Criteria or specific requirement - (including statutory, regulatory, or other citation) - The Code of Federal Regulations (CFR) Title 2, Part 200.305(b)(3) states that non-federal entities must disburse funds for program purposes before requesting payment from the federal awarding agency or pass-through entity. Condition - The District's expenditure report filed for June 30, 2023 included expenditures in the amount of $27,366 paid in September 2023. These amounts were not reported as committed or obligated. Questioned Costs - NONE. Contexts - The District received federal reimbursement before expenditures were paid. Effect - The June 30, 2023 expenditure report was filed overstating expenditures by $27,366. Cause - Grant expenditures reported on the final June 30, 2023 expenditure report included $27,366 of expenditures that that were not paid by the District until the following fiscal year. Recommendation - Grant expenditure reports should only include expenditures that have been paid during the grant report expenditure period. Managment's response - There is no disagreement with this finding and management will monitor all future federal reimbursement requests.
Criteria or specific requirement - (including statutory, regulatory, or other citation) - The Code of Federal Regulations (CFR) Title 2, Part 200.305(b)(3) states that non-federal entities must disburse funds for program purposes before requesting payment from the federal awarding agency or pass-through entity. Condition - The District's expenditure report filed for June 30, 2023 included expenditures in the amount of $27,366 paid in September 2023. These amounts were not reported as committed or obligated. Questioned Costs - NONE. Contexts - The District received federal reimbursement before expenditures were paid. Effect - The June 30, 2023 expenditure report was filed overstating expenditures by $27,366. Cause - Grant expenditures reported on the final June 30, 2023 expenditure report included $27,366 of expenditures that that were not paid by the District until the following fiscal year. Recommendation - Grant expenditure reports should only include expenditures that have been paid during the grant report expenditure period. Managment's response - There is no disagreement with this finding and management will monitor all future federal reimbursement requests.
Criteria or specific requirement - (including statutory, regulatory, or other citation) - The Code of Federal Regulations (CFR) Title 2, Part 200.305(b)(3) states that non-federal entities must disburse funds for program purposes before requesting payment from the federal awarding agency or pass-through entity. Condition - The District's expenditure report filed for June 30, 2023 included expenditures in the amount of $27,366 paid in September 2023. These amounts were not reported as committed or obligated. Questioned Costs - NONE. Contexts - The District received federal reimbursement before expenditures were paid. Effect - The June 30, 2023 expenditure report was filed overstating expenditures by $27,366. Cause - Grant expenditures reported on the final June 30, 2023 expenditure report included $27,366 of expenditures that that were not paid by the District until the following fiscal year. Recommendation - Grant expenditure reports should only include expenditures that have been paid during the grant report expenditure period. Managment's response - There is no disagreement with this finding and management will monitor all future federal reimbursement requests.
The Uniform Guidance in 2 CFR section 200.305(b)(3) requires that program costs must be paid by non-federal entity funds before submitting a payment request for reimbursement. Based on testing performed over cash management, we noted that for the first nine months of the fiscal year ended June 30, 2023, management requested funds for an amount that was different and often more than actual expenditures for the given month. Specifically, during November 2021, the grant team noted that the budgeted fringe rates differed from actuals. This was brought to the attention of the finance department who was unable to explain the discrepancy. Rather than requesting reimbursement based on actual expenditures, the team kept track of the discrepancy and requested reimbursement based on the budgeted amounts. Upon investigating further, it was deemed that the difference was due to the grant team miscalculating the fringe benefit due to pre-tax contributions, and therefore, the Organization requested reimbursement for an amount more than what was actually expended. Management corrected the issue beginning in March 2023, and made a correction on their November 2023 draw in the amount of $4,446.75. In addition, auditor noted differences of $3,425.55, between the balance approved on the February 2023 drawdown and the total amount requested and ultimately transferred. Auditor notes that there were indirect costs of $3,425.55 for the month of February 2023 that inadvertently did not get paid and post until March 2023, therefore they were requested for reimbursement in March 2023. As the February 2023 drawdown was based on budgeted and not actual, the drawdown included these same indirect costs as well. Management identified the issue and performed an analysis over indirect costs that were not getting posted correctly during year 2 of the grant. Management noted two other months in which the same issue occurred which was in January 2023 and December 2022, however for these months, the indirect costs did not get requested for reimbursement at all, resulting in an understatement of expenditures. Management made a correction for these on their November 2023 draw in the amount of $76,950.97. Although program management has controls in place for the grant analyst to perform a reconciliation between the budgeted amounts and actual expenditures each month prior to requesting for reimbursement, discrepancies noted are not fully investigated prior to requesting funds for reimbursement. In addition, the error related to unintentionally miscalculating fringe benefits occurred during the period of time when the Organization’s CFO had resigned. Once a new CFO was in place, the error was identified and resolved. The error related to indirect costs resulted from issues within the payroll system where retirement and other costs were not posting until the following month. Without adequate controls in place to ensure that discrepancies between budget to actual expenditures are being fully investigated and resolved prior to requests for reimbursements being made, noncompliance with cash management requirements could occur and not be detected by management. Management should strengthen the Organization’s internal controls to ensure that program staff are timely investigating and resolving all differences noted in the monthly reconciliations between budget and actual expenditures and only requesting reimbursement for those costs that have been expended during the month.
2023-003 – UNIFORM GUIDANCE WRITTEN POLICIES AND PROCEDURES Type of Finding: (F) Significant Deficiency in Internal Control Over Compliance of Federal Awards, (G) Instance of Non-compliance related to Federal Awards, and (H) Other Non-compliance Required to be Reported per Section 12-6-5 NMSA 1978 Funding Agency: All (see Schedule of Expenditures of Federal Awards) Title: All (see Schedule of Expenditures of Federal Awards) AL #: All (see Schedule of Expenditures of Federal Awards) Award #: All (see Schedule of Expenditures of Federal Awards) Award Period: All (see Schedule of Expenditures of Federal Awards) Questioned Costs: None Statement of Condition During the audit, we noted the Authority’s policies and procedures required updates to conform with Uniform Guidance. Criteria Uniform Guidance requires that procedures are documented related to cash management, cost allowability, procurement, and conflict of interest provisions. Cash Management 2 C.F.R. Part 200, §200.302(b)(6) “Written procedures to implement the requirements of §200.305 Payment.” • Written procedures should answer questions such as: who determines that the cash management procedures are being followed; how the procedures are followed; when the steps are performed; what is being verified. A subrecipient’s Cash Management written procedures must address both advance payments and cost reimbursement. The written procedures should include steps involved in the obligating, liquidating, and claiming of federal funds. Allowable Costs 2 C.F.R. Part 200, §200.302(b)(7) “Written procedures for determining the allowability of costs in accordance with Subpart E—Cost Principles of this part and the terms and conditions of the Federal award.” • Written procedures on Allowable Costs must address how the subrecipient is ensuring that costs on the federal grant, and ultimately claimed, are allowed under the individual Federal program and in accordance with the cost principles established in the Uniform Grant Guidance. Conflict of Interest 2 C.F.R. Part 200, §200.318(c)(1) “The non-Federal entity must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts.” • Written procedures such as required per 2 C.F.R. Part 200, §200.318 should not be a reiteration of the federal requirements or the policies or goals. Rather, procedures are the step-by-step process that is used to obtain the goal or the steps that are necessary to be in compliance with the federal requirement. Written procedures should answer questions like: what is considered a conflict of interest; how is it determined that an employee has a conflict of interest, how it is determined the procedures are followed; when the steps are performed; what is being verified. Procurement CFR 2, § 200.318(a) The non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part. Cause The Authority has not previously required a single audit under Uniform Guidance. As a result, the Authority’s policies and procedures have not been updated to include the required language. Effect The Authority is noncompliant with the requirements of Uniform Guidance, which could result in future findings. Recommendation We recommend that the Authority review their current policies and procedures and bring them up to date with the appropriate language as required per Uniform Guidance. Adding the language will ensure that the Authority is always in compliance when single audits are required. Management Response CRRUA has not previously required a single audit under Uniform Guidance, CRRUA will work with DAC Grant and Accounting team, who assist in oversight per contract agreement, to develop written procedures and policies per Uniform Guidance requirements. In addition, CRRUA will enlist external assistance for additional review and recommendations regarding the drafted policies and procedures. Finding resolved timeline: Implemented by June 30, 2024. In the next 3 months CRRUA will implement policies and procedures required to conform with Uniform Guidance. Designation of employee position responsible for meeting this deadline: Office Manager
2023-003 – UNIFORM GUIDANCE WRITTEN POLICIES AND PROCEDURES Type of Finding: (F) Significant Deficiency in Internal Control Over Compliance of Federal Awards, (G) Instance of Non-compliance related to Federal Awards, and (H) Other Non-compliance Required to be Reported per Section 12-6-5 NMSA 1978 Funding Agency: All (see Schedule of Expenditures of Federal Awards) Title: All (see Schedule of Expenditures of Federal Awards) AL #: All (see Schedule of Expenditures of Federal Awards) Award #: All (see Schedule of Expenditures of Federal Awards) Award Period: All (see Schedule of Expenditures of Federal Awards) Questioned Costs: None Statement of Condition During the audit, we noted the Authority’s policies and procedures required updates to conform with Uniform Guidance. Criteria Uniform Guidance requires that procedures are documented related to cash management, cost allowability, procurement, and conflict of interest provisions. Cash Management 2 C.F.R. Part 200, §200.302(b)(6) “Written procedures to implement the requirements of §200.305 Payment.” • Written procedures should answer questions such as: who determines that the cash management procedures are being followed; how the procedures are followed; when the steps are performed; what is being verified. A subrecipient’s Cash Management written procedures must address both advance payments and cost reimbursement. The written procedures should include steps involved in the obligating, liquidating, and claiming of federal funds. Allowable Costs 2 C.F.R. Part 200, §200.302(b)(7) “Written procedures for determining the allowability of costs in accordance with Subpart E—Cost Principles of this part and the terms and conditions of the Federal award.” • Written procedures on Allowable Costs must address how the subrecipient is ensuring that costs on the federal grant, and ultimately claimed, are allowed under the individual Federal program and in accordance with the cost principles established in the Uniform Grant Guidance. Conflict of Interest 2 C.F.R. Part 200, §200.318(c)(1) “The non-Federal entity must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts.” • Written procedures such as required per 2 C.F.R. Part 200, §200.318 should not be a reiteration of the federal requirements or the policies or goals. Rather, procedures are the step-by-step process that is used to obtain the goal or the steps that are necessary to be in compliance with the federal requirement. Written procedures should answer questions like: what is considered a conflict of interest; how is it determined that an employee has a conflict of interest, how it is determined the procedures are followed; when the steps are performed; what is being verified. Procurement CFR 2, § 200.318(a) The non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part. Cause The Authority has not previously required a single audit under Uniform Guidance. As a result, the Authority’s policies and procedures have not been updated to include the required language. Effect The Authority is noncompliant with the requirements of Uniform Guidance, which could result in future findings. Recommendation We recommend that the Authority review their current policies and procedures and bring them up to date with the appropriate language as required per Uniform Guidance. Adding the language will ensure that the Authority is always in compliance when single audits are required. Management Response CRRUA has not previously required a single audit under Uniform Guidance, CRRUA will work with DAC Grant and Accounting team, who assist in oversight per contract agreement, to develop written procedures and policies per Uniform Guidance requirements. In addition, CRRUA will enlist external assistance for additional review and recommendations regarding the drafted policies and procedures. Finding resolved timeline: Implemented by June 30, 2024. In the next 3 months CRRUA will implement policies and procedures required to conform with Uniform Guidance. Designation of employee position responsible for meeting this deadline: Office Manager
2023-003 – UNIFORM GUIDANCE WRITTEN POLICIES AND PROCEDURES Type of Finding: (F) Significant Deficiency in Internal Control Over Compliance of Federal Awards, (G) Instance of Non-compliance related to Federal Awards, and (H) Other Non-compliance Required to be Reported per Section 12-6-5 NMSA 1978 Funding Agency: All (see Schedule of Expenditures of Federal Awards) Title: All (see Schedule of Expenditures of Federal Awards) AL #: All (see Schedule of Expenditures of Federal Awards) Award #: All (see Schedule of Expenditures of Federal Awards) Award Period: All (see Schedule of Expenditures of Federal Awards) Questioned Costs: None Statement of Condition During the audit, we noted the Authority’s policies and procedures required updates to conform with Uniform Guidance. Criteria Uniform Guidance requires that procedures are documented related to cash management, cost allowability, procurement, and conflict of interest provisions. Cash Management 2 C.F.R. Part 200, §200.302(b)(6) “Written procedures to implement the requirements of §200.305 Payment.” • Written procedures should answer questions such as: who determines that the cash management procedures are being followed; how the procedures are followed; when the steps are performed; what is being verified. A subrecipient’s Cash Management written procedures must address both advance payments and cost reimbursement. The written procedures should include steps involved in the obligating, liquidating, and claiming of federal funds. Allowable Costs 2 C.F.R. Part 200, §200.302(b)(7) “Written procedures for determining the allowability of costs in accordance with Subpart E—Cost Principles of this part and the terms and conditions of the Federal award.” • Written procedures on Allowable Costs must address how the subrecipient is ensuring that costs on the federal grant, and ultimately claimed, are allowed under the individual Federal program and in accordance with the cost principles established in the Uniform Grant Guidance. Conflict of Interest 2 C.F.R. Part 200, §200.318(c)(1) “The non-Federal entity must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts.” • Written procedures such as required per 2 C.F.R. Part 200, §200.318 should not be a reiteration of the federal requirements or the policies or goals. Rather, procedures are the step-by-step process that is used to obtain the goal or the steps that are necessary to be in compliance with the federal requirement. Written procedures should answer questions like: what is considered a conflict of interest; how is it determined that an employee has a conflict of interest, how it is determined the procedures are followed; when the steps are performed; what is being verified. Procurement CFR 2, § 200.318(a) The non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part. Cause The Authority has not previously required a single audit under Uniform Guidance. As a result, the Authority’s policies and procedures have not been updated to include the required language. Effect The Authority is noncompliant with the requirements of Uniform Guidance, which could result in future findings. Recommendation We recommend that the Authority review their current policies and procedures and bring them up to date with the appropriate language as required per Uniform Guidance. Adding the language will ensure that the Authority is always in compliance when single audits are required. Management Response CRRUA has not previously required a single audit under Uniform Guidance, CRRUA will work with DAC Grant and Accounting team, who assist in oversight per contract agreement, to develop written procedures and policies per Uniform Guidance requirements. In addition, CRRUA will enlist external assistance for additional review and recommendations regarding the drafted policies and procedures. Finding resolved timeline: Implemented by June 30, 2024. In the next 3 months CRRUA will implement policies and procedures required to conform with Uniform Guidance. Designation of employee position responsible for meeting this deadline: Office Manager
