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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
Finding No. 2023-004 – Internal Controls over Compliance of Federal Awards (Partial Repeat 2022-005 and 2021-007) Federal Program Name: Education Stabilization Funds (Elementary and Secondary School Emergency Relief Fund Project Number: N/A CFDA Number: 84.425D and 84.425U Passed Through: Illinois State Board of Education Federal Agency: U.S. Department of Education Criteria/Specific Requirement: 2 CFR 200.303 – Internal Controls, requires the District to establish and maintain effective internal controls over the federal awards that provide reasonable assurance that the entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR Part 2, subpart E – the District must receive prior approval from the SEA (ISBE) for capital expenditures for equipment acquisition or improvements to land, buildings, or equipment. 2 CFR Part 4, Wage Rate Requirements – Recipients of ESF funds for minor remodeling, renovation, or construction contracts that are over $2,000 and use laborers and mechanics must meet Davis-Bacon prevailing wage requirements. Condition: 1) During testing of compliance over disbursements, we noted the following: a. Eight (8) transactions totaling $474,924 appeared to be for capital purchases that did not have prior approval by the SEA b. Six (6) transactions totaling $52,117 were incurred where the District appeared to be subject to Davis-Bacon prevailing wage requirements but no documentation was retained. Additionally, a formal policy for complying with Davis-Bacon requirements is not in place for individual expenditures less than $25,000. 2) During testing of compliance over reporting, we noted the following: a. Expenditure reports were completed based on budgeted amounts rather than actual expenditures. In total, expenditure reports exceeded amounts reported in the District’s general ledger by $726,653. Questioned Costs: 1) N/A 2) $726,653 Context: 1) a. 8 exceptions of 60 transactions tested b. 6 exceptions of 60 transactions tested 2) Expenditure reports for ESSER programs totaled $3,411,524 for expenditures claimed for reimbursement while the District’s general ledger indicated $2,684,871 of ESSER-related expenditures. Effect: 1) The lack of proper internal controls of disbursements could result in the District paying for unallowable expenditures from the grant funds. 2) Noncompliance with grant agreement. Cause: Lack of proper oversight by District personnel. Recommendation: We recommend that the District appoint an individual that is knowledgeable, or provide the appropriate training, of the federal compliance requirements set forth in the Code of Federal Regulation to oversee the District’s federal programs to ensure the District is in compliance with all applicable federal compliance requirements. Management’s Response: The District is working to implement that the auditor’s recommendation
Finding No. 2023-004 – Internal Controls over Compliance of Federal Awards (Partial Repeat 2022-005 and 2021-007) Federal Program Name: Education Stabilization Funds (Elementary and Secondary School Emergency Relief Fund Project Number: N/A CFDA Number: 84.425D and 84.425U Passed Through: Illinois State Board of Education Federal Agency: U.S. Department of Education Criteria/Specific Requirement: 2 CFR 200.303 – Internal Controls, requires the District to establish and maintain effective internal controls over the federal awards that provide reasonable assurance that the entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR Part 2, subpart E – the District must receive prior approval from the SEA (ISBE) for capital expenditures for equipment acquisition or improvements to land, buildings, or equipment. 2 CFR Part 4, Wage Rate Requirements – Recipients of ESF funds for minor remodeling, renovation, or construction contracts that are over $2,000 and use laborers and mechanics must meet Davis-Bacon prevailing wage requirements. Condition: 1) During testing of compliance over disbursements, we noted the following: a. Eight (8) transactions totaling $474,924 appeared to be for capital purchases that did not have prior approval by the SEA b. Six (6) transactions totaling $52,117 were incurred where the District appeared to be subject to Davis-Bacon prevailing wage requirements but no documentation was retained. Additionally, a formal policy for complying with Davis-Bacon requirements is not in place for individual expenditures less than $25,000. 2) During testing of compliance over reporting, we noted the following: a. Expenditure reports were completed based on budgeted amounts rather than actual expenditures. In total, expenditure reports exceeded amounts reported in the District’s general ledger by $726,653. Questioned Costs: 1) N/A 2) $726,653 Context: 1) a. 8 exceptions of 60 transactions tested b. 6 exceptions of 60 transactions tested 2) Expenditure reports for ESSER programs totaled $3,411,524 for expenditures claimed for reimbursement while the District’s general ledger indicated $2,684,871 of ESSER-related expenditures. Effect: 1) The lack of proper internal controls of disbursements could result in the District paying for unallowable expenditures from the grant funds. 2) Noncompliance with grant agreement. Cause: Lack of proper oversight by District personnel. Recommendation: We recommend that the District appoint an individual that is knowledgeable, or provide the appropriate training, of the federal compliance requirements set forth in the Code of Federal Regulation to oversee the District’s federal programs to ensure the District is in compliance with all applicable federal compliance requirements. Management’s Response: The District is working to implement that the auditor’s recommendation
Finding No. 2023-004 – Internal Controls over Compliance of Federal Awards (Partial Repeat 2022-005 and 2021-007) Federal Program Name: Education Stabilization Funds (Elementary and Secondary School Emergency Relief Fund Project Number: N/A CFDA Number: 84.425D and 84.425U Passed Through: Illinois State Board of Education Federal Agency: U.S. Department of Education Criteria/Specific Requirement: 2 CFR 200.303 – Internal Controls, requires the District to establish and maintain effective internal controls over the federal awards that provide reasonable assurance that the entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR Part 2, subpart E – the District must receive prior approval from the SEA (ISBE) for capital expenditures for equipment acquisition or improvements to land, buildings, or equipment. 2 CFR Part 4, Wage Rate Requirements – Recipients of ESF funds for minor remodeling, renovation, or construction contracts that are over $2,000 and use laborers and mechanics must meet Davis-Bacon prevailing wage requirements. Condition: 1) During testing of compliance over disbursements, we noted the following: a. Eight (8) transactions totaling $474,924 appeared to be for capital purchases that did not have prior approval by the SEA b. Six (6) transactions totaling $52,117 were incurred where the District appeared to be subject to Davis-Bacon prevailing wage requirements but no documentation was retained. Additionally, a formal policy for complying with Davis-Bacon requirements is not in place for individual expenditures less than $25,000. 2) During testing of compliance over reporting, we noted the following: a. Expenditure reports were completed based on budgeted amounts rather than actual expenditures. In total, expenditure reports exceeded amounts reported in the District’s general ledger by $726,653. Questioned Costs: 1) N/A 2) $726,653 Context: 1) a. 8 exceptions of 60 transactions tested b. 6 exceptions of 60 transactions tested 2) Expenditure reports for ESSER programs totaled $3,411,524 for expenditures claimed for reimbursement while the District’s general ledger indicated $2,684,871 of ESSER-related expenditures. Effect: 1) The lack of proper internal controls of disbursements could result in the District paying for unallowable expenditures from the grant funds. 2) Noncompliance with grant agreement. Cause: Lack of proper oversight by District personnel. Recommendation: We recommend that the District appoint an individual that is knowledgeable, or provide the appropriate training, of the federal compliance requirements set forth in the Code of Federal Regulation to oversee the District’s federal programs to ensure the District is in compliance with all applicable federal compliance requirements. Management’s Response: The District is working to implement that the auditor’s recommendation
