Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Special Programs for the Aging Assistance Listing Number: 93.Aging Cluster Award Period: July 1, 2022 – June 30, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Condition/Context: For 21 of the 21 cash disbursements tested, there was no indication of review and approval over the expense by a secondary, independent individual separate from the requestor. Criteria or specific requirement: In accordance with the Compliance Supplement, Part 6 – Internal Control, 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 the terms and conditions of the federal awards. Cause: The Organization did not have established sufficient controls designed to ensure adequate segregation of duties in the cash distribution process. Disbursements to US Foods were established as an automatic debit and therefore did not have individual approvals. Effect: The Organization was not in compliance with the Compliance Supplement related to establishing and maintaining internal controls over federal awards. Repeat Finding: No Recommendation: We recommend that the Organization implement policies and procedures surrounding the cash disbursement process that ensures all disbursements are reviewed and approved by a second, independent individual. Views of responsible officials: Management agrees with the audit condition.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Special Programs for the Aging Assistance Listing Number: 93.Aging Cluster Award Period: July 1, 2022 – June 30, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Condition/Context: For the calculation of the 15% non-federal matching contribution requirement, there was no indication of review or approval by a secondary, independent individual separate from the preparer. Criteria or specific requirement: In accordance with the Compliance Supplement, Part 6 – Internal Control, 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 the terms and conditions of the federal awards. Cause: The Organization did not have established internal controls designed to ensure adequate segregation of duties for calculating the matching requirement. Effect: The Organization was not in compliance with the Compliance Supplement related to establishing and maintaining internal controls over federal awards. Repeat Finding: No Recommendation: We recommend that the Organization implement policies and procedures that ensure the calculation of the matching requirement is reviewed and approved by a second, independent individual. Views of responsible officials: Management agrees with the audit condition.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Special Programs for the Aging Assistance Listing Number: 93.Aging Cluster Award Period: July 1, 2022 – June 30, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Condition/Context: For 21 of the 21 cash disbursements tested, there was no indication of review and approval over the expense by a secondary, independent individual separate from the requestor. Criteria or specific requirement: In accordance with the Compliance Supplement, Part 6 – Internal Control, 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 the terms and conditions of the federal awards. Cause: The Organization did not have established sufficient controls designed to ensure adequate segregation of duties in the cash distribution process. Disbursements to US Foods were established as an automatic debit and therefore did not have individual approvals. Effect: The Organization was not in compliance with the Compliance Supplement related to establishing and maintaining internal controls over federal awards. Repeat Finding: No Recommendation: We recommend that the Organization implement policies and procedures surrounding the cash disbursement process that ensures all disbursements are reviewed and approved by a second, independent individual. Views of responsible officials: Management agrees with the audit condition.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Special Programs for the Aging Assistance Listing Number: 93.Aging Cluster Award Period: July 1, 2022 – June 30, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Condition/Context: For the calculation of the 15% non-federal matching contribution requirement, there was no indication of review or approval by a secondary, independent individual separate from the preparer. Criteria or specific requirement: In accordance with the Compliance Supplement, Part 6 – Internal Control, 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 the terms and conditions of the federal awards. Cause: The Organization did not have established internal controls designed to ensure adequate segregation of duties for calculating the matching requirement. Effect: The Organization was not in compliance with the Compliance Supplement related to establishing and maintaining internal controls over federal awards. Repeat Finding: No Recommendation: We recommend that the Organization implement policies and procedures that ensure the calculation of the matching requirement is reviewed and approved by a second, independent individual. Views of responsible officials: Management agrees with the audit condition.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises Assistance Listing Number: 93.391 Award Period: April 1, 2022 – May 31, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Condition/Context: For 3 of the 13 cash disbursements tested, there was no indication of review and approval over the expense by a secondary, independent individual separate from the requestor. Criteria or specific requirement: In accordance with the Compliance Supplement, Part 6 – Internal Control, 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 the terms and conditions of the federal awards. Cause: The Organization did not have established sufficient controls designed to ensure adequate segregation of duties in the cash distribution process. Credit card disbursements did not have individual approvals. Effect: The Organization was not in compliance with the Compliance Supplement related to establishing and maintaining internal controls over federal awards. Repeat Finding: No Recommendation: We recommend that the Organization implement policies and procedures surrounding the cash disbursement process that ensures all disbursements are reviewed and approved by a second, independent individual. Views of responsible officials: Management agrees with the audit condition.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises Assistance Listing Number: 93.391 Award Period: April 1, 2022 – May 31, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Condition/Context: For the calculation of the cash management requirement for all periods during the fiscal year, there was no indication of review or approval by a secondary, independent individual separate from the preparer. Criteria or specific requirement: In accordance with the Compliance Supplement, Part 6 – Internal Control, 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 the terms and conditions of the federal awards. Cause: The Organization did not have established internal controls designed to ensure adequate segregation of duties over cash management. Effect: The Organization was not in compliance with the Compliance Supplement related to establishing and maintaining internal controls over federal awards. Repeat Finding: No Recommendation: We recommend that the Organization implement policies and procedures that ensure the cash management requirement is reviewed and approved by a second, independent individual. Views of responsible officials: Management agrees with the audit condition.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises Assistance Listing Number: 93.391 Award Period: April 1, 2022 – May 31, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Condition/Context: For the calculation of indirect costs for all periods during the fiscal year, there was no indication of review or approval by a secondary, independent individual separate from the preparer. Criteria or specific requirement: In accordance with the Compliance Supplement, Part 6 – Internal Control, 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 the terms and conditions of the federal awards. Cause: The Organization did not have established internal controls designed to ensure adequate segregation of duties over the indirect cost calculation. Effect: The Organization was not in compliance with the Compliance Supplement related to establishing and maintaining internal controls over federal awards. Repeat Finding: No Recommendation: We recommend that the Organization implement policies and procedures that ensure the indirect cost calculation is reviewed and approved by a second, independent individual. Views of responsible officials: Management agrees with the audit condition.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises Assistance Listing Number: 93.391 Award Period: April 1, 2022 – May 31, 2024 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Condition/Context: For the quarterly financial and performance reports submitted during the fiscal year, there was no indication of review or approval by a secondary, independent individual separate from the preparer. Criteria or specific requirement: In accordance with the Compliance Supplement, Part 6 – Internal Control, 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 the terms and conditions of the federal awards. Cause: The Organization did not have established internal controls designed to ensure adequate segregation of duties over reporting. Effect: The Organization was not in compliance with the Compliance Supplement related to establishing and maintaining internal controls over federal awards. Repeat Finding: No Recommendation: We recommend that the Organization implement policies and procedures that ensure required reports are reviewed and approved by a second, independent individual. Views of responsible officials: Management agrees with the audit condition.
Finding 2023-001 – Enrollment Reporting Repeat Finding: Yes Federal Program Title – U.S. Department of Education Student Financial Assistance Cluster Federal Pell Grant Program: 84.063 Federal Direct Student Loans: 84.268 Federal Award Year 2022-2023 Condition For four out of sixty students tested (7%) who withdrew from City Colleges, the students’ withdrawal date reported to the National Student Loan Data System (NSLDS) for campus level and program level did not match the institution’s records. Criteria CFR section 685.309 and 690.83(b)(2) requires City Colleges to notify the NSLDS within 30 days of a change in student status or include the change in status in a response to an enrollment reporting roster within 60 days of the student’s date of determination of withdrawal. 2 CFR Section 200.303 requires entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures in place to ensure accurate reporting of enrollment status changes. Questioned Costs There were no questioned costs related to testing of enrollment reporting. Cause The financial aid office does not have an effective system in place to ensure all official student status changes are reported to the lender accurately. Prevalence Infrequent. Four out of sixty students selected for testing. Effect Failure to report status changes timely is noncompliance with Federal regulation and could result in loss of future funding. Recommendation We recommend City Colleges implement monitoring procedures which will promptly notify the financial aid office of any student status changes. A system of monitoring procedures and/or controls will ensure the College is reporting any status changes to the lender accurately. City Colleges should implement a review process to ensure all status changes are addressed by the financial aid office. Views of responsible officials We agree with this finding. See corrective action plan.
Finding 2023-001 – Enrollment Reporting Repeat Finding: Yes Federal Program Title – U.S. Department of Education Student Financial Assistance Cluster Federal Pell Grant Program: 84.063 Federal Direct Student Loans: 84.268 Federal Award Year 2022-2023 Condition For four out of sixty students tested (7%) who withdrew from City Colleges, the students’ withdrawal date reported to the National Student Loan Data System (NSLDS) for campus level and program level did not match the institution’s records. Criteria CFR section 685.309 and 690.83(b)(2) requires City Colleges to notify the NSLDS within 30 days of a change in student status or include the change in status in a response to an enrollment reporting roster within 60 days of the student’s date of determination of withdrawal. 2 CFR Section 200.303 requires entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures in place to ensure accurate reporting of enrollment status changes. Questioned Costs There were no questioned costs related to testing of enrollment reporting. Cause The financial aid office does not have an effective system in place to ensure all official student status changes are reported to the lender accurately. Prevalence Infrequent. Four out of sixty students selected for testing. Effect Failure to report status changes timely is noncompliance with Federal regulation and could result in loss of future funding. Recommendation We recommend City Colleges implement monitoring procedures which will promptly notify the financial aid office of any student status changes. A system of monitoring procedures and/or controls will ensure the College is reporting any status changes to the lender accurately. City Colleges should implement a review process to ensure all status changes are addressed by the financial aid office. Views of responsible officials We agree with this finding. See corrective action plan.
