Finding 2024-001 (A/B – Activities Allowed or Unallowed and Allowable Costs / Cost Principles) Identification of the federal program: Federal Grantor: US Department of Homeland Security Federal Emergency Management Agency (FEMA) Assistance Listing No.: 97.036 - COVID-19 - Disaster Grants – Public Assistance (Presidentially Declared Disasters) Criteria or specific requirement (including statutory, regulatory or other citation): The Uniform Guidance 2 CFR section 200.303 states, “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).” The Uniform Guidance 2 CFR sections 200.400 through 200.405 set forth the guidance for allowable costs for projects funded with Federal funds. Condition: Baptist Health Care, Inc. (the Company) received funding under program 97.036 – COVID-19 - Disaster Grants – Public Assistance (Presidentially Declared Disasters) (Program) during the fiscal year ended September 30, 2024. The Company submitted duplicate invoices for different projects that resulted in expenditures being reimbursed for costs incurred multiple times. The Company also submitted for reimbursement an amount greater than what was supported by the underlying invoice due to incorrect data submission. Based on discussions with management, we understand that the Company utilized a contracted third party to assist with collecting the information to be submitted to FEMA. However, the internal controls over compliance did not detect or prevent these situations from occurring at the required level of precision. As such, we consider the lack of effectiveness of controls to validate completeness and accuracy of the amounts submitted for reimbursement for this program to represent a material weakness in internal control over compliance. Cause: The Company’s internal controls in place over the review of the completeness and accuracy of amounts submitted for reimbursement under the Program were not sufficient to detect or prevent errors in the underlying files submitted for reimbursement. Effect or potential effect: The lack of management review at a sufficient level of precision regarding expenditures submitted for reimbursement under this Program resulted in the reimbursement of duplicate invoices and reimbursement of an amount greater than the amount supported by the underlying supporting documentation from the granting agency. As a result, the Company will be required to reimburse the Federal Agency. Questioned costs: $79,118.82 Context: There were 8 individual projects for the COVID-19 disaster that the Company received funding for in fiscal year 2024. These projects were submitted to FEMA during the fiscal years 2020 through 2022. We selected 40 expenditures totaling $161,579 from the total population of expenditures totaling $1,843,741. We identified a duplicate invoice in our testing sample. We then reviewed the total population of invoices subject to testing and identified 24 invoices totaling $77,521.50 that were submitted for reimbursement more than once and therefore reimbursed by the Program more than once. We also identified one invoice totaling $177.48 for which reimbursement was requested for an amount $1,597.32 greater than the invoice amount. We extrapolated this error to estimate the likely questioned costs of $16,629.33. We reviewed the entire population of expenditures for which reimbursement was requested and received to determine the total amount of duplicate reimbursements and reimbursements in excess of supporting documentation to quantify the total known questioned costs of $79,118.82. Identification as a repeat finding, if applicable: Not applicable. Recommendation: The Company should ensure that a diligent review of amounts submitted for reimbursement is conducted at a sufficient level of precision by an appropriate individual with knowledge of the Program to ensure expenditures are only submitted once for reimbursement and to ensure that amounts submitted for reimbursement are not in excess of the amounts supported by appropriate documentation. We also recommend that management reimburse the Agency for the amounts reimbursed more than once and reimbursed at amounts in excess of the appropriate supporting documentation. Views of responsible officials: The Company agrees with the above recommendation. See separate Corrective Action Plan.
Finding 2024-043 - Use of Federal Funds to Satisfy Required Local Match Without Prior Approval Summary: The City of Batesville substituted federal Delta Regional Authority (ORA) and Appalachian Regional Commission (ARC) funds for required local match obligations under two federal grants-ARC (ALN 23.002) and CDBG (ALN 14.228)-without obtaining prior written approval from the awarding agencies. Although CDBG was not selected for audit testing, the questioned costs originally exceeded the $10,000 threshold and are reported in accordance with 2 CFR §200.516(a): Total questioned costs of $800,406 were initially allocated proportionally between the two programs; These costs have since been resolved through formal amendments to both grant agreements. Federal Programs 23.002 _; Appalachian Area Development (ARC) 14.228 - Community Development Block Grants/State's Program and Non-Entitlement Grants in Hawaii· (CDBG) Note: ALN 14.228 was not selected for audit testing under the Uniform Guidance compliance requirements. However, a finding is presented in accordance with 2 CFR §200.516(a) due to the materiality of the issue and its connection to ARC grant MS-20699. Award Numbers ARC: MS-20699 CDBG Subgrant: 1137 ~21-111-PF-01 Federal Agencies U.S. Department of the Treasury (via Appalachian Regional Commission) U.S. Department of Housing and Urban Development Compliance Requirements Matching - 2 CFR §200.306 Allowable Costs/Cost Principles - 2 CFR §200.403 Internal Controls -2 CFR §200.303 Audit Finding Threshold - 2 CFR §200.516(a) Type of Finding Internal Control over Compliance - Material Weakness Compliance - Noncompliance Questioned Costs Based on actual net expenditures and proportional match requirements: (TABLE) These questioned costs have been eliminated following receipt of amended contracts from ARC and CDBG approving the use of ORA and CDBG funds as match. Criteria The following federal regulations and grant conditions establish the requirements violated in this finding: 1. Matching Requirements - 2 CFR §200.306 Federal funds may not be used to meet a required cost share or match unless expressly authorized by the awarding agency. Matching contributions must: Be verifiable from the recipient's records Not be included as contributions for any other federal award Be necessary and reasonable for accomplishing program objectives Be allowable under the cost principles Not be paid by. the federal government under another award, unless authorized 2. Allowable Costs ... 2 CFR §200.403 Costs must be necessary, reasonable, allocable, and conform to limitations in the award terms. Costs must be adequately documented and consistent with policies that apply uniformly to both federally financed and other activities. 3. Internal Controls - 2 CFR §200.303 Recipients must establish and maintain effective internal controls to ensure compliance with feqeral statutes, regulations, and award terms. Controls should provide reasonable assurance that the organization is managing the award in compliance with applicable requirements. 4. Audit Finding Threshold-2 CFR §200.516(a) Auditors must report known questioned costs that exceed $10,000 for a federal program, even if the program was not selected for audit testing. Condition During the audit of ARC grant MS-20699 (ALN 23.002), we noted that the City of Batesville substituted $569,600 in federal ORA funds for the originally budgeted local match of $341,784. Additionally, for COBG grant ALN 14.228, the City substituted $569,600 in ORA funds and $553,000 in ARC grant funds for the originally budgeted local match of $901,784. These substitutions were made without prior written approval or executed amendments from the awarding agencies, as required under 2 CFR §200.306 and the respective grant agreements. Resolution Following the audit fieldwork, the City obtained formal amendments to both grant agreements: On October 24, 2025, ARC approved the substitution of ORA and COBG funds as match under ALN 23.002. On November 7, 2025, COBG approved the substitution of ORA and ARC funds as match under ALN 14.228. These approvals eliminate the previously identified questioned costs totaling $800,406. However, the lack of contemporaneous documentation and prior approval reflects a breakdown in internal controls and remains a material compliance issue. Cause The City lacked adequate internal controls to ensure changes to match sources were formally reviewed and approved by the awarding agencies prior to implementation. The substitution of federal funds for required local match was not documented or authorized at the time of expenditure. Effect Although questioned costs have been resolved, the City was in noncompliance with federal matching requirements and allowable cost principles at the time of expenditure. This reflects a broader control deficiency in the City's grant management process and increases the risk of future noncompliance. Recommendation We recommend the City strengthen its internal controls over grant compliance, including: Formal review and documentation of match sources prior to drawdown Written approval from awarding agencies before substituting federal funds for required match Staff training on federal match requirements and Uniform Guidance compliance Views of Responsible Officials Management concurs with the finding. The City acknowledges that federal ORA and ARC funds were applied toward required match obligations without prior approval or amendment to the respective grant agreements. ARC and CDBG representatives have since approved the substitutions through formal amendments. The City will implement procedures requiring written authorization for any future match substitutions and establish a formal review process to verify match sources prior to drawdown.
2024-032 - Delayed Final Reimbursement Due to Unresolved Agency Requests Federal Programs 23.002 - Appalachian Area Development 14.228 - Community Development Block Grants/State's Program Award Numbers ARC-20698 ARC-20699 CDBG Subgrant: 1137-21-111-PF-01 Federal Agency U.S. Department of Housing and Urban Development (HUD) Appalachian Regional Commission (ARC) Compliance Requirement Reporting and Closeout- 2 CFR §§ 200.302, 200.303, and 200.344 Type of Finding: Internal Control over Compliance - Significant Deficiency Compliance - Noncompliance Questioned Costs: None Criteria: In accordance with 2 CFR §200.302 and §200.303, non-federal entities must maintain effective internal control over federal awards and ensure timely closeout. Additionally, 2 CFR §200.344 requires that closeout be completed within one year of the end of the period of performance. Condition: Final reimbursement requests for the above federal programs were submitted over a year ago. Although the granting agencies have initiated follow-up correspondence requesting additional documentation or clarification, the final payments remain outstanding as of the audit date. No resolution has been reached, and the grants remain open. Cause: The City lacks a formalized process for tracking unresolved reimbursement requests and responding to agency inquiries in a timely and coordinated manner. This has contributed to delays in resolving outstanding issues and receiving final payments. Effect: The City has not received final reimbursement for completed federal programs, resulting in delayed revenue recognition and potential strain on local resources. The extended delay also risks noncompliance with federal closeout requirements and may affect future funding eligibility. Recommendation: Implement a grant closeout protocol that includes: A centralized tracking system for final reimbursement submissions and agency correspondence Defined timelines for follow-up and escalation Clear assignment of responsibility for resolving outstanding issues Views of Responsible Officials: Management concurs with the finding. The City acknowledges that final reimbursement requests for the referenced federal programs were submitted in a timely manner; however, final payments have not been received due to ongoing correspondence and requests for additional information from the granting agencies. While staff have responded to these inquiries, the absence of a formalized tracking and escalation process has contributed to delays in resolution.
2024-044 - Untimely Submission of Required Performance Reports Federal Programs 23.002 - Appalachian Area Development (ARC) Award Numbers ARC MS-20698 ARC MS~20699 Federal Agency Appalachian Regional Commission (ARC) Compliance Requirement Reporting - 2 CFR §200.328 and §200.303 Type of Finding Internal Control over Compliance - Significant Deficiency Compliance - Noncompliance Questioned Costs None. The reporting noncompliance did not affect the allowability of costs charged to the grant. Criteria 2 CFR §200.328(b)(1) requires recipients to submit performance reports at intervals required by the federal awarding agency or pass-through entity. These reports must contain a comparison of actual accomplishments to the objectives of the award and be submitted in accordance with the terms and conditions of the grant. 2 CFR §200.303 requires recipients to establish and maintain effective internal controls over federal awards to ensure compliance with federal statutes, regulations, and the terms and conditions of the award. This includes controls over timely and accurate reporting. Under the ARC grant agreements, semi-annual performance reports are required to be submitted within 15 days following the end of each six-month reporting period. Condition The City did not submit required semi-annual performance reports for ARC grants MS-20698 and MS-20699 within the timeframes established by the grant agreements. Reports were submitted significantly past the 15-day deadline following the end of each six-month reporting period. In some cases, multiple reports were submitted on the same day, and one report due during the audit period had not been filed as of fieldwork completion. Additionally, the reports lacked clear identification of the reporting period covered. Cause The City did not have adequate procedures in place to ensure timely tracking and submission of required performance reports. Internal controls over reporting deadlines were not operating effectively. Effect Failure to submit timely and complete performance reports limits the pass-through entity's and federal awarding agency's ability to monitor project progress and ensure compliance with grant terms. This represents noncompliance with federal reporting requirements and a deficiency in internal control over federal programs. Recommendation We recommend the City implement procedures to ensure timely submission of required performance reports, including: Maintaining a reporting calendar with automated reminders Assigning responsibility for monitoring deadlines Retaining documentation that clearly identifies the reporting period covered Views of Responsible Officials Management concurs with the finding. The City acknowledges that performance reports were submitted late and that documentation lacked clarity regarding the reporting periods. To address this, the City will implement a reporting calendar with automated reminders and assign staff responsibility for monitoring deadlines. A standardized reporting template will be adopted to ensure each submission clearly identifies the reporting period covered. These measures will strengthen internal controls and improve compliance with ARC reporting requirements.
2024-042 - Misallocation of Expenditures Across Federal Awards Federal Program 14.228 - Community Development Block Grants Program 23.002 - Appalachian Area Development 90.210 - Delta Regional Authority (not subject to audit under Uniform Guidance) Award Numbers ARC-20698 ARC-20699 CDBG Subgrant: 1137-21-111-PF-01 Federal Agencies U.S. Department of Housing and Urban Development (HUD) U.S. Department of the Treasury (via Appalachian Regional Commission) Delta Regional Authority (DRA) Compliance Requirements Allowable Costs/Cost Principles - 2 CFR §200.403 and §200.405 Internal Controls - 2 CFR §200.303 Type of Finding Internal Control over Compliance - Significant Deficiency Compliance '- Noncompliance Questioned Costs (TABLE) Per 2 CFR §200.403, costs must be necessary, reasonable, and allocable to the federal award. Under §200.405, costs must be assigned to the federal award in accordance with the relative benefits received. Additionally, §200.303 requires the non-federal entity to maintain effective internal control over federal awards to ensure compliance. Condition During testing of 13 disbursements totaling $1,541,660 charged to the above federal programs, 11 invoices were not allocated in accordance with the approved budget percentages. This resulted in over-reimbursements across multiple federal awards. Known Over (Under) Reimbursements by Program and Fiscal Year (TABLE) *ALN 90.210 was not subject to audit under Uniform Guidance. Amounts shown are for context only. Cause The City did not consistently apply approved budget allocation percentages when charging expenditures to federal awards. This resulted in misclassification of costs and excess reimbursement from federal sources. Effect The City received federal reimbursements in excess of allowable amounts under ALNs 14.228 and 23.002. These errors may result in repayment obligations and indicate a broader weakness in internal controls over grant accounting and drawdown procedures. Recommendation We recommend the City strengthen its internal controls over grant accounting and reimbursement procedures. This should include: Formal review of allocation schedules prior to submission of reimbursement requests Periodic reconciliation of actual expenditures to approved budget allocations Staff training on federal cost principles and grant compliance requirements Views of Responsible Officials Management concurs with the finding. The City acknowledges that allocation errors occurred across multiple federal programs due to inconsistent application of approved budget percentages. To address this, the City will implement a formal review process for allocation schedules and establish reconciliation procedures to ensure expenditures align with approved budgets. Staff will receive training on federal cost principles and grant compliance requirements. The City will also evaluate prior reimbursements and consult with awarding agencies regarding any necessary adjustments.