Finding No. 2023-004 – Internal Controls over Compliance of Federal Awards (Partial Repeat 2022-005 and 2021-007) Federal Program Name: Education Stabilization Funds (Elementary and Secondary School Emergency Relief Fund Project Number: N/A CFDA Number: 84.425D and 84.425U Passed Through: Illinois State Board of Education Federal Agency: U.S. Department of Education Criteria/Specific Requirement: 2 CFR 200.303 – Internal Controls, requires the District to establish and maintain effective internal controls over the federal awards that provide reasonable assurance that the entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR Part 2, subpart E – the District must receive prior approval from the SEA (ISBE) for capital expenditures for equipment acquisition or improvements to land, buildings, or equipment. 2 CFR Part 4, Wage Rate Requirements – Recipients of ESF funds for minor remodeling, renovation, or construction contracts that are over $2,000 and use laborers and mechanics must meet Davis-Bacon prevailing wage requirements. Condition: 1) During testing of compliance over disbursements, we noted the following: a. Eight (8) transactions totaling $474,924 appeared to be for capital purchases that did not have prior approval by the SEA b. Six (6) transactions totaling $52,117 were incurred where the District appeared to be subject to Davis-Bacon prevailing wage requirements but no documentation was retained. Additionally, a formal policy for complying with Davis-Bacon requirements is not in place for individual expenditures less than $25,000. 2) During testing of compliance over reporting, we noted the following: a. Expenditure reports were completed based on budgeted amounts rather than actual expenditures. In total, expenditure reports exceeded amounts reported in the District’s general ledger by $726,653. Questioned Costs: 1) N/A 2) $726,653 Context: 1) a. 8 exceptions of 60 transactions tested b. 6 exceptions of 60 transactions tested 2) Expenditure reports for ESSER programs totaled $3,411,524 for expenditures claimed for reimbursement while the District’s general ledger indicated $2,684,871 of ESSER-related expenditures. Effect: 1) The lack of proper internal controls of disbursements could result in the District paying for unallowable expenditures from the grant funds. 2) Noncompliance with grant agreement. Cause: Lack of proper oversight by District personnel. Recommendation: We recommend that the District appoint an individual that is knowledgeable, or provide the appropriate training, of the federal compliance requirements set forth in the Code of Federal Regulation to oversee the District’s federal programs to ensure the District is in compliance with all applicable federal compliance requirements. Management’s Response: The District is working to implement that the auditor’s recommendation
Finding No. 2023-005 – Internal Controls over Compliance of Federal Awards Federal Program Name: Coronavirus State and Local Recovery Funds Project Number: N/A CFDA Number: 21.027 Passed Through: Illinois State Board of Education Federal Agency: U.S. Department of Education Criteria/Specific Requirement: 2 CFR 200.303 – Internal Controls, requires the District to establish and maintain effective internal controls over the federal awards that provide reasonable assurance that the entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: During testing of compliance over disbursements, we noted the following: 1) Five (5) instances where employees received pay rates in excess of three hundred percent of their normal pay rates received from unrestricted funds. 2) Fifteen (15) instances were noted where salaries were allocated to this program without documentation of time and effort. Questioned Costs: 1) N/A 2) N/A Context: 1) 5 exceptions of the total 40 payroll transactions tested 2) 15 exceptions of the total 40 payroll transactions tested Effect: 1) The lack of proper internal controls of disbursements could result in the District paying for unallowable expenditures from the grant funds. 2) Noncompliance with grant agreement. Cause: Lack of proper oversight by District personnel. Recommendation: We recommend that the District appoint an individual that is knowledgeable, or provide the appropriate training, of the federal compliance requirements set forth in the Code of Federal Regulation to oversee the District’s federal programs to ensure the District is in compliance with all applicable federal compliance requirements. Management’s Response: The District is working to implement that the auditor’s recommendation.
Finding 2023-004 Department of Health and Human Services Federal Financial Assistance Listing #93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year – Period 4 TIN #420796764 Activities Allowed or Unallowed and Allowable Costs/Cost Principles 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 award. Condition: The Health Center’s final expenditure listing identified as eligible and claimed under the federal program were not reviewed and approved by a separate individual outside of the preparer. Cause: The Health Center had multiple individuals identifying and compiling eligible costs, however, the Health Center did not have an internal control process in place to ensure a secondary review and approval of eligible expenditures that were summarized from the underlying supporting spreadsheets to the final expenditure listing was documented. The summary spreadsheet was used to claim allowable costs under the federal program. Effect: Without a secondary review and approval, there is a possibility that ineligible expenditures may be claimed under the program that may not be accurately completed. Questioned Costs: None reported. Context/Sampling: Summary level testing was performed over general and administrative expenses including payroll. Repeat Finding from Prior Year: No Recommendation: We recommend Health Center implement a control process which includes a secondary review and approval of the summarized final expenditure listing used to claim the allowable costs under the federal program. Response: Management agrees with the finding.
Section 223(f) Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Housing Projects , ALN #14.155 Statement of Condition: The Project does not have sufficient internal controls in place over eligibility. Criteria: Pursuant to 2 CFR section 200.303, Uniform Guidance requires that entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Effect of Condition: This is a violation of Uniform Guidance requirements. Cause of Condition: The Project does not have sufficient internal controls in place over eligibility. Recommendation: It is recommended that the Project develop sufficient internal controls over eligibility. Response: See Corrective Action Plan.
