FINDING 2023-003 Information on the federal program: Subject: Education Stabilization Fund – Advance Draws Federal Agency: Department of Education Federal Program: COVID-19 – Education Stabilization Fund Assistance Listing Number: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425D210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs- Cost Principles Audit Finding: Material Weakness, Other Matters Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR section 200.305 states in part: (b) 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. FINDING 2023-003 (Continued) 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. Condition: The School Corporation requested reimbursement prior to incurring expenditures under federal grant awards. An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Activities Allowed or Unallowed, Allowable Costs- Cost Principles compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. Requesting advance payments prior to incurring allowable costs could result in disallowed costs or an interest obligation owed to the federal government. Questioned Costs: $38,379 of known questioned costs has been identified. This represents the amount of advance payment received and not yet spent at June 30, 2023. Context: During testing disbursements charged to ESF grants, we noted the ESSER I grant award, tracked in Fund 7940, and the ESSER III grant award, tracked in Fund 7932, had a positive cash balance of $2,718 and $35,661, respectively, at June 30, 2023 as a result of advance payments received during fiscal year 2023. The School Corporation submitted a request for reimbursement on November 15, 2022 for $21,745 from the ESSER I grant award and $565,876 from the ESSER III grant award, respectively. These requests for reimbursements were partially supported by disbursements incurred as of the date of the request, however, partially include requests for advance payments that were still not fully expended as of June 30, 2023. Identification as a repeat finding, if applicable: No. Recommendation: We recommended the School Corporation review the internal controls surrounding the reimbursement request process and ensure claims for reimbursements are supported by costs incurred prior to the submission of the request for reimbursement. For any requests for advance payments, the School Corporation should seek pre-approval from the Indiana Department of Education prior to making any requests for advance payments and implement controls to minimize the time between drawing and disbursing federal funds. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2023-003 Information on the federal program: Subject: Education Stabilization Fund – Advance Draws Federal Agency: Department of Education Federal Program: COVID-19 – Education Stabilization Fund Assistance Listing Number: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425D210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs- Cost Principles Audit Finding: Material Weakness, Other Matters Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR section 200.305 states in part: (b) 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. FINDING 2023-003 (Continued) 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. Condition: The School Corporation requested reimbursement prior to incurring expenditures under federal grant awards. An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Activities Allowed or Unallowed, Allowable Costs- Cost Principles compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. Requesting advance payments prior to incurring allowable costs could result in disallowed costs or an interest obligation owed to the federal government. Questioned Costs: $38,379 of known questioned costs has been identified. This represents the amount of advance payment received and not yet spent at June 30, 2023. Context: During testing disbursements charged to ESF grants, we noted the ESSER I grant award, tracked in Fund 7940, and the ESSER III grant award, tracked in Fund 7932, had a positive cash balance of $2,718 and $35,661, respectively, at June 30, 2023 as a result of advance payments received during fiscal year 2023. The School Corporation submitted a request for reimbursement on November 15, 2022 for $21,745 from the ESSER I grant award and $565,876 from the ESSER III grant award, respectively. These requests for reimbursements were partially supported by disbursements incurred as of the date of the request, however, partially include requests for advance payments that were still not fully expended as of June 30, 2023. Identification as a repeat finding, if applicable: No. Recommendation: We recommended the School Corporation review the internal controls surrounding the reimbursement request process and ensure claims for reimbursements are supported by costs incurred prior to the submission of the request for reimbursement. For any requests for advance payments, the School Corporation should seek pre-approval from the Indiana Department of Education prior to making any requests for advance payments and implement controls to minimize the time between drawing and disbursing federal funds. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2023-003 Information on the federal program: Subject: Education Stabilization Fund – Advance Draws Federal Agency: Department of Education Federal Program: COVID-19 – Education Stabilization Fund Assistance Listing Number: 84.425D, 84.425U Federal Award Numbers: S425D200013, S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs- Cost Principles Audit Finding: Material Weakness, Qualified Opinion Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR section 200.305 states in part: (b) 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. (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. Condition: The School Corporation requested reimbursement prior to incurring expenditures under federal grant awards. An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Activities Allowed or Unallowed, Allowable Costs- Cost Principles compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. FINDING 2023-003 (Continued) Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. Requesting advance payments prior to incurring allowable costs could result in disallowed costs or an interest obligation owed to the federal government. Questioned Costs: $37,987 of known questioned costs has been identified. This represents the amount of advance payment received and not yet spent at June 30, 2023. Context: During testing disbursements charged to ESF grants, we noted advance payments were received during the audit period prior to allowable costs being incurred by the School Corporation impacting the following Education Stabilization Fund grant awards: The School Corporation submitted a claim for reimbursement for $43,864 from the ESSER I grant award (84.425D) which was receipted on August 24, 2021. As of August 24, 2021, the School Corporation had incurred $41,674 of grant expenditures. The remaining $2,190 was disbursed on April 12, 2022. The School Corporation submitted a claim for reimbursement for $148,822 from the ESSER II grant award (84.425D) which was receipted on July 28, 2021. There were no expenditures incurred as of the date of the reimbursement request. The School Corporation began incurring expenditures after the advance payment, however, as of June 30, 2022, the School Corporation had an unspent cash balance of $24,613 in the ESSER II fund because of the advance payment. The School Corporation did not request any reimbursements for the period of July 1, 2022 through June 30, 2023 and continued to incur expenditures. As of June 30, 2023, the School Corporation had an u nspent cash balance of $16,145. The School Corporation submitted two claims for reimbursements from the ESSER III grant award (84.425U) during fiscal year 2022. The first claim reimbursement was receipted on November 24, 2021, in the amount of $52,210. The second claim reimbursement request was receipted on June 22, 2022, in the amount of $144,649. The School Corporation had incurred expenditures as of the date of each claim reimbursement requests, however, the amount claimed for reimbursement exceeded expenditures incurred resulting in advance payments being received. As of June 30, 2022, the School Corporation had an unspent cash balance of $88,348 in the ESSER III fund as a result of the advance payment. The School Corporation did not request any claims for reimbursements for the period of July 1, 2022 through June 30, 2023 and continued to incur expenditures. As of June 30, 2023, the School Corporation had an unspent cash balance of $21,842 in the ESSER III fund because of the advance payments. Identification as a repeat finding, if applicable: No. Recommendation: We recommended the School Corporation review the internal controls surrounding the reimbursement request process and ensure claims for reimbursements are supported by costs incurred prior to the submission of the request for reimbursement. For any requests for advance payments, the School Corporation should seek pre-approval from the the Indiana Department of Education prior to making any requests for advance payments and implement controls to minimize the time between drawing and disbursing federal funds. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2023-003 Information on the federal program: Subject: Education Stabilization Fund – Advance Draws Federal Agency: Department of Education Federal Program: COVID-19 – Education Stabilization Fund Assistance Listing Number: 84.425D, 84.425U Federal Award Numbers: S425D200013, S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs- Cost Principles Audit Finding: Material Weakness, Qualified Opinion Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR section 200.305 states in part: (b) 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. (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. Condition: The School Corporation requested reimbursement prior to incurring expenditures under federal grant awards. An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Activities Allowed or Unallowed, Allowable Costs- Cost Principles compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. FINDING 2023-003 (Continued) Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. Requesting advance payments prior to incurring allowable costs could result in disallowed costs or an interest obligation owed to the federal government. Questioned Costs: $37,987 of known questioned costs has been identified. This represents the amount of advance payment received and not yet spent at June 30, 2023. Context: During testing disbursements charged to ESF grants, we noted advance payments were received during the audit period prior to allowable costs being incurred by the School Corporation impacting the following Education Stabilization Fund grant awards: The School Corporation submitted a claim for reimbursement for $43,864 from the ESSER I grant award (84.425D) which was receipted on August 24, 2021. As of August 24, 2021, the School Corporation had incurred $41,674 of grant expenditures. The remaining $2,190 was disbursed on April 12, 2022. The School Corporation submitted a claim for reimbursement for $148,822 from the ESSER II grant award (84.425D) which was receipted on July 28, 2021. There were no expenditures incurred as of the date of the reimbursement request. The School Corporation began incurring expenditures after the advance payment, however, as of June 30, 2022, the School Corporation had an unspent cash balance of $24,613 in the ESSER II fund because of the advance payment. The School Corporation did not request any reimbursements for the period of July 1, 2022 through June 30, 2023 and continued to incur expenditures. As of June 30, 2023, the School Corporation had an u nspent cash balance of $16,145. The School Corporation submitted two claims for reimbursements from the ESSER III grant award (84.425U) during fiscal year 2022. The first claim reimbursement was receipted on