Finding 2023-002– Short-Term Program Completion and Placement Rates Repeat Finding: Yes Federal Program Title – U.S. Department of Education Student Financial Assistance Cluster Federal Direct Student Loans: 84.268 Federal Award Year 2022-2023 Condition The College did not achieve the required 70% completion rate for a short-term program. The College cannot demonstrate compliance with the gainful employment placement rate calculation for a short-term program. Criteria For the Direct Loan Program, short-term eligible programs at a postsecondary vocational institution must be between 300 - 599 clock hours. They must have been provided for at least one year and must have a substantiated completion and placement rate of at least 70 percent for the most recently completed award year. 34 CFR Section 668.8(f) and (g) requires the college to have documentation supporting its placement rates for each student showing that the student obtained gainful employment in the recognized occupation for which he or she was trained or in a related comparable recognized occupation. 2 CFR Section 200.303 requires entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures in place to ensure compliance with completion and placement rate calculations for short-term programs. Questioned Costs There were no questioned costs with respect to this finding. Cause The financial aid office did not follow-up on the gainful employment of students. Prevalence Frequent. Two out of two students who completed the program did not have sufficient support for the placement rate calculation. Five out of seven students tested did not successfully complete the programs resulting in a completion rate below 70%. Effect Failure to calculate the placement data for each student or achievement of the required completion rate is noncompliance with Federal regulation and could result in loss of future funding Recommendation We recommend City Colleges enhance their policies and procedures to ensure that calculation of placement rates is being maintained and that completion rates are being monitored for compliance. Views of responsible officials We agree with this finding. See corrective action plan.
Finding 2023-003– Common Origination and Disbursement (COD) Reporting Repeat Finding: No Federal Program Title – U.S. Department of Education Student Financial Assistance Cluster Federal Direct Student Loans: 84.268 Federal Pell Grant Program: 84.063 Federal Award Year 2022-2023 Condition For ten out of forty students tested (25%), the College did not report certain disbursements of financial aid to COD within the require fifteen days from the date of disbursement. In all instances, the disbursements were reported one day late. Criteria For the Direct Loan and Pell Grant Programs, Institutions must report student disbursement data to COD within 15 calendar days after the institution makes a disbursement or becomes aware of the need to make an adjustment to previously reported student disbursement data or expected student disbursement data. Institutions may do this by reporting once every 15 calendar days, bi-weekly or weekly, or may set up their own system to ensure that changes are reported in a timely manner. 2 CFR Section 200.303 requires entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures in place to ensure timeliness of transmission of disbursement records to COD. Questioned Costs There were no questioned costs with respect to this finding. Cause The financial aid office inadvertently miscalculated the reporting date. Prevalence Frequent. Ten out of forty students selected for testing. Effect Failure to report disbursement records to COD could result in loss of future funding. Recommendation We recommend City Colleges enhance their policies and procedures to ensure COD disbursement records are transmitted to COD within the required timeframe. Views of responsible officials We agree with this finding. See corrective action plan.
Finding 2023-003– Common Origination and Disbursement (COD) Reporting Repeat Finding: No Federal Program Title – U.S. Department of Education Student Financial Assistance Cluster Federal Direct Student Loans: 84.268 Federal Pell Grant Program: 84.063 Federal Award Year 2022-2023 Condition For ten out of forty students tested (25%), the College did not report certain disbursements of financial aid to COD within the require fifteen days from the date of disbursement. In all instances, the disbursements were reported one day late. Criteria For the Direct Loan and Pell Grant Programs, Institutions must report student disbursement data to COD within 15 calendar days after the institution makes a disbursement or becomes aware of the need to make an adjustment to previously reported student disbursement data or expected student disbursement data. Institutions may do this by reporting once every 15 calendar days, bi-weekly or weekly, or may set up their own system to ensure that changes are reported in a timely manner. 2 CFR Section 200.303 requires entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures in place to ensure timeliness of transmission of disbursement records to COD. Questioned Costs There were no questioned costs with respect to this finding. Cause The financial aid office inadvertently miscalculated the reporting date. Prevalence Frequent. Ten out of forty students selected for testing. Effect Failure to report disbursement records to COD could result in loss of future funding. Recommendation We recommend City Colleges enhance their policies and procedures to ensure COD disbursement records are transmitted to COD within the required timeframe. Views of responsible officials We agree with this finding. See corrective action plan.
Finding 2023-004– Cash Management – Excess Cash Repeat Finding: No Federal Program Title – U.S. Department of Education Student Financial Assistance Cluster Federal Direct Student Loans: 84.268 Federal Pell Grant Program: 84.063 Federal Award Year 2022-2023 Condition During our cash management testing, we identified the following instances of excess cash: • Kennedy King College had excess cash for the Pell Grant Program ranging from $34,408 to $175,609 during the period of November 14, 2022 through January 31, 2023. In these situations, the excess cash exceeded one percent of total prior year drawdowns and amounts were not returned within a seven day period, as outlined below. • Kennedy King College had excess cash for the Direct Loan Program ranging from $1,349 to $4,318 during the period of November 29, 2022 through December 13, 2022, from $1,508 to $3,948 during the period of January 6, 2023 through January 16, 2023 and from $3,207 to $5,137 during the period of June 15, 2023 through June 29, 2023. In these situations, the excess cash did not exceed one percent of total prior year drawdowns, however, amounts were not returned within a seven day period, as outlined below. • Truman College had excess cash for the Pell Grant Program ranging from $164,625 to $262,034 during the period of November 14, 2022 through January 31, 2023. In these situations, the excess cash exceeded one percent of total prior year drawdowns and amounts were not returned within a seven day period, as outlined below. • Truman College had excess cash for the Direct Loan Program ranging from $2,731 to $8,669 during the period of January 20, 2023 through February 16, 2023 and from $752 to $10,028 during the period of April 28, 2023 through June 29, 2023. In these situations, the excess cash did not exceed one percent of total prior year drawdowns, however, amounts were not returned within a seven day period, as outlined below. Criteria Uniform Grant Guidance (34 CFR 668.166) states the Secretary considers excess cash to be any amount of title IV, HEA program funds, other than Federal Perkins Loan program funds, that an institution does not disburse to students by the end of the third business day following the date the institution (1) received those funds from the Secretary; or (2) deposited or transferred to its depository account previously disbursed title IV, HEA program funds, such as those resulting from awards adjustments, recoveries, or cancellations. An institution may maintain for up to seven days an amount of excess cash that does not exceed one percent of the total amount of funds the institution drew down in the prior award year. The institution must return immediately to the Secretary any amount of excess cash over the one-percent tolerance and any amount of excess cash remaining in its account after the seven-day tolerance period. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure excess cash is properly handled. Questioned Costs Questioned costs would be those in excess of the one percent threshold. Questioned costs for the Kennedy King College Pell Grant Program excess cash ranged from $486 to $133,996. Questioned costs for Truman College Grant Program excess cash ranged from $108,399 to $205,809. Cause The College drew down funds available in the G5 system as opposed to drawing down expected student disbursement amounts. Effect Excess cash is noncompliance with Federal regulation and could result in the loss of future funding and the return of additional funds. Recommendation We recommend City Colleges review current processes for monitoring cash management and implement procedures that eliminate excess cash. Views of responsible officials We agree with this finding. See corrective action plan.
Finding 2023-004– Cash Management – Excess Cash Repeat Finding: No Federal Program Title – U.S. Department of Education Student Financial Assistance Cluster Federal Direct Student Loans: 84.268 Federal Pell Grant Program: 84.063 Federal Award Year 2022-2023 Condition During our cash management testing, we identified the following instances of excess cash: • Kennedy King College had excess cash for the Pell Grant Program ranging from $34,408 to $175,609 during the period of November 14, 2022 through January 31, 2023. In these situations, the excess cash exceeded one percent of total prior year drawdowns and amounts were not returned within a seven day period, as outlined below. • Kennedy King College had excess cash for the Direct Loan Program ranging from $1,349 to $4,318 during the period of November 29, 2022 through December 13, 2022, from $1,508 to $3,948 during the period of January 6, 2023 through January 16, 2023 and from $3,207 to $5,137 during the period of June 15, 2023 through June 29, 2023. In these situations, the excess cash did not exceed one percent of total prior year drawdowns, however, amounts were not returned within a seven day period, as outlined below. • Truman College had excess cash for the Pell Grant Program ranging from $164,625 to $262,034 during the period of November 14, 2022 through January 31, 2023. In these situations, the excess cash exceeded one percent of total prior year drawdowns and amounts were not returned within a seven day period, as outlined below. • Truman College had excess cash for the Direct Loan Program ranging from $2,731 to $8,669 during the period of January 20, 2023 through February 16, 2023 and from $752 to $10,028 during the period of April 28, 2023 through June 29, 2023. In these situations, the excess cash did not exceed one percent of total prior year drawdowns, however, amounts were not returned within a seven day period, as outlined below. Criteria Uniform Grant Guidance (34 CFR 668.166) states the Secretary considers excess cash to be any amount of title IV, HEA program funds, other than Federal Perkins Loan program funds, that an institution does not disburse to students by the end of the third business day following the date the institution (1) received those funds from the Secretary; or (2) deposited or transferred to its depository account previously disbursed title IV, HEA program funds, such as those resulting from awards adjustments, recoveries, or cancellations. An institution may maintain for up to seven days an amount of excess cash that does not exceed one percent of the total amount of funds the institution drew down in the prior award year. The institution must return immediately to the Secretary any amount of excess cash over the one-percent tolerance and any amount of excess cash remaining in its account after the seven-day tolerance period. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure excess cash is properly handled. Questioned Costs Questioned costs would be those in excess of the one percent threshold. Questioned costs for the Kennedy King College Pell Grant Program excess cash ranged from $486 to $133,996. Questioned costs for Truman College Grant Program excess cash ranged from $108,399 to $205,809. Cause The College drew down funds available in the G5 system as opposed to drawing down expected student disbursement amounts. Effect Excess cash is noncompliance with Federal regulation and could result in the loss of future funding and the return of additional funds. Recommendation We recommend City Colleges review current processes for monitoring cash management and implement procedures that eliminate excess cash. Views of responsible officials We agree with this finding. See corrective action plan.