2023-003 Compliance and Internal Controls over Allowable Costs (Significant Deficiency) Assistance Listing Number 64.033 VA Supportive Services for Veteran Families, VA Supportive Services for Veteran Families – Shallow Subsidy, and VA Supportive Services for Veteran Families – Legal Services 2021-2022 and 2022-2023 Funding U.S. Department of Veteran Affairs Criteria: Under 2 CFR Section 200.303(a), non‐federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally, grantees are required to have a detailed breakout of these costs along with any supporting documents for those expenses for auditing and oversight. Title 2 CFR 200.302 requires the financial management system of each non-Federal entity provide records that identify adequately the source and application of funds for federally-funded activities. Condition: We noted instances of the allocation rates being used to calculate amount of payroll costs to charge to grants did not agree to the hours incurred per approved timesheets. Cause: Certain payroll allocation spreadsheets used to calculate amounts to charge grants for payroll costs were not updated to agree with the approved timesheets. Effect: The Agency requested in error reimbursement for unallowable payroll costs. Questioned Costs: $1,617 Perspective: Errors were noted during periods when the prior accounting team was in place or during transition period as the new accounting staff were being hired. Such errors resulted in certain employees’ times under / over allocated, thus reducing overall financial impact. Recommendation: The Agency should update its payroll allocation spreadsheets to agree with the approved timesheets per payroll period to ensure only allowable payroll costs are charged to grants. Views of Responsible Officials: We concur with the recommendation, please see Corrective Action Plan
2023-003 Compliance and Internal Controls over Allowable Costs (Significant Deficiency) Assistance Listing Number 64.033 VA Supportive Services for Veteran Families, VA Supportive Services for Veteran Families – Shallow Subsidy, and VA Supportive Services for Veteran Families – Legal Services 2021-2022 and 2022-2023 Funding U.S. Department of Veteran Affairs Criteria: Under 2 CFR Section 200.303(a), non‐federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally, grantees are required to have a detailed breakout of these costs along with any supporting documents for those expenses for auditing and oversight. Title 2 CFR 200.302 requires the financial management system of each non-Federal entity provide records that identify adequately the source and application of funds for federally-funded activities. Condition: We noted instances of the allocation rates being used to calculate amount of payroll costs to charge to grants did not agree to the hours incurred per approved timesheets. Cause: Certain payroll allocation spreadsheets used to calculate amounts to charge grants for payroll costs were not updated to agree with the approved timesheets. Effect: The Agency requested in error reimbursement for unallowable payroll costs. Questioned Costs: $1,617 Perspective: Errors were noted during periods when the prior accounting team was in place or during transition period as the new accounting staff were being hired. Such errors resulted in certain employees’ times under / over allocated, thus reducing overall financial impact. Recommendation: The Agency should update its payroll allocation spreadsheets to agree with the approved timesheets per payroll period to ensure only allowable payroll costs are charged to grants. Views of Responsible Officials: We concur with the recommendation, please see Corrective Action Plan
2023-003 Compliance and Internal Controls over Allowable Costs (Significant Deficiency) Assistance Listing Number 64.033 VA Supportive Services for Veteran Families, VA Supportive Services for Veteran Families – Shallow Subsidy, and VA Supportive Services for Veteran Families – Legal Services 2021-2022 and 2022-2023 Funding U.S. Department of Veteran Affairs Criteria: Under 2 CFR Section 200.303(a), non‐federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally, grantees are required to have a detailed breakout of these costs along with any supporting documents for those expenses for auditing and oversight. Title 2 CFR 200.302 requires the financial management system of each non-Federal entity provide records that identify adequately the source and application of funds for federally-funded activities. Condition: We noted instances of the allocation rates being used to calculate amount of payroll costs to charge to grants did not agree to the hours incurred per approved timesheets. Cause: Certain payroll allocation spreadsheets used to calculate amounts to charge grants for payroll costs were not updated to agree with the approved timesheets. Effect: The Agency requested in error reimbursement for unallowable payroll costs. Questioned Costs: $1,617 Perspective: Errors were noted during periods when the prior accounting team was in place or during transition period as the new accounting staff were being hired. Such errors resulted in certain employees’ times under / over allocated, thus reducing overall financial impact. Recommendation: The Agency should update its payroll allocation spreadsheets to agree with the approved timesheets per payroll period to ensure only allowable payroll costs are charged to grants. Views of Responsible Officials: We concur with the recommendation, please see Corrective Action Plan
2023-002 Compliance and Internal Controls over Allowable Costs (Significant Deficiency) Assistance Listing Number 21.027 COVID - 19 Coronavirus State and Local Fiscal Recovery Funds 2022-2023 Funding U.S. Department of Treasury Criteria: Under 2 CFR Section 200.303(a), non‐federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally, grantees are required to have a detailed breakout of these costs along with any supporting documents for those expenses for auditing and oversight. Title 2 CFR 200.302 requires the financial management system of each non-Federal entity provide records that identify adequately the source and application of funds for federally-funded activities. Condition: We noted instances of the allocation rates being used to calculate amount of payroll costs to charge to grants did not agree to the hours incurred per approved timesheets. Cause: Certain payroll allocation spreadsheets used to calculate amounts to charge grants for payroll costs were not updated to agree with the approved timesheets. Effect: The Agency requested in error reimbursement for unallowable payroll costs. Questioned Costs: $2,668 Perspective: Errors were noted during periods when the prior accounting team was in place or during transition period as the new accounting staff were being hired. Such errors resulted in certain employees’ times under / over allocated, thus reducing overall financial impact. Recommendation: The Agency should update its payroll allocation spreadsheets to agree with the approved timesheets per payroll period to ensure only allowable payroll costs are charged to grants. Views of Responsible Officials: We concur with the recommendation, please see Corrective Action Plan.
2023-002 Compliance and Internal Controls over Allowable Costs (Significant Deficiency) Assistance Listing Number 21.027 COVID - 19 Coronavirus State and Local Fiscal Recovery Funds 2022-2023 Funding U.S. Department of Treasury Criteria: Under 2 CFR Section 200.303(a), non‐federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally, grantees are required to have a detailed breakout of these costs along with any supporting documents for those expenses for auditing and oversight. Title 2 CFR 200.302 requires the financial management system of each non-Federal entity provide records that identify adequately the source and application of funds for federally-funded activities. Condition: We noted instances of the allocation rates being used to calculate amount of payroll costs to charge to grants did not agree to the hours incurred per approved timesheets. Cause: Certain payroll allocation spreadsheets used to calculate amounts to charge grants for payroll costs were not updated to agree with the approved timesheets. Effect: The Agency requested in error reimbursement for unallowable payroll costs. Questioned Costs: $2,668 Perspective: Errors were noted during periods when the prior accounting team was in place or during transition period as the new accounting staff were being hired. Such errors resulted in certain employees’ times under / over allocated, thus reducing overall financial impact. Recommendation: The Agency should update its payroll allocation spreadsheets to agree with the approved timesheets per payroll period to ensure only allowable payroll costs are charged to grants. Views of Responsible Officials: We concur with the recommendation, please see Corrective Action Plan.