Segregation of Duties Condition and criteria: During our audit of the Authority’s Schedule of Expenditures of Federal Awards, we noted that the Authority does not have adequate segregation of duties in place. Specifically, the same individual is responsible for initiating and recording journal entries and disbursements and reconciling the bank accounts. In accordance with 2 CFR § 200.303(a), the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Cause and Effect: The Authority is a small entity with limited administrative and accounting staff, which makes it difficult to achieve a complete segregation of duties. Due to resource constraints, individual staff members are assigned multiple roles that overlap key financial processes. Without proper segregation of duties, there is an increased risk that errors or irregularities, including potential misappropriation of assets or fraud, could occur and remain undetected. This condition could lead to noncompliance with applicable federal requirements and inaccuracies in financial reporting. Auditor’s Recommendations: We recommend that the Authority assess the current structure and implement compensating controls where full segregation of duties is not feasible due to staffing limitations. These may include enhanced supervisory review, periodic oversight by the board or executive leadership, documentation of independent reviews, and rotation of duties when possible. Authority’s Response: The board reviews the reports monthly. A printed payroll report and checks written from meeting to meeting are provided and are approved and initialed. Also provided is a report of the bank statements for the board to review what has been received and what has been paid. Before any bills are paid they are approved at the meeting. If an error is made when inputting a deposit received into C/A, the correction is printed and initialed approving the correction.
Finding 2024-004: Allowable Costs Program Title: Defense Nuclear Nonproliferation Research Assistance Listing Number: 81.113 Federal Agency: U.S. Department of Energy Direct Award Identifying Numbers: DE-NA003862, DE-NA004179, DE-NA0004177 Federal Award Year: Year ended September 30, 2024 Program Title: Export Control and Related Border Security Assistance Listing Number: 19.901 Federal Agency: U.S. Department of State Direct Award Identifying Number: SAQMIP23CA0153 Pass-Through Entity Name, Pass-Through Identifying Number: The Research Foundation for SUNY, University at Albany, 3-98939 Federal Award Year: Year ended September 30, 2024 Type of Finding: Material Weakness in Internal Control over Compliance Criteria: According to 2 CFR §200.303, the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non- Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in Standards for Internal Control in the Federal Government issued by the Comptroller General of the United States or the Internal Control Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: During our testing over expenditures, we noted that there is no written documentation of the review and approval of transactions that are reimbursed by Federally funded awards. Cause: PFI does not have a formal policy in place with respect to documenting management’s review and approval over expenditures of Federal awards. As such, PFI did not have effective internal controls in place to ensure that approvals were performed and documented as being performed in a timely manner. Effect or Potential Effect: There is the potential that expenditures allocated to the Federal awards were not properly reviewed in a timely manner which could result in unallowable costs being charged to Federal awards and potential noncompliance. Questioned Costs: None. Context: 46 out of 46 salary and wage expenditure transactions and 60 out of 60 expenditure transactions selected for control testing did not have documented review and approval. The sample is deemed representative of the population. Repeat Finding: Not applicable. Recommendation: We recommend that PFI implement a formal expense review and approval policy. This policy should require that management formally document its review and approval all expense transactions on a timely basis.
Finding 2024-005: Period of Performance Program Title: Defense Nuclear Nonproliferation Research Assistance Listing Number: 81.113 Federal Agency: U.S. Department of Energy Direct Award Identifying Numbers: DE-NA003862, DE-NA004179, DE-NA0004177 Federal Award Year: Year ended September 30, 2024 Program Title: Export Control and Related Border Security Assistance Listing Number: 19.901 Federal Agency: U.S. Department of State Direct Award Identifying Number: SAQMIP23CA0153 Pass-Through Entity Name, Pass-Through Identifying Number: The Research Foundation for SUNY, University at Albany, 3-98939 Federal Award Year: Year ended September 30, 2024 Type of Finding: Material Weakness in Internal Control over Compliance Criteria: According to 2 CFR §200.303, the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non- Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in Standards for Internal Control in the Federal Government issued by the Comptroller General of the United States or the Internal Control Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: During our testing over expenditures, we noted that there is no written documentation of the review and approval of transactions that are reimbursed by Federally funded awards. Cause: PFI does not have a formal policy in place with respect to documenting management’s review and approval over expenditures of Federal awards. As such, PFI did not have effective internal controls in place to ensure that approvals were performed and documented as being performed in a timely manner. Effect or Potential Effect: There is the potential that expenditures allocated to the Federal awards were not properly reviewed in a timely manner and could have been charged to a Federally funded award outside of the grant’s stated period of performance, thereby creating a potential for being reimbursed for unallowable costs. Questioned Costs: None. Context: 3 out of 3 grants under ALN 81.113 and 2 out of 2 grants under ALN 19.901 selected for control testing did not have documented review and approval for their expenditures. The sample is deemed representative of the population. Repeat Finding: Not applicable. Recommendation: We recommend that PFI implement a formal expense review and approval policy. This policy should require that management formally review and approve all expense transactions on a timely basis.
Finding 2024-006: Cash Management Program Title: Defense Nuclear Nonproliferation Research Assistance Listing Number: 81.113 Federal Agency: U.S. Department of Energy Direct Award Identifying Numbers: DE-NA003862, DE-NA004179, DE-NA0004177 Federal Award Year: Year ended September 30, 2024 Program Title: Export Control and Related Border Security Assistance Listing Number: 19.901 Federal Agency: U.S. Department of State Direct Award Identifying Number: SAQMIP23CA0153 Pass-Through Entity Name, Pass-Through Identifying Number: The Research Foundation for SUNY, University at Albany, 3-98939 Federal Award Year: Year ended September 30, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matter Compliance Finding Criteria: Under 2 CFR § 200.303, organizations that receive Federal funding are required to “establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Under 2 CFR § 200.305(b)(3), when using the reimbursement method, entities should request payment as soon as possible after the costs are incurred to minimize the time between expenditure and Federal reimbursement. Condition: PFI does not have documentation of the review and approval of Federal cash drawdown requests prior to submission. During testing, we noted that drawdowns totaling $219,376 for ALN 81.113 and $188,631 for ALN 19.901 were processed without evidence of supervisory review. Additionally, we noted that PFI submitted a late cash drawdown request for Federal expenditures of $74,111 under ALN 81.113 that occurred during prior years but were newly identified and reimbursed during the year under audit. Cause: PFI has not implemented a formal review process for cash drawdowns. Furthermore, PFI lacks written procedures to ensure timely submission of reimbursement requests. Effect or Potential Effect: Lack of review increases the risk of drawing excessive funds, noncompliance with cash management requirements, and potential misuse of Federal funds. Delayed drawdowns resulted in PFI using non-Federal funds for an extended period of time, which may have impacted cash flow and program operations. Questioned Costs: None. Context: 4 out of 4 drawdown requests selected for testing under ALN 81.113 and 3 out of 3 drawdown requests selected for testing under ALN 19.901 did not have documented supervisory review and approval. 1 of 4 drawdown requests tested for ALN 81.113 was submitted late for expenditures that had occurred in prior fiscal years. The samples are representative of the population. Repeat Finding: Not applicable Recommendation: It is recommended that PFI establish and document a formal review and approval process for all cash drawdown requests, including maintaining evidence of supervisory approval. Furthermore, we recommend that PFI implement procedures to ensure reimbursement requests are submitted promptly after costs are incurred, ideally within 30 days.
Finding 2024-007: Procurement Program Title: Defense Nuclear Nonproliferation Research Assistance Listing Number: 81.113 Federal Agency: U.S. Department of Energy Direct Award Identifying Numbers: DE-NA003862, DE-NA004179, DE-NA0004177 Federal Award Year: Year ended September 30, 2024 Program Title: Export Control and Related Border Security Assistance Listing Number: 19.901 Federal Agency: U.S. Department of State Direct Award Identifying Number: SAQMIP23CA0153 Pass-Through Entity Name, Pass-Through Identifying Number: The Research Foundation for SUNY, University at Albany, 3-98939 Federal Award Year: Year ended September 30, 2024 Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria: According to 2 CFR §200.303, the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non- Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in Standards for Internal Control in the Federal Government issued by the Comptroller General of the United States or the internal Control Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Per CFR §200.318-§200.326, non-Federal entities must maintain written procurement procedures that comply with Federal standards, including thresholds, methods of procurement, and documentation requirements. Noncompetitive procurements can only be awarded in accordance with §200.320(c). According to 2 CFR §200.320 Procurement Standards, there are specific circumstances in which noncompetitive procurement can be used. Noncompetitive procurement can only be awarded if one or more of the following circumstances apply: 1. The acquisition of property or services, the aggregate dollar amount of which does not exceed the micro-purchase threshold, 2. The item is available only from a single source; 3. The public exigency or emergency for the requirement will not permit a delay resulting from publicizing a competitive solicitation; 4. The Federal awarding agency or pass-through entity expressly authorizes a noncompetitive procurement in response to a written request from the non-Federal entity; or 5. After solicitation of a number of sources, competition is determined inadequate. Condition: We noted that PFI’s procurement policy does not contain a micropurchase threshold and its threshold for simplified acquisitions is not accurately defined in accordance with the applicable Uniform Guidance requirements. During our testing over procurement, we noted several instances where PFI did not clearly document the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Furthermore, there were instances where review and approval over procurement was evidenced but the reviewer was not included in PFI’s procurement policy list of authorized approvers. Cause: PFI’s procurement policy was out of date and had not been updated to align with the current version of the Uniform Guidance. Effect or Potential Effect: An outdated procurement policy increases the risk of noncompliance with Federal requirements, improper procurement practices, and potential disallowance of costs charged to Federal awards. Questioned Costs: $31,120 of known questioned costs were identified for 2 procurements under ALN 81.113. $15,000 of known questioned costs were identified for ALN 19.901 along with $806 of likely questioned costs based on projecting the known questioned costs to the remaining population of procurement transactions. Context: 2 of 2 samples selected for testing under ALN 81.113 and 1 out of 3 samples selected for testing under 19.901 did not have adequate documentation for the rationale related to the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. For 2 out of 2 samples under ALN 81.113 and 2 out of 3 samples under ALN 19.901, PFI had evidence of review and approval, but the reviewer was not on PFI’s authorized list included in its procurement policy. The samples are representative of the populations. Repeat Finding: Not applicable. Recommendation: We recommend that PFI revise its procurement policy to fully comply with the requirements in the latest version of the Uniform Guidance. In particular, the revised policy should include a micropurchase threshold, an accurate simplified acquisition threshold, and update the authorized list of reviewers for procurement transactions.
Finding No.: 2024-006 Federal Agency: U.S. Department of Education AL Program: 84.027 Special Education Grants to States Area: Period of Performance Questioned Costs: $39,665 Criteria: In accordance with applicable period of performance (POP) requirements, a non-federal entity may charge only allowable costs incurred during a federal award’s period of performance. Unless the federal awarding agency authorizes an extension, a non-federal entity must liquidate all financial obligations incurred under the federal award not later than 120 calendar days after the end date of the period of performance as specified in the terms and conditions of the federal award or in the approved extension. Furthermore, 2 CFR 200.303(a) states that the recipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the COSO. Conditions: Of sixty items, aggregating $384,666 of $3,198,523 of expenditures subjected to period of performance test, deficiencies were noted, as follows: 1. For 4 items or (7%), GDOE charged costs to a federal award after the period of performance ended and liquidated obligations of a federal award after the approved liquidation end date: Federal Award No. Purchase Order/ Invoice No. Invoice Date POP End Date Liquidation End Date Liquidation Date Expenditures Questioned Costs H027A210013 20232230 08/27/2024 09/30/2023 01/28/2024 08/01/2025 3,240 3,240 H027A220013 20233151 01/28/2025 09/30/2024 01/28/2025 Not yet paid 17,953 17,953 H027A220013 20233151 01/28/2025 09/30/2024 01/28/2025 Not yet paid 10,636 10,636 H027A220013 20240021 04/29/2025 09/30/2024 01/28/2025 Not yet paid 7,408 7,408 $39,237 $39,237 Finding No.: 2024-006, continued Federal Agency: U.S. Department of Education AL Program: 84.027 Special Education Grants to States Area: Period of Performance Questioned Costs: $39,665 Conditions, continued: 2. For 1 item or (2%), compliance with period of performance of expenditure (PO# 20241462) amounting to $428 could not be determined as supporting documents such as an invoice or canceled check was not made available for examination. 3. There is no review in place to ensure that liquidation of the obligation occur within the allowable time period. Cause: GDOE did not enforce monitoring controls over compliance with applicable period of performance requirements relating to charging of costs to a federal award within the period of performance. Also, GDOE’s internal control policies and procedures in place are not suitably designed to ensure that liquidation of the obligation occurs within the allowable time period. Effect: GDOE is in noncompliance with applicable period of performance requirements. The reportable questioned cost is $39,665. Identified as a Repeat Finding: 2023-009 Recommendation: Responsible personnel should enforce monitoring controls over compliance with applicable period of performance requirements. Prior to charging costs to a federal award or liquidating obligations incurred under a federal award, responsible personnel should verify that the period of performance, including the liquidation end date, has not expired. Views of Responsible Officials: The Division of Special Education is currently reviewing the details of the finding in order to provide an adequate response and corrective action plan.
Internal Control over Compliance Significant Deficiency Federal Grantor: U.S. Department of Health and Human Services Federal Program: Centers for Independent Living Assistance Listing Number: 93.432 Criteria: 2 CFR 200.303 (Uniform Guidance) – Internal Controls is the regulation that requires Federal entities receiving Federal awards to establish and maintain effective internal controls over those awards to ensure compliance with Federal statutes, regulations, and the award terms. These controls must include processes to monitor compliance, take prompt action on non-compliance, and safeguard sensitive information. Condition and Context: Internal controls designed relating to the major program’s direct and material compliance requirements were not operating effectively. Cause: Management was not following the Organization’s approved control activities for federal awards. Effect: Without effective internal controls, material non-compliance due to error or fraud could occur and not be detected. Questioned Costs: None. Context: We tested internal control over compliance for the direct and material compliance requirements of the Organization’s major program.Recommendation: We recommend management review and reinforce the Organization’s established control activities related to federal awards. This should include comprehensive training for staff involved in federal program administration, regular monitoring to ensure controls are consistently applied, and periodic internal audits to assess the effectiveness of compliance systems. We also recommend documenting all significant control activities and monitoring procedures, including review and approval, for future audit purposes. By strengthening adherence to approved control activities, the Organization will reduce the risk of potential non-compliance with federal requirements. Views of Responsible Official: Immediate Control Reinforcement and Staff Training - The Executive Director and the Program Manager have already started identifying specific areas of each contract and grant for federal awards. The Executive Director will call a meeting between all managers to go over each contract and grants together with information that has already been reviewed. It will be important to observe specific instances when controls were created, and documentation was not accurate. Staff will be trained regarding the agency budget, and each role and responsibility of their program to better understand how their service delivery affects organizational funding. Monthly monitoring of grant funding from all managers will be important for transparency and prudent decision making. All managers will receive frequent training to keep up with any changes or new processes that will impact federal funding. Monitoring and Periodic Internal Auditing - The Executive Director, Program Manager, and Finance manager will meet every month before the Finance Committee meeting to go over the progression of spending. The Executive Director and Finance Manager will keep record of all information that will be helpful for the next audit regarding federal grants. Written corrective action plans will be created for each area of noncompliance. Finance Manager will be responsible for maintaining accurate budget updates and will inform Executive Director of any updates and changes as soon as they happen to ensure full transparency and preparation. Failure to do so will result in disciplinary consequences. All information will be presented to the Board of Directors whether at the monthly Board meeting or at the request for a special meeting. Documentation and Formalization - The Executive Director will meet with the Finance Manager to understand what process is used for quality assurance and documentation the finance staff uses. Any improvements necessary will be implemented as soon as possible after evaluating all processes. An evaluation of the software used for tracking all grant funding will be done and any quality assurance improvements will be implemented as soon as possible. Federal grants compliance adherence will be included in performance reviews and documented.
