FINDING 2023-005 Information on the federal program: Subject: Special Education Cluster (IDEA) – Procurement and Suspension and Debarment Federal Agency: Department of Education Federal Program: Special Education Grants to States, Special Education Preschool Grants Assistance Listing Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (Or Other Identifying Number): 19611-067-PN01, 20611-070-PN01, 21611-070-PN01, 22611-02-CEIS, 22611-070-PN01, 22611-070-ARP, 23611-067-PN01, 21619-070- PN01, 22619-070-ARP, 22619-070-PN01 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Procurement and Suspension and Debarment Audit Finding: Material Weakness, Qualified Opinion 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 200.318 states in part: "(a) The non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in §§ 200.317 through 200.327. . . . (i) The non-Federal entity 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. . . .” 2 CFR 200.320 states in part: “The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. • Informal procurement methods. When the value of the procurement for property or services under a Federal award does not exceed the simplified acquisition threshold (SAT), as defined in § 200.1, or a lower threshold established by a non-Federal entity, formal procurement methods are not required. The non-Federal entity may use informal procurement methods to expedite the completion of its transactions and minimize the associated administrative burden and cost. The informal methods used for procurement of property or services at or below the SAT include: . . . (2) Small purchases — (i) Small purchase procedures. The acquisition of property or services, the aggregate dollar amount of which is higher than the micro-purchase threshold but does not exceed the simplified acquisition threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources as determined appropriate by the non-Federal entity. . . . “ 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 the SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." Condition: An effective internal control system was not in place at the School Corporation to ensure compliance with requirements related to the grant agreements and Procurement and Suspension and Debarment compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls that would have ensured compliance with the Procurement and Suspension and Debarment compliance requirement. Effect: The failure to establish internal controls enabled noncompliance to go undetected. The failure to comply with the grant agreement and the compliance requirement could have resulted in the loss of federal funds to the School Corporation. Questioned Costs: There were no questioned costs identified. Context: Procurement Federal regulations allow for informal procurement methods when the value of the procurement for property or services does not exceed the simplified acquisition threshold, which is set at $250,000 unless a lower, more restrictive threshold is set by a non-Federal entity. As Indiana Code has set a more restrictive threshold of $150,000, informal procurement methods are permitted when the value of the procurement does not exceed $150,000. This informal process allows for methods other than the formal bid process. The informal process is divided between two methods based on thresholds. Micro-purchases, typically for those purchases $50,000 or under, and small purchase procedures for those purchases above the micropurchase threshold, but below the simplified acquisition threshold. Micro-purchases may be awarded without soliciting competitive price rate quotations. If small purchase procedures are used, then price or rate quotations must be obtained from an adequate number of qualified sources. For fiscal year 2022, the School Corporation had one vendor, with disbursements totaling $199,713 for the fiscal year, which exceeds the simplified acquisition threshold of $150,000. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2022, three vendors, totaling $228,079, were identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold. One of the three vendors was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. For fiscal year 2023, one vendor, totaling $65,861, was identified as being less than the simplified acquisition threshold of $150,000, but exceeding the $50,000 micro-purchase threshold and was selected for testing. The School Corporation did not obtain price or rate quotes nor was there documentation detailing the history of procurement, which must include the reason for the procurement method used. The lack of internal controls and noncompliance were systemic issues throughout the audit period. 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. “Covered transactions” include but are not limited to contracts for goods and services awarded under a non-procurement transaction (i.e., grant agreement) that are expected to equal or exceed $25,000. The verification is to be done by checking the SAMs exclusions, collecting a certification from that vendor, or adding a clause or condition to the covered transaction with that vendor. During the audit period, there were six vendors identified which exceeded $25,000 in disbursements on an annual basis. Two vendors were selected for testing. In both instances, the School Corporation’s contract with the vendor did not include any suspension and debarment clause and the School Corporation did not verify the vendor’s suspension and debarment status prior to payment. The lack of internal controls and noncompliance was systemic issues throughout the audit period. Identification as a repeat finding, if applicable: Yes, See Finding 2021-005. Recommendation: We recommended that the School Corporation's management establish and implement control procedures to ensure compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. This should include documenting the procurement process taken by management for transactions with vendors exceeding the simplified acquisition and small purchase thresholds. When utilizing vendors providing specialized services, documentation should be prepared and maintained by management to support sole source procurement decisions when competitive is limited due to the nature of the service. We also recommend implement an annual control to review and document suspension and debarment checks for all vendors funded with Special Education grant funds that meet the covered transaction threshold of $25,000. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Federal Agency: U.S. Department of Homeland Security Federal Program Name: Staffing for Adequate Fire and Emergency Response ALN: 97.083 Award Period: March 14, 2023 – March 13, 2026 Compliance Requirement: Period of Performance Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Prior Year Finding: No Criteria or specific requirement: Compliance – A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). A period of performance may contain one or more budget periods. Social Services Block Grant funds must be expended by the state in the fiscal year allotted or in the succeeding fiscal year. Control – Per 2 CFR Section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Department of Homeland Security charged costs to the program that were incurred outside of the grant award’s period of performance. Context: One of the six pay-periods selected for testing, had expenditures totaling $19,871, that were incurred on March 13, 2023, which is prior to the award’s period of performance start date of March 14, 2023. Questioned costs: Known costs of $19,871. Cause: Personnel Costs for March 13, 2023 embedded in the pay period report of March 13, 2023 through March 26, 2023 were submitted as expenditures before the period of performance start date of March 14, 2023. This was caused by an oversight of removing the first day of employment March 13, 2023 from the expenditures when the first reimbursement was submitted for payment to FEMA. Effect: The Department was not compliant with the grant’s period of performance which could result in the grantor’s disallowance of the costs. Recommendation: We recommend that the Department review and enhance its procedures and controls to ensure that expenditures charged to the program are incurred within the grant’s period of performance. Views of responsible officials: We concur with your finding and have taken the following corrective action: 1. The error has been reported to FEMA and the transaction for correcting this error will be submitted with the next reimbursement request as a negative adjustment. 2. We are continuously monitoring the expenditure consistency with the grant award timeline. 3. We are working with our Grant Coordinator to ensure that all of our grants are consistent with the requirements of the award.
Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Community Development Block Grants ALN: 14.218 Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Prior Year Finding: Yes Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Sub awardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Department of Housing and Urban Development did not report subaward information timely to FSRS during FY 2023. Context: Forty out of forty subawards selected for testing were due on 8/31/2022 and were not reported to FSRS until 11/3/2022, or 76 days late. Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 5 0 5 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $ $0 $ $0 $0 Cause: The Department’s internal controls were not sufficient to ensure that subawards were reported timely to FSRS during FY 2023. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend that the Department develop internal controls and procedures to ensure that all required subawards are reported timely to FSRS no later than the end of the month following the month of issuance in accordance with FFATA reporting requirements.
Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: Community Development Block Grants ALN: 14.218 Compliance Requirement: Reporting – Federal Funding Accountability and Transparency Act (FFATA) Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Prior Year Finding: Yes Criteria or specific requirement: Compliance: Per the Federal Funding Accountability and Transparency Act (FFATA), prime (direct) recipients of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Reports must be filed in FSRS by the end of the month following the month in which the prime recipient awards any sub-grant greater than or equal to $30,000. If the initial award is below $30,000 but subsequent grant modifications result in a total award equal to or over $30,000, the award will be subject to the reporting requirements as of the date the award exceeds $30,000. If the initial award equals or exceeds $30,000 but funding is subsequently de-obligated such that the total award amount falls below $30,000, the award continues to be subject to FFATA reporting requirements. The following key data elements must be reported: Sub awardee Name and Data Universal Numbering System (DUNS) number; Amount of Subaward (inclusive of modifications); Subaward Obligation/Action Date; Date of Report Submission; Subaward Number; Project Description; and Names and Compensation of Highly Compensated Officers. (Names and Compensation of Highly Compensated Officers must only be reported when the entity in the preceding fiscal year received 80 percent or more of its annual gross revenues in Federal awards; and $30,000,000 or more in annual gross revenues from Federal awards; and the public does not have access to this information about the compensation of the senior executives of the entity through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986.) Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Department of Housing and Urban Development did not report subaward information timely to FSRS during FY 2023. Context: Forty out of forty subawards selected for testing were due on 8/31/2022 and were not reported to FSRS until 11/3/2022, or 76 days late. Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 5 0 5 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $ $0 $ $0 $0 Cause: The Department’s internal controls were not sufficient to ensure that subawards were reported timely to FSRS during FY 2023. Effect: Subawards were not reported to FSRS in accordance with FFATA requirements. Questioned costs: None noted. Recommendation: We recommend that the Department develop internal controls and procedures to ensure that all required subawards are reported timely to FSRS no later than the end of the month following the month of issuance in accordance with FFATA reporting requirements.
2023 – 006 Federal Agency: Department of Education Federal Program Name: Student Financial Assistance Cluster Assistance Listing Number: 84.007, 84.063, and 84.268 Federal Award Identification Number and Year: See FAIN numbers included within the Context section below; all grants were awarded within the 2021-22 and 2022-23 award years. Award Period: July 1, 2022 through June 30, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria: In accordance with 34 CFR 668.22(a)(1), when a recipient of Title IV grant or loan assistance withdraws from an institution during a payment period or period of enrollment in which the recipient began attendance, the institution must determine the amount of Title IV grant or loan assistance that the student earned as of the student’s withdrawal date. The Code of Federal Regulations, 2 CFR 200.303, non-Federal entities receiving Federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations and program compliance requirements. Condition and Context: During our testing of Return of Title IV (R2T4) funding on the State System, we noted: 1) Calculations were not being performed timely, resulting in payments being returned outside of the 45 day timeframe • Pennsylvania Western University (P007A213550, P007A223550, P063P212130, P063P222130, P268K222130, and P268K232130): 2 of the 13 students tested for award year 2022-23 • Cheyney University (P007A213558, P007A223558, P063P212131, P063P222131, P268K222131, and P268K232131): 3 of the 6 students tested for award year 2022-23 Questioned Costs: N/A Cause: The Universities were not timely tracking withdraws of students who were awarded Title IV aid, resulting in calculations being performed late. Effect: Funds could be returned late to either the Department of Education or late post-withdrawal disbursements to the students. Repeat Finding: No Recommendation: The Universities should review policies and procedures around tracking withdraws and timely performance of R2T4 calculations. Views of Responsible Officials: There is no disagreement with the audit finding.
2023 – 007 Federal Agency: Department of Education Federal Program Name: Student Financial Assistance Cluster Assistance Listing Number: 84.007, 84.033, 84.063, and 84.268 Federal Award Identification Number and Year: See FAIN numbers included within the Context section below; all grants were awarded within the 2021-22 and 2022-23 award years. Award Period: July 1, 2022 through June 30, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria: Uniform Guidance requires the auditee to prepare a Schedule of Expenditures of Federal Awards (SEFA) which must include the total federal awards expended as determined in accordance with sub-section 200.502. 2 CFR 200.510. The Code of Federal Regulations, 2 CFR 200.303, non-Federal entities receiving Federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations and program compliance requirements. Condition and Context: During our testing of completeness of the SEFA for Cheyney University (P007A213558, P007A223558, P063P212131, P063P222131, P268K222131, and P268K232131) we noted approximately $3,000,000 of institutional aid expenditures were incorrectly included in the Student Financial Assistance Cluster. The error is a result of institutional aid expenditures being disallowed from the student financial assistance program and the SEFA not being subsequently updated. Questioned Costs: N/A Cause: The University did not timely update the SEFA and provide an updated version to the auditors. Effect: The SEFA contained errors in the balances reported for federal expenditures, which can cause the miscalculation of major programs and testing selections. Repeat Finding: No Recommendation: The University should review applicable guidance as well as its policies and procedures in place to ensure Federal grant and loan related activity is properly reflecting within the SEFA. Views of Responsible Officials: There is no disagreement with the audit finding.
2023 – 007 Federal Agency: Department of Education Federal Program Name: Student Financial Assistance Cluster Assistance Listing Number: 84.007, 84.033, 84.063, and 84.268 Federal Award Identification Number and Year: See FAIN numbers included within the Context section below; all grants were awarded within the 2021-22 and 2022-23 award years. Award Period: July 1, 2022 through June 30, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria: Uniform Guidance requires the auditee to prepare a Schedule of Expenditures of Federal Awards (SEFA) which must include the total federal awards expended as determined in accordance with sub-section 200.502. 2 CFR 200.510. The Code of Federal Regulations, 2 CFR 200.303, non-Federal entities receiving Federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations and program compliance requirements. Condition and Context: During our testing of completeness of the SEFA for Cheyney University (P007A213558, P007A223558, P063P212131, P063P222131, P268K222131, and P268K232131) we noted approximately $3,000,000 of institutional aid expenditures were incorrectly included in the Student Financial Assistance Cluster. The error is a result of institutional aid expenditures being disallowed from the student financial assistance program and the SEFA not being subsequently updated. Questioned Costs: N/A Cause: The University did not timely update the SEFA and provide an updated version to the auditors. Effect: The SEFA contained errors in the balances reported for federal expenditures, which can cause the miscalculation of major programs and testing selections. Repeat Finding: No Recommendation: The University should review applicable guidance as well as its policies and procedures in place to ensure Federal grant and loan related activity is properly reflecting within the SEFA. Views of Responsible Officials: There is no disagreement with the audit finding.
2023 – 002 Federal Agency: Department of Education Federal Program Name: Student Financial Assistance Cluster Assistance Listing Numbers: 84.063 and 84.268 Federal Award Identification Number and Year: See FAIN numbers included within the Context section below; all grants were awarded within the 2021-22 and 2022-23 award years. Award Period: July 1, 2022 through June 30, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria: The Code of Federal Regulations, consisting of 2 CFR 200.303, 34 CFR 685.309 and 34 CFR 690.83(b)(2), requires that enrollment status changes for students be reported to NSLDS within 30 days or within 60 days if the student with the status change will be reported on a scheduled transmission within 60 days of the change in status. Additionally, schools are required to certify enrollment at a minimum of every 60 days or every other month. Condition and Context: During our testing of NSLDS Enrollment Reporting on the State System, we noted: 1) Status change was received by NSLDS was outside of the 60-day timeframe: • West Chester University (P268K222141, P268K232141, P063P212141, and P063P222141): 4 of the 40 students tested for award year 2022-23 • East Stroudsburg University (P268K222133, P268K232133, P063P212133, and P063P222133): 24 of the 40 students tested for award year 2022-23 • Kutztown University (P268K222135, P268K232135, P063P212135, and P063P222135): 5 of the 5 students tested for award year 2022-23 • Cheyney University (P268K222130, P268K232130, P063P212130, and P063P222130): 3 of the 40 students tested for award year 2022-23 Questioned Costs: N/A Cause: The Universities’ policies and procedures were not designed to ensure that student status changes were timely reported to NSLDS. Effect: The NSLDS system is not updated with the student information which can cause over-awarding should the student transfer to another institution and the student may not properly enter the repayment period. Repeat Finding: Cheyney University – Yes – Finding 2022-002 Kutztown University – Yes – Finding 2022-002 All Other Universities – No Recommendation: The Universities should review their reporting procedures to ensure that students’ statuses are timely reported to NSLDS as required by Federal regulations. Views of Responsible Officials: There is no disagreement with the audit finding.
