2025 001 Activities Allowed or Unallowed and Allowable Costs/Cost Principles U.S. Department of Homeland Security, Federal Emergency Management Agency: Passed through New Jersey Department of Law and Public Safety, Office of Emergency Management: COVID 19 Disaster Grants – Public Assistance (Presidentially Declared Disasters) (ALN 97.036) Contract Number and Years: 4488DR NJ 734668; 4488DR NJ 734675; 4488DR NJ 736923 (01/20/2020 – 05/11/2023) Statistically Valid Sample: The sample was not intended to be, and was not, a statistically valid sample Repeat Finding: No Finding Type: Material Weakness, Material Noncompliance Criteria The terms and conditions for recipients of Disaster Grants Public Assistance (Presidentially Declared Disasters) include the following: • The funds are utilized to perform emergency work, which is defined as “Work that must be done immediately to save lives, protect improved property, protect public health and safety, or avert or lessen the threat of a major disaster.” • Federal Emergency Management Agency (FEMA) defines the eligibility of costs based on the following factors: • Directly tied to the performance of eligible work; • Adequately documented (2 CFR section 200.403 (g)); • Reduced by all applicable credits, such as insurance proceeds and salvage values (Stafford Act section 312, 42 USC section 5155, and 2 CFR section 200.406); • Authorized and not prohibited under federal, state, territorial, tribal, or local government laws or regulations; • Consistent with applicant’s internal policies, regulations, and procedures that apply uniformly to both federal awards and other activities of the applicant; and • Necessary and reasonable to accomplish the work properly and efficiently (2 CFR section 200.403) • For large projects, the subrecipient must make an accounting to the state. In submitting the accounting, the entity is required to certify that reported costs were incurred in performance of eligible work, that the approved work was completed, that the project is in compliance with the provisions of the FEMA State Agreement, all grant conditions were met, and that payments for that project were made in accordance with the applicable payment provisions. 2 CFR Section 200.406 states: Applicable credits refer to those receipts or reduction of expenditure type transactions that offset or reduce expense items allocable to the Federal award as direct or indirect (F&A) costs. Examples of such transactions are: purchase discounts, rebates or allowances, recoveries or indemnities on losses, insurance refunds or rebates, and adjustments of overpayments or erroneous charges. To the extent that such credits accruing to or received by the non Federal entity relate to allowable costs, they must be credited to the Federal award either as a cost reduction or cash refund, as appropriate. 2 CFR 200.303 requires non Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Condition and Context On April 28, 2025, FEMA approved and obligated the System’s three applications (734675, 734668, and 736923) totaling $986,596 in total Federal assistance under the COVID 19 Disaster Grants – Public Assistance (Presidentially Declared Disasters) (Disaster Grants). The System reported $986,596 on the schedule of expenditures of Federal awards (SEFA), as these funds were obligated by FEMA in the System’s fiscal year 2025. Subsequently, after the approval of the obligations, FEMA completed the final financial reconciliation, and in March 2026 issued a letter to the System concluding that a portion of the costs previously funded under the program had also been funded through another source, resulting in unallowable costs under Federal requirements. FEMA concluded that $480,020 of the $562,314 obligated under Obligation 734675 and $192,444 of the $384,755 obligated under Obligation 736923 were unallowable due to duplicate funding. In August 2026, the System decided to not appeal FEMA’s finding of duplication of benefits and accepted the finding. The System is responsible for establishing internal controls to ensure the accuracy of eligible expenses reported to the New Jersey Office of Emergency Management. By deciding not to appeal the finding of duplication of benefits, the System’s originally reported amount of $986,596 was reduced to $314,132 creating $672,464 of questioned costs. Cause The System’s did not establish adequate policies and procedures to identify, track, and reconcile Disaster Grants funded expenditures against insurance recoveries and other sources of disaster related funding to ensure that applicable credits were identified and offset against FEMA claims, to detect potential duplicate funding. Effect The System claimed and received reimbursement for amounts under Federal requirements because the costs had been funded from another source. This resulted in questioned costs of $672,464 and the de obligation of previously awarded Federal assistance. The noncompliance affected multiple obligations within the Disaster Grants program. Questioned Costs $672,464 Recommendation We recommend that the System strengthen its policies and procedures to ensure only allowable Disaster Grants costs are claimed for reimbursement, and prior to submission for reimbursement, such costs are reviewed to ensure there are no offsetting amounts or any duplication of benefits paid from other sources for the same disaster. View of Responsible Official Management agrees with the auditor’s finding and will strengthen its grant management and monitoring policies and procedures to ensure insurance recoveries, alternative funding sources, and other applicable credits are identified, communicated, and reconciled to Disaster Grant expenditures. Management will also enhance oversight procedures to identify and prevent potential duplication of benefits and ensure compliance with applicable Federal requirements.
2025 002 Reporting and Procurement U.S. Department of the Treasury: Passed through State of New Jersey Department of Community Affairs: COVID 19 Coronavirus State and Local Fiscal Recovery Funds (ALN 21.027) Contract Number and Years: G2022 09 (03/02/2021 – 12/31/2026) Statistically Valid Sample: The sample was not intended to be, and was not, a statistically valid sample Repeat Finding: Yes (2024 001) Finding Type: Material Weakness, Material Noncompliance Criteria Reporting Per 2 CFR 200.502, the determination of when a Federal award is expended must be based on when the activity related to the Federal award occurs. Generally, the activity pertains to events that require the non Federal statutes, regulations and the terms and conditions of Federal awards, such as: expenditures/expense transactions associated with awards including grants. Further, the Uniform Guidance compliance supplement notes, each recipient must report program outlays and program income on a cash or accrual basis, as prescribed by the Federal awarding agency. In accordance with the grant agreement and the reporting requirements for the State of New Jersey Department of Community Affairs, direct grants and pass through funds are fulfilled utilizing an advanced payment method and tracking reports. The grantee shall submit quarterly financial reports, in a format to be provided by the Department, and including the number of government full time employees responding to COVID 19 as supported by this funding. The reports are prepared and submitted to allow for relevant and reliable information to be provided to the Federal government or State of New Jersey for tracking purposes. The reports are the source documents for the grantee to prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the grantee’s financial statements in accordance with 2 CFR 200.502, Basis for determining Federal awards expended, for the SEFA. Procurement Non Federal entities other than states, including those operating Federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.327. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable Federal statutes and the procurement requirements identified in 2 CFR Part 200. A non Federal entity must: 1. Meet the general procurement standards in 2 CFR section 200.318, which include oversight of contractors’ performance, maintaining written standards of conduct for employees involved in contracting, awarding contracts only to responsible contractors, and maintaining records to document history of procurements. 2. Conduct all procurement transactions in a manner providing full and open competition, in accordance with 2 CFR section 200.319. 3. Use the micro purchase and small purchase methods only for procurements that meet the applicable criteria under 2 CFR sections 200.320(a) (1) and (2). Under the micro purchase method, the aggregate dollar amount does not exceed $50,000 ($2,000 in the case of acquisition for construction subject to the Wage Rate Requirements (Davis Bacon Act)). Small purchase procedures are used for purchases that exceed the micro purchase amount but do not exceed the simplified acquisition threshold ($250,000). Micro purchases may be awarded without soliciting competitive quotations if the non Federal entity considers the price to be reasonable (2 CFR 200.320(a)(1)(ii)). If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources (2 CFR 200.320(a)(2)(i)). In accordance with the grant agreement and the reporting requirements for the State of New Jersey Department of Community Affairs, recipients may use award funds to enter into contracts to procure goods and services necessary to implement one or more of the eligible purposes outlined in sections 602(c) and 603(c) of the Act and Treasury’s Interim Final Rule and Final Rule. As such, recipients are expected to have procurement policies and procedures in place that comply with the procurement standards outlined in the Uniform Guidance. Under the program, St. Joseph’s Health, Inc. must follow the procurement standards in 2 CFR sections 200.318 through 200.327, including ensuring that the procurement method used for the contracts are appropriate based on the dollar amount and conditions specified in 2 CFR section 200.320. Internal Control 2 CFR 200.303 requires non Federal entities receiving Federal awards to establish and maintain internal controls designed to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Condition and Context Reporting On a quarterly basis, St. Joseph’s Health, Inc. (the System) prepares and reports to New Jersey Department of Community Affairs (the Department) the program expenditures for Federal funding amounts on the tracking report of expenditures, which are then used to prepare the annual SEFA in conjunction with the general ledger detail at the end of the fiscal year. While expenditures per the SEFA as prepared by the System were accurate and the quarterly reporting was accepted by the State, the System’s expenditures per the report of expenditures continue to be based upon purchase order amounts, which include expenditures that were incurred subsequent to year end. Procurement Further, the System engaged multiple vendors for several projects under the G2022 09 grant that were above the $50K micro purchase threshold, but below the simplified acquisition threshold. However, the System did not obtain multiple quotes from different vendors to encourage fair competition in the market. The System’s policies and procedures to ensure compliance with the above compliance requirements did not include certain internal controls that were designed properly and operating effectively to ensure that the System properly reported costs on the report of expenditures or obtained the necessary quotes from potential bidders for procurements over the micro purchase threshold. Cause Management did not properly design adequate review procedures to ensure that expenditures reported on financial reports to the Department were reconciled to the System’s accounting records and reflected expenditures incurred. Consequently, purchase order commitments were reported in lieu of incurred expenditures, resulting in a variance of approximately $1.9 million between amounts reported on financial reports to the Department and amounts reported on the SEFA. We noted, however, that this variance did not represent any unallowable costs. Additionally, Management did not retain or obtain the required documentation indicating quotes from multiple vendors were obtained for the ongoing construction projects under the grant. Effect The System had a material variance in the amount of expenditures reported on financial reports to the Department as compared to the SEFA and did not obtain multiple quotations from vendors when making selections for various projects ongoing under the Federal program. Questioned Costs None Recommendation Reporting We recommend that the System strengthen its processes and internal controls to ensure that only allowable and incurred expenditures and not purchase order amounts, are reported on the financial reports submitted to the Department in the applicable period in which they were incurred. Procurement We recommend that the System strengthen its processes and internal controls to ensure that all procurement related transactions are supported by the appropriate bidding documentation as required by the Uniform Guidance for each respective bidding threshold. View of Responsible Official Management agrees with the auditor’s finding and will strengthen its processes and internal controls to ensure the report of expenditures provided to the Department has a reconciliation of the amount of expenditures incurred in the period compared to the purchase order balances and all procurement transactions contain the required bidding documentation for each bidding threshold in accordance with the Uniform Guidance.
FINDING 2025-002 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting Federal Agency: Department of Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): SLT-3157 Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2024-005. Condition and Context Recipients are required to submit quarterly or annual Project and Expenditure (P&E) reports to the U.S. Department of the Treasury (Treasury). The reporting periods, as well as the respective due dates, are based upon type of recipient and its population, as well as the recipient's allocation amount. Information to be reported includes projects funded, expenditures, and contracts for the appropriate reporting period. The County was classified as a county with a population that exceeds 250,000 residents. As such, the County was required to submit quarterly P&E reports in 2025. The amounts submitted were not supported by the County's records and contained the following errors: • The 2024 Quarter 4 P&E report period and cumulative expenditures were overstated by $229,125 and understated by $520,330, respectively. • The 2025 Quarter 1 P&E report period and cumulative expenditures were understated by $2,388,734 and $2,909,064, respectively. • The 2025 Quarter 2 P&E report period and cumulative expenditures were understated by $7,726,388 and $9,568,969, respectively. • The 2025 Quarter 3 P&E report period and cumulative expenditures were understated by $11,401,926 and $20,970,894, respectively. Additionally, the current period obligations amounts reported in all quarterly reports could not be verified as supporting documentation was not provided for audit. The lack of internal controls and noncompliance was a systemic issue throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 18 LAKE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Compliance and Reporting Guidance, State and Local Fiscal Recovery Funds, page 13, states in part: "10. Reporting. All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. . . ." 31 CFR 35.4(c) states in part: "Reporting and requests for other information. During the period of performance, recipients shall provide to the Secretary or her delegate, as applicable, periodic reports providing detailed accounting of the uses of funds, . . ." Cause All quarterly P&E reports were prepared and submitted by a consultant without an oversight or review process in place to prevent, or detect and correct, errors prior to submission. Effect Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the repayment or loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the County's management establish a proper system of internal controls that would ensure compliance with the Reporting requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): SLT-3157 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2024-004. Condition and Context Prior to entering into subawards and covered transactions with the COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF) award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded. "Covered transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000 and all subawards. The verification is to be done by checking the Excluded Parties List System (EPLS), collecting a certification from that person or entity, or adding a clause or condition to the covered transaction with that person or entity. The County did not have policies or procedures in place related to the suspension and debarment requirements for the SLFRF funds. Two covered transactions totaling $5,130,604 paid from the SLFRF funds were identified and tested. Documentation to show that suspension and debarment was verified prior to entering into contract with the one vendor could not be provided by the County. The amounts for which suspension and debarment was not verified totaled $461,808. The noncompliance was isolated to the transaction identified above. The lack of internal controls was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 20 LAKE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you do business is not excluded or disqualified. You do this by: (a) Checking EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Cause The County's policy does not provide procedures on how the County will ensure compliance with the suspension and debarment requirements. Effect Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the repayment or loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. Recommendation Management of the County should develop procedures to ensure vendors are not suspended or debarred when expending federal funds. Appropriate documentation should be maintained to ensure compliance with suspension and debarment compliance requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
2025-002 Cash Management and Reporting Federal Agency: U.S. Department of Labor Federal Program Title: Reintegration of Ex-Offenders Assistance Listing No. 17.270 Award Periods: July 1, 2023 – December 31, 2026 Type of Finding: • Significant Deficiency in Internal Control Over Compliance – Cash Management and Reporting Questioned Costs: None Condition: During our testing of five drawdown requests and four reports, CLA noted that two drawdown requests and two reports were submitted without evidence of management review and approval. The Organization did not implement its review process over drawdown requests until September 2025, therefore, the two drawdowns selected for testing that occurred prior to implementation did not have documentation of review. In addition, no review process was documented for two reports tested prior to submission. While all financial reports were prepared and submitted by the outsourced accountant, management review and approval was not documented for two of the four items tested. Criteria: Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure drawdowns and reports are formally reviewed by someone who did not prepare the drawdown or report to verify the correct amount is required. Context: The Organization did not maintain adequate documentation related to internal controls over cash management and reporting. The sampling methodology used is not, and is not intended to be statistically valid. Cause: For some instances, the Organization did not have effective internal controls over compliance in place to ensure that cash management and reporting procedures were followed and documented. Effect: Failure to properly approve drawdowns, reports and maintain documentation may result in drawdown requests for unapproved or unrelated costs charged to the grant. Repeat Finding: The finding is a repeat of the prior year finding number 2024-002. Recommendation: The Organization should formalize and consistently apply its review and approval controls over drawdown requests and grant reports. Management should review all submissions prior to filing and maintain documentation evidencing the review and approval performed. Views of Responsible Officials: There is no disagreement with the audit finding.