November 24, 2021, in the amount of $52,210. The second claim reimbursement request was receipted on June 22, 2022, in the amount of $144,649. The School Corporation had incurred expenditures as of the date of each claim reimbursement requests, however, the amount claimed for reimbursement exceeded expenditures incurred resulting in advance payments being received. As of June 30, 2022, the School Corporation had an unspent cash balance of $88,348 in the ESSER III fund as a result of the advance payment. The School Corporation did not request any claims for reimbursements for the period of July 1, 2022 through June 30, 2023 and continued to incur expenditures. As of June 30, 2023, the School Corporation had an unspent cash balance of $21,842 in the ESSER III fund because of the advance payments. Identification as a repeat finding, if applicable: No. Recommendation: We recommended the School Corporation review the internal controls surrounding the reimbursement request process and ensure claims for reimbursements are supported by costs incurred prior to the submission of the request for reimbursement. For any requests for advance payments, the School Corporation should seek pre-approval from the the Indiana Department of Education prior to making any requests for advance payments and implement controls to minimize the time between drawing and disbursing federal funds. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
FINDING 2023-003 Information on the federal program: Subject: Education Stabilization Fund – Advance Draws Federal Agency: Department of Education Federal Program: COVID-19 – Education Stabilization Fund Assistance Listing Number: 84.425D, 84.425U Federal Award Numbers: S425D200013, S425D210013, S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs- Cost Principles Audit Finding: Material Weakness, Qualified Opinion Criteria: 2 CFR section 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR section 200.305 states in part: (b) 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. (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. Condition: The School Corporation requested reimbursement prior to incurring expenditures under federal grant awards. An effective internal control system was not in place at the School Corporation in order to ensure compliance with requirements related to the grant agreement and the Activities Allowed or Unallowed, Allowable Costs- Cost Principles compliance requirements. Cause: The School Corporation's management had not developed a system of internal controls to ensure compliance with the compliance requirements listed above. FINDING 2023-003 (Continued) Effect: The failure to establish an effective internal control system placed the School Corporation at risk of noncompliance with the grant agreement and the compliance requirements. Requesting advance payments prior to incurring allowable costs could result in disallowed costs or an interest obligation owed to the federal government. Questioned Costs: $37,987 of known questioned costs has been identified. This represents the amount of advance payment received and not yet spent at June 30, 2023. Context: During testing disbursements charged to ESF grants, we noted advance payments were received during the audit period prior to allowable costs being incurred by the School Corporation impacting the following Education Stabilization Fund grant awards: The School Corporation submitted a claim for reimbursement for $43,864 from the ESSER I grant award (84.425D) which was receipted on August 24, 2021. As of August 24, 2021, the School Corporation had incurred $41,674 of grant expenditures. The remaining $2,190 was disbursed on April 12, 2022. The School Corporation submitted a claim for reimbursement for $148,822 from the ESSER II grant award (84.425D) which was receipted on July 28, 2021. There were no expenditures incurred as of the date of the reimbursement request. The School Corporation began incurring expenditures after the advance payment, however, as of June 30, 2022, the School Corporation had an unspent cash balance of $24,613 in the ESSER II fund because of the advance payment. The School Corporation did not request any reimbursements for the period of July 1, 2022 through June 30, 2023 and continued to incur expenditures. As of June 30, 2023, the School Corporation had an u nspent cash balance of $16,145. The School Corporation submitted two claims for reimbursements from the ESSER III grant award (84.425U) during fiscal year 2022. The first claim reimbursement was receipted on November 24, 2021, in the amount of $52,210. The second claim reimbursement request was receipted on June 22, 2022, in the amount of $144,649. The School Corporation had incurred expenditures as of the date of each claim reimbursement requests, however, the amount claimed for reimbursement exceeded expenditures incurred resulting in advance payments being received. As of June 30, 2022, the School Corporation had an unspent cash balance of $88,348 in the ESSER III fund as a result of the advance payment. The School Corporation did not request any claims for reimbursements for the period of July 1, 2022 through June 30, 2023 and continued to incur expenditures. As of June 30, 2023, the School Corporation had an unspent cash balance of $21,842 in the ESSER III fund because of the advance payments. Identification as a repeat finding, if applicable: No. Recommendation: We recommended the School Corporation review the internal controls surrounding the reimbursement request process and ensure claims for reimbursements are supported by costs incurred prior to the submission of the request for reimbursement. For any requests for advance payments, the School Corporation should seek pre-approval from the the Indiana Department of Education prior to making any requests for advance payments and implement controls to minimize the time between drawing and disbursing federal funds. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and has prepared a corrective action plan.