2024-101: Reimbursement Requests were Not Formally Approved by the City Prior to Submission Assistance Listing Number: 97.036 Program Title: Disaster Grants – Public Assistance (Presidentially Declared Disasters) Compliance Requirement: Special Tests and Provisions Pass-through Entity: Florida Division of Emergency Management Federal Grant/Contract Number and Grant Year Z0894 2019 Finding Type: Significant Deficiency in Internal Control Known Questioned Costs: $0 Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and terms and conditions of the federal awards. Condition: The reimbursement requests to the Florida Division of Emergency Management were prepared by the City’s consultant and acknowledged as approved by them as well. In the two reimbursement requests selected for sampling, one of the requests was both submitted and acknowledged by the third-party administrator. This was not a statistically valid sample. Cause: The City implemented procedures to ensure they are the entity to provide the acknowledgement of approval on the Florida Division of Emergency Management FEMA website for reimbursement requests submitted by the third-party consultants however those processes were not followed by the third-party administrator and subsequently not corrected by the City. Effect: Reimbursement requests could include potential errors and cause the City to be out of compliance with the requirements of the grant Recommendation: The City should consistently be the entity to acknowledge and approve the submission of the request on the Florida Division of Emergency Management FEMA website. If it is not feasible for them to be on the website then email confirmation between the City and the consultant should be obtained which supports the review and approval of the submission by the City. Management Response: See attached Corrective Action Plan
2024-006: Preparation of Schedule of Expenditures of Federal Awards (SEFA) (repeat) Finding Type: Material Weakness in Internal Controls and Noncompliance (Reporting, Cash Management and Allowable Costs/Cost Principles) Federal Program: U.S. Department of Transportation – Airport Improvement Program (AL #20.106); all project numbers and U.S. Department of Treasury – Coronavirus State and Local Fiscal Recovery Funds (AL #21.027) Criteria: The Code of Federal Regulations (CFR) Section 200.303(b) requires non-Federal entities to establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and terms and conditions of the Federal award. CFR Section 200.502(a) states that the determination of when a Federal award is expended should be based on when the activity related to the Federal award occurs. Generally, the activity pertains to events that require the non-Federal entity to comply with Federal statutes, regulations, and the terms and conditions of Federal awards, such as expenditure/expense transactions associated with grant awards. The County reports expenditures on the SEFA when the expenditure has been incurred, or on the accrual basis of accounting, in accordance with generally accepted accounting principles. CFR Section 200.510(b) requires the auditee to prepare a SEFA for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with CFR Section 200.502(a), as stated above, and must reconcile amounts reported in the SEFA to the amounts reported in the auditee’s financial statements. Condition: The SEFA was not appropriately reconciled to federal grant revenues and expenditures recorded in the financial statements. Changes were made to major program expenditures, as well as expenditures of other programs, during the closing process and during the completion of the single audit to properly report expenditures on the SEFA. Closing procedures should be in place to reconcile grant expenditures incurred at year-end, confirm the amount as eligible with the grantor, claim the grant revenues on a timely basis, reconcile the claim to the general ledger, and ensure the expenditures that will be claimed under federal awards are properly reported on the SEFA and audited financial statements prior to the start of the single audit. If expenditures reported on the SEFA are misstated, the County could fail to have a program appropriately identified as a major program and tested as a major program during the single audit. Failure to have a program audited during the single audit would result in noncompliance with Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Cause: Closing procedures were not in place and management did not effectively communicate with County departments responsible for administering federal awards to identify all federal grant related activity. Effect: The SEFA required material adjustments to include all federal expenditures prior to the single audit beginning, which resulted in a misstated preliminary SEFA and inefficiencies during the single audit. In addition, the lack of closing procedures resulted in audit delays which caused the 2022 through 2024 financial reporting process, including data collection form submission, to be untimely. Questioned Costs: No costs have been questioned as a result of this finding. Recommendation: We recommend that management meet with department heads throughout the year and during the closing process to identify all expenditures under federal awards. Training should be provided to all staff to make sure they are aware of the importance of accurately reconciling and claiming grant expenditures on a timely basis and providing the information to management for inclusion on the SEFA. Views of Responsible Officials: The County will work to improve closing processes and communications with various departments to ensure the SEFA is complete and accurate.
2024-007: Written Policies Required by the Uniform Guidance (repeat) Finding Type: Material Weakness in Internal Controls and Noncompliance (Reporting and Allowable Costs/Cost Principles) Federal Program: U.S. Department of Transportation – Airport Improvement Program (AL #20.106); all project numbers and U.S. Department of Treasury – Coronavirus State and Local Fiscal Recovery Funds (AL #21.027) Criteria: Delta County does not have written policies and procedures to implement the requirements of 2 CFR section 200 for the administration of federal awards. The Uniform Guidance requires a non-federal entity that has expended federal awards for a grant on or after December 26, 2014 to have written policies pertaining to: 1) advance payments and reimbursements; 2) determination of allowable costs; 3) compensation (personnel and benefits policies); 4) travel costs; and 5) procurement procedures. 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal controls over the federal awards that provide assurance that the entity is managing the federal awards in compliance with federal statutes, regulations, and the conditions of the federal award. Condition: The County does not have processes in place to conform to all of the requirements in the Uniform Guidance. Cause: The County has not reviewed and updated its policies and procedures for continued changes in grants and the Uniform Guidance. Certain departmental grants operate outside of the general County processes and internal control system and policies and procedures for these departments have not been maintained. Effect: As a result of this condition, the County did not fully comply with the Uniform Guidance. Questioned Costs: No costs have been questioned as a result of this finding. Recommendation: We recommend that the County adopt formal written policies covering these areas as soon as practical. Views of Responsible Officials: The County will work to update policies and procedures and to formalize responsibilities.
Finding No.: 2024-014 Federal Agency: U.S. Department of Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Various Area: Equipment and Real Property Management Questioned Costs: $ Undeterminable Criteria: In accordance with 2 CFR 200.313(b), a State must use, manage and dispose of equipment acquired under a Federal award in accordance with State laws and procedures. 2 CFR 200.313(d) states that regardless of whether equipment is acquired in part or its entirety under the Federal award, the recipient must manage equipment (including replacement equipment) utilizing procedures that meet the following requirements: (1) Property records must include a description of the property, a serial number or another identification number, the source of funding for the property (including the FAIN), the title holder, the acquisition date, the cost of the property, the percentage of the Federal agency contribution towards the original purchase, the location, use and condition of the property, and any disposition data including the date of disposal and sale price of the property. The recipient and subrecipient are responsible for maintaining and updating property records when there is a change in the status of the property. (2) A physical inventory of the property must be conducted, and the results must be reconciled with the property records at least once every two years. (3) A control system must be in place to ensure safeguards for preventing property loss, damage, or theft. Any loss, damage, or theft of equipment must be investigated. The recipient or subrecipient must notify the Federal agency or pass-through entity of any loss, damage, or theft of equipment that will have an impact on the program. (4) Regular maintenance procedures must be in place to ensure the property is in proper working condition. (5) If the recipient or subrecipient is authorized or required to sell the property, proper sales procedures must be in place to ensure the highest possible return. Furthermore, 2 CFR 200.303(a) states that the recipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the COSO. Finding No.: 2024-014, continued Federal Agency: U.S. Department of Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Various Area: Equipment and Real Property Management Questioned Costs: $ Undeterminable Conditions: 1. Bureau of Budget and Management Research (BBMR) lacks adequate internal policies and procedures over compliance with the applicable federal property rules and regulations. 2. BBMR’s capital asset records do not meet the criteria above and lacks certain information such as: a. Serial number or asset tag number b. Funding source, including the FAIN c. Title holder d. Percentage of Federal participation in the project costs for the Federal award under which the property was acquired e. Location f. Use and condition g. Date of disposal, if any h. Sale price of the property 3. BBMR’s most recent comprehensive physical inventory of its property was in January 2016; however, the required reconciliation was not completed. As of September 30, 2024, the required biannual physical inventory and reconciliation were not performed. 4. As capital asset records are not effectively maintained, it does not appear that BBMR has effectively developed means to adequately safeguard capital assets from loss, damage, or theft, or to reasonably investigate such occurrences. We are unable to assess the overall cumulative monetary value of these deficiencies. However, the table below summarizes total capital outlays over the past five years. See the Notes to the SEFA for chart/table. Finding No.: 2024-014, continued Federal Agency: U.S. Department of Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: Various Area: Equipment and Real Property Management Questioned Costs: $ Undeterminable Cause: The processes over inventory, maintenance and reconciliation of capital assets are not routine. BBMR requires additional funding and human resources to fully implement and develop a useful capital asset management system. Effect: GovGuam is in noncompliance with applicable equipment and real property management requirements. The underlying capital outlays are not considered questioned costs, as we are unable to quantify the extent of noncompliance. Identification as a Repeat Finding: 2023-011 Recommendation: BBMR should complete the required biannual physical inventory and reconciliations and should consider developing a more detailed corrective action plan with timetables for completing planned actions, such as processing required reconciliations and reports, training personnel and coordinating with other governmental units on property management requirements. Views of Responsible Officials: Implementation of a Fixed Assets Module as part of the new FMIS system that will help automate the tracking and reporting of Capital assets, is near completion with final testing in progress. DOA will update the SOP for the Fixed Assets for capital asset reporting accordingly. Review of Assets acquired in FY2024 was completed, with FY2025 in progress. As noted previously, the process is hampered by difficulties in recruiting personnel.
Finding No.: 2024-019 Federal Agency: U.S. Department of the Treasury AL Program: 21.023 Emergency Rental Assistance Federal Award No.: COVID-19 Section 501 of the Consolidated Appropriations Act, 2021 Federal Award No.: COVID-19 Section 3201 of the American Rescue Plan Act, 2021 Area: Matching, Level of Effort, Earmarking Questioned Costs: $ Undeterminable Criteria: In accordance with applicable matching, level of effort, earmarking requirements, under Emergency Rental Assistance (ERA) 1, a grantee may use up to 10 percent of the total award amount for direct and indirect administrative costs. Under ERA 2, a grantee may use up to 15% percent of the total award amount for direct and indirect administrative costs and 10 percent of the total award amount for housing stability purposes. Furthermore, 2 CFR 200.303(a) states that the recipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the COSO. Condition: The Department of Administration (DOA) was unable to demonstrate and provide evidence of compliance with the applicable earmarking requirement due to closure of the program during the fiscal year and expiration of employment contract of personnel responsible for compliance. Cause: DOA lacks established internal control policies and procedures relating to proper turn-over of documents. Remaining DOA personnel managing the program did not have access to internal files of the Program Coordinator whose employment contract expired. Effect: GovGuam is in noncompliance with applicable matching, level of effort, earmarking requirements. No questioned cost is presented as we are unable to quantify the extent of noncompliance. Finding No.: 2024-019, continued Federal Agency: U.S. Department of the Treasury AL Program: 21.023 Emergency Rental Assistance Federal Award No.: COVID-19 Section 501 of the Consolidated Appropriations Act, 2021 Federal Award No.: COVID-19 Section 3201 of the American Rescue Plan Act, 2021 Area: Matching, Level of Effort, Earmarking Questioned Costs: $ Undeterminable Recommendation: DOA management should establish internal control policies and procedures relating to turnover of documents to ensure that all required and supporting documentation are properly maintained and retained for purposes of demonstrating compliance over applicable matching, level of effort, and earmarking requirements. Views of Responsible Officials: The Agency is reviewing the management of Federal Grants to ensure robust handover and succession plans are in place for future programs. The sudden passing of the ERA Program Coordinator directly impacted overall management of the program.
Finding No.: 2024-023 Federal Agency: U.S. Department of the Treasury AL Program: 21.026 Homeowner Assistance Fund Federal Award No.: COVID-19 Section 3206 of the American Rescue Plan Act of 2021 Area: Matching, Level of Effort, Earmarking Questioned Costs: $ Undeterminable Criteria: In accordance with applicable matching, level of effort, earmarking requirements, GovGuam is subject to the following earmarking requirements: a) Counseling or educational efforts by housing counseling agencies approved by Housing and Urban Development (HUD), tribal government (including such efforts by in-house housing counselors who are HUD certified or tribally approved), or legal services, targeted to households eligible to be served with funding from the Homeowner Assistance Fund (HAF) related to foreclosure prevention or displacement, in an aggregate amount up to 5 percent of the funding from the HAF received by the HAF participant. b) Planning, community engagement, needs assessment, and administrative expenses related to the HAF participant’s disbursement of HAF funds for qualified expenses, in an aggregate amount not to exceed 15 percent of the funding from the HAF received by the HAF participant. If the HAF participant has only received the initial 10% of its allocation, no more than 50% of the initial payment is permitted to be used for the expenses mentioned here. c) Participants are providing not less than 60% of funds to homeowners with income less than 100% AMI or 100% of U.S. median income. d) Participants target homeowners that are classified as Socially Disadvantaged Individuals (SDI) and 100 percent AMI or less. Furthermore, 2 CFR 200.303(a) states that the recipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the COSO. Condition: The Department of Administration (DOA) was unable to demonstrate and provide evidence of compliance with the applicable earmarking requirement due to closure of the program during the fiscal year and expiration of employment contract of personnel responsible for compliance. Finding No.: 2024-023, continued Federal Agency: U.S. Department of the Treasury AL Program: 21.026 Homeowner Assistance Fund Federal Award No.: COVID-19 Section 3206 of the American Rescue Plan Act of 2021 Area: Matching, Level of Effort, Earmarking Questioned Costs: $ Undeterminable Cause: DOA lacks established internal control policies and procedures relating to proper turn-over of documents. Remaining DOA personnel managing the program did not have access to internal files of the Program Coordinator whose employment contract expired. Effect: GovGuam is in noncompliance with applicable matching, level of effort, earmarking requirements. No questioned cost is presented as we are unable to quantify the extent of noncompliance. Recommendation: DOA management should establish internal control policies and procedures relating to turnover of documents to ensure that all required and supporting documentation is properly maintained and retained for purposes of demonstrating compliance over applicable matching, level of effort, and earmarking requirements. Views of Responsible Officials: The Agency is reviewing its federal grants management to ensure robust handover and succession plans are in place of future programs.