2023-002 Compliance and Internal Controls over Allowable Costs (Significant Deficiency) Assistance Listing Number 21.027 COVID - 19 Coronavirus State and Local Fiscal Recovery Funds 2022-2023 Funding U.S. Department of Treasury Criteria: Under 2 CFR Section 200.303(a), non‐federal entities must establish and maintain effective internal controls to provide reasonable assurance that the entity is managing the federal awards in compliance with statues, regulations, and the terms and conditions of the award. Additionally, grantees are required to have a detailed breakout of these costs along with any supporting documents for those expenses for auditing and oversight. Title 2 CFR 200.302 requires the financial management system of each non-Federal entity provide records that identify adequately the source and application of funds for federally-funded activities. Condition: We noted instances of the allocation rates being used to calculate amount of payroll costs to charge to grants did not agree to the hours incurred per approved timesheets. Cause: Certain payroll allocation spreadsheets used to calculate amounts to charge grants for payroll costs were not updated to agree with the approved timesheets. Effect: The Agency requested in error reimbursement for unallowable payroll costs. Questioned Costs: $2,668 Perspective: Errors were noted during periods when the prior accounting team was in place or during transition period as the new accounting staff were being hired. Such errors resulted in certain employees’ times under / over allocated, thus reducing overall financial impact. Recommendation: The Agency should update its payroll allocation spreadsheets to agree with the approved timesheets per payroll period to ensure only allowable payroll costs are charged to grants. Views of Responsible Officials: We concur with the recommendation, please see Corrective Action Plan.
Assistance Listing Number, Federal Agency, and Program Name - 21.023, U.S. Department of the Treasury, COVID-19 - Emergency Rental Assistance Program Federal Award Identification Number and Year - ERA0415, 2023 Pass-through Entity - Michigan State Housing Development Authority Finding Type - Significant deficiency Repeat Finding - Yes Prior Year Reference Number - 2022-001 Criteria - Per 2 CFR 200.303, an entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. The federal award agreement includes specific allowable costs calculated in accordance with the U.S. Treasury guidance. Condition - Controls in place did not identify an inaccurate calculation of assistance. Identification of How Questioned Costs Were Computed - Not applicable Context - Out of a sample of 60 assistance case numbers selected for allowability testing, 2 samples were not properly calculated in accordance with the U.S. Treasury guidance. The inaccurate calculation caused an overpayment and under payment in rental assistance charged to the program. Cause and Effect - While the Organization had procedures in place to review the rental assistance calculations, management's review did not prevent inaccurate assistance payments. As a result, the Organization disbursed an amount that was not calculated in accordance with the U.S. Treasury guidance. Recommendation - We recommend the Organization review its procedures and controls to ensure calculations of eligible expenses are performed accurately. Views of Responsible Officials and Corrective Action Plan - The grant is complete for direct assistance to eligible participants.
Assistance Listing Number, Federal Agency, and Program Name - 21.023, U.S. Department of the Treasury, COVID-19 - Emergency Rental Assistance Program Federal Award Identification Number and Year - ERA0415, 2023 Pass-through Entity - Michigan State Housing Development Authority Finding Type - Significant deficiency Repeat Finding - Yes Prior Year Reference Number - 2022-001 Criteria - Per 2 CFR 200.303, an entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. The federal award agreement includes specific allowable costs calculated in accordance with the U.S. Treasury guidance. Condition - Controls in place did not identify an inaccurate calculation of assistance. Identification of How Questioned Costs Were Computed - Not applicable Context - Out of a sample of 60 assistance case numbers selected for allowability testing, 2 samples were not properly calculated in accordance with the U.S. Treasury guidance. The inaccurate calculation caused an overpayment and under payment in rental assistance charged to the program. Cause and Effect - While the Organization had procedures in place to review the rental assistance calculations, management's review did not prevent inaccurate assistance payments. As a result, the Organization disbursed an amount that was not calculated in accordance with the U.S. Treasury guidance. Recommendation - We recommend the Organization review its procedures and controls to ensure calculations of eligible expenses are performed accurately. Views of Responsible Officials and Corrective Action Plan - The grant is complete for direct assistance to eligible participants.
2023-003 Department of Health and Human Services Federal Financial Assistance Listing #93.498 COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Applicable Federal Award Number and Year – Period 4 TIN# 411392082 Activities Allowed or Unallowed and Allowable Costs/Cost Principles Material Weakness in Internal Control over Compliance and Noncompliance 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 conditions of the federal award. Condition: There were the expenses claimed under general and administrative category that were in excess of the amounts actually incurred under the program. Also, there was a duplication of utility expenses already claimed for the month of November 2021. Cause: The Medical Center claimed general and administrative costs that did not agree to supporting documentation due to clerical errors within the final expenditure listing. Effect: Expenditures included within the special report submitted to the Department of Health and Human Services for Period 4 TIN# 411392082 relating to general and administrative expenses were overstated by $53,954. Questioned Costs: The Medical Center has additional lost revenue in Period 4 that exceeds the general and administrative expenses. As a result, there are no questioned costs for activities allowed or unallowed and allowable costs/cost principles. Expenses included within the special report were overstated by $53,954. Context/Sampling: Summary level testing was performed over mortgage, utilities, and insurance. Key line items were tested on the Period 4 Department of Health and Human Services special report. Repeat Finding from Prior Years: No Recommendation: We recommend implementing a control process that reviews the clerical accuracy to the supporting detail being used to claim the allowable costs under the program. Views of Responsible Officials: Management agrees with the finding.
2023-002 Program: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Federal Financial Assistance Listing: 21.027 Federal Agency: U.S. Department of the Treasury Passed-through: N/A Award Year: 2022-2023 Compliance Requirement: Reporting Grant Award Number: Applies to all awards with findings and no specific grant award. Type of Finding: Material Instance of Noncompliance, Material Weakness in Internal Controls over Compliance. Criteria: Per 2 CFR 200.303, the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. This includes internal controls over maintaining records of the preparer and approver of required reports. 2 CFR 200.329(b) requires that reports submitted to the federal awarding agency include all activity of the reporting period, are supported by applicable accounting or performance records, and are fairly presented in accordance with program requirements. The County must submit an annual Project and Expenditure Report that contains costs incurred during the covered period. Critical information pertaining to the annual Project and Expenditure Report specifically includes: • Subawards • Detailed information on any loans issued; contracts and grants awarded; transfers made to other government entities; and direct payments made by the recipient that are greater than $50,000. For amounts less than $50,000, the recipient must report in the aggregate for these same categories of loans issued; contracts and grants awarded; transfers made by the recipient. Condition found: As a result of audit procedures, we identified that the annual Project and Expenditure Report had 3 instances where the project expenditure category and subcategory was not correctly classified. The project category of, (6-Revenue Replacement) and the subcategory of, (6.1- Provision of Government Services) were reported for projects that were either related to capital projects or other COVID-19 related projects that would result in this being classified incorrectly within the annual report. A different classification should have been used to report these project expenditures in the annual report. Context: The County filed the annual Project and Expenditure Report under project expenditure category, (6-Revenue Replacement) and subcategory, (6.1-Provision of Government Services). We identified expenditures for subrecipient awards in the amount of $629,387 and $7,939, respectively, and COVID-19 economic assistance expenditures in the amount of $60,000. All 3 instances should have been reported under a different category and subcategory in the report and not (6.1-Provision of Government Services). While the expenditures were deemed to be allowable under the terms and conditions of the award, the expenditures were not for general government services; therefore, they were not classified correctly. Cause: The County’s procedures did not ensure that the classification of expenditures was reported correctly in the annual Project and Expenditure Report. Effect: The County did not comply with the requirements of 2 CFR 200.303 and inaccurate information was reported to the federal awarding agency. Repeat Finding from Prior Year(s): This is not a repeat finding. Recommendation: We recommend the County enhance internal controls to ensure that the annual Project and Expenditure Reports are prepared in accordance with program requirements. Views of Responsible Officials and Corrective Action: Management agrees. See the County's separately issued Corrective Action Plan.