2023-003 – UNIFORM GUIDANCE WRITTEN POLICIES AND PROCEDURES Type of Finding: (F) Significant Deficiency in Internal Control Over Compliance of Federal Awards, (G) Instance of Non-compliance related to Federal Awards, and (H) Other Non-compliance Required to be Reported per Section 12-6-5 NMSA 1978 Funding Agency: All (see Schedule of Expenditures of Federal Awards) Title: All (see Schedule of Expenditures of Federal Awards) AL #: All (see Schedule of Expenditures of Federal Awards) Award #: All (see Schedule of Expenditures of Federal Awards) Award Period: All (see Schedule of Expenditures of Federal Awards) Questioned Costs: None Statement of Condition During the audit, we noted the Authority’s policies and procedures required updates to conform with Uniform Guidance. Criteria Uniform Guidance requires that procedures are documented related to cash management, cost allowability, procurement, and conflict of interest provisions. Cash Management 2 C.F.R. Part 200, §200.302(b)(6) “Written procedures to implement the requirements of §200.305 Payment.” • Written procedures should answer questions such as: who determines that the cash management procedures are being followed; how the procedures are followed; when the steps are performed; what is being verified. A subrecipient’s Cash Management written procedures must address both advance payments and cost reimbursement. The written procedures should include steps involved in the obligating, liquidating, and claiming of federal funds. Allowable Costs 2 C.F.R. Part 200, §200.302(b)(7) “Written procedures for determining the allowability of costs in accordance with Subpart E—Cost Principles of this part and the terms and conditions of the Federal award.” • Written procedures on Allowable Costs must address how the subrecipient is ensuring that costs on the federal grant, and ultimately claimed, are allowed under the individual Federal program and in accordance with the cost principles established in the Uniform Grant Guidance. Conflict of Interest 2 C.F.R. Part 200, §200.318(c)(1) “The non-Federal entity must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts.” • Written procedures such as required per 2 C.F.R. Part 200, §200.318 should not be a reiteration of the federal requirements or the policies or goals. Rather, procedures are the step-by-step process that is used to obtain the goal or the steps that are necessary to be in compliance with the federal requirement. Written procedures should answer questions like: what is considered a conflict of interest; how is it determined that an employee has a conflict of interest, how it is determined the procedures are followed; when the steps are performed; what is being verified. Procurement CFR 2, § 200.318(a) The non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part. Cause The Authority has not previously required a single audit under Uniform Guidance. As a result, the Authority’s policies and procedures have not been updated to include the required language. Effect The Authority is noncompliant with the requirements of Uniform Guidance, which could result in future findings. Recommendation We recommend that the Authority review their current policies and procedures and bring them up to date with the appropriate language as required per Uniform Guidance. Adding the language will ensure that the Authority is always in compliance when single audits are required. Management Response CRRUA has not previously required a single audit under Uniform Guidance, CRRUA will work with DAC Grant and Accounting team, who assist in oversight per contract agreement, to develop written procedures and policies per Uniform Guidance requirements. In addition, CRRUA will enlist external assistance for additional review and recommendations regarding the drafted policies and procedures. Finding resolved timeline: Implemented by June 30, 2024. In the next 3 months CRRUA will implement policies and procedures required to conform with Uniform Guidance. Designation of employee position responsible for meeting this deadline: Office Manager
FINDING 2023-009 Subject: COVID-19 - Education Stabilization Fund - Cash Management Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425D Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425D210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Cash 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 Cash Management compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 30 SILVER CREEK SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Reimbursement requests for the program were prepared by one employee and reviewed by another employee; however, no supporting documentation was provided to the reviewer. As documentation did not accompany the reimbursement request, and the reimbursement requests, as noted below, did not agree to the ledger, the reviewer could not have ensured expenses were paid prior to requesting reimbursement. Five reimbursement requests were submitted during the audit period. All five reimbursement requests were selected for testing. Of the five reimbursement requests tested, three were not traceable to the School Corporation's fund ledger. For those three reimbursement requests, the expenditures in the ledger exceeded the amount requested by $67,907, in total. However, as the expenditures could not be determined for each reimbursement requested, it could not be determined if the School Corporation paid for the expense prior to requesting reimbursement. The lack of internal controls and noncompliance were systemic issues throughout the audit period for ESSER I and ESSER II grant funds. 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 200.305(b) states in part: "For non-Federal entities other than states, payments methods must minimize the time elapsing between the transfer of funds from the United States Treasury or the pass-through entity and the disbursement by the non-Federal entity whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means. . . . (3) Reimbursement is the preferred method when the requirements in paragraph (b) cannot be met, when the Federal awarding agency sets a specific condition per § 200.208, or when the non-Federal entity requests payment by reimbursement. . . ." 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. . . ." INDIANA STATE BOARD OF ACCOUNTS 31 SILVER CREEK SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause A proper system of internal controls was not designed by management of the School Corporation. 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, it could not be determined if all expenditures were paid by the School Corporation prior to requesting reimbursement. 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 the reimbursement requests. 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 - Cash Management Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425D Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425D210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Cash 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 Cash Management compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 30 SILVER CREEK SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Reimbursement requests for the program were prepared by one employee and reviewed by another employee; however, no supporting documentation was provided to the reviewer. As documentation did not accompany the reimbursement request, and the reimbursement requests, as noted below, did not agree to the ledger, the reviewer could not have ensured expenses were paid prior to requesting reimbursement. Five reimbursement requests were submitted during the audit period. All five reimbursement requests were selected for testing. Of the five reimbursement requests tested, three were not traceable to the School Corporation's fund ledger. For those three reimbursement requests, the expenditures in the ledger exceeded the amount requested by $67,907, in total. However, as the expenditures could not be determined for each reimbursement requested, it could not be determined if the School Corporation paid for the expense prior to requesting reimbursement. The lack of internal controls and noncompliance were systemic issues throughout the audit period for ESSER I and ESSER II grant funds. 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 200.305(b) states in part: "For non-Federal entities other than states, payments methods must minimize the time elapsing between the transfer of funds from the United States Treasury or the pass-through entity and the disbursement by the non-Federal entity whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means. . . . (3) Reimbursement is the preferred method when the requirements in paragraph (b) cannot be met, when the Federal awarding agency sets a specific condition per § 200.208, or when the non-Federal entity requests payment by reimbursement. . . ." 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. . . ." INDIANA STATE BOARD OF ACCOUNTS 31 SILVER CREEK SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause A proper system of internal controls was not designed by management of the School Corporation. 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, it could not be determined if all expenditures were paid by the School Corporation prior to requesting reimbursement. 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 the reimbursement requests. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
2023-002: Cash Management-Subrecipient Federal Agency: U.S. Federal Government Federal Program Title: Research and Development Cluster Assistance Listing Number: 93.859 Federal Award Identification Number and Year: 1R01GM137083 - 2023 Award Period: July 1, 2022 to June 30, 2023 Type of Finding: • Other Matters • Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: The Federal Government requires that when the reimbursement method is used, the Federal awarding agency or pass-through entity must make payment within 30 calendar days after receipt of the billing, unless the Federal awarding agency or pass-through entity reasonably believes the request to be improper (2 CFR section 200.305(b)(4)). In addition, per the Uniform Guidance 2 CFR 200.303, nonfederal 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: The University did not make payment to Subrecipients within the required 30 calendar days after receipt of the billing. Context: One subrecipient invoice, totaling $1,601, out of 8 tested, totaling $43,340, was not paid within the required 30 days. Questioned costs: None. Cause: The invoice was sent to the wrong email for approval. Effect: Subrecipients did not receive their reimbursement timely. Repeat finding: No Recommendation: We recommend the University evaluate its procedures and implement an additional control to review and approve the Subrecipient reimbursements timely. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.
Criteria or specific requirement (including statutory, regulatory, or other citation) - The Code of Federal Regulations (CFR) Title 2, part 200.305(b)(3) states that non-federal entities must disburse funds for program purposes before requesting payment from the federal awarding agency or pass-through entity. Condition - The District does not have internal controls in place to prevent expenditure reports being submitted that include expenditures that have not been spent, committed, or obligated. Questioned Costs - None. Context - The District did not implement adequate internal controls to ensure expenditure reports include only expenditures that have been spent, committed, or obligated. Effect - The District may receive grant disbursements prior to having the expenditure to support the request for disbursement. Cause - Due to the District's understanding that the project would be completed prior to year end no change to their expenditure report was made. Recommendation - The District should implement internal controls that verify all expenditure reports include only amounts expended or committed or obligated. Management's Response - There is no disagreement. The District will implement internal controls to ensure expenditure reports are being submitted accurately.
Criteria or specific requirement (including statutory, regulatory, or other citation) - The Code of Federal Regulations (CFR) Title 2, part 200.305(b)(3) states that non-federal entities must disburse funds for program purposes before requesting payment from the federal awarding agency or pass-through entity. Condition - The District does not have internal controls in place to prevent expenditure reports being submitted that include expenditures that have not been spent, committed, or obligated. Questioned Costs - None. Context - The District did not implement adequate internal controls to ensure expenditure reports include only expenditures that have been spent, committed, or obligated. Effect - The District may receive grant disbursements prior to having the expenditure to support the request for disbursement. Cause - Due to the District's understanding that the project would be completed prior to year end no change to their expenditure report was made. Recommendation - The District should implement internal controls that verify all expenditure reports include only amounts expended or committed or obligated. Management's Response - There is no disagreement. The District will implement internal controls to ensure expenditure reports are being submitted accurately.
Criteria or specific requirement (including statutory, regulatory, or other citation) - The Code of Federal Regulations (CFR) Title 2, part 200.305(b)(3) states that non-federal entities must disburse funds for program purposes before requesting payment from the federal awarding agency or pass-through entity. Condition - The District does not have internal controls in place to prevent expenditure reports being submitted that include expenditures that have not been spent, committed, or obligated. Questioned Costs - None. Context - The District did not implement adequate internal controls to ensure expenditure reports include only expenditures that have been spent, committed, or obligated. Effect - The District may receive grant disbursements prior to having the expenditure to support the request for disbursement. Cause - Due to the District's understanding that the project would be completed prior to year end no change to their expenditure report was made. Recommendation - The District should implement internal controls that verify all expenditure reports include only amounts expended or committed or obligated. Management's Response - There is no disagreement. The District will implement internal controls to ensure expenditure reports are being submitted accurately.
Criteria or specific requirement (including statutory, regulatory, or other citation) - The Code of Federal Regulations (CFR) Title 2, part 200.305(b)(3) states that non-federal entities must disburse funds for program purposes before requesting payment from the federal awarding agency or pass-through entity. Condition - The District does not have internal controls in place to prevent expenditure reports being submitted that include expenditures that have not been spent, committed, or obligated. Questioned Costs - None. Context - The District did not implement adequate internal controls to ensure expenditure reports include only expenditures that have been spent, committed, or obligated. Effect - The District may receive grant disbursements prior to having the expenditure to support the request for disbursement. Cause - Due to the District's understanding that the project would be completed prior to year end no change to their expenditure report was made. Recommendation - The District should implement internal controls that verify all expenditure reports include only amounts expended or committed or obligated. Management's Response - There is no disagreement. The District will implement internal controls to ensure expenditure reports are being submitted accurately.