FINDING 2025-004 Subject: Highway Planning and Construction - Internal Controls Federal Agency: Department of Transportation Federal Program: Highway Planning and Construction Assistance Listings Number: 20.205 Federal Award Numbers and Years (or Other Identifying Numbers): DES# 2201624, DES# 2002980, DES# 2201626, DES# 2201625, DES# 2300034 Pass-Through Entity: Indiana Department of Transportation Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Finding: Material Weakness INDIANA STATE BOARD OF ACCOUNTS 21 JEFFERSON COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The County had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, material noncompliance related to expenditures made from the Highway Planning and Construction funds. The Indiana Department of Transportation (INDOT) administers the Highway Planning and Construction program in the State of Indiana. The INDOT passes federal funds through to the Local Public Agencies (LPA) for qualifying projects to construct, preserve, and improve transportation on the nation's roads. When a project is awarded, the contract outlines specific requirements with which the LPA is required to comply. When the LPA signs the contract, they accept their responsibility for ensuring each local federal-aid project complies with all federal laws and regulations. The LPA is also required to appoint at least one full-time employee as the Employee in Responsible Charge (ERC) to manage the award. In order to receive reimbursement, the LPA is required to submit an LPA Invoice Voucher with supporting documentation. Invoices are to be reviewed for accuracy, and approved by the ERC, before payment by the LPA. Proof of the ERC review must be provided when requesting reimbursement on the LPA Invoice Voucher. Given INDOT's thorough review process for ensuring expenses are allowable, our objective was to verify invoices were not charged to any other federal programs and that invoices sent to the INDOT were not fraudulent. The Highway Department Administrative Assistant/ERC prepared and submitted the LPA Invoice Vouchers without a review or oversight process in place to ensure that the expenses were not charged to any other federal programs and were not fraudulent. The lack of internal controls was a systematic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause A proper system of internal controls over the Highway Planning and Construction expenditures was not designed by management of the County, which would include segregation of key functions to ensure the Highway Planning and Construction funds were not fraudulent or charged to other federal programs. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the County's management perspective of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. INDIANA STATE BOARD OF ACCOUNTS 22 JEFFERSON COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the County design and implement a proper system of internal controls that would provide segregation of duties for the preparation of the LPA Invoice Voucher and the review of the LPA Invoice Voucher prior to submission to the INDOT. Additionally, policies and procedures should be implemented to ensure appropriate reviews, approvals, and oversight are taking place. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
2025-004 Procurement Prior Year Finding Number: N/A Year of Finding Origination: 2025 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Material Weakness and Modified Opinion Federal Agency: U.S. Department of Justice Program: 16.710 Public Safety Partnership and Community Policing Grants Award Number and Year: 15JCOPS-24-GG-02198-TECP; 2025 Pass-Through Agency: N/A - Direct Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 2 U.S. Code of Federal Regulations § 200.318(i) states that the County must maintain records sufficient to detail the history of procurement. These records will include, but are not necessarily limited to, the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Additionally, the County must follow further federal guidance over full and open competition as provided in Title 2 U.S. Code of Federal Regulations § 200.319 and perform a cost or price analysis as provided in Title 2 U.S. Code of Federal Regulations § 200.324. Condition: For one contract over the simplified acquisition threshold tested, no documentation was maintained detailing the history of the procurement demonstrating full and open competition, or that a cost or price analysis was performed. Questioned Costs: $273,011; known questioned costs were calculated as the amount of the contract. Context: The threshold used for the procurement testing was based on the County's policy for simplified acquisition threshold which is over $175,000. The population consisted of two contracts over the simplified acquisition threshold; both contracts were tested. Effect: Documentation detailing the procurement was not maintained and therefore it cannot be determined whether the County provided full and open competition or performed a cost or price analysis. Cause: The County relied on a sole source contract established within the County between a vendor and the Ramsey/Washington Recycling & Energy Board. Ramsey County staff who purchased the generators believed that the contract used was competitively bid. Recommendation: We recommend the County maintain documentation on the history of a procurement, provide for full and open competition, and perform a cost or price analysis to support compliance with Title 2 U.S. Code of Federal Regulations §§ 200.318, 200.319, and 200.324. View of Responsible Official: Concur
2025-001 Eligibility-MAXIS Prior Year Finding Number: 2024-003 Year of Finding Origination: 2024 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Material Weakness and Modified Opinion Federal Agency: U.S. Department of Health and Human Services Program: 93.558 Temporary Assistance for Needy Families Award Number and Year: 2501MNTANF; 2025 Pass-Through Agency: Minnesota Department of Human Services Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 42 United States Code § 602(a)(1)(B)(iii) requires each state to create a written document that shall set forth the objective criteria for the delivery of benefits and the determination of eligibility. The Minnesota Department of Human Services’ State Plan for Temporary Assistance for Needy Families (TANF) and Minn. Stat. § 142G.10, subd. 1 establish the general eligibility requirements for TANF benefits. Condition: The Minnesota Department of Human Services maintains the computer system, MAXIS, which is used by Ramsey County to support the eligibility determination process. In the recipient files reviewed for eligibility, not all documentation was available, updated, or input correctly to support recipient eligibility. The following exceptions were noted in the sample of 40 MAXIS recipient files tested: • One recipient file in which the relationship between the minor child and the parent or other caretaker relative was not documented; • Six recipients’ files in which the applicant did not complete required questions on the application; • One recipient file in which the income in MAXIS did not agree with the supporting documentation on file; • One recipient file in which the amount of rent for a housing subsidy did not match supporting documentation on file; • One recipient file in which the housing subsidy in MAXIS did not have supporting documentation on file; and • One recipient file in which the number of months on TANF exceeded 60 months with no exceptions to extend past the 60-month limit. Questioned Costs: Not applicable. The County administers the program, but the State of Minnesota pays benefits to recipients in this program. Context: The State of Minnesota and the County split the eligibility determination process. Pursuant to Minnesota statutes, Ramsey County performs the “intake function” needed for this program, while the State maintains the MAXIS system, which supports the eligibility determination process. Recipients receive benefit payments from the State. The population of eligible recipients was 3,982 for Temporary Assistance for Needy Families in 2025; the sample size was 40 recipients. The sample size was based on guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: The improper input or updating of information in MAXIS and lack of verification or follow-up of eligibility determining factors increase the risk that program recipients will receive benefits when they are not eligible. Cause: Program personnel entering recipient data into MAXIS did not ensure all required information was input correctly, supported, and retained. Recommendation: We recommend Ramsey County implement additional procedures to provide reasonable assurance that all documentation needed to support eligibility determinations exists, the program personnel properly input or update the documentation in MAXIS, and the program personnel follow up on issues in a timely manner. In addition, Ramsey County should consider providing further training to program personnel. View of Responsible Official: Concur
2025-002 Special Tests and Provisions – Child Support Non-Cooperation Prior Year Finding Number: 2024-003 Year of Finding Origination: 2024 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Material Weakness and Modified Opinion Federal Agency: U.S. Department of Health and Human Services Program: 93.558 Temporary Assistance for Needy Families Award Number and Year: 2501MNTANF; 2025 Pass-Through Agency: Minnesota Department of Human Services Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 45 U.S. Code of Federal Regulations § 264.30 states: “What procedures exist to ensure cooperation with the child support enforcement requirements? (a)(1) The State agency must refer all appropriate individuals in the family of a child, for whom paternity has not been established or for whom a child support order needs to be established, modified, or enforced, to the child support enforcement agency (i.e., the IV-D agency). (2) Referred individuals must cooperate in establishing paternity and in establishing, modifying, or enforcing a support order with respect to the child. (b) If the IV-D agency determines that an individual is not cooperating, and the individual does not qualify for a good cause or other exception established by the State agency responsible for making good cause determinations in accordance with section 454(29) of the Act or for a good cause domestic violence waiver granted in accordance with § 260.52 of this chapter, then the IV-D agency must notify the IV-A agency promptly. (c) The IV-A agency must then take appropriate action by: (1) Deducting from the assistance that would otherwise be provided to the family of the individual an amount equal to not less than 25 percent of the amount of such assistance; or (2) Denying the family any assistance under the program.” Condition: Eligibility requirements include cooperating with child support. When a recipient is determined to be in non-cooperation status by the child support agency, counties are required to reduce benefits accordingly. The following exceptions were noted in the sample of six recipient files with non-cooperation in establishing paternity tested: • One recipient file did not have a child support non-cooperation letter included in supporting documentation; • One recipient file had sanctions that should have begun in July; however, the non-cooperation letter was not issued until September 17, 2025. Sanctions were applied in September but are supposed to be applied in the month subsequent to the non-cooperation letter; and • One recipient file had sanctions imposed on October 1, 2025. The client came into compliance on October 3, 2025, and had sanctions lifted in October; however, sanctions should have instead been lifted in November. Questioned Costs: Not applicable. The County administers the program, but the State of Minnesota pays benefits to recipients in this program. Context: Child support non-cooperation is determined by Ramsey County, and the Providing Resources to Improve Support in Minnesota (PRISM) system maintains the information and recipient status. When a Child Support Officer at the County updates PRISM to show non-cooperation, it interfaces with MAXIS. From this interface, MAXIS receives a Worker’s Daily Report message which notifies the entity of child support non-cooperation. The County is responsible for updating the recipient’s record in MAXIS, including entering child support sanctions, or closing a recipient file on the seventh occurrence of noncompliance. The total population of recipients subject to child support non-cooperation for this program was 54; the sample size was 6 recipients. The sample size was based on guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: Benefit overpayments or underpayments could be paid when child support non-cooperation is not properly processed for a benefit month. Cause: Program personnel entering recipient data into MAXIS did not ensure all required information was input correctly, supported, and retained. Recommendation: We recommend Ramsey County implement additional procedures to provide reasonable assurance that child support non-cooperation benefits are being reduced as necessary in MAXIS. In addition, Ramsey County should consider providing further training to program personnel. View of Responsible Official: Concur
2025-003 Eligibility - MAXIS Prior Year Finding Number: 2024-004 Year of Finding Origination: 2024 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Material Weakness and Modified Opinion Federal Agency: U.S. Department of Health and Human Services Program: 93.778 Grants to States for Medicaid Award Number and Year: 2205MN5ADM; 2025 Pass-Through Agency: Minnesota Department of Human Services Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 42 U.S. Code of Federal Regulations §§ 435.911 and 435.945 require the state Medicaid agency to determine and verify eligibility of enrollees in Medicaid. The Minnesota Department of Human Services provides the Minnesota Health Care Programs Eligibility Policy Manual. The manual contains the Minnesota Department of Human Services eligibility policies for the Minnesota Health Care Programs, including the eligibility requirements of Grants to States for Medicaid. Specific eligibility requirements are included for recipients’ citizenship verification, income limits, applications, and asset verification. Minnesota Statutes, Section 256B.05, requires county agencies to administer Grants to States for Medicaid. Condition: The Minnesota Department of Human Services maintains the computer system, MAXIS, which is used by Ramsey County to support the eligibility determination process. In the recipient files reviewed for eligibility, not all documentation to support recipient eligibility was available, updated, or input correctly. The following exceptions were noted in the sample of 40 MAXIS recipient files tested: • Two recipients’ files in which the application was not documented; • One recipient file in which the verification of citizenship was not documented; • Three recipients’ files in which the verification of income was not documented, or documentation did not agree with MAXIS; • Six recipients’ files in which the verification of assets was not documented, or documentation did not agree with MAXIS; and • One recipient was incorrectly enrolled in a specific program type in MAXIS. Questioned Costs: Not applicable. The County administers the program, but the State of Minnesota pays benefits to recipients in this program. Context: The State of Minnesota and the County split the eligibility determination process. Pursuant to Minnesota statutes, Ramsey County performs the “intake function” needed for this program, while the State maintains the MAXIS system, which supports the eligibility determination process. Recipients receive benefit payments from the State. The population consisted of 30,409 active MAXIS recipients enrolled in Grants to States for Medicaid in 2025; the sample size was 40 recipients. The sample size was based on guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: The improper input or updating of information in MAXIS and lack of verification or follow-up of eligibility determining factors increase the risk that program recipients will receive benefits when they are not eligible. Cause: Program personnel entering recipient file information into MAXIS did not ensure all required information was input correctly, supported, and retained. Recommendation: We recommend Ramsey County implement additional procedures to provide reasonable assurance that all documentation needed to support eligibility determinations exists, the program personnel properly input or update the documentation in MAXIS, and the program personnel follow up on issues in a timely manner. In addition, Ramsey County should consider providing further training to program personnel. View of Responsible Official: Concur
FINDING 2025-001 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY 2025 Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2024-003. Condition and Context As part of sound management of the federal award, the County was responsible for implementing a system of internal controls that would ensure compliance with the applicable requirements. The County had not properly designed or implemented such a system that would likely be effective in preventing, or detecting and correcting, noncompliance with the reporting requirements of the federal award. The County was required to submit an annual Project and Expenditure (P&E) report to the U.S. Department of the Treasury (Treasury), which included information on the County's current period expenditures and obligations and total cumulative expenditures and obligations. The County had designed an internal control that the County Auditor's Bookkeeper prepared the P&E report based on reports generated from the County's financial software. The County Auditor's Bookkeeper then submitted the P&E report to the County Auditor for review and approval. However, the internal control was not effective as the review of the P&E report did not prevent, nor detect and correct, noncompliance. As a result, the P&E report submitted in April 2025 was not accurate as the County reported total cumulative amounts for both current year expenditures/obligations and total cumulative expenditures/obligations for the County's five projects, which resulted in current year expenditures/obligations being overstated by the same amount by project as follows: Amount Project Overstated Project 1: YR2022 $ 470,000 Project 2: YR2023 177,808 Project 3: Health Dept Renovation/Furnishings 289,000 Project 4: YR 2023-2024 3,658,115 Project 5: YR 2024-2025 815,846 These variances were discussed with County management, who stated they were already aware that the numbers submitted through the federal portal did not match its local financial records. The lack of internal controls and noncompliance were systemic issues throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 14 KNOX COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Compliance and Reporting Guidance, State and Local Fiscal Recovery Funds, page 13, states in part: ". . . 10. Reporting. All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. . . ." 31 CFR 35.4(c) states in part: "Reporting and requests for other information. During the period of performance, recipients shall provide to the Secretary periodic reports providing detailed accounting of the uses of funds, . . ." Cause The County Auditor's Bookkeeper stated that County officials understood that current expenditures and current obligations should agree to the cumulative expenditures and cumulative obligations, which resulted in reporting errors. Effect Without a proper system of internal controls in place that operated effectively, the County did not file an accurate annual P&E report as required under the federal award. As a result, noncompliance occurred and remained undetected. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 15 KNOX COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that the management of the County establish a system of internal controls and develop policies and procedures over the preparation and review of federal reports to ensure appropriate reviews, approval, and oversight take place. Additionally, management should develop policies and procedures to ensure that the County provides the Treasury with complete and accurate information for all reports. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Medical Assistance Assistance Listing Number: 93.778 Federal Award Identification Number and Year: 2505MN5MAP and 2505MN5ADM, 2025 Pass-Through Agency: Minnesota Department of Human Services Pass-Through Numbers: 2505MN5MAP and 2505MN5ADM Award Period: Year Ended December 31, 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: No internal casefile reviews were performed during 2025. Questioned Costs: None noted. Context: During eligibility testing, it was noted that casefile review was not performed during 2025. Cause: Turnover within the department. Effect: Errors made in determining eligibility may not be discovered and benefits may be issued to clients who are not eligible. Repeat Finding: Yes – 2024-005. Recommendation: We recommend the County implement additional procedures to ensure case file reviews are being performed on a regular basis. Views of responsible officials: There is no disagreement with the audit finding.