Finding 2023-005– Student Financial Assistance Cluster Internal Control over Compliance Repeat Finding: No Federal Program Title – U.S. Department of Education Student Financial Assistance Cluster Federal Direct Student Loans: 84.268 Federal Pell Grant Program: 84.063 Federal Work-Study Program: 84.033 Federal Supplemental Educational Opportunity Grants: 84.007 Federal Award Year 2022-2023 Condition City Colleges did not have sufficient documentation that internal controls were in place and operating effectively relative to the following areas: • Allowable Activities: For each of the seven campuses, City Colleges did not have sufficient supporting evidence that review controls were performed over the transfer, carryforward, carryback, and administrative cost calculations in the Fiscal Operations Report and Application to Participate (FISAP) for award year July 1, 2021 through June 30, 2022 submitted during fiscal year 2023. • Reporting: For each of the seven campuses, City Colleges did not have sufficient supporting evidence that secondary review controls were performed over FISAP data for award year July 1, 2021 through June 30, 2022 submitted during fiscal year 2023. Criteria 2 CFR Section 200.303 requires entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures in place to ensure the review and approval controls over allowable activities, eligibility and reporting compliance requirements are sufficiently documented. Questioned Costs There were no questioned costs with respect to this finding. Cause City Colleges did not formally document the additional reviews and approvals over the department’s review of the FISAP. Effect For allowable activities, the lack of properly documented reviews in carryforward, carryback, and administrative cost calculations could result in errors that would impact future funding determinations. For eligibility, the lack of properly documented reviews could result in over or under awards to students which could result in loss of future funding. For reporting, the lack of properly documented reviews over the FISAP, could result in loss of future funding. Recommendation We recommend City Colleges implement controls to ensure that sufficient documentation is maintained over review control associated with eligibility, allowable costs and reporting. Views of responsible officials We agree with this finding. See corrective action plan.
Finding 2023-005– Student Financial Assistance Cluster Internal Control over Compliance Repeat Finding: No Federal Program Title – U.S. Department of Education Student Financial Assistance Cluster Federal Direct Student Loans: 84.268 Federal Pell Grant Program: 84.063 Federal Work-Study Program: 84.033 Federal Supplemental Educational Opportunity Grants: 84.007 Federal Award Year 2022-2023 Condition City Colleges did not have sufficient documentation that internal controls were in place and operating effectively relative to the following areas: • Allowable Activities: For each of the seven campuses, City Colleges did not have sufficient supporting evidence that review controls were performed over the transfer, carryforward, carryback, and administrative cost calculations in the Fiscal Operations Report and Application to Participate (FISAP) for award year July 1, 2021 through June 30, 2022 submitted during fiscal year 2023. • Reporting: For each of the seven campuses, City Colleges did not have sufficient supporting evidence that secondary review controls were performed over FISAP data for award year July 1, 2021 through June 30, 2022 submitted during fiscal year 2023. Criteria 2 CFR Section 200.303 requires entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures in place to ensure the review and approval controls over allowable activities, eligibility and reporting compliance requirements are sufficiently documented. Questioned Costs There were no questioned costs with respect to this finding. Cause City Colleges did not formally document the additional reviews and approvals over the department’s review of the FISAP. Effect For allowable activities, the lack of properly documented reviews in carryforward, carryback, and administrative cost calculations could result in errors that would impact future funding determinations. For eligibility, the lack of properly documented reviews could result in over or under awards to students which could result in loss of future funding. For reporting, the lack of properly documented reviews over the FISAP, could result in loss of future funding. Recommendation We recommend City Colleges implement controls to ensure that sufficient documentation is maintained over review control associated with eligibility, allowable costs and reporting. Views of responsible officials We agree with this finding. See corrective action plan.
Finding 2023-005– Student Financial Assistance Cluster Internal Control over Compliance Repeat Finding: No Federal Program Title – U.S. Department of Education Student Financial Assistance Cluster Federal Direct Student Loans: 84.268 Federal Pell Grant Program: 84.063 Federal Work-Study Program: 84.033 Federal Supplemental Educational Opportunity Grants: 84.007 Federal Award Year 2022-2023 Condition City Colleges did not have sufficient documentation that internal controls were in place and operating effectively relative to the following areas: • Allowable Activities: For each of the seven campuses, City Colleges did not have sufficient supporting evidence that review controls were performed over the transfer, carryforward, carryback, and administrative cost calculations in the Fiscal Operations Report and Application to Participate (FISAP) for award year July 1, 2021 through June 30, 2022 submitted during fiscal year 2023. • Reporting: For each of the seven campuses, City Colleges did not have sufficient supporting evidence that secondary review controls were performed over FISAP data for award year July 1, 2021 through June 30, 2022 submitted during fiscal year 2023. Criteria 2 CFR Section 200.303 requires entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures in place to ensure the review and approval controls over allowable activities, eligibility and reporting compliance requirements are sufficiently documented. Questioned Costs There were no questioned costs with respect to this finding. Cause City Colleges did not formally document the additional reviews and approvals over the department’s review of the FISAP. Effect For allowable activities, the lack of properly documented reviews in carryforward, carryback, and administrative cost calculations could result in errors that would impact future funding determinations. For eligibility, the lack of properly documented reviews could result in over or under awards to students which could result in loss of future funding. For reporting, the lack of properly documented reviews over the FISAP, could result in loss of future funding. Recommendation We recommend City Colleges implement controls to ensure that sufficient documentation is maintained over review control associated with eligibility, allowable costs and reporting. Views of responsible officials We agree with this finding. See corrective action plan.
Finding 2023-005– Student Financial Assistance Cluster Internal Control over Compliance Repeat Finding: No Federal Program Title – U.S. Department of Education Student Financial Assistance Cluster Federal Direct Student Loans: 84.268 Federal Pell Grant Program: 84.063 Federal Work-Study Program: 84.033 Federal Supplemental Educational Opportunity Grants: 84.007 Federal Award Year 2022-2023 Condition City Colleges did not have sufficient documentation that internal controls were in place and operating effectively relative to the following areas: • Allowable Activities: For each of the seven campuses, City Colleges did not have sufficient supporting evidence that review controls were performed over the transfer, carryforward, carryback, and administrative cost calculations in the Fiscal Operations Report and Application to Participate (FISAP) for award year July 1, 2021 through June 30, 2022 submitted during fiscal year 2023. • Reporting: For each of the seven campuses, City Colleges did not have sufficient supporting evidence that secondary review controls were performed over FISAP data for award year July 1, 2021 through June 30, 2022 submitted during fiscal year 2023. Criteria 2 CFR Section 200.303 requires entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures in place to ensure the review and approval controls over allowable activities, eligibility and reporting compliance requirements are sufficiently documented. Questioned Costs There were no questioned costs with respect to this finding. Cause City Colleges did not formally document the additional reviews and approvals over the department’s review of the FISAP. Effect For allowable activities, the lack of properly documented reviews in carryforward, carryback, and administrative cost calculations could result in errors that would impact future funding determinations. For eligibility, the lack of properly documented reviews could result in over or under awards to students which could result in loss of future funding. For reporting, the lack of properly documented reviews over the FISAP, could result in loss of future funding. Recommendation We recommend City Colleges implement controls to ensure that sufficient documentation is maintained over review control associated with eligibility, allowable costs and reporting. Views of responsible officials We agree with this finding. See corrective action plan.
Finding 2023-006– Gramm-Leach Bliley Act—Student Information Security Repeat Finding: No Federal Program Title – U.S. Department of Education Student Financial Assistance Cluster Federal Direct Student Loans: 84.268 Federal Pell Grant Program: 84.063 Federal Work-Study Program: 84.033 Federal Supplemental Educational Opportunity Grants: 84.007 Federal Award Year 2022-2023 Condition City Colleges did not have a documented policy to address a required safeguard for one of the eight required elements under the Gramm-Leach Bliley Act (GLBA). Specifically, the City Colleges did not conduct a periodic inventory of data, nothing where it’s collected, stored or transmitted. Criteria In accordance with 16 CFR 314.4(c), an institution’s written information security program must address the implementation of the minimum safeguards identified in 16 CFR 314.4(c)(1) through (8). This includes the following: (1) implement and periodically review access controls, (2) conduct a periodic inventory of data, noting where it’s collected, stored or transmitted, (3) encrypt customer information on the institution’s system and when it’s in transit, (4) assess apps developed by the institution, (5) implement multi-factor authentication for anyone accessing customer information on the institution’s system, (6) dispose of customer information securely, (7) anticipate and evaluate changes to the information system or network, and (8) maintain a log of authorized users’ activity and keep an eye out for unauthorized users. 2 CFR Section 200.303 requires entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures in place to ensure that reviews are being completed over information security policies and that they are in compliance with GLBA requirements. Questioned Costs There were no questioned costs with respect to this finding. Cause City Colleges does not have a periodic data inventory in place. The policy is under development with an expected completion date of Spring 2024. Effect Failure to meet the minimum requirements of the GLBA act is noncompliance and increases the risk of unauthorized disclosure, misuse, alteration, destruction, or other comprise of student information. Recommendation We recommend City Colleges implement controls to ensure that GLBA requirements are reviewed and addressed in a formally documented policy. Views of responsible officials We agree with this finding. See corrective action plan.