2023 – 003 Federal Agency: Department of Education Federal Program Name: Student Financial Assistance Cluster Assistance Listing Numbers: 84.063 and 84.268 Federal Award Identification Number and Year: See FAIN numbers included within the Context section below; all grants were awarded within the 2021-22 and 2022-23 award years Award Period: July 1, 2022 through June 30, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria: The Code of Federal Regulations, 34 CFR 685.309(b), states that: 1) Schools must have some arrangement to report student enrollment data to NSLDS through an enrollment roster file. The school is required to report changes in the student’s enrollment status, the effective date of the status, and an anticipated completion date. Also, the Code of Federal Regulations, 34 CFR 682.610, states that institutions must report accurately the enrollment status of all students regardless if they receive aid from the institution or not. 2) Schools must have some arrangement to report student program enrollment effective date and status to NSLDS. The Code of Federal Regulations, 2 CFR 200.303, non-Federal entities receiving Federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations and program compliance requirements. Condition and Context: During our testing of enrollment status reporting on the State System, we noted: 1) Incorrect Enrollment Effective Date Reported to NSLDS • East Stroudsburg University (P268K222133, P268K232133, P063P212133, and P063P222133): 7 of the 40 students tested for award year 2022-23 • Kutztown University (P268K222135, P268K232135, P063P212135, and P063P222135): 1 of the 5 students tested for award year 2022-23 • Cheyney University (P268K222131, P268K232131, P063P212131, and P063P222131): 6 of the 40 students tested for award year 2022-23 2) Incorrect Program Enrollment Effective Date Reported to NSLDS • Lock Haven University (P268K222136, P268K232136, P063P212136, and P063P222136): 1 of the 5 students tested for award year 2022-23 • West Chester University (P268K222141, P268K232141, P063P212141, and P063P222141): 1 of the 40 students tested for award year 2022-23 • East Stroudsburg University (P268K222133, P268K232133, P063P212133, and P063P222133): 3 of the 40 students tested for award year 2022-23 • Cheyney University (P268K222131, P268K232131, P063P212131, and P063P222131): 1 of the 40 students tested for award year 2022-23 3) Incorrect Program Enrollment Status Reported to NSLDS • Lock Haven University (P268K222136, P268K232136, P063P212136, and P063P222136): 1 of the 5 students tested for award year 2022-23 • West Chester University (P268K222141, P268K232141, P063P212141, and P063P222141): 1 of the 40 students tested for award year 2022-23 Questioned Costs: N/A Causes: 1) The Universities did not have a process in place to ensure the effective date reported to NSLDS matches the effective date of the student’s last date of attendance. 2) The Universities did not have a process in place to ensure the student's program enrollment effective date was being accurately reported. 3) The Universities did not have a process in place to ensure the student's program enrollment status was being accurately reported. Effect: 1) The enrollment effective date reported to NSLDS is used to determine when the student’s grace period should begin. By not reporting a correct effective date, the grace period begin date for the student will be incorrect. 2) The program enrollment effective date reported to NSLDS is used to determine the student’s 150% limit for direct loans as well as when grace period should begin. By not reporting the correct status, the calculation of the 150% would be incorrect and the grace period begin date would be incorrect. Repeat Finding: Cheyney University – Yes – Finding 2022-003 Kutztown University – Yes – Finding 2022-003 All Other Universities – No Recommendation: 1) The Universities should evaluate their procedures and review policies surrounding reporting status changes to NSLDS to ensure the enrollment effective date reported to NSLDS is aligning with the Universities’ last date of attendance. 2) The Universities should evaluate their procedures and review policies surrounding reporting program enrollment effective dates to NSLDS. 3) The Universities should evaluate their procedures and review policies surrounding reporting program enrollment statuses to NSLDS. Views of Responsible Officials: There is no disagreement with the audit finding.
2023 – 006 Federal Agency: Department of Education Federal Program Name: Student Financial Assistance Cluster Assistance Listing Number: 84.007, 84.063, and 84.268 Federal Award Identification Number and Year: See FAIN numbers included within the Context section below; all grants were awarded within the 2021-22 and 2022-23 award years. Award Period: July 1, 2022 through June 30, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria: In accordance with 34 CFR 668.22(a)(1), when a recipient of Title IV grant or loan assistance withdraws from an institution during a payment period or period of enrollment in which the recipient began attendance, the institution must determine the amount of Title IV grant or loan assistance that the student earned as of the student’s withdrawal date. The Code of Federal Regulations, 2 CFR 200.303, non-Federal entities receiving Federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations and program compliance requirements. Condition and Context: During our testing of Return of Title IV (R2T4) funding on the State System, we noted: 1) Calculations were not being performed timely, resulting in payments being returned outside of the 45 day timeframe • Pennsylvania Western University (P007A213550, P007A223550, P063P212130, P063P222130, P268K222130, and P268K232130): 2 of the 13 students tested for award year 2022-23 • Cheyney University (P007A213558, P007A223558, P063P212131, P063P222131, P268K222131, and P268K232131): 3 of the 6 students tested for award year 2022-23 Questioned Costs: N/A Cause: The Universities were not timely tracking withdraws of students who were awarded Title IV aid, resulting in calculations being performed late. Effect: Funds could be returned late to either the Department of Education or late post-withdrawal disbursements to the students. Repeat Finding: No Recommendation: The Universities should review policies and procedures around tracking withdraws and timely performance of R2T4 calculations. Views of Responsible Officials: There is no disagreement with the audit finding.
2023 – 007 Federal Agency: Department of Education Federal Program Name: Student Financial Assistance Cluster Assistance Listing Number: 84.007, 84.033, 84.063, and 84.268 Federal Award Identification Number and Year: See FAIN numbers included within the Context section below; all grants were awarded within the 2021-22 and 2022-23 award years. Award Period: July 1, 2022 through June 30, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria: Uniform Guidance requires the auditee to prepare a Schedule of Expenditures of Federal Awards (SEFA) which must include the total federal awards expended as determined in accordance with sub-section 200.502. 2 CFR 200.510. The Code of Federal Regulations, 2 CFR 200.303, non-Federal entities receiving Federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations and program compliance requirements. Condition and Context: During our testing of completeness of the SEFA for Cheyney University (P007A213558, P007A223558, P063P212131, P063P222131, P268K222131, and P268K232131) we noted approximately $3,000,000 of institutional aid expenditures were incorrectly included in the Student Financial Assistance Cluster. The error is a result of institutional aid expenditures being disallowed from the student financial assistance program and the SEFA not being subsequently updated. Questioned Costs: N/A Cause: The University did not timely update the SEFA and provide an updated version to the auditors. Effect: The SEFA contained errors in the balances reported for federal expenditures, which can cause the miscalculation of major programs and testing selections. Repeat Finding: No Recommendation: The University should review applicable guidance as well as its policies and procedures in place to ensure Federal grant and loan related activity is properly reflecting within the SEFA. Views of Responsible Officials: There is no disagreement with the audit finding.
2023 – 002 Federal Agency: Department of Education Federal Program Name: Student Financial Assistance Cluster Assistance Listing Numbers: 84.063 and 84.268 Federal Award Identification Number and Year: See FAIN numbers included within the Context section below; all grants were awarded within the 2021-22 and 2022-23 award years. Award Period: July 1, 2022 through June 30, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria: The Code of Federal Regulations, consisting of 2 CFR 200.303, 34 CFR 685.309 and 34 CFR 690.83(b)(2), requires that enrollment status changes for students be reported to NSLDS within 30 days or within 60 days if the student with the status change will be reported on a scheduled transmission within 60 days of the change in status. Additionally, schools are required to certify enrollment at a minimum of every 60 days or every other month. Condition and Context: During our testing of NSLDS Enrollment Reporting on the State System, we noted: 1) Status change was received by NSLDS was outside of the 60-day timeframe: • West Chester University (P268K222141, P268K232141, P063P212141, and P063P222141): 4 of the 40 students tested for award year 2022-23 • East Stroudsburg University (P268K222133, P268K232133, P063P212133, and P063P222133): 24 of the 40 students tested for award year 2022-23 • Kutztown University (P268K222135, P268K232135, P063P212135, and P063P222135): 5 of the 5 students tested for award year 2022-23 • Cheyney University (P268K222130, P268K232130, P063P212130, and P063P222130): 3 of the 40 students tested for award year 2022-23 Questioned Costs: N/A Cause: The Universities’ policies and procedures were not designed to ensure that student status changes were timely reported to NSLDS. Effect: The NSLDS system is not updated with the student information which can cause over-awarding should the student transfer to another institution and the student may not properly enter the repayment period. Repeat Finding: Cheyney University – Yes – Finding 2022-002 Kutztown University – Yes – Finding 2022-002 All Other Universities – No Recommendation: The Universities should review their reporting procedures to ensure that students’ statuses are timely reported to NSLDS as required by Federal regulations. Views of Responsible Officials: There is no disagreement with the audit finding.
2023 – 003 Federal Agency: Department of Education Federal Program Name: Student Financial Assistance Cluster Assistance Listing Numbers: 84.063 and 84.268 Federal Award Identification Number and Year: See FAIN numbers included within the Context section below; all grants were awarded within the 2021-22 and 2022-23 award years Award Period: July 1, 2022 through June 30, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria: The Code of Federal Regulations, 34 CFR 685.309(b), states that: 1) Schools must have some arrangement to report student enrollment data to NSLDS through an enrollment roster file. The school is required to report changes in the student’s enrollment status, the effective date of the status, and an anticipated completion date. Also, the Code of Federal Regulations, 34 CFR 682.610, states that institutions must report accurately the enrollment status of all students regardless if they receive aid from the institution or not. 2) Schools must have some arrangement to report student program enrollment effective date and status to NSLDS. The Code of Federal Regulations, 2 CFR 200.303, non-Federal entities receiving Federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations and program compliance requirements. Condition and Context: During our testing of enrollment status reporting on the State System, we noted: 1) Incorrect Enrollment Effective Date Reported to NSLDS • East Stroudsburg University (P268K222133, P268K232133, P063P212133, and P063P222133): 7 of the 40 students tested for award year 2022-23 • Kutztown University (P268K222135, P268K232135, P063P212135, and P063P222135): 1 of the 5 students tested for award year 2022-23 • Cheyney University (P268K222131, P268K232131, P063P212131, and P063P222131): 6 of the 40 students tested for award year 2022-23 2) Incorrect Program Enrollment Effective Date Reported to NSLDS • Lock Haven University (P268K222136, P268K232136, P063P212136, and P063P222136): 1 of the 5 students tested for award year 2022-23 • West Chester University (P268K222141, P268K232141, P063P212141, and P063P222141): 1 of the 40 students tested for award year 2022-23 • East Stroudsburg University (P268K222133, P268K232133, P063P212133, and P063P222133): 3 of the 40 students tested for award year 2022-23 • Cheyney University (P268K222131, P268K232131, P063P212131, and P063P222131): 1 of the 40 students tested for award year 2022-23 3) Incorrect Program Enrollment Status Reported to NSLDS • Lock Haven University (P268K222136, P268K232136, P063P212136, and P063P222136): 1 of the 5 students tested for award year 2022-23 • West Chester University (P268K222141, P268K232141, P063P212141, and P063P222141): 1 of the 40 students tested for award year 2022-23 Questioned Costs: N/A Causes: 1) The Universities did not have a process in place to ensure the effective date reported to NSLDS matches the effective date of the student’s last date of attendance. 2) The Universities did not have a process in place to ensure the student's program enrollment effective date was being accurately reported. 3) The Universities did not have a process in place to ensure the student's program enrollment status was being accurately reported. Effect: 1) The enrollment effective date reported to NSLDS is used to determine when the student’s grace period should begin. By not reporting a correct effective date, the grace period begin date for the student will be incorrect. 2) The program enrollment effective date reported to NSLDS is used to determine the student’s 150% limit for direct loans as well as when grace period should begin. By not reporting the correct status, the calculation of the 150% would be incorrect and the grace period begin date would be incorrect. Repeat Finding: Cheyney University – Yes – Finding 2022-003 Kutztown University – Yes – Finding 2022-003 All Other Universities – No Recommendation: 1) The Universities should evaluate their procedures and review policies surrounding reporting status changes to NSLDS to ensure the enrollment effective date reported to NSLDS is aligning with the Universities’ last date of attendance. 2) The Universities should evaluate their procedures and review policies surrounding reporting program enrollment effective dates to NSLDS. 3) The Universities should evaluate their procedures and review policies surrounding reporting program enrollment statuses to NSLDS. Views of Responsible Officials: There is no disagreement with the audit finding.
2023 – 005 Federal Agency: Department of Education Federal Program Name: Student Financial Assistance Cluster Assistance Listing Number: 84.268 Federal Award Identification Number and Year: P268K222133 and P268K232133; all grants were awarded within the 2021-22 and 2022-23 award years Award Period: July 1, 2022 through June 30, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria: The Code of Federal Regulations, 2 CFR 200.303, non-Federal entities receiving Federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations and program compliance requirements. Condition and Context: During the testing of Direct Loan Reconciliations on the State System, we noted that East Stroudsburg University was performing reconciliations; however, formal documentation of review or approval could not be provided. Questioned Costs: N/A Cause: The University financial and student records management did not have the appropriate coordination or communication with the financial aid team to formally document the review of the reconciliations being performed on a timely basis. Effect: The University is not complying with internal policy and federal requirements to ensure federal funds are properly reconciled. Repeat Finding: No Recommendation: The University should ensure all necessary employees receive proper training, support, and time to follow the university policies and federal requirements related to monthly reconciliations and maintenance of documentation. Views of Responsible Officials: There is no disagreement with the audit finding.
2023 – 006 Federal Agency: Department of Education Federal Program Name: Student Financial Assistance Cluster Assistance Listing Number: 84.007, 84.063, and 84.268 Federal Award Identification Number and Year: See FAIN numbers included within the Context section below; all grants were awarded within the 2021-22 and 2022-23 award years. Award Period: July 1, 2022 through June 30, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria: In accordance with 34 CFR 668.22(a)(1), when a recipient of Title IV grant or loan assistance withdraws from an institution during a payment period or period of enrollment in which the recipient began attendance, the institution must determine the amount of Title IV grant or loan assistance that the student earned as of the student’s withdrawal date. The Code of Federal Regulations, 2 CFR 200.303, non-Federal entities receiving Federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations and program compliance requirements. Condition and Context: During our testing of Return of Title IV (R2T4) funding on the State System, we noted: 1) Calculations were not being performed timely, resulting in payments being returned outside of the 45 day timeframe • Pennsylvania Western University (P007A213550, P007A223550, P063P212130, P063P222130, P268K222130, and P268K232130): 2 of the 13 students tested for award year 2022-23 • Cheyney University (P007A213558, P007A223558, P063P212131, P063P222131, P268K222131, and P268K232131): 3 of the 6 students tested for award year 2022-23 Questioned Costs: N/A Cause: The Universities were not timely tracking withdraws of students who were awarded Title IV aid, resulting in calculations being performed late. Effect: Funds could be returned late to either the Department of Education or late post-withdrawal disbursements to the students. Repeat Finding: No Recommendation: The Universities should review policies and procedures around tracking withdraws and timely performance of R2T4 calculations. Views of Responsible Officials: There is no disagreement with the audit finding.
2023 – 007 Federal Agency: Department of Education Federal Program Name: Student Financial Assistance Cluster Assistance Listing Number: 84.007, 84.033, 84.063, and 84.268 Federal Award Identification Number and Year: See FAIN numbers included within the Context section below; all grants were awarded within the 2021-22 and 2022-23 award years. Award Period: July 1, 2022 through June 30, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria: Uniform Guidance requires the auditee to prepare a Schedule of Expenditures of Federal Awards (SEFA) which must include the total federal awards expended as determined in accordance with sub-section 200.502. 2 CFR 200.510. The Code of Federal Regulations, 2 CFR 200.303, non-Federal entities receiving Federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations and program compliance requirements. Condition and Context: During our testing of completeness of the SEFA for Cheyney University (P007A213558, P007A223558, P063P212131, P063P222131, P268K222131, and P268K232131) we noted approximately $3,000,000 of institutional aid expenditures were incorrectly included in the Student Financial Assistance Cluster. The error is a result of institutional aid expenditures being disallowed from the student financial assistance program and the SEFA not being subsequently updated. Questioned Costs: N/A Cause: The University did not timely update the SEFA and provide an updated version to the auditors. Effect: The SEFA contained errors in the balances reported for federal expenditures, which can cause the miscalculation of major programs and testing selections. Repeat Finding: No Recommendation: The University should review applicable guidance as well as its policies and procedures in place to ensure Federal grant and loan related activity is properly reflecting within the SEFA. Views of Responsible Officials: There is no disagreement with the audit finding.