FINDING 2025-001 Subject: WIC Special Supplemental Nutrition Program for Women, Infants, and Children - Suspension and Debarment Federal Agency: Department of Agriculture Federal Program: WIC Special Supplemental Nutrition Program for Women, Infants, and Children Assistance Listings Number: 10.557 Federal Award Number and Year (or Other Identifying Number): Contract #88733 Pass-Through Entity: Indiana Department of Health Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Significant Deficiency, Other Matters Condition and Context Suspension and Debarment Prior to entering into subawards and covered transactions with federal award funds, recipients are required to verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded from participation in federal programs. "Covered transactions" include, but are not limited to, contracts for goods or services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. Verification may be performed by checking the System for Awarded Management (SAM), collecting a certification from that person, or adding a clause or condition to the covered transaction with that person. The County had established policies and procedures intended to ensure that an entity it intended to do business with was not suspended, debarred, or otherwise excluded prior to entering into a covered transaction. However, these procedures were not operating effectively, as not all vendors were verified. The County entered into two covered transactions totaling $119,706, both of which were selected for testing. For one of these transactions, totaling $72,656, the County did not verify the vendor's suspension and debarment status prior to entering into the covered transaction or making payment. The ineffective internal controls and noncompliance were isolated to the covered transactions described above. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 16 JOHNSON COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Cause The County had policies and procedures in place to verify that vendors were not suspended or debarred or otherwise excluded from participating in federal programs which included obtaining a certification from vendors regarding their exclusion status. However, there were no procedures in place to ensure this was not unintentionally omitted for any vendor contracts. Effect Without the proper implementation of an effectively designed system of internal controls, the County cannot ensure that vendors paid with federal funds are eligible to participate in federal programs. Noncompliance with the suspension and debarment requirements could result in the repayment or loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. Recommendation Management should develop procedures to ensure vendors are not suspended or debarred when expending federal funds. Appropriate documentation should be obtained and maintained to ensure compliance with suspension and debarment. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
2025-001 Finding – Federal Award Type: Subrecipient Monitoring – Non-Compliance and Material Weakness in Internal Control Over Compliance (Partial repeat of Finding 2024-002) Identification of Federal Program: Assistance Listing (AL) No. 81.086 – Conservation Research and Development Program Criteria / Requirement: 2 CFR 200.303 requires non-federal entities receiving federal awards to establish, document, and maintain effective internal control over federal awards that provides reasonable assurance that the entity is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. In accordance with 2 CFR 200.332, a pass-through entity is required to clearly identify the federal award as a subaward and provide the subrecipient with required federal award information and all applicable requirements imposed by the pass-through entity. The pass-through entity must also evaluate the risk of noncompliance for each subrecipient, monitor the activities of subrecipients to ensure that federal awards are used for authorized purposes and that performance goals are achieved, and take appropriate action when necessary. Condition / Context: Forth passed through $2,260,902 in federal funding to subrecipients under AL No. 81.086. During the audit, we noted that Forth made improvements to its subrecipient monitoring process during fiscal year 2025. Specifically, Forth established and documented a policy addressing subrecipient monitoring, including an administrative review to be completed by subrecipients and a risk assessment process for subrecipients prior to entering into new subaward agreements. We also noted that required federal award information was included in subaward agreements and, when applicable, Forth obtained and reviewed the subrecipient's audit under 2 CFR Subpart F for relevant audit findings. However, the established subrecipient monitoring policy was not consistently followed and was not applied retroactively to previously established subrecipients. Specifically, the risk assessment process was implemented for new subrecipients but was not applied to existing or previously engaged subrecipients. Additionally, Forth did not consistently maintain formal documentation evidencing ongoing monitoring activities, including regular meetings with subrecipients to assess timely completion of tasks and the provision of technical assistance when needed. Further, although a risk assessment was performed for new subrecipients, Forth had not established a systematic process to ensure that the results of the risk assessment were consistently used to determine, document, and execute the appropriate level of monitoring for each subrecipient. As a result, Forth was unable to demonstrate that its established subrecipient monitoring policy was consistently implemented and that monitoring procedures were appropriately applied based on the risk of noncompliance for each federal subrecipient. Cause: Although Forth had established a subrecipient monitoring policy, controls were not sufficient to ensure the policy was consistently implemented and applied to all applicable subrecipients. Management had not established an effective process to ensure that existing subrecipients were incorporated into the risk assessment process or that required monitoring activities and related documentation were consistently completed and retained. Effect: Failure to consistently implement and document the established subrecipient monitoring policy increases the risk that subrecipient noncompliance may not be identified, evaluated, or addressed timely. Incomplete award and monitoring documentation also limits Forth's ability to demonstrate that it exercised appropriate oversight over federal subawards and complied with the requirements of 2 CFR 200.303 and 200.332. Questioned Costs: None. Recommendation: Forth should strengthen its implementation and oversight of its existing subrecipient monitoring policy to ensure that the policy is consistently followed and applied prospectively to all applicable subrecipients. Specifically, Forth should: 1. Apply and document the required risk assessment for all subrecipients, including existing and previously engaged subrecipients, and establish procedures for periodic reassessment as appropriate; 2. Ensure that the results of each risk assessment are documented and used to determine the appropriate nature, timing, and extent of subrecipient monitoring; 3. Maintain complete and accurate documentation of subaward information and ongoing monitoring activities, including meetings, technical assistance, performance reviews, follow-up, and resolution of identified issues; and 4. Establish management review and other internal controls to verify that the subrecipient monitoring policy is consistently implemented, documented, and applied to all applicable federal subrecipients. Management should also perform a review of existing subrecipient files to identify and remediate instances where required risk assessments, monitoring documentation, or other award documentation were not completed in accordance with the established policy. Management’s Response: We agree with the auditor's comments. Forth made progress in FY2025 by establishing a documented subrecipient monitoring policy, a risk assessment process for new subawards, and including required federal award information in subaward agreements. In FY2026, we will extend the risk assessment retroactively to all existing subrecipients, formalize a written process that ties risk assessment results to a defined monitoring plan, implement a standard monitoring log to document ongoing activities, and establish a semi-annual management review to confirm consistent application - with full implementation targeted by December 31, 2026.
2025-001 Finding – Federal Award Finding Type: Material Weakness in Internal Control over Compliance – Eligibility Identification of Federal Program: AL Number: 10.558 Child and Adult Care Food Program Criteria / Requirement: The 2 CFR section 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. In order to be eligible for free meals under the Child and Adult Care Food Program, the participating child’s household must be at or below 130 percent of the poverty level. In order to be eligible for reduced price meals under the Child and Adult Care Food Program, the participating child’s household must be between 130 percent and 185 percent of the poverty level. Condition / Context: During the audit, 25 children participating in the Child and Adult Care Food Program were tested for eligibility. For one child tested, the supporting documentation for the child’s household income eligibility was unable to be located. However, the Organization was able to retroactively provide documentation that the child was eligible for the program. Additionally, one other child tested had the supporting documentation for eligibility, however there was no documented review of the eligibility file. Cause: The procedures and controls in place were not followed to ensure that eligibility determination was properly reviewed and that eligibility documentation is retained. Effect: The Organization could have provided meals to an ineligible child, resulting in noncompliance with the federal award requirements. Questioned Costs: None Recommendation: We recommend that the Organization implement the necessary internal controls to ensure that each child served under the program has a completed eligibility determination and that the file is appropriately reviewed. Management’s Response: Management concurs with the finding and will implement effective internal controls to ensure that eligibility requirements are met, documented, properly reviewed, and retained.
2025-001 Internal Controls over Compliance - Allowable Activities and Costs - Payroll (Significant Deficiency) Legal Services Corporation 09.744060 Basic Field Grant Grant Period: 1/1/2025 – 12/31/2025 Contract Number: 744060 U.S Department of Justice 16.575 Victims of Crime Act Grant Periods: 10/1/24 – 9/30/25 and 10/1/25 – 9/30/26 Contract Number: 4055105; 4055106 Supreme Court of Texas Basic Civil Legal Services Program Grant Period: 9/1/2023 – 8/31/2026 Contract Number: 26030 Criteria: Under 2 CFR Section 200.303(a) a non-Federal entity is required to establish and maintain internal controls over compliance with Federal statutes, regulations, and the terms and conditions of the Federal grant. In addition, under 2 CFR Section 200.430 – Compensation – personal services, charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. Budget estimates may be used for interim accounting purposes, but budget estimates alone do not qualify as support for charges to Federal awards. The entity’s system of internal controls must include a process to review after-the-fact interim charges made to a Federal award to budget estimates and make any necessary adjustments such that the final amount charged to the Federal award is accurate, allowable and properly allocated. Texas Grant Management Standards also contains provisions for selected items of cost for Compensation – personal services which mirrors the requirements of 2 CFR Section 200.430. Condition: The Organization’s internal control process to compare actual time charged on the employee’s time sheet to the budget allocation charged to the grant to determine if budget estimates reflect reasonable approximations of the activities performed did not consistently occur. For 8 of 74 payroll transactions selected for testing for the two major federal programs, the underlying time sheet provided was not signed by either the employee or the supervisor and/or was completed or approved several months after the pay period. The same condition was noted for the Organization’s BCLS Program. For 4 of the 40 payroll transactions selected for testing the underlying time sheet provided was not signed by either the employee or the supervisor and/or was completed or approved several months after the pay period. In addition, for 3 of 40 payroll transactions selected for testing, the Organization was unable to provide a time sheet to substantiate the employee’s time for that period. The finding appears to be a systemic issue. The samples were not statistically valid. Cause: While the Organization's internal control processes require that time sheets be completed and reviewed and approved by appropriate personnel on a timely basis, these policies are not consistently followed. In some cases, time sheets are completed, reviewed, or approved only when required for grantor or auditor review. Time sheets supporting personnel costs for employees that have subsequently left the Organization may not be available or reproducible. Effect: Failure to review time sheets or maintain time sheets to support compensation allocations could result in an over/under statement of compensation charged to the grants. Questioned Costs: There were no questioned costs for Legal Services Corporation Basic Field Grant ALN 09.77460 or Victims of Crime Act ALN 16.575. For the Basic Civil Legal Services Grant Contract No. 26030, known questioned costs for the three missing time sheets totaled $2,291. Likely questioned costs which were extrapolated from known questioned costs to the remaining payroll population for the grant were calculated to be $16,322. Perspective: There is not consistent evidence of the Organization’s review and reconciliation of time sheets to budget estimates which affects both the allowable activities and allowable costs requirements. Repeat Finding: Yes Auditor’s Recommendation: We recommend the Organization review its timekeeping policies and procedures to ensure time sheets are retained for all payroll transactions to support the allocation of compensation between cost objectives and that these are provided timely to the Director of Finance to reconcile the allocation of personnel costs charged on the time sheets to the budget estimates used to bill grantors. This should be done in conjunction with monthly or quarterly billings (or other determined regular interval), at fiscal year-end, and at the end of the grant year (if different from the Organization’s fiscal year). Views of Responsible Officials: We concur with the recommendation, please see Corrective Action Plan.
Criteria: Continuum of Care Program, Assistance Listing 14.267, requires recipients and subrecipients to provide a match of no less than 25% of grant funds, excluding leasing funds, using eligible cash or in-kind contributions from non-CoC sources. Match must be supported by records sufficient to demonstrate that the contributions are eligible, properly valued, from allowable sources, and applied to the applicable grant period. In addition, 2 CFR 200.303 requires the Organization to establish and maintain effective internal control over the federal award, including controls designed to support compliance with matching requirements. Condition: During testing of both match reports submitted during the audit period, representing 100% of the population, we noted that the match calculations and supporting documentation were not consistently subject to documented independent review before submission. Specifically, the same individual participated in portions of both the preparation and review process, and evidence of a separate supervisory review was not consistently retained. No unsupported or ineligible match amounts were identified from the documentation tested; however, the review control was not operating as designed. Cause and Effect: Written procedures did not clearly assign preparation and independent review responsibilities for match reporting, and evidence of review by an individual not involved in preparing the match calculations was not consistently retained. The lack of independent review and segregation of duties increases the risk that errors, unsupported amounts, or noncompliance with matching requirements could occur and not be detected in a timely manner. No known questioned costs were identified. The audit procedures did not identify unsupported or ineligible match amounts; therefore, no likely questioned costs were identified based on the information available. Repeat Finding: This is a repeat finding related to prior-year finding 2024-005. Recommendation: We recommend that the Organization implement procedures to ensure independent review and approval of match calculations and supporting documentation prior to submission. Where segregation of duties is limited, management should implement compensating controls, such as documented secondary review by an individual not involved in preparation.
Noncompliance with Procurement Requirements and Material Weakness in Internal Control over Procurement and Suspension and Debarment Assistance Listing Number: 14.251 Name of Federal Program or Cluster: Economic Development Initiative, Community Project Funding, and Miscellaneous Grants Name of Federal Agency: Department of Housing and Urban Development Name of Pass-Through Entities: N/A Procurement and Suspension and Debarment 2 CFR§200.318(i) requires the recipient or subrecipient must maintain records sufficient to detail the history of each procurement transaction. These records must include the rationale for the procurement method, contract type selection, contractor selection or rejection, and the basis for the contract price. 2 CFR§200.303 requires the Organization to establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). WRTP entered into a contract with a vendor greater than the simplified acquisition threshold to perform services under the federal award. WRTP was unable to provide records sufficient to detail the history of the procurement transaction. WRTP had turnover during the year with the positions that assisted with the procurement transactions. WRTP was unable to locate the records requested with their departures. Failure to keep adequate procurement records limits the ability to determine that procurement complied with applicable Uniform Guidance procurement standards or whether the procurement provided the required degree of competition. We recommend that WRTP implement procedures to ensure that adequate documentation is maintained for all procurements subject to the Uniform Guidance. Procurement files should document the procurement method used, vendors solicited, bids or quotations received, the basis for vendor selection or rejection, and the basis for determining contract price is reasonable. No Management concurs with the finding and recognizes the importance of maintaining consistent documentation supporting compliance with federal procurement, suspension, and debarment requirements. While WRTP|BIG STEP has procedures in place intended to ensure that it is in compliance with procurement requirements for federally funded activities, management acknowledges that documentation supporting those procedures was not maintained in a manner sufficient to satisfy audit requirements. During 2026, Management will establish standardized compliance checklists and procedures to ensure procurement requirements are being met. The planned hiring of a Finance Director will further strengthen oversight and accountability related to federal grant compliance and documentation requirements. The Finance Director will be responsible for overseeing grant financial management, federal and state grant compliance, implementation of internal controls, maintenance of supporting grant documentation, development and monitoring of compliance procedures, audit coordination, and ongoing verification that required documentation is maintained in accordance with federal regulations and Uniform Guidance requirements. Management believes these enhancements will strengthen internal controls over federal grant compliance and ensure adequate support is maintained for future audits.