Finding 2023-006– Gramm-Leach Bliley Act—Student Information Security Repeat Finding: No Federal Program Title – U.S. Department of Education Student Financial Assistance Cluster Federal Direct Student Loans: 84.268 Federal Pell Grant Program: 84.063 Federal Work-Study Program: 84.033 Federal Supplemental Educational Opportunity Grants: 84.007 Federal Award Year 2022-2023 Condition City Colleges did not have a documented policy to address a required safeguard for one of the eight required elements under the Gramm-Leach Bliley Act (GLBA). Specifically, the City Colleges did not conduct a periodic inventory of data, nothing where it’s collected, stored or transmitted. Criteria In accordance with 16 CFR 314.4(c), an institution’s written information security program must address the implementation of the minimum safeguards identified in 16 CFR 314.4(c)(1) through (8). This includes the following: (1) implement and periodically review access controls, (2) conduct a periodic inventory of data, noting where it’s collected, stored or transmitted, (3) encrypt customer information on the institution’s system and when it’s in transit, (4) assess apps developed by the institution, (5) implement multi-factor authentication for anyone accessing customer information on the institution’s system, (6) dispose of customer information securely, (7) anticipate and evaluate changes to the information system or network, and (8) maintain a log of authorized users’ activity and keep an eye out for unauthorized users. 2 CFR Section 200.303 requires entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures in place to ensure that reviews are being completed over information security policies and that they are in compliance with GLBA requirements. Questioned Costs There were no questioned costs with respect to this finding. Cause City Colleges does not have a periodic data inventory in place. The policy is under development with an expected completion date of Spring 2024. Effect Failure to meet the minimum requirements of the GLBA act is noncompliance and increases the risk of unauthorized disclosure, misuse, alteration, destruction, or other comprise of student information. Recommendation We recommend City Colleges implement controls to ensure that GLBA requirements are reviewed and addressed in a formally documented policy. Views of responsible officials We agree with this finding. See corrective action plan.
Finding 2023-006– Gramm-Leach Bliley Act—Student Information Security Repeat Finding: No Federal Program Title – U.S. Department of Education Student Financial Assistance Cluster Federal Direct Student Loans: 84.268 Federal Pell Grant Program: 84.063 Federal Work-Study Program: 84.033 Federal Supplemental Educational Opportunity Grants: 84.007 Federal Award Year 2022-2023 Condition City Colleges did not have a documented policy to address a required safeguard for one of the eight required elements under the Gramm-Leach Bliley Act (GLBA). Specifically, the City Colleges did not conduct a periodic inventory of data, nothing where it’s collected, stored or transmitted. Criteria In accordance with 16 CFR 314.4(c), an institution’s written information security program must address the implementation of the minimum safeguards identified in 16 CFR 314.4(c)(1) through (8). This includes the following: (1) implement and periodically review access controls, (2) conduct a periodic inventory of data, noting where it’s collected, stored or transmitted, (3) encrypt customer information on the institution’s system and when it’s in transit, (4) assess apps developed by the institution, (5) implement multi-factor authentication for anyone accessing customer information on the institution’s system, (6) dispose of customer information securely, (7) anticipate and evaluate changes to the information system or network, and (8) maintain a log of authorized users’ activity and keep an eye out for unauthorized users. 2 CFR Section 200.303 requires entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures in place to ensure that reviews are being completed over information security policies and that they are in compliance with GLBA requirements. Questioned Costs There were no questioned costs with respect to this finding. Cause City Colleges does not have a periodic data inventory in place. The policy is under development with an expected completion date of Spring 2024. Effect Failure to meet the minimum requirements of the GLBA act is noncompliance and increases the risk of unauthorized disclosure, misuse, alteration, destruction, or other comprise of student information. Recommendation We recommend City Colleges implement controls to ensure that GLBA requirements are reviewed and addressed in a formally documented policy. Views of responsible officials We agree with this finding. See corrective action plan.
Finding 2023-006– Gramm-Leach Bliley Act—Student Information Security Repeat Finding: No Federal Program Title – U.S. Department of Education Student Financial Assistance Cluster Federal Direct Student Loans: 84.268 Federal Pell Grant Program: 84.063 Federal Work-Study Program: 84.033 Federal Supplemental Educational Opportunity Grants: 84.007 Federal Award Year 2022-2023 Condition City Colleges did not have a documented policy to address a required safeguard for one of the eight required elements under the Gramm-Leach Bliley Act (GLBA). Specifically, the City Colleges did not conduct a periodic inventory of data, nothing where it’s collected, stored or transmitted. Criteria In accordance with 16 CFR 314.4(c), an institution’s written information security program must address the implementation of the minimum safeguards identified in 16 CFR 314.4(c)(1) through (8). This includes the following: (1) implement and periodically review access controls, (2) conduct a periodic inventory of data, noting where it’s collected, stored or transmitted, (3) encrypt customer information on the institution’s system and when it’s in transit, (4) assess apps developed by the institution, (5) implement multi-factor authentication for anyone accessing customer information on the institution’s system, (6) dispose of customer information securely, (7) anticipate and evaluate changes to the information system or network, and (8) maintain a log of authorized users’ activity and keep an eye out for unauthorized users. 2 CFR Section 200.303 requires entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures in place to ensure that reviews are being completed over information security policies and that they are in compliance with GLBA requirements. Questioned Costs There were no questioned costs with respect to this finding. Cause City Colleges does not have a periodic data inventory in place. The policy is under development with an expected completion date of Spring 2024. Effect Failure to meet the minimum requirements of the GLBA act is noncompliance and increases the risk of unauthorized disclosure, misuse, alteration, destruction, or other comprise of student information. Recommendation We recommend City Colleges implement controls to ensure that GLBA requirements are reviewed and addressed in a formally documented policy. Views of responsible officials We agree with this finding. See corrective action plan.
Finding 2023-007 – COVID-19 Education Stabilization Fund: Higher Education Emergency Relief Fund Annual Reporting Repeat Finding: Partial Federal Program Title – U.S. Department of Education COVID-19 Education Stabilization Fund Higher Education Emergency Relief Fund (HEERF) COVID-19: HEERF Institutional Portion 84.425F Federal Award Year 2022-2023 Condition City Colleges did not accurately report certain information required in the calendar year 2022 annual report. The following instances of noncompliance were identified: • HEERF Institutional Portion: City Colleges submitted the annual report for Olive Harvey for the period of January 1, 2022 – December 31, 2022 which did not reconcile to the underlying expense detail as of the date of the report. The difference was $234,118 which was a result of a figure being double counted in the total. • HEERF Institutional Portion: City Colleges submitted the annual report for Malcolm X for the period of January 1, 2022 – December 31, 2022 which did not reconcile to the underlying expense detail as of the date of the report. The difference was $5,580,216 which was a result of a figure being double counted in the total. Criteria The Department of Education requires the submission of a “Higher Education Emergency Relief Fund (HEERF) I, II, & III Annual Performance Report” to be submitted on a calendar year basis. The third annual report covered the period of January 1, 2022 – December 31, 2022 and was due in March 2023. 2 CFR Section 200.303 requires entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures in place to ensure the timely and accurate posting of reports. Questioned Costs There were no questioned costs with respect to this finding. Cause City Colleges did not have effective internal controls in place to ensure reports were submitted accurately. Reports were reviewed prior to submission but those reviews were not precise enough. Prevalence Infrequent. 35 reports were required to be submitted in fiscal year 2023 relative to HEERF Student, Institutional, MSI and Annual reporting. 2 reports contained 1 field that was inaccurate. Effect The submission of inaccurate reports is noncompliance with the requirements of the grant award and could result in other penalties. Recommendation We recommend City Colleges implement internal controls to ensure reports are submitted accurately for the final annual report that is anticipated to be due in early 2024. Views of responsible officials We agree with this finding. See corrective action plan.
Finding 2023-008 – Student Financial Assistance Cluster – Fraudulent Enrollment Repeat Finding: No Federal Program Title – U.S. Department of Education Student Financial Assistance Cluster Federal Pell Grant Program: 84.063 Federal Work-Study Program: 84.033 Federal Supplemental Educational Opportunity Grants: 84.007 Federal Direct Student Loans: 84.268 Federal Award Year 2022-2023 Condition City Colleges did not timely report information regarding potential fraudulent student enrollments to the Department of Education’s Office of Inspector General (OIG). City Colleges identified a total of 23 students where the Enrollment and Admissions Departments discovered submission of fraudulent documents to verify residency. City Colleges performed a thorough investigation of student enrollment and verified that no aid was disbursed for these identified fraudulent enrollments. Criteria In accordance with Chapter 3 “FSA Administrative and Related Requirements” of the Federal Student Aid Handbook, the Department of Education requires that “a school must refer any credible information indicating that an applicant for federal student aid may have engaged in fraud or other criminal misconduct in connection with his or her application.” 2 CFR Section 200.303 requires entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures in place to ensure all Department of Education requirements are followed. Questioned Costs There were no questioned costs with respect to this finding. Cause City Colleges experienced turnover in the Admissions Department and was training a new employee. The new employee did not have enough training or experience to identify fraudulent documents when the students enrolled with the college and registered for classes. City Colleges was not aware that this issue was required to be reported to the Department of Education. Prevalence Infrequent. 23 fraudulent applications were identified. Effect The inability to identify fraudulent documents could result in the incorrect distribution of student financial aid. Recommendation We recommend City Colleges increase training around reporting requirements to the U.S. Department of Education when fraudulent student enrollments occur. Views of responsible officials We agree with this finding. See corrective action plan.
Finding 2023-008 – Student Financial Assistance Cluster – Fraudulent Enrollment Repeat Finding: No Federal Program Title – U.S. Department of Education Student Financial Assistance Cluster Federal Pell Grant Program: 84.063 Federal Work-Study Program: 84.033 Federal Supplemental Educational Opportunity Grants: 84.007 Federal Direct Student Loans: 84.268 Federal Award Year 2022-2023 Condition City Colleges did not timely report information regarding potential fraudulent student enrollments to the Department of Education’s Office of Inspector General (OIG). City Colleges identified a total of 23 students where the Enrollment and Admissions Departments discovered submission of fraudulent documents to verify residency. City Colleges performed a thorough investigation of student enrollment and verified that no aid was disbursed for these identified fraudulent enrollments. Criteria In accordance with Chapter 3 “FSA Administrative and Related Requirements” of the Federal Student Aid Handbook, the Department of Education requires that “a school must refer any credible information indicating that an applicant for federal student aid may have engaged in fraud or other criminal misconduct in connection with his or her application.” 2 CFR Section 200.303 requires entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures in place to ensure all Department of Education requirements are followed. Questioned Costs There were no questioned costs with respect to this finding. Cause City Colleges experienced turnover in the Admissions Department and was training a new employee. The new employee did not have enough training or experience to identify fraudulent documents when the students enrolled with the college and registered for classes. City Colleges was not aware that this issue was required to be reported to the Department of Education. Prevalence Infrequent. 23 fraudulent applications were identified. Effect The inability to identify fraudulent documents could result in the incorrect distribution of student financial aid. Recommendation We recommend City Colleges increase training around reporting requirements to the U.S. Department of Education when fraudulent student enrollments occur. Views of responsible officials We agree with this finding. See corrective action plan.
