable. . . . (D) Davis-Bacon Act, as amended (40 U.S.C. 3141-3148). When required by Federal program legislation, all prime construction contracts in excess of $2,000 awarded by non- Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, and 3146-3148) as supplemented by Department of Labor regulations (29 CFR Part 5, 'Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction'). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor. In addition, contractors must be required to pay wages not less than once a week. . . ." INDIANA STATE BOARD OF ACCOUNTS 18 BATESVILLE COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.334 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." Cause The School Corporation did not implement corrective action as planned to rectify the prior audit finding. This was partially due to the timing of the prior audit as well as an oversight by management. Upon realizing corrective action had not been taken, the grant had been fully expended, and corrective action was no longer possible. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, certified payrolls were not obtained by the School Corporation, and one out of two contractors was not notified of prevailing wage requirements. Noncompliance with the grant agreement and the compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls and ensure certified payrolls are obtained and contractors are notified of prevailing wage requirements as required. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Administration for Children and Families Federal Financial Assistance Listing #93.566, 2302SDRCMA, 10/01/2022 – 9/30/2024 Federal Financial Assistance Listing #93.566, 2402SDRCMA, 10/01/2023 – 9/30/2026 Refugee and Entrant Assistance – State Administered Programs Eligibility 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 the terms and conditions of the federal award. Condition: Two instances were identified where the participant was underpaid based upon eligibility for one month (2 participant files). Cause: The participant in each case obtained employment and no monthly redetermination form was completed to ensure the participant no longer was eligible to receive the monthly cash assistance. Additionally, the Organization experienced an increase in refugee arrivals at the beginning of the fiscal year creating an increase in the workload of staff members. Effect: Ineffective controls over this area of compliance could result in a reasonable possibility that the Organization would provide services to ineligible participants and the Organization would not detect ineligibility in a timely manner. Questioned Costs: None reported. The grant was under allocated. Context/Sampling: A nonstatistical sample of 60 participant case files out of more than 250 participant case files were selected for testing which included $149,528 of participant payments out of $668,330. Repeat Finding from Prior Year: Yes, prior year finding 2024‐003 Recommendation: We recommend management review the Organization’s policies, procedures and controls over eligibility with applicable program employees to ensure compliance with the federal program. View of Responsible Officials: Management is in agreement.
Passed through Lutheran Immigration and Refugee Service dba Global Refuge Federal Financial Assistance Listing #19.510, 323‐24‐00, 10/01/2023 – 9/30/2024 Federal Financial Assistance Listing #19.510, 323‐25‐00, 10/01/2024 – 9/30/2025 U.S. Refugee Admissions Program Activities Allowed or Unallowed and Allowable Costs/Cost Principles 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 the terms and conditions of the federal award. Condition: In the sample of expenditures selected for testing, two instances were identified where the approval over the expense occurred after the check was written. Cause: The Organization underwent a transitional phase from paper‐based documentation to a digital workflow using Salesforce. This system change likely contributed to deviations in the established processes and internal controls, including the sequence of expense approvals. Effect: Lack of compliance with designed internal controls over disbursements allows for payment of expenses that were not approved prior to checks being written. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 60 payroll and nonpayroll disbursements out of more than 250 payroll and nonpayroll disbursements were selected for testing which included $31,198 out of $756,944. Repeat Finding from Prior Year: No Recommendation: We recommend management review the Organization’s policies, procedures and controls over expenses with applicable program employees to ensure approval of expenses occurs prior to checks being written and payments being made. View of Responsible Officials: Management is in agreement.