Noncompliance with Approved Federal Award Budgets and Material Weakness in Internal Control Over Compliance Assistance Listing Number: 14.251 Name of Federal Program or Cluster: Economic Development Initiative, Community Project Funding, and Miscellaneous Grants Name of Federal Agency: Department of Housing and Urban Development (HUD) Name of Pass-Through Entities: N/A Assistance Listing Number: 47.084 Name of Federal Program or Cluster: Technology, Innovation, and Partnerships Name of Federal Agency: National Science Foundation Name of Pass-Through Entities: Current Innovation Activities Allowed or Unallowed 2 CFR§200.308 revision of budget and program plans: The Code of Federal Regulations (CFR) Section 200.308(b) Deviations from Approved Budget requires the recipient or subrecipient must report deviations from the approved budget, project or program scope, or objectives(s) in accordance with §200.329. The recipient or subrecipient must request prior approvals from the Federal agency or pass-through entity for budget and program plan revisions in accordance with this section. 2 CFR§200.308(f)(9) transferring funds between construction and non-construction work under a Federal award is a revision requiring prior approval. Article 3C of the HUD Grant Agreement states all changes to the Grantee’s Project of Approved budget must be made in accordance with 2 CFR 200.308 and this grant agreement. To request HUD’s approval for a change in the project or approved budget, the grantee must submit a formal letter to the Director of HUD’s Office of Economic Development – Congressional Grants Division. The letter must be submitted by email to the assigned grant officer and must provide justification for the change. Section G.1 of the Current Innovation Grant Agreement requires prior approvals for (d) to change or temporarily replace key project staff (e) any rebudgeting in excess of 15% or $100,000, whichever is greater, by programmatic core functions, and (f) to add a line item to the budget. 2 CFR§200.303 requires the Organization to establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The HUD approved line-item budget included: $140,000 Equipment: training equipment for training bays includes a virtual welder, a virtual CDL training system, and several VR training apparatuses. WRTP did not use the HUD Federal grant funds to purchase the VR training system and instead the VR training system was purchased using other grant funding. The total $1,500,000 HUD award was spent and WRTP deviated from the budget without meeting the requirements noted in the criteria section of the finding resulting in a $140,000 questioned cost. The HUD grant agreement explicitly incorporated the requirements in the Criteria section into the grant award. The Current Innovation approved budget included personnel salaries and wages for the President & CEO, Chief Operating Officer, the Program Coordinator, and Outreach Coordinator. On the December 2025 invoice sent to Current Innovation for cost reimbursement, WRTP included the salaries and wages for a total of 11 positions and some of these positions were not included in the approved budget. WRTP was working with Current Innovation to modify the budget to include additional positions but the budget modification was not approved at the time these costs were billed resulting in a $18,992 questioned cost. Management did not monitor to ensure that the requirements listed in the Uniform Guidance as well as the approved award budgets were being followed. WRTP may have expended grant funds on activities or cost categories inconsistent with the approved award budget and contract terms. We recommend that WRTP management monitor their compliance with the approved budget. If changes to the approved budget are necessary we recommend that WRTP follows the Uniform Guidance and grant agreement requirements.No Management concurs with the finding and acknowledges the importance of maintaining complete documentation supporting approved grant budgets and budget modifications associated with federally funded programs. Although the Organization monitored expenditures and program performance throughout the grant period, certain documentation supporting budget approvals and modifications was not maintained in a manner sufficient to satisfy audit requirements. During 2026, management will strengthen grant management procedures by implementing centralized grant files containing all award documents, approved budgets, amendments, correspondence, supporting approvals, and related grant documentation. Additional internal review procedures will be established to ensure budget revisions and approvals are properly documented, reviewed, and retained in accordance with grant requirements. The planned hiring of a Finance Director will provide additional oversight of grant budgeting, financial reporting, and compliance monitoring. The Finance Director will be responsible for budget development and monitoring, grant financial management, maintenance of supporting grant documentation, implementation of internal controls, development of financial policies and procedures, audit coordination, and ensuring that grant budgets, amendments, approvals, and related documentation are properly maintained and consistently applied across all funding sources. Management is committed to enhancing grant administration and compliance processes and believes the corrective actions being implemented will mitigate the risk of similar findings in future audits.
Finding 2025-003 ALN Number: 14.871 Name of Federal Agency: U.S. Department of Housing & Urban Development Type of Finding – Single Audit Material Weakness in Internal Control Over Financial Reporting Criteria: HUD requires that public housing authorities accurately report program activity in the Voucher Management System (VMS) and reconcile these submissions to the general ledger (GL) on a monthly basis. The Uniform Guidance (2 CFR 200.303) requires non-federal entities to establish and maintain effective internal control over federal awards, including accurate financial reporting and reconciliation processes. Port HAP revenue and expense is not being tracked properly in the GL. Condition: The Schertz Housing Authority did not properly track and reconcile its monthly VMS submissions to the general ledger. As a result, there were material discrepancies between the VMS-reported data and the HCV program’s financial statements, specifically related to income and restricted equity. Cause and Effect: The Authority did not follow their formal procedures to ensure that VMS submissions were reconciled to the general ledger each month. Material discrepancies existed in the HCV program’s financial statements, affecting reported income and restricted equity. Additionally, these discrepancies contributed to the Authority experiencing a funding shortfall in the HCV program by year-end, increasing the risk of questioned costs and noncompliance with HUD requirements. Recommendation: We recommend that the Schertz Housing Authority should work with their fee accountant to ensure that the financial records agree to the VMS submissions to the general ledger. View of Responsible Officials and Planned Corrective Action: We are working with our HUD field office to correct our VMS reporting. We are also working with our fee accountant and have switched our software to HAPPY so we can get better reporting. Responsible Official: Cristi LaJeunesse, Executive Director
2025-005 Procurement and Suspension and Debarment Prior Year Finding Number: 2024-006 Year of Finding Origination: 2020 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of the Treasury Program: 21.027 COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Award Number and Year: SLFRP3474, 2021 Pass-Through Agency: N/A – Federal Direct Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Federal requirements prohibit non-federal entities from contracting with or making subawards under covered transactions to parties that are suspended or debarred. Title 2 U.S. Code of Federal Regulations § 180.300 describes a required verification process. Prior to entering into the transaction, one of the following must be performed: (1) checking SAM.gov exclusions, (2) collecting a certification, or (3) adding a clause or condition to the covered transaction with the contracting party. Condition: The County did not verify that vendors were not debarred, suspended, or otherwise excluded from participation in federal assistance programs or activities before entering into the covered transactions. Questioned Costs: $217,587; known questioned costs were determined based on payments to vendors with federal funds from this program that exceeded $25,000 in 2025. Context: This issue is reported for this major program; however, it impacts federal programs county-wide. The County has revised its procurement policies to include components of federal procurement requirements related to suspension and debarment; these are pending review and approval by the Board of County Commissioners. The vendors paid with federal funds from this program were not listed as suspended or debarred on SAM.gov at the time of audit. Total federal expenditures for this program were $336,448. Effect: Failure to verify vendors are not suspended, debarred, or otherwise excluded prior to entering into a covered transaction may result in the County entering into a transaction with a vendor that is not authorized to provide goods and services under the grant. Cause: The County’s written procurement policy does not include requirements specific to suspension and debarment. Recommendation: We recommend the County review and approve their revised policy that includes the requirements specific to suspension and debarment and maintain documentation to demonstrate that vendors were not suspended, debarred, or otherwise excluded from conducting business with the County; the County should complete this documentation prior to entering into a covered transaction. View of Responsible Official: Concur
2025-006 Eligibility – METS Prior Year Finding Number: N/A Year of Finding Origination: 2025 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of Health and Human Services Program: 93.778 Grants to States for Medicaid Award Number and Year: 2505MN5ADM; 2025 Pass-Through Agency: Minnesota Department of Human Services Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 42 U.S. Code of Federal Regulations §§ 435.911 and 435.945 require the state Medicaid agency to determine and verify eligibility of enrollees in Medicaid. The Minnesota Department of Human Services provides the Minnesota Health Care Programs Eligibility Policy Manual. The manual contains the Minnesota Department of Human Services eligibility policies for the Minnesota Health Care Programs, including the eligibility requirements of Grants to States for Medicaid. Specific eligibility requirements are included for participants’ Social Security number verification. Minnesota Statutes, Section 256B.05, requires county agencies to administer Grants to States for Medicaid. Condition: The Minnesota Department of Human Services maintains the computer system, METS, which is used by McLeod County to support the eligibility determination process. In a sample of 40 recipient files tested for eligibility, two recipients’ coverage was not terminated in a timely manner after eligibility ended resulting in benefits being provided to ineligible recipients. Questioned Costs: Not applicable. McLeod County administers the program, but benefits to clients in this program are paid by the State of Minnesota. Context: The State of Minnesota and McLeod County split the eligibility determination process. Generally, McLeod County resolves eligibility issues when prompted by the system, while the State performs the initial review of the recipient files, including determining the information in METS is verified. Recipients receive benefits from the State. The population consisted of 6,398 active METS recipients enrolled in the Grants to States for Medicaid in 2025; the sample size was 40 recipient files. The sample size was based on the guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: The improper input or updating of information in METS and lack of verification or follow-up of eligibility determining factors increase the risk that program participants will receive benefits when they are not eligible. Cause: Program personnel responsible for resolving eligibility issues in METS did not ensure coverage was terminated in a timely manner after eligibility ended. Recommendation: We recommend McLeod County implement additional procedures to provide reasonable assurance that all necessary documentation needed to support eligibility determinations exists and the program personnel properly input or update the documentation in METS and follow up on issues in a timely manner. In addition, McLeod County should consider providing further training to program personnel. View of Responsible Official: Concur
2025-002 Eligibility – METS Prior Year Finding Number: 2024-002 Year of Finding Origination: 2023 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of Health and Human Services Program: 93.778 Grants to States for Medicaid Award Number and Year: 2505MN5ADM; 2025 Pass-Through Agency: Minnesota Department of Human Services Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 42 U.S. Code of Federal Regulations §§ 435.911 and 435.945 require the state Medicaid agency to determine and verify eligibility of enrollees in Medicaid. The Minnesota Department of Human Services provides the Minnesota Health Care Programs Eligibility Policy Manual. The manual contains the Minnesota Department of Human Services eligibility policies for the Minnesota Health Care Programs, including the eligibility requirements of Grants to States for Medicaid. Specific eligibility requirements are included for recipients’ social security number documentation, citizenship verification, and income limits. Minnesota Statutes, Section 256B.05, requires county agencies to administer Grants to States for Medicaid. Condition: The Minnesota Department of Human Services maintains the computer system, METS, which is used by Clay County to support the eligibility determination process. In the recipient files reviewed for eligibility, not all documentation to support recipient eligibility was available or input correctly. The following exceptions were noted in the sample of 40 recipient files tested: • One recipient’s case file lacked social security number documentation. • Two recipients’ case files lacked citizenship documentation. • One recipient’s case file did not document the recipient's income correctly. Questioned Costs: Not applicable. Clay County administers the program, but benefits to recipients in this program are paid by the State of Minnesota. Context: The State of Minnesota and Clay County split the eligibility determination process. Generally, Clay County resolves eligibility issues when prompted by the system, while the State performs the initial review of the recipient files, including determining the information in METS is verified. Recipients receive benefits from the State. The population consisted of 16,604 active METS recipients enrolled in the Grants to States for Medicaid in 2025; the sample size was 40 recipient files. The sample size was based on guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: The improper input or updating of information in METS and lack of verification of key eligibility determining factors increase the risk that program recipients will receive benefits when they are not eligible. Cause: Program personnel responsible for resolving eligibility issues in METS did not ensure all required information was input or updated correctly or verified. Recommendation: We recommend Clay County implement additional procedures to provide reasonable assurance that all necessary documentation needed to resolve eligibility issues exists and program personnel properly input, update, or verify the documentation in METS. In addition, Clay County should consider providing further training to program personnel. View of Responsible Official: Concur
2025-003 Eligibility – MAXIS Prior Year Finding Number: 2024-003 Year of Finding Origination: 2023 Type of Finding: Internal Control Over Compliance and Compliance Severity of Deficiency: Significant Deficiency and Other Matter Federal Agency: U.S. Department of Health and Human Services Program: 93.778 Grants to States for Medicaid Award Number and Year: 2505MN5ADM; 2025 Pass-Through Agency: Minnesota Department of Human Services Criteria: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Title 42 U.S. Code of Federal Regulations §§ 435.911 and 435.945 require the state Medicaid agency to determine and verify eligibility of enrollees in Medicaid. The Minnesota Department of Human Services provides the Minnesota Health Care Programs Eligibility Policy Manual. The manual contains the Minnesota Department of Human Services eligibility policies for the Minnesota Health Care Programs, including the eligibility requirements of Grants to States for Medicaid. The manual includes specific eligibility requirements for recipients’ social security number verification and asset verification. Minnesota Statutes, Section 256B.05, requires county agencies to administer Grants to States for Medicaid. Condition: The Minnesota Department of Human Services maintains the computer systems, MAXIS, which is used by Clay County to support the eligibility determination process. In the recipient files reviewed for eligibility, not all documentation to support recipient eligibility was available, updated, or input correctly into MAXIS. The following exceptions were noted in the sample of 40 MAXIS recipient files tested: • One recipient’s case file lacked social security number documentation. • Four recipients’ case files did not document the recipient's assets correctly. Questioned Costs: Not applicable. The County administers the program, but benefits to recipients in this program are paid by the State of Minnesota. Context: The State of Minnesota and the County split the eligibility determination process. Pursuant to Minnesota statutes, Clay County performs the “intake function” needed for this program, while the State maintains the MAXIS systems, which supports the eligibility determination process. Recipients receive benefit payments from the State. The population consisted of 3,294 eligible recipients enrolled in the Grants to States for Medicaid in 2025; the sample size was 40 recipient files. The sample size was based on guidance from Chapter 11 of the AICPA Audit Guide, Government Auditing Standards and Single Audits. Effect: The improper input or updating of information in MAXIS and lack of verification of key eligibility determining factors increase the risk that program recipients will receive benefits when they are not eligible. Cause: Program personnel entering recipient data into MAXIS did not obtain and update the information in the system. Recommendation: We recommend Clay County implement additional procedures to provide reasonable assurance that all documentation needed to support eligibility determinations exists, the program personnel properly input or update the documentation in MAXIS, and the program personnel follow up on issues in a timely manner. In addition, Clay County should consider providing further training to program personnel. View of Responsible Official: Concur