Finding 2023-008 – Student Financial Assistance Cluster – Fraudulent Enrollment Repeat Finding: No Federal Program Title – U.S. Department of Education Student Financial Assistance Cluster Federal Pell Grant Program: 84.063 Federal Work-Study Program: 84.033 Federal Supplemental Educational Opportunity Grants: 84.007 Federal Direct Student Loans: 84.268 Federal Award Year 2022-2023 Condition City Colleges did not timely report information regarding potential fraudulent student enrollments to the Department of Education’s Office of Inspector General (OIG). City Colleges identified a total of 23 students where the Enrollment and Admissions Departments discovered submission of fraudulent documents to verify residency. City Colleges performed a thorough investigation of student enrollment and verified that no aid was disbursed for these identified fraudulent enrollments. Criteria In accordance with Chapter 3 “FSA Administrative and Related Requirements” of the Federal Student Aid Handbook, the Department of Education requires that “a school must refer any credible information indicating that an applicant for federal student aid may have engaged in fraud or other criminal misconduct in connection with his or her application.” 2 CFR Section 200.303 requires entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures in place to ensure all Department of Education requirements are followed. Questioned Costs There were no questioned costs with respect to this finding. Cause City Colleges experienced turnover in the Admissions Department and was training a new employee. The new employee did not have enough training or experience to identify fraudulent documents when the students enrolled with the college and registered for classes. City Colleges was not aware that this issue was required to be reported to the Department of Education. Prevalence Infrequent. 23 fraudulent applications were identified. Effect The inability to identify fraudulent documents could result in the incorrect distribution of student financial aid. Recommendation We recommend City Colleges increase training around reporting requirements to the U.S. Department of Education when fraudulent student enrollments occur. Views of responsible officials We agree with this finding. See corrective action plan.
Finding 2023-008 – Student Financial Assistance Cluster – Fraudulent Enrollment Repeat Finding: No Federal Program Title – U.S. Department of Education Student Financial Assistance Cluster Federal Pell Grant Program: 84.063 Federal Work-Study Program: 84.033 Federal Supplemental Educational Opportunity Grants: 84.007 Federal Direct Student Loans: 84.268 Federal Award Year 2022-2023 Condition City Colleges did not timely report information regarding potential fraudulent student enrollments to the Department of Education’s Office of Inspector General (OIG). City Colleges identified a total of 23 students where the Enrollment and Admissions Departments discovered submission of fraudulent documents to verify residency. City Colleges performed a thorough investigation of student enrollment and verified that no aid was disbursed for these identified fraudulent enrollments. Criteria In accordance with Chapter 3 “FSA Administrative and Related Requirements” of the Federal Student Aid Handbook, the Department of Education requires that “a school must refer any credible information indicating that an applicant for federal student aid may have engaged in fraud or other criminal misconduct in connection with his or her application.” 2 CFR Section 200.303 requires entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures in place to ensure all Department of Education requirements are followed. Questioned Costs There were no questioned costs with respect to this finding. Cause City Colleges experienced turnover in the Admissions Department and was training a new employee. The new employee did not have enough training or experience to identify fraudulent documents when the students enrolled with the college and registered for classes. City Colleges was not aware that this issue was required to be reported to the Department of Education. Prevalence Infrequent. 23 fraudulent applications were identified. Effect The inability to identify fraudulent documents could result in the incorrect distribution of student financial aid. Recommendation We recommend City Colleges increase training around reporting requirements to the U.S. Department of Education when fraudulent student enrollments occur. Views of responsible officials We agree with this finding. See corrective action plan.
2023‐003 United States Department Agriculture Federal Financial Assistance Listing #10.766 Community Facilities Loans and Grant Cluster Special Tests and Provisions Significant Deficiency in Internal Control Over Compliance Criteria – 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Condition – During our testing, there was no formal review separate from the preparer over the reserve fund reconciliation for the federal program and there was no formal review of the balance in comparison to the required minimum reserve balance. Cause – The Health Center did not have an adequate internal control policy in place to ensure review and approval over the reserve fund. Effect – The lack of adequate policies governing review increases the risk that employees participating in the federal award administration may not be able to detect and correct noncompliance in a timely manner. Questioned Costs ‐ None reported. Context ‐ Sampling was not used. The Health Center has one reserve account, which includes the debt service and emergency and replacement reserve, that was tested. Repeat Finding from Prior Years – Yes, Finding 2022‐004 Recommendation ‐ We recommend that the Health Center enhance internal control policies to ensure that formal documentation of reviews is present. Views of Responsible Officials ‐ Management agrees with the finding.
2023-001 – Internal Controls Surrounding Claim Reconciliation and Reimbursement Finding Type: Material Weakness in Internal Control over Compliance / Material Non-Compliance Program: Education Stabilization Fund (ALN #84.425) Compliance Area: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: Generally Accepted Accounting Principles and 2 CFR Part 200.303 requires that non-Federal entities 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 award. In addition, the SC Department of Education, the Pass-Through Entity, requires that all claims for expenditures through June 30th of any fiscal year be performed prior to August 15. Condition: The District failed to reconcile expenditures to filed claims to ensure that all expenditures were appropriately accounted for and timely claimed by the SC Department of Education deadline of August 15. The failure in the design of internal controls led to the Districts’ oversight of not timely claiming certain funds for the Education Stabilization Fund and the Special Education Cluster in the amount of $834,955 and $1,838,443, respectively. In addition, after performing appropriate reconciliations and final claims of the Education Stabilization Fund, the District had overclaimed funds and is required to return $114,865 to the SC Department of Education for use in future fiscal years. Cause: The District failed to have an adequate documented system of internal controls in place surrounding the claims process for federal claims passed through the SC Department of Education. Effect: Despite the SC Department of Education making an exception to allow the District to claim these funds past the deadline, the failure to properly reconcile and timely claim expenditures could result in the loss of the District’s ability to claim the federal funds. Any expenditures not allowed to be claimed after the State’s deadline would have to be transferred from the federal program to the general fund of the District. Auditor’s Recommendations: The District should implement internal control processes and monitoring to ensure grant expenditures are appropriately reconciled and claims filed quarterly.
2023-001 – Internal Controls Surrounding Claim Reconciliation and Reimbursement Finding Type: Material Weakness in Internal Control over Compliance / Material Non-Compliance Program: Education Stabilization Fund (ALN #84.425) Compliance Area: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: Generally Accepted Accounting Principles and 2 CFR Part 200.303 requires that non-Federal entities 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 award. In addition, the SC Department of Education, the Pass-Through Entity, requires that all claims for expenditures through June 30th of any fiscal year be performed prior to August 15. Condition: The District failed to reconcile expenditures to filed claims to ensure that all expenditures were appropriately accounted for and timely claimed by the SC Department of Education deadline of August 15. The failure in the design of internal controls led to the Districts’ oversight of not timely claiming certain funds for the Education Stabilization Fund and the Special Education Cluster in the amount of $834,955 and $1,838,443, respectively. In addition, after performing appropriate reconciliations and final claims of the Education Stabilization Fund, the District had overclaimed funds and is required to return $114,865 to the SC Department of Education for use in future fiscal years. Cause: The District failed to have an adequate documented system of internal controls in place surrounding the claims process for federal claims passed through the SC Department of Education. Effect: Despite the SC Department of Education making an exception to allow the District to claim these funds past the deadline, the failure to properly reconcile and timely claim expenditures could result in the loss of the District’s ability to claim the federal funds. Any expenditures not allowed to be claimed after the State’s deadline would have to be transferred from the federal program to the general fund of the District. Auditor’s Recommendations: The District should implement internal control processes and monitoring to ensure grant expenditures are appropriately reconciled and claims filed quarterly.
2023-001 – Internal Controls Surrounding Claim Reconciliation and Reimbursement Finding Type: Material Weakness in Internal Control over Compliance / Material Non-Compliance Program: Education Stabilization Fund (ALN #84.425) Compliance Area: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Criteria: Generally Accepted Accounting Principles and 2 CFR Part 200.303 requires that non-Federal entities 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 award. In addition, the SC Department of Education, the Pass-Through Entity, requires that all claims for expenditures through June 30th of any fiscal year be performed prior to August 15. Condition: The District failed to reconcile expenditures to filed claims to ensure that all expenditures were appropriately accounted for and timely claimed by the SC Department of Education deadline of August 15. The failure in the design of internal controls led to the Districts’ oversight of not timely claiming certain funds for the Education Stabilization Fund and the Special Education Cluster in the amount of $834,955 and $1,838,443, respectively. In addition, after performing appropriate reconciliations and final claims of the Education Stabilization Fund, the District had overclaimed funds and is required to return $114,865 to the SC Department of Education for use in future fiscal years. Cause: The District failed to have an adequate documented system of internal controls in place surrounding the claims process for federal claims passed through the SC Department of Education. Effect: Despite the SC Department of Education making an exception to allow the District to claim these funds past the deadline, the failure to properly reconcile and timely claim expenditures could result in the loss of the District’s ability to claim the federal funds. Any expenditures not allowed to be claimed after the State’s deadline would have to be transferred from the federal program to the general fund of the District. Auditor’s Recommendations: The District should implement internal control processes and monitoring to ensure grant expenditures are appropriately reconciled and claims filed quarterly.