Assistance Listing Number(s), Federal Agency and Program Name: 84.031F and 84.031C; United States Department of Education (ED) , and 47.076; National Science Foundation (NSF), Research and Development Cluster. Finding Type: Noncompliance and significant deficiency in internal control over compliance relating to cash management. Criteria: The Uniform Guidance requires the University to manage grant payments to minimize the time elapsing between the transfer of funds received from the federal government and disbursement by a recipient and/or to draw funds on an as-needed basis within three days before the funds are needed. Statement of Condition: The University withdrew the current year budget amount for one grant for $176,615 before incurring allowable expenses and did not disburse the funds within three days. The University kept the funds in an insured account and used the funds on eligible expenses by June 30, 2023. The internal controls over cash management were not operating effectively. Questioned Costs: Interest earned on the advanced funds during 2023 did not exceed an amount that was necessary to return to the funders. Context: The internal controls over cash management did not prevent, or detect and correct, the University from drawing an advance on a federal award prior to incurring, or within three days of paying for, allowable expenses. There was one grant that had a draw of $176,615 that was not in compliance with the cash management requirement. Cause: The University did not have the proper controls in place to ensure that cash advances were spent on allowable grant expenditures within a timely manner of the draw down of grant funds. Effect: The University was not in compliance with cash management requirements. The University also could have earned interest on the advance that would be necessary to return to the funders. Recommendation: We recommend management revisit its processes and controls over the preparation and review of draw downs to ensure the draw downs are supported by expenses prior to the draw down or funds are disbursed within 3 days of any advance draws. Management’s Response: A desk review of ALN #47.076 National Science Foundation (NSF) occured in August 2023 and identified 17.76% of the current year annual budget amount had been drawn down in advance of expenditures incurred and not fully utilized as indicated in 2 CFR 200.305 Federal Payments. MMU has discontinued the practice of drawing down funds in advance based on the budgeted amount for each year of the project (as prior grants allowed). Instead, MMU will draw down funds based on immediate cash requirements each month of the project after expenditures are incurred, reflected in the general ledger system and reviewed by the Principal Investigator (PI)/Co Principal Investigator (Co-PI) and Senior Accountant. The Business Office has implemented a cash management control as follows: review financial requirements upon grant submission and again when awarded, adjust accounting controls according to grantor requirements, actively participate in monthly review of financial reporting to grantor and document all financial activities as required.