2023 – 001 Federal Agency: Department of Education Federal Program Name: Education Stabilization Fund - Higher Education Emergency Relief Fund Assistance Listing Numbers: 84.425E and 84.425F Federal Award Identification Number and Year: See FAIN numbers included within the Context section below; Award Year 2021-22 Award Period: July 1, 2022 through June 30, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria: The Code of Federal Regulations, 2 CFR 200.303, non-Federal entities receiving Federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations and program compliance requirements. There are three components to reporting for Higher Education Emergency Relief Fund (HEERF): 1) public reporting on the section 2003(a)(1) Student Aid Portion; 2) public reporting on the section 2003(a)(1) Institutional Portion section 2003(a)(2) and section 2003(a)(3) subprograms (Quarterly Reporting Form), as applicable; and 3) the annual report. Condition and Context: During our testing of HEERF reporting requirements on the State System, we noted: 1) Noncompliant Reporting: • Cheyney University (P425E202680 and P425F201194): Two of the two quarterly reports and the annual report selected for testing were not uploaded to the University’s website timely. • Pennsylvania Western University (P425E200998): The one quarterly report and the annual report selected for testing were not able to be provided as proof of completion. Questioned Costs: N/A Cause: The policies and procedures of the Universities are not designed to ensure that grant reporting requirements were timely met. Effect: The Universities are not complying with awarding requirements, which could affect the amount of Federal funding received. Repeat Finding: Cheyney University – Yes – Finding 2022-001 Pennsylvania Western University – Yes – Finding 2022-001 Recommendation: The Universities should review their policies and procedures around grant reporting to ensure all reporting requirements are met timely and accurately. Views of Responsible Officials: There is no disagreement with the audit finding.
2023 – 001 Federal Agency: Department of Education Federal Program Name: Education Stabilization Fund - Higher Education Emergency Relief Fund Assistance Listing Numbers: 84.425E and 84.425F Federal Award Identification Number and Year: See FAIN numbers included within the Context section below; Award Year 2021-22 Award Period: July 1, 2022 through June 30, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria: The Code of Federal Regulations, 2 CFR 200.303, non-Federal entities receiving Federal awards are required to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations and program compliance requirements. There are three components to reporting for Higher Education Emergency Relief Fund (HEERF): 1) public reporting on the section 2003(a)(1) Student Aid Portion; 2) public reporting on the section 2003(a)(1) Institutional Portion section 2003(a)(2) and section 2003(a)(3) subprograms (Quarterly Reporting Form), as applicable; and 3) the annual report. Condition and Context: During our testing of HEERF reporting requirements on the State System, we noted: 1) Noncompliant Reporting: • Cheyney University (P425E202680 and P425F201194): Two of the two quarterly reports and the annual report selected for testing were not uploaded to the University’s website timely. • Pennsylvania Western University (P425E200998): The one quarterly report and the annual report selected for testing were not able to be provided as proof of completion. Questioned Costs: N/A Cause: The policies and procedures of the Universities are not designed to ensure that grant reporting requirements were timely met. Effect: The Universities are not complying with awarding requirements, which could affect the amount of Federal funding received. Repeat Finding: Cheyney University – Yes – Finding 2022-001 Pennsylvania Western University – Yes – Finding 2022-001 Recommendation: The Universities should review their policies and procedures around grant reporting to ensure all reporting requirements are met timely and accurately. Views of Responsible Officials: There is no disagreement with the audit finding.
FINDING 2023-003 Subject: Title I Grants to Local Educational Agencies - Internal Controls Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listings Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A190014, S010A200014, S010A210014, S010A220014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Finding: Material Weakness Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance related to the Allowable Costs/Cost Principles compliance requirement. The School Corporation had not developed a system of internal controls over payroll transactions to ensure expenditures were allowable and in conformance with the cost principles. The Program Administrator reviewed a report attached to program reimbursement requests which had the total amount paid from each fund and account; however, a detailed payroll report was not reviewed which would have identified the employee and related payroll benefits being paid from the grant fund. 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: INDIANA STATE BOARD OF ACCOUNTS 18 CROTHERSVILLE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (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 was not designed by management of the School Corporation, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation 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. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-003 Subject: Title I Grants to Local Educational Agencies - Internal Controls Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listings Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A190014, S010A200014, S010A210014, S010A220014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Finding: Material Weakness Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance related to the Allowable Costs/Cost Principles compliance requirement. The School Corporation had not developed a system of internal controls over payroll transactions to ensure expenditures were allowable and in conformance with the cost principles. The Program Administrator reviewed a report attached to program reimbursement requests which had the total amount paid from each fund and account; however, a detailed payroll report was not reviewed which would have identified the employee and related payroll benefits being paid from the grant fund. 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: INDIANA STATE BOARD OF ACCOUNTS 18 CROTHERSVILLE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (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 was not designed by management of the School Corporation, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation 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. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-004 Subject: Title I Grants to Local Educational Agencies - Eligibility Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listings Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A190014, S010A200014, S010A210014, S010A220014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Eligibility Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance related to the Eligibility compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 19 CROTHERSVILLE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Eligibility for Title I is determined on the Eligible School Summary of the Tile I application. Enrollment and Poverty numbers are automatically pulled from the Indiana Department of Education's (IDOE) Official Pupil Enrollment (PE) count for each school into the Eligible School Summary page of the Title I application. These counts that are pre-populated should be based on the School Corporation's records as of October of the prior fiscal year. One person compiled and uploaded enrollment data, including poverty status for Real Time reports, to the IDOE without a documented oversight or review process to ensure that the information was accurate. In addition, there was no review by the School Corporation of the enrollment and poverty counts that were pre-populated into the School Corporation's Title I grant application. The IDOE used the October 1 Real Time (RT) reports for fiscal years 2020-2021 and 2021-2022, as provided by the School Corporation, to determine Title I Eligibility for the 2021-2022 and 2022-2023 grant programs, respectively. The October 1 Real Time report could not be presented for audit for either 2020-2021 or 2021-2022, which would have been used to populate enrollment and poverty information for the 2021-2022 and 2022-2023 grants, respectively. As such, we were unable to verify the amounts reported in the grant application. Additionally, we were unable to verify if the correct socioeconomic status was properly reported for any of the students. The lack of internal controls and failure to maintain and provide adequate documentation 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). . . ." 2 CFR 200.334 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." 34 CFR 200.78(a)(1) states: "After reserving funds, as applicable, under § 200.77, including funds for equitable services for private school students, their teachers, and their families, an LEA must allocate funds under this subpart to school attendance areas and schools, identified as eligible and selected to participate under section 1113(a) or (b) of the ESEA, in rank order on the basis of the total number of public school children from low-income families in each area or school." INDIANA STATE BOARD OF ACCOUNTS 20 CROTHERSVILLE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause A proper system of internal controls was not designed by management of the School Corporation, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, Real Time reports were not maintained for audit, and, as such, we could not determine if the School Corporation complied with the eligibility compliance requirements. 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 School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure Real Time reports are maintained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-004 Subject: Title I Grants to Local Educational Agencies - Eligibility Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listings Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A190014, S010A200014, S010A210014, S010A220014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Eligibility Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance related to the Eligibility compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 19 CROTHERSVILLE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Eligibility for Title I is determined on the Eligible School Summary of the Tile I application. Enrollment and Poverty numbers are automatically pulled from the Indiana Department of Education's (IDOE) Official Pupil Enrollment (PE) count for each school into the Eligible School Summary page of the Title I application. These counts that are pre-populated should be based on the School Corporation's records as of October of the prior fiscal year. One person compiled and uploaded enrollment data, including poverty status for Real Time reports, to the IDOE without a documented oversight or review process to ensure that the information was accurate. In addition, there was no review by the School Corporation of the enrollment and poverty counts that were pre-populated into the School Corporation's Title I grant application. The IDOE used the October 1 Real Time (RT) reports for fiscal years 2020-2021 and 2021-2022, as provided by the School Corporation, to determine Title I Eligibility for the 2021-2022 and 2022-2023 grant programs, respectively. The October 1 Real Time report could not be presented for audit for either 2020-2021 or 2021-2022, which would have been used to populate enrollment and poverty information for the 2021-2022 and 2022-2023 grants, respectively. As such, we were unable to verify the amounts reported in the grant application. Additionally, we were unable to verify if the correct socioeconomic status was properly reported for any of the students. The lack of internal controls and failure to maintain and provide adequate documentation 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). . . ." 2 CFR 200.334 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." 34 CFR 200.78(a)(1) states: "After reserving funds, as applicable, under § 200.77, including funds for equitable services for private school students, their teachers, and their families, an LEA must allocate funds under this subpart to school attendance areas and schools, identified as eligible and selected to participate under section 1113(a) or (b) of the ESEA, in rank order on the basis of the total number of public school children from low-income families in each area or school." INDIANA STATE BOARD OF ACCOUNTS 20 CROTHERSVILLE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause A proper system of internal controls was not designed by management of the School Corporation, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, Real Time reports were not maintained for audit, and, as such, we could not determine if the School Corporation complied with the eligibility compliance requirements. 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 School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure Real Time reports are maintained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-005 Subject: Title I Grants to Local Educational Agencies - Matching, Level of Effort, Earmarking Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listings Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A190014, S010A200014, S010A210014, S010A220014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance related to the Matching, Level of Effort, Earmarking compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 21 CROTHERSVILLE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Earmarking A portion of the School Corporation's Title I allocation is required to be set aside for homeless reservation. The required amount to be set aside is indicated in the Title I grant application. The School Corporation is responsible for monitoring each required set aside throughout the life of the grant to ensure the obligation is met. There was no oversight or review process in place to ensure monitoring of each required set aside. The School Corporation did not provide documentation to show that the obligation was met or not met to service all the homeless students in the School Corporation and did not transfer the unused funds to the next grant award. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Level of Effort - Individual Transactions (Vendor) The financial information submitted by the School Corporation to the Indiana Department of Education (IDOE) through the Form 9 report was used by the IDOE to calculate the School Corporation's Level of Effort - Maintenance of Effort. The Treasurer completed vendor claims and certified them; as such, there was not an oversight or review process at the School Corporation level over vendor expenditures to ensure the data used to complete the Form 9 was reported accurately in the correct fund, account, and object code. 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 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). . . ." 20 USC 6313(c)(3)(A) states: "A local educational agency shall reserve such funds as are necessary under this part, determined in accordance with subparagraphs (B) and (C), to provide services comparable to those provided to children in schools funded under this part to serve— (i) homeless children and youths, including providing educationally related support services to children in shelters and other locations where children may live; (ii) children in local institutions for neglected children; and INDIANA STATE BOARD OF ACCOUNTS 22 CROTHERSVILLE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (iii) if appropriate, children in local institutions for delinquent children, and neglected or delinquent children in community day programs." Cause A proper system of internal controls was not designed by management of the School Corporation which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, the homeless set aside was not spent or carried forward. 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 School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure homeless set asides are spent as required. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-005 Subject: Title I Grants to Local Educational Agencies - Matching, Level of Effort, Earmarking Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listings Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A190014, S010A200014, S010A210014, S010A220014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Matching, Level of Effort, Earmarking Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance related to the Matching, Level of Effort, Earmarking compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 21 CROTHERSVILLE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Earmarking A portion of the School Corporation's Title I allocation is required to be set aside for homeless reservation. The required amount to be set aside is indicated in the Title I grant application. The School Corporation is responsible for monitoring each required set aside throughout the life of the grant to ensure the obligation is met. There was no oversight or review process in place to ensure monitoring of each required set aside. The School Corporation did not provide documentation to show that the obligation was met or not met to service all the homeless students in the School Corporation and did not transfer the unused funds to the next grant award. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Level of Effort - Individual Transactions (Vendor) The financial information submitted by the School Corporation to the Indiana Department of Education (IDOE) through the Form 9 report was used by the IDOE to calculate the School Corporation's Level of Effort - Maintenance of Effort. The Treasurer completed vendor claims and certified them; as such, there was not an oversight or review process at the School Corporation level over vendor expenditures to ensure the data used to complete the Form 9 was reported accurately in the correct fund, account, and object code. 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 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). . . ." 20 USC 6313(c)(3)(A) states: "A local educational agency shall reserve such funds as are necessary under this part, determined in accordance with subparagraphs (B) and (C), to provide services comparable to those provided to children in schools funded under this part to serve— (i) homeless children and youths, including providing educationally related support services to children in shelters and other locations where children may live; (ii) children in local institutions for neglected children; and INDIANA STATE BOARD OF ACCOUNTS 22 CROTHERSVILLE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (iii) if appropriate, children in local institutions for delinquent children, and neglected or delinquent children in community day programs." Cause A proper system of internal controls was not designed by management of the School Corporation which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, the homeless set aside was not spent or carried forward. 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 School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure homeless set asides are spent as required. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-006 Subject: Title I Grants to Local Educational Agencies - Reporting Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listings Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A190014, S010A200014, S010A210014, S010A220014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. The School Corporation was required to submit final expenditure reports to the Indiana Department of Education (IDOE) on or before December 31, after the September 30 deadline, for encumbering prior school year funds. INDIANA STATE BOARD OF ACCOUNTS 23 CROTHERSVILLE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) During the audit period, the School Corporation submitted three final expenditure reports. The final expenditure reports were completed and submitted by the Treasurer without an oversight or review process in place to prevent, or detect and correct, errors. In addition, the final expenditure report for the Title I School Improvement for program year 2021, due December 30, 2021, was submitted March 7, 2024. The lack of internal controls was a systemic issue throughout the audit period. The noncompliance was isolated to the final expenditure report for the Title I School Improvement grant. 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 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." 34 CFR 76.731 states: "A State and a subgrantee shall keep records to show its compliance with program requirements." Cause A proper system of internal controls was not designed by management of the School Corporation, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements 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 24 CROTHERSVILLE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper design or implementation of the components of a system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, Title I reports submitted to the IDOE were not submitted in a timely manner. 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 School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation 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 filing required reports. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-006 Subject: Title I Grants to Local Educational Agencies - Reporting Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listings Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A190014, S010A200014, S010A210014, S010A220014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. The School Corporation was required to submit final expenditure reports to the Indiana Department of Education (IDOE) on or before December 31, after the September 30 deadline, for encumbering prior school year funds. INDIANA STATE BOARD OF ACCOUNTS 23 CROTHERSVILLE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) During the audit period, the School Corporation submitted three final expenditure reports. The final expenditure reports were completed and submitted by the Treasurer without an oversight or review process in place to prevent, or detect and correct, errors. In addition, the final expenditure report for the Title I School Improvement for program year 2021, due December 30, 2021, was submitted March 7, 2024. The lack of internal controls was a systemic issue throughout the audit period. The noncompliance was isolated to the final expenditure report for the Title I School Improvement grant. 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 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." 34 CFR 76.731 states: "A State and a subgrantee shall keep records to show its compliance with program requirements." Cause A proper system of internal controls was not designed by management of the School Corporation, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements 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 24 CROTHERSVILLE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper design or implementation of the components of a system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, Title I reports submitted to the IDOE were not submitted in a timely manner. 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 School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation 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 filing required reports. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-007 Subject: Title I Grants to Local Educational Agencies - Special Tests and Provisions - Annual Report Card, High School Graduation Rate Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listings Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A190014, S010A200014, S010A210014, S010A220014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Tests and Provisions - Annual Report Card, High School Graduation Rate Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance related to the Special Tests and Provisions - Annual Report Card, High School Graduation Rate compliance requirement. The School Corporation did not have effective internal controls in place to ensure that documentation regarding the reason for a student being removed from the high school graduation cohort for mobility reasons was prepared, reviewed, and retained. INDIANA STATE BOARD OF ACCOUNTS 25 CROTHERSVILLE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The Special Tests and Provisions - Annual Report Card, High School Graduation Rate compliance requirement necessitated that for students removed from the high school graduation cohort for mobility reasons there be proper written documentation to support the identified mobility code. There were 11 students selected for testing. Of the 11 students tested, 1 student did not have the required supporting documentation to substantiate removal from the cohort for mobility reasons, and 9 students did not have any supporting documentation. The lack of internal controls, noncompliance, and failure to maintain adequate supporting documentation 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). . . ." 20 USC 7801(23)(B) states: "To remove a student from a cohort, a school or local educational agency shall require documentation, or obtain documentation from the State educational agency, to confirm that the student has transferred out, emigrated to another country, or transferred to a prison or juvenile facility, or is deceased." 2 CFR 200.334 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." Cause A proper system of internal controls was not designed by management of the School Corporation, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements 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 26 CROTHERSVILLE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper design or implementation of the components of a system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, proper documentation to support students' mobility was not collected, retained or provided for audit. 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 School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure mobility documentation is collected and retained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-007 Subject: Title I Grants to Local Educational Agencies - Special Tests and Provisions - Annual Report Card, High School Graduation Rate Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listings Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A190014, S010A200014, S010A210014, S010A220014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Tests and Provisions - Annual Report Card, High School Graduation Rate Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance related to the Special Tests and Provisions - Annual Report Card, High School Graduation Rate compliance requirement. The School Corporation did not have effective internal controls in place to ensure that documentation regarding the reason for a student being removed from the high school graduation cohort for mobility reasons was prepared, reviewed, and retained. INDIANA STATE BOARD OF ACCOUNTS 25 CROTHERSVILLE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The Special Tests and Provisions - Annual Report Card, High School Graduation Rate compliance requirement necessitated that for students removed from the high school graduation cohort for mobility reasons there be proper written documentation to support the identified mobility code. There were 11 students selected for testing. Of the 11 students tested, 1 student did not have the required supporting documentation to substantiate removal from the cohort for mobility reasons, and 9 students did not have any supporting documentation. The lack of internal controls, noncompliance, and failure to maintain adequate supporting documentation 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). . . ." 20 USC 7801(23)(B) states: "To remove a student from a cohort, a school or local educational agency shall require documentation, or obtain documentation from the State educational agency, to confirm that the student has transferred out, emigrated to another country, or transferred to a prison or juvenile facility, or is deceased." 2 CFR 200.334 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." Cause A proper system of internal controls was not designed by management of the School Corporation, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements 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 26 CROTHERSVILLE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper design or implementation of the components of a system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, proper documentation to support students' mobility was not collected, retained or provided for audit. 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 School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure mobility documentation is collected and retained for audit. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-008 Subject: Title I Grants to Local Educational Agencies - Special Tests and Provisions - Assessment System Security Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listings Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A190014, S010A200014, S010A210014, S010A220014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Tests and Provisions - Assessment System Security Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance related to the Special Tests and Provisions - Assessment System Security compliance requirement. The School Corporation had not developed and adopted a written test security policy. Although training had been provided to staff on an annual basis, the School Corporation had not established a system of internal controls regarding test security for assessments. In addition, there were no documented internal controls in place to ensure all individuals that should have received training did receive training. The lack of internal controls and noncompliance due to not adopting a test security policy were systemic issues throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 27 CROTHERSVILLE COMMUNITY SCHOOLS 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). . . ." 2 CFR 200.207(a) states in part: "The Federal awarding agency or pass-through entity may impose additional specific award conditions as needed, . . ." 511 IAC 5-5-5(b) states: "Any individual who administers, handles, or has access to secure test materials at the school or school corporation shall complete assessment training and sign a testing security and integrity agreement to remain on file in the appropriate building-level office each year." Indiana Assessment Program Manual, Section 10, Part D states in part: ". . . Locally developed written test security policies must include, but not be limited to, the following descriptions regarding how the corporation will: ● Ensure that all appropriate staff have knowledge of the Code of Ethical Practices and Procedures and understand how to secure, administer, and handle the assessments while in their possession. ● Ensure all appropriate staff receive Test Security and Integrity Training prior to IDOE's established deadline. ● Ensure all appropriate staff receive test administration training prior to the stare of the state testing window for each assessment. ● Ensure staff members who will provide students with testing accommodations are familiar with each student's individual accommodation needs as per the student's IEP, ILP, Section 504 Plan, CSEP, and/or Service Plan prior to testing. ● Ensure staff members who will provide students with test accommodations receive focused training on providing such accommodations prior to the start of the state testing window for each assessment. ● Ensure all appropriate staff receive test security refresher training prior to the start of the state testing window for each assessment. ● Define and clearly communicate at least once annually for all appropriate staff how staff implementation of test administration and test security standards and procedures will be monitored by school administrators. INDIANA STATE BOARD OF ACCOUNTS 28 CROTHERSVILLE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) ● Provide any other information and professional development necessary to ensure that all appropriate staff have the knowledge and skills necessary to make ethical decisions related to preparing students for an assessment, administering the assessment, and interpreting the results from assessment. ● Establish a testing schedule. At a minimum, the schedule should include the assessment name, testing dates and times, applicable grade levels, content areas, and testing room locations. Local testing schedules must be developed prior to the start of the state testing window for each assessment. ● Establish an access policy for assessment materials that allows only appropriate staff to have access to test administration manuals prior to the administration of the test, but prohibits the reviewing of any secure test questions before, during, or after the assessment administration. ● Establish a process that ensures all student assessments are secure when they are not being administered. ● Annually review school materials and practices related to preparing students for assessments. The description must include an explanation regarding how the corporation will ensure test preparation materials used by school staff are appropriate and do not violate test security protocols. ● Monitor testing to ensure staff are administering assessments with fidelity in terms of test administration and test security protocols/procedures and that staff are appropriately providing students with accommodations included in their formal plan. ● Provide channels of communication that allow teachers, administrators, students, parents/guardians, and other community members to voice their concerns about testing practices they consider inappropriate (see the Testing Concerns and Security Violations Report form in Appendix C). ● Establish procedures for investigating any complaint, allegation, or concern about inappropriate testing practices, and ensuring the protection of both the rights of individuals and of the integrity of the assessment. ● Investigate any complaint of inappropriate testing practices or testing irregularities according to the Protocol for Reporting and Investigating Alleged Breaches as established and published pursuant to 511 IAC 5-5-4 (see Appendix A)." Cause A proper system of internal controls was not designed by management of the School Corporation, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper design or implementation of the components of a system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, the School Corporation did not have a written test security policy. INDIANA STATE BOARD OF ACCOUNTS 29 CROTHERSVILLE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure a written test security policy is created and adopted. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-008 Subject: Title I Grants to Local Educational Agencies - Special Tests and Provisions - Assessment System Security Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listings Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A190014, S010A200014, S010A210014, S010A220014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Tests and Provisions - Assessment System Security Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance related to the Special Tests and Provisions - Assessment System Security compliance requirement. The School Corporation had not developed and adopted a written test security policy. Although training had been provided to staff on an annual basis, the School Corporation had not established a system of internal controls regarding test security for assessments. In addition, there were no documented internal controls in place to ensure all individuals that should have received training did receive training. The lack of internal controls and noncompliance due to not adopting a test security policy were systemic issues throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 27 CROTHERSVILLE COMMUNITY SCHOOLS 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). . . ." 2 CFR 200.207(a) states in part: "The Federal awarding agency or pass-through entity may impose additional specific award conditions as needed, . . ." 511 IAC 5-5-5(b) states: "Any individual who administers, handles, or has access to secure test materials at the school or school corporation shall complete assessment training and sign a testing security and integrity agreement to remain on file in the appropriate building-level office each year." Indiana Assessment Program Manual, Section 10, Part D states in part: ". . . Locally developed written test security policies must include, but not be limited to, the following descriptions regarding how the corporation will: ● Ensure that all appropriate staff have knowledge of the Code of Ethical Practices and Procedures and understand how to secure, administer, and handle the assessments while in their possession. ● Ensure all appropriate staff receive Test Security and Integrity Training prior to IDOE's established deadline. ● Ensure all appropriate staff receive test administration training prior to the stare of the state testing window for each assessment. ● Ensure staff members who will provide students with testing accommodations are familiar with each student's individual accommodation needs as per the student's IEP, ILP, Section 504 Plan, CSEP, and/or Service Plan prior to testing. ● Ensure staff members who will provide students with test accommodations receive focused training on providing such accommodations prior to the start of the state testing window for each assessment. ● Ensure all appropriate staff receive test security refresher training prior to the start of the state testing window for each assessment. ● Define and clearly communicate at least once annually for all appropriate staff how staff implementation of test administration and test security standards and procedures will be monitored by school administrators. INDIANA STATE BOARD OF ACCOUNTS 28 CROTHERSVILLE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) ● Provide any other information and professional development necessary to ensure that all appropriate staff have the knowledge and skills necessary to make ethical decisions related to preparing students for an assessment, administering the assessment, and interpreting the results from assessment. ● Establish a testing schedule. At a minimum, the schedule should include the assessment name, testing dates and times, applicable grade levels, content areas, and testing room locations. Local testing schedules must be developed prior to the start of the state testing window for each assessment. ● Establish an access policy for assessment materials that allows only appropriate staff to have access to test administration manuals prior to the administration of the test, but prohibits the reviewing of any secure test questions before, during, or after the assessment administration. ● Establish a process that ensures all student assessments are secure when they are not being administered. ● Annually review school materials and practices related to preparing students for assessments. The description must include an explanation regarding how the corporation will ensure test preparation materials used by school staff are appropriate and do not violate test security protocols. ● Monitor testing to ensure staff are administering assessments with fidelity in terms of test administration and test security protocols/procedures and that staff are appropriately providing students with accommodations included in their formal plan. ● Provide channels of communication that allow teachers, administrators, students, parents/guardians, and other community members to voice their concerns about testing practices they consider inappropriate (see the Testing Concerns and Security Violations Report form in Appendix C). ● Establish procedures for investigating any complaint, allegation, or concern about inappropriate testing practices, and ensuring the protection of both the rights of individuals and of the integrity of the assessment. ● Investigate any complaint of inappropriate testing practices or testing irregularities according to the Protocol for Reporting and Investigating Alleged Breaches as established and published pursuant to 511 IAC 5-5-4 (see Appendix A)." Cause A proper system of internal controls was not designed by management of the School Corporation, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper design or implementation of the components of a system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, the School Corporation did not have a written test security policy. INDIANA STATE BOARD OF ACCOUNTS 29 CROTHERSVILLE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 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 School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure a written test security policy is created and adopted. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-009 Subject: COVID-19 - Education Stabilization Fund - Equipment and Real Property Management Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425D Federal Award Number and Year (or Other Identifying Number): S425D200013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Equipment and Real Property Management Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance related to the Equipment and Real Property Management compliance requirement. The School Corporation made one equipment purchase, a school bus in the amount of $204,961, with grant funds. The school bus was acquired in June 2021, late in the prior audit period, and the expenditure was reimbursed under the ESSER II award in July 2021 in the current audit period. The School Corporation did not maintain a capital asset ledger during the audit period, so the equipment purchased was not properly added to an asset ledger or property record. In addition, while the bus was maintained and safeguarded from theft there was no identified internal controls that would prevent, or detect and correct, noncompliance with these requirements if they were to occur. The School Corporation did not perform a physical inventory of equipment at least once every two years as required. The lack of internal controls and noncompliance were systemic issues throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 30 CROTHERSVILLE COMMUNITY SCHOOLS 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). . . ." 2 CFR 200.313 (d) states in part: "Management requirements. Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, as a minimum, meet the following requirements: (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. . . ." Cause A proper system of internal controls was not designed by management of the School Corporation, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, a capital asset ledger was not maintained and the required inventory was not completed. 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 School Corporation. INDIANA STATE BOARD OF ACCOUNTS 31 CROTHERSVILLE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure asset records are maintained and that a physical inventory is taken every two years. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-010 Subject: COVID-19 - Education Stabilization Fund - Reporting Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance with the Reporting compliance requirement. The School Corporation was required to submit annual data reports to the Indiana Department of Education (IDOE) via JotForm, a form/report builder. Data to be submitted included, but was not limited to, current period expenditures, prior period expenditures, and expenditures per activity. During the audit period, the School Corporation submitted two ESSER I reports, two ESSER II reports, and one ESSER III report, for a total of five reports. A single employee prepared and submitted each annual data report without a review or oversight process in place to prevent, or detect and correct, errors. All five reports were selected for testing, two of which were not supported by the School Corporation's records. The errors identified were as follows: 1. The ESSER I, Year 2 report, which covered the period of October 1, 2020 to June 30, 2021, reported total expenses of $24,256; however, the School Corporation's ledger for the same period had total expenses of $35,344. INDIANA STATE BOARD OF ACCOUNTS 32 CROTHERSVILLE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2. The ESSER II, Year 1 report, which covered the period of July 1, 2020 to June 30, 2021, reported total expenditures of $25,264; however, the School Corporation's ledger for the same period had total expenses of $244,923. In addition, the key line items "Meeting Students' Academic, Social, Emotional, and Other Needs (Excluding Mental Health Supports) - Personnel Services - Salaries" and "Meeting Students' Academic, Social, Emotional, and Other Needs (Excluding Mental Health Supports) - Purchased Property Services" were reported incorrectly. The lack of internal controls was a systemic issue throughout the audit period. The noncompliance was isolated to the ESSER I, Year 2 and ESSER II, Year 1 reports. 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 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following: . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . ." Cause A proper system of internal controls was not designed and implemented by management of the School Corporation, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper design or implementation of the components of a system of internal controls, including policies and procedures that provide segregation of duties and additional oversight, as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, reports submitted to the IDOE were not supported by the School Corporation's underlying accounting records. 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 School Corporation. INDIANA STATE BOARD OF ACCOUNTS 33 CROTHERSVILLE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure all reports submitted on behalf of the COVID-19 - Education Stabilization Fund program funds are supported by the School Corporation's underlying accounting records. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-010 Subject: COVID-19 - Education Stabilization Fund - Reporting Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance with the Reporting compliance requirement. The School Corporation was required to submit annual data reports to the Indiana Department of Education (IDOE) via JotForm, a form/report builder. Data to be submitted included, but was not limited to, current period expenditures, prior period expenditures, and expenditures per activity. During the audit period, the School Corporation submitted two ESSER I reports, two ESSER II reports, and one ESSER III report, for a total of five reports. A single employee prepared and submitted each annual data report without a review or oversight process in place to prevent, or detect and correct, errors. All five reports were selected for testing, two of which were not supported by the School Corporation's records. The errors identified were as follows: 1. The ESSER I, Year 2 report, which covered the period of October 1, 2020 to June 30, 2021, reported total expenses of $24,256; however, the School Corporation's ledger for the same period had total expenses of $35,344. INDIANA STATE BOARD OF ACCOUNTS 32 CROTHERSVILLE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2. The ESSER II, Year 1 report, which covered the period of July 1, 2020 to June 30, 2021, reported total expenditures of $25,264; however, the School Corporation's ledger for the same period had total expenses of $244,923. In addition, the key line items "Meeting Students' Academic, Social, Emotional, and Other Needs (Excluding Mental Health Supports) - Personnel Services - Salaries" and "Meeting Students' Academic, Social, Emotional, and Other Needs (Excluding Mental Health Supports) - Purchased Property Services" were reported incorrectly. The lack of internal controls was a systemic issue throughout the audit period. The noncompliance was isolated to the ESSER I, Year 2 and ESSER II, Year 1 reports. 