Finding No.: 2024-037 Federal Agency: U.S. Department of Health and Human Service AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Federal Award No.: Various Area: Equipment and Real Property Management Questioned Costs: $ Undeterminable Criteria: In accordance with 2 CFR 200.313(b), a State must use, manage and dispose of equipment acquired under a Federal award in accordance with State laws and procedures. 2 CFR 200.313(d) states that regardless of whether equipment is acquired in part or its entirety under the Federal award, the recipient must manage equipment (including replacement equipment) utilizing procedures that meet the following requirements: (1) Property records must include a description of the property, a serial number or another identification number, the source of funding for the property (including the FAIN), the title holder, the acquisition date, the cost of the property, the percentage of the Federal agency contribution towards the original purchase, the location, use and condition of the property, and any disposition data including the date of disposal and sale price of the property. The recipient and subrecipient are responsible for maintaining and updating property records when there is a change in the status of the property. (2) A physical inventory of the property must be conducted, and the results must be reconciled with the property records at least once every two years. (3) A control system must be in place to ensure safeguards for preventing property loss, damage, or theft. Any loss, damage, or theft of equipment must be investigated. The recipient or subrecipient must notify the Federal agency or pass-through entity of any loss, damage, or theft of equipment that will have an impact on the program. (4) Regular maintenance procedures must be in place to ensure the property is in proper working condition. (5) If the recipient or subrecipient is authorized or required to sell the property, proper sales procedures must be in place to ensure the highest possible return. Furthermore, 2 CFR 200.303(a) states that the recipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the COSO. Finding No.: 2024-037, continued Federal Agency: U.S. Department of Health and Human Service AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Federal Award No.: Various Area: Equipment and Real Property Management Questioned Costs: $ Undeterminable Conditions: 1. Department of Public Health and Social Services (DPHSS) lacks adequate internal policies and procedures over compliance with the applicable federal property rules and regulations. 2. DPHSS’s capital asset records do not meet the criteria above and certain sources of funding for the property (including the FAIN) information are missing. Furthermore, some assets purchased in prior years (e.g., 2020 through 2023) are tagged as “New”. 3. DPHSS’s most recent comprehensive physical inventory of its property was in January 2016; however, the required reconciliation was not completed. As of September 30, 2024, the required biannual physical inventory and reconciliation were not performed. 4. As capital asset records are not effectively maintained, it does not appear that DPHSS has effectively developed means to adequately safeguard capital assets from loss, damage, or theft, or to reasonably investigate such occurrences. We are unable to assess the overall cumulative monetary value of these deficiencies. However, the table below summarizes total capital outlays over the past five years. See the Notes to the SEFA for chart/table. Cause: The processes over inventory, maintenance and reconciliation of capital assets are not routine. DPHSS requires more funding and human resources to fully implement and develop a useful capital asset management system. Effect: GovGuam is in noncompliance with applicable equipment and real property management requirements. The underlying capital outlays are not considered questioned costs, as we are unable to quantify the extent of noncompliance. Finding No.: 2024-037, continued Federal Agency: U.S. Department of Health and Human Service AL Program: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) Federal Award No.: Various Area: Equipment and Real Property Management Questioned Costs: $ Undeterminable Identification as a Repeat Finding: 2023-026 Recommendation: DPHSS should complete the required biannual physical inventory and reconciliations and should consider developing a more detailed corrective action plan with timetables for completing planned actions, such as processing required reconciliations and reports, training personnel and coordinating with other governmental units on property management requirements. Views of Responsible Officials: Implementation of a Fixed Assets Module as part of the new FMIS system that will help automate the tracking and reporting of Capital assets, is near completion with final testing in progress. DOA will update the SOP for the Fixed Assets for capital asset reporting accordingly. Review of Assets acquired in FY2024 was completed, with FY2025 in progress. As noted previously, the process is hampered by difficulties in recruiting personnel.
Finding No.: 2024-047 Federal Agency: U.S. Department of Health and Human Service AL Program: 93.767 Children’s Health Insurance Program Federal Award No.: 2405GQ5021 Area: Special Tests and Provisions - Provider Eligibility (Screening and Enrollment) Questioned Costs: $1,562,177 Criteria: 42 CFR 455.412 states that the State Medicaid Agency must have a method for verifying that any provider purporting to be licensed in accordance with the laws of any State is licensed by such State. Also, State Medicaid Agency must confirm that the provider’s license has not expired and that there are no current limitations on the provider’s license. 42 CFR 455.432 states that the State Medicaid agency must conduct pre-enrollment and post-enrollment site visits of providers who are designated as “moderate” or “high” categorical risks to the Medicaid program. Also, the State Medicaid agency must require any enrolled provider to permit CMS, its agents, its designated contractors, or the Medicaid agency to conduct unannounced on-site inspection of any and all provider locations. 42 CFR 455.434(a) states that the State Medicaid agency, as a condition of enrollment, must require providers to consent to a criminal background checks including fingerprinting when required to do so under State law or by the level of screening based on risk of fraud, waste or abuse as determined for that category of provider. 42 CFR 455.434(b) states that the State Medicaid agency must establish categorical risk levels for providers and provider categories who pose an increased financial risk of fraud, waste or abuse to the Medicaid program. 42 CFR 455.450 states that a State Medicaid agency must screen all initial applications, including applications for a new practice location, and any applications received in response to a re-enrollment or revalidation of enrollment request based on a categorical risk level of “limited,” “moderate,” or “high.” If a provider could fit within more than one risk level described in this section, the highest level of screening is applicable. Finding No.: 2024-047, continued Federal Agency: U.S. Department of Health and Human Service AL Program: 93.767 Children’s Health Insurance Program Federal Award No.: 2405GQ5021 Area: Special Tests and Provisions - Provider Eligibility (Screening and Enrollment) Questioned Costs: $1,562,177 Criteria, continued: 42 CFR 455.460 states that beginning on or after March 25, 2011, States must collect the applicable application fee prior to executing a provider agreement from a prospective or re-enrolling provider other than either of the following: (1) Individual physicians or nonphysician practitioners. (2) (i) Providers who are enrolled in either of the following: (A) Title XVIII of the Act. (B) Another State’s title XIX or XXI plan. (ii) Providers that have paid the applicable application fee to - (A) A Medicare contractor; or (B) Another State. 42 CFR 455.104 states that the Medicaid agency must require that disclosing entities, fiscal agents, and managed care entities provide the following disclosures: (1) (i) The name and address of any person (individual or corporation) with an ownership or control interest in the disclosing entity, fiscal agent, or managed care entity. The address for corporate entities must include as applicable primary business address, every business location, and P.O. Box address. (ii) Date of birth and Social Security Number (in the case of an individual). (iii) Other tax identification number (in the case of a corporation) with an ownership or control interest in the disclosing entity (or fiscal agent or managed care entity) or in any subcontractor in which the disclosing entity (or fiscal agent or managed care entity) has a 5 percent or more interest. (2) Whether the person (individual or corporation) with an ownership or control interest in the disclosing entity (or fiscal agent or managed care entity) is related to another person with ownership or control interest in the disclosing entity as a spouse, parent, child, or sibling; or whether the person (individual or corporation) with an ownership or control interest in any subcontractor in which the disclosing entity (or fiscal agent or managed care entity) has a 5 percent or more interest is related to another person with ownership or control interest in the disclosing entity as a spouse, parent, child, or sibling. Finding No.: 2024-047, continued Federal Agency: U.S. Department of Health and Human Service AL Program: 93.767 Children’s Health Insurance Program Federal Award No.: 2405GQ5021 Area: Special Tests and Provisions - Provider Eligibility (Screening and Enrollment) Questioned Costs: $1,562,177 Criteria, continued: (3) The name of any other disclosing entity (or fiscal agent or managed care entity) in which an owner of the disclosing entity (or fiscal agent or managed care entity) has an ownership or control interest. (4) The name, address, date of birth, and Social Security Number of any managing employee of the disclosing entity (or fiscal agent or managed care entity). Furthermore, 2 CFR 200.303(a) states that the recipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the COSO. Conditions: 1. The Department of Public Health and Social Services (DPHSS) lacks adequate internal policies and procedures over compliance with the applicable special tests and provisions for provider eligibility (screening and enrollment). 2. For twenty-four (or 100%) of twenty-four items, aggregating $1,562,177 of $32,045,067 of expenditures, deficiencies were noted, as follows: See the Notes to the SEFA for chart/table. Finding No.: 2024-047, continued Federal Agency: U.S. Department of Health and Human Service AL Program: 93.767 Children’s Health Insurance Program Federal Award No.: 2405GQ5021 Area: Special Tests and Provisions - Provider Eligibility (Screening and Enrollment) Questioned Costs: $1,562,177 Conditions, continued: See the Notes to the SEFA for chart/table. DPHSS did not establish categorical risk levels for providers and provider categories who pose an increased financial risk of fraud, waste or abuse to the Medicaid program, hence, for all items, we are unable to determine whether screening and enrollment requirements (e.g., pre-enrollment and post-enrollment site visits and consent to a criminal background checks) were performed accordingly based on the categorical risk level of providers. For all items, DPHSS was unable to provide supporting documentation that could demonstrate the basis of not collecting the applicable application fee prior to executing a provider agreement. For items # 8 through 22, the Guam Medicaid and Medically Indigent Program (MIP) Provider Enrollment Disclosure of Ownership and Control Interest Statement form was not on file. For items # 18 through 22, provider’s license or business license was not on file. Finding No.: 2024-047, continued Federal Agency: U.S. Department of Health and Human Service AL Program: 93.767 Children’s Health Insurance Program Federal Award No.: 2405GQ5021 Area: Special Tests and Provisions - Provider Eligibility (Screening and Enrollment) Questioned Costs: $1,562,177 Cause: DPHSS lacks adequate internal policies and procedures over compliance with the applicable special tests and provisions for provider eligibility (screening and enrollment). Responsible personnel managing the program attended off-island trainings during the fiscal year, however, standard operating procedures that specifically address the applicable compliance requirements have not yet been established. Effect: GovGuam is in noncompliance with applicable special tests and provisions for provider eligibility (screening and enrollment). The reportable questioned cost is $1,562,177 based on the items identified in Conditions above. Recommendation: DPHSS management should prioritize to establish internal policies and procedures over compliance with applicable special tests and provisions for provider eligibility (screening and enrollment). Views of Responsible Officials: DPHSS agrees with this finding. DPHSS is aware that deficiencies exist with the Medicaid provider enrolment process. DPHSS’s response to this deficiency is addressed in its modernization plan, which will automate certain provider enrolment functions. In March 2024, DPHSS performed site visits for 21 providers, and since then has continued to perform site visits year-round. Memorandums regarding provider compliance topics have also been communicated to providers and published on the provider portal, including information regarding criminal background checks. DPHSS is currently contracted with a consultant that is assisting in the implementation of compliant provider enrolment operations, which includes policy revisions, updates to provider applications and disclosure forms, development of standard operating procedures, and training for both staff and providers. Finding No.: 2024-047, continued Federal Agency: U.S. Department of Health and Human Service AL Program: 93.767 Children’s Health Insurance Program Federal Award No.: 2405GQ5021 Area: Special Tests and Provisions - Provider Eligibility (Screening and Enrollment) Questioned Costs: $1,562,177 Views of Responsible Officials, continued: In addition, DPHSS is currently in the process of establishing a Medicaid Program Integrity Unit (PI Unit) with a mission to conduct independent and objective Medicaid program integrity functions adherent to federal and local laws. The PI Unit will also assist DPHSS in addressing and managing Medicaid related Corrective Action Plans.
Finding No.: 2024-050 Federal Agency: U.S. Department of Homeland Security AL Program: 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disasters) Federal Award No.: Various Area: Matching, Level of Effort, Earmarking Questioned Costs: $ Undeterminable Criteria: In accordance with 44 CFR 206.65, the Federal share for assistance provided shall not be less than 75 percent of the eligible costs. Per applicable matching requirement, the accountability for meeting the matching requirement resides with the recipient and is determined at the time of project accounting as part of project closeout (i.e., the nonfederal share does not have to be met until the end of the project). In accordance with FEMA Recovery Policy 104-11-2 (B)(2)(a), FEMA provides contribution for management costs based on actual costs incurred up to 7 percent of the total award amount for the disaster or emergency, excluding subrecipient management costs. Furthermore, 2 CFR 200.303(a) states that the recipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the COSO. Conditions: 1. Required non-federal share of matching could not be determined as underlying grant agreements were not made available. 2. Guam Homeland Security (GHS) was unable to demonstrate and provide evidence of compliance with the aforementioned earmarking requirement. 3. GHS lacks adequate internal policies and procedures over compliance with the applicable matching and earmarking requirements. Cause: GHS management did not monitor compliance with applicable matching and earmarking requirements. Finding No.: 2024-050, continued Federal Agency: U.S. Department of Homeland Security AL Program: 97.036 Disaster Grants – Public Assistance (Presidentially Declared Disasters) Federal Award No.: Various Area: Matching, Level of Effort, Earmarking Questioned Costs: $ Undeterminable Effect: We are unable to verify compliance with the requirements for matching. Furthermore, GovGuam is in noncompliance with applicable earmarking requirements. No questioned cost is presented as we are unable to quantify the extent of noncompliance. Recommendation: GHS management should establish internal policies and procedures over compliance with applicable matching and earmarking requirements. Also, GHS management should clearly identify department/ personnel responsible for program’s compliance. Views of responsible officials: GHS will create a Standard Operating Procedure (SOP) to establish internal policies and procedures with applicable matching and earmarking requirements. GHS will also identify department personnel responsible.