2023-002 Program: COVID-19 Coronavirus State and Local Fiscal Recovery Funds Federal Financial Assistance Listing: 21.027 Federal Agency: U.S. Department of the Treasury Passed-through: N/A Award Year: 2022-2023 Compliance Requirement: Reporting Grant Award Number: Applies to all awards with findings and no specific grant award. Type of Finding: Material Instance of Noncompliance, Material Weakness in Internal Controls over Compliance. Criteria: Per 2 CFR 200.303, the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. This includes internal controls over maintaining records of the preparer and approver of required reports. 2 CFR 200.329(b) requires that reports submitted to the federal awarding agency include all activity of the reporting period, are supported by applicable accounting or performance records, and are fairly presented in accordance with program requirements. The County must submit an annual Project and Expenditure Report that contains costs incurred during the covered period. Critical information pertaining to the annual Project and Expenditure Report specifically includes: • Subawards • Detailed information on any loans issued; contracts and grants awarded; transfers made to other government entities; and direct payments made by the recipient that are greater than $50,000. For amounts less than $50,000, the recipient must report in the aggregate for these same categories of loans issued; contracts and grants awarded; transfers made by the recipient. Condition found: As a result of audit procedures, we identified that the annual Project and Expenditure Report had 3 instances where the project expenditure category and subcategory was not correctly classified. The project category of, (6-Revenue Replacement) and the subcategory of, (6.1- Provision of Government Services) were reported for projects that were either related to capital projects or other COVID-19 related projects that would result in this being classified incorrectly within the annual report. A different classification should have been used to report these project expenditures in the annual report. Context: The County filed the annual Project and Expenditure Report under project expenditure category, (6-Revenue Replacement) and subcategory, (6.1-Provision of Government Services). We identified expenditures for subrecipient awards in the amount of $629,387 and $7,939, respectively, and COVID-19 economic assistance expenditures in the amount of $60,000. All 3 instances should have been reported under a different category and subcategory in the report and not (6.1-Provision of Government Services). While the expenditures were deemed to be allowable under the terms and conditions of the award, the expenditures were not for general government services; therefore, they were not classified correctly. Cause: The County’s procedures did not ensure that the classification of expenditures was reported correctly in the annual Project and Expenditure Report. Effect: The County did not comply with the requirements of 2 CFR 200.303 and inaccurate information was reported to the federal awarding agency. Repeat Finding from Prior Year(s): This is not a repeat finding. Recommendation: We recommend the County enhance internal controls to ensure that the annual Project and Expenditure Reports are prepared in accordance with program requirements. Views of Responsible Officials and Corrective Action: Management agrees. See the County's separately issued Corrective Action Plan.
2023-003 United States Department of Agriculture Federal Financial Assistance Listing #10.766 Community 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 award. The commitment letter for the term loan with the bank requires debt service coverage ratio and working capital calculations to be calculated yearly using audited financial statements. Condition: Management does not have controls in place to ensure compliance with the requirements as they have not been calculating or monitoring the required ratios internally. Cause: The Health Center was relying on the annual calculations performed by the audit team. Effect: The Health Center could be in violation of the debt coverage ratio and working capital requirements if management is not monitoring compliance. Questioned Costs: None reported Context/Sampling: Sampling was not used Repeat Finding from Prior Year: Yes, Finding 2022-003 Recommendation: We recommend management implement processes and controls to monitor the debt service coverage ratio and working capital calculations as a part of their year-end close process to ensure all covenants of the loan are met. Views of Responsible Officials: Management agrees with the finding.
2023-003 United States Department of Agriculture Federal Financial Assistance Listing #10.766 Community 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 award. The commitment letter for the term loan with the bank requires debt service coverage ratio and working capital calculations to be calculated yearly using audited financial statements. Condition: Management does not have controls in place to ensure compliance with the requirements as they have not been calculating or monitoring the required ratios internally. Cause: The Health Center was relying on the annual calculations performed by the audit team. Effect: The Health Center could be in violation of the debt coverage ratio and working capital requirements if management is not monitoring compliance. Questioned Costs: None reported Context/Sampling: Sampling was not used Repeat Finding from Prior Year: Yes, Finding 2022-003 Recommendation: We recommend management implement processes and controls to monitor the debt service coverage ratio and working capital calculations as a part of their year-end close process to ensure all covenants of the loan are met. Views of Responsible Officials: Management agrees with the finding.