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 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following: . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . ." Cause A proper system of internal controls was not designed and implemented by management of the School Corporation, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper design or implementation of the components of a system of internal controls, including policies and procedures that provide segregation of duties and additional oversight, as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, reports submitted to the IDOE were not supported by the School Corporation's underlying accounting records. 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 School Corporation. INDIANA STATE BOARD OF ACCOUNTS 33 CROTHERSVILLE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure all reports submitted on behalf of the COVID-19 - Education Stabilization Fund program funds are supported by the School Corporation's underlying accounting records. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-010 Subject: COVID-19 - Education Stabilization Fund - Reporting Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance with the Reporting compliance requirement. The School Corporation was required to submit annual data reports to the Indiana Department of Education (IDOE) via JotForm, a form/report builder. Data to be submitted included, but was not limited to, current period expenditures, prior period expenditures, and expenditures per activity. During the audit period, the School Corporation submitted two ESSER I reports, two ESSER II reports, and one ESSER III report, for a total of five reports. A single employee prepared and submitted each annual data report without a review or oversight process in place to prevent, or detect and correct, errors. All five reports were selected for testing, two of which were not supported by the School Corporation's records. The errors identified were as follows: 1. The ESSER I, Year 2 report, which covered the period of October 1, 2020 to June 30, 2021, reported total expenses of $24,256; however, the School Corporation's ledger for the same period had total expenses of $35,344. INDIANA STATE BOARD OF ACCOUNTS 32 CROTHERSVILLE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2. The ESSER II, Year 1 report, which covered the period of July 1, 2020 to June 30, 2021, reported total expenditures of $25,264; however, the School Corporation's ledger for the same period had total expenses of $244,923. In addition, the key line items "Meeting Students' Academic, Social, Emotional, and Other Needs (Excluding Mental Health Supports) - Personnel Services - Salaries" and "Meeting Students' Academic, Social, Emotional, and Other Needs (Excluding Mental Health Supports) - Purchased Property Services" were reported incorrectly. The lack of internal controls was a systemic issue throughout the audit period. The noncompliance was isolated to the ESSER I, Year 2 and ESSER II, Year 1 reports. 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 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following: . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . ." Cause A proper system of internal controls was not designed and implemented by management of the School Corporation, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper design or implementation of the components of a system of internal controls, including policies and procedures that provide segregation of duties and additional oversight, as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, reports submitted to the IDOE were not supported by the School Corporation's underlying accounting records. 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 School Corporation. INDIANA STATE BOARD OF ACCOUNTS 33 CROTHERSVILLE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure all reports submitted on behalf of the COVID-19 - Education Stabilization Fund program funds are supported by the School Corporation's underlying accounting records. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-010 Subject: COVID-19 - Education Stabilization Fund - Reporting Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance with the Reporting compliance requirement. The School Corporation was required to submit annual data reports to the Indiana Department of Education (IDOE) via JotForm, a form/report builder. Data to be submitted included, but was not limited to, current period expenditures, prior period expenditures, and expenditures per activity. During the audit period, the School Corporation submitted two ESSER I reports, two ESSER II reports, and one ESSER III report, for a total of five reports. A single employee prepared and submitted each annual data report without a review or oversight process in place to prevent, or detect and correct, errors. All five reports were selected for testing, two of which were not supported by the School Corporation's records. The errors identified were as follows: 1. The ESSER I, Year 2 report, which covered the period of October 1, 2020 to June 30, 2021, reported total expenses of $24,256; however, the School Corporation's ledger for the same period had total expenses of $35,344. INDIANA STATE BOARD OF ACCOUNTS 32 CROTHERSVILLE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2. The ESSER II, Year 1 report, which covered the period of July 1, 2020 to June 30, 2021, reported total expenditures of $25,264; however, the School Corporation's ledger for the same period had total expenses of $244,923. In addition, the key line items "Meeting Students' Academic, Social, Emotional, and Other Needs (Excluding Mental Health Supports) - Personnel Services - Salaries" and "Meeting Students' Academic, Social, Emotional, and Other Needs (Excluding Mental Health Supports) - Purchased Property Services" were reported incorrectly. The lack of internal controls was a systemic issue throughout the audit period. The noncompliance was isolated to the ESSER I, Year 2 and ESSER II, Year 1 reports. 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 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following: . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . ." Cause A proper system of internal controls was not designed and implemented by management of the School Corporation, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper design or implementation of the components of a system of internal controls, including policies and procedures that provide segregation of duties and additional oversight, as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, reports submitted to the IDOE were not supported by the School Corporation's underlying accounting records. 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 School Corporation. INDIANA STATE BOARD OF ACCOUNTS 33 CROTHERSVILLE COMMUNITY SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure all reports submitted on behalf of the COVID-19 - Education Stabilization Fund program funds are supported by the School Corporation's underlying accounting records. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Department of Education and Passed through State of Iowa Department of Education Federal Financial Assistance Listing #84.287, C14-SHIP, C15-SHIP, C16-SHIP, C17-SHIP, 7/1/2022 – 6/30/2023 Twenty-First Century Community Learning Centers Program Activities Allowed or Unallowed and Allowable Costs/Cost Principles Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria: The Organization is required to have procedures in place to ensure that federal awards are expended only for allowable costs in accordance with Subpart E – Cost Principles of the Uniform Guidance. Allowable costs are supported by appropriate documentation and correctly charged as to account, amount, and period. 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. The Iowa Department of Education Guide to Program Budgets and Accounting for the 21st Century Community Learning Centers program provides that an organization participating in the program may expend no more than 8 percent of annual funding on general administration and indirect costs. Further, indirect costs are to be recovered only to the extent of direct costs incurred. Condition: Through review of indirect costs charged to the federal awards, we noted the following: • The Organization charged an 8% administrative indirect cost rate to the federal awards, however, calculated the 8% on the budgeted grant award rather than on the actual direct costs incurred under the federal award, resulting in overcharging the award by $14,704. • The Organization serves as an employer of record for organizations that need assistance in providing benefits, payroll, and human resources to employees. A fixed rate is applied to total payroll wages and charged as additional payroll costs to cover administrative time incurred. In addition to the amount charged above, the Organization charged $49,049 to the federal program under this methodology resulting in an overcharge to the award. Cause: The Organization was not aware that the indirect cost rate should be applied pro rata to the underlying direct costs. In addition, the Organization believed this employer of record rate could be charged on grant wages incurred under the federal program. Effect: The Organization’s controls did not detect or correct the errors identified, which resulting in disallowed costs being charged to the federal award. Questioned Costs: Total questioned costs are $63,753. Context: For the Twenty First Century Community Learning Centers Program, a non-statistical sample of 60 direct expenditures were selected for testing, including 41 payroll transactions and 19 nonpayroll transactions. The 41 payroll transactions accounted for $20,888 of $358,025 total payroll costs charged to the federal award. The 19 nonpayroll transactions accounted for $10,368 of $168,717 total nonpayroll costs charged to the federal award. Additionally, all indirect costs charged to the federal awards were selected for testing, accounting for $105,893. Repeat Finding from Prior Year: No Recommendation: We recommend management review procedures over the allocation of indirect costs to ensure indirect amounts charged to the program are based on actual underlying direct costs and that the total indirect allocation of general administration costs does not exceed the rate allowed by the federal program. Views of Responsible Officials: Management is in agreement.
Department of Education and Passed through State of Iowa Department of Education Federal Financial Assistance Listing #84.287, C14-SHIP, C15-SHIP, C16-SHIP, C17-SHIP, 7/1/2022 – 6/30/2023 Twenty-First Century Community Learning Centers Program Cash Management Material Weakness in Internal Control over Compliance Criteria: 2 CFR 200.303(a) states 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. In addition, 2 CFR 200.302(b)(6) establishes that the financial management system of the entity must provide written procedures to implement the requirements of 2 CFR 200.305 Payment. Condition: No support could be provided for the third quarter draw requests to substantiate a secondary level of review was completed prior to submission of the draws. Cause: Documentation to support the review of draw requests prior to submission was not retained during the transition period in the Finance Director role. Effect: Without retaining supporting documentation to substantiate the review of draw requests, demonstrating that the program complies with laws, regulations, and other compliance requirements is difficult. Questioned Costs: None reported. Context: A non-statistical sample of 2 of 4 quarters were selected for testing. All draws submitted within the selected quarters were tested. Repeat Finding from Prior Year: No Recommendation: We acknowledge the review process lapsed during a time of employee transition, however, we recommend that management retain documentation to support the review of grant draws is performed for all grant draw requests. Views of Responsible Officials: Management is in agreement.
Criteria: 2 CFR 200.431 includes the standards for documentation of fringe benefits. According to 2 CFR 200.431(c), the cost of fringe benefits are allowable, provided such benefits are granted under established written policies. Such benefits should be charged as direct or indirect costs in accordance with the non-Federal entity’s accounting practices. Additionally, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Conditions Found: We noted several conditions that existed due to cost transfers that occurred during the fiscal year. While performing procedures related to cost transfers, we noted the University had not followed their ‘Cost Transfer Policy’ which states “Cost transfers for current transactions must occur on a timely basis”. The University’s cost transfer policy defines timely as “occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)”. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted seventy-five of our one hundred nineteen transactions sampled cost transfers (totaling $246,869 positive and $66,004 negative) where the cost transfer date was between 91 and 1,002 days past the date the original expenditure was incurred (30 were between 91 and 180 days past, 15 were between 181 and 270 days past, and 30 were greater than 271 days past). While testing cost transfers and adjustments, we noted a transaction recorded to a grant that did not have supporting documentation resulting in the costs being unallowable to the grant: Additionally, we noted a transaction recorded to a grant that was recorded outside of the period of performance resulting in the costs being unallowable to the grant: During the fiscal year, positive cost transfers were approximately $2,815,865 and negative cost transfers were $1,792,678 during fiscal year 2023. While performing procedures related to fringe benefits, we noted one of twenty-five sampled grants (totaling $461,382) where transactions were originally recorded to an incorrect worktag. Management identified the error and a cost transfer was performed to move the fringe benefits to a federal research and development grant. However, the incorrect fringe rate was utilized as the University’s non-sponsored research fringe rate utilized in the original entry is a higher fringe rate than the federally approved fringe rate which resulted in an overcharge to the research and development grant during the University’s fiscal year ended June 30, 2023 for a total overstatement of $26 as noted below: Additionally, we noted fringe benefits were expensed during the University’s fiscal year ended June 30, 2023 for two of twenty-five sampled grants (totaling $461,382) where the labor transaction originated in previous fiscal years. The University booked an adjustment within Workday to correct the fringe benefit charges for the life of the grant. This resulted in the SEFA being overstated during the University’s fiscal year ended June 30, 2023. We noted the total fringe benefits charged for the life of the grants was allowable and within the period of performance. These overstatements to the SEFA for the University’s fiscal year 2023 was for a total of $3,134 as noted below: Total fringe benefits during fiscal year 2023 totaled approximately $2,673,231.While performing procedures related to indirect costs, we noted indirect costs were expensed during the University’s fiscal year ended June 30, 2023 for two of forty sampled grants (totaling $1,817,264) where indirect costs were originally undercharged during the previous fiscal year. The University booked an adjustment within Workday to correct the indirect costs for the life of the grant. This resulted in the SEFA being overstated during the University’s fiscal year ended June 30, 2023. We noted the total indirect costs charged for the life of the grants was allowable and within the period of performance. These overstatements to the SEFA for the University’s fiscal year 2023 was for a total of $3,677 as noted below: Total indirect costs during fiscal year 2023 totaled approximately $10,484,419. Questioned Cost: Known questioned costs of $26. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2023, they continued reconciliation procedures related to ‘grant level’ activity as a result of implementing the grants module of Workday during fiscal year 2021. Grant level activity allows them to track the specific budget provided by the individual grant as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2022-001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University continue its corrective action plan and adjust internal controls as needed to prevent and detect noncompliance with and improve adherence to federal regulations.View of Responsible Official: The University concurs with the finding. As noted in our prior year response, the University continued to have cost transfers in fiscal year 2023 as it reconciled its grants. To limit cost transfers in the future, the following steps have been taken by the University: Additionally, the University is exploring additional functionality within our Workday grants management module to build in additional approvals, specifically for labor, on expense before the expenses are charged to the grant to reduce future cost transfers. In regards to the three transactions noted above (federal award number HHSN272201300021I; federal award number 5R21AG065526-02; and federal award number UH3HD096929), the erroneous charges have been refunded to the federal agency. As part of the University’s corrective action plan, during fiscal year 2023 the sponsored programs accounting team recalculated fringe and indirect costs on all federal grants to ensure the correct expense was recorded to each grant. During this reconciliation process cumulative award to date errors were identified and corrected in fiscal year 2023. The sponsored program accounting team continues to reconcile fringe and indirect costs on cost transfers at the grant level on a periodic basis to ensure accuracy.
Criteria: 2 CFR 200.431 includes the standards for documentation of fringe benefits. According to 2 CFR 200.431(c), the cost of fringe benefits are allowable, provided such benefits are granted under established written policies. Such benefits should be charged as direct or indirect costs in accordance with the non-Federal entity’s accounting practices. Additionally, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Conditions Found: We noted several conditions that existed due to cost transfers that occurred during the fiscal year. While performing procedures related to cost transfers, we noted the University had not followed their ‘Cost Transfer Policy’ which states “Cost transfers for current transactions must occur on a timely basis”. The University’s cost transfer policy defines timely as “occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)”. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted seventy-five of our one hundred nineteen transactions sampled cost transfers (totaling $246,869 positive and $66,004 negative) where the cost transfer date was between 91 and 1,002 days past the date the original expenditure was incurred (30 were between 91 and 180 days past, 15 were between 181 and 270 days past, and 30 were greater than 271 days past). While testing cost transfers and adjustments, we noted a transaction recorded to a grant that did not have supporting documentation resulting in the costs being unallowable to the grant: Additionally, we noted a transaction recorded to a grant that was recorded outside of the period of performance resulting in the costs being unallowable to the grant: During the fiscal year, positive cost transfers were approximately $2,815,865 and negative cost transfers were $1,792,678 during fiscal year 2023. While performing procedures related to fringe benefits, we noted one of twenty-five sampled grants (totaling $461,382) where transactions were originally recorded to an incorrect worktag. Management identified the error and a cost transfer was performed to move the fringe benefits to a federal research and development grant. However, the incorrect fringe rate was utilized as the University’s non-sponsored research fringe rate utilized in the original entry is a higher fringe rate than the federally approved fringe rate which resulted in an overcharge to the research and development grant during the University’s fiscal year ended June 30, 2023 for a total overstatement of $26 as noted below: Additionally, we noted fringe benefits were expensed during the University’s fiscal year ended June 30, 2023 for two of twenty-five sampled grants (totaling $461,382) where the labor transaction originated in previous fiscal years. The University booked an adjustment within Workday to correct the fringe benefit charges for the life of the grant. This resulted in the SEFA being overstated during the University’s fiscal year ended June 30, 2023. We noted the total fringe benefits charged for the life of the grants was allowable and within the period of performance. These overstatements to the SEFA for the University’s fiscal year 2023 was for a total of $3,134 as noted below: Total fringe benefits during fiscal year 2023 totaled approximately $2,673,231.While performing procedures related to indirect costs, we noted indirect costs were expensed during the University’s fiscal year ended June 30, 2023 for two of forty sampled grants (totaling $1,817,264) where indirect costs were originally undercharged during the previous fiscal year. The University booked an adjustment within Workday to correct the indirect costs for the life of the grant. This resulted in the SEFA being overstated during the University’s fiscal year ended June 30, 2023. We noted the total indirect costs charged for the life of the grants was allowable and within the period of performance. These overstatements to the SEFA for the University’s fiscal year 2023 was for a total of $3,677 as noted below: Total indirect costs during fiscal year 2023 totaled approximately $10,484,419. Questioned Cost: Known questioned costs of $26. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2023, they continued reconciliation procedures related to ‘grant level’ activity as a result of implementing the grants module of Workday during fiscal year 2021. Grant level activity allows them to track the specific budget provided by the individual grant as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2022-001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University continue its corrective action plan and adjust internal controls as needed to prevent and detect noncompliance with and improve adherence to federal regulations.View of Responsible Official: The University concurs with the finding. As noted in our prior year response, the University continued to have cost transfers in fiscal year 2023 as it reconciled its grants. To limit cost transfers in the future, the following steps have been taken by the University: Additionally, the University is exploring additional functionality within our Workday grants management module to build in additional approvals, specifically for labor, on expense before the expenses are charged to the grant to reduce future cost transfers. In regards to the three transactions noted above (federal award number HHSN272201300021I; federal award number 5R21AG065526-02; and federal award number UH3HD096929), the erroneous charges have been refunded to the federal agency. As part of the University’s corrective action plan, during fiscal year 2023 the sponsored programs accounting team recalculated fringe and indirect costs on all federal grants to ensure the correct expense was recorded to each grant. During this reconciliation process cumulative award to date errors were identified and corrected in fiscal year 2023. The sponsored program accounting team continues to reconcile fringe and indirect costs on cost transfers at the grant level on a periodic basis to ensure accuracy.