Criteria or specific requirement (including statutory, regulatory, or other citation) - The Code of Federal Regulations (CFR) Title 2, part 200.305(b)(3) states that non-federal entities must disburse funds for program purposes before requesting payment from the federal awarding agency or pass-through entity. Condition - The District's expenditure report filed for June 30, 2023 included expenditures that were not disbursed as of June 30, 2023. These amounts were not reported as committed or obligated and were not liquidated within 90 days of the end of the fiscal year. Questioned Costs - $63,703. Context - The District received federal reimbursement before expenditures were disbursed and did not label the expenditures as committed or obligated, and the obligation was not liquidated within 90 days of the end of the fiscal year. Effect - The June 30, 2023 expenditure report was filed overstating cash basis expenditures. The expenditure report did not include the expenditures disbusred after June 30, 2023 as committed or obligated, and the obligation was not liquidated within 90 days of the end of the fiscal year. Cause - Grant expenditures reported on the final June 30, 2023 expenditure report included expenditures that should have been reported as committed or obligated and not included with cash basis expenditures and liquidated within 90 days of the end of the fiscal year. Recommendation - Grant expenditure reports should be prepared on the cash basis and obligations reported. The liquidation of the obligations should be reported on subsequent liquidation reports. Management's response - There is no disagreement with this finding and management will monitor all future federal reimbursement requests. Committed or obligated expenditures will be reported appropriately, and will be liquidated within 90 days of the end of the fiscal year.
Criteria or specific requirement (including statutory, regulatory, or other citation) - The Code of Federal Regulations (CFR) Title 2, part 200.305(b)(3) states that non-federal entities must disburse funds for program purposes before requesting payment from the federal awarding agency or pass-through entity. Condition - The District's expenditure report filed for June 30, 2023 included expenditures that were not disbursed as of June 30, 2023. These amounts were not reported as committed or obligated and were not liquidated within 90 days of the end of the fiscal year. Questioned Costs - $63,703. Context - The District received federal reimbursement before expenditures were disbursed and did not label the expenditures as committed or obligated, and the obligation was not liquidated within 90 days of the end of the fiscal year. Effect - The June 30, 2023 expenditure report was filed overstating cash basis expenditures. The expenditure report did not include the expenditures disbusred after June 30, 2023 as committed or obligated, and the obligation was not liquidated within 90 days of the end of the fiscal year. Cause - Grant expenditures reported on the final June 30, 2023 expenditure report included expenditures that should have been reported as committed or obligated and not included with cash basis expenditures and liquidated within 90 days of the end of the fiscal year. Recommendation - Grant expenditure reports should be prepared on the cash basis and obligations reported. The liquidation of the obligations should be reported on subsequent liquidation reports. Management's response - There is no disagreement with this finding and management will monitor all future federal reimbursement requests. Committed or obligated expenditures will be reported appropriately, and will be liquidated within 90 days of the end of the fiscal year.
Criteria or specific requirement (including statutory, regulatory, or other citation) - The Code of Federal Regulations (CFR) Title 2, part 200.305(b)(3) states that non-federal entities must disburse funds for program purposes before requesting payment from the federal awarding agency or pass-through entity. Condition - The District's expenditure report filed for June 30, 2023 included expenditures that were not disbursed as of June 30, 2023. These amounts were not reported as committed or obligated and were not liquidated within 90 days of the end of the fiscal year. Questioned Costs - $63,703. Context - The District received federal reimbursement before expenditures were disbursed and did not label the expenditures as committed or obligated, and the obligation was not liquidated within 90 days of the end of the fiscal year. Effect - The June 30, 2023 expenditure report was filed overstating cash basis expenditures. The expenditure report did not include the expenditures disbusred after June 30, 2023 as committed or obligated, and the obligation was not liquidated within 90 days of the end of the fiscal year. Cause - Grant expenditures reported on the final June 30, 2023 expenditure report included expenditures that should have been reported as committed or obligated and not included with cash basis expenditures and liquidated within 90 days of the end of the fiscal year. Recommendation - Grant expenditure reports should be prepared on the cash basis and obligations reported. The liquidation of the obligations should be reported on subsequent liquidation reports. Management's response - There is no disagreement with this finding and management will monitor all future federal reimbursement requests. Committed or obligated expenditures will be reported appropriately, and will be liquidated within 90 days of the end of the fiscal year.
Criteria or specific requirement (including statutory, regulatory, or other citation) - The Code of Federal Regulations (CFR) Title 2, part 200.305(b)(3) states that non-federal entities must disburse funds for program purposes before requesting payment from the federal awarding agency or pass-through entity. Condition - The District's expenditure report filed for June 30, 2023 included expenditures that were not disbursed as of June 30, 2023. These amounts were not reported as committed or obligated and were not liquidated within 90 days of the end of the fiscal year. Questioned Costs - $63,703. Context - The District received federal reimbursement before expenditures were disbursed and did not label the expenditures as committed or obligated, and the obligation was not liquidated within 90 days of the end of the fiscal year. Effect - The June 30, 2023 expenditure report was filed overstating cash basis expenditures. The expenditure report did not include the expenditures disbusred after June 30, 2023 as committed or obligated, and the obligation was not liquidated within 90 days of the end of the fiscal year. Cause - Grant expenditures reported on the final June 30, 2023 expenditure report included expenditures that should have been reported as committed or obligated and not included with cash basis expenditures and liquidated within 90 days of the end of the fiscal year. Recommendation - Grant expenditure reports should be prepared on the cash basis and obligations reported. The liquidation of the obligations should be reported on subsequent liquidation reports. Management's response - There is no disagreement with this finding and management will monitor all future federal reimbursement requests. Committed or obligated expenditures will be reported appropriately, and will be liquidated within 90 days of the end of the fiscal year.
Criteria or specific requirement (including statutory, regulatory, or other citation) - The Code of Federal Regulations (CFR) Title 2, part 200.305(b)(3) states that non-federal entities must disburse funds for program purposes before requesting payment from the federal awarding agency or pass-through entity. Condition - The District does not have internal controls in place to prevent expenditure reports being submitted that include expenditures that have not been spent or committed or obligated. Questioned Costs - None. Context - The District did not implement adequate internal controls to ensure expenditure reports include only expenditures that have been spent or committed or obligated. Effect - The District may receive grant disbursements prior to having the expenditure to support the request for disbursement. Cause - Due to the District's understanding that the construction in progress would be completed prior to year end and the expenditures would be incurred. Recommendation - The District should implement internal controls the verify all expenditure reports include only amounts expended, committed, or obligated. Managment's response - There is no disagreement. The District will implement internal controls to ensure expenditure reports are being submitted accurately.
Criteria or specific requirement (including statutory, regulatory, or other citation) - The Code of Federal Regulations (CFR) Title 2, part 200.305(b)(3) states that non-federal entities must disburse funds for program purposes before requesting payment from the federal awarding agency or pass-through entity. Condition - The District does not have internal controls in place to prevent expenditure reports being submitted that include expenditures that have not been spent or committed or obligated. Questioned Costs - None. Context - The District did not implement adequate internal controls to ensure expenditure reports include only expenditures that have been spent or committed or obligated. Effect - The District may receive grant disbursements prior to having the expenditure to support the request for disbursement. Cause - Due to the District's understanding that the construction in progress would be completed prior to year end and the expenditures would be incurred. Recommendation - The District should implement internal controls the verify all expenditure reports include only amounts expended, committed, or obligated. Managment's response - There is no disagreement. The District will implement internal controls to ensure expenditure reports are being submitted accurately.
Criteria or specific requirement (including statutory, regulatory, or other citation) - The Code of Federal Regulations (CFR) Title 2, part 200.305(b)(3) states that non-federal entities must disburse funds for program purposes before requesting payment from the federal awarding agency or pass-through entity. Condition - The District does not have internal controls in place to prevent expenditure reports being submitted that include expenditures that have not been spent or committed or obligated. Questioned Costs - None. Context - The District did not implement adequate internal controls to ensure expenditure reports include only expenditures that have been spent or committed or obligated. Effect - The District may receive grant disbursements prior to having the expenditure to support the request for disbursement. Cause - Due to the District's understanding that the construction in progress would be completed prior to year end and the expenditures would be incurred. Recommendation - The District should implement internal controls the verify all expenditure reports include only amounts expended, committed, or obligated. Managment's response - There is no disagreement. The District will implement internal controls to ensure expenditure reports are being submitted accurately.
Criteria or specific requirement (including statutory, regulatory, or other citation) - The Code of Federal Regulations (CFR) Title 2, part 200.305(b)(3) states that non-federal entities must disburse funds for program purposes before requesting payment from the federal awarding agency or pass-through entity. Condition - The District's expenditure report filed for June 30, 2023 included expenditures in the amount of $171,918 that were not disbursed as of June 30, 2023. These amounts were not reported as committed or obligated on the June 30, 2023 expenditure report. Questioned Costs - None. Context - The District received federal reimbursement before expenditures were disbursed. Effect - The June 30, 2023 expenditure report was filed overstating expenditures by $171,918. Cause - Grant expenditures reported on the final June 30, 2023 expenditure report included $171,918 of expenditures that were not paid by the District until the next fiscal year. The expenditures were liquidated within 90 days of June 30, 2023. Recommendation - Grant expenditure reports should only include expenditures that have been paid. Grant obligations should be reported on separately on the expenditure report. The liquidation of the obligations should be reported on subsequent liquidation reports. Managment's Response - There is no disagreement with this finding and management will monitor all future federal reimbursement requests. Committed or obligated expenditures will be reported appropriately. Additionally, the grant expenditures in question were liquidated within 90 days of the fiscal year end.
Criteria or specific requirement (including statutory, regulatory, or other citation) - The Code of Federal Regulations (CFR) Title 2, part 200.305(b)(3) states that non-federal entities must disburse funds for program purposes before requesting payment from the federal awarding agency or pass-through entity. Condition - The District's expenditure report filed for June 30, 2023 included expenditures in the amount of $171,918 that were not disbursed as of June 30, 2023. These amounts were not reported as committed or obligated on the June 30, 2023 expenditure report. Questioned Costs - None. Context - The District received federal reimbursement before expenditures were disbursed. Effect - The June 30, 2023 expenditure report was filed overstating expenditures by $171,918. Cause - Grant expenditures reported on the final June 30, 2023 expenditure report included $171,918 of expenditures that were not paid by the District until the next fiscal year. The expenditures were liquidated within 90 days of June 30, 2023. Recommendation - Grant expenditure reports should only include expenditures that have been paid. Grant obligations should be reported on separately on the expenditure report. The liquidation of the obligations should be reported on subsequent liquidation reports. Managment's Response - There is no disagreement with this finding and management will monitor all future federal reimbursement requests. Committed or obligated expenditures will be reported appropriately. Additionally, the grant expenditures in question were liquidated within 90 days of the fiscal year end.
Criteria or specific requirement (including statutory, regulatory, or other citation) - The Code of Federal Regulations (CFR) Title 2, part 200.305(b)(3) states that non-federal entities must disburse funds for program purposes before requesting payment from the federal awarding agency or pass-through entity. Condition - The District's expenditure report filed for June 30, 2023 included expenditures in the amount of $171,918 that were not disbursed as of June 30, 2023. These amounts were not reported as committed or obligated on the June 30, 2023 expenditure report. Questioned Costs - None. Context - The District received federal reimbursement before expenditures were disbursed. Effect - The June 30, 2023 expenditure report was filed overstating expenditures by $171,918. Cause - Grant expenditures reported on the final June 30, 2023 expenditure report included $171,918 of expenditures that were not paid by the District until the next fiscal year. The expenditures were liquidated within 90 days of June 30, 2023. Recommendation - Grant expenditure reports should only include expenditures that have been paid. Grant obligations should be reported on separately on the expenditure report. The liquidation of the obligations should be reported on subsequent liquidation reports. Managment's Response - There is no disagreement with this finding and management will monitor all future federal reimbursement requests. Committed or obligated expenditures will be reported appropriately. Additionally, the grant expenditures in question were liquidated within 90 days of the fiscal year end.
Assistance Listing, Federal Agency, and Program Name - Research and Development Cluster, 47.076, National Science Foundation, Education and Human Resources Federal Award Identification Number and Year - 1841783 Pass through Entity - N/A Finding Type - Significant deficiency Repeat Finding - No Criteria - As outlined in 2 CFR 200.305(b)(3), when the reimbursement method is used for payment, organizations must make a payment within 30 calendar days after receipt of the billing unless the federal awarding agency or pass through entity reasonably believes the request to be improper. Condition - Out of 20 payments to subrecipients that were tested, 3 were made after the 30 calendar day requirement. Questioned Costs - None Identification of How Questioned Costs Were Computed - The issue identified was related solely to timeliness of payments. Context - In all samples tested, payment was made to the subrecipient; however, the delayed payments on 3 samples ranged from 37 - 71 days between the invoice being received by the University and payment being made to the subrecipient. Cause and Effect - The University does have formal general accounts payable and cash disbursement processes in place; however, there are no specific controls in place to ensure that subrecipients are paid within the 30-day requirement. Although all of the payments were ultimately made, the lack of controls resulted in several late payments. Recommendation - The University should implement a control to ensure that payments are made within the required time frame. Views of Responsible Officials and Corrective Action Plan - Management agrees. The University has established subrecipient monitoring procedures. Included in those procedures is the control to monitor the 30 day payment requirement. 2 of the payments were during the major service disruption of the entire university network. We have now implemented weekly backups to the network folders that contain our subrecipient monitoring files. 1 of the payments was due to the department not sending us the invoice timely. We plan to do follow up trainings to educate departments and PIs on the requirement for providing payment within 30 days of receipt of invoice to assure payment is made within the 30 day requirement.