Passed through Lutheran Immigration and Refugee Service dba Global Refuge Federal Financial Assistance Listing #19.510, 323‐24‐00, 10/01/2023 – 9/30/2024 Federal Financial Assistance Listing #19.510, 323‐25‐00, 10/01/2024 – 9/30/2025 U.S. Refugee Admissions Program Special Tests and Provisions 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 the terms and conditions of the federal award. Condition: We noted the following matters during testing which affected 2 participant files: a) One instance was identified where documentation for both the initial home visit and the 30‐day followup home visit was missing from the participant file. No case activity or other documentation was able to be provided to indicate that these visits were conducted in accordance with the federal program. b) One instance was identified where an expense was paid and reimbursed under the grant without evidence of a formal request, invoice support, review, or approval. Cause: The Organization experienced an increase in refugee arrivals at the beginning of the fiscal year creating an increase in the workload of staff members along with employee turnover occurring toward the end of the fiscal year. Additionally, the Organization underwent a transitional phase from paper‐based documentation to a digital workflow using Salesforce. This system change likely contributed to deviations in established processes and internal controls. Effect: Ineffective controls over this area of compliance could result in a reasonable possibility that the Organization would not be in compliance with the federal award was it relates to case file management. Questioned Costs: $39 Context/Sampling: A nonstatistical sample of 18 participant files out of 117 total participant files were selected for testing. Repeat Finding from Prior Year: No Recommendation: We recommend that management review the Organization’s policies, procedures and controls over case file management with applicable program employees to ensure compliance with the federal program. View of Responsible Officials: Management is in agreement.
Criteria: Accurate financial reporting and compliance with the Uniform Guidance require a strong internal control system. This includes proper segregation of duties, consistent application of documented policies and procedures, and routine management oversight. Under 2 CFR 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provides reasonable assurance that the entity is managing the awards in compliance with the applicable requirements. Controls should be documented sufficiently to allow management to monitor their effectiveness and to demonstrate compliance to external parties. Criteria: Accurate financial reporting and compliance with the Uniform Guidance require a strong internal control system. This includes proper segregation of duties, consistent application of documented policies and procedures, and routine management oversight. Under 2 CFR 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provides reasonable assurance that the entity is managing the awards in compliance with the applicable requirements. Controls should be documented sufficiently to allow management to monitor their effectiveness and to demonstrate compliance to external parties. Condition: During the year, the former Senior Director of Housing & Facilities was responsible for the custody of assets and for authorizing and recording transactions in the Project’s accounting software, with limited routine oversight. Evidence of mitigating controls, such as supervisory review, documented by management approvals or signoffs, was not maintained. Cause: Staffing constraints and employee turnover have contributed to the current control environment’s inadequate segregation of duties and a lack of documented management oversight. Effect: This concentration of incompatible duties in a single individual, without documented oversight, increases the risk that errors or irregularities may occur and remain undetected. When control activities rely on a single individual’s institutional knowledge rather than documented procedures and effective internal controls, continuity and compliance can be difficult to maintain during periods of staff transition. Recommendations: Management should review existing policies and procedures and improve them where necessary to address gaps in the current control structure. Roles and responsibilities should be clearly defined and documented for all key financial reporting and compliance functions. Controls and mitigating controls should be designed, implemented, and documented, with particular attention given to segregation of duties and oversight. Evidence of supervisory review should be maintained routinely through sign-offs, checklists, or review logs. Staff involved in financial reporting and compliance should be familiar with applicable HUD requirements, the Uniform Guidance, and the entity's own policies to ensure ongoing adherence to federal program requirements. Management Comments: We concur with this finding and recognize the need for a more robust control environment. We are actively working to reevaluate staff responsibilities, expand the documentation of oversight procedures, and implement structured, recurring reviews of financial transactions and compliance-related data to ensure compliance with the Uniform Guidance.