FINDING 2025-002 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY2022 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the prior audit report. The prior audit finding number was 2024-002. Condition and Context Recipients of the COVID-19 - State and Local Fiscal Recovery Funds are required to verify before entering into subawards and covered transactions that contractors and subrecipients are not suspended, debarred, or otherwise excluded. Covered transactions include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction, such as a grant agreement, when the value is expected to equal or exceed $25,000. Verification may be performed by checking the Excluded Parties List System, obtaining a certification from the entity, or including an appropriate clause or condition in the transaction. The County did not have procedures in place to verify that entities were not suspended, debarred, or otherwise excluded from participation in federal assistance programs. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 16 BOONE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.214 states: "Non-Federal entities are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. The regulations in 2 CFR part 180 restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the EPLS; or (b) Collecting a certification from that person if allowed by this rule; or (c) Adding a clause or condition to the covered transaction with that person." Part 4 of the Treasury's Compliance and Reporting Guidance states in part: ". . . recipients are expected to have procurement policies and procedures in place that comply with the procurement standards outlined in the Uniform Guidance . . ." Cause Management did not design an adequate system of internal controls. The County was unable to provide documentation demonstrating the verification that contractors and vendors were not suspended or debarred. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system could not effectively prevent, or detect and correct, material noncompliance. As a result, vendors receiving payments equal to or exceeding $25,000 were not verified to ensure they were not suspended, debarred, or otherwise excluded. Noncompliance with federal statutes, regulations, and terms and conditions of federal awards could result in the loss of future federal funding to the County. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the County strengthen its internal control system to ensure that all vendors receiving payments of $25,000 or more, in whole or in part with federal funds, are verified as not suspended or debarred from participating in federal programs before entering into any covered transactions. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY2022 Compliance Requirement: Reporting Audit Finding: Material Weakness Repeat Finding This is a repeat finding from the prior audit report. The prior audit finding number was 2024-003. Condition and Context The County had not properly designed or implemented a system of internal controls, including appropriate segregation of duties, that would be effective in preventing, or detecting and correcting, noncompliance. A single employee prepared and submitted reports without any documented review or oversight process in place to prevent, or detect and correct, errors. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause The County did not have an effective system of internal controls in place over the Project and Expenditure reports and was unable to provide documentation showing that a proper review of the reports was completed prior to submission. Effect Without the proper implementation of an effectively designed system of internal controls, the County cannot ensure that submitted reports accurately reflect the COVID-19 - Coronavirus State and Local Fiscal Recovery Funds activity. This increases the likelihood that the public will not have access to transparent and accurate information regarding expenditures of federal awards. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 18 BOONE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation Management should develop and implement proper procedures and internal controls, including review and oversight of the reports, prior to its submission to the U.S. Department of the Treasury. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-004 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Period of Performance Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY2022 Compliance Requirement: Period of Performance Audit Findings: Material Weakness, Other Matters Condition and Context The County had not properly designed or implemented a system of internal controls to ensure that transactions made with the COVID-19 - Coronavirus State and Local Fiscal Recovery Funds occurred within the appropriate period of performance. The lack of effective internal controls resulted in items incurred after the period of performance in 4 of the 27 items tested. Further review indicated that the County used the 2025 appropriations as the obligation for some program expenditures. The lack of internal controls and noncompliance was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.1 states in part: ". . . Financial obligations, when referencing a recipient's or subrecipient's use of funds under a Federal award, means orders placed for property and services, contracts and subawards made, and similar transactions that require payment. . . . INDIANA STATE BOARD OF ACCOUNTS 19 BOONE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Period of performance means the total estimated time interval between the start of an initial Federal award and the planned end date, which may include one or more funded portions, or budget periods. Identification of the period of performance in the Federal award per § 200.211(b)(5) does not commit the awarding agency to fund the award beyond the currently approved budget period. . . . Unliquidated financial obligations means, for financial reports prepared on a cash basis, financial obligations incurred by the non-Federal entity that have not been paid (liquidated). . . ." Cause The County had a system of internal controls; however, the internal controls were not in place and operating effectively. Effect The failure to establish an effective system of internal controls enabled costs to be incurred under the federal program after the period of performance had ended. Questioned Costs We identified $25,837 in known questioned costs. Recommendation Management should develop and implement proper procedures and internal controls, including review and oversight of reports prior to their submission to the Department of the Treasury. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-005 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Allowable Costs/Cost Principles Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY2022 Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Significant Deficiency, Other Matters Condition and Context Prior to receipt of the COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF), all eligible entities were required to execute a Financial Assistance Agreement (Agreement), which included the award terms and conditions that recipients must comply within carrying out the objectives of its award. Per the Agreement, the County was responsible for the effective administration of the federal award, as well as the application of sound management practices and administration of the federal funds in a manner consistent with the program objectives and the terms and conditions of the award. INDIANA STATE BOARD OF ACCOUNTS 20 BOONE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recipients may use the SLFRF funds for any eligible expenses subject to the restrictions set forth in sections 602 and 603 of the Social Security Act, as added by section 9901 of the American Rescue Plan Act of 2021. The SLFRF program provides substantial flexibility for each recipient to meet local needs within four separate eligible use categories. Recipients may use the SLFRF funds to: Respond to the COVID-19 public health emergency and its negative economic impacts; Respond to workers performing essential work during the COVID-19 public health emergency by providing premium pay to eligible workers of eligible employers that have eligible workers who are performing essential work; Provide government services, to the extent COVID-19 caused a reduction in revenues collected in the most recent full fiscal year of the recipient; and Make necessary investments in water, sewer, or broadband infrastructure. During the audit, it was identified that the County charged various drug court expenditures to the SLFRF award throughout the audit period. While certain drug court expenditures were used to provide government services, detailed testing determined that the SLFRF funds were applied to costs that are not allowable under state guidance governing the drug court program. These expenditures do not meet the federal eligibility or cost-allowability requirements established for the SLFRF funds, and, therefore, constitute unallowable charges to the grant. The County had a system of internal controls over the compliance requirement; however, they were not properly implemented to prevent noncompliance. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.400 states in part: "The application of these cost principles is based on the fundamental premises that: (a) The non-Federal entity is responsible for the efficient and effective administration of the Federal award through the application of sound management practices. (b) The non-Federal entity assumes responsibility for administering Federal funds in a manner consistent with underlying agreements, program objectives, and the terms and conditions of the Federal award. . . ." INDIANA STATE BOARD OF ACCOUNTS 21 BOONE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. . . ." 2 CFR 200.404 states in part: "A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to: (a) Whether the cost is of a type generally recognized as ordinary and necessary for the recipient's or subrecipient's operation or the proper and efficient performance of the Federal award; . . . (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost." Indiana Code 12-23-14-6 states in part: "(a) A program may provide for eligible individuals a range of necessary intervention services, including the following: (1) Screening for eligibility and other appropriate services. (2) Clinical assessment. (3) Education. (4) Referral. (5) Service coordination and case management. (b) A program that is eligible under section 7 of this chapter may also provide a range of necessary treatment and rehabilitation services, including the following: (1) Emergency services. (2) Detoxification. (3) Counseling. (4) Rehabilitative care. INDIANA STATE BOARD OF ACCOUNTS 22 BOONE COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause The County improperly charged the SLFRF funds to unallowable drug court costs. This occurred because the County did not have sufficient internal controls or review procedures in place to ensure that expenditures charged to the SLFRF award met federal and state allowability requirements. The approval process did not include adequate verification of eligibility, and staff responsible for coding and approving transactions did not consistently apply federal cost principles when determining whether drug court expenditures were appropriate for the SLFRF funding. As a result, unallowable costs were charged to the grant, leading to noncompliance with federal guidance and an internal control deficiency within the County's grant management processes. Effect Due to a misunderstanding of the SLFRF requirements, the County inadvertently allocated federal grant funds to an unallowable expenditure. Questioned Costs We identified $25,837 in known questioned costs. Recommendation We recommended that management of the County design and implement a proper system of internal controls including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place prior to payment of funds from the SLFRF award. We could also recommend county officials review and become familiar with the grant requirements. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Accounting Policies and Procedures Repeat Finding: No Condition: The Organization has established written financial policies and procedures; however, the policies and procedures were not consistently implemented or followed during the year. The Organization did not have sufficient processes in place to ensure that policies for administering Federal awards were understood and consistently applied. The Organization's established policy provides for the allocation of certain indirect and shared costs based on full‐time equivalent employees (FTEs). However, certain indirect and shared costs were allocated to the Federal award based on grant budget amounts or predetermined allocation percentages rather than the methodology established by the Organization's written policy. We recalculated the applicable indirect and shared cost allocations using the Organization's established FTE methodology and determined that the resulting difference was not material to the Federal program. We also identified deficiencies related to the allocation and supporting documentation of personnel costs charged to the Federal award which are separately reported in Finding #2025‐003. Criteria: Under 2 CFR § 200.303, the Organization is required to establish, document, and maintain effective internal control over Federal awards that provides reasonable assurance that Federal awards are managed in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards. Effective internal control includes procedures to implement and monitor established policies and to ensure that personnel responsible for administering Federal awards understand and consistently apply those policies. Additionally, the Uniform Guidance establishes specific requirements applicable to the administration of Federal awards, including requirements related to allowable costs, procurement, cash management, property management, subrecipient monitoring, and other areas, as applicable to the Organization's Federal programs. Cause: The Organization did not have sufficient procedures in place to communicate, implement, and monitor compliance with its established financial policies and procedures. Effect: The failure to consistently implement and monitor established financial policies and procedures increases the risk that costs may be allocated or charged to Federal awards inconsistently and that transactions may not comply with applicable Federal requirements. Although the differences identified from recalculating the indirect and shared cost allocations under the Organization's established FTE methodology were not material to the Federal program, other deficiencies associated with personnel cost allocations resulted in separately reportable matters, as described in Finding #2025‐003. The broader lack of controls over implementation and monitoring of established policies increases the risk that additional noncompliance could occur and not be prevented, or detected and corrected, on a timely basis. Questioned Costs: None attributable to the indirect and shared cost allocation matters described in this finding. Questioned costs associated with personnel cost allocations, if applicable, are reported in Finding #2025‐003. Perspective Information: The Organization has established written financial policies and procedures; however, controls were not sufficient to ensure that those policies were consistently communicated, implemented, and followed. During the audit, instances were identified in which established allocation methodologies were not applied to indirect, shared, and personnel costs charged to the Federal award. For the indirect and shared costs addressed in this finding, the auditors recalculated the applicable allocations using the Organization's established FTE methodology and determined that the resulting difference was not material to the Federal program. Deficiencies specifically related to personnel cost allocations and supporting documentation are separately reported in Finding #2025‐003. Recommendation: We recommend that the Organization establish procedures to ensure that its financial policies and procedures are effectively communicated, implemented, and consistently followed. Personnel responsible for administering Federal awards should be provided with the applicable policies and appropriate training regarding their responsibilities, including the methodologies required for allocating indirect, shared, and personnel costs to Federal awards. Management should periodically monitor compliance with established policies and document its review, including reviewing allocation methodologies and supporting documentation to determine whether costs charged to Federal awards are consistent with established policies and applicable Federal requirements. The Organization should also periodically review its financial policies and procedures to ensure they remain appropriate for its current operations and applicable Federal requirements. Any changes to established policies or allocation methodologies should be formally documented and approved before implementation. Reporting Views of Responsible Officials: Management agrees with the finding and will develop and formally adopt written accounting and administrative policies and procedures addressing applicable Uniform Guidance requirements.
Finding 2025-002: Suspension and Debarment Requirements Program: COVID-19 Coronavirus State and Local Fiscal Recovery Funds ALN 21.027 Federal Agency: Department of the Treasury Pass-through Agencies: City of Pittsburgh and the Commonwealth of Pennsylvania, Department of Community and Economic Development Condition: During 2025, the URA did not follow internal control procedures to ensure that all covered contracts and subawards were not conducted with entities that are suspended and debarred. During our testing of procurement transactions subject to suspension and debarment requirements, we noted that the entity did not retain documentation demonstrating that it had reviewed the System for Award Management (SAM.gov) exclusion records prior to entering into contractual agreements. Specifically, there was no evidence that a SAM.gov printout was reviewed or approved to verify that vendors were not suspended or debarred at the time of contract execution. While the entity stated that such reviews are conducted, the lack of documented verification prevents confirmation that appropriate controls were consistently applied. In conjunction with the audit, we reviewed the SAM Exclusions for all transactions in our sample and we noted that no transactions were with entities that were suspended or debarred. Criteria: In accordance with 2 CFR Part 200.303, a non-Federal entity must establish and maintain effective internal control over Federal awards that provide reasonable assurance that the non-Federal entity manages the Federal award in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. Cause: The URA did not follow internal control procedures to document the review of the SAM.gov exclusion list prior to contract execution. Effect: The lack of following internal control processes to review the verification of suspension and debarment prior to entering into contracts, agreements, and grants, could result in the URA entering into covered transactions with entities that are suspended and debarred which is not allowed under the requirements for the Coronavirus State and Local Fiscal Recovery Funds program. Questioned Costs: None Identification as a Repeat Finding: This is a repeat finding. Recommendation: We recommend that the URA consistently apply written procedures to verify, prior to executing any covered transaction expected to equal or exceed $25,000, that the prospective contractor is not suspended, debarred, or otherwise excluded. The URA should document its verification by retaining a dated SAM.gov exclusion search printout (or equivalent screenshot), obtaining a certification from the contractor, or including an appropriate suspension and debarment clause in the agreement. Evidence of the review and approval should be retained in the procurement file to demonstrate compliance. Views of responsible officials and Planned Corrective Action: Management agrees with this finding; see separate Corrective Action Plan.
Finding 2025-003 – Activities Allowed or Unallowed Program: CDBG – Entitlement Grants Cluster: Community Development Block Grants/Entitlement Grants ALN 14.218 Federal Agency: U.S. Department of Housing and Urban Development Pass-through Agencies: City of Pittsburgh Condition: The URA did not have sufficient internal controls to ensure that reimbursement requests were reviewed for compliance with the executed grant agreement before approval or payment. During our review of the grant agreement between the URA and Neighborhood Legal Services Association (NLSA), we noted that grant proceeds were required to be used for eligible project costs, including the salaries, wages, and related costs of NLSA staff performing the legal services. However, based on our examination of the reimbursement requests, NLSA billed the URA using a fixed hourly fee for salaries rather than actual expenditures. The reimbursement requests totaled $321,000, while the total grant award was $320,000. Because NLSA did not bill based on actual expenditures, the URA could have overpaid NLSA for services provided under the grant agreement. Although this represents noncompliance with the terms of the grant agreement, based on the information available, the potential effect of the noncompliance was not material to the major program. Criteria: 2 CFR 200.303 requires a non-Federal entity to establish and maintain effective internal control over a Federal award that provides reasonable assurance the award is managed in compliance with Federal statutes, regulations, and the terms and conditions of the award. Cause: The URA did not have sufficient internal controls to ensure that the executed grant agreement was followed when reviewing and approving NLSA’s reimbursement requests. Specifically, the URA’s review process did not require verification that billed salaries and wages represented actual eligible project costs and that cumulative reimbursement requests did not exceed the authorized grant amount. Effect: The reimbursement requests were not prepared in accordance with the terms of the grant agreement and created a risk that unallowable costs were reimbursed. Because NLSA billed using a fixed hourly fee rather than actual expenditures, the URA did not have assurance that all amounts requested represented allowable salaries, wages, and related project costs. The $1,000 billed in excess of the grant award is unallowable and additional unallowable costs may have existed if the fixed hourly billings exceeded NLSA’s actual allowable costs. The amount of any additional allowable costs could not be determined; however, based on the information available, the potential effect was not material to the major program. Questioned Costs: Unknown. The $1,000 billed in excess of the grant award and any additional unallowable costs that may have existed if the fixed hourly billings exceeded NLSA’s actual allowable costs. The amount of any additional unallowable costs could not be determined. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: The URA should establish and implement monitoring procedures requiring reimbursement requests to be reviewed against the executed grant agreement before approval or payment. The procedures should require verification that requests are supported by actual eligible costs, reconciled to payroll, time records, and related-cost documentation, and tracked against the authorized grant amount. The URA should coordinate with NLSA to determine the final allowable amount and require repayment or credit for any amount reimbursed in excess of allowable costs or the grant award. Views of responsible officials and Planned Corrective Action: Management agrees with this finding; see separate Corrective Action Plan.
Finding 2025-004: Subrecipient Monitoring Requirements Program: COVID-19 Coronavirus State and Local Fiscal Recovery Funds ALN 21.027 Federal Agency: Department of the Treasury Pass-through Agencies: City of Pittsburgh and the Commonwealth of Pennsylvania, Department of Community and Economic Development Condition: During 2024, the URA passed through federal funds to a subrecipient in excess of the Single Audit threshold of $750,000. During 2025, the URA did not have adequate controls in place to verify that subrecipients expected to be audited as required by 2 CFR Part 200, Subpart F, met this requirement. Criteria: In accordance with 2 CFR Part 200.303, a non-Federal entity must establish and maintain effective internal control over Federal awards that provide reasonable assurance that the non-Federal entity manages the Federal award in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. The pass-through entity must also verify that a subrecipient is audited as required by 2 CFR Part 200, Subpart F. Cause: The URA did not have an effective, documented process to identify subrecipients that met the single audit threshold, track the status and due date of required audits, and follow up with subrecipients until the required audit was completed and obtained. Effect: The URA was unable to demonstrate that a subrecipient complied with applicable single audit requirements. In addition, the URA may not identify and address deficiencies, questioned costs, or corrective-action requirements related to the subrecipient’s use of federal funds in a timely manner. Questioned Costs: None Identification as a Repeat Finding: This is not a repeat finding. Recommendation: The URA should establish and implement a documented subrecipient audit-monitoring process that includes tracking subrecipients who were provided funding over the single audit threshold to reach out and determine if they spent over the single audit threshold. If the subrecipient had federal expenditures over the single audit threshold, the URA should track the audit status and follow up on outstanding audits until the audit report, or other appropriate documentation of compliance, is obtained, document the review of audit results and evaluate whether findings require additional monitoring, corrective action, a management decision, or adjustments to the URA’s records, and escalate unresolved audit-status issues to responsible management and impose additional monitoring or other appropriate enforcement measures when necessary. Corrective Action: Management agrees with this finding; see separate Corrective Action Plan.
Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the Federal award that provides assurance that the entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Additionally, 2 CFR Appendix IV to Part 200 Section B.2(b) requires that both the direct costs and the indirect costs must exclude capital expenditures and unallowable costs. Per Compliance Supplement, these indirect costs must conform to the allowability of cost provisions in 2 CFR Part 200, Subpart E or award agreement. Condition: During our testing of indirect costs, we noted that the Corporation charges the Federally approved rate of 28.7% on specific grant awards based on direct salaries and wages. However, the Corporation did not maintain ongoing supporting documentation of eligible indirect costs. Cause: The Corporation did not have formal process and policies to demonstrate adherence to the allowability requirements of indirect costs in accordance with 2 CFR Appendix IV to Part 200 Section B.2(b). Effect or Potential Effect: Additional efforts after year end were required to determine whether indirect costs charged to Federal awards conform to the allowability of cost provisions in 2 CFR Part 200, Subpart E or award agreement. Allowable costs incurred by the Corporation exceeded the amount of approved grant funding, therefore no questioned costs are reported. Questioned costs: None Context: Additional efforts after year end were required by management in order to provide sufficient and appropriate evidence that the reported indirect costs conformed to the allowability of cost provisions in 2 CFR Part 200, Subpart E or award agreement. Repeat finding: This is a repeat finding from prior year. This was reported as finding 2024-005 in the 2024 report. Recommendation: We recommend the Corporation develop and incorporate internal controls and policies to demonstrate adherence to the allowability requirements of indirect costs in accordance with 2 CFR Appendix IV to Part 200 Section B.2(b). View of Responsible Officials:Due to staff turnover the Corporation did not have adequate personnel or infrastructure in place to monitor costs in order to calculate and determine an updated indirect cost rate. Also, the current indirect cost rate allocations is based on historical assumptions.
Criteria or specific requirement: 2 CFR §200.303, Internal Controls, requires non-federal entities to establish and maintain effective internal control over federal awards that provides reasonable assurance the entity is managing federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Effective internal controls include procedures to ensure financial reports submitted to federal agencies are accurate, complete, and reviewed prior to submission. Condition: The Organization did not have a documented review and approval process for Federal Financial Reports (FFRs) prior to submission to the granting agency. Questioned costs: None. Context: During testing of Federal Financial Reporting, CLA noted that the one Federal Financial Report submitted during the audit period was prepared and submitted without evidence of review or approval by an individual independent of the preparer. Cause: Management had not established a formal review and approval control over the preparation and submission of Federal Financial Reports. Effect: Federal Financial Reports may be submitted with inaccurate, incomplete, or unsupported information, resulting in noncompliance with federal reporting requirements and potentially affecting grant funding and monitoring decisions. Repeat finding: No. Recommendation: The Organization should implement a documented review and approval process for all Federal Financial Reports prior to submission. Evidence of review and approval should be retained to demonstrate compliance with federal reporting requirements and to help ensure reports are accurate and complete. Views of responsible officials: There is no disagreement with the audit finding.
Finding 2025-001 – N: Special Tests and Provisions Information on the Federal Program: Grantor: United States Department of Health and Human Services Program Name: Health Center Program Cluster Assistance Listing Numbers: 93.224 – Health Center Program; 93.527 – Grants for New and Expanded Services under the Health Center Program Criteria or Specific Requirement: Title 2 U.S. Code of Federal Regulations (CFR), Part 200.303 of the Uniform Guidance states the following regarding internal control, “The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Per 42 CFR sections 51c.303(e), (f), and (g) and 42 CFR sections 56.303(e), (f), and (g), health centers must prepare and apply a sliding fee discount schedule (SFDS) so that the amounts owed for health center services by eligible patients are adjusted (discounted) based on the patient’s ability to pay as defined by these subsections. Condition: Montefiore Health System, Inc. (the Health System) was unable to demonstrate that internal controls were operating effectively throughout the audit period to ensure the proper application of its sliding fee discount schedule (SFDS). During testing, three patients were charged self-pay balances when, based on the applicable sliding fee discount schedule, those charges should have been discounted. The exceptions occurred prior to the implementation of corrective actions associated with the prior-year finding. Management implemented enhanced controls effective October 1, 2025; however, the identified exceptions demonstrate that controls were not operating effectively during a portion of the audit period. Cause: Corrective actions associated with the prior-year finding were not fully implemented until October 1, 2025. As a result, controls designed to ensure the consistent and accurate application of the sliding fee discount schedule were not operating effectively during a portion of the audit period, resulting in instances where eligible patients were assessed self-pay balances that should have been discounted. Effect or Potential Effect: As a result of the control deficiency, eligible patients were charged self-pay balances that exceeded amounts permitted under the Health System's sliding fee discount schedule. Although the exceptions identified were limited to transactions occurring prior to the implementation of corrective actions effective October 1, 2025, failure to effectively apply the SFDS could result in eligible patients being charged incorrect amounts and increase the risk of noncompliance with Federal program requirements. Questioned Costs: None noted. Amounts charged to patients do not impact expenditures reported on the Schedule of Expenditures of Federal Awards (SEFA); therefore, no questioned costs were identified. Context: We tested 60 compliance samples from a population of 31,357 transactions for compliance with the Health Center Program Cluster special test and provision related to sliding fee discount schedule requirements. Three exceptions were identified in which patients were charged self-pay balances that should have been reduced based on the applicable sliding fee discount schedule. All three exceptions occurred during the first nine months of the audit period, prior to management's implementation of corrective actions effective October 1, 2025. Identification as a repeat finding: Repeat Finding 2024-001 Recommendation: We recommend management continue to monitor the effectiveness of the corrective actions implemented on October 1, 2025 and ensure controls operate consistently to verify that sliding fee discount determinations are supported, documented, and applied accurately in accordance with Federal requirements and organizational policy. View of responsible officials: Management concurs with the audit finding and will continue to monitor the effectiveness of the corrective actions implemented October 1, 2025. The total of noted exceptions was determined to be de minimis (less than $50). Standardized procedures have been implemented to strengthen patient screening and enrollment, including controls to ensure the timely collection and documentation of income and family size.
Finding 2025-002 – I. Procurement and Suspension and Debarment Information on the Federal Program: Grantor: United States Department of Health and Human Services, Health Resources and Services Administration (HRSA) Program Name: Congressional Directives Assistance Listing Numbers: 93.493 Criteria or Specific Requirement (including statutory, regulatory or other citation): Section 200.303 of the Uniform Guidance states the following regarding internal control: “The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Title 2, Subtitle A, Chapter II, Part 200, Subpart D 200.320 – Procurement methods – requires entities to maintain documented procurement procedures and appropriate supporting documentation for procurement methods, including noncompetitive procurements. Purchases below the simple acquisition threshold, but above the micro-purchase threshold, require price and rate quotations to be obtained from an adequate number of qualified sources. Title 2, Subtitle A, Chapter II, Part 200, Subpart C 200.214 - Recipients and subrecipients are subject to the nonprocurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, as well as 2 CFR part 180. The regulations in 2 CFR part 180 restrict making Federal awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from receiving or participating in Federal awards. Condition: The Health System did not retain documentation demonstrating either (1) competitive bidding was performed or (2) the justification and circumstances supporting the use of a noncompetitive procurement method for equipment, installation and broadband services purchased under the grant. The procurement transactions reviewed exceeded the micro-purchase threshold; however, no supporting competitive procurement or sole-source documentation was available for audit inspection. The Health System has an established process to monitor vendor suspension and debarment requirements. Management’s process includes suspension and debarment evaluations on all new vendors prior to entering into any business relationship. The Health System utilized a third party to perform monthly suspension and debarment reviews; however, vendors associated with the program were not included in the listings provided to the third party for review. As a result, the Health System could not demonstrate that required suspension and debarment procedures had been performed for applicable vendors. Cause: Controls over the retention and maintenance of procurement documentation were not operating effectively to ensure that competitive procurement activities or sole-source justifications were documented and retained in accordance with Federal requirements. Controls over the identification and submission of vendors subject to suspension and debarment review were not operating effectively to ensure all applicable program vendors were included in the monthly review process performed by the third party. Effect or potential effect: Failure to maintain procurement documentation supporting competition or sole-source justification may result in noncompliance with Federal procurement requirements and limits the Health System's ability to demonstrate that contracts were awarded in accordance with Federal regulations. Failure to perform and document required suspension and debarment procedures increases the risk that the Health System could enter into a covered transaction with a suspended, debarred, or otherwise excluded party, resulting in noncompliance with Federal requirements. Questioned costs: Questioned costs totaled $2,299,513 and represent procurement transactions exceeding the micro-purchase threshold for which competitive procurement or sole-source documentation was not available for audit inspection. Although the costs are questioned due to the lack of required procurement documentation, the audit team noted the costs appear allowable. No questioned costs were noted for suspension and debarment. Audit procedures performed by the audit team determined that none of the vendors tested were suspended or debarred. Context: The population consisted of 20 procurement transactions. We selected a sample of 5 procurement transactions for testing and identified exceptions in all 5 items tested. For each transaction selected, the Health System was unable to provide documentation demonstrating that competitive bidding occurred or documentation supporting the circumstances that would allow for the use of a noncompetitive procurement method at the time the procurement occurred. The population consisted of 8 vendors associated with the Congressional Directives program. We selected a sample of 5 vendors for testing and identified exceptions for all 5 vendors. Specifically, several of the vendors selected for testing did not appear on a sample of 6 monthly vendor listings provided to the third party responsible for performing suspension and debarment reviews. As a result, the Health System could not demonstrate that the required suspension and debarment procedures had been performed for those vendors. Although these vendors were not subjected to the Health System's suspension and debarment review process, our independent verification procedures noted that none of the vendors tested were suspended or debarred. Identification as a repeat finding, if applicable: Not a repeat finding. Recommendation: The Health System should strengthen its internal controls over procurement and suspension and debarment compliance to ensure: (1) procurement files contain and retain documentation supporting competitive procurement procedures or noncompetitive procurement justifications, as applicable; and (2) all vendors subject to Federal suspension and debarment requirements are identified, included in the review process, and appropriately documented. Views of Responsible Officials: Management agrees with the findings. The Health System has established procurement policies and procedures; however, the purchases identified in the audit were not consistently processed through the established procurement review process, and the required supporting documentation was not retained. The purchases involved IT equipment, installation, and broadband services necessary for the project. Management believes the vendor selections were supportable as sole-source procurements based on technical compatibility, integration with existing IT infrastructure, continuity of implementation and support, and specialized vendor capabilities. Management determined that the associated costs were allowable. Corrective action will focus on reinforcing departmental compliance with the existing procurement policy, requiring procurement’s involvement before vendor engagement, and ensuring that competitive bidding documentation or an approved sole-source justification is retained for all federally funded purchases. Although the Health System has an established suspension and debarment screening process, certain vendors associated with the Federal program were not included in the screening population. Management will implement a documented reconciliation of federally funded vendors to the screening population, including supervisory review and resolution of any exceptions, to ensure that all applicable vendors are screened and evidence of the screening is retained. No questioned costs were identified, and subsequent to the transaction, management verified that none of the vendors tested were suspended or debarred at the time of the transactions.
FINDING 2025-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Suspension and Debarment Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY 2025 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Other Matters Condition and Context Prior to entering into subawards and covered transactions with the COVID-19 - State and Local Fiscal Recovery Funds (SLFRF) award funds, recipients are required to verify that such contractors and subrecipients are not suspended and debarred, or otherwise excluded. "Covered Transactions" include, but are not limited to, contracts for goods and services awarded under a nonprocurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by either; checking the Excluded Parties List System (EPLS), collecting a certification from that person, or adding a clause or condition to the covered transaction with that vendor. The County had policies and procedures in place to verify that a vendor with which it planned to enter into a covered transaction was not suspended and debarred or otherwise excluded, but its policies and procedures were not effective in ensuring all vendors were verified. A sample of two vendors was selected for testing the suspension and debarment requirements; however, documentation supporting the County's compliance with its suspension and debarment verification policies was not provided for audit for either vendor selected. The lack of effective internal controls and noncompliance were systemic issues throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 20 ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 31 CFR 19.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the EPLS, or (b) Collecting a certification from that person if allowed by this rule, or (c) Adding a clause or condition to the covered transaction with that person." Cause The system of internal controls established by management of the County was not implemented as designed, and employees lacked sufficient training to carry out suspension and debarment procedures required to certify vendor status. Effect Without the proper implementation of an effectively designed system of internal controls, the system was incapable of effectively preventing, or detecting and correcting, material noncompliance. As a result, the County was not able to provide documentation that the suspension and debarment requirements were followed for two vendors to whom payment was equal to or in excess of $25,000 was made. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the County's management establish a system of internal controls to ensure compliance with the grant agreements and the Procurement and Suspension and Debarment compliance requirement. Additionally, the County should ensure that all necessary personnel understand and follow the compliance requirements and County policies. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Department of Energy, Federal Financial Assistance Listing 81.254, DE-GD0000886, 2025 Grid Infrastructure Deployment and Resilience Reporting Material Weakness in Internal Control over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: During testing of quarterly financial and performance reports, we noted that the Cooperative did not retain the supporting documentation used in the preparation of the reports. As a result, reported amounts could not be reconciled to the documentation subsequently provided by the Cooperative. Cause: The Cooperative's procedures did not require the retention of the specific supporting schedules and records used to prepare and submit quarterly financial and performance reports. Effect: Failure to maintain adequate supporting documentation for quarterly reports increases the risk that reported information may be inaccurate, incomplete, or unsupported and limits the Cooperative's ability to demonstrate compliance with federal reporting requirements. Questioned Costs: None reported. Context/Sampling: A non-statistical sample of 3 out of 8 quarterly reports were selected for testing. Repeat Finding from Prior Year: No Recommendation: We recommend that the Cooperative establish and implement procedures to retain all supporting documentation, schedules, and records used in the preparation and submission of quarterly financial and performance reports. Such documentation should be maintained in sufficient detail to support reported amounts and facilitate review and verification. Views of Responsible Officials: Management agrees with the finding.
Department of Energy, Federal Financial Assistance Listing 81.254, DE-GD0000886, 2025 Grid Infrastructure Deployment and Resilience Procurement, Suspension & Debarment Material Weakness in Internal Control over Compliance and Noncompliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR 200.318 maintains that recipients must have and use documented procurement policies and must conform procurement standards to sections 200.317 through 200.327. 2 CFR 200 Appendix II requires certain provisions to be included in contracts if criteria are applicable. Additionally, 2 CFR 200.214 requires recipients to restrict the subawards and contract with certain parties that are debarred, suspended, or excluded from ineligible participation in Federal assistance programs or activities. Condition: Testing of procurement activities and related controls identified the following exceptions: • The Cooperative's documented procurement policy did not include several elements required by Uniform Guidance. • One contract tested did not contain all applicable Uniform Guidance contract provisions. • In one instance involving a contract exceeding $25,000, the Cooperative did not document a review to verify that the vendor was not suspended or debarred from participation in federal programs. Cause: The Cooperative had not established procedures to periodically evaluate its procurement policy and procurement documentation for compliance with Uniform Guidance requirements, including required contract provisions, documentation of procurement decisions, and suspension and debarment verification procedures. Effect: Failure to maintain effective controls over procurement activities increases the risk of noncompliance with federal procurement requirements. As a result, the Cooperative may enter into contracts that do not contain required federal provisions, fail to adequately document procurement decisions, or engage in covered transactions with vendors that are suspended or debarred from participation in federally funded programs. Questioned Costs: None reported. Context/Sampling: Sampling was not used. Repeat Finding from Prior Year: No Recommendation: We recommend that the Cooperative update its procurement policy to incorporate all applicable Uniform Guidance requirements. Management should also establish and implement procedures to: • Verify and document suspension and debarment reviews for all applicable covered transactions. • Review contracts prior to execution to ensure all required Uniform Guidance contract provisions are included. • Maintain documentation evidencing compliance with federal procurement requirements. Views of Responsible Officials: Management agrees with the finding.
Reference Number: 2025-002 Prior Year Finding: No Federal Agency: U.S. Department of Agriculture Federal Program: SNAP Cluster Assistance Listing Number: 10.561 Pass-Through Entity: New York State Office of Temporary and Disability Assistance Pass-Through Entity Identifying Number and Period: 18000 (1/1/2025-12/31/2025), Various Compliance Requirement: Special Tests and Provisions – ADP System for SNAP Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: State agencies are required to automate their SNAP operations and computerize their systems for obtaining, maintaining, utilizing, and transmitting information concerning SNAP (7 CFR sections 272.10 and 277.18). This includes: (1) processing and storing all case file information necessary for eligibility determination and benefit calculation, identifying specific elements that affect eligibility, and notifying the certification unit of cases requiring notices of case disposition, adverse action and mass change, and expiration; (2) providing an automatic cutoff of participation for households that have not been recertified at the end of their certification period by reapplying and being determined eligible for a new period (7 CFR sections 272.10(b)(1)(iii) and 273.10(f) and (g)); and (3) generating data necessary to meet federal issuance and reconciliation reporting requirements. The State passes the responsibility of document retention to Suffolk County, New York (the County) for eligibility and benefit recalculation, therefore the County is subject to this requirement. Control: Per 2 CFR section 200.303(a), the recipient and subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The County did not maintain adequate documentation of program participant eligibility; therefore it was unable to demonstrate compliance with the special provisions required for the SNAP ADP System. Context: Forty participants were selected for testing and the following exceptions were noted: • For 1 of 40 participants selected for testing, the County was unable to provide documentation that a program supervisor had approved the application for benefits. • For 2 of 40 participants selected for testing, no approved Case Service Record could be provided to show review of the participants’ eligibility. • For 1 of 40 participants selected, a budget for benefits was not retained, therefore the benefit amount could not be recalculated. Questioned costs: Undetermined. The dollar amount of questioned costs could not be determined because the County did not provide sufficient documentation to determine whether the participants were eligible for program benefits nor could the specific benefit amounts associated with those participants be identified. Cause: The County’s procedures were not sufficient to ensure it maintained documentation that program participants’ eligibility was properly determined, reviewed and approved nor that benefits were properly calculated. Effect: Without sufficient documentation of eligibility, the County cannot demonstrate that services were provided only to eligible participants and that benefit amounts were calculated correctly. Recommendation: The County should strengthen procedures and internal controls to ensure eligibility is properly determined, that benefits are properly calculated, and that supporting documentation is retained and readily available for audit. Views of Responsible Officials: Management agrees with the finding and will perform corrective actions noted on the corresponding Corrective Action Plan.
Reference Number: 2025-003 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services Federal Program: Low-Income Home Energy Assistance Program Assistance Listing Number: 93.568 Pass-Through Entity: New York State Office of Temporary and Disability Assistance Pass-Through Entity Identifying Number and Period: OSC HEAP Awards 1/1/2025-12/31/2025 Compliance Requirement: Eligibility Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Recipients may assist (a) households in which one or more individuals are receiving Temporary Assistance for Needy Families (TANF), Supplemental Security Income (SSI), Supplemental Nutrition Assistance Program (SNAP) benefits, or certain needs-tested veterans’ benefits; or (b) households with incomes which do not exceed the greater of 150 percent of the state’s established poverty level, or 60 percent of the state median income. Recipients may establish lower income eligibility criteria, but no household may be excluded solely based on income if the household income is less than 110 percent of the state’s poverty level (42 USC 8624(b)(2)). Recipients must give priority to those households with the highest home energy costs or needs in relation to income and household size (42 USC 8624(b)(5)). The County must ensure that only eligible participants receive services under the program. Control: Per 2 CFR section 200.303(a), the recipient and subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The County did not maintain adequate documentation of program participant eligibility. Context: For eight of forty participants selected for testing, the County was unable to provide evidence of a Case Service Record which indicates the participant’s categorical eligibility. Questioned costs: Undetermined. The dollar amount of questioned costs could not be determined because the County did not provide sufficient documentation to determine whether the participants were eligible for program benefits nor could the specific benefit amounts associated with those participants be identified. Cause: The County’s procedures were not sufficient to ensure it maintained documentation that program participants’ eligibility was properly determined, reviewed and approved. Effect: Without sufficient documentation of eligibility, the County cannot demonstrate that services were provided only to eligible participants. Recommendation: The County should strengthen procedures and internal controls to ensure eligibility is properly determined and documented and that supporting documentation is retained and readily available for audit. Views of Responsible Officials: Management agrees with the finding and will perform corrective actions noted on the corresponding Corrective Action Plan.
Reference Number: 2025-004 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services Federal Program: Adoption Assistance Assistance Listing Number: 93.659 Pass-Through Entity: New York State Office of Children and Family Services Pass-Through Entity Identifying Number and Period: 18000 (1/1/2025-12/31/2025) Compliance Requirement: Eligibility Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: In addition to establishment of categorical eligibility, the prospective adoptive parent(s) and any other adult living in the home who has resided in the provider home in the preceding five years must satisfactorily have met a child abuse and neglect registry check. (42 USC 671(a)(20)(B); Pub. L. No. 109-248, Sections 152(c)(2) and (3)). Control: Per 2 CFR section 200.303(a), the recipient and subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The County did not maintain adequate documentation of program participant eligibility. Context: For four of sixty participants selected for testing, the file maintained by the County did not include evidence that the prospective adoptive parents and adults in the home met the child abuse and neglect registry check. Questioned costs: Undetermined. The dollar amount of questioned costs could not be determined because the County did not provide sufficient documentation to determine whether the participants were eligible for program benefits nor if benefit amounts associated with those participants were unallowable. Cause: The County’s procedures were not sufficient to ensure it retained documentation of the original child abuse and neglect registry checks. Effect: Without sufficient documentation that adoptive parents and adults in the home met the child abuse and neglect registry check, the County cannot demonstrate that services were provided only to eligible participants. Recommendation: The County should strengthen its procedures and internal controls to ensure that required child abuse and neglect registry checks are completed and that documentation supporting participant eligibility is retained in participant files and is readily available for audit. Views of Responsible Officials: Management agrees with the finding and will perform corrective actions noted on the corresponding Corrective Action Plan.
Reference Number: 2025-005 Prior Year Finding: No Federal Agency: U.S. Department of Health and Human Services Federal Program: Social Services Block Grant Assistance Listing Number: 93.667 Pass-Through Entity: New York State Office of Temporary and Disability Assistance Pass-Through Entity Identifying Number and Period: 18000 (Multiple) (1/1/2025-12/31/2025) Compliance Requirement: Subrecipient Monitoring Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Per 2 CFR 200.332(c), a pass-through entity must evaluate each subrecipient's fraud risk and risk of noncompliance with a subaward to determine the appropriate subrecipient monitoring. Per 2 CFR section 200.332(e) and (g), pass-through entities must monitor the activities of a subrecipient as necessary to ensure that the subrecipient complies with Federal statutes, regulations, and the terms and conditions of the subaward, and must monitor the overall performance of the subrecipient to ensure that the goals and objectives of the subaward are achieved. Subrecipient monitoring must include reviewing financial and performance reports, following up and ensuring that the subrecipient takes timely and appropriate action on deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity, issuing management decisions for applicable audit findings, and verifying that the subrecipient is audited as required by Subpart F when applicable. Control: Per 2 CFR section 200.303(a), the recipient and subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The County did not maintain documentation that it performed an evaluation of subrecipients’ fraud risk and risk of noncompliance prior to issuance of subawards. Context: For five of five subrecipients selected for testing, the County was unable to provide documentation demonstrating that a program supervisor performed fraud risk and noncompliance risk assessments before the related subawards were issued. Although the County performed general monitoring activities for these subrecipients, the monitoring procedures were not based on documented evaluations of each subrecipient’s individual risk. Questioned costs: Undetermined. Known questioned costs could not be quantified because the County did not maintain documentation of the required subrecipient risk assessments; therefore, the amount of Federal expenditures, if any, affected by the exception could not be determined. Cause: The County’s procedures did not ensure that subrecipient fraud risk and risk of noncompliance were evaluated and documented before subaward issuance. Effect: Without documented risk assessments, the County may not have established appropriate monitoring procedures to address each subrecipient’s fraud risk and risk of noncompliance with program requirements. Recommendation: The County should strengthen procedures and internal controls to ensure subrecipient fraud risk and risk of noncompliance assessments are performed and documented before subaward issuance and that supporting documentation is retained and available for audit. Views of responsible officials: Management agrees with the finding and will perform corrective actions noted on the corresponding Corrective Action Plan.
Reference Number: 2025-006 Prior Year Finding: No Federal Agency: U.S. Department of Agriculture Federal Program: SNAP Cluster Assistance Listing Number: 10.561 Pass-Through Entity: New York State Office of Temporary and Disability Assistance Pass-Through Entity Identifying Number and Period: 18000 (1/1/2025-12/31/2025), Various Compliance Requirement: Suspension and Debarment Type of Finding: Significant Deficiency in Internal Control Over Compliance, Other Matters Criteria or specific requirement: Compliance: Non-federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. “Covered transactions” include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR 180.220. All non-procurement transactions entered into by a pass-through entity (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR 180.215. 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 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 (1) checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA) and available at SAM.gov, (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity, as provided in 2 CFR section 180.300. Control: Per 2 CFR section 200.303(a), the recipient and subrecipient must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The County was unable to provide documentation that it had verified contractors were not suspended or debarred before entering into a covered transaction with the entities. Context: The suspension and debarment status for two of two contractors selected for testing was not documented. Auditors verified that the contractors were not suspended or debarred at the time of audit. Questioned costs: None noted. There are no questioned costs related to this finding since the vendors were not federally suspended or debarred. Cause: The County did not have effective controls to ensure suspension and debarment checks were performed and documented before contracts were issued. Effect: Without documentation that suspension and debarment checks were completed before contracts were issued, the County cannot demonstrate compliance with federal requirements and it could enter into a transaction with an ineligible entity. Recommendation: We recommend the County implement procedures and controls to ensure suspension and debarment checks are completed before entering into covered transactions and that documentation is retained and is available for audit. Views of responsible officials: Management agrees with the finding and will perform corrective actions noted on the corresponding Corrective Action Plan.