Federal Agencies: U.S. Department of Energy; U.S. Health and Human Services; and U.S. Department of State Program Names: Research and Development Cluster; Professional and Cultural Exchange Program ALN #s: 81.086, 81.049, 93.859, 19.415 Award Numbers: DE-EE0009418, DE-SC0021123, RGM129216B, SECAGD21CA3070; Federal Award Year 2022 - 2023 Questioned Costs: None 2023-005. Finding: Cash Management – Timeliness of Subrecipient Payments Northern Illinois University (the University) did not make certain subrecipient payments timely under the Research and Development Cluster and the Professional and Cultural Exchange Program. Out of 31 subrecipient payments tested which were made by the University under the Research and Development Cluster, 11 payments (35%) were not made within 30 days after receipt of the billing from the subrecipient. Payments to the subrecipients were made 35-166 days after receipt of the billing. The sample was not intended to be, and was not, a statistically valid sample. Out of two subrecipient payments tested which were made by the University under the Professional and Cultural Exchange Program, one payment (50%) was not made within 30 days after receipt of the billing from the subrecipient. Payment to the subrecipient was made 31 days after receipt of the billing. The sample was not intended to be, and was not, a statistically valid sample. Under Uniform Guidance (2 CFR 200.305(b)(3)), when the reimbursement method is used, the Federal awarding agency or pass-through entity must make payment within 30 calendar days after receipt of the billing, unless the Federal awarding agency or pass-through entity reasonably believes the request to be improper. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure subrecipient payments are made timely. The University officials stated the payment delays were due to the additional steps required to obtain the Principal Investigator review and approval to ensure payments are proper. Additionally, payments due at the end of the calendar year were further delayed due to University closure, holidays, and regular business schedules. Without proper program cash management policies and procedures, late subrecipient payments could result in the loss of future funding. (Finding Code No. 2023-005) Recommendation: We recommend the University review current processes, policies and procedures to minimize the time elapsing between the transfer of federal funds to the subrecipient. University Response: Accepted. The University will review its current processes, policies and procedures to minimize the time between the transfer of federal funds to the subrecipient.
Federal Agencies: U.S. Department of Energy; U.S. Health and Human Services; and U.S. Department of State Program Names: Research and Development Cluster; Professional and Cultural Exchange Program ALN #s: 81.086, 81.049, 93.859, 19.415 Award Numbers: DE-EE0009418, DE-SC0021123, RGM129216B, SECAGD21CA3070; Federal Award Year 2022 - 2023 Questioned Costs: None 2023-005. Finding: Cash Management – Timeliness of Subrecipient Payments Northern Illinois University (the University) did not make certain subrecipient payments timely under the Research and Development Cluster and the Professional and Cultural Exchange Program. Out of 31 subrecipient payments tested which were made by the University under the Research and Development Cluster, 11 payments (35%) were not made within 30 days after receipt of the billing from the subrecipient. Payments to the subrecipients were made 35-166 days after receipt of the billing. The sample was not intended to be, and was not, a statistically valid sample. Out of two subrecipient payments tested which were made by the University under the Professional and Cultural Exchange Program, one payment (50%) was not made within 30 days after receipt of the billing from the subrecipient. Payment to the subrecipient was made 31 days after receipt of the billing. The sample was not intended to be, and was not, a statistically valid sample. Under Uniform Guidance (2 CFR 200.305(b)(3)), when the reimbursement method is used, the Federal awarding agency or pass-through entity must make payment within 30 calendar days after receipt of the billing, unless the Federal awarding agency or pass-through entity reasonably believes the request to be improper. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure subrecipient payments are made timely. The University officials stated the payment delays were due to the additional steps required to obtain the Principal Investigator review and approval to ensure payments are proper. Additionally, payments due at the end of the calendar year were further delayed due to University closure, holidays, and regular business schedules. Without proper program cash management policies and procedures, late subrecipient payments could result in the loss of future funding. (Finding Code No. 2023-005) Recommendation: We recommend the University review current processes, policies and procedures to minimize the time elapsing between the transfer of federal funds to the subrecipient. University Response: Accepted. The University will review its current processes, policies and procedures to minimize the time between the transfer of federal funds to the subrecipient.
Federal Agencies: U.S. Department of Energy; U.S. Health and Human Services; and U.S. Department of State Program Names: Research and Development Cluster; Professional and Cultural Exchange Program ALN #s: 81.086, 81.049, 93.859, 19.415 Award Numbers: DE-EE0009418, DE-SC0021123, RGM129216B, SECAGD21CA3070; Federal Award Year 2022 - 2023 Questioned Costs: None 2023-005. Finding: Cash Management – Timeliness of Subrecipient Payments Northern Illinois University (the University) did not make certain subrecipient payments timely under the Research and Development Cluster and the Professional and Cultural Exchange Program. Out of 31 subrecipient payments tested which were made by the University under the Research and Development Cluster, 11 payments (35%) were not made within 30 days after receipt of the billing from the subrecipient. Payments to the subrecipients were made 35-166 days after receipt of the billing. The sample was not intended to be, and was not, a statistically valid sample. Out of two subrecipient payments tested which were made by the University under the Professional and Cultural Exchange Program, one payment (50%) was not made within 30 days after receipt of the billing from the subrecipient. Payment to the subrecipient was made 31 days after receipt of the billing. The sample was not intended to be, and was not, a statistically valid sample. Under Uniform Guidance (2 CFR 200.305(b)(3)), when the reimbursement method is used, the Federal awarding agency or pass-through entity must make payment within 30 calendar days after receipt of the billing, unless the Federal awarding agency or pass-through entity reasonably believes the request to be improper. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure subrecipient payments are made timely. The University officials stated the payment delays were due to the additional steps required to obtain the Principal Investigator review and approval to ensure payments are proper. Additionally, payments due at the end of the calendar year were further delayed due to University closure, holidays, and regular business schedules. Without proper program cash management policies and procedures, late subrecipient payments could result in the loss of future funding. (Finding Code No. 2023-005) Recommendation: We recommend the University review current processes, policies and procedures to minimize the time elapsing between the transfer of federal funds to the subrecipient. University Response: Accepted. The University will review its current processes, policies and procedures to minimize the time between the transfer of federal funds to the subrecipient.
Federal Agencies: U.S. Department of Energy; U.S. Health and Human Services; and U.S. Department of State Program Names: Research and Development Cluster; Professional and Cultural Exchange Program ALN #s: 81.086, 81.049, 93.859, 19.415 Award Numbers: DE-EE0009418, DE-SC0021123, RGM129216B, SECAGD21CA3070; Federal Award Year 2022 - 2023 Questioned Costs: None 2023-005. Finding: Cash Management – Timeliness of Subrecipient Payments Northern Illinois University (the University) did not make certain subrecipient payments timely under the Research and Development Cluster and the Professional and Cultural Exchange Program. Out of 31 subrecipient payments tested which were made by the University under the Research and Development Cluster, 11 payments (35%) were not made within 30 days after receipt of the billing from the subrecipient. Payments to the subrecipients were made 35-166 days after receipt of the billing. The sample was not intended to be, and was not, a statistically valid sample. Out of two subrecipient payments tested which were made by the University under the Professional and Cultural Exchange Program, one payment (50%) was not made within 30 days after receipt of the billing from the subrecipient. Payment to the subrecipient was made 31 days after receipt of the billing. The sample was not intended to be, and was not, a statistically valid sample. Under Uniform Guidance (2 CFR 200.305(b)(3)), when the reimbursement method is used, the Federal awarding agency or pass-through entity must make payment within 30 calendar days after receipt of the billing, unless the Federal awarding agency or pass-through entity reasonably believes the request to be improper. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure subrecipient payments are made timely. The University officials stated the payment delays were due to the additional steps required to obtain the Principal Investigator review and approval to ensure payments are proper. Additionally, payments due at the end of the calendar year were further delayed due to University closure, holidays, and regular business schedules. Without proper program cash management policies and procedures, late subrecipient payments could result in the loss of future funding. (Finding Code No. 2023-005) Recommendation: We recommend the University review current processes, policies and procedures to minimize the time elapsing between the transfer of federal funds to the subrecipient. University Response: Accepted. The University will review its current processes, policies and procedures to minimize the time between the transfer of federal funds to the subrecipient.
Inadequate Maintenance of Records Supporting Cash Management Process Assistance Listing: 84.042, 84.044 and 84.047 Program Title: TRIO Cluster Federal Agency: Department of Education Criteria 2 CFR §200.305(b) states that “For non-Federal entities other than states, payments methods must minimize the time elapsing between the transfer of funds from the United States Treasury or the pass-through entity and the disbursement by the non-Federal entity whether the payment is made by electronic funds transfer, or issuance of redemption of checks, warrants, or payments by other means.” Condition The College receives funding on the reimbursement method. However, for 10 out of 40 expenses sampled (1 for Student Support Services, 4 for Talent Search and 5 for Upward), we were unable to obtain information indicating when the expenses were submitted for reimbursement and therefore could not determine that the payments were made prior to reimbursement. In addition, for 2 out of 9 reimbursement requests tested (one for Upword Bound and one for Student Support Services) the College could not provide detail as to what expenses made up the requests. The two requests totaled $112,527 and the total requests tested totaled $282,815. Effect As a result of the lack of an audit trail, we were unable to determine compliance with cash management requirements for some expenses. Cause All exceptions occurred during the first half of the year prior to the hiring of a new Manager of Account Services. Recommendation We recommend that the College develop procedures to ensure that documentation supporting cash drawdowns is maintained and that all disbursements are included in a request for reimbursement. Management’s Response There are 10 audit findings total in calendar year 2022 and all are connected to a former staff person. In January 2023, we hired a new Manager of Account Services who immediately implemented new procedures and prepared the appropriate level of detail backup information for the TRIO reimbursements. Each reimbursement was also signed by the Controller, who verified the information and transactions before any funds were transferred. This process currently complies with cash management requirements.
Inadequate Maintenance of Records Supporting Cash Management Process Assistance Listing: 84.042, 84.044 and 84.047 Program Title: TRIO Cluster Federal Agency: Department of Education Criteria 2 CFR §200.305(b) states that “For non-Federal entities other than states, payments methods must minimize the time elapsing between the transfer of funds from the United States Treasury or the pass-through entity and the disbursement by the non-Federal entity whether the payment is made by electronic funds transfer, or issuance of redemption of checks, warrants, or payments by other means.” Condition The College receives funding on the reimbursement method. However, for 10 out of 40 expenses sampled (1 for Student Support Services, 4 for Talent Search and 5 for Upward), we were unable to obtain information indicating when the expenses were submitted for reimbursement and therefore could not determine that the payments were made prior to reimbursement. In addition, for 2 out of 9 reimbursement requests tested (one for Upword Bound and one for Student Support Services) the College could not provide detail as to what expenses made up the requests. The two requests totaled $112,527 and the total requests tested totaled $282,815. Effect As a result of the lack of an audit trail, we were unable to determine compliance with cash management requirements for some expenses. Cause All exceptions occurred during the first half of the year prior to the hiring of a new Manager of Account Services. Recommendation We recommend that the College develop procedures to ensure that documentation supporting cash drawdowns is maintained and that all disbursements are included in a request for reimbursement. Management’s Response There are 10 audit findings total in calendar year 2022 and all are connected to a former staff person. In January 2023, we hired a new Manager of Account Services who immediately implemented new procedures and prepared the appropriate level of detail backup information for the TRIO reimbursements. Each reimbursement was also signed by the Controller, who verified the information and transactions before any funds were transferred. This process currently complies with cash management requirements.
Inadequate Maintenance of Records Supporting Cash Management Process Assistance Listing: 84.042, 84.044 and 84.047 Program Title: TRIO Cluster Federal Agency: Department of Education Criteria 2 CFR §200.305(b) states that “For non-Federal entities other than states, payments methods must minimize the time elapsing between the transfer of funds from the United States Treasury or the pass-through entity and the disbursement by the non-Federal entity whether the payment is made by electronic funds transfer, or issuance of redemption of checks, warrants, or payments by other means.” Condition The College receives funding on the reimbursement method. However, for 10 out of 40 expenses sampled (1 for Student Support Services, 4 for Talent Search and 5 for Upward), we were unable to obtain information indicating when the expenses were submitted for reimbursement and therefore could not determine that the payments were made prior to reimbursement. In addition, for 2 out of 9 reimbursement requests tested (one for Upword Bound and one for Student Support Services) the College could not provide detail as to what expenses made up the requests. The two requests totaled $112,527 and the total requests tested totaled $282,815. Effect As a result of the lack of an audit trail, we were unable to determine compliance with cash management requirements for some expenses. Cause All exceptions occurred during the first half of the year prior to the hiring of a new Manager of Account Services. Recommendation We recommend that the College develop procedures to ensure that documentation supporting cash drawdowns is maintained and that all disbursements are included in a request for reimbursement. Management’s Response There are 10 audit findings total in calendar year 2022 and all are connected to a former staff person. In January 2023, we hired a new Manager of Account Services who immediately implemented new procedures and prepared the appropriate level of detail backup information for the TRIO reimbursements. Each reimbursement was also signed by the Controller, who verified the information and transactions before any funds were transferred. This process currently complies with cash management requirements.
(2023-077) Title: Internal control over subrecipient cash management needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Division of Audit Division of Contract Management Federal Agency: U.S. Department of Agriculture U.S. Department of Health and Human Services Assistance Listing Title: Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) (COVID-19) Immunization Cooperative Agreements (COVID-19) Temporary Assistance for Needy Families (TANF) Assistance Listing Number: 10.557; 93.268; 93.558 Federal Award Identification Number: See E-93 to E-94, E-94 Compliance Area: Cash management Subrecipient monitoring Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.305 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department is required to monitor cash drawdowns by their subrecipients to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes is minimized. Condition: The Department’s Division of Contract Management (DCM) has three methods for providing payments to subrecipients: cost-settled, cost-settled by invoice, and fee-for-service subawards. Cash management requirements are not applicable for fee-for-service subawards. For cost-settled subawards, DCM procedures include making equal advance monthly payments and then reconciling those amounts to the quarterly financial reports submitted by the subrecipient. This procedure does not take into consideration the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes, and therefore is not in compliance with subrecipient cash management requirements. For “cost-settled by invoice” (reimbursement) subawards, DCM procedures do not require subrecipients to include supporting documentation with monthly requests for reimbursement. As a result, DCM does not have assurance whether payments are for reimbursement or advances. During fiscal year 2023, the Department’s Division of Audit (DOA) performed testing over a sample of payments made to 37 subrecipients deemed high risk by the Department; payments were reviewed for compliance with cash management and allowability requirements. The Office of the State Auditor reviewed DOA’s testing and identified: • eight subrecipients where testing was not completed; therefore, compliance with cash management requirements was not determined. • eight subrecipients where documentation to support cash management testing performed could not be provided. As a result, compliance with subrecipient cash management requirements could not be substantiated. • 13 subrecipients were noted as noncompliant with cash management requirements by DOA; however, corrective action plans have not been established for any of the 13 subrecipients. Therefore, as evidenced above, the Department is not in compliance with subrecipient cash management requirements. Context: In fiscal year 2023, the Department provided: • $31.7 million to subrecipients from TANF grant funds of $91.8 million. TANF’s subawards are either cost-settled, cost-settled by invoice, or fee-for-service. • $6 million to subrecipients from WIC grant funds of $22.4 million. All of WIC’s subawards are cost-settled. • $2.7 million to subrecipients from Immunization Cooperative Agreements grant funds of $24.5 million. Immunization Cooperative Agreement’s subawards are either cost-settled or cost-settled by invoice. Cause: • Lack of adequate subrecipient monitoring procedures • Misinterpretation of Federal regulations Effect: • Noncompliance with subrecipient cash management requirements • Federal programs may not be effectively and efficiently administered. • The Federal government may require the implementation of more stringent subrecipient cash management procedures. Recommendation: We recommend that the Department enhance monitoring procedures to ensure that: • the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes is minimized for cost-settled subawards. • the payment of Federal funds to the subrecipient is for reimbursement purposes, and not for advance payment, for “cost-settled by invoice” subawards. • corrective action plans are established for subrecipients where noncompliance has been identified. Corrective Action Plan: See F-32 Management’s Response: The Department disagrees with this finding. The Department believes that we are in compliance with the requirement for minimizing the time between payments to our subrecipients and the disbursement is as close as administratively feasible. The Department’s procedures related to cash management include: reconciling payments to expenditures quarterly and monitoring subrecipient’s audits. The Department’s subrecipients not only are required to have Single Audits but also are required to have audited financial statements and audited Schedule of Expenditures of Department Awards at a lower threshold than that of the Single Audit through the Department’s rule, Maine Uniform Accounting and Auditing Practices for Community Agencies (MAAP). This rule also defines a major program at a much lower threshold than the Uniform Guidance, so far more programs get tested annually than just Single Audits alone. Contact: Jim Lopatosky, Director, Division of Contract Management, DHHS, 207-287-5075 Auditor’s Concluding Remarks: The subrecipient monitoring procedures outlined in Management’s Response do not ensure that subrecipients are drawing funds in accordance with Federal cash management requirements, as follows: • The Department does not obtain documentation to support the timing of the subrecipient’s expenditures reported on the quarterly expense reports and to substantiate compliance. • Though reviewing the subrecipient’s MAAP audits and Single Audits for findings is beneficial: o monitoring procedures must be performed during the award period; however, MAAP and Single Audits are completed towards the end or after the grant award period. o MAAP audit requirements do not require testing of all subawards. Therefore, the subrecipient’s cash management may or may not be tested by the subrecipient’s auditor. o it is not guaranteed that cash management will be selected for testing by the subrecipient’s auditor; therefore, relying on the subrecipient’s auditor to discover cash management issues is not an adequate procedure to monitor the subrecipient’s compliance with that requirement. Additionally, Management’s Response does not address specific issues identified by OSA cited in the Condition above. Therefore, the Department was noncompliant with Federal regulation 2 CFR 200.305 that requires monitoring cash drawdowns of subrecipients to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual cash disbursement for program purposes is minimized. The finding remains as stated. (State Number: 23-1111-04)
(2023-077) Title: Internal control over subrecipient cash management needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Division of Audit Division of Contract Management Federal Agency: U.S. Department of Agriculture U.S. Department of Health and Human Services Assistance Listing Title: Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) (COVID-19) Immunization Cooperative Agreements (COVID-19) Temporary Assistance for Needy Families (TANF) Assistance Listing Number: 10.557; 93.268; 93.558 Federal Award Identification Number: See E-93 to E-94, E-94 Compliance Area: Cash management Subrecipient monitoring Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.305 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department is required to monitor cash drawdowns by their subrecipients to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes is minimized. Condition: The Department’s Division of Contract Management (DCM) has three methods for providing payments to subrecipients: cost-settled, cost-settled by invoice, and fee-for-service subawards. Cash management requirements are not applicable for fee-for-service subawards. For cost-settled subawards, DCM procedures include making equal advance monthly payments and then reconciling those amounts to the quarterly financial reports submitted by the subrecipient. This procedure does not take into consideration the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes, and therefore is not in compliance with subrecipient cash management requirements. For “cost-settled by invoice” (reimbursement) subawards, DCM procedures do not require subrecipients to include supporting documentation with monthly requests for reimbursement. As a result, DCM does not have assurance whether payments are for reimbursement or advances. During fiscal year 2023, the Department’s Division of Audit (DOA) performed testing over a sample of payments made to 37 subrecipients deemed high risk by the Department; payments were reviewed for compliance with cash management and allowability requirements. The Office of the State Auditor reviewed DOA’s testing and identified: • eight subrecipients where testing was not completed; therefore, compliance with cash management requirements was not determined. • eight subrecipients where documentation to support cash management testing performed could not be provided. As a result, compliance with subrecipient cash management requirements could not be substantiated. • 13 subrecipients were noted as noncompliant with cash management requirements by DOA; however, corrective action plans have not been established for any of the 13 subrecipients. Therefore, as evidenced above, the Department is not in compliance with subrecipient cash management requirements. Context: In fiscal year 2023, the Department provided: • $31.7 million to subrecipients from TANF grant funds of $91.8 million. TANF’s subawards are either cost-settled, cost-settled by invoice, or fee-for-service. • $6 million to subrecipients from WIC grant funds of $22.4 million. All of WIC’s subawards are cost-settled. • $2.7 million to subrecipients from Immunization Cooperative Agreements grant funds of $24.5 million. Immunization Cooperative Agreement’s subawards are either cost-settled or cost-settled by invoice. Cause: • Lack of adequate subrecipient monitoring procedures • Misinterpretation of Federal regulations Effect: • Noncompliance with subrecipient cash management requirements • Federal programs may not be effectively and efficiently administered. • The Federal government may require the implementation of more stringent subrecipient cash management procedures. Recommendation: We recommend that the Department enhance monitoring procedures to ensure that: • the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes is minimized for cost-settled subawards. • the payment of Federal funds to the subrecipient is for reimbursement purposes, and not for advance payment, for “cost-settled by invoice” subawards. • corrective action plans are established for subrecipients where noncompliance has been identified. Corrective Action Plan: See F-32 Management’s Response: The Department disagrees with this finding. The Department believes that we are in compliance with the requirement for minimizing the time between payments to our subrecipients and the disbursement is as close as administratively feasible. The Department’s procedures related to cash management include: reconciling payments to expenditures quarterly and monitoring subrecipient’s audits. The Department’s subrecipients not only are required to have Single Audits but also are required to have audited financial statements and audited Schedule of Expenditures of Department Awards at a lower threshold than that of the Single Audit through the Department’s rule, Maine Uniform Accounting and Auditing Practices for Community Agencies (MAAP). This rule also defines a major program at a much lower threshold than the Uniform Guidance, so far more programs get tested annually than just Single Audits alone. Contact: Jim Lopatosky, Director, Division of Contract Management, DHHS, 207-287-5075 Auditor’s Concluding Remarks: The subrecipient monitoring procedures outlined in Management’s Response do not ensure that subrecipients are drawing funds in accordance with Federal cash management requirements, as follows: • The Department does not obtain documentation to support the timing of the subrecipient’s expenditures reported on the quarterly expense reports and to substantiate compliance. • Though reviewing the subrecipient’s MAAP audits and Single Audits for findings is beneficial: o monitoring procedures must be performed during the award period; however, MAAP and Single Audits are completed towards the end or after the grant award period. o MAAP audit requirements do not require testing of all subawards. Therefore, the subrecipient’s cash management may or may not be tested by the subrecipient’s auditor. o it is not guaranteed that cash management will be selected for testing by the subrecipient’s auditor; therefore, relying on the subrecipient’s auditor to discover cash management issues is not an adequate procedure to monitor the subrecipient’s compliance with that requirement. Additionally, Management’s Response does not address specific issues identified by OSA cited in the Condition above. Therefore, the Department was noncompliant with Federal regulation 2 CFR 200.305 that requires monitoring cash drawdowns of subrecipients to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual cash disbursement for program purposes is minimized. The finding remains as stated. (State Number: 23-1111-04)
(2023-077) Title: Internal control over subrecipient cash management needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Division of Audit Division of Contract Management Federal Agency: U.S. Department of Agriculture U.S. Department of Health and Human Services Assistance Listing Title: Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) (COVID-19) Immunization Cooperative Agreements (COVID-19) Temporary Assistance for Needy Families (TANF) Assistance Listing Number: 10.557; 93.268; 93.558 Federal Award Identification Number: See E-93 to E-94, E-94 Compliance Area: Cash management Subrecipient monitoring Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.305 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department is required to monitor cash drawdowns by their subrecipients to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes is minimized. Condition: The Department’s Division of Contract Management (DCM) has three methods for providing payments to subrecipients: cost-settled, cost-settled by invoice, and fee-for-service subawards. Cash management requirements are not applicable for fee-for-service subawards. For cost-settled subawards, DCM procedures include making equal advance monthly payments and then reconciling those amounts to the quarterly financial reports submitted by the subrecipient. This procedure does not take into consideration the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes, and therefore is not in compliance with subrecipient cash management requirements. For “cost-settled by invoice” (reimbursement) subawards, DCM procedures do not require subrecipients to include supporting documentation with monthly requests for reimbursement. As a result, DCM does not have assurance whether payments are for reimbursement or advances. During fiscal year 2023, the Department’s Division of Audit (DOA) performed testing over a sample of payments made to 37 subrecipients deemed high risk by the Department; payments were reviewed for compliance with cash management and allowability requirements. The Office of the State Auditor reviewed DOA’s testing and identified: • eight subrecipients where testing was not completed; therefore, compliance with cash management requirements was not determined. • eight subrecipients where documentation to support cash management testing performed could not be provided. As a result, compliance with subrecipient cash management requirements could not be substantiated. • 13 subrecipients were noted as noncompliant with cash management requirements by DOA; however, corrective action plans have not been established for any of the 13 subrecipients. Therefore, as evidenced above, the Department is not in compliance with subrecipient cash management requirements. Context: In fiscal year 2023, the Department provided: • $31.7 million to subrecipients from TANF grant funds of $91.8 million. TANF’s subawards are either cost-settled, cost-settled by invoice, or fee-for-service. • $6 million to subrecipients from WIC grant funds of $22.4 million. All of WIC’s subawards are cost-settled. • $2.7 million to subrecipients from Immunization Cooperative Agreements grant funds of $24.5 million. Immunization Cooperative Agreement’s subawards are either cost-settled or cost-settled by invoice. Cause: • Lack of adequate subrecipient monitoring procedures • Misinterpretation of Federal regulations Effect: • Noncompliance with subrecipient cash management requirements • Federal programs may not be effectively and efficiently administered. • The Federal government may require the implementation of more stringent subrecipient cash management procedures. Recommendation: We recommend that the Department enhance monitoring procedures to ensure that: • the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes is minimized for cost-settled subawards. • the payment of Federal funds to the subrecipient is for reimbursement purposes, and not for advance payment, for “cost-settled by invoice” subawards. • corrective action plans are established for subrecipients where noncompliance has been identified. Corrective Action Plan: See F-32 Management’s Response: The Department disagrees with this finding. The Department believes that we are in compliance with the requirement for minimizing the time between payments to our subrecipients and the disbursement is as close as administratively feasible. The Department’s procedures related to cash management include: reconciling payments to expenditures quarterly and monitoring subrecipient’s audits. The Department’s subrecipients not only are required to have Single Audits but also are required to have audited financial statements and audited Schedule of Expenditures of Department Awards at a lower threshold than that of the Single Audit through the Department’s rule, Maine Uniform Accounting and Auditing Practices for Community Agencies (MAAP). This rule also defines a major program at a much lower threshold than the Uniform Guidance, so far more programs get tested annually than just Single Audits alone. Contact: Jim Lopatosky, Director, Division of Contract Management, DHHS, 207-287-5075 Auditor’s Concluding Remarks: The subrecipient monitoring procedures outlined in Management’s Response do not ensure that subrecipients are drawing funds in accordance with Federal cash management requirements, as follows: • The Department does not obtain documentation to support the timing of the subrecipient’s expenditures reported on the quarterly expense reports and to substantiate compliance. • Though reviewing the subrecipient’s MAAP audits and Single Audits for findings is beneficial: o monitoring procedures must be performed during the award period; however, MAAP and Single Audits are completed towards the end or after the grant award period. o MAAP audit requirements do not require testing of all subawards. Therefore, the subrecipient’s cash management may or may not be tested by the subrecipient’s auditor. o it is not guaranteed that cash management will be selected for testing by the subrecipient’s auditor; therefore, relying on the subrecipient’s auditor to discover cash management issues is not an adequate procedure to monitor the subrecipient’s compliance with that requirement. Additionally, Management’s Response does not address specific issues identified by OSA cited in the Condition above. Therefore, the Department was noncompliant with Federal regulation 2 CFR 200.305 that requires monitoring cash drawdowns of subrecipients to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual cash disbursement for program purposes is minimized. The finding remains as stated. (State Number: 23-1111-04)
(2023-077) Title: Internal control over subrecipient cash management needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Division of Audit Division of Contract Management Federal Agency: U.S. Department of Agriculture U.S. Department of Health and Human Services Assistance Listing Title: Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) (COVID-19) Immunization Cooperative Agreements (COVID-19) Temporary Assistance for Needy Families (TANF) Assistance Listing Number: 10.557; 93.268; 93.558 Federal Award Identification Number: See E-93 to E-94, E-94 Compliance Area: Cash management Subrecipient monitoring Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.305 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department is required to monitor cash drawdowns by their subrecipients to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes is minimized. Condition: The Department’s Division of Contract Management (DCM) has three methods for providing payments to subrecipients: cost-settled, cost-settled by invoice, and fee-for-service subawards. Cash management requirements are not applicable for fee-for-service subawards. For cost-settled subawards, DCM procedures include making equal advance monthly payments and then reconciling those amounts to the quarterly financial reports submitted by the subrecipient. This procedure does not take into consideration the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes, and therefore is not in compliance with subrecipient cash management requirements. For “cost-settled by invoice” (reimbursement) subawards, DCM procedures do not require subrecipients to include supporting documentation with monthly requests for reimbursement. As a result, DCM does not have assurance whether payments are for reimbursement or advances. During fiscal year 2023, the Department’s Division of Audit (DOA) performed testing over a sample of payments made to 37 subrecipients deemed high risk by the Department; payments were reviewed for compliance with cash management and allowability requirements. The Office of the State Auditor reviewed DOA’s testing and identified: • eight subrecipients where testing was not completed; therefore, compliance with cash management requirements was not determined. • eight subrecipients where documentation to support cash management testing performed could not be provided. As a result, compliance with subrecipient cash management requirements could not be substantiated. • 13 subrecipients were noted as noncompliant with cash management requirements by DOA; however, corrective action plans have not been established for any of the 13 subrecipients. Therefore, as evidenced above, the Department is not in compliance with subrecipient cash management requirements. Context: In fiscal year 2023, the Department provided: • $31.7 million to subrecipients from TANF grant funds of $91.8 million. TANF’s subawards are either cost-settled, cost-settled by invoice, or fee-for-service. • $6 million to subrecipients from WIC grant funds of $22.4 million. All of WIC’s subawards are cost-settled. • $2.7 million to subrecipients from Immunization Cooperative Agreements grant funds of $24.5 million. Immunization Cooperative Agreement’s subawards are either cost-settled or cost-settled by invoice. Cause: • Lack of adequate subrecipient monitoring procedures • Misinterpretation of Federal regulations Effect: • Noncompliance with subrecipient cash management requirements • Federal programs may not be effectively and efficiently administered. • The Federal government may require the implementation of more stringent subrecipient cash management procedures. Recommendation: We recommend that the Department enhance monitoring procedures to ensure that: • the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes is minimized for cost-settled subawards. • the payment of Federal funds to the subrecipient is for reimbursement purposes, and not for advance payment, for “cost-settled by invoice” subawards. • corrective action plans are established for subrecipients where noncompliance has been identified. Corrective Action Plan: See F-32 Management’s Response: The Department disagrees with this finding. The Department believes that we are in compliance with the requirement for minimizing the time between payments to our subrecipients and the disbursement is as close as administratively feasible. The Department’s procedures related to cash management include: reconciling payments to expenditures quarterly and monitoring subrecipient’s audits. The Department’s subrecipients not only are required to have Single Audits but also are required to have audited financial statements and audited Schedule of Expenditures of Department Awards at a lower threshold than that of the Single Audit through the Department’s rule, Maine Uniform Accounting and Auditing Practices for Community Agencies (MAAP). This rule also defines a major program at a much lower threshold than the Uniform Guidance, so far more programs get tested annually than just Single Audits alone. Contact: Jim Lopatosky, Director, Division of Contract Management, DHHS, 207-287-5075 Auditor’s Concluding Remarks: The subrecipient monitoring procedures outlined in Management’s Response do not ensure that subrecipients are drawing funds in accordance with Federal cash management requirements, as follows: • The Department does not obtain documentation to support the timing of the subrecipient’s expenditures reported on the quarterly expense reports and to substantiate compliance. • Though reviewing the subrecipient’s MAAP audits and Single Audits for findings is beneficial: o monitoring procedures must be performed during the award period; however, MAAP and Single Audits are completed towards the end or after the grant award period. o MAAP audit requirements do not require testing of all subawards. Therefore, the subrecipient’s cash management may or may not be tested by the subrecipient’s auditor. o it is not guaranteed that cash management will be selected for testing by the subrecipient’s auditor; therefore, relying on the subrecipient’s auditor to discover cash management issues is not an adequate procedure to monitor the subrecipient’s compliance with that requirement. Additionally, Management’s Response does not address specific issues identified by OSA cited in the Condition above. Therefore, the Department was noncompliant with Federal regulation 2 CFR 200.305 that requires monitoring cash drawdowns of subrecipients to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual cash disbursement for program purposes is minimized. The finding remains as stated. (State Number: 23-1111-04)
(2023-077) Title: Internal control over subrecipient cash management needs improvement Prior Year Findings: See schedule of Findings and Questioned Costs for chart/table State Department: Health and Human Services State Bureau: Division of Audit Division of Contract Management Federal Agency: U.S. Department of Agriculture U.S. Department of Health and Human Services Assistance Listing Title: Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) (COVID-19) Immunization Cooperative Agreements (COVID-19) Temporary Assistance for Needy Families (TANF) Assistance Listing Number: 10.557; 93.268; 93.558 Federal Award Identification Number: See E-93 to E-94, E-94 Compliance Area: Cash management Subrecipient monitoring Type of Finding: Material weakness Material noncompliance Questioned Costs: None Criteria: 2 CFR 200.303; 2 CFR 200.305 The Department must establish and maintain effective internal control over Federal awards that provides reasonable assurance that the Department is managing awards in compliance with Federal statutes, regulations, and the terms and conditions of awards. The Department is required to monitor cash drawdowns by their subrecipients to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes is minimized. Condition: The Department’s Division of Contract Management (DCM) has three methods for providing payments to subrecipients: cost-settled, cost-settled by invoice, and fee-for-service subawards. Cash management requirements are not applicable for fee-for-service subawards. For cost-settled subawards, DCM procedures include making equal advance monthly payments and then reconciling those amounts to the quarterly financial reports submitted by the subrecipient. This procedure does not take into consideration the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes, and therefore is not in compliance with subrecipient cash management requirements. For “cost-settled by invoice” (reimbursement) subawards, DCM procedures do not require subrecipients to include supporting documentation with monthly requests for reimbursement. As a result, DCM does not have assurance whether payments are for reimbursement or advances. During fiscal year 2023, the Department’s Division of Audit (DOA) performed testing over a sample of payments made to 37 subrecipients deemed high risk by the Department; payments were reviewed for compliance with cash management and allowability requirements. The Office of the State Auditor reviewed DOA’s testing and identified: • eight subrecipients where testing was not completed; therefore, compliance with cash management requirements was not determined. • eight subrecipients where documentation to support cash management testing performed could not be provided. As a result, compliance with subrecipient cash management requirements could not be substantiated. • 13 subrecipients were noted as noncompliant with cash management requirements by DOA; however, corrective action plans have not been established for any of the 13 subrecipients. Therefore, as evidenced above, the Department is not in compliance with subrecipient cash management requirements. Context: In fiscal year 2023, the Department provided: • $31.7 million to subrecipients from TANF grant funds of $91.8 million. TANF’s subawards are either cost-settled, cost-settled by invoice, or fee-for-service. • $6 million to subrecipients from WIC grant funds of $22.4 million. All of WIC’s subawards are cost-settled. • $2.7 million to subrecipients from Immunization Cooperative Agreements grant funds of $24.5 million. Immunization Cooperative Agreement’s subawards are either cost-settled or cost-settled by invoice. Cause: • Lack of adequate subrecipient monitoring procedures • Misinterpretation of Federal regulations Effect: • Noncompliance with subrecipient cash management requirements • Federal programs may not be effectively and efficiently administered. • The Federal government may require the implementation of more stringent subrecipient cash management procedures. Recommendation: We recommend that the Department enhance monitoring procedures to ensure that: • the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual disbursement for program purposes is minimized for cost-settled subawards. • the payment of Federal funds to the subrecipient is for reimbursement purposes, and not for advance payment, for “cost-settled by invoice” subawards. • corrective action plans are established for subrecipients where noncompliance has been identified. Corrective Action Plan: See F-32 Management’s Response: The Department disagrees with this finding. The Department believes that we are in compliance with the requirement for minimizing the time between payments to our subrecipients and the disbursement is as close as administratively feasible. The Department’s procedures related to cash management include: reconciling payments to expenditures quarterly and monitoring subrecipient’s audits. The Department’s subrecipients not only are required to have Single Audits but also are required to have audited financial statements and audited Schedule of Expenditures of Department Awards at a lower threshold than that of the Single Audit through the Department’s rule, Maine Uniform Accounting and Auditing Practices for Community Agencies (MAAP). This rule also defines a major program at a much lower threshold than the Uniform Guidance, so far more programs get tested annually than just Single Audits alone. Contact: Jim Lopatosky, Director, Division of Contract Management, DHHS, 207-287-5075 Auditor’s Concluding Remarks: The subrecipient monitoring procedures outlined in Management’s Response do not ensure that subrecipients are drawing funds in accordance with Federal cash management requirements, as follows: • The Department does not obtain documentation to support the timing of the subrecipient’s expenditures reported on the quarterly expense reports and to substantiate compliance. • Though reviewing the subrecipient’s MAAP audits and Single Audits for findings is beneficial: o monitoring procedures must be performed during the award period; however, MAAP and Single Audits are completed towards the end or after the grant award period. o MAAP audit requirements do not require testing of all subawards. Therefore, the subrecipient’s cash management may or may not be tested by the subrecipient’s auditor. o it is not guaranteed that cash management will be selected for testing by the subrecipient’s auditor; therefore, relying on the subrecipient’s auditor to discover cash management issues is not an adequate procedure to monitor the subrecipient’s compliance with that requirement. Additionally, Management’s Response does not address specific issues identified by OSA cited in the Condition above. Therefore, the Department was noncompliant with Federal regulation 2 CFR 200.305 that requires monitoring cash drawdowns of subrecipients to ensure that the time elapsing between the payment of Federal funds to the subrecipient and the subrecipient’s actual cash disbursement for program purposes is minimized. The finding remains as stated. (State Number: 23-1111-04)
Federal Agencies: US Department of Energy (DOE); and US Health and Human Services (HHS Program Names: Research & Development Cluster: Office of Science and Financial Assistance Program; Health Center Program Cluster; and HIV-Related Training and Technical Assistance Program ALN #s: 81.049; 93.224; and 93.145 Award Numbers: DOE DE-SC0018420; and 675 HRSA 5U1OHA29293-07; Federal Award Year 2022 - 2023 Questioned Costs: None 2023-006. Finding: Cash Management – Timeliness of Subrecipient Payments The University of Illinois Urbana-Champaign and the University of Illinois Chicago did not make certain subrecipient payments timely and did not have controls in place to prevent late payments. Out of twelve subrecipient payments tested which were made by the University of Illinois at Urbana-Champaign under the Research & Development Cluster, seven payments (58%) were not submitted within 30 days after receipt of the billing from the subrecipient. The payments ranged from 34-197 days after receipt of the billing from the subrecipients. The sample was not intended to be, and was not, a statistically valid sample. Out of fourteen subrecipient payments tested which were made by the University of Illinois Chicago under the Health Center Program Cluster and HIV-Related Training and Technical Assistance Program, three payments (21%) were not submitted within 30 days after receipt of the billing from the subrecipient. The payments ranged from 37-51 days after the receipt of billing from the subrecipients. The sample was not intended to be, and was not, a statistically valid sample. Under Uniform Guidance (2 CFR 200.305(b)(3)), when the reimbursement method is used, the Federal awarding agency or pass-through entity must make payment within 30 calendar days after receipt of the billing, unless the Federal awarding agency or pass-through entity reasonably believes the request to be improper. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure subrecipient payments are made timely. University of Illinois Urbana-Champaign officials stated continued staffing issues and the multi-layered review and approval process contributed to untimely subrecipient payments. University of Illinois Chicago officials stated the administering unit was delayed in submitting invoices due to competing priorities. Additionally, the central approving offices contributed to the delay in one payment due to fiscal year-end close responsibilities. Without proper program cash management processes and procedures, late subrecipient payments could result in the loss of future funding. (Finding Code No. 2023-006; 2022-008) 2023-006. Finding: Cash Management – Timeliness of Subrecipient Payments (Continued) Recommendation: We recommend the University of Illinois Urbana-Champaign and the University of Illinois Chicago review current processes, policies and procedures to minimize the time elapsing between the transfer of federal funds to the subrecipient. University Response: Accepted. The University will take steps to address the recommendation in this finding.
Federal Agencies: US Department of Energy (DOE); and US Health and Human Services (HHS Program Names: Research & Development Cluster: Office of Science and Financial Assistance Program; Health Center Program Cluster; and HIV-Related Training and Technical Assistance Program ALN #s: 81.049; 93.224; and 93.145 Award Numbers: DOE DE-SC0018420; and 675 HRSA 5U1OHA29293-07; Federal Award Year 2022 - 2023 Questioned Costs: None 2023-006. Finding: Cash Management – Timeliness of Subrecipient Payments The University of Illinois Urbana-Champaign and the University of Illinois Chicago did not make certain subrecipient payments timely and did not have controls in place to prevent late payments. Out of twelve subrecipient payments tested which were made by the University of Illinois at Urbana-Champaign under the Research & Development Cluster, seven payments (58%) were not submitted within 30 days after receipt of the billing from the subrecipient. The payments ranged from 34-197 days after receipt of the billing from the subrecipients. The sample was not intended to be, and was not, a statistically valid sample. Out of fourteen subrecipient payments tested which were made by the University of Illinois Chicago under the Health Center Program Cluster and HIV-Related Training and Technical Assistance Program, three payments (21%) were not submitted within 30 days after receipt of the billing from the subrecipient. The payments ranged from 37-51 days after the receipt of billing from the subrecipients. The sample was not intended to be, and was not, a statistically valid sample. Under Uniform Guidance (2 CFR 200.305(b)(3)), when the reimbursement method is used, the Federal awarding agency or pass-through entity must make payment within 30 calendar days after receipt of the billing, unless the Federal awarding agency or pass-through entity reasonably believes the request to be improper. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure subrecipient payments are made timely. University of Illinois Urbana-Champaign officials stated continued staffing issues and the multi-layered review and approval process contributed to untimely subrecipient payments. University of Illinois Chicago officials stated the administering unit was delayed in submitting invoices due to competing priorities. Additionally, the central approving offices contributed to the delay in one payment due to fiscal year-end close responsibilities. Without proper program cash management processes and procedures, late subrecipient payments could result in the loss of future funding. (Finding Code No. 2023-006; 2022-008) 2023-006. Finding: Cash Management – Timeliness of Subrecipient Payments (Continued) Recommendation: We recommend the University of Illinois Urbana-Champaign and the University of Illinois Chicago review current processes, policies and procedures to minimize the time elapsing between the transfer of federal funds to the subrecipient. University Response: Accepted. The University will take steps to address the recommendation in this finding.
Federal Agencies: US Department of Energy (DOE); and US Health and Human Services (HHS Program Names: Research & Development Cluster: Office of Science and Financial Assistance Program; Health Center Program Cluster; and HIV-Related Training and Technical Assistance Program ALN #s: 81.049; 93.224; and 93.145 Award Numbers: DOE DE-SC0018420; and 675 HRSA 5U1OHA29293-07; Federal Award Year 2022 - 2023 Questioned Costs: None 2023-006. Finding: Cash Management – Timeliness of Subrecipient Payments The University of Illinois Urbana-Champaign and the University of Illinois Chicago did not make certain subrecipient payments timely and did not have controls in place to prevent late payments. Out of twelve subrecipient payments tested which were made by the University of Illinois at Urbana-Champaign under the Research & Development Cluster, seven payments (58%) were not submitted within 30 days after receipt of the billing from the subrecipient. The payments ranged from 34-197 days after receipt of the billing from the subrecipients. The sample was not intended to be, and was not, a statistically valid sample. Out of fourteen subrecipient payments tested which were made by the University of Illinois Chicago under the Health Center Program Cluster and HIV-Related Training and Technical Assistance Program, three payments (21%) were not submitted within 30 days after receipt of the billing from the subrecipient. The payments ranged from 37-51 days after the receipt of billing from the subrecipients. The sample was not intended to be, and was not, a statistically valid sample. Under Uniform Guidance (2 CFR 200.305(b)(3)), when the reimbursement method is used, the Federal awarding agency or pass-through entity must make payment within 30 calendar days after receipt of the billing, unless the Federal awarding agency or pass-through entity reasonably believes the request to be improper. Uniform Grant Guidance (2 CFR 200.303) requires nonfederal entities receiving Federal awards establish and maintain internal controls deigned to reasonably ensure compliance with Federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure subrecipient payments are made timely. University of Illinois Urbana-Champaign officials stated continued staffing issues and the multi-layered review and approval process contributed to untimely subrecipient payments. University of Illinois Chicago officials stated the administering unit was delayed in submitting invoices due to competing priorities. Additionally, the central approving offices contributed to the delay in one payment due to fiscal year-end close responsibilities. Without proper program cash management processes and procedures, late subrecipient payments could result in the loss of future funding. (Finding Code No. 2023-006; 2022-008) 2023-006. Finding: Cash Management – Timeliness of Subrecipient Payments (Continued) Recommendation: We recommend the University of Illinois Urbana-Champaign and the University of Illinois Chicago review current processes, policies and procedures to minimize the time elapsing between the transfer of federal funds to the subrecipient. University Response: Accepted. The University will take steps to address the recommendation in this finding.
United States Department of the Treasury Reference Number: 2023-007 Program: 21.026 COVID-19 Homeowner Assistance Fund Program Federal Award Number: HAF0034 Type of Finding: Noncompliance; Significant Deficiency in Internal Controls over Compliance Compliance Requirement: Cash Management; Program Income Condition: During audit testing of the HAF program, we found the following instances of non-compliance. HAF funding received in June 2022 totaling $45 million was deposited into a non-interest-bearing demand account. In March 2023, $21 million was moved to an interest-bearing savings account. Fiscal year 2023 interest earnings of $88,777 on the HAF funds held by DSHA were recognized as program income. Interest earnings in excess of $500 were not annually remitted to the Department of Health and Human Services Payment Management System. Criteria: The HAF program operates in accordance with the requirements of 2 CFR 200.305(b) which requires the following: (8) The non-Federal entity must maintain advance payments of Federal awards in interest-bearing accounts… (9) Interest earned amounts up to $500 per year may be retained by the non-Federal entity for administrative expense. Any additional interest earned on Federal advance payments deposited in interest-bearing accounts must be remitted annually to the Department of Health and Human Services Payment Management System (PMS) through an electronic medium using either Automated Clearing House (ACH) network or a Fedwire Funds Service payment. Questioned Costs: $88,777. Interest income on HAF program funds was initially recorded as program income until it was corrected by an adjusting journal entry. During the audit of the year ended June 30, 2023, interest income was reduced by an audit adjusting journal entry. Effect: HAF program funds were held in a non-interest-bearing account during the period of July 2022 through March 2023. Interest income on HAF program was not timely remitted to the Department of Health and Human Services as required by the federal regulations. Cause: DSHA’s internal controls did not identify HAF program compliance requirements in time to prevent the Conditions noted. Recommendation: We recommend DSHA review the design and implementation of internal controls to address the identified weaknesses in internal control.
Criteria: The federal award program noted above is not subject to the Treasury-State Cash Management Improvement Act agreement and, as such, is subject to 2 CFR 200.305(b), which states: “The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity for direct program or project costs and the proportionate share of any allowable indirect costs. The non-Federal entity must make timely payment to contractors in accordance with the contract provisions.” 2 CFR section 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the non-federal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. The State of Hawaii, Department of Budget and Finance has determined and communicated in Finance Memorandum 20-02 that their standard for an “administratively feasible time period” was 21 calendar days. Condition: During the testing of the Department’s cash management procedures, it was determined that two out of sixty payments tested were not distributed within 21 days of the draw down of funds. For the items tested, the time elapsed between draw down and payment ranged to 28 to 57 days. Context: During the fiscal year ended June 30, 2023, the Department expended $8,398,791 (excluding food expenditures). Cause: The Department draws down federal funds that will be needed based on the expenditures that must be paid. However, since deposits must be posted prior to the processing of payments or disbursing of the funds, it is difficult for the Department to disburse federal funds in accordance with 2 CFR 200.305 (b). Also, the State’s payment process requires all State departments to process payments through DAGS resulting in processing delays. Effect: Noncompliance with federal regulations could result in a loss of funding that may jeopardize the operations of the Department’s federally funded programs. Questioned Costs: None Identification as a Repeat Finding, if applicable: See finding 2022-005 included in the Summary Schedule of Prior Audit Findings. Recommendation: We recommend that the Department work with DAGS and the Department of Budget and Finance to ensure compliance with established standard and timely disbursement of federal funds in accordance with 2 CFR 200.305(b). Views of Responsible Officials and Planned Corrective Action: See Part VI Correction Action Plan.
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.