Duplicate Payments to Vendors Type of Finding Material Weakness - Internal Control Over Financial Reporting Material Noncompliance - Material to the Financial Statements Material Weakness - Internal Control Over Compliance Material Noncompliance - Material to the Major Program New or Repeat Finding New Federal Program Community Development Block Grant/State's Program (ALN 14.228) Federal Agency U.S. Department of Housing and Urban Development Pass-through Entity and Identifying Number(s) Texas General Land Office (22-119-003-D373, 22-085-017-D253) Compliance Requirement(s) A. Activities allowed or unallowed B. Allowable costs/cost principles Criteria 2 CFR 200.303(a) requires entities to maintain effective internal control over federal awards. 2 CFR 200.302(b)(3) requires entities to maintain accountability over funds to ensure they are used for authorized purposes and safeguarded against loss or misuse. Condition The City paid a vendor twice for the same invoices and also submitted duplicate reimbursement requests to the pass through entity for the same expenditures. These errors resulted in a material misstatement of expenditures recorded in the City’s accounting records and in federal reimbursement requests. Cause The same individual entered invoices and released them for payment without secondary review. Inconsistent invoice naming prevented the accounting system’s duplicate invoice controls from identifying previously processed and paid invoices. Effect or Potential Effect Duplicate payments may occur or go undetected, and duplicate reimbursement requests may be submitted to the grantor. Questioned Costs $721,272 Context During the audit period, the City experienced significant turnover within the finance department. Reduced staffing and inconsistent invoice entry practices prevented system controls from recognizing duplicate invoices, resulting in duplicate vendor payments. Because the City relied on these records when requesting grant reimbursements, duplicate requests were also submitted. The errors were identified by the auditors and corrected by the City prior to September 30, 2024. Recommendation The City should segregate duties so one individual enters invoices and another reviews and releases payments. The City should also adopt a standardized invoice naming convention to allow system controls to identify potential duplicates. Views of Responsible Officials City management agrees with the finding. Duplicate payments and reimbursement requests occurred during a period of financial department turnover, compounded by insufficient segregation of duties and inconsistent invoice referencing. The City has recovered the duplicate payments, returned the duplicate reimbursements, implemented a standardized invoice numbering convention, and revised procedures to ensure appropriate review before payments are released. Management is also evaluating additional system controls to prevent recurrence.
Finding Number: 2024-003, Significant Deficiency ALN # 21.027: Federal Program: Coronavirus State and Local Fiscal Recovery Fund Federal Agency: US Department of Treasury Grant # and Year: Y5065, 2024 Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Earmarking, Period of Performance, Reporting. Questioned Costs: N/A Criteria: In accordance with 2 CFR § 200.303, non-federal entities are required to establish and maintain effective internal controls to provide reasonable assurance of compliance with federal statutes, regulations, and the terms and conditions of federal awards. Condition: The City did not maintain formal documentation surrounding the internal controls over compliance for multiple compliance requirements. Specifically, for 1 of 12 employees tested for pay rate approvals, there was no documentation evidencing approval of the pay rate. In addition, there was no documented review of the payroll registers or of the project and expenditure reports submitted. Cause: Lack of documented controls over compliance primarily attributed to significant operational and personnel changes within the Finance Department. Effect: Potential for noncompliance with federal program requirements. Although there was a lack of internal controls documented, there were no instances of noncompliance noted. Recommendation: The City should evaluate their processes and procedures over internal controls are appropriately documented and maintained. Response: See attached Corrective Action Plan.
Pass-Through Entity: Federated States of Micronesia National Government Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D23AF00013, D24AF00341 Area: Equipment and Real Property Management Questioned Costs: $32,214 Criteria: In accordance with 2 CFR 200.303(a), a subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Article VI Section I (f)(iv)(c) of the Fiscal Procedures Agreement (FPA) states that a control system shall be developed to ensure adequate safeguards against property loss, damage, or theft. Any loss, damage, or theft shall be investigated. Additionally, according to article VI Section I (f)(iv)(d) of the FPA states that adequate maintenance procedures shall be developed to keep the property in good condition. Condition: For six (or 14%) out of forty-two equipment selected for testing with an aggregate net book value totaling $589,938 and a total net book value population of $3,703,666, CSG did not properly safeguard and maintain the federal capital assets to ensure that the property exists and is in proper working condition. Based on the physical inspection, the following capital assets were either not located or found to be in a broken state, with no evidence indicating that they are currently under repair. Cause: CSG does not have established policies or procedures to ensure sufficient safeguards against loss, damage, or theft of the property, as well as adequate maintenance procedures to keep property in good condition. Effect or Potential Effect: CSG is in noncompliance with applicable equipment and real property management requirements and a total questioned costs $32,214 result. The amount of questioned cost is based on the net book value of the asset. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: 1. CSG should establish a written policy along with comprehensive procedures to ensure effective safeguards against loss, damage, or theft of property, as well as establish robust maintenance protocols to preserve the property in good condition. 2. CSG should strictly enforce their actual safeguarding and maintenance procedures to ensure that federal capital expenditures are kept safe and in good working condition. Views of Responsible Officials The State agrees with the finding. Corrective Action is described in the Corrective Action Plan.
Pass-Through Entity: Federated States of Micronesia National Government Federal Agency: U.S. Department of the Interior AL Program: 15.875 Economic, Social, and Political Development of the Territories Federal Award No.: D24AF00334 Area: Period of Performance Questioned Costs: $0 Criteria: In accordance with 2 CFR 200.303(a), the recipient 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. Condition: For two (8%) of the twenty‑five transactions tested, aggregating $45,413 out of a total population of $12,334,264, CSG voided expenditures recorded in their SEFA. No questioned cost identified because it was subsequently corrected and it is only an internal control finding. Cause: CSG did not timely reverse voided expenditure during the correct fiscal year. Effect or Potential Effect: CSG’s current control and procedure for monitoring and correcting voided transactions is not efficiently designed. Identification as a Repeat Finding: Finding No. 2023-004. Recommendation: CSG should strengthen controls to ensure that only valid, incurred, and paid costs are recorded and reported within the correct period of performance and that unsupported expenditures are identified and corrected timely. Views of Responsible Officials: The State agrees with the finding. Corrective Action is described in the Corrective Action Plan
Finding Number: 2024-018 Prior Year Finding Number: 2023-019 Compliance Requirement: Allowable Costs/Cost Principles – Payroll Activities/ Period of Performance Program: U.S. Department of Agriculture Government Department/Agency: Department of Human Services (DHS) Supplemental Nutrition Assistance Program Cluster (SNAP) ALN: 10.561 Award #: Various Award Period: Various Criteria – The Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish, document, and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Management is responsible for establishing and maintaining a system of internal control that should include controls over its activities allowed or unallowed, allowable cost/cost principal process. CFR 200.403(g) states that for costs to be allowed under federal awards, they must be adequately documented. Additionally, salaries and wages charged to Federal awards are subject to the standards of documentation as described by 2 CFR Section 200.430(i) and must be based on records that accurately reflect the work performed. These records must: • Be incorporated into the organization’s official records. • Reasonably reflect the total activity for which the employee is compensated across all grant-related and non-grant related activities (100%); and • Support the distribution of employee salary across multiple activities or cost objectives. Condition – We noted the following: • The SNAP participation report was not properly reconciled to accounting records. • One grant award was overspent by $391,000. No adjustment was made to the SEFA. • During our testing of allowable costs for payroll expenditures incurred throughout the year, we sampled and selected 60 of the 1,806 payroll disbursements and noted the following: o 19 instances in which DHS did not consistently apply the funding allocation. The hours that should have been split 50/50 between federal and local or that should have been 100% local were charged 100% to the program. o 3 instances in which the project code on an employee’s Notice of Personnel Action (NOPA), which is used to record time and effort to the appropriate grant, were expired and had not been updated. o 9 instances in which payroll costs were charged outside of the award’s period of performance. Further, we noted that internal controls identified did not appear to be operating at a level of precision to ensure compliance with the above-mentioned requirements. Cause – DHS does not appear to have adequate policies and procedures to ensure compliance with applicable cost principles and ensure that an appropriate level of review and approval was completed prior to charging costs to a federal program. Effect or Potential Effect – An ineffective control system related to review of transactions to ensure that only allowable costs are allocated to federal programs can lead to noncompliance with federal statutes, regulations, and the provisions of grant agreements that could ultimately lead to disallowed costs for the major programs. Questioned Costs – Not determinable. Given the nature of the finding (e.g. unavailability of supporting documentation), we determined that projecting estimated questioned costs to the entire population was inappropriate. Context – This is a condition identified per review of DHS’ compliance with the specified requirements using a statistically valid sample. The total payroll expenditures charged to the program in fiscal year 2024 were $4,207,231. The amount sampled is $159,098. The known amount of inconsistencies noted is $38,462. The total food stamps expenditure charged to the program in fiscal year 2024 were $72,308,337. The known amount of unreconciled information is $355,108. Recommendation – We recommend that DHS reevaluate and improve internal controls to ensure adherence to federal regulations related to the fiscal administrative requirement for expending and accounting for payroll and to ensure proper and accurate funding allocation of payroll cost. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. DHS has enhanced the internal control policies and processes to ensure compliance with federal requirements and has adopted an electronic system for payroll, replacing manual processes. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
Finding Number: 2024-019 Prior Year Finding Number: 2023-020 Compliance Requirement: Matching, Level of Effort, Earmarking Program: U.S. Department of Agriculture Government Department/Agency: Department of Human Services (DHS) Supplemental Nutrition Assistance Program Cluster (SNAP) ALN: 10.561 Award #: Various Award Period: Various Criteria – 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish, document, and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Management is responsible for establishing and maintaining a system of internal control that should include controls over its matching process. Further, 2 CFR Section 200.306 provides detailed criteria for acceptable matching costs. The basic criteria for acceptable matching costs include costs that are necessary and reasonable for accomplishment of program objectives and are allowed under 2 CFR Part 200, Subpart E (Cost Principles). Condition – We found that DHS was unable to readily exhibit and provide evidence that it met the matching requirement or monitored compliance with the matching requirement. Cause – DHS does not appear to have adequate policies and procedures in place to ensure complete compliance with the matching requirement. Further, lack of monitoring of the match requirement appears to be the result of significant personnel turnover and lack of staffing. Effect or Potential Effect – DHS is not in compliance with the stated provisions. Without adequate internal controls to ensure compliance with matching requirements, there is an increased risk that matching will not be properly applied and funding could be jeopardized. Questioned Costs – Not determinable. Given the nature of the finding (e.g. unavailability of supporting documentation), we determined that projecting estimated questioned costs to the entire population was inappropriate. Context – This is a condition identified per review of DHS’ compliance with the specified requirements and general compliance principles. Recommendation – We recommend that DHS deploy resources that are given the responsibility to ensure periodic monitoring and compliance of the matching requirement throughout the fiscal year. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. DHS has developed a specific liquidation report to ensure that matching is completed with each report submission. Additionally, an audit team is being developed to support compliance and monitoring. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
Finding Number: 2024-020 Prior Year Finding Number: N/A Compliance Requirement: Period of Performance Program: U.S. Department of Agriculture Government Department/Agency: Department of Human Services (DHS) Supplemental Nutrition Assistance Program Cluster (SNAP) ALN: 10.561 Award #: Various Award Period: Various Criteria – A non-Federal entity may charge to the Federal award only allowable costs incurred during the period of performance and any costs incurred before the Federal awarding agency or pass-through entity made the Federal award, and only with the written approval of the Federal awarding agency. Further, the Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish, document, and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition – We found that for 1 project, expenditures were incurred before the award’s period of performance without written approval from the Federal awarding agency. Cause – DHS does not appear to have adequate policies and procedures in place to ensure compliance with the required period of performance stipulations. Effect or Potential Effect – DHS is not in compliance with the stated provisions. Failure to obtain Federal awarding agency approval for incurring expenditures before an award’s period of performance can result in noncompliance with laws and regulations along with loss of funding. Questioned Costs – $47,135. Context – This is a condition identified per review of DHS’ compliance with the specified requirements and general compliance principles. Total expenditures for this project in the fiscal year 2024 SEFA are $47,135 and all were determined to be incurred prior to the award’s period of performance. Recommendation – We recommend that DHS strengthen its process with respect to charging expenditures between various grant awards. We also recommend DHS enhance its review process to properly determine the activities of each grant relative to the appropriate period of performance. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. DHS has established close-out procedures so that all open purchase orders are now submitted to the Department of Finance for closure and the grant close-out process has been shifted to the OMB. Additionally, an audit team is being developed to support compliance and oversight. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
Finding Number: 2024-017 Prior Year Finding Number: 2023-024 Compliance Requirement: Cash Management Program: U.S. Department of Agriculture Government Department/Agency: Department of Health (DOH) Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) ALN: 10.557 Award #: Various Award Period: Various Criteria – The WIC program is subject to the provisions of the Cash Management Improvement Act (CMIA) (42 USC 1786(h)(8)(J)) and federal regulation 7 CFR section 246.15(a). Further, the Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish, document, and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition – We sampled and selected 16 of the 153 drawdowns and noted that 4 drawdown requests did not contain evidence of review and approval. Cause – It appears that policies and procedures, including review over cash management transactions, were not functioning as intended. Effect or Potential Effect – Without proper review and oversight drawdowns may not be in compliance with the cash management compliance requirements. Questioned Costs – None. Context – This is a condition identified per review of the DOH’s compliance with the specified requirements using a statistically valid sample. Total drawdown requests were $2,014,096. The amount sampled is $317,786. The total drawdowns related to the sampled drawdown requests that lack evidence of review and approval is $97,870. Recommendation – We recommend that the DOH reevaluate its policies and procedures to ensure proper monitoring and continue to be vigilant in following internal procedures over reviews and authorizations. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. DOH has updated Standard Operating Procedures (SOPs) over drawdowns requiring signatures or initials on all supporting documents, certifying proper review. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
Finding Number: 2024-021 Prior Year Finding Number: 2023-026 Compliance Requirement: Cash Management Program: U.S. Department of Agriculture Government Department/Agency: Department of Health (DOH) WIC Grants to States (WGS) ALN: 10.578 Award #: 1VI700748 Award Period: 07/01/19 - 12/31/23 Criteria - The Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish, document, and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition – We sampled and selected 6 of the 8 drawdowns and noted that all 6 drawdown requests did not contain evidence of review and approval. Cause – It appears that policies and procedures, including review over cash management transactions, were not functioning as intended. Effect or Potential Effect – Without proper review and oversight drawdowns may not be in compliance with the cash management compliance requirements. Questioned Costs – None. Context – This is a condition identified per review of the DOH’s compliance with the specified requirements using a statistically valid sample. Total drawdown requests were $2,051,331. The total drawdowns related to the sampled drawdown requests that lack evidence of review and approval is $1,971,498. Recommendation – We recommend that the DOH reevaluate its policies and procedures to ensure proper monitoring and continue to be vigilant in following internal procedures over reviews and authorizations. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. The matter will be considered in future recommendations; however, as the program has been closed, no further action can be taken to address the observation at this time. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
Finding Number: 2024-022 Prior Year Finding Number: 2023-027 Compliance Requirement: Procurement and Suspension and Debarment Program: U.S. Department of Agriculture Government Department/Agency: Department of Health (DOH) WIC Grants to States (WGS) ALN: 10.578 Award #: 1VI700748 Award Period: 07/01/19 - 12/31/23 Criteria - When procuring property and services, states must use the same policies and procedures they use for procurements from their non-federal funds (2 CFR section 200.317). Per Procurement Manual, User Agencies are required to submit a written justification letter to the Government’s Department of Property and Procurement (DPP), which was signed by the agency head, which explains the need for the services, the exception in title 31, Virgin Islands Code, chapter 23, section 239(a) being relied upon, the methodology for the selection process, and the rationale for selecting the prospective contractor. The letter must identify the funding source and comply with all other requirements necessary for the acquisition of services under title 31, Virgin Islands Code, chapter 23, sections 239(a) (1), (2) or (3) whichever is applicable. The letter must contain an “approve/disapprove” block for the Commissioner of Property and Procurement. Further, non-Federal entity must comply with section 70914 of the Build America, Buy America Act (BABA), including through incorporation of a Buy America preference in the terms and conditions of each award with an infrastructure project or obtain waiver. Additionally, the Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish, document, and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition – We selected 5 of 13 procurement transactions and noted the following: • The support provided for 3 procurement transactions did not contain sufficient supporting documentation to validate adherence to procurement policy. • The support provided for 5 procurements did not include Buy America domestic preference provisions in the agreement or obtained a BABA waiver. Cause – DOH and DPP do not appear to have a process in place to adequately monitor and maintain completed contract files comprising of all supporting documents. Effect or Potential Effect – DOH and DPP could inadvertently contract or make sub-awards to parties that are suspended or debarred from doing business with the Federal government as well as award contracts to vendors whose contract prices are unreasonable. In addition, contracts may be executed to unqualified vendors. Questioned Costs – None. Context – This is a condition identified per review of the DOH’s compliance with the specified requirements using a statistically valid sample. Total amount of procurement transactions was $2,016,062. The known amount of exceptions is $2,016,062. Recommendation – We recommend that DOH and DPP improve internal controls to ensure adherence to federal regulations relating to the procurement of goods and services and review current records retention policies. There should be timely coordination and communication amongst all Government departments and/or agencies that are responsible for handling and managing procurement tasks. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. The matter will be considered in future recommendations; however, as the program has been closed, no further action can be taken to address the observation at this time. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
Finding Number: 2024-023 Prior Year Finding Number: 2023-028 Compliance Requirement: Reporting Program: U.S. Department of Agriculture Government Department/Agency: Department of Health (DOH) WIC Grants to States (WGS) ALN: 10.578 Award #: 1VI700748 Award Period: 07/01/19 - 12/31/23 Criteria - Each State or Territory must file various financial, programmatic, and special reports. Additionally, the requirements necessitate that all submitted reports should be supported by the underlying performance records and presented in accordance with program requirements. Further, the Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish, document, and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition – We selected all reports submitted, consisting of 2 financial reports and 2 progress reports, and noted the following: • 1 financial report and 1 progress report did not appear to be submitted as required. • 1 financial report where the basis of accounting used in reporting the data was not specified. • 1 progress report did not contain evidence that it was reviewed by an authorized reviewer prior to submission. Further, it does not appear that the controls are operating at a level of precision to ensure compliance with reporting compliance requirements. Cause – It appears that policies and procedures, including review over reporting procedures, were not functioning as intended. Further, the Government does not have adequate control over maintenance of the underlying documentation used in preparing various reports. Effect or Potential Effect – The Government is not in compliance with the stated provisions and inaccurate information may have been reported to the Federal government. Questioned Costs – None. Context – This is a condition identified per review of the DOH’s compliance with the specified requirements. Recommendation – We recommend that the DOH reevaluate its policies and procedures to ensure proper monitoring and continue to be vigilant in following internal procedures over reviews and authorizations. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. The matter will be considered in future recommendations; however, as the program has been closed, no further action can be taken to address the observation at this time. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
Finding Number: 2024-025 Prior Year Finding Number: 2023-029 Compliance Requirement: Allowable Costs/Cost Principles – Payroll Activities Program: U.S. Department of Defense Government Department/Agency: Office of the Adjutant General (OTAG) National Guard Military Operations and Maintenance (O&M) Projects ALN: 12.401 Award #: W9127P-23-2, W9127P-24-2 Award Period: 10/01/2022 – 09/30/2023 10/01/2023 – 09/30/2024 Criteria – CFR 200.403(g) states that for costs to be allowed under Federal awards, they must be adequately documented. Additionally, salaries and wages charged to Federal awards are subject to the standards of documentation as described by 2 CFR Section 200.403(i) and must be based on records that accurately reflect the work performed. These records must: • Be incorporated into the organization’s official records. • Reasonably reflect the total activity for which the employee is compensated across all grant-related and non-grant related activities (100%); and • Support the distribution of employee salary across multiple activities or cost objectives. The Uniform Guidance in 2 CFR 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish, document, and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition – We selected a sample of 60 out of 3,696 payroll transactions and identified the following: • 3 instances where the timesheets for the pay period selected were not provided. • 1 instance in which total hours worked on the employees’ timesheet did not agree with total hours worked as recorded in the payroll register. Further, it does not appear that the controls in place are operating at a level of precision to ensure compliance with the allowable costs/cost principles compliance requirements. Cause – OTAG does not appear to have adequate policies and procedures in place to ensure compliance with applicable cost principles and the required period of performance stipulations. Effect or Potential Effect – OTAG is not in compliance with the stated provisions. Failure to properly review and support expenditures can result in noncompliance with laws and regulations along with loss of funding. Questioned Costs – Below reporting threshold. Context – This is a condition identified per review of OTAG’s compliance with the specified requirements using a statistically valid sample. The total amount of payroll expenditures charged to the program during fiscal year 2024 were $1,669,934 and the total amount of our sample was $52,772. The known amount of the exceptions totaled $11,469. Recommendation – We recommend that OTAG strengthen internal controls by developing and implementing policies and procedures to ensure compliance with Federal requirements related to payroll expenditures, including applicable cost principles and documentation standards. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. OTAG has reviewed the payroll transactions identified during the audit and has initiated corrective measures to strengthen controls over payroll documentation, appendix charging, and period-of-performance compliance. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
Finding Number: 2024-026 Prior Year Finding Number: 2023-030 Compliance Requirement: Cash Management and Reporting Program: U.S. Department of Defense Government Department/Agency: Office of the Adjutant General (OTAG) National Guard Military Operations and Maintenance (O&M) Projects ALN: 12.401 Award #: W9127P-23-2, W9127P-24-2 Award Period: 10/01/2022 – 09/30/2023 10/01/2023 – 09/30/2024 Criteria – U.S. Department of the (Treasury) regulations at 31 CFR Part 205 implement the Cash Management Improvement Act of 1990 (CMIA), as (Pub. L. No. 101-453; 31 USC 6501 et seq.). Subpart A of those regulations requires state recipients to enter into Treasury-State Agreements that prescribe specific methods of drawing down federal funds (funding techniques) for federal programs listed in the Assisting Lising that meet the funding threshold for a major federal assistance program under the CMIA. Treasury-State Agreements also specify the terms and conditions under which an interest would be incurred. Each State or Territory must file various financial, programmatic, and special reports. Additionally, the requirements necessitate that all submitted reports should be supported by the underlying performance records and presented in accordance with program requirements. SF-270, Request for Advance or Reimbursement Report, is required to be filed in connection with cash drawdowns. Further, the Uniform Guidance in 2 CFR 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish, document, and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition – As a part of its reporting requirements, OTAG is required to submit the SF-270, 'Request for Advance or Reimbursement' Report to the Federal grantor to facilitate cash drawdown requests for reimbursements. We were unable to verify the completeness of the SF-270 (cash management and reporting) population. As a result, we were unable to test compliance and internal controls over compliance related to the cash management and reporting compliance requirements. Cause – It appears that policies and procedures, including review over cash management transactions, were not functioning as intended. Effect or Potential Effect – OTAG is not in compliance with the stated provisions. Inaccurate information may have been reported to the Federal government in the absence of required reconciliations and reviews. Questioned Costs – Not determinable. Given the nature of the finding (e.g. unavailability of supporting documentation), we determined that projecting estimated questioned costs to the entire population was inappropriate. Context – This is a condition identified per review of OTAG’s compliance with the specified requirements and general compliance principles. Recommendation – We recommend that OTAG reevaluate its policies and procedures to ensure proper monitoring and continue to be vigilant in following internal procedures over reviews and authorizations. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. OTAG will enhance internal control processes and procedures including reconciliations, a centralized tracking log, and supervisory review and approval. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
Finding Number: 2024-027 Prior Year Finding Number: 2023-031 Compliance Requirement: Matching, Level of Effort, Earmarking Program: U.S. Department of Defense Government Department/Agency: Office of the Adjutant General (OTAG) National Guard Military Operations and Maintenance (O&M) Projects ALN: 12.401 Award #: W9127P-23-2, W9127P-24-2 Award Period: 10/01/2022 – 09/30/2023 10/01/2023 – 09/30/2024 Criteria – According to the Master Cooperative Agreement Section 303, Cost Sharing, cost sharing requirements are found in a grantees individual Cooperative Agreements. The Government has various cost-sharing requirements within their Cooperative Agreements. Further, the Uniform Guidance in 2 CFR 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish, document, and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition – OTAG was unable to readily exhibit and provide its computation of the matching calculation or provide evidence that it was monitoring compliance with said requirement. Therefore, we were unable to determine if the matching requirement had been met or if the expenditures being claimed towards the matching requirement are allowable activities/costs. Further, it does not appear that the controls in place are operating at level of precision to ensure compliance with the matching compliance requirement. Cause – OTAG does not appears to have adequate policies and procedures in place to ensure compliance with the matching requirement. Effect or Potential Effect – OTAG is not in compliance with the stated provisions. Questioned Costs – Not determinable. Given the nature of the finding (e.g. unavailability of supporting documentation), we determined that projecting estimated questioned costs to the entire population was inappropriate. Context – This is a condition identified per review of OTAG’s compliance with the specified requirements and general compliance principles. Recommendation – We recommend that OTAG deploy resources that are given the responsibility to ensure periodic monitoring and compliance of the matching requirement throughout the fiscal year. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. OTAG will enhance internal control processes and procedures including a formal methodology for calculating, documenting, and monitoring matching requirements. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
Finding Number: 2024-028 Prior Year Finding Number: 2023-032 Compliance Requirement: Period of Performance Program: U.S. Department of Defense Government Department/Agency: Office of the Adjutant General (OTAG) National Guard Military Operations and Maintenance (O&M) Projects ALN: 12.401 Award #: W9127P-23-2, W9127P-24-2 Award Period: 10/01/2022 – 09/30/2023 10/01/2023 – 09/30/2024 Criteria – National Guard Bureau O&M cooperative agreements (CA) are funded with one-year appropriations. By policy, only state costs obligated during the period of the federal fiscal year or period of performance identified in the CA are reimbursable per National Guard Regulation (NGR) 5-1, chapter 3 and 11. The recipient shall not request reimbursement for any expenditure it made before the date that all required parties execute the Master Cooperative Agreement (MCA) unless the United States Property & Fiscal Officer (USPFO) expressly authorized expenditures made during the funding period, but prior to the date of final signature, the parties may also agree on a specific start or effective date (NGR 5-1, Chapter 11). Within 90 days after the end of the federal fiscal year or upon termination of the CA, whichever is earlier, the recipient shall promptly deliver to the USPFO a final accounting of all funding and disbursements under the agreement for the fiscal year (NGR 5-1, Chapter 11). If unliquidated claims and undisbursed arising from the recipient’s performance of the CA will remain 90 days after the close of the federal fiscal year, the recipient shall provide a detailed listing of uncleared obligations and a projected timetable for their liquidation and disbursement no later than 31 December. The USPFO shall then set an appropriate new timetable for the recipient to submit its final accounting (NGR 5-1, Chapter 11). Costs incurred in a federal fiscal year, which are not disclosed by the recipient within 90 days of the end of the federal fiscal year, except costs associated with unliquidated claims and undisbursed obligations arising from the recipient’s performance of the CA that the recipient has reported, shall not be eligible for reimbursement by NGB. The USPFO may extend the 90-day limit for good cause shown (NGR 5-1, Chapter 11). Additionally, a non-federal entity may charge to the Federal award, allowable costs incurred during the period of performance and any cost incurred before the Federal awarding agency or pass-through entity made the Federal award, only to the extent that they would have been allowable if incurred after the date of the Federal award and only the written approval of the Federal awarding agency. Further, the Uniform Guidance in 2 CFR 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish, document, and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition – We sampled and selected 83 of 489 transactions and noted the following: • 28 instances where transactions were charged to the incorrect grant award based on the noted period of performance for each award. • 2 instances where transactions were paid outside the liquidation period. Additionally, we tested period of performance and noted the following : • We selected a sample of 60 of 619 non-payroll transactions and identified 13 instances in which non-payroll expenditures were incurred and charged outside of the allowable liquidation period, without evidence of an approved extension or authorization, in noncompliance with Federal award requirements. • We selected a sample of 60 out of 3,696 payroll transactions and noted 6 instances in which payroll costs were charged to prior-year Federal grant projects that were outside the approved period of performance and lacked evidence of an authorized extension. Cause – OTAG did not appear to have adequate policies and procedures in place to ensure compliance with the required period of performance. Effect or Potential Effect – OTAG is not in compliance with the stated provisions. Failure to properly review and support expenditures can result in noncompliance with laws regulations along with loss of funding. Questioned Costs – 257,468. Context – This is a condition identified per review of OTAG’s compliance with the specified requirements using a statistically valid sample. The total amount expenditures charged to program was $3,300,673 and the total amount of our sample was $881,480. The known amount of the exceptions totaled $257,468. Recommendation – We recommend that OTAG strengthen its processes with respect to setting up and charging expenditures between various grants awards. We also recommend that OTAG enhance its review process to properly determine the activities of each grant relative to the appropriated period of performance. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. OTAG will implement tracking tools to monitor award periods, liquidation deadlines, and expenditure charging. In addition, OTAG should enhance its review and monitoring processes to ensure payroll costs are properly supported and charged within the appropriate period of performance for each Federal award. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
Finding Number: 2024-029 Prior Year Finding Number: N/A Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles – Non-Payroll Activities Program: U.S. Department of the Interior Government Department/Agency: Department of Planning and Natural Resources (DPNR) Fish and Wildlife Cluster ALN: 15.605, 15.611 Award #: Various Award Period: Various Criteria - The Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish, document, and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Management is responsible for establishing and maintaining a system of internal control that should include controls over its activities allowed or unallowed and allowable cost/cost principal process. Condition – In our review of 60 of 538 non-payroll transactions, we noted 5 instances in which the expenditure was not approved by authorized personnel. Cause – DPNR does not appear to have adequate policies and procedures in place to ensure internal controls are consistently and diligently applied. Effect or Potential Effect – Failure to properly review and support expenditures can result in noncompliance with laws and regulations along with loss of funding. Questioned Costs – None. Context – This is a condition identified per review of the DPNR’s compliance with the specified requirements using a statistically valid sample. The total amount of non-payroll expenditures charged to the program were $1,565,197. Total amount sampled is $828,341. The known amount of the instances of noncompliance is $27,015. Recommendation – We recommend that DPNR improve internal controls to ensure adherence to the Federal regulations related to the fiscal and administrative requirements for expending and accounting for non-payroll expenditures. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. DPNR will review and update its policies and procedures to ensure all non-payroll expenditures are approved by authorized personnel, provide staff training on proper approval processes and internal control requirements, and conduct periodic checks to monitor compliance and promptly address any exceptions. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
Finding Number: 2024-030 Prior Year Finding Number: 2023-033 Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles – Payroll Activities Program: U.S. Department of the Interior Government Department/Agency: Department of Planning and Natural Resources (DPNR) Fish and Wildlife Cluster ALN: 15.605, 15.611 Award #: Various Award Period: Various Criteria – The Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish, document, and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Management is responsible for establishing and maintaining a system of internal control that should include controls over its activities allowed or unallowed and allowable cost/cost principal process. CFR 200.403(g) requires all costs charged to a federal award must be adequately documented. Additionally, salaries and wages charged to Federal awards are subject to the standards of documentation as described by 2 CFR Section 200.430(i) and must be based on records that accurately reflect the work performed. These records must: • Be incorporated into the organization’s official records. • Reasonably reflect the total activity for which the employee is compensated across all grant-related and non-grant related activities (100%); and • Support the distribution of employee salary across multiple activities or cost objectives. Condition – During our testing of allowable costs for payroll expenditures incurred throughout the year, we sampled and selected 60 of 620 payroll disbursements and noted the following: • 1 instance in which the approved timesheet for the pay period selected was not available for review, and there was a variance between the hours reported on the payroll register and the Detail Check History. • 13 instances in which the employee assigned project code documented on the Notice of Personnel Action was not associated with the grant. Additionally, the payroll register reflected a different project code for these transactions. As a result, it does not appear that the controls in place are operating at a level of precision to ensure compliance with the compliance requirement. Cause – DPNR does not appear to have adequate policies and procedures to ensure compliance with applicable cost principles and to ensure that an appropriate level of review and approval was completed prior to charging costs to a federal program. Effect or Potential Effect – An ineffective control system related to review of transactions to ensure that only allowable costs are allocated to federal programs can lead to noncompliance with federal statutes, regulations, and the provisions of grant agreements that could ultimately lead to disallowed costs for the major programs. Questioned Costs – $43,593. Context – This is a condition identified per review of the DPNR’s compliance with the specified requirements using a statistically valid sample. The total payroll expenditures charged to the program in fiscal year 2024 were $1,704,442. The amount sampled is $181,084. The value of transactions with exceptions totaled $43,593. Recommendation – We recommend that DPNR reevaluate and improve internal controls to ensure adherence to federal regulations related to the fiscal administrative requirement for expending and accounting for payroll and to ensure proper and accurate funding allocation of payroll cost. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. DPNR will enhance internal control procedures to include reconciliations and increased review and approval requirements. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
Finding Number: 2024-031 Prior Year Finding Number: 2023-034 Compliance Requirement: Equipment and Real Property Management Program: U.S. Department of the Interior Government Department/Agency: Department of Planning and Natural Resources (DPNR) Fish and Wildlife Cluster ALN: 15.605, 15.611 Award #: Various Award Period: Various Criteria - Per 2 CFR section 200.313, Equipment, property records must be maintained that include a description of the property, a serial number or other identification number, the source of property, who holds title, the acquisition date, cost of the property, percentage of Federal participation in the cost of the property, the location, use and conditions of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Further, a physical inventory of equipment should be taken at least once every 2 years and reconciled to the equipment records along with the usage of an appropriate control system to safeguard and maintain equipment. Additionally, the Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish, document, and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition – The Government’s DPP maintains the equipment register for the Government. DPNR was unable to provide accurate and complete property records which met the stated requirements. Further, no physical inventory was taken in fiscal year 2024. Further, we noted that internal controls were not operating at a level of precision to ensure compliance with the equipment management and real property compliance requirements. Cause – DPNR and DPP do not appear to have a process in place to adequately monitor equipment acquired with Federal funds. Effect or Potential Effect – Inadequate recordkeeping of equipment could lead to misappropriation of assets and noncompliance with Federal regulations resulting in a return of Federal awards received. Questioned Costs – Not determinable. Given the nature of the finding (e.g. unavailability of supporting documentation), we determined that projecting estimated questioned costs to the entire population was inappropriate. Context – This is a condition identified per review of DPNR’s compliance with the specified requirements. Equipment purchased in 2024 totaled $47,748. Recommendation – We recommend that DPNR and DPP improve internal controls to ensure adherence to Federal regulations related to equipment and its related maintenance. There should be timely coordination and communication amongst all Government departments and/or agencies that are responsible for handling and managing such assets. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. The Asset Management Division (AMD) adheres to Federal Equipment guidelines. Assets are tagged, and records are created using the Tyler Munis Resource system (ERP) The completed Standard Operating Policies and Procedures (SOPP) are pending update and approval crucial for enhancing internal controls. Training sessions will occur and additional staff will be needed to support the initiative effectively. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
Finding Number: 2024-032 Prior Year Finding Number: N/A Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles – Payroll Activities Program: U.S. Department of the Interior Government Department/Agency: Department of Planning and Natural Resources (DPNR) Economic, Social, and Political Development of the Territories ALN: 15.875 Award #: Various Award Period: Various Criteria - The Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish, document, and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Management is responsible for establishing and maintaining a system of internal control that should include controls over its activities allowed or unallowed, allowable cost/cost principal process. CFR 200.403(g) states that for costs to be allowed under federal awards, they must be adequately documented. Additionally, salaries and wages charged to Federal awards are subject to the standards of documentation as described by 2 CFR Section 200.430(i) and must be based on records that accurately reflect the work performed. These records must: • Be incorporated into the organization’s official records. • Reasonably reflect the total activity for which the employee is compensated across all grant-related and non-grant related activities (100%); and • Support the distribution of employee salary across multiple activities or cost objectives. Condition – The payroll expenditures recorded in the Schedule of Expenditures of Federal Awards (SEFA) agree to the payroll expenditures recorded in the accounting system. The summary level payroll transactions recorded in the accounting system could not be reconciled to the transaction level detail obtained from the payroll system. When comparing the two populations, we identified multiple differences that net to a variance of $38,439. Cause – DPNR did not adhere to their internal policies and procedures to ensure the accuracy of the SEFA. Effect or Potential Effect – The SEFA may not be completely and accurately stated. In addition, the lack of established internal control policies and procedures to ensure the SEFA is completely and accurately stated can lead to noncompliance with federal statutes, regulations, and provisions of grant agreements. Questioned Costs – Not determinable. Given the nature of the finding (e.g. unavailability of supporting documentation), we determined that projecting estimated questioned costs to the entire population was inappropriate. Context – This is a condition identified per review of DPNR system’s population completeness over the compliance requirements for the program. Total payroll expenditure charged to the program for the year is $16,218. Recommendation – We recommend that the DPNR develop policies and procedures and enhance existing their existing reconciliation process to ensure completeness and accuracy of the SEFA, and that amounts reported on the SEFA are supported by transaction level detail. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. DPNR will implement enhanced internal control procedures to ensure that payroll expenditures reported on the Schedule of Expenditures of Federal Awards (SEFA) are complete, accurate, and fully supported by transaction-level detail in accordance with Federal statutes and regulations by implementing monthly payroll reconciliations, by developing and enhancing internal controls and procedures, and by providing training to relevant personnel. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
Finding Number: 2024-033 Prior Year Finding Number: N/A Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Procurement and Suspension and Debarment Program: U.S. Department of the Interior Government Department/Agency: Office of Management and Budget (OMB) Economic, Social, and Political Development of the Territories ALN: 15.875 Award #: Various Award Period: Various Criteria – Funds may be used only for activities that are authorized under the terms and conditions of the award, the approved project budget, and applicable federal requirements, including 2 CFR Part 200. Costs charged to the program must be necessary, reasonable, allocable, and directly related to carrying out the approved program objectives. Further, the Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish, document, and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition – In mid-2024, an inquiry was conducted by the United States Department of Justice (DOJ) into potential criminal activity associated with three individuals, each of whom were senior government officials working in their respective capacities as Director/Commissioner of the U.S. Virgin Islands Office of Management and Budget, Virgin Islands Police Department, and Department of Sports, Parks, and Recreation. As of January 2025, the DOJ filed formal indictments against the now former USVI officials (collectively the “Indicted Individuals”). DOJ alleged that the Indicted Individuals were involved in activities associated with bribery, and specifically providing, or attempting to provide, accelerated approval of contracts and payments on invoices to a vendor, Mon Ethos Pro Support, LLC. The court cases are on-going. In 2024, Mon Ethos Pro Support, LLC was paid $20,000 from Economic, Social, and Political Development of the Territories Program funds, which are considered questioned costs. Cause – OMB does not appear to have adequate policies and procedures to ensure compliance with applicable cost principles and procurement standards. Specifically, there appears to be a lack of monitoring controls and an appropriate level of review and approval of transactions prior to charging costs to a federal program. Effect or Potential Effect – Fraudulent transactions associated with a Federal program can lead to an assessment of penalties, claw back of federal funds and termination of awards. Further, an ineffective control system related to procuring of vendors and submission of allowable costs that could ultimately lead to disallowed costs for the major programs. Questioned Costs – Below reporting threshold. Context – This is a condition identified per review of current events and specific transactions related to the vendor identified in the DOJ indictment. Recommendation – We recommend that OMB should strengthen controls over vendor procurement and the review and submission of program costs to help ensure that transactions charged to federal programs are valid, properly supported, and allowable under applicable grant requirements. This should include clearer review procedures, adequate supporting documentation, supervisory approval, and periodic monitoring of procurement and cost submissions. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. OMB will strengthen grant management and compliance through the Public Finance Management initiative including the development of a three-tier overarching Financial and Compliance policy and procedures framework and the hiring of key personnel. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
Finding Number: 2024-034 Prior Year Finding Number: 2023-035 Compliance Requirement: Cash Management Program: U.S. Department of the Interior Government Department/Agency: Virgin Islands Department of Education (VIDOE) & Department of Planning and Natural Resources (DPNR) Economic, Social, and Political Development of the Territories ALN: 15.875 Award #: Various Award Period: Various Criteria – U.S. Department of the Treasury (Treasury) regulations at 31 CFR Part 205 implement the Cash Management Improvement Act of 1990 (CMIA), as amended (Pub. L. No. 101-453; 31 USC 6501 et seq.). Subpart A of those regulations requires state recipients to enter into Treasury-State Agreements that prescribe specific methods of drawing down federal funds (funding techniques) for federal programs listed in the Assistance Listing that meet the funding threshold for a major federal assistance program under the CMIA. The CMIA agreement for this program stipulates a reimbursement method with 7-day clearance. Further, the Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish, document, and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition – We reviewed 10 out of 77 drawdowns, and noted no supporting documentation was available for review for 1 drawdown. Additionally, for one project included in the program, we noted a variance of $2,288 between the cash receipts recorded in the accounting system and the amount reflected in the related federal drawdown. Cause – It appears that policies and procedures, including review over cash management transactions, were not functioning as intended. Effect or Potential Effect – VIDOE and DPNR are not in compliance with the stated provisions. Questioned Costs – $258,122. Context – This is a condition identified per review of VIDOE and DPNR’s compliance with the specified requirements using a statistically valid sample. Total fiscal year 2024 drawdown requests were $5,674,452. Total amount sampled is $4,247,674. The total related to the drawdown request without supporting documentation is $258,122. Recommendation - We recommend that VIDOE and DPNR reevaluate its policies and procedures to ensure proper monitoring and continue to be vigilant in following internal procedures to ensure compliance with stated provisions. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. The Government’s Audit Committee is leading the development of a structured, three-tier policy and procedures framework under the Public Finance Management project. Regular training sessions will be provided to staff involved in grant management to ensure they understand and adhere to compliance requirements with monitoring and evaluation occurring by the OMB Compliance Unit supported by the Government’s Audit Committee, to assess and improve the effectiveness of controls. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
Finding Number: 2024-035 Prior Year Finding Number: 2023-036 Compliance Requirement: Equipment and Real Property Management Program: U.S. Department of the Interior Government Department/Agency: Various Economic, Social, and Political Development of the Territories ALN: 15.875 Award #: Various Award Period: Various Criteria - Per 2 CFR section 200.313, Equipment, property records must be maintained that include a description of the property, a serial number or other identification number, the source of property, who holds title, the acquisition date, cost of the property, percentage of Federal participation in the cost of the property, the location, use and conditions of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Further, a physical inventory of equipment should be taken at least once every 2 years and reconciled to the equipment records along with the usage of an appropriate control system to safeguard and maintain equipment. Additionally, the Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish, document, and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition – The Government’s DPP maintains the equipment register for the Government. DPP was unable to provide an accurate and complete property records which met the stated requirements. Further, no physical inventory was taken in fiscal year 2024. Further, we noted that internal controls were not operating at a level of precision to ensure compliance with the equipment management compliance requirements. Cause – The Government does not appear to have a process in place to adequately monitor equipment acquired with Federal funds. Effect or Potential Effect – There is a risk that inadequate recordkeeping of equipment could lead to misappropriation of assets and noncompliance with Federal regulations resulting in a return of Federal awards received. Questioned Costs – Not determinable. Given the nature of the finding (e.g. unavailability of supporting documentation), we determined that projecting estimated questioned costs to the entire population was inappropriate. Context – This is a condition identified per review of the Government’s compliance with the specified requirements. Equipment purchased in 2024 totaled $ 2,633,484. Recommendation – We recommend that the Government improve internal controls to ensure adherence to Federal regulations related to equipment and its related maintenance. There should be timely coordination and communication amongst all Government departments and/or agencies that are responsible for handling and managing such assets. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. The Government’s Audit Committee is leading the development of a structured, three-tier policy and procedures framework under the Public Finance Management project. Additional staff will be needed to effectively support the initiative and regular training sessions will be provided to staff to ensure they understand and adhere to compliance requirements with monitoring and evaluation occurring by the OMB Compliance Unit supported by the Government’s Audit Committee, to assess and improve the effectiveness of controls. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