Criteria or Specific Requirement Per 2 CFR 200.303, a non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Institutions are required to report enrollment information under the Pell grant and the Direct and FFEL loan programs via the National Student Loan Data System (NSLDS) (OMB No. 1845-0035). Although FFEL loans are no longer made or a part of the SFA Cluster, a student may have a FFEL loan from previous years that would require enrollment reporting for that student (Pell, 34 CFR 690.83(b)(2); FFEL, 34 CFR 682.610; Direct Loan, 34 CFR 685.309; Perkins 34 CFR 674.19(f)). The administration of the Title IV programs depends heavily on the accuracy and timeliness of the enrollment information reported by institutions. Institutions must review, update, and certify student enrollment statuses, program information, and effective dates that appear on the Enrollment Reporting Roster file or on the Enrollment Maintenance page of the NSLDS Professional Access (NSLDSFAP) website which the financial aid administrator can access for the auditor. The data on the institution’s Enrollment Reporting Roster, or Enrollment Maintenance page, is what NSLDS has as the most recently certified enrollment. There are two categories of enrollment information, “Campus Level” and “Program Level,” both of which need to be reported accurately and have separate record types. Condition Found Of the 50 students selected for enrollment reporting testing, 7 students who had graduated from the University did not have the proper Graduation (G) status submitted to the NSLDS. Cause and Possible Asserted Effect The University transmits student status changes to the National Student Clearinghouse (NSC) who then transmits the changes to the NSLDS. The University was submitting the status changes to the NSC, but these changes were sent back to the University on a Graduation Not Reported listing by the NSLDS. The University did not follow-up on these returned items in a timely manner. Questioned Costs None. Whether the Sample Was a Statistically Valid Sample The sample was not intended to be, and was not, a statistically valid sample. Identification of Whether the Audit Finding Was a Repeat Finding in the Immediately Prior Audit No similar findings were noted in the prior year audit. Recommendation We recommend the University strengthen its controls surrounding the review of student status changes that were not reported or were returned to ensure enrollment reporting requirements are accurately completed in a timely manner. View of Responsible Officials The Office of the Registrar will implement new NSC file submission and review procedures to ensure that enrollment and graduate records are submitted to NSLDS in a timely and accurate manner.
Criteria or Specific Requirement Per 2 CFR 200.303, a non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Institutions are required to report enrollment information under the Pell grant and the Direct and FFEL loan programs via the National Student Loan Data System (NSLDS) (OMB No. 1845-0035). Although FFEL loans are no longer made or a part of the SFA Cluster, a student may have a FFEL loan from previous years that would require enrollment reporting for that student (Pell, 34 CFR 690.83(b)(2); FFEL, 34 CFR 682.610; Direct Loan, 34 CFR 685.309; Perkins 34 CFR 674.19(f)). The administration of the Title IV programs depends heavily on the accuracy and timeliness of the enrollment information reported by institutions. Institutions must review, update, and certify student enrollment statuses, program information, and effective dates that appear on the Enrollment Reporting Roster file or on the Enrollment Maintenance page of the NSLDS Professional Access (NSLDSFAP) website which the financial aid administrator can access for the auditor. The data on the institution’s Enrollment Reporting Roster, or Enrollment Maintenance page, is what NSLDS has as the most recently certified enrollment. There are two categories of enrollment information, “Campus Level” and “Program Level,” both of which need to be reported accurately and have separate record types. Condition Found Of the 50 students selected for enrollment reporting testing, 7 students who had graduated from the University did not have the proper Graduation (G) status submitted to the NSLDS. Cause and Possible Asserted Effect The University transmits student status changes to the National Student Clearinghouse (NSC) who then transmits the changes to the NSLDS. The University was submitting the status changes to the NSC, but these changes were sent back to the University on a Graduation Not Reported listing by the NSLDS. The University did not follow-up on these returned items in a timely manner. Questioned Costs None. Whether the Sample Was a Statistically Valid Sample The sample was not intended to be, and was not, a statistically valid sample. Identification of Whether the Audit Finding Was a Repeat Finding in the Immediately Prior Audit No similar findings were noted in the prior year audit. Recommendation We recommend the University strengthen its controls surrounding the review of student status changes that were not reported or were returned to ensure enrollment reporting requirements are accurately completed in a timely manner. View of Responsible Officials The Office of the Registrar will implement new NSC file submission and review procedures to ensure that enrollment and graduate records are submitted to NSLDS in a timely and accurate manner.
2023-001 Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Reporting; Federal Agency: U.S. Department of Health and Human Services; Program: COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution (ALN 93.498); Pass-through Entity: N/A; Federal Assistance Identification Number or Pass-Through Number: N/A; Federal Award Year: Year ended June 30, 2023; Type of Finding: Material Weakness in Internal Control over Compliance; Other Matter Compliance Finding; Criteria: 2 CFR 200.303(a) requires that each 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."; In addition, per the Health Resources and Services Administration (HRSA) reporting guidance, providers who accepted provider relief fund (PRF) payments agreed to the Terms and Conditions of the program, which included a requirement to report on the use of funds. Providers who received one or more payments totaling greater than $10,000 in the aggregate during a payment received period must report on use of funds in each applicable reporting period. Condition: UW Health did not maintain effective internal controls over allowable costs, cost principles and reporting for the PRF program for Periods 4 and 5. In addition, during our testing we noted errors in the amount of revenue reported in the portal. This resulted in an overstatement of actual 2020 revenues of $10,000 and an understatement of actual 2021 revenues of $1,000,002 on the Period 4 and Period 5 portal submissions, respectively, for the University of Wisconsin Medical Foundation, Inc. (UWMF). Cause: The client did not perform internal control procedures that had been in place in previous years as much of the information in the PRF submission had been reviewed previously. Effect: Revenue reported in the UWMF's PRF reporting portal was misstated for several quarters, resulting in a total overstatement of actual 2020 revenues of $10,000, and a total understatement of actual 2021 revenues of $1,000,002. However, if the revenues were reported correctly, it would have still resulted in enough lost revenue to fully earn the funds received. Context: The errors were present in the UWMF reporting submissions completed for reporting Period 4 and 5. Questioned Costs: None; Repeat Finding?: No; Recommendation: We recommend management conduct training with individuals involved in the administration of federal and state grants to stress the importance of performing internal control activities for all compliance requirements. View of responsible officials of the auditee: Management agrees with the finding. See corrective action plan.
2023-002 Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Period of Performance; Federal Agency: Department of Health and Human Services; Program: Social Services Research and Demonstration (ALN 93.647); Pass-through Entity: N/A; Federal Assistance Identification Number or Pass-Through Numbers: N/A; Federal Award Years: Year ended June 30, 2023; Type of Finding: Significant Deficiency in Internal Control over Compliance; Criteria: 2 CFR 200.303(a) requires that each 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." Expenditures are to be made for allowable activities and must be in accordance with 2 CFR Part 200, Subpart E and must be within the appropriate period of performance. Condition: During our testing, we noted that internal controls were not properly designed over activities allowed or unallowed, allowable costs/cost principles and period of performance to identify program expenditures from other expenditures in the cost center. Additionally, we noted controls were not operating as designed to ensure payroll expenses charged to the program were properly approved. In our sample of 20 payroll expenditures, two had no evidence of timesheet approval. Cause: There are multiple funding sources within the cost center and the client did not consistently use the fund # identifier to distinguish the expenditures that were program expenditures. Also, the client's payroll processing system allows unapproved timesheets to be processed and paid for one pay period before additional internal controls occur. Effect: Due to the issues noted with internal controls, inappropriate expenditures could have been charged to the program. Context: Applies to the entire population of expenditures. In addition, out of the population of payroll expenditures charged to the program, we noted that two out of our sample of 20 had no evidence of timesheet approval. The sample size was based on guidance from chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Questioned Costs: None; Repeat Finding?: No; Recommendation: We recommend that internal controls over activities allowed or unallowed, allowable costs/cost principles and period of performance be strengthened. In addition, we recommend that internal controls in place when timesheets are not approved for more than one pay period be implemented any time a timesheet is not approved and that approval is always obtained. View of responsible officials of the auditee: Management agrees with the finding. See corrective action plan.
2023-003 Procurement; Federal Agency: Department of Health and Human Services; Program: Social Services Research and Demonstration (ALN 93.647); Pass-through Entity: N/A; Federal Assistance Identification Number or Pass-Through Numbers: N/A; Federal Award Years: Year ended June 30, 2023; Type of Finding: Material Weakness in Internal Control over Compliance; Other Matter Compliance Finding; Criteria: 2 CFR 200.303(a) requires that each 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." 2 CFR 200.320 requires that each non-Federal entity must "have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award." Condition: While testing the procurement requirement, we were able to test compensating controls, but noted that internal controls were not properly designed over the procurement requirement. Prior to receiving federal funding beginning in August 2022, the program conducted a request for proposal (RFP) process and began contracting with a vendor. When federal funding was obtained, the vendor was not reevaluated in accordance with the Uniform Guidance to ensure the procurement requirements were being met. In addition, we noted UW Health – Madison’s procurement policy documents do not include all of the information that is required by the Uniform Guidance. Cause: Because the vendor was already in place for the program prior to receiving federal funds, management did not recognize the need to reevaluate the vendor under the requirements of the Uniform Guidance. In addition, management also did not recognize the need to include additional information in its procurement policy documents related to the Uniform Guidance. Effect: Without appropriate internal controls, there is an increased risk of noncompliance related to federal funding. Context: We identified and tested one vendor that was direct and material to the program and related to the procurement and suspension and debarment requirements. The sample size was based on guidance from chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits.Questioned Costs: None. Repeat Finding?: No; Recommendation: While it was determined that the requirements of the Uniform Guidance were met related to the vendor tested, we suggest that management reevaluate all vendors that were previously used prior to receiving federal funding. In addition, we recommend that management update its procurement policies to incorporate the requirements of the Uniform Guidance. View of responsible officials of the auditee: Management agrees with the finding. See corrective action plan.