Finding 2025-001: Inadequate Segregation of Duties and Lack of Documented Management Oversight Federal Program: U.S. Department of Housing and Urban Development - Supportive Housing for Persons with Disabilities (14.181) Compliance Requirement: Internal Control Over Compliance (2 CFR 200.303) Type of Finding: Significant Deficiency in Internal Control Over Financial Reporting and Compliance Known Questioned Costs: None Criteria: Accurate financial reporting and compliance with the Uniform Guidance require a strong internal control system. This includes proper segregation of duties, consistent application of documented policies and procedures, and routine management oversight. Under 2 CFR 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provides reasonable assurance that the entity is managing the awards in compliance with the applicable requirements. Controls should be documented sufficiently to allow management to monitor their effectiveness and to demonstrate compliance to external parties. Condition: During the year, the former Senior Director of Housing & Facilities was responsible for the custody of assets and for authorizing and recording transactions in the Project’s accounting software, with limited routine oversight. Evidence of mitigating controls, such as supervisory review, documented by management approvals or signoffs, was not maintained. Cause: Staffing constraints and employee turnover have contributed to the current control environment’s inadequate segregation of duties and a lack of documented management oversight. Effect: This concentration of incompatible duties in a single individual, without documented oversight, increases the risk that errors or irregularities may occur and remain undetected. When control activities rely on a single individual’s institutional knowledge rather than documented procedures and effective internal controls, continuity and compliance can be difficult to maintain during periods of staff transition. Recommendations: Management should review existing policies and procedures and improve them where necessary to address gaps in the current control structure. Roles and responsibilities should be clearly defined and documented for all key financial reporting and compliance functions. Controls and mitigating controls should be designed, implemented, and documented, with particular attention given to segregation of duties and oversight. Evidence of supervisory review should be maintained routinely through signoffs, checklists, or review logs. Staff involved in financial reporting and compliance should be familiar with applicable HUD requirements, the Uniform Guidance, and the entity's own policies to ensure ongoing adherence to federal program requirements. Views of Responsible Officials: We concur with this finding and recognize the need for a more robust control environment. We are actively working to reevaluate staff responsibilities, expand the documentation of oversight procedures, and implement structured, recurring reviews of financial transactions and compliance-related data to ensure compliance with the Uniform Guidance.
Criteria: Accurate financial reporting and compliance with the Uniform Guidance require a strong internal control system. This includes proper segregation of duties, consistent application of documented policies and procedures, and routine management oversight. Under 2 CFR 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provides reasonable assurance that the entity is managing the awards in compliance with the applicable requirements. Controls should be documented sufficiently to allow management to monitor their effectiveness and to demonstrate compliance to external parties. Condition: During the year, the former Senior Director of Housing & Facilities was responsible for the custody of assets and for authorizing and recording transactions in the Project’s accounting software, with limited routine oversight. Evidence of mitigating controls, such as supervisory review, documented by management approvals or signoffs, was not maintained. Cause: Staffing constraints and employee turnover have contributed to the current control environment’s inadequate segregation of duties and a lack of documented management oversight. Effect: This concentration of incompatible duties in a single individual, without documented oversight, increases the risk that errors or irregularities may occur and remain undetected. When control activities rely on a single individual’s institutional knowledge rather than documented procedures and effective internal controls, continuity and compliance can be difficult to maintain during periods of staff transition. Recommendations: Management should review existing policies and procedures and improve them where necessary to address gaps in the current control structure. Roles and responsibilities should be clearly defined and documented for all key financial reporting and compliance functions. Controls and mitigating controls should be designed, implemented, and documented, with particular attention given to segregation of duties and oversight. Evidence of supervisory review should be maintained routinely through sign-offs, checklists, or review logs. Staff involved in financial reporting and compliance should be familiar with applicable HUD requirements, the Uniform Guidance, and the entity's own policies to ensure ongoing adherence to federal program requirements. Management Comments: We concur with this finding and recognize the need for a more robust control environment. We are actively working to reevaluate staff responsibilities, expand the documentation of oversight procedures, and implement structured, recurring reviews of financial transactions and compliance-related data to ensure compliance with the Uniform Guidance.
SIGNIFICANT DEFICIENCIES 2025-002 – Allowable Costs and Allowable Activities Federal Program Information: 10.553,10.555,10.556,10.5599 Child Nutrition Cluster and 10.582 Criteria: The following CFR applies to this finding: 2 CFR 200.303 Condition: During audit procedures, it was identified that the Districts process to document approval and coding over disbursements is not working effectively. Cause: The District does not have the necessary internal controls over compliance. Effect: Insufficient controls could allow for unallowable costs to be charged. Identification Of Questioned Costs: None Identified Context: 25 Cash Disbursements were tested and it was found that 13 of the disbursements tested did not have the Purchase Orders or approval on the invoices and 14 of the disbursements that did not have account codes written on the invoices or purchase order to help ensure they were properly charged to the correct accounts. This is not statistically valid sample. Repeat Finding: This is not a repeat finding. Recommendation: It is recommended that the District implements internal control processes and procedures to ensure that they are following the criteria above. Views of Responsible Officials and Corrective Action Plan: Please see the Corrective Action Plan issued by the Maine School Administrative District No. 27.