Criteria: 2 CFR 200.431 includes the standards for documentation of fringe benefits. According to 2 CFR 200.431(c), the cost of fringe benefits are allowable, provided such benefits are granted under established written policies. Such benefits should be charged as direct or indirect costs in accordance with the non-Federal entity’s accounting practices. Additionally, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Conditions Found: We noted several conditions that existed due to cost transfers that occurred during the fiscal year. While performing procedures related to cost transfers, we noted the University had not followed their ‘Cost Transfer Policy’ which states “Cost transfers for current transactions must occur on a timely basis”. The University’s cost transfer policy defines timely as “occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)”. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted seventy-five of our one hundred nineteen transactions sampled cost transfers (totaling $246,869 positive and $66,004 negative) where the cost transfer date was between 91 and 1,002 days past the date the original expenditure was incurred (30 were between 91 and 180 days past, 15 were between 181 and 270 days past, and 30 were greater than 271 days past). While testing cost transfers and adjustments, we noted a transaction recorded to a grant that did not have supporting documentation resulting in the costs being unallowable to the grant: Additionally, we noted a transaction recorded to a grant that was recorded outside of the period of performance resulting in the costs being unallowable to the grant: During the fiscal year, positive cost transfers were approximately $2,815,865 and negative cost transfers were $1,792,678 during fiscal year 2023. While performing procedures related to fringe benefits, we noted one of twenty-five sampled grants (totaling $461,382) where transactions were originally recorded to an incorrect worktag. Management identified the error and a cost transfer was performed to move the fringe benefits to a federal research and development grant. However, the incorrect fringe rate was utilized as the University’s non-sponsored research fringe rate utilized in the original entry is a higher fringe rate than the federally approved fringe rate which resulted in an overcharge to the research and development grant during the University’s fiscal year ended June 30, 2023 for a total overstatement of $26 as noted below: Additionally, we noted fringe benefits were expensed during the University’s fiscal year ended June 30, 2023 for two of twenty-five sampled grants (totaling $461,382) where the labor transaction originated in previous fiscal years. The University booked an adjustment within Workday to correct the fringe benefit charges for the life of the grant. This resulted in the SEFA being overstated during the University’s fiscal year ended June 30, 2023. We noted the total fringe benefits charged for the life of the grants was allowable and within the period of performance. These overstatements to the SEFA for the University’s fiscal year 2023 was for a total of $3,134 as noted below: Total fringe benefits during fiscal year 2023 totaled approximately $2,673,231.While performing procedures related to indirect costs, we noted indirect costs were expensed during the University’s fiscal year ended June 30, 2023 for two of forty sampled grants (totaling $1,817,264) where indirect costs were originally undercharged during the previous fiscal year. The University booked an adjustment within Workday to correct the indirect costs for the life of the grant. This resulted in the SEFA being overstated during the University’s fiscal year ended June 30, 2023. We noted the total indirect costs charged for the life of the grants was allowable and within the period of performance. These overstatements to the SEFA for the University’s fiscal year 2023 was for a total of $3,677 as noted below: Total indirect costs during fiscal year 2023 totaled approximately $10,484,419. Questioned Cost: Known questioned costs of $26. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2023, they continued reconciliation procedures related to ‘grant level’ activity as a result of implementing the grants module of Workday during fiscal year 2021. Grant level activity allows them to track the specific budget provided by the individual grant as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2022-001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University continue its corrective action plan and adjust internal controls as needed to prevent and detect noncompliance with and improve adherence to federal regulations.View of Responsible Official: The University concurs with the finding. As noted in our prior year response, the University continued to have cost transfers in fiscal year 2023 as it reconciled its grants. To limit cost transfers in the future, the following steps have been taken by the University: Additionally, the University is exploring additional functionality within our Workday grants management module to build in additional approvals, specifically for labor, on expense before the expenses are charged to the grant to reduce future cost transfers. In regards to the three transactions noted above (federal award number HHSN272201300021I; federal award number 5R21AG065526-02; and federal award number UH3HD096929), the erroneous charges have been refunded to the federal agency. As part of the University’s corrective action plan, during fiscal year 2023 the sponsored programs accounting team recalculated fringe and indirect costs on all federal grants to ensure the correct expense was recorded to each grant. During this reconciliation process cumulative award to date errors were identified and corrected in fiscal year 2023. The sponsored program accounting team continues to reconcile fringe and indirect costs on cost transfers at the grant level on a periodic basis to ensure accuracy.
Criteria: 2 CFR 200.431 includes the standards for documentation of fringe benefits. According to 2 CFR 200.431(c), the cost of fringe benefits are allowable, provided such benefits are granted under established written policies. Such benefits should be charged as direct or indirect costs in accordance with the non-Federal entity’s accounting practices. Additionally, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Conditions Found: We noted several conditions that existed due to cost transfers that occurred during the fiscal year. While performing procedures related to cost transfers, we noted the University had not followed their ‘Cost Transfer Policy’ which states “Cost transfers for current transactions must occur on a timely basis”. The University’s cost transfer policy defines timely as “occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)”. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted seventy-five of our one hundred nineteen transactions sampled cost transfers (totaling $246,869 positive and $66,004 negative) where the cost transfer date was between 91 and 1,002 days past the date the original expenditure was incurred (30 were between 91 and 180 days past, 15 were between 181 and 270 days past, and 30 were greater than 271 days past). While testing cost transfers and adjustments, we noted a transaction recorded to a grant that did not have supporting documentation resulting in the costs being unallowable to the grant: Additionally, we noted a transaction recorded to a grant that was recorded outside of the period of performance resulting in the costs being unallowable to the grant: During the fiscal year, positive cost transfers were approximately $2,815,865 and negative cost transfers were $1,792,678 during fiscal year 2023. While performing procedures related to fringe benefits, we noted one of twenty-five sampled grants (totaling $461,382) where transactions were originally recorded to an incorrect worktag. Management identified the error and a cost transfer was performed to move the fringe benefits to a federal research and development grant. However, the incorrect fringe rate was utilized as the University’s non-sponsored research fringe rate utilized in the original entry is a higher fringe rate than the federally approved fringe rate which resulted in an overcharge to the research and development grant during the University’s fiscal year ended June 30, 2023 for a total overstatement of $26 as noted below: Additionally, we noted fringe benefits were expensed during the University’s fiscal year ended June 30, 2023 for two of twenty-five sampled grants (totaling $461,382) where the labor transaction originated in previous fiscal years. The University booked an adjustment within Workday to correct the fringe benefit charges for the life of the grant. This resulted in the SEFA being overstated during the University’s fiscal year ended June 30, 2023. We noted the total fringe benefits charged for the life of the grants was allowable and within the period of performance. These overstatements to the SEFA for the University’s fiscal year 2023 was for a total of $3,134 as noted below: Total fringe benefits during fiscal year 2023 totaled approximately $2,673,231.While performing procedures related to indirect costs, we noted indirect costs were expensed during the University’s fiscal year ended June 30, 2023 for two of forty sampled grants (totaling $1,817,264) where indirect costs were originally undercharged during the previous fiscal year. The University booked an adjustment within Workday to correct the indirect costs for the life of the grant. This resulted in the SEFA being overstated during the University’s fiscal year ended June 30, 2023. We noted the total indirect costs charged for the life of the grants was allowable and within the period of performance. These overstatements to the SEFA for the University’s fiscal year 2023 was for a total of $3,677 as noted below: Total indirect costs during fiscal year 2023 totaled approximately $10,484,419. Questioned Cost: Known questioned costs of $26. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2023, they continued reconciliation procedures related to ‘grant level’ activity as a result of implementing the grants module of Workday during fiscal year 2021. Grant level activity allows them to track the specific budget provided by the individual grant as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2022-001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University continue its corrective action plan and adjust internal controls as needed to prevent and detect noncompliance with and improve adherence to federal regulations.View of Responsible Official: The University concurs with the finding. As noted in our prior year response, the University continued to have cost transfers in fiscal year 2023 as it reconciled its grants. To limit cost transfers in the future, the following steps have been taken by the University: Additionally, the University is exploring additional functionality within our Workday grants management module to build in additional approvals, specifically for labor, on expense before the expenses are charged to the grant to reduce future cost transfers. In regards to the three transactions noted above (federal award number HHSN272201300021I; federal award number 5R21AG065526-02; and federal award number UH3HD096929), the erroneous charges have been refunded to the federal agency. As part of the University’s corrective action plan, during fiscal year 2023 the sponsored programs accounting team recalculated fringe and indirect costs on all federal grants to ensure the correct expense was recorded to each grant. During this reconciliation process cumulative award to date errors were identified and corrected in fiscal year 2023. The sponsored program accounting team continues to reconcile fringe and indirect costs on cost transfers at the grant level on a periodic basis to ensure accuracy.
Criteria: 2 CFR 200.431 includes the standards for documentation of fringe benefits. According to 2 CFR 200.431(c), the cost of fringe benefits are allowable, provided such benefits are granted under established written policies. Such benefits should be charged as direct or indirect costs in accordance with the non-Federal entity’s accounting practices. Additionally, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Conditions Found: We noted several conditions that existed due to cost transfers that occurred during the fiscal year. While performing procedures related to cost transfers, we noted the University had not followed their ‘Cost Transfer Policy’ which states “Cost transfers for current transactions must occur on a timely basis”. The University’s cost transfer policy defines timely as “occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)”. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted seventy-five of our one hundred nineteen transactions sampled cost transfers (totaling $246,869 positive and $66,004 negative) where the cost transfer date was between 91 and 1,002 days past the date the original expenditure was incurred (30 were between 91 and 180 days past, 15 were between 181 and 270 days past, and 30 were greater than 271 days past). While testing cost transfers and adjustments, we noted a transaction recorded to a grant that did not have supporting documentation resulting in the costs being unallowable to the grant: Additionally, we noted a transaction recorded to a grant that was recorded outside of the period of performance resulting in the costs being unallowable to the grant: During the fiscal year, positive cost transfers were approximately $2,815,865 and negative cost transfers were $1,792,678 during fiscal year 2023. While performing procedures related to fringe benefits, we noted one of twenty-five sampled grants (totaling $461,382) where transactions were originally recorded to an incorrect worktag. Management identified the error and a cost transfer was performed to move the fringe benefits to a federal research and development grant. However, the incorrect fringe rate was utilized as the University’s non-sponsored research fringe rate utilized in the original entry is a higher fringe rate than the federally approved fringe rate which resulted in an overcharge to the research and development grant during the University’s fiscal year ended June 30, 2023 for a total overstatement of $26 as noted below: Additionally, we noted fringe benefits were expensed during the University’s fiscal year ended June 30, 2023 for two of twenty-five sampled grants (totaling $461,382) where the labor transaction originated in previous fiscal years. The University booked an adjustment within Workday to correct the fringe benefit charges for the life of the grant. This resulted in the SEFA being overstated during the University’s fiscal year ended June 30, 2023. We noted the total fringe benefits charged for the life of the grants was allowable and within the period of performance. These overstatements to the SEFA for the University’s fiscal year 2023 was for a total of $3,134 as noted below: Total fringe benefits during fiscal year 2023 totaled approximately $2,673,231.While performing procedures related to indirect costs, we noted indirect costs were expensed during the University’s fiscal year ended June 30, 2023 for two of forty sampled grants (totaling $1,817,264) where indirect costs were originally undercharged during the previous fiscal year. The University booked an adjustment within Workday to correct the indirect costs for the life of the grant. This resulted in the SEFA being overstated during the University’s fiscal year ended June 30, 2023. We noted the total indirect costs charged for the life of the grants was allowable and within the period of performance. These overstatements to the SEFA for the University’s fiscal year 2023 was for a total of $3,677 as noted below: Total indirect costs during fiscal year 2023 totaled approximately $10,484,419. Questioned Cost: Known questioned costs of $26. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2023, they continued reconciliation procedures related to ‘grant level’ activity as a result of implementing the grants module of Workday during fiscal year 2021. Grant level activity allows them to track the specific budget provided by the individual grant as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2022-001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University continue its corrective action plan and adjust internal controls as needed to prevent and detect noncompliance with and improve adherence to federal regulations.View of Responsible Official: The University concurs with the finding. As noted in our prior year response, the University continued to have cost transfers in fiscal year 2023 as it reconciled its grants. To limit cost transfers in the future, the following steps have been taken by the University: Additionally, the University is exploring additional functionality within our Workday grants management module to build in additional approvals, specifically for labor, on expense before the expenses are charged to the grant to reduce future cost transfers. In regards to the three transactions noted above (federal award number HHSN272201300021I; federal award number 5R21AG065526-02; and federal award number UH3HD096929), the erroneous charges have been refunded to the federal agency. As part of the University’s corrective action plan, during fiscal year 2023 the sponsored programs accounting team recalculated fringe and indirect costs on all federal grants to ensure the correct expense was recorded to each grant. During this reconciliation process cumulative award to date errors were identified and corrected in fiscal year 2023. The sponsored program accounting team continues to reconcile fringe and indirect costs on cost transfers at the grant level on a periodic basis to ensure accuracy.
Criteria: 2 CFR 200.431 includes the standards for documentation of fringe benefits. According to 2 CFR 200.431(c), the cost of fringe benefits are allowable, provided such benefits are granted under established written policies. Such benefits should be charged as direct or indirect costs in accordance with the non-Federal entity’s accounting practices. Additionally, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Conditions Found: We noted several conditions that existed due to cost transfers that occurred during the fiscal year. While performing procedures related to cost transfers, we noted the University had not followed their ‘Cost Transfer Policy’ which states “Cost transfers for current transactions must occur on a timely basis”. The University’s cost transfer policy defines timely as “occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)”. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted seventy-five of our one hundred nineteen transactions sampled cost transfers (totaling $246,869 positive and $66,004 negative) where the cost transfer date was between 91 and 1,002 days past the date the original expenditure was incurred (30 were between 91 and 180 days past, 15 were between 181 and 270 days past, and 30 were greater than 271 days past). While testing cost transfers and adjustments, we noted a transaction recorded to a grant that did not have supporting documentation resulting in the costs being unallowable to the grant: Additionally, we noted a transaction recorded to a grant that was recorded outside of the period of performance resulting in the costs being unallowable to the grant: During the fiscal year, positive cost transfers were approximately $2,815,865 and negative cost transfers were $1,792,678 during fiscal year 2023. While performing procedures related to fringe benefits, we noted one of twenty-five sampled grants (totaling $461,382) where transactions were originally recorded to an incorrect worktag. Management identified the error and a cost transfer was performed to move the fringe benefits to a federal research and development grant. However, the incorrect fringe rate was utilized as the University’s non-sponsored research fringe rate utilized in the original entry is a higher fringe rate than the federally approved fringe rate which resulted in an overcharge to the research and development grant during the University’s fiscal year ended June 30, 2023 for a total overstatement of $26 as noted below: Additionally, we noted fringe benefits were expensed during the University’s fiscal year ended June 30, 2023 for two of twenty-five sampled grants (totaling $461,382) where the labor transaction originated in previous fiscal years. The University booked an adjustment within Workday to correct the fringe benefit charges for the life of the grant. This resulted in the SEFA being overstated during the University’s fiscal year ended June 30, 2023. We noted the total fringe benefits charged for the life of the grants was allowable and within the period of performance. These overstatements to the SEFA for the University’s fiscal year 2023 was for a total of $3,134 as noted below: Total fringe benefits during fiscal year 2023 totaled approximately $2,673,231.While performing procedures related to indirect costs, we noted indirect costs were expensed during the University’s fiscal year ended June 30, 2023 for two of forty sampled grants (totaling $1,817,264) where indirect costs were originally undercharged during the previous fiscal year. The University booked an adjustment within Workday to correct the indirect costs for the life of the grant. This resulted in the SEFA being overstated during the University’s fiscal year ended June 30, 2023. We noted the total indirect costs charged for the life of the grants was allowable and within the period of performance. These overstatements to the SEFA for the University’s fiscal year 2023 was for a total of $3,677 as noted below: Total indirect costs during fiscal year 2023 totaled approximately $10,484,419. Questioned Cost: Known questioned costs of $26. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2023, they continued reconciliation procedures related to ‘grant level’ activity as a result of implementing the grants module of Workday during fiscal year 2021. Grant level activity allows them to track the specific budget provided by the individual grant as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2022-001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University continue its corrective action plan and adjust internal controls as needed to prevent and detect noncompliance with and improve adherence to federal regulations.View of Responsible Official: The University concurs with the finding. As noted in our prior year response, the University continued to have cost transfers in fiscal year 2023 as it reconciled its grants. To limit cost transfers in the future, the following steps have been taken by the University: Additionally, the University is exploring additional functionality within our Workday grants management module to build in additional approvals, specifically for labor, on expense before the expenses are charged to the grant to reduce future cost transfers. In regards to the three transactions noted above (federal award number HHSN272201300021I; federal award number 5R21AG065526-02; and federal award number UH3HD096929), the erroneous charges have been refunded to the federal agency. As part of the University’s corrective action plan, during fiscal year 2023 the sponsored programs accounting team recalculated fringe and indirect costs on all federal grants to ensure the correct expense was recorded to each grant. During this reconciliation process cumulative award to date errors were identified and corrected in fiscal year 2023. The sponsored program accounting team continues to reconcile fringe and indirect costs on cost transfers at the grant level on a periodic basis to ensure accuracy.
Criteria: 2 CFR 200.431 includes the standards for documentation of fringe benefits. According to 2 CFR 200.431(c), the cost of fringe benefits are allowable, provided such benefits are granted under established written policies. Such benefits should be charged as direct or indirect costs in accordance with the non-Federal entity’s accounting practices. Additionally, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Conditions Found: We noted several conditions that existed due to cost transfers that occurred during the fiscal year. While performing procedures related to cost transfers, we noted the University had not followed their ‘Cost Transfer Policy’ which states “Cost transfers for current transactions must occur on a timely basis”. The University’s cost transfer policy defines timely as “occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)”. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted seventy-five of our one hundred nineteen transactions sampled cost transfers (totaling $246,869 positive and $66,004 negative) where the cost transfer date was between 91 and 1,002 days past the date the original expenditure was incurred (30 were between 91 and 180 days past, 15 were between 181 and 270 days past, and 30 were greater than 271 days past). While testing cost transfers and adjustments, we noted a transaction recorded to a grant that did not have supporting documentation resulting in the costs being unallowable to the grant: Additionally, we noted a transaction recorded to a grant that was recorded outside of the period of performance resulting in the costs being unallowable to the grant: During the fiscal year, positive cost transfers were approximately $2,815,865 and negative cost transfers were $1,792,678 during fiscal year 2023. While performing procedures related to fringe benefits, we noted one of twenty-five sampled grants (totaling $461,382) where transactions were originally recorded to an incorrect worktag. Management identified the error and a cost transfer was performed to move the fringe benefits to a federal research and development grant. However, the incorrect fringe rate was utilized as the University’s non-sponsored research fringe rate utilized in the original entry is a higher fringe rate than the federally approved fringe rate which resulted in an overcharge to the research and development grant during the University’s fiscal year ended June 30, 2023 for a total overstatement of $26 as noted below: Additionally, we noted fringe benefits were expensed during the University’s fiscal year ended June 30, 2023 for two of twenty-five sampled grants (totaling $461,382) where the labor transaction originated in previous fiscal years. The University booked an adjustment within Workday to correct the fringe benefit charges for the life of the grant. This resulted in the SEFA being overstated during the University’s fiscal year ended June 30, 2023. We noted the total fringe benefits charged for the life of the grants was allowable and within the period of performance. These overstatements to the SEFA for the University’s fiscal year 2023 was for a total of $3,134 as noted below: Total fringe benefits during fiscal year 2023 totaled approximately $2,673,231.While performing procedures related to indirect costs, we noted indirect costs were expensed during the University’s fiscal year ended June 30, 2023 for two of forty sampled grants (totaling $1,817,264) where indirect costs were originally undercharged during the previous fiscal year. The University booked an adjustment within Workday to correct the indirect costs for the life of the grant. This resulted in the SEFA being overstated during the University’s fiscal year ended June 30, 2023. We noted the total indirect costs charged for the life of the grants was allowable and within the period of performance. These overstatements to the SEFA for the University’s fiscal year 2023 was for a total of $3,677 as noted below: Total indirect costs during fiscal year 2023 totaled approximately $10,484,419. Questioned Cost: Known questioned costs of $26. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2023, they continued reconciliation procedures related to ‘grant level’ activity as a result of implementing the grants module of Workday during fiscal year 2021. Grant level activity allows them to track the specific budget provided by the individual grant as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2022-001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University continue its corrective action plan and adjust internal controls as needed to prevent and detect noncompliance with and improve adherence to federal regulations.View of Responsible Official: The University concurs with the finding. As noted in our prior year response, the University continued to have cost transfers in fiscal year 2023 as it reconciled its grants. To limit cost transfers in the future, the following steps have been taken by the University: Additionally, the University is exploring additional functionality within our Workday grants management module to build in additional approvals, specifically for labor, on expense before the expenses are charged to the grant to reduce future cost transfers. In regards to the three transactions noted above (federal award number HHSN272201300021I; federal award number 5R21AG065526-02; and federal award number UH3HD096929), the erroneous charges have been refunded to the federal agency. As part of the University’s corrective action plan, during fiscal year 2023 the sponsored programs accounting team recalculated fringe and indirect costs on all federal grants to ensure the correct expense was recorded to each grant. During this reconciliation process cumulative award to date errors were identified and corrected in fiscal year 2023. The sponsored program accounting team continues to reconcile fringe and indirect costs on cost transfers at the grant level on a periodic basis to ensure accuracy.
Criteria: 2 CFR 200.431 includes the standards for documentation of fringe benefits. According to 2 CFR 200.431(c), the cost of fringe benefits are allowable, provided such benefits are granted under established written policies. Such benefits should be charged as direct or indirect costs in accordance with the non-Federal entity’s accounting practices. Additionally, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Conditions Found: We noted several conditions that existed due to cost transfers that occurred during the fiscal year. While performing procedures related to cost transfers, we noted the University had not followed their ‘Cost Transfer Policy’ which states “Cost transfers for current transactions must occur on a timely basis”. The University’s cost transfer policy defines timely as “occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)”. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted seventy-five of our one hundred nineteen transactions sampled cost transfers (totaling $246,869 positive and $66,004 negative) where the cost transfer date was between 91 and 1,002 days past the date the original expenditure was incurred (30 were between 91 and 180 days past, 15 were between 181 and 270 days past, and 30 were greater than 271 days past). While testing cost transfers and adjustments, we noted a transaction recorded to a grant that did not have supporting documentation resulting in the costs being unallowable to the grant: Additionally, we noted a transaction recorded to a grant that was recorded outside of the period of performance resulting in the costs being unallowable to the grant: During the fiscal year, positive cost transfers were approximately $2,815,865 and negative cost transfers were $1,792,678 during fiscal year 2023. While performing procedures related to fringe benefits, we noted one of twenty-five sampled grants (totaling $461,382) where transactions were originally recorded to an incorrect worktag. Management identified the error and a cost transfer was performed to move the fringe benefits to a federal research and development grant. However, the incorrect fringe rate was utilized as the University’s non-sponsored research fringe rate utilized in the original entry is a higher fringe rate than the federally approved fringe rate which resulted in an overcharge to the research and development grant during the University’s fiscal year ended June 30, 2023 for a total overstatement of $26 as noted below: Additionally, we noted fringe benefits were expensed during the University’s fiscal year ended June 30, 2023 for two of twenty-five sampled grants (totaling $461,382) where the labor transaction originated in previous fiscal years. The University booked an adjustment within Workday to correct the fringe benefit charges for the life of the grant. This resulted in the SEFA being overstated during the University’s fiscal year ended June 30, 2023. We noted the total fringe benefits charged for the life of the grants was allowable and within the period of performance. These overstatements to the SEFA for the University’s fiscal year 2023 was for a total of $3,134 as noted below: Total fringe benefits during fiscal year 2023 totaled approximately $2,673,231.While performing procedures related to indirect costs, we noted indirect costs were expensed during the University’s fiscal year ended June 30, 2023 for two of forty sampled grants (totaling $1,817,264) where indirect costs were originally undercharged during the previous fiscal year. The University booked an adjustment within Workday to correct the indirect costs for the life of the grant. This resulted in the SEFA being overstated during the University’s fiscal year ended June 30, 2023. We noted the total indirect costs charged for the life of the grants was allowable and within the period of performance. These overstatements to the SEFA for the University’s fiscal year 2023 was for a total of $3,677 as noted below: Total indirect costs during fiscal year 2023 totaled approximately $10,484,419. Questioned Cost: Known questioned costs of $26. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2023, they continued reconciliation procedures related to ‘grant level’ activity as a result of implementing the grants module of Workday during fiscal year 2021. Grant level activity allows them to track the specific budget provided by the individual grant as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2022-001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University continue its corrective action plan and adjust internal controls as needed to prevent and detect noncompliance with and improve adherence to federal regulations.View of Responsible Official: The University concurs with the finding. As noted in our prior year response, the University continued to have cost transfers in fiscal year 2023 as it reconciled its grants. To limit cost transfers in the future, the following steps have been taken by the University: Additionally, the University is exploring additional functionality within our Workday grants management module to build in additional approvals, specifically for labor, on expense before the expenses are charged to the grant to reduce future cost transfers. In regards to the three transactions noted above (federal award number HHSN272201300021I; federal award number 5R21AG065526-02; and federal award number UH3HD096929), the erroneous charges have been refunded to the federal agency. As part of the University’s corrective action plan, during fiscal year 2023 the sponsored programs accounting team recalculated fringe and indirect costs on all federal grants to ensure the correct expense was recorded to each grant. During this reconciliation process cumulative award to date errors were identified and corrected in fiscal year 2023. The sponsored program accounting team continues to reconcile fringe and indirect costs on cost transfers at the grant level on a periodic basis to ensure accuracy.
Criteria: 2 CFR 200.431 includes the standards for documentation of fringe benefits. According to 2 CFR 200.431(c), the cost of fringe benefits are allowable, provided such benefits are granted under established written policies. Such benefits should be charged as direct or indirect costs in accordance with the non-Federal entity’s accounting practices. Additionally, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Conditions Found: We noted several conditions that existed due to cost transfers that occurred during the fiscal year. While performing procedures related to cost transfers, we noted the University had not followed their ‘Cost Transfer Policy’ which states “Cost transfers for current transactions must occur on a timely basis”. The University’s cost transfer policy defines timely as “occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)”. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted seventy-five of our one hundred nineteen transactions sampled cost transfers (totaling $246,869 positive and $66,004 negative) where the cost transfer date was between 91 and 1,002 days past the date the original expenditure was incurred (30 were between 91 and 180 days past, 15 were between 181 and 270 days past, and 30 were greater than 271 days past). While testing cost transfers and adjustments, we noted a transaction recorded to a grant that did not have supporting documentation resulting in the costs being unallowable to the grant: Additionally, we noted a transaction recorded to a grant that was recorded outside of the period of performance resulting in the costs being unallowable to the grant: During the fiscal year, positive cost transfers were approximately $2,815,865 and negative cost transfers were $1,792,678 during fiscal year 2023. While performing procedures related to fringe benefits, we noted one of twenty-five sampled grants (totaling $461,382) where transactions were originally recorded to an incorrect worktag. Management identified the error and a cost transfer was performed to move the fringe benefits to a federal research and development grant. However, the incorrect fringe rate was utilized as the University’s non-sponsored research fringe rate utilized in the original entry is a higher fringe rate than the federally approved fringe rate which resulted in an overcharge to the research and development grant during the University’s fiscal year ended June 30, 2023 for a total overstatement of $26 as noted below: Additionally, we noted fringe benefits were expensed during the University’s fiscal year ended June 30, 2023 for two of twenty-five sampled grants (totaling $461,382) where the labor transaction originated in previous fiscal years. The University booked an adjustment within Workday to correct the fringe benefit charges for the life of the grant. This resulted in the SEFA being overstated during the University’s fiscal year ended June 30, 2023. We noted the total fringe benefits charged for the life of the grants was allowable and within the period of performance. These overstatements to the SEFA for the University’s fiscal year 2023 was for a total of $3,134 as noted below: Total fringe benefits during fiscal year 2023 totaled approximately $2,673,231.While performing procedures related to indirect costs, we noted indirect costs were expensed during the University’s fiscal year ended June 30, 2023 for two of forty sampled grants (totaling $1,817,264) where indirect costs were originally undercharged during the previous fiscal year. The University booked an adjustment within Workday to correct the indirect costs for the life of the grant. This resulted in the SEFA being overstated during the University’s fiscal year ended June 30, 2023. We noted the total indirect costs charged for the life of the grants was allowable and within the period of performance. These overstatements to the SEFA for the University’s fiscal year 2023 was for a total of $3,677 as noted below: Total indirect costs during fiscal year 2023 totaled approximately $10,484,419. Questioned Cost: Known questioned costs of $26. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2023, they continued reconciliation procedures related to ‘grant level’ activity as a result of implementing the grants module of Workday during fiscal year 2021. Grant level activity allows them to track the specific budget provided by the individual grant as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2022-001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University continue its corrective action plan and adjust internal controls as needed to prevent and detect noncompliance with and improve adherence to federal regulations.View of Responsible Official: The University concurs with the finding. As noted in our prior year response, the University continued to have cost transfers in fiscal year 2023 as it reconciled its grants. To limit cost transfers in the future, the following steps have been taken by the University: Additionally, the University is exploring additional functionality within our Workday grants management module to build in additional approvals, specifically for labor, on expense before the expenses are charged to the grant to reduce future cost transfers. In regards to the three transactions noted above (federal award number HHSN272201300021I; federal award number 5R21AG065526-02; and federal award number UH3HD096929), the erroneous charges have been refunded to the federal agency. As part of the University’s corrective action plan, during fiscal year 2023 the sponsored programs accounting team recalculated fringe and indirect costs on all federal grants to ensure the correct expense was recorded to each grant. During this reconciliation process cumulative award to date errors were identified and corrected in fiscal year 2023. The sponsored program accounting team continues to reconcile fringe and indirect costs on cost transfers at the grant level on a periodic basis to ensure accuracy.
Criteria: 2 CFR 200.431 includes the standards for documentation of fringe benefits. According to 2 CFR 200.431(c), the cost of fringe benefits are allowable, provided such benefits are granted under established written policies. Such benefits should be charged as direct or indirect costs in accordance with the non-Federal entity’s accounting practices. Additionally, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Conditions Found: We noted several conditions that existed due to cost transfers that occurred during the fiscal year. While performing procedures related to cost transfers, we noted the University had not followed their ‘Cost Transfer Policy’ which states “Cost transfers for current transactions must occur on a timely basis”. The University’s cost transfer policy defines timely as “occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)”. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted seventy-five of our one hundred nineteen transactions sampled cost transfers (totaling $246,869 positive and $66,004 negative) where the cost transfer date was between 91 and 1,002 days past the date the original expenditure was incurred (30 were between 91 and 180 days past, 15 were between 181 and 270 days past, and 30 were greater than 271 days past). While testing cost transfers and adjustments, we noted a transaction recorded to a grant that did not have supporting documentation resulting in the costs being unallowable to the grant: Additionally, we noted a transaction recorded to a grant that was recorded outside of the period of performance resulting in the costs being unallowable to the grant: During the fiscal year, positive cost transfers were approximately $2,815,865 and negative cost transfers were $1,792,678 during fiscal year 2023. While performing procedures related to fringe benefits, we noted one of twenty-five sampled grants (totaling $461,382) where transactions were originally recorded to an incorrect worktag. Management identified the error and a cost transfer was performed to move the fringe benefits to a federal research and development grant. However, the incorrect fringe rate was utilized as the University’s non-sponsored research fringe rate utilized in the original entry is a higher fringe rate than the federally approved fringe rate which resulted in an overcharge to the research and development grant during the University’s fiscal year ended June 30, 2023 for a total overstatement of $26 as noted below: Additionally, we noted fringe benefits were expensed during the University’s fiscal year ended June 30, 2023 for two of twenty-five sampled grants (totaling $461,382) where the labor transaction originated in previous fiscal years. The University booked an adjustment within Workday to correct the fringe benefit charges for the life of the grant. This resulted in the SEFA being overstated during the University’s fiscal year ended June 30, 2023. We noted the total fringe benefits charged for the life of the grants was allowable and within the period of performance. These overstatements to the SEFA for the University’s fiscal year 2023 was for a total of $3,134 as noted below: Total fringe benefits during fiscal year 2023 totaled approximately $2,673,231.While performing procedures related to indirect costs, we noted indirect costs were expensed during the University’s fiscal year ended June 30, 2023 for two of forty sampled grants (totaling $1,817,264) where indirect costs were originally undercharged during the previous fiscal year. The University booked an adjustment within Workday to correct the indirect costs for the life of the grant. This resulted in the SEFA being overstated during the University’s fiscal year ended June 30, 2023. We noted the total indirect costs charged for the life of the grants was allowable and within the period of performance. These overstatements to the SEFA for the University’s fiscal year 2023 was for a total of $3,677 as noted below: Total indirect costs during fiscal year 2023 totaled approximately $10,484,419. Questioned Cost: Known questioned costs of $26. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2023, they continued reconciliation procedures related to ‘grant level’ activity as a result of implementing the grants module of Workday during fiscal year 2021. Grant level activity allows them to track the specific budget provided by the individual grant as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2022-001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University continue its corrective action plan and adjust internal controls as needed to prevent and detect noncompliance with and improve adherence to federal regulations.View of Responsible Official: The University concurs with the finding. As noted in our prior year response, the University continued to have cost transfers in fiscal year 2023 as it reconciled its grants. To limit cost transfers in the future, the following steps have been taken by the University: Additionally, the University is exploring additional functionality within our Workday grants management module to build in additional approvals, specifically for labor, on expense before the expenses are charged to the grant to reduce future cost transfers. In regards to the three transactions noted above (federal award number HHSN272201300021I; federal award number 5R21AG065526-02; and federal award number UH3HD096929), the erroneous charges have been refunded to the federal agency. As part of the University’s corrective action plan, during fiscal year 2023 the sponsored programs accounting team recalculated fringe and indirect costs on all federal grants to ensure the correct expense was recorded to each grant. During this reconciliation process cumulative award to date errors were identified and corrected in fiscal year 2023. The sponsored program accounting team continues to reconcile fringe and indirect costs on cost transfers at the grant level on a periodic basis to ensure accuracy.
Criteria: 2 CFR 200.431 includes the standards for documentation of fringe benefits. According to 2 CFR 200.431(c), the cost of fringe benefits are allowable, provided such benefits are granted under established written policies. Such benefits should be charged as direct or indirect costs in accordance with the non-Federal entity’s accounting practices. Additionally, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Conditions Found: We noted several conditions that existed due to cost transfers that occurred during the fiscal year. While performing procedures related to cost transfers, we noted the University had not followed their ‘Cost Transfer Policy’ which states “Cost transfers for current transactions must occur on a timely basis”. The University’s cost transfer policy defines timely as “occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)”. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted seventy-five of our one hundred nineteen transactions sampled cost transfers (totaling $246,869 positive and $66,004 negative) where the cost transfer date was between 91 and 1,002 days past the date the original expenditure was incurred (30 were between 91 and 180 days past, 15 were between 181 and 270 days past, and 30 were greater than 271 days past). While testing cost transfers and adjustments, we noted a transaction recorded to a grant that did not have supporting documentation resulting in the costs being unallowable to the grant: Additionally, we noted a transaction recorded to a grant that was recorded outside of the period of performance resulting in the costs being unallowable to the grant: During the fiscal year, positive cost transfers were approximately $2,815,865 and negative cost transfers were $1,792,678 during fiscal year 2023. While performing procedures related to fringe benefits, we noted one of twenty-five sampled grants (totaling $461,382) where transactions were originally recorded to an incorrect worktag. Management identified the error and a cost transfer was performed to move the fringe benefits to a federal research and development grant. However, the incorrect fringe rate was utilized as the University’s non-sponsored research fringe rate utilized in the original entry is a higher fringe rate than the federally approved fringe rate which resulted in an overcharge to the research and development grant during the University’s fiscal year ended June 30, 2023 for a total overstatement of $26 as noted below: Additionally, we noted fringe benefits were expensed during the University’s fiscal year ended June 30, 2023 for two of twenty-five sampled grants (totaling $461,382) where the labor transaction originated in previous fiscal years. The University booked an adjustment within Workday to correct the fringe benefit charges for the life of the grant. This resulted in the SEFA being overstated during the University’s fiscal year ended June 30, 2023. We noted the total fringe benefits charged for the life of the grants was allowable and within the period of performance. These overstatements to the SEFA for the University’s fiscal year 2023 was for a total of $3,134 as noted below: Total fringe benefits during fiscal year 2023 totaled approximately $2,673,231.While performing procedures related to indirect costs, we noted indirect costs were expensed during the University’s fiscal year ended June 30, 2023 for two of forty sampled grants (totaling $1,817,264) where indirect costs were originally undercharged during the previous fiscal year. The University booked an adjustment within Workday to correct the indirect costs for the life of the grant. This resulted in the SEFA being overstated during the University’s fiscal year ended June 30, 2023. We noted the total indirect costs charged for the life of the grants was allowable and within the period of performance. These overstatements to the SEFA for the University’s fiscal year 2023 was for a total of $3,677 as noted below: Total indirect costs during fiscal year 2023 totaled approximately $10,484,419. Questioned Cost: Known questioned costs of $26. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2023, they continued reconciliation procedures related to ‘grant level’ activity as a result of implementing the grants module of Workday during fiscal year 2021. Grant level activity allows them to track the specific budget provided by the individual grant as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2022-001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University continue its corrective action plan and adjust internal controls as needed to prevent and detect noncompliance with and improve adherence to federal regulations.View of Responsible Official: The University concurs with the finding. As noted in our prior year response, the University continued to have cost transfers in fiscal year 2023 as it reconciled its grants. To limit cost transfers in the future, the following steps have been taken by the University: Additionally, the University is exploring additional functionality within our Workday grants management module to build in additional approvals, specifically for labor, on expense before the expenses are charged to the grant to reduce future cost transfers. In regards to the three transactions noted above (federal award number HHSN272201300021I; federal award number 5R21AG065526-02; and federal award number UH3HD096929), the erroneous charges have been refunded to the federal agency. As part of the University’s corrective action plan, during fiscal year 2023 the sponsored programs accounting team recalculated fringe and indirect costs on all federal grants to ensure the correct expense was recorded to each grant. During this reconciliation process cumulative award to date errors were identified and corrected in fiscal year 2023. The sponsored program accounting team continues to reconcile fringe and indirect costs on cost transfers at the grant level on a periodic basis to ensure accuracy.
Criteria: 2 CFR 200.431 includes the standards for documentation of fringe benefits. According to 2 CFR 200.431(c), the cost of fringe benefits are allowable, provided such benefits are granted under established written policies. Such benefits should be charged as direct or indirect costs in accordance with the non-Federal entity’s accounting practices. Additionally, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Conditions Found: We noted several conditions that existed due to cost transfers that occurred during the fiscal year. While performing procedures related to cost transfers, we noted the University had not followed their ‘Cost Transfer Policy’ which states “Cost transfers for current transactions must occur on a timely basis”. The University’s cost transfer policy defines timely as “occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)”. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted seventy-five of our one hundred nineteen transactions sampled cost transfers (totaling $246,869 positive and $66,004 negative) where the cost transfer date was between 91 and 1,002 days past the date the original expenditure was incurred (30 were between 91 and 180 days past, 15 were between 181 and 270 days past, and 30 were greater than 271 days past). While testing cost transfers and adjustments, we noted a transaction recorded to a grant that did not have supporting documentation resulting in the costs being unallowable to the grant: Additionally, we noted a transaction recorded to a grant that was recorded outside of the period of performance resulting in the costs being unallowable to the grant: During the fiscal year, positive cost transfers were approximately $2,815,865 and negative cost transfers were $1,792,678 during fiscal year 2023. While performing procedures related to fringe benefits, we noted one of twenty-five sampled grants (totaling $461,382) where transactions were originally recorded to an incorrect worktag. Management identified the error and a cost transfer was performed to move the fringe benefits to a federal research and development grant. However, the incorrect fringe rate was utilized as the University’s non-sponsored research fringe rate utilized in the original entry is a higher fringe rate than the federally approved fringe rate which resulted in an overcharge to the research and development grant during the University’s fiscal year ended June 30, 2023 for a total overstatement of $26 as noted below: Additionally, we noted fringe benefits were expensed during the University’s fiscal year ended June 30, 2023 for two of twenty-five sampled grants (totaling $461,382) where the labor transaction originated in previous fiscal years. The University booked an adjustment within Workday to correct the fringe benefit charges for the life of the grant. This resulted in the SEFA being overstated during the University’s fiscal year ended June 30, 2023. We noted the total fringe benefits charged for the life of the grants was allowable and within the period of performance. These overstatements to the SEFA for the University’s fiscal year 2023 was for a total of $3,134 as noted below: Total fringe benefits during fiscal year 2023 totaled approximately $2,673,231.While performing procedures related to indirect costs, we noted indirect costs were expensed during the University’s fiscal year ended June 30, 2023 for two of forty sampled grants (totaling $1,817,264) where indirect costs were originally undercharged during the previous fiscal year. The University booked an adjustment within Workday to correct the indirect costs for the life of the grant. This resulted in the SEFA being overstated during the University’s fiscal year ended June 30, 2023. We noted the total indirect costs charged for the life of the grants was allowable and within the period of performance. These overstatements to the SEFA for the University’s fiscal year 2023 was for a total of $3,677 as noted below: Total indirect costs during fiscal year 2023 totaled approximately $10,484,419. Questioned Cost: Known questioned costs of $26. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2023, they continued reconciliation procedures related to ‘grant level’ activity as a result of implementing the grants module of Workday during fiscal year 2021. Grant level activity allows them to track the specific budget provided by the individual grant as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2022-001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University continue its corrective action plan and adjust internal controls as needed to prevent and detect noncompliance with and improve adherence to federal regulations.View of Responsible Official: The University concurs with the finding. As noted in our prior year response, the University continued to have cost transfers in fiscal year 2023 as it reconciled its grants. To limit cost transfers in the future, the following steps have been taken by the University: Additionally, the University is exploring additional functionality within our Workday grants management module to build in additional approvals, specifically for labor, on expense before the expenses are charged to the grant to reduce future cost transfers. In regards to the three transactions noted above (federal award number HHSN272201300021I; federal award number 5R21AG065526-02; and federal award number UH3HD096929), the erroneous charges have been refunded to the federal agency. As part of the University’s corrective action plan, during fiscal year 2023 the sponsored programs accounting team recalculated fringe and indirect costs on all federal grants to ensure the correct expense was recorded to each grant. During this reconciliation process cumulative award to date errors were identified and corrected in fiscal year 2023. The sponsored program accounting team continues to reconcile fringe and indirect costs on cost transfers at the grant level on a periodic basis to ensure accuracy.
Criteria: 2 CFR 200.431 includes the standards for documentation of fringe benefits. According to 2 CFR 200.431(c), the cost of fringe benefits are allowable, provided such benefits are granted under established written policies. Such benefits should be charged as direct or indirect costs in accordance with the non-Federal entity’s accounting practices. Additionally, the National Institutes of Health (NIH) Grants Policy Statement section 7.5, Cost Transfers, Overruns, Accelerated and Delayed Expenditures, states that cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. Documentation must be maintained of cost transfers, pursuant to 2 CFR Part 200.337 and 45 CFR Part 75.364. The recipient should have systems in place to detect such errors within a reasonable time frame; untimely discovery of errors could be an indication of poor internal controls. Frequent errors in recording costs may indicate the need for accounting system improvements, enhanced internal controls, or both. If such errors occur, recipients are encouraged to evaluate the need for improvements and to make whatever improvements are deemed necessary to prevent reoccurrence. Lastly, 2 CFR 200.303 requires nonfederal entities to, among other things, 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. Conditions Found: We noted several conditions that existed due to cost transfers that occurred during the fiscal year. While performing procedures related to cost transfers, we noted the University had not followed their ‘Cost Transfer Policy’ which states “Cost transfers for current transactions must occur on a timely basis”. The University’s cost transfer policy defines timely as “occurring no later than two accounting periods after the month end of the date of the original transaction (no later than 90 days total)”. The University did not have an effective system of internal control in place to timely discover errors and get them corrected as we noted seventy-five of our one hundred nineteen transactions sampled cost transfers (totaling $246,869 positive and $66,004 negative) where the cost transfer date was between 91 and 1,002 days past the date the original expenditure was incurred (30 were between 91 and 180 days past, 15 were between 181 and 270 days past, and 30 were greater than 271 days past). While testing cost transfers and adjustments, we noted a transaction recorded to a grant that did not have supporting documentation resulting in the costs being unallowable to the grant: Additionally, we noted a transaction recorded to a grant that was recorded outside of the period of performance resulting in the costs being unallowable to the grant: During the fiscal year, positive cost transfers were approximately $2,815,865 and negative cost transfers were $1,792,678 during fiscal year 2023. While performing procedures related to fringe benefits, we noted one of twenty-five sampled grants (totaling $461,382) where transactions were originally recorded to an incorrect worktag. Management identified the error and a cost transfer was performed to move the fringe benefits to a federal research and development grant. However, the incorrect fringe rate was utilized as the University’s non-sponsored research fringe rate utilized in the original entry is a higher fringe rate than the federally approved fringe rate which resulted in an overcharge to the research and development grant during the University’s fiscal year ended June 30, 2023 for a total overstatement of $26 as noted below: Additionally, we noted fringe benefits were expensed during the University’s fiscal year ended June 30, 2023 for two of twenty-five sampled grants (totaling $461,382) where the labor transaction originated in previous fiscal years. The University booked an adjustment within Workday to correct the fringe benefit charges for the life of the grant. This resulted in the SEFA being overstated during the University’s fiscal year ended June 30, 2023. We noted the total fringe benefits charged for the life of the grants was allowable and within the period of performance. These overstatements to the SEFA for the University’s fiscal year 2023 was for a total of $3,134 as noted below: Total fringe benefits during fiscal year 2023 totaled approximately $2,673,231.While performing procedures related to indirect costs, we noted indirect costs were expensed during the University’s fiscal year ended June 30, 2023 for two of forty sampled grants (totaling $1,817,264) where indirect costs were originally undercharged during the previous fiscal year. The University booked an adjustment within Workday to correct the indirect costs for the life of the grant. This resulted in the SEFA being overstated during the University’s fiscal year ended June 30, 2023. We noted the total indirect costs charged for the life of the grants was allowable and within the period of performance. These overstatements to the SEFA for the University’s fiscal year 2023 was for a total of $3,677 as noted below: Total indirect costs during fiscal year 2023 totaled approximately $10,484,419. Questioned Cost: Known questioned costs of $26. Cause and Effect: In discussing these conditions with University management, they stated that during fiscal year 2023, they continued reconciliation procedures related to ‘grant level’ activity as a result of implementing the grants module of Workday during fiscal year 2021. Grant level activity allows them to track the specific budget provided by the individual grant as well as monitor other key compliance requirement aspects. The University continued to process an increased volume of cost transfers and experienced delays in posting necessary cost transfers for identified unallowable costs stemming from the reconciliation efforts. Repeat Finding: A similar finding was reported in prior year audit as finding number 2022-001. Statistical Sampling: The sample was not intended to be, and was not, a statistically valid sample. Recommendations: We recommend the University continue its corrective action plan and adjust internal controls as needed to prevent and detect noncompliance with and improve adherence to federal regulations.View of Responsible Official: The University concurs with the finding. As noted in our prior year response, the University continued to have cost transfers in fiscal year 2023 as it reconciled its grants. To limit cost transfers in the future, the following steps have been taken by the University: Additionally, the University is exploring additional functionality within our Workday grants management module to build in additional approvals, specifically for labor, on expense before the expenses are charged to the grant to reduce future cost transfers. In regards to the three transactions noted above (federal award number HHSN272201300021I; federal award number 5R21AG065526-02; and federal award number UH3HD096929), the erroneous charges have been refunded to the federal agency. As part of the University’s corrective action plan, during fiscal year 2023 the sponsored programs accounting team recalculated fringe and indirect costs on all federal grants to ensure the correct expense was recorded to each grant. During this reconciliation process cumulative award to date errors were identified and corrected in fiscal year 2023. The sponsored program accounting team continues to reconcile fringe and indirect costs on cost transfers at the grant level on a periodic basis to ensure accuracy.