2023-003 Department of Justice and State of South Dakota Department of Public Safety FFAL #16.575, 2022-COMBO-00022 Crime Victim Assistance Reporting Material Weakness in Internal Control over Compliance Criteria: 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. 2 CFR 200.327 and 2 CFR 200.328 require the auditee to collect financial information and monitor its activities under federal awards to assure compliance with applicable federal requirements and performance expectations are being achieved and report these items in accordance with the program requirements. Condition: The Victims’ Service final financial report was not completed and submitted until requested by the auditors. Cause: There was a lapse in the Organization’s internal control process ensuring reporting requirements were fulfilled timely. Effect: Lack of compliance with designed internal controls over reporting could result in the Organization reporting incorrect or incomplete information. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 6 reports out of 10 reports. Repeat Finding from Prior Year(s): No Recommendation: We recommend management review internal control procedures over reporting to ensure reporting requirements are completed and submitted timely.
Finding 2023-002 Administration for Children and Families Federal Financial Assistance Listing #93.566, 2202SDRCMA, 10/01/2021 – 9/30/2023 Refugee and Entrant Assistance – State Administered Programs Allowable Costs / Costs Principles and Activities Allowed or Unallowed Significant Deficiency in Internal Control over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. The Organization is required to have procedures in place to assure that federal awards are expended only for allowable costs in accordance with Subpart E – Cost Principles of the Uniform Guidance. Allowable costs are supported by appropriate documentation and correctly charged as to account, amount, and period. Condition: One instance identified in which a family was overpaid for a monthly cash assistance payment. Cause: During the check writing process, the amount was mis-keyed for $688 instead of $668 based upon supporting documentation. Effect: The family was overpaid and the Organization over-charged the federal award. Questioned Costs: $20 Context/Sampling: A nonstatistical sample of 24 non-payroll disbursements out of a total of approximately 471 non-payroll disbursements were tested which accounted for $104,148 out of $598,085 of non-payroll disbursements. Repeat Finding from Prior Year: Yes, prior year finding 2022-002. Recommendation: We recommend management review the process over cash assistance payments to ensure accurate amounts are paid to families. View of Responsible Officials: Management is in agreement.
Finding 2023-003 Administration for Children and Families Federal Financial Assistance Listing #93.566, 2001SDRSOC, 10/01/2019 – 9/30/2022 Federal Financial Assistance Listing #93.566, 2201SDRSSS, 10/01/2021 – 9/30/2023 Federal Financial Assistance Listing #93.566, 2202SDRCMA, 10/01/2021 – 9/30/2023 Federal Financial Assistance Listing #93.566, 2301SDRSSS, 10/01/2022 – 9/30/2024 Refugee and Entrant Assistance – State Administered Programs Reporting Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR Part 170 establishes requirements for recipients’ reporting of information on subawards as required by the Federal Funding Accountability and Transparency Act of 2006 (FFATA). Condition: We noted the following matters during testing: a) The quarterly report ending December 2022 for fiscal year award 2020 improperly excluded expenditures incurred of $85,000 relating to the Services to Older Refugees set-aside services program. b) The semi-annual ORR6, covering the period of 4/1/2022 – 9/30/2022, was not submitted timely. c) The FFATA report filed for Sioux Falls School District included the incorrect Subaward Obligation/Action Date. Cause: The independent review process over the quarterly report did not identify the improperly excluded expenditures. The ORR6 report was not filed timely by management. Within the FFATA report, the Organization included the grant award end date due to misinterpretation of the required FFATA report information. Effect: Ineffective controls over this area of compliance could result in a reasonable possibility that the Organization would not be in compliance with the federal award as it relates to reporting. Questioned Costs: None reported. Context/Sampling: Included under eight award letters of the federal program, four quarterly federal financial reports (SF-425s) and one quarterly federal financial report (ORR2) were reviewed in the Organization’s fiscal year. In addition, one semi-annual programmatic report was reviewed in the Organization’s fiscal year. A total of 24 reports were filed during the Organization’s fiscal year. The FFATA report for the only subrecipient who received funds through this program was tested. The quantity and subaward obligation errors were noted as follows: Subawards Obligations Total Tested 1 $ 2 02,559 Not Reported - - Not Timely - - Obligation Incorrect - - Missing Key Elements 1 202,559 Repeat Finding from Prior Years: Yes, prior year finding 2022-003 Recommendation: We recommend that management review internal control procedures over reporting to ensure reports are submitted timely and accurate information is reported. Views of Responsible Officials: Management is in agreement.
Finding 2023-004 Administration for Children and Families Federal Financial Assistance Listing #93.566, 2202SDRCMA, 10/01/2021 – 9/30/2023 Federal Financial Assistance Listing #93.566, 2302SDRCMA, 10/01/2022 – 9/30/2023 Refugee and Entrant Assistance – State Administered Programs Eligibility Material Weakness in Internal Control over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: We noted the following matters during testing which affected 11 participant files; a) Four participant case files were not reviewed through the Organization’s peer review process and two participant case files were not reviewed in a timely manner through the Organization’s peer review process. b) Four instances in which the family’s first month’s prorated cash assistance payment was not properly calculated based upon the date the Cooperative Agreement and Rights and Responsibilities Form was signed by the client. c) One instance in which a family was underpaid based upon their family size and eligibility for the month. d) One instance in which a family was moved from the Refugee Cash Assistance program to another program and the expenses remained to be charged under the Refugee Cash Assistance program. Cause: The Organization experienced staff turnover along with an increase in refugee arrivals during the fiscal year creating an increase in the workload of staff members. In addition, the Organization’s policies and designed controls were not followed. Effect: Ineffective controls over this area of compliance could result in a reasonable possibility that the Organization would provide services to ineligible participants and the Organization would not detect ineligibility in a timely manner. Questioned Costs: $1,005 Context/Sampling: A nonstatistical sample of 35 participant case files out of 153 participant case files were selected for testing which included $83,824 of participant payments out of $353,391. Repeat Finding from Prior Year: Yes, prior year finding 2022-005 Recommendation: We recommend that management review the Organization’s policies, procedures and controls over eligibility with applicable program employees to ensure compliance with the federal program. View of Responsible Officials: Management is in agreement.
Program name: Moving to Work Demonstration Program Assistance Listing Number: 14.881 Federal Awarding Agency: Department of Housing and Urban Development (HUD) State Awarding Agency: Not applicable (Direct Award) Department: Fairfax County Department of Housing and Community Development (DHCD) Compliance Requirement: Special Test-Housing Quality Standards (HQS) Enforcement Prior Year Finding Number: Not applicable Type of finding: Significant Deficiency, Non Material Non-Compliance Criteria: Per 24 CFR 982.404 “The public housing authority (PHA) must not make any housing assistance payments (HAP) for a dwelling unit that fails to meet the HQS, unless the owner corrects the defect within the period specified by the PHA and the PHA verifies the correction. If a defect is life threatening, the owner must correct the defect within no more than 24 hours. For other defects, the owner must correct the defect within no more than 30 calendar days (or any PHA-approved extension).” Per 2 CFR section 200.303, non-Federal entities receiving Federal awards must establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and terms and conditions of the Federal award. Per 24 CFR 982.405, “The PHA must inspect the unit leased to a family prior to the initial term of the lease, at least biennially during assisted occupancy, and at other times as needed, to determine if the unit meets the Housing Quality Standards (HQS).” However, Fairfax County DHCD participates in the Moving to Work Demonstration Program (MTW) that provides them the opportunity to design and test innovative strategies that use federal dollars more efficiently. MTW allows PHAs exemptions from many existing public housing and voucher rules. Per Fairfax County Redevelopment and Housing Authority’s FY 2023 Moving to Work Plan, the County implemented Activity 2014-3, Streamlined Inspections for Housing Choice Voucher and Rental Assistance Demonstration Project-Based Voucher Units, in 2014 and later amended in 2020 and 2021. This activity reduces costs associated with conducting inspections, encourages owners to maintain their units, and incentivizes families to employ good housekeeping practices. The activity allows HCV units to be inspected on a triennial basis. Condition: During our testing of 60 inspections, we noted four instances where a unit failed its inspection and the defect was not corrected within the allowable timeframe and HAP payments were not abated: In one instance, a unit failed inspection and the required re-inspection was never performed prior to the tenant moving out, 4 months after the failed inspection. In the second instance, a unit failed inspection. The first re-inspection was performed within 30 days, however the unit failed re-inspection. Another re-inspection was never performed prior to the tenant moving out, 5 months after the second failed inspection. In the third instance, a unit failed inspection and was not re-inspected for 7 months. The re-inspection also failed. DHCD withheld HAP payments beginning after the second failed inspection, however, this was not completed timely. In the fourth instance, a unit failed inspection and the required re-inspection was not performed prior to the fiscal year end. During our testing of 60 inspection, we noted four instances where a unit was not inspected on the required triennial basis. Cause: The Authority relies on a heavily manual process and does not have a comprehensive inspection report for ensuring that units are timely re-inspected, self-certifications get documented within the system, the status of the failed unit is changed in the system, and that rent is abated when a unit with a failed inspection is not corrected within the required timeframe. The nature of the current process is complex and allows for human error. The current process consists of a daily, multi-step process by the inspection supervisor, who runs several reports to monitor inspections, as follows: Inspectors must enter in the results of the inspections they perform within 24 hours. The Inspection Supervisor runs the inspector activity report to ensure that the inspectors have entered in their results timely. Inspectors are responsible for entering in a failed inspection and entering the date of the next inspection. The Inspection Supervisor also runs a “failed and follow up report” that tracks failed inspections that do not have a re-inspection scheduled. The Inspection Supervisor goes into each account on this report and investigates why an inspection was not rescheduled. The HAP hold report is run weekly to show units that have failed inspections twice and thus should have a hold placed on their account. The inspection assignment report is run almost daily; it tells the inspection supervisor what’s scheduled and unscheduled for both annual inspections and re-inspections due to failures. The inspection supervisor then schedules any units that are due for re-inspection. Due to the above limitations and complexities, there are oversights that occur in the review and documentation process. Effect: The Authority’s control environment over HQS enforcements did not ensure that re-inspections were timely performed or documented within the system or that HAP abatements occurred in a timely manner. As a result, the Authority was not in compliance with the HQS enforcement requirements as of June 30, 2023. Non-compliance with these requirements creates a risk that the Authority may provide federal funds to tenants of ineligible units. Recommendation: We recommend the Authority review their system functionality to determine whether an electronic process for scheduling and follow-up or comprehensive reporting can be identified to improve efficiency and eliminate the potential for human error. If an electronic process or comprehensive reporting isn’t available, or cannot fully cover the deficiency, we recommend the Authority look into measures to streamline their current process and to eliminate non-compliance. Potential examples include adding an inspection checklist, having the inspection supervisor review and schedule upcoming inspections in advance, building room into the schedule for life-threatening re-inspections, having the inspection supervisor ensure that each scheduled inspection is timely documented in the system, etc. Questioned costs: None. Repeat Finding: No.