Federal Program: Research and Development Cluster Grantor Agency: Department of Defense Program Title: Randomized Trial for Pazopanib in HHT-Related Bleeding Federal Award Year: July 1, 2022 - June 30, 2023 Type of finding: • Significant Deficiency in Internal Control over Compliance • Compliance, Other Matter Criteria: 2 CFR 200.303 requires that organizations establish and maintain effective internal controls in place over Federal awards that provide reasonable assurance that the non-Federal entity is managing the award in compliance with Federal statues, regulations, and the terms of and conditions of the Federal award. Additionally, 2 CFR 200.305(b)(1) requires an organization receiving advances on federal funds must maintain or demonstrate the willingness to maintain both written procedures that minimize the time elapsing between the transfer of funds and disbursement by the non-Federal entity, and financial management systems that meet the standards for fund control and accountability as established in this part, and the timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity for direct program or project costs and the proportionate share of any allowable indirect costs. Condition: One reimbursement request submitted to the cognizant agency included expenditures for which the organization had already been reimbursed and, per review of the organization’s SF-425 submissions and accounting records, we noted that Federal funds advanced to the organization were not disbursed in a timely manner. Context: During our review of the organization’s Federal grant revenue reconciliation, an amount classified as an advance on Federal funds was determined to include amounts for which the organization had already requested reimbursement and been paid. Additionally, through review of grant reports, accounting records and inquiries with management, we discovered that the funds the organization had received in advance had not been used for project costs in a timely manner, consistent with 2 CFR 200.305. Cause: During the preparation of the fiscal year-end drawdown request, the data used to determine the amount the organization needed to draw down was not reviewed or reconciled against amounts previously requested and, thus, the drawdown included duplicate and/or incorrect requests for grant funds. Effect or possible effect of condition: Proper internal controls were not in place to mitigate the excess drawdown due to incorrect underlying information and procedures were not in place to minimize the time elapsing between receipt and disbursement of Federal funds. Questioned Costs: None. Repeat Finding: No. Recommendation: We recommend that management strengthen its internal controls over cash management to ensure that amounts submitted for reimbursement are properly reconciled against internal data used to request funding to date. Additionally, we recommend that management develop written procedures to minimize the time elapsed between receipt of Federal funds and the disbursement thereof. Views of responsible officials: This error occurred during a time of transition from one outsourced accounting firm and accounting system to another. The new outsourced accounting systems were not fully in place or automated at the time of the reporting error and there was no internal review process. The outsourced accounting firm is now fully transitioned, all systems are fully integrated with the accounting software, and the accounting team provides the program managers and organization managers with the reports needed to prepare drawdown requests. Cure HHT has developed and fully implemented a corrective action plan. The organization has communicated with the cognizant agency and all expenses eligible for submission for payment through grant funding will be submitted to and paid from the overdrawn funds. Once these funds are depleted, the organization will resume monthly draw submissions for all eligible expenses. The organization will reconcile all eligible expenses prior to requesting grant funds to avoid future duplicate and/or incorrect requests for grant funds. In addition, pending proper internal approvals of all submitted expenses, grant funds received will be dispersed within 3-7 business days from the date received.
CASH MANAGEMENT ACTVITIES Criteria: Non-Federal entities must minimize the time elapsing between the transfer of funds from the U.S. Treasury or pass-through entity and disbursement by the non-Federal entity for direct program or project costs and the proportionate share of allowable indirect costs, whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means (2 CFR section 200.305(b)). Condition: The BOCES submitted three reimbursement requests for its Colorado Department of Education ESSER III ARP 9.5%, RURAL COACTION grant that were not properly supported by the underlying expenses. It appears in two of the instances the draws for the August through October 2023 expenditures and the draw for the November 2023 expenditures included a $1,667 payment that was subsequently charged to a different program. In the third instance, the amount requested differed from the June and 2023 accrued expenditures by $313. We were not able to isolate the cause of the difference. In total there was $3,647 of expenditures that had been reimbursed that were not charged to the grant. The BOCES did recognize that these amounts had been requested in error by year end and recorded an unearned revenue of $3,647 at year end and accordingly are not considered a questioned cost. This was not considered a material non-compliance with the grant requirements. In addition, the BOCES requested a reimbursement of $48,962 for the 23-24 fiscal year from the Colorado Department of Education. When this payment was received by the BOCES from the Department, it was noted as being for the 22-23 fiscal year and was recorded by the BOCES as a receivable and unearned revenue at year end. Context: This finding was noted during the testing of Cash Management procedures related to the BOES Educational Stabilization Funds grant receipts. All other tested grant receipts were based on previously incurred grant expenditures in compliance with the Cash Management requirements and this does not appear to be a recurring issue or a material weakness in controls and was not noted in prior years for the BOCES’ other Federal grants. Effect: The BOCES had requested $3,647 of grant funding that had either not been earned or obligated at the time of the request or was subsequently charged to a different BOCES program. Cause: It appears that the BOCES may have reclassified expenditures from one program to another subsequent to the corresponding draw request. This error may have occurred if the BOCES was generating reimbursement requests based on current month activity rather than relying on year to date report relative to year to date draw requests Recommendation: The BOCES must ensure that internal control procedures are in place to verify that all grant funding requests meet Cash Management requirements. In the BOCES case, this is normally a process whereby reimbursements are requested subsequent to the expenditure of grant funds, The BOCES should establish internal controls whereby the grant manager determines the amount to be requested and this is subsequently verified by finance staff to ensure that total requests do not exceed incurred or obligated expenditures. Management Response: The BOCES will assure internal control procedures are in place to verify that all grant funding requests meet Cash Management requirements. Reimbursements will be requested subsequent to the expenditure of grant funds. The BOCES will establish internal controls whereby the grant manager determines the amount to be requested and this will be subsequently verified by finance staff to ensure that total requests do not exceed incurred or obligated expenditures. A review of the internal control procedures with all grant management and finance staff will assure that this is not a reoccurring issue.
Finding Reference Number: SA2023-003 Cash Management - Draw Down of Community Development Block Grant Funds in Advance of Disbursement Assistance Listing Number: 14.218 Assistance Listing Title: Community Development Block Grant – Entitlement Grants COVID-19 - Community Development Block Grants/Entitlement Grants-CV Federal Agency: Department of Housing and Urban Development Federal Award Identification Number: B-22-MC-06-0010 COVID-19 - B-20-MW-06-0010 Criteria: Under 2 CFR 200.305, a CDBG grantee is prohibited from drawing funds down from its line of credit in advance of cash need, and must minimize the time elapsing between the transfer of funds from its line of credit, and the disbursement of the funds. Advance payment must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the grantee or subrecipient carrying out an eligible activity. Condition: We selected eight non-payroll disbursements related to projects and subgrants for testing and noted two disbursement in April 2023 and June 2023 totaling $268,439 had been charged to the CDBG program in the amount of $282.567. The difference of $14,128 was the retention payable to the vendor, which was not paid in cash until after June 30, 2023. However, the City included the retentions payable in the grant drawdowns filed and received in May 2023 and September 2023. We also noted that total retentions payable charged to the CDBG program for the project were $17,301 as of June 30, 2023. Cause: We understand that the retentions were included in the grant drawdowns due to staff oversight. Questioned Costs: We question costs in the amount of $17,301. Effect: Drawing down funds in advance does not minimize the time elapsing between receipt of funds and expenditures and is not in compliance with the cash management provisions of 2 CFR 200.305 and the CDBG program. Recommendation: The City should not draw down funds until expenditures have been paid in cash and in the event, drawdowns occur prior to disbursement, ensure that the time elapsing between the draw down and the expenditure is minimized. In addition, the City should determine whether the interest earned on the grant funds advanced need to be returned to the grantor. View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.
Finding Reference Number: SA2023-003 Cash Management - Draw Down of Community Development Block Grant Funds in Advance of Disbursement Assistance Listing Number: 14.218 Assistance Listing Title: Community Development Block Grant – Entitlement Grants COVID-19 - Community Development Block Grants/Entitlement Grants-CV Federal Agency: Department of Housing and Urban Development Federal Award Identification Number: B-22-MC-06-0010 COVID-19 - B-20-MW-06-0010 Criteria: Under 2 CFR 200.305, a CDBG grantee is prohibited from drawing funds down from its line of credit in advance of cash need, and must minimize the time elapsing between the transfer of funds from its line of credit, and the disbursement of the funds. Advance payment must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the grantee or subrecipient carrying out an eligible activity. Condition: We selected eight non-payroll disbursements related to projects and subgrants for testing and noted two disbursement in April 2023 and June 2023 totaling $268,439 had been charged to the CDBG program in the amount of $282.567. The difference of $14,128 was the retention payable to the vendor, which was not paid in cash until after June 30, 2023. However, the City included the retentions payable in the grant drawdowns filed and received in May 2023 and September 2023. We also noted that total retentions payable charged to the CDBG program for the project were $17,301 as of June 30, 2023. Cause: We understand that the retentions were included in the grant drawdowns due to staff oversight. Questioned Costs: We question costs in the amount of $17,301. Effect: Drawing down funds in advance does not minimize the time elapsing between receipt of funds and expenditures and is not in compliance with the cash management provisions of 2 CFR 200.305 and the CDBG program. Recommendation: The City should not draw down funds until expenditures have been paid in cash and in the event, drawdowns occur prior to disbursement, ensure that the time elapsing between the draw down and the expenditure is minimized. In addition, the City should determine whether the interest earned on the grant funds advanced need to be returned to the grantor. View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.
2023-008 – Cash Management Federal Agency: U.S. Department of Education Federal Program Title: Education Stabilization Fund – Higher Education Emergency Relief Fund – Student Aid Portion and Institutional Portion Federal Assistance Listing Numbers: 84.425E and 84.425F Federal Award Identification Number and Year: P425F203028 and P425E201388 – all grants were awarded within 2021-2022 and 2022-2023 Award Period: 7/1/2022 – 6/30/2023 Type of Finding: Other Matters and Significant Deficiency in Internal Control Over Compliance Criteria or Specific Requirement: The Code of Federal Regulations, 2 CFR 200.305(b)(1), the non- Federal entity must be paid in advance, provided it maintains or demonstrates the willingness to maintain both written procedures that minimize the time elapsing between the transfer of funds and disbursement by the non-Federal entity, and financial management systems that meet the standards for fund control and accountability as established in this part. Advance payments to a non-Federal entity must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the non-Federal entity in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity for direct program or project costs and the proportionate share of any allowable indirect costs. The non-Federal entity must make timely payment to contractors in accordance with the contract provisions. 200.305(b)(9) Interest earned amounts up to $500 per year may be retained by the non-Federal entity for administrative expense. Any additional interest earned on Federal advance payments deposited in interest-bearing accounts must be remitted annually to the government. A non-federal entity must maintain effective internal control over the federal award (2 CFR 200.303). Condition: The University did not expend all funds drawn down in advance by June 30, 2023, and therefore, they did not minimize the amount of time between the transfer of funds and disbursement. Additionally, more than $500 of interest was earned on the unspent funds and it was not remitted to the federal government as of year-end. Questioned Costs: $75,070 of interest earned as of June 30, 2023 Context: Federal funds were drawn down in advance of expenditure and there were no policies to minimize the time elapsing between the transfer of funds and disbursement by the University. Additionally, the University earned interest greater than $500 which was not remitted as of report date. Cause: University does not have a documented procedure or control that minimizes the time elapsing between the transfer of funds and disbursement or returning earned interest. Effect: Failure to document and adhere to procedures to minimize the time elapsing between transfer and disbursement of funds and the University incurred interest that has not been remitted back to the treasury. Repeat Finding: Yes, 2022-011 Recommendation: We recommend the University formally design and implement controls and monitor advances in federal funds to ensure time elapsing between the transfer of funds and disbursement is minimized and any interest required to be remitted is calculated and returned on a timely basis. Views of Responsible Officials: There is no disagreement with the audit finding and the University is in the process of implementing corrective procedures.
2023-008 – Cash Management Federal Agency: U.S. Department of Education Federal Program Title: Education Stabilization Fund – Higher Education Emergency Relief Fund – Student Aid Portion and Institutional Portion Federal Assistance Listing Numbers: 84.425E and 84.425F Federal Award Identification Number and Year: P425F203028 and P425E201388 – all grants were awarded within 2021-2022 and 2022-2023 Award Period: 7/1/2022 – 6/30/2023 Type of Finding: Other Matters and Significant Deficiency in Internal Control Over Compliance Criteria or Specific Requirement: The Code of Federal Regulations, 2 CFR 200.305(b)(1), the non- Federal entity must be paid in advance, provided it maintains or demonstrates the willingness to maintain both written procedures that minimize the time elapsing between the transfer of funds and disbursement by the non-Federal entity, and financial management systems that meet the standards for fund control and accountability as established in this part. Advance payments to a non-Federal entity must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the non-Federal entity in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity for direct program or project costs and the proportionate share of any allowable indirect costs. The non-Federal entity must make timely payment to contractors in accordance with the contract provisions. 200.305(b)(9) Interest earned amounts up to $500 per year may be retained by the non-Federal entity for administrative expense. Any additional interest earned on Federal advance payments deposited in interest-bearing accounts must be remitted annually to the government. A non-federal entity must maintain effective internal control over the federal award (2 CFR 200.303). Condition: The University did not expend all funds drawn down in advance by June 30, 2023, and therefore, they did not minimize the amount of time between the transfer of funds and disbursement. Additionally, more than $500 of interest was earned on the unspent funds and it was not remitted to the federal government as of year-end. Questioned Costs: $75,070 of interest earned as of June 30, 2023 Context: Federal funds were drawn down in advance of expenditure and there were no policies to minimize the time elapsing between the transfer of funds and disbursement by the University. Additionally, the University earned interest greater than $500 which was not remitted as of report date. Cause: University does not have a documented procedure or control that minimizes the time elapsing between the transfer of funds and disbursement or returning earned interest. Effect: Failure to document and adhere to procedures to minimize the time elapsing between transfer and disbursement of funds and the University incurred interest that has not been remitted back to the treasury. Repeat Finding: Yes, 2022-011 Recommendation: We recommend the University formally design and implement controls and monitor advances in federal funds to ensure time elapsing between the transfer of funds and disbursement is minimized and any interest required to be remitted is calculated and returned on a timely basis. Views of Responsible Officials: There is no disagreement with the audit finding and the University is in the process of implementing corrective procedures.