Finding Number: 2024-036 Prior Year Finding Number: 2023-037 Compliance Requirement: Procurement and Suspension and Debarment Program: U.S. Department of the Interior Government Department/Agency: Various Economic, Social, and Political Development of the Territories ALN: 15.875 Award #: Various Award Period: Various Criteria - When procuring property and services, states must use the same policies and procedures they use for procurements from their non-federal funds (2 CFR section 200.317). Per the Procurement Manual, User Agencies are required to submit a written justification letter to the Government’s DPP, which was signed by the agency head, which explains the need for the services, the exception in title 31, Virgin Islands Code, chapter 23, section 239(a) being relied upon, the methodology for the selection process, and the rationale for selecting the prospective contractor. The letter must identify the funding source and comply with all other requirements necessary for the acquisition of services under title 31, Virgin Islands Code, chapter 23, sections 239(a) (1), (2) or (3) whichever is applicable. The letter must contain an “approve/disapprove” block for the Commissioner of Property and Procurement. Additionally, the Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish, document, and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition - In our review of 14 out of 90 procurement transactions, we noted the following: • The supporting documentation for 1 procurement transaction did not contain evidence that a quotation was obtained prior to selection of the vendor. • In addition, we noted that 6 procurement transactions did not include the following: o Contract file documents showing the significant history of the procurement, including the rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis of contract price. o The procurement provides full and open competition. o Documentation in support of the rationale to limit competition in those cases where competition was limited and ascertain if the limitation was justified. o Cost or price analysis in connection with procurement action, including contract modifications and that this analysis supported the procurement action. Cause – The Government does not appear to have a process in place to adequately monitor and maintain completed contract files comprising of all supporting documents. Effect or Potential Effect – The Government could inadvertently contract or make sub-awards to parties that are suspended or debarred from doing business with the Federal government as well as award contracts to vendors whose contract prices are unreasonable. In addition, contracts may be executed to unqualified vendors. Questioned Costs – None. Context – This is a condition identified per review of the Government’s compliance with the specified requirements using a statistically valid sample. Total amount of procurement and suspension and debarment transactions was $6,395,225. Total amount sampled was $4,137,592. The known amount of exceptions is $1,150,428. Recommendation – We recommend that the Government improve internal controls to ensure adherence to federal regulations relating to the procurement of goods and services and review current records retention policies. There should be timely coordination and communication amongst all Government departments and/or agencies that are responsible for handling and managing procurement tasks. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. DPP has transitioned the Government of the Virgin Islands to a centralized eProcurement system, GVIBuy. Vendor profiles are centralized with all corporate documents attached. Additionally, DPP has published written guidelines that dictate adherence to federal regulations relate to the procurement of goods and services including records retention. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
Finding Number: 2024-037 Prior Year Finding Number: 2023-038 Compliance Requirement: Reporting Program: U.S. Department of the Interior Government Department/Agency: Various Economic, Social, and Political Development of the Territories ALN: 15.875 Award #: Various Award Period: Various Criteria - Each State or Territory must file various financial, programmatic, and special reports. Additionally, the requirements necessitate that all submitted reports should be supported by the underlying performance records and presented in accordance with program requirements. Further, the Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish, document, and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition – We sampled and selected 24 out of 224 financial and performance reports and noted the following: • 2 performance reports were not available for review. • For 12 financial reports, sufficient supporting documentation was not available to verify that the reported financial information agreed to the underlying records. • 2 performance reports did not contain evidence of review or approval prior to submission. • For 3 performance reports and 2 financial reports, there was no evidence of submission. Additionally, the Government did not submit FFATA report where subawards were made for more than $30,000 for fiscal year 2024. Cause – It appears that policies and procedures, including review over reporting procedures were not functioning as intended. Further, the Government does not have adequate control over maintenance of the underlying documentation used in preparing various reports. Effect or Potential Effect – The Government is not in compliance with the stated provisions and inaccurate information may have been reported to the Federal government. Questioned Costs – None. Context – This is a condition identified per review of the Government’s compliance with the specified requirements using a statistically valid sample. Recommendation – We recommend that Government reevaluate its policies and procedures to ensure proper retention, monitoring, and review of the required reports by an appropriate official who would ensure that information submitted is complete, accurate, consistent, and submitted within the required timeframe. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. The Government’s Audit Committee is leading the development of a structured, three-tier policy and procedures framework under the Public Finance Management project. Regular training sessions will be provided to staff involved in grant management to ensure they understand and adhere to compliance requirements with monitoring and evaluation occurring by the OMB Compliance Unit supported by the Government’s Audit Committee, to assess and improve the effectiveness of controls. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
Finding Number: 2024-038 Prior Year Finding Number: N/A Compliance Requirement: Cash Management Program: U.S. Department of the Interior Government Department/Agency: Department of Planning and Natural Resources (DPNR) Emergency Supplemental Historic Preservation Fund ALN: 15.957 Award #: P19AP00016 Award Period: 03/01/2019 - 09/30/2026 Criteria – The Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish, document, and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition – We sampled and selected 11 out of 23 drawdowns and noted that sufficient supporting invoices were not available for review for 3 drawdowns. Cause – It appears sufficient documentation was not maintained or provided to support certain reimbursement requests, and review procedures over amounts requested were not functioning effectively. Effect or Potential Effect – Without adequate supporting documentation, the entity may draw Federal funds in excess of allowable and supported expenditures, resulting in noncompliance with cash management requirements and unsupported questioned costs. Questioned Costs – $142,939. Context – This is a condition identified per review of DPNR’s compliance with the specified requirements using a statistically valid sample. Total drawdown requests were $7,857,474. The amount sampled is $7,590,468. The total of drawdowns for which we were unable to obtain support is $142,939. Recommendation – We recommend that DPNR reevaluate its policies and procedures to ensure proper monitoring and continue to be vigilant in following internal procedures to ensure compliance with cash management provisions. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. DPNR, with the support of the federal agency’s consultant, will implement a centralized electronic repository system to serve as the official recordkeeping location for all Federal drawdown requests and supporting documentation. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
Finding Number: 2024-039 Prior Year Finding Number: N/A Compliance Requirement: Eligibility Program: U.S. Department of the Interior Government Department/Agency: Department of Planning and Natural Resources (DPNR) Emergency Supplemental Historic Preservation Fund ALN: 15.957 Award #: P19AP00016 Award Period: 03/01/2019 - 09/30/2026 Criteria - DPNR must have in place procedures for documenting and verifying eligibility in accordance with the Federal requirements, as well as the specific eligibility requirements in accordance with grant agreement. Further, the Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish, document, and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition – DPNR did not provide supporting documentation to determine whether it implemented a formal process to ensure compliance with eligibility requirements during the year under audit. Cause – It appears that policies and procedures, including review over the eligibility of transactions, were not designed and functioning as needed. Effect or Potential Effect – Noncompliance with program requirements could result in disallowances of costs and program participants could be receiving benefits that they are not entitled to receive along with loss of funding. Questioned Costs – $6,964,757. Context - This is a condition identified per review of DPNR’s compliance with the specified requirements and general compliance principles. Recommendation – We recommend that DPNR strengthen its policies and procedures for documenting and retaining evidence that eligibility controls are performed and operating effectively to ensure compliance with eligibility requirements. DPNR should also maintain a complete and accurate listing of eligible participants, including all relevant information needed to support eligibility determinations. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. DPNR, with the support of the federal agency’s consultant, will implement a centralized electronic repository system to serve as the official recordkeeping location for all eligibility requests and supporting documentation. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
Finding Number: 2024-040 Prior Year Finding Number: N/A Compliance Requirement: Procurement and Suspension and Debarment Program: U.S. Department of the Interior Government Department/Agency: Department of Planning and Natural Resources (DPNR) Emergency Supplemental Historic Preservation Fund ALN: 15.957 Award #: P19AP00016 Award Period: 03/01/2019 - 09/30/2026 Criteria – When procuring property and services, states must use the same policies and procedures they use for procurements from their non-federal funds (2 CFR section 200.317). Additionally, the Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish, document, and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition – DPNR did not provide supporting documentation to determine whether it implemented a formal process to ensure compliance with procurement and suspension and debarment compliance during the year under audit. Cause – It appears that policies and procedures, including review over procurement and suspension and debarment transactions, were not designed and functioning as intended. Effect or Potential Effect – DPNR is not in compliance with the stated provisions. DPNR could inadvertently contract or make sub-awards to parties that are suspended or debarred from doing business with the Federal government as well as award contracts to vendors whose contract prices are unreasonable. In addition, contracts may be executed to unqualified vendors. Questioned Costs – Not determinable. Given the nature of the finding (e.g. unavailability of supporting documentation), we determined that projecting estimated questioned costs to the entire population was inappropriate. Context – This is a condition identified per review of DPNR’s compliance with the specified requirements and general compliance principles. Recommendation – We recommend that DPNR strengthen its documentation and record-retention procedures to ensure evidence is maintained to support that internal controls over procurement and suspension and debarment requirements are designed and operating effectively to ensure compliance with procurement and suspension and debarment provisions. DPNR should also maintain a complete and accurate procurement population listing to support compliance monitoring. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. DPNR, with the support of the federal agency’s consultant, will implement a centralized electronic repository system to serve as the official recordkeeping location for all procurement requests and supporting documentation. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
Finding Number: 2024-041 Prior Year Finding Number: N/A Compliance Requirement: Reporting Program: U.S. Department of the Interior Government Department/Agency: Department of Planning and Natural Resources (DPNR) Emergency Supplemental Historic Preservation Fund ALN: 15.957 Award #: P19AP00016 Award Period: 03/01/2019 - 09/30/2026 Criteria – Each State or Territory must file various financial, programmatic, and special reports. Additionally, the requirements necessitate that all submitted reports should be supported by the underlying performance records and presented in accordance with the program requirements. Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252, hereafter referred as the “Transparency Act” that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Further, the Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish, document, and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition – We sampled and selected 4 out of 8 financial and progress reports, and noted that 2 financial reports were reviewed by an individual other than the authorized reviewer. Additionally, DPNR was unable to provide a listing of FFATA reports submitted during the year under audit. Cause – It appears that policies and procedures, including review over reporting procedures, were not designed and/or not functioning as intended. Effect or Potential Effect – DPNR is not in compliance with the stated provisions, and inaccurate information may have been reported to the Federal government. Questioned Costs – Not determinable. Given the nature of the finding (e.g. unavailability of supporting documentation), we determined that projecting estimated questioned costs to the entire population was inappropriate. Context – This is a condition identified per review of DPNR’s compliance with the specified requirements using a statistically valid sample. Recommendation – We recommend that DPNR reevaluate its policies and procedures to ensure proper retention, monitoring, and review of the required reports by an appropriate official to ensure that information submitted is complete, accurate, consistent, and submitted within the required timeframe. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. DPNR will conduct an internal review to analyze internal controls and procedures for potential weaknesses and will implement additional measures as needed. In addition, DPNR, with the support of the federal agency’s consultant, will implement a centralized electronic repository system to serve as the official recordkeeping location for all reporting supporting documentation. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.
Finding Number: 2024-042 Prior Year Finding Number: N/A Compliance Requirement: Subrecipient Monitoring Program: U.S. Department of the Interior Government Department/Agency: Department of Planning and Natural Resources (DPNR) Emergency Supplemental Historic Preservation Fund ALN: 15.957 Award #: P19AP00016 Award Period: 03/01/2019 - 09/30/2026 Criteria – A pass-through entity (PTE) must: • Verify the Subrecipient – Verify that the subrecipient is not excluded or disqualified in accordance with 2 CFR 180.300. Verification methods are provided in 2 CFR 180.300, which include confirming in SAM.gov that a potential subrecipient is not suspended, debarred, or otherwise excluded from receiving Federal funds (2 CFR 200.322(a)). • Identify the Award and Applicable Requirements – Clearly identify to the subrecipient the award as a subaward at the time of subaward (or subsequent subaward modification) by providing the information described in 2 CFR section 200.332(b). • Evaluate Risk – Evaluate each subrecipient’s risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward (2 CFR section 200.332(c)). This evaluation of risk may include consideration of such factors as the following: 1. The subrecipient’s prior experience with the same or similar subawards; 2. The results of previous audits including whether or not the subrecipient receives a single audit in accordance with 2 CFR Part 200, Subpart F, and the extent to which the same or similar subaward has been audited as a major program; 3. Whether the subrecipient has new personnel or new or substantially changed systems; and 4. The extent and results of Federal awarding agency monitoring (e.g., if the subrecipient also receives Federal awards directly from a Federal awarding agency). • Monitor – Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals (2 CFR sections 200.332(e) through (g)). In addition to procedures identified as necessary based upon the evaluation of subrecipient risk or specifically required by the terms and conditions of the award, subaward monitoring must include the following: 1. Reviewing financial and performance reports required by the PTE. 2. Ensure that the subrecipient takes corrective action on all significant developments that negatively affect the subaward in accordance with 2 CFR 200.332(e)(2). 3. Issuing a management decision for audit findings pertaining to the Federal award provided to the subrecipient from the PTE as required by 2 CFR section 200.521. 4. Resolve audit findings specifically related to the subaward. • Ensure Accountability of For-Profit Subrecipients – Some Federal awards may be passed through to for-profit entities. For-profit subrecipients are accountable to the PTE for the use of the Federal funds provided. Because 2 CFR Part 200 does not make Subpart F applicable to for-profit subrecipients, the PTE is responsible for establishing requirements, to ensure compliance by for-profit subrecipients. The subaward with the for-profit subrecipient must describe applicable compliance requirements and the for-profit subrecipient's compliance responsibility. Methods to ensure compliance for Federal awards made to for-profit subrecipients may include pre-award audits, monitoring throughout the performance of the subaward, and post-award audits (2 CFR section 200.501(i)). Further, the Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires that non-federal entities receiving Federal awards (i.e., auditee management) establish, document, and maintain internal control designed to ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition – DPNR did not provide supporting documentation to determine whether it designed and implemented a formal process to ensure compliance with subrecipient monitoring requirements during the year under audit. Additionally, DPNR was not able to provide a listing of subrecipient payments made during the year under audit. Cause – It appears that DPNR did not maintain or provide sufficient documentation to demonstrate the design and implementation of controls and compliance with subrecipient monitoring requirements. Effect or Potential Effect – Failure to properly adhere to policies and procedures can result in noncompliance with laws and regulations and failure to meet the program’s objectives along with loss of funding. Questioned Costs – $6,964,757. Context – This is a condition identified per review of DPNR’s compliance with the specified requirements and general compliance principles. The total subrecipient payments made during the year were $6,964,757. Recommendation – We recommend that DPNR strengthen its policies and procedures for documenting and retaining the evidence to ensure that internal controls over subrecipient monitoring are designed and operating effectively. DPNR should also maintain a complete and accurate listing of subrecipients for the year to support monitoring activities. Views of Responsible Officials – The Government concurs with the auditor’s findings and recommendations. DPNR, with the support of federal agency’s, consultant will implement a centralized electronic repository system to serve as the official recordkeeping location for all subrecipient supporting documentation. The planned corrective actions are presented in the Government’s Corrective Action Plan attached as Appendix B to the Single Audit Report.