Department of Agriculture Federal Financial Assistance Listing #10.766 Community Facilities Loans and Grants Activities Allowed or Unallowed and Allowable Costs/Cost Principles Significant Deficiency in Internal Control Over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Condition: The Medical Center excluded adjustments from the lost revenue calculation. Cause: The Medical Center did not have an internal control process in place to ensure the lost revenue calculation reported under the federal program was updated for all adjustments related to cost report settlements. Effect: Without adjusting for cost report settlements, the lost revenue calculation was inaccurate. Questioned Costs: There were no questioned costs related to the lost revenue calculation, as there was still enough lost revenue to support the grant and the matching portion of the grant. Context: The entire lost revenue calculation was tested. Repeat Finding from Prior Years: No Recommendation: We recommend the Medical Center enhance internal control policies to ensure that the lost revenue calculation properly includes and excludes all relevant information. Views of Responsible Officials: Management agrees with the finding.
Department of Agriculture Federal Financial Assistance Listing #10.766 Community Facilities Loans and Grants Activities Allowed or Unallowed and Allowable Costs/Cost Principles Significant Deficiency in Internal Control Over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Condition: The Medical Center excluded adjustments from the lost revenue calculation. Cause: The Medical Center did not have an internal control process in place to ensure the lost revenue calculation reported under the federal program was updated for all adjustments related to cost report settlements. Effect: Without adjusting for cost report settlements, the lost revenue calculation was inaccurate. Questioned Costs: There were no questioned costs related to the lost revenue calculation, as there was still enough lost revenue to support the grant and the matching portion of the grant. Context: The entire lost revenue calculation was tested. Repeat Finding from Prior Years: No Recommendation: We recommend the Medical Center enhance internal control policies to ensure that the lost revenue calculation properly includes and excludes all relevant information. Views of Responsible Officials: Management agrees with the finding.
Department of Agriculture Federal Financial Assistance Listing #10.766 Community Facilities Loans and Grants Activities Allowed or Unallowed and Allowable Costs/Cost Principles Significant Deficiency in Internal Control Over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Condition: The Medical Center excluded adjustments from the lost revenue calculation. Cause: The Medical Center did not have an internal control process in place to ensure the lost revenue calculation reported under the federal program was updated for all adjustments related to cost report settlements. Effect: Without adjusting for cost report settlements, the lost revenue calculation was inaccurate. Questioned Costs: There were no questioned costs related to the lost revenue calculation, as there was still enough lost revenue to support the grant and the matching portion of the grant. Context: The entire lost revenue calculation was tested. Repeat Finding from Prior Years: No Recommendation: We recommend the Medical Center enhance internal control policies to ensure that the lost revenue calculation properly includes and excludes all relevant information. Views of Responsible Officials: Management agrees with the finding.
Department of Health and Human Services Federal Financial Assistance Listing #93.498 COVID‐19 Provider Relief Fund (PRF) and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year – Period 4 TIN #426037888 Activities Allowed or Unallowed and Allowable Costs/Cost Principles and Reporting Significant Deficiency in Internal Control Over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Condition: The Medical Center included expenses in the Department of Health and Human Services (HHS) special report for Period 4 that were transcribed incorrectly or were preliminary amounts instead of final expenses which caused the HHS special report to be inaccurate. In addition, there was no evidence of formal review and approval over tracking of expenditures that were claimed for the program. In addition, there was no evidence retained that the Medical Center’s special reports submitted to the Department of Health and Human Services for Period 4 TIN #426037888 were reviewed or approved by an individual separate from the preparer prior to submission. Cause: The Medical Center did not have an internal control process in place to ensure documentation of review and approval of the tracking of expenditures claimed under the federal program and the reports submitted to the Department of Health and Human Services. Effect: The lack of adequate policies governing review and approval increases the risk that employees participating in the federal awards administration may not be able to detect and correct noncompliance in a timely manner. Questioned Costs: None over the $25,000 limit. Context: A sample of 11 ($629,403) from a population of 24 items ($806,374) were tested for activities allowed or unallowed and allowable costs/cost principles. Key line items were tested on the Period 4 HHS special report. Repeat Finding from Prior Years: Yes Recommendation: We recommend the Medical Center enhance internal control policies to ensure that formal documentation of review and approval is obtained and retained, and review is thorough enough to catch mistakes. Views of Responsible Officials: Management agrees with the finding.
2023-004 Department of Agriculture Federal Financial Assistance Listing #10.766 Communities Facilities Loans and Grants Cluster Special Test and Provisions Material Weakness in Internal Control over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal awards. Section 4 of the loan resolution security agreements dated September 2, 2008 and March 10, 2010 states the Hospital must set aside a reserve amount each month until the specified account balance is reached. Condition: The Hospital’s reserve account is fully funded per the requirements in the loan resolution agreement. However, there is no documented secondary monitoring of the account balance as compared to the required minimum balance. Cause: The Hospital did not have a formal review or approval process in place. The balance is disclosed to the board within the financial information provided to the board members, however, there is no comparison of the reserve fund account balance compared to the required minimum balance. Effect: The lack of formal review or approval increases the risk of employees participating in the federal award administration not detecting and correcting noncompliance in a timely manner. Questioned Costs: None reported. Context: Sampling was not used. Repeat Finding from Prior Year: Yes, prior year finding 2022-004. Recommendation: We recommend that management implement procedures to include monitoring over special test and provisions related to federal expenditures including a secondary review of the reserve bank account which may include a comparison of the required balance to the actual balance or documenting the requirement in the monthly financial information which are provided to the board. Views of Responsible Officials: Management agrees with the finding.
2023-004 Department of Agriculture Federal Financial Assistance Listing #10.766 Communities Facilities Loans and Grants Cluster Special Test and Provisions Material Weakness in Internal Control over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal awards. Section 4 of the loan resolution security agreements dated September 2, 2008 and March 10, 2010 states the Hospital must set aside a reserve amount each month until the specified account balance is reached. Condition: The Hospital’s reserve account is fully funded per the requirements in the loan resolution agreement. However, there is no documented secondary monitoring of the account balance as compared to the required minimum balance. Cause: The Hospital did not have a formal review or approval process in place. The balance is disclosed to the board within the financial information provided to the board members, however, there is no comparison of the reserve fund account balance compared to the required minimum balance. Effect: The lack of formal review or approval increases the risk of employees participating in the federal award administration not detecting and correcting noncompliance in a timely manner. Questioned Costs: None reported. Context: Sampling was not used. Repeat Finding from Prior Year: Yes, prior year finding 2022-004. Recommendation: We recommend that management implement procedures to include monitoring over special test and provisions related to federal expenditures including a secondary review of the reserve bank account which may include a comparison of the required balance to the actual balance or documenting the requirement in the monthly financial information which are provided to the board. Views of Responsible Officials: Management agrees with the finding.
2023-004 Department of Agriculture Federal Financial Assistance Listing #10.766 Communities Facilities Loans and Grants Cluster Special Test and Provisions Material Weakness in Internal Control over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal awards. Section 4 of the loan resolution security agreements dated September 2, 2008 and March 10, 2010 states the Hospital must set aside a reserve amount each month until the specified account balance is reached. Condition: The Hospital’s reserve account is fully funded per the requirements in the loan resolution agreement. However, there is no documented secondary monitoring of the account balance as compared to the required minimum balance. Cause: The Hospital did not have a formal review or approval process in place. The balance is disclosed to the board within the financial information provided to the board members, however, there is no comparison of the reserve fund account balance compared to the required minimum balance. Effect: The lack of formal review or approval increases the risk of employees participating in the federal award administration not detecting and correcting noncompliance in a timely manner. Questioned Costs: None reported. Context: Sampling was not used. Repeat Finding from Prior Year: Yes, prior year finding 2022-004. Recommendation: We recommend that management implement procedures to include monitoring over special test and provisions related to federal expenditures including a secondary review of the reserve bank account which may include a comparison of the required balance to the actual balance or documenting the requirement in the monthly financial information which are provided to the board. Views of Responsible Officials: Management agrees with the finding.
2023 -004 Review And Approval Of The Schedule Of Expenditures Of Federal Awards (SEFA) – Significant Deficiency All Federal Awards Criteria: The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e. auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. The School should have a written process in place to perform a review of the SEFA, to include evidence of the resolution of variances, as well as a process to document the overall review and approval to ensure proper presentation, completeness, and accuracy of the SEFA. Condition: During the course of the audit, the engagement team noted a review process of the SEFA had been implemented during 2023. However, there was no formal written review process and the review and approval procedures completed during 2023 was not documented. Cause: The entity does not have a written process in place to review the SEFA, to include retaining evidence of the resolution of variances, as well as documentation of the overall review and approval procedures performed. Effect: Potential misstatement could occur if expenditure amounts are not accurately presented on the SEFA. Questioned Costs: Not applicable. Context: Not applicable. Identification As A Repeat Finding: Yes. Recommendation: The School should develop a written consistent process to review the SEFA and the review and approval procedures performed should be documented. Issues identified during the course of the review should be investigated and resolved in a timely manner. View Of Responsible Officials: While there was a review of the SEFA, the documentation of said review did not occur properly. Management has put in place a process to document preparation/review of the SEFA evidenced by signature and date.