Federal Agency: U.S. Department of Agriculture Federal Program Name: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.555C, 10.559 Federal Award Identification Number and Year: 202020N109942, 22MIN061N1199 Pass-Through Agency: Minnesota Department of Education Pass-Through Numbers: Unknown Award Period: Fiscal Year 2023 Type of Finding: • Material Weakness in Internal Control over Compliance • Other Matters Criteria: The District should have controls in place to ensure compliance per the requirements of 2 CFR §200.303. The Uniform Guidance requires that when a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by either checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA), collecting a certification from the entity, or adding a clause to the covered transaction with the entity. Condition: The School District did not perform the required verification procedures for two Child Nutrition Cluster covered transactions prior to entering into the contracts. The District did complete the verification procedures before entering into the related contracts, but the District did complete the procedures a few months after the contracts were awarded. Context: Of two covered transactions tested in the Child Nutrition Cluster, it was noted that the District did not perform the required verifications for either of the two covered transactions before entering into the related contracts. Questioned Costs: None Cause: Nutrition Services has limited ability to obtain food and materials due to supply chain issues. Effect: The District could have entered into a covered transaction with an entity which was suspended or debarred without realizing it. Repeat Finding: Yes – 2022-003 Recommendation: We recommend that the District follow its procurement policies as well as requirements within the Uniform Guidance to perform the proper verification procedures on all covered transactions entered into with federal funds. View of Responsible Official: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Agriculture Federal Program Name: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.555C, 10.559 Federal Award Identification Number and Year: 202020N109942, 22MIN061N1199 Pass-Through Agency: Minnesota Department of Education Pass-Through Numbers: Unknown Award Period: Fiscal Year 2023 Type of Finding: • Material Weakness in Internal Control over Compliance • Other Matters Criteria: The District should have controls in place to ensure compliance per the requirements of 2 CFR §200.303. The Uniform Guidance requires that when a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by either checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA), collecting a certification from the entity, or adding a clause to the covered transaction with the entity. Condition: The School District did not perform the required verification procedures for two Child Nutrition Cluster covered transactions prior to entering into the contracts. The District did complete the verification procedures before entering into the related contracts, but the District did complete the procedures a few months after the contracts were awarded. Context: Of two covered transactions tested in the Child Nutrition Cluster, it was noted that the District did not perform the required verifications for either of the two covered transactions before entering into the related contracts. Questioned Costs: None Cause: Nutrition Services has limited ability to obtain food and materials due to supply chain issues. Effect: The District could have entered into a covered transaction with an entity which was suspended or debarred without realizing it. Repeat Finding: Yes – 2022-003 Recommendation: We recommend that the District follow its procurement policies as well as requirements within the Uniform Guidance to perform the proper verification procedures on all covered transactions entered into with federal funds. View of Responsible Official: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Agriculture Federal Program Name: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.555C, 10.559 Federal Award Identification Number and Year: 202020N109942, 22MIN061N1199 Pass-Through Agency: Minnesota Department of Education Pass-Through Numbers: Unknown Award Period: Fiscal Year 2023 Type of Finding: • Material Weakness in Internal Control over Compliance • Other Matters Criteria: The District should have controls in place to ensure compliance per the requirements of 2 CFR §200.303. The Uniform Guidance requires that when a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by either checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA), collecting a certification from the entity, or adding a clause to the covered transaction with the entity. Condition: The School District did not perform the required verification procedures for two Child Nutrition Cluster covered transactions prior to entering into the contracts. The District did complete the verification procedures before entering into the related contracts, but the District did complete the procedures a few months after the contracts were awarded. Context: Of two covered transactions tested in the Child Nutrition Cluster, it was noted that the District did not perform the required verifications for either of the two covered transactions before entering into the related contracts. Questioned Costs: None Cause: Nutrition Services has limited ability to obtain food and materials due to supply chain issues. Effect: The District could have entered into a covered transaction with an entity which was suspended or debarred without realizing it. Repeat Finding: Yes – 2022-003 Recommendation: We recommend that the District follow its procurement policies as well as requirements within the Uniform Guidance to perform the proper verification procedures on all covered transactions entered into with federal funds. View of Responsible Official: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Agriculture Federal Program Name: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.555C, 10.559 Federal Award Identification Number and Year: 202020N109942, 22MIN061N1199 Pass-Through Agency: Minnesota Department of Education Pass-Through Numbers: Unknown Award Period: Fiscal Year 2023 Type of Finding: • Material Weakness in Internal Control over Compliance • Other Matters Criteria: The District should have controls in place to ensure compliance per the requirements of 2 CFR §200.303. The Uniform Guidance requires that when a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by either checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA), collecting a certification from the entity, or adding a clause to the covered transaction with the entity. Condition: The School District did not perform the required verification procedures for two Child Nutrition Cluster covered transactions prior to entering into the contracts. The District did complete the verification procedures before entering into the related contracts, but the District did complete the procedures a few months after the contracts were awarded. Context: Of two covered transactions tested in the Child Nutrition Cluster, it was noted that the District did not perform the required verifications for either of the two covered transactions before entering into the related contracts. Questioned Costs: None Cause: Nutrition Services has limited ability to obtain food and materials due to supply chain issues. Effect: The District could have entered into a covered transaction with an entity which was suspended or debarred without realizing it. Repeat Finding: Yes – 2022-003 Recommendation: We recommend that the District follow its procurement policies as well as requirements within the Uniform Guidance to perform the proper verification procedures on all covered transactions entered into with federal funds. View of Responsible Official: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Agriculture Federal Program Name: Child Nutrition Cluster Assistance Listing Number: 10.553, 10.555, 10.555C, 10.559 Federal Award Identification Number and Year: 202020N109942, 22MIN061N1199 Pass-Through Agency: Minnesota Department of Education Pass-Through Numbers: Unknown Award Period: Fiscal Year 2023 Type of Finding: • Material Weakness in Internal Control over Compliance • Other Matters Criteria: The District should have controls in place to ensure compliance per the requirements of 2 CFR §200.303. The Uniform Guidance requires that when a non-federal entity enters into a covered transaction with an entity at a lower tier, the non-federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by either checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA), collecting a certification from the entity, or adding a clause to the covered transaction with the entity. Condition: The School District did not perform the required verification procedures for two Child Nutrition Cluster covered transactions prior to entering into the contracts. The District did complete the verification procedures before entering into the related contracts, but the District did complete the procedures a few months after the contracts were awarded. Context: Of two covered transactions tested in the Child Nutrition Cluster, it was noted that the District did not perform the required verifications for either of the two covered transactions before entering into the related contracts. Questioned Costs: None Cause: Nutrition Services has limited ability to obtain food and materials due to supply chain issues. Effect: The District could have entered into a covered transaction with an entity which was suspended or debarred without realizing it. Repeat Finding: Yes – 2022-003 Recommendation: We recommend that the District follow its procurement policies as well as requirements within the Uniform Guidance to perform the proper verification procedures on all covered transactions entered into with federal funds. View of Responsible Official: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Education Federal Program Name: Special Education Cluster Assistance Listing Number: 84.027 and 84.173 Federal Award Identification Number and Year: H027A210087 and H173A180086 Pass-Through Agency: Minnesota Department of Education Pass-Through Numbers: Unknown Award Period: Fiscal Year 2023 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria: The District should have controls in place to ensure compliance per the requirements of 2 CFR §200.303. 2 CFR §200.318 - §200.321 requires that all procurement transactions be conducted in a manner providing full and open competition consistent with the standards of the section. Procurement by noncompetitive proposals may be utilized if the item is available only from a single source, however efforts must be made and the process fully documented in order to conclude that the use of a sole source procurement is appropriate. Condition: It was noted during procurement testing that, for one contract, the District did not utilize quotes, sealed bids, or competitive proposals for the noted procurement, and any sole course conclusions were also not documented. Questioned Costs: ALN 84.027 and 84.173, Federal Award Identification Number H027A220087 and H173A180086: $4,502 Context: Of the two procurements tested in the Special Education Cluster, one was missing documentation to support a proper procurement method. Cause: The District procedures do not contain sufficient guidelines for ensuring all procurements utilize the proper method and are properly documented. Effect: The lack of proper methods and documentation could lead to using vendors for small purchase acquisitions without ensuring comparable pricing from other vendors and justifying costs. Repeat Finding: Yes – 2022-002. Recommendation: CLA recommends the District puts in place the proper procedures for sufficiently documenting all procurements and methodology used. View of Responsible Official: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Education Federal Program Name: Special Education Cluster Assistance Listing Number: 84.027 and 84.173 Federal Award Identification Number and Year: H027A210087 and H173A180086 Pass-Through Agency: Minnesota Department of Education Pass-Through Numbers: Unknown Award Period: Fiscal Year 2023 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria: The District should have controls in place to ensure compliance per the requirements of 2 CFR §200.303. 2 CFR §200.318 - §200.321 requires that all procurement transactions be conducted in a manner providing full and open competition consistent with the standards of the section. Procurement by noncompetitive proposals may be utilized if the item is available only from a single source, however efforts must be made and the process fully documented in order to conclude that the use of a sole source procurement is appropriate. Condition: It was noted during procurement testing that, for one contract, the District did not utilize quotes, sealed bids, or competitive proposals for the noted procurement, and any sole course conclusions were also not documented. Questioned Costs: ALN 84.027 and 84.173, Federal Award Identification Number H027A220087 and H173A180086: $4,502 Context: Of the two procurements tested in the Special Education Cluster, one was missing documentation to support a proper procurement method. Cause: The District procedures do not contain sufficient guidelines for ensuring all procurements utilize the proper method and are properly documented. Effect: The lack of proper methods and documentation could lead to using vendors for small purchase acquisitions without ensuring comparable pricing from other vendors and justifying costs. Repeat Finding: Yes – 2022-002. Recommendation: CLA recommends the District puts in place the proper procedures for sufficiently documenting all procurements and methodology used. View of Responsible Official: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Education Federal Program Name: Special Education Cluster Assistance Listing Number: 84.027 and 84.173 Federal Award Identification Number and Year: H027A210087 and H173A180086 Pass-Through Agency: Minnesota Department of Education Pass-Through Numbers: Unknown Award Period: Fiscal Year 2023 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria: The District should have controls in place to ensure compliance per the requirements of 2 CFR §200.303. 2 CFR §200.318 - §200.321 requires that all procurement transactions be conducted in a manner providing full and open competition consistent with the standards of the section. Procurement by noncompetitive proposals may be utilized if the item is available only from a single source, however efforts must be made and the process fully documented in order to conclude that the use of a sole source procurement is appropriate. Condition: It was noted during procurement testing that, for one contract, the District did not utilize quotes, sealed bids, or competitive proposals for the noted procurement, and any sole course conclusions were also not documented. Questioned Costs: ALN 84.027 and 84.173, Federal Award Identification Number H027A220087 and H173A180086: $4,502 Context: Of the two procurements tested in the Special Education Cluster, one was missing documentation to support a proper procurement method. Cause: The District procedures do not contain sufficient guidelines for ensuring all procurements utilize the proper method and are properly documented. Effect: The lack of proper methods and documentation could lead to using vendors for small purchase acquisitions without ensuring comparable pricing from other vendors and justifying costs. Repeat Finding: Yes – 2022-002. Recommendation: CLA recommends the District puts in place the proper procedures for sufficiently documenting all procurements and methodology used. View of Responsible Official: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Education Federal Program Name: Special Education Cluster Assistance Listing Number: 84.027 and 84.173 Federal Award Identification Number and Year: H027A210087 and H173A180086 Pass-Through Agency: Minnesota Department of Education Pass-Through Numbers: Unknown Award Period: Fiscal Year 2023 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matters Criteria: The District should have controls in place to ensure compliance per the requirements of 2 CFR §200.303. 2 CFR §200.318 - §200.321 requires that all procurement transactions be conducted in a manner providing full and open competition consistent with the standards of the section. Procurement by noncompetitive proposals may be utilized if the item is available only from a single source, however efforts must be made and the process fully documented in order to conclude that the use of a sole source procurement is appropriate. Condition: It was noted during procurement testing that, for one contract, the District did not utilize quotes, sealed bids, or competitive proposals for the noted procurement, and any sole course conclusions were also not documented. Questioned Costs: ALN 84.027 and 84.173, Federal Award Identification Number H027A220087 and H173A180086: $4,502 Context: Of the two procurements tested in the Special Education Cluster, one was missing documentation to support a proper procurement method. Cause: The District procedures do not contain sufficient guidelines for ensuring all procurements utilize the proper method and are properly documented. Effect: The lack of proper methods and documentation could lead to using vendors for small purchase acquisitions without ensuring comparable pricing from other vendors and justifying costs. Repeat Finding: Yes – 2022-002. Recommendation: CLA recommends the District puts in place the proper procedures for sufficiently documenting all procurements and methodology used. View of Responsible Official: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Education Federal Program Name: Special Education Cluster Assistance Listing Number: 84.027, and 84.173 Federal Award Identification Number and Year: H027A210087 and H173A180086 Pass-Through Agency: Minnesota Department of Education Pass-Through Numbers: Unknown Award Period: Fiscal Year 2023 Type of Finding: • Material Weakness in Internal Control over Compliance • Other Matters Criteria: The District should have controls in place to ensure compliance per the requirements of 2 CFR §200.303. The Uniform Guidance requires that when a non-federal entity enters into a covered transaction with an entity at a lower tier, the nonfederal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by either checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA), collecting a certification from the entity, or adding a clause to the covered transaction with the entity. Condition: The School District did not perform the required verification procedures over two covered transactions in fiscal year 2023. Context: Of two covered transactions tested in the Special Education Cluster, it was noted that the District did not perform the required verifications on either of the two covered transactions. Questioned Costs: None Cause: The District has had turnover in some roles within the Special Education program. Effect: The District could have entered into a covered transaction with an entity which was suspended or debarred without realizing it. Repeat Finding: Yes – 2022-003 Recommendation: We recommend that the District follow its procurement policies as well as requirements within the Uniform Guidance to perform the proper verification procedures on all covered transactions entered into with federal funds. View of Responsible Official: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Education Federal Program Name: Special Education Cluster Assistance Listing Number: 84.027, and 84.173 Federal Award Identification Number and Year: H027A210087 and H173A180086 Pass-Through Agency: Minnesota Department of Education Pass-Through Numbers: Unknown Award Period: Fiscal Year 2023 Type of Finding: • Material Weakness in Internal Control over Compliance • Other Matters Criteria: The District should have controls in place to ensure compliance per the requirements of 2 CFR §200.303. The Uniform Guidance requires that when a non-federal entity enters into a covered transaction with an entity at a lower tier, the nonfederal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by either checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA), collecting a certification from the entity, or adding a clause to the covered transaction with the entity. Condition: The School District did not perform the required verification procedures over two covered transactions in fiscal year 2023. Context: Of two covered transactions tested in the Special Education Cluster, it was noted that the District did not perform the required verifications on either of the two covered transactions. Questioned Costs: None Cause: The District has had turnover in some roles within the Special Education program. Effect: The District could have entered into a covered transaction with an entity which was suspended or debarred without realizing it. Repeat Finding: Yes – 2022-003 Recommendation: We recommend that the District follow its procurement policies as well as requirements within the Uniform Guidance to perform the proper verification procedures on all covered transactions entered into with federal funds. View of Responsible Official: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Education Federal Program Name: Special Education Cluster Assistance Listing Number: 84.027, and 84.173 Federal Award Identification Number and Year: H027A210087 and H173A180086 Pass-Through Agency: Minnesota Department of Education Pass-Through Numbers: Unknown Award Period: Fiscal Year 2023 Type of Finding: • Material Weakness in Internal Control over Compliance • Other Matters Criteria: The District should have controls in place to ensure compliance per the requirements of 2 CFR §200.303. The Uniform Guidance requires that when a non-federal entity enters into a covered transaction with an entity at a lower tier, the nonfederal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by either checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA), collecting a certification from the entity, or adding a clause to the covered transaction with the entity. Condition: The School District did not perform the required verification procedures over two covered transactions in fiscal year 2023. Context: Of two covered transactions tested in the Special Education Cluster, it was noted that the District did not perform the required verifications on either of the two covered transactions. Questioned Costs: None Cause: The District has had turnover in some roles within the Special Education program. Effect: The District could have entered into a covered transaction with an entity which was suspended or debarred without realizing it. Repeat Finding: Yes – 2022-003 Recommendation: We recommend that the District follow its procurement policies as well as requirements within the Uniform Guidance to perform the proper verification procedures on all covered transactions entered into with federal funds. View of Responsible Official: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Education Federal Program Name: Special Education Cluster Assistance Listing Number: 84.027, and 84.173 Federal Award Identification Number and Year: H027A210087 and H173A180086 Pass-Through Agency: Minnesota Department of Education Pass-Through Numbers: Unknown Award Period: Fiscal Year 2023 Type of Finding: • Material Weakness in Internal Control over Compliance • Other Matters Criteria: The District should have controls in place to ensure compliance per the requirements of 2 CFR §200.303. The Uniform Guidance requires that when a non-federal entity enters into a covered transaction with an entity at a lower tier, the nonfederal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by either checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA), collecting a certification from the entity, or adding a clause to the covered transaction with the entity. Condition: The School District did not perform the required verification procedures over two covered transactions in fiscal year 2023. Context: Of two covered transactions tested in the Special Education Cluster, it was noted that the District did not perform the required verifications on either of the two covered transactions. Questioned Costs: None Cause: The District has had turnover in some roles within the Special Education program. Effect: The District could have entered into a covered transaction with an entity which was suspended or debarred without realizing it. Repeat Finding: Yes – 2022-003 Recommendation: We recommend that the District follow its procurement policies as well as requirements within the Uniform Guidance to perform the proper verification procedures on all covered transactions entered into with federal funds. View of Responsible Official: There is no disagreement with the audit finding.
2023-004 Department of Agriculture Federal Financial Assistance Listing #10.766 Communities Facilities Loans and Grants Cluster Special Tests & Provisions Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Section 4 of the Loan Resolution Security Agreement dated October 18, 2012, states the Organization must set aside a reserve amount which may be established as a bookkeeping account or as a separate bank account. Funds may be deposited in institutions insured by the state or federal government or invested in marketable securities backed by the full faith and credit of the United States. When approved by the federal agency, funds may be withdrawn for certain specified Facility purposes. Condition: Management created the reserve account of $114,600 in December 2022 which was established as a separate bookkeeping and bank account. However, management transposed the $116,400 amount that was required to be in the reserve account according to the Letter of Conditions. The Organization underfunded the actual reserve balance after interest earnings by $521 as of June 30, 2023. Additionally, the Organization withdrew $100,000 in May 2023 from the reserve account to deposit into the operating account and subsequently replenished the reserve account within 14 days without obtaining proper federal agency approval. Cause: Due to a clerical error, the amount required to be included in the reserve account was underfunded in December 2022. Also, management did not have a control process in place to obtain federal agency approval over the disbursement from the reserve account. Effect: The Organization could be in violation of the reserve amount requirements if the federal agency does not approve of any short-term disbursements of the reserve account. Questioned Costs: None reported. Context/Sampling: Sampling was not used. Repeat Finding from Prior Year: No Recommendation: We recommend management have a formal review and approval process in place which monitors any disbursements or replenishments of the reserve account and obtains federal agency approval, as required. 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 Tests & Provisions Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. Section 4 of the Loan Resolution Security Agreement dated October 18, 2012, states the Organization must set aside a reserve amount which may be established as a bookkeeping account or as a separate bank account. Funds may be deposited in institutions insured by the state or federal government or invested in marketable securities backed by the full faith and credit of the United States. When approved by the federal agency, funds may be withdrawn for certain specified Facility purposes. Condition: Management created the reserve account of $114,600 in December 2022 which was established as a separate bookkeeping and bank account. However, management transposed the $116,400 amount that was required to be in the reserve account according to the Letter of Conditions. The Organization underfunded the actual reserve balance after interest earnings by $521 as of June 30, 2023. Additionally, the Organization withdrew $100,000 in May 2023 from the reserve account to deposit into the operating account and subsequently replenished the reserve account within 14 days without obtaining proper federal agency approval. Cause: Due to a clerical error, the amount required to be included in the reserve account was underfunded in December 2022. Also, management did not have a control process in place to obtain federal agency approval over the disbursement from the reserve account. Effect: The Organization could be in violation of the reserve amount requirements if the federal agency does not approve of any short-term disbursements of the reserve account. Questioned Costs: None reported. Context/Sampling: Sampling was not used. Repeat Finding from Prior Year: No Recommendation: We recommend management have a formal review and approval process in place which monitors any disbursements or replenishments of the reserve account and obtains federal agency approval, as required. Views of Responsible Officials: Management agrees with the finding.
Finding No: 2023-001 Activities allowed/unallowed and allowable costs Federal Agency: U.S. Department of Health and Human Services Pass-Through Entities: N/A Assistance Listing Number: 93.498 Program: COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution Award Year: January 1 to March 31, 2023 (Period 4) and July 1 to September 30, 2023 (Period 5) Criteria or Requirement Per 2 CFR 200.303, the non-Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition Found, Including Perspective Bonuses, that were claimed to be COVID-related as reported via the PRF portal, were paid out to St. Dominic employees for which there was no supporting documentation to validate they were allowable COVID-related bonuses in accordance with the System’s policies. Possible Cause Change in control owners at St. Dominic resulting in management’s failure to retain sufficient documentation to support the bonus payments. Questioned Cost $3,000 for all St. Dominic employees Effect Federal funds were possibly expended for unallowable purposes as management could not provide documentation to support the bonuses were COVID-19 related. Statistical Validity The sample was not intended to be, and was not, a statistically valid sample. Repeat Finding in the Prior Year Not a repeat finding. Recommendation The System should strengthen controls over the retention of documentation to ensure that management can provide the necessary documentation to support grant expenditures. View of Responsible Officials Management concurs with this finding. Effective January 2022, the System has transitioned the St. Dominic payroll to be processed centrally at the System in accordance with all System’s processes and procedures.