Documentation of Costs Claimed for Reimbursement and Cash Management Significant Deficiency in Internal Control Over Compliance; Noncompliance; Known Questioned Costs - Federal Program: Assistance Listing No. 10.719 - Infrastructure Investment and Jobs Act Firewood Bank Program Federal Agency: U.S. Department of Agriculture, Forest Service (direct award; no pass-through entity) Federal Award Identification: 22-DG-11132544-049 (federal award year 2022) and 25-DG-11132544- 082 (federal award year 2025); USDA Forest Service Firewood Bank Program grant agreements identified by the Organization as contract 049 and contract 082 Compliance Requirements: Activities Allowed or Unallowed and Allowable Costs/Cost Principles; Cash Management; Reporting Type of Finding: Significant deficiency in internal control over compliance; noncompliance; known questioned costs Known Questioned Costs: $64,969 (contract 049 and contract 082 combined; the Organization’s records do not allocate administrative cost claims between the two agreements) Criteria: 2 CFR 200.303 requires a non-federal entity to establish and maintain effective internal control over the federal award providing reasonable assurance that the entity is managing the award in compliance with federal statutes, regulations and the terms and conditions of the award. 2 CFR 200.403 requires that costs charged to a federal award be necessary and reasonable, allocable to the award, adequately documented, and otherwise allowable under the cost principles in 2 CFR 200 Subpart E. 2 CFR 200.305(b) requires that payments made in advance of expenditures be limited to the minimum amounts needed and be timed in accordance with the actual, immediate cash requirements of the entity in carrying out the purpose of the approved program. 2 CFR 200.510(b) requires the auditee to prepare a schedule of expenditures of federal awards for the period covered by the audit. Condition: We identified the following related conditions, each arising from the concentration of the program’s administrative, accounting and monitoring functions in a single individual without documented independent review: (a) Costs claimed without supporting documentation. The Organization submitted requests to the two awards under Assistance Listing No. 10.719 totaling $170,700 for administrative costs for the year ended December 31, 2025. The Organization’s accounting records and supporting documentation substantiate administrative costs of $105,731 applicable to those awards. The remaining $64,969 was claimed, and reimbursed by the grantor, without supporting documentation. The personnel component of the administrative costs claimed was based on estimated allocations rather than records of work performed, as described in Finding 2025-004. (b) Federal funds drawn and unspent at year end. At December 31, 2025 the Organization held $15,735 of federal funds that had been drawn but not disbursed for program purposes. A subrecipient returned its award on December 22, 2025 and the funds were not re-granted until January 30, 2026. (c) Advance payments. The Organization received advance payments under the awards totaling $1,155,000 during the year ($300,000 received September 24, 2025; $500,000 received October 30, 2025; and $355,000 received December 10, 2025). No documented determination of the program’s immediate cash requirements supports the amount or the timing of these advances, and the Organization does not monitor the elapsed time between receipt of advanced funds and their disbursement for program purposes. (d) Preparation and review of program records. The log of amounts requested for reimbursement and amounts received, the monthly reconciliation of that log, and the schedule of expenditures of federal awards are prepared by the same individual who prepares the requests and records the related receipts in the general ledger. Neither the reconciliation nor the schedule is subject to a documented review by an individual independent of its preparation. Cause: The Organization administers the award with limited administrative staff and has not adopted written policies and procedures governing federal grant administration, including the documentation required to support costs claimed for reimbursement, the determination of immediate cash needs before requesting or accepting advance payments, and independent review of the reimbursement log, the monthly reconciliation and the schedule of expenditures of federal awards. Effect or Potential Effect: Costs of $64,969 were claimed and reimbursed without documentation supporting their allowability, and $15,735 of drawn funds remained unspent at year end. Amounts totaling $127,373, of which $64,969 relates to this program, were recorded as due to the grantor through an audit adjustment, and $15,735 was recorded as a refundable advance. A deficiency in internal control over compliance exists that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Context: All administrative cost reimbursement requests submitted under the awards for the year ended December 31, 2025 ($170,700), all three advance payments received ($1,155,000), and the year-end balance of drawn but undisbursed funds were examined in their entirety and compared to the Organization’s accounting records; no sampling was used. Known questioned costs of $64,969 represent 38 percent of the administrative costs claimed and 5.2 percent of total program expenditures of $1,244,996, and exceed the $25,000 threshold in 2 CFR 200.516(a)(3). Our tests of compliance did not disclose instances of noncompliance that are material to the program, and our opinion on compliance for the major federal program is unmodified. Recommendation: We recommend that the Organization: (1) submit requests only for costs incurred and documented at the date of the request, and retain the request, the expenditure listing and the underlying support together in a single referenced file with the allowability review evidenced by preparer and reviewer sign-off; (2) prepare and retain, for each advance requested or received, an analysis of the program’s immediate cash requirements supporting the amount and timing of the advance, and monitor the period between receipt and disbursement of advanced funds; (3) require documented review of the monthly reimbursement log reconciliation and of the schedule of expenditures of federal awards by an individual not involved in preparing requests or recording receipts; and (4) coordinate with the USDA Forest Service program contact regarding repayment or offset of the amount recorded as due to the grantor. Repeat Finding: No Views of Responsible Officials: Management agrees that reimbursement requests should be subject to a more structured review and that an individual who did not prepare the request should independently review the supporting documentation and costs claimed. Cash needs are currently discussed and assessed based on factors including the number and status of applications, anticipated award amounts, and the timing of expected payments. Going forward, management will document its cash requirement determination when preparing each federal cash draw request, including the factors considered and the amount determined to be needed.
Standards for Documentation of Personnel Expenses Charged to Federal Awards Significant Deficiency in Internal Control Over Compliance - Federal Program: Assistance Listing No. 10.719 - Infrastructure Investment and Jobs Act Firewood Bank Program Federal Agency: U.S. Department of Agriculture, Forest Service (direct award; no pass-through entity) Federal Award Identification: 22-DG-11132544-049 (federal award year 2022) and 25-DG-11132544- 082 (federal award year 2025); USDA Forest Service Firewood Bank Program grant agreements identified by the Organization as contract 049 and contract 082 Compliance Requirements: Activities Allowed or Unallowed and Allowable Costs/Cost Principles Type of Finding: Significant deficiency in internal control over compliance Known Questioned Costs: None in addition to the $64,969 reported in Finding 2025-003. The personnel costs claimed without supporting records are included in that amount and are not questioned a second time here. Criteria: 2 CFR 200.430(g) (2 CFR 200.430(i) for awards subject to the guidance in effect before October 1, 2024) requires that charges to federal awards for salaries and wages be based on records that accurately reflect the work performed, be supported by a system of internal control that provides reasonable assurance that the charges are accurate, allowable and properly allocated, be incorporated into the official records of the entity, and reasonably reflect the total activity for which the employee is compensated, encompassing both federally assisted and all other activities. Budget estimates alone do not qualify as support for charges to federal awards. 2 CFR 200.303 requires the entity to establish and maintain effective internal control over the federal award. Condition: The Organization does not maintain records reflecting the work performed by employees whose salaries and related benefits are charged to the federal award. Personnel costs are assigned to programs, and between federal and non-federal activities, on the basis of management’s estimates rather than records of actual activity. For the year ended December 31, 2025, salaries, payroll taxes and related benefits of $177,331 were allocated on that basis, of which $158,372 was assigned to program services. No after-the-fact activity records, certifications or equivalent documentation covering the total compensated time of those employees are prepared, reviewed or retained, and no reconciliation of amounts charged to the award against records of actual effort is performed. Cause: The Organization has not adopted a time and effort reporting process or written policies addressing the documentation required to support personnel costs charged to federal awards. Effect or Potential Effect: Personnel costs charged to the award are not supported by records that meet the standards in 2 CFR 200.430, and unallowable or misallocated personnel charges could occur and not be prevented, or detected and corrected, on a timely basis. The same condition affects the allocation of expenses among functions presented in the financial statements, as described in Note 11 to the financial statements. Should the award impose a cost-sharing or matching requirement satisfied in whole or in part by personnel effort, the amounts claimed toward that requirement would likewise not be verifiable from the Organization’s records as required by 2 CFR 200.306(b)(1). Context: The condition is systemic and applies to all personnel costs charged to the award for the year ended December 31, 2025. Salaries, payroll taxes and related benefits totaling $177,331 were recorded for the year, against total expenditures of the major federal program of $1,244,996. The absence of activity records was established by inquiry and by examination of the Organization’s payroll and allocation records in their entirety; no sampling was used. Recommendation: We recommend that the Organization implement a personnel activity reporting process under which each employee whose compensation is charged to a federal award prepares, not less frequently than monthly, an after-the-fact record accounting for the employee’s total compensated time across federal and non-federal activities. Each record should be reviewed and approved by a supervisor, reconciled to payroll at least quarterly, used as the basis for amounts charged to the award, and retained in accordance with 2 CFR 200.334. Other documentation methods that satisfy the standards in 2 CFR 200.430 are acceptable provided they are applied consistently and are supported by a system of internal control. Repeat Finding: No Views of Responsible Officials: Management agrees that the Organization should maintain specific records of time and activity worked on federal awards. The Organization will implement a monthly process for documenting and reviewing employee activity to support personnel costs charged to federal awards.
Finding Reference Number: 2025-002 - Reportable Finding Considered a Significant Deficiency and Noncompliance Finding - Reporting Title and ALN Number of Federal Program: Economic Development Initiative, Community Project Funding - 14.251 and Eviction Protection Grant Program - 14.537 Type of Finding: Federal Award Finding Finding Resolution Status: Unresolved Identification of Repeat Finding and Finding Reference Number: Not applicable. Criteria: 2 CFR § 200.303 requires recipients and subrecipients to establish and maintain effective internal controls over federal awards. Such controls should include documented evidence of management review and approval of financial and performance reports submitted to the awarding agency. Maintaining documentation of the review and approval process provides evidence that control activities were performed and supports compliance with federal award requirements. Statement of Condition: As part of testing over the Reporting compliance requirement, we reviewed financial and performance reports submitted to HUD and inquired of management regarding the review and approval process. Management indicated that the reports and supporting documentation were reviewed and verbally approved prior to submission. We note that for one of the selections tested, no documentation was maintained to evidence management's review and approval of the reports. Accordingly, we could not verify through documentation that the control operated as designed for the reports tested. Cause: The condition occurred because MEDA's review and approval process for financial and performance reports relied on verbal management authorization prior to submission. While management reviewed the reports and supporting documentation, procedures were not in place to require the retention of documented evidence of the review and approval. As a result, MEDA was unable to demonstrate that the control had been performed in accordance with internal control requirements. Effect or Potential Effect: Although no material errors were identified in the reports tested, the absence of documented evidence of management review and approval prevented us from verifying that the control operated effectively. As a result, there is an increased risk that inaccuracies or omissions in future financial and performance reports could occur and remain undetected prior to submission. Questioned Costs: $- Context: This finding represents a control deficiency in MEDA's reporting review and approval process rather than an isolated instance affecting a single report. As part of testing over the Reporting compliance requirement, we reviewed financial and performance reports submitted during the audit period and noted that documented evidence of management review and approval was not maintained for the reports tested. The condition indicates that MEDA's control relied on verbal approval rather than documented evidence of review, which could affect all reports subject to management review and approval Recommendation: We recommend that MEDA strengthen its reporting controls by implementing procedures to document management's review and approval of all financial and performance reports prior to submission to HUD. Such documentation may include signed approval forms, documented email approvals, electronic workflow approvals, or other evidence demonstrating that the review control was performed. In addition, MEDA should retain this documentation in accordance with its record retention policies to provide evidence that reports were reviewed for accuracy, completeness, and compliance with federal award requirements before submission Response: See Corrective Action Plan 13
Type of Finding: Significant deficiency Federal Agencies, Programs, and Assistance Listing Numbers: o U.S. Department of Agriculture: State of Hawaiʻi, Department of Education, Hawaiʻi Child Nutrition Program: • Summer Food Service Program for Children (Assistance Listing No. 10.559) Criteria – In accordance with Title 2, Subtitle A, Chapter II, Section 200.303 (2 CFR § 200.303), non-federal entities must establish and maintain effective internal controls over federal awards that provide reasonable assurance that the entity is managing the award in compliance with federal statutes, regulations, and terms and conditions of the award. Segregation of duties and management oversight are essential components of effective internal control. Condition – During our audit, we noted that the meal reimbursement claims submitted for June and July 2025 reconciled to supporting documentation. However, there was no evidence of management's review and approval of the submitted meal reimbursement claims. Cause – The Organization's meal reimbursement process did not require management review or approval of claims prior to submission. Effect – Insufficient management review increases the risk of unsubstantiated claim reimbursements which could result in noncompliance with program requirements. Questioned Costs – None Identification as a Repeat Finding, if applicable – Yes; refer to prior year Finding No. 2024-002 in the Summary Schedule of Prior Audit Findings. Recommendation – In addition to existing processes and controls over meal reimbursement claim submissions, we recommend management document their review and approval of meal reimbursement claims with a reviewer sign off. Views of Responsible Official(s) and Planned Corrective Action – See Corrective Action Plan on page 39.
Finding 2025-001 Equipment and Real Property Management Information on the federal program: Federal Agency: United States Department of Health and Human Services ALN: 93.889 National Bioterrorism Hospital Preparedness Program Pass-Through Grantor: Illinois Department of Public Health and Illinois Health and Hospital Association Pass-Through Award Number: 57280009M; 67280009N; 47280009L; 47280007L; 57280009M Pass-Through Award Period: 7/1/2023 to 6/30/2026 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Section 200.303 of the Uniform Guidance states the following regarding internal control: “The non-Federal entity must: (a) Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Section 200.313(d)(1) and (2) states, “Regardless of whether equipment is acquired in part or its entirety under Federal award, the recipient or subrecipient must manage equipment (including replacement equipment) utilizing procedures that meet the following requirements: Property records must include a description of the property, a serial number or another identification number, the source of funding for the property (including FAIN), the title holder, the acquisition date, the cost of the property, the percentage of the Federal agency contributions towards the original purchase, the location, use and condition of the property, and the disposition data including the date of disposal and sale price of the property. The recipient and subrecipient are responsible for maintaining and updating property records when there is a change in the status of the property. Section III – Federal Award Findings and Questioned Costs (continued) Condition: The System did not retain property records documenting the appropriate criteria required by Section 200.313(d)(1) and (2). Cause: The System did not have sufficiently designed internal controls to ensure that property records are retained in accordance with Section 200.313(d)(1) and (2). Effect or potential effect: Federal equipment may not be maintained or disposed of in accordance with federal regulations. Questioned Costs: $8,481 Context: We tested a sample of six items from the equipment listing related to the federal program for the period January 1, 2025 through December 31, 2025. For one item selected for testing, the serial number listed on the item was not recorded in the property records to ensure the asset was appropriately designated for use in accordance with the requirements of the grant. For one item selected for testing, the item was unable to be physically located. The total National Bioterrorism Hospital Preparedness Program expenditures reported on the Schedule are $882,827 for the year ended December 31, 2025. The net book value of all assets related to this federal program was $161,020. The net book value of the assets with exceptions identified was $8,481. Identification as a repeat finding, if applicable: This is a repeat finding of 2024-005 from the prior year. Recommendation: The System should implement more robust internal controls to ensure that accurate property records are maintained. Section III – Federal Award Findings and Questioned Costs (continued) Views of responsible officials: Management agrees with the finding and will ensure that the enhanced procedures and monitoring controls already in place are consistently followed to ensure that equipment acquired with Federal grant funds is accurately recorded, properly tracked, and supported by property records that are maintained and retained in accordance with 2 CFR § 200.313(d)(1) and (2). The Program team is responsible for ensuring that physical inventories are conducted at least every two years, reconciled to the applicable property records, and that any discrepancies identified are investigated and resolved in a timely manner. These corrective actions will strengthen internal controls over federally funded equipment and support continued compliance with applicable Federal requirements.
Finding 2025-001 –Procurement , Suspension & Debarment Material Weakness in Internal Control over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR 200.318 maintains that recipients must have and use documented procurement policies and must conform to the procurement standards in sections 200.317 through 200.327. These standards generally require recipients to maintain records sufficient to detail the history of procurement, including the rationale for the procurement method, selection of contract type, contractor selection or rejection, and the basis for the contract price. Condition: Testing of the federal program identified the following: • The Organization failed to document price comparisons including the rationale or circumstances leading up to the selection of the non-competitive sole source procurement. The Organization did follow through with the suspension and debarment check of the contracted vendor. Cause: The Organization lacked adequate documentation of procurement decisions being reached during the initial project funding phase. Effect/Potential Effect: Ineffective controls over this area of compliance could result in a reasonable possibility the Organization would be noncompliant with the compliance requirements outlined above. Questioned Costs: None reported. Context / Sampling: A statistical sample of 1 out of 3 vendors selected for testing.