Assistance Listing Number(s), Federal Agency and Program Name: 84.031F and 84.031C; United States Department of Education (ED) , and 47.076; National Science Foundation (NSF), Research and Development Cluster. Finding Type: Noncompliance and significant deficiency in internal control over compliance relating to cash management. Criteria: The Uniform Guidance requires the University to manage grant payments to minimize the time elapsing between the transfer of funds received from the federal government and disbursement by a recipient and/or to draw funds on an as-needed basis within three days before the funds are needed. Statement of Condition: The University withdrew the current year budget amount for one grant for $176,615 before incurring allowable expenses and did not disburse the funds within three days. The University kept the funds in an insured account and used the funds on eligible expenses by June 30, 2023. The internal controls over cash management were not operating effectively. Questioned Costs: Interest earned on the advanced funds during 2023 did not exceed an amount that was necessary to return to the funders. Context: The internal controls over cash management did not prevent, or detect and correct, the University from drawing an advance on a federal award prior to incurring, or within three days of paying for, allowable expenses. There was one grant that had a draw of $176,615 that was not in compliance with the cash management requirement. Cause: The University did not have the proper controls in place to ensure that cash advances were spent on allowable grant expenditures within a timely manner of the draw down of grant funds. Effect: The University was not in compliance with cash management requirements. The University also could have earned interest on the advance that would be necessary to return to the funders. Recommendation: We recommend management revisit its processes and controls over the preparation and review of draw downs to ensure the draw downs are supported by expenses prior to the draw down or funds are disbursed within 3 days of any advance draws. Management’s Response: A desk review of ALN #47.076 National Science Foundation (NSF) occured in August 2023 and identified 17.76% of the current year annual budget amount had been drawn down in advance of expenditures incurred and not fully utilized as indicated in 2 CFR 200.305 Federal Payments. MMU has discontinued the practice of drawing down funds in advance based on the budgeted amount for each year of the project (as prior grants allowed). Instead, MMU will draw down funds based on immediate cash requirements each month of the project after expenditures are incurred, reflected in the general ledger system and reviewed by the Principal Investigator (PI)/Co Principal Investigator (Co-PI) and Senior Accountant. The Business Office has implemented a cash management control as follows: review financial requirements upon grant submission and again when awarded, adjust accounting controls according to grantor requirements, actively participate in monthly review of financial reporting to grantor and document all financial activities as required.
Assistance Listing Number(s), Federal Agency and Program Name: 84.031F and 84.031C; United States Department of Education (ED) , and 47.076; National Science Foundation (NSF), Research and Development Cluster. Finding Type: Noncompliance and significant deficiency in internal control over compliance relating to cash management. Criteria: The Uniform Guidance requires the University to manage grant payments to minimize the time elapsing between the transfer of funds received from the federal government and disbursement by a recipient and/or to draw funds on an as-needed basis within three days before the funds are needed. Statement of Condition: The University withdrew the current year budget amount for one grant for $176,615 before incurring allowable expenses and did not disburse the funds within three days. The University kept the funds in an insured account and used the funds on eligible expenses by June 30, 2023. The internal controls over cash management were not operating effectively. Questioned Costs: Interest earned on the advanced funds during 2023 did not exceed an amount that was necessary to return to the funders. Context: The internal controls over cash management did not prevent, or detect and correct, the University from drawing an advance on a federal award prior to incurring, or within three days of paying for, allowable expenses. There was one grant that had a draw of $176,615 that was not in compliance with the cash management requirement. Cause: The University did not have the proper controls in place to ensure that cash advances were spent on allowable grant expenditures within a timely manner of the draw down of grant funds. Effect: The University was not in compliance with cash management requirements. The University also could have earned interest on the advance that would be necessary to return to the funders. Recommendation: We recommend management revisit its processes and controls over the preparation and review of draw downs to ensure the draw downs are supported by expenses prior to the draw down or funds are disbursed within 3 days of any advance draws. Management’s Response: A desk review of ALN #47.076 National Science Foundation (NSF) occured in August 2023 and identified 17.76% of the current year annual budget amount had been drawn down in advance of expenditures incurred and not fully utilized as indicated in 2 CFR 200.305 Federal Payments. MMU has discontinued the practice of drawing down funds in advance based on the budgeted amount for each year of the project (as prior grants allowed). Instead, MMU will draw down funds based on immediate cash requirements each month of the project after expenditures are incurred, reflected in the general ledger system and reviewed by the Principal Investigator (PI)/Co Principal Investigator (Co-PI) and Senior Accountant. The Business Office has implemented a cash management control as follows: review financial requirements upon grant submission and again when awarded, adjust accounting controls according to grantor requirements, actively participate in monthly review of financial reporting to grantor and document all financial activities as required.
FA 2023-001 Improve Controls over Expenditures Compliance Requirement: Activities Allowed or Unallowed Allowable Costs/Cost Principles Cash Management Program Income Internal Control Impact: Significant Deficiency Compliance Impact: Nonmaterial Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Number and Title: COVID-19 – 84.425U – American Rescue Plan Elementary and Secondary School Emergency Relief Fund Federal Award Number: S425U210012 Questioned Costs: $309,623 Description: The policies and procedures of the School District were insufficient to provide adequate internal controls over expenditures as it relates to the Elementary and Secondary School Emergency Relief Fund program. Background Information: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The CARES Act was designed to mitigate the economic effects of the COVID-19 pandemic in a variety of ways, including providing additional funding for local educational agencies (LEAs) navigating the impact of the COVID-19 outbreak. Provisions included in Title VIII of the CARES Act created the Education Stabilization Fund to provide financial resources to educational entities to prevent, prepare for, and respond to coronavirus. The CARES Act allocated $30.75 billion, the Coronavirus Response and Relief Supplemental Appropriations Act allocated an additional $81.9 billion, and the American Rescue Plan Act added $165.1 billion in funding to the Education Stabilization Fund. Multiple Education Stabilization Fund subprograms were created and allotted funding through the various COVID-19-related legislation. Of these programs, the Elementary and Secondary School Emergency Relief (ESSER) Fund was created to address the impact that COVID-19 has had, and continues to have, on elementary and secondary schools across the nation. ESSER funding was granted to the Georgia Department of Education (GaDOE) by the U.S. Department of Education (ED). GaDOE is responsible for distributing funds to LEAs and overseeing the expenditure of funds by LEAs. ESSER funds totaling $18,867,709 were expended and reported on the Clarke County Board of Education’s Schedule of Expenditures of Federal Awards (SEFA) for fiscal year 2023. Criteria: As a recipient of federal awards, the School District is required to establish and maintain effective internal control over federal awards that provides reasonable assurance of managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards pursuant to Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), Section 200.303 – Internal Controls. Provisions included in the Uniform Guidance, Section 200.403 – Factors Affecting Allowability of Costs state that “costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles, (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items, (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity… (g) Be adequately documented…” In addition, provisions included in the Uniform Guidance, Section 202.403 – Reasonable Costs state that “a cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to: (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm’s-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award… (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award’s cost.” Furthermore, provisions included in the Uniform Guidance, Section 200.305(b)(5) state that “To the extent available, the non-Federal entity must disburse funds available from program income… before requesting additional cash payments.” Lastly, provisions included in the Uniform Guidance, Section 200.307(e)(1) state that “ordinarily program income must be deducted from total allowable costs to determine the net allowable costs. Program income must be used for current costs unless the Federal awarding agency authorizes otherwise…” Condition: Auditors performed a review of expenditure activity associated with the ESSER program to determine if appropriate internal controls were implemented and applicable compliance requirements were met. This testing revealed that ESSER funds were utilized to cover after-school program expenditures that exceeded net allowable costs. The School District incurred $1,765,203 in expenditures and received $913,744 in program income related to the after-school program. Based upon this activity, the net allowable costs that could have been funded by the ESSER program totaled $851,459; however, the School District received $1,161,082 in ESSER funding for this purpose during the period under review. Therefore, expenditures totaling $309,623 were deemed unallowable for the ESSER program, and it was noted that excessive cash drawdowns in this same amount were made. Questioned Costs: Known questioned costs of $309,623 identified for unallowable expenditures. These known questioned costs related to expenditures that were not tested as part of a sample, and therefore, should not be projected to a population to determine likely questioned costs. Cause: Per management personnel, schools experienced a significant shortfall in revenue with the closure of schools due to the pandemic. By covering the after-school program payroll with ESSER funds, the School District was attempting to reestablish a fund balance for their after-school program, which should be self-sustaining, and was unaware that they could not use ESSER funds to accomplish this. Effect: The School District is not in compliance with the Uniform Guidance, ED, or GaDOE guidance related to the ESSER program. Failure to ensure that appropriate policies and procedures are followed when expending federal funds may expose the School District to unnecessary financial strains and shortages as GaDOE may require the School District to return funds associated with unallowable expenditures. Recommendation: The School District should review current internal control procedures related to ESSER program expenditures. Where vulnerable, the School District should develop and/or modify its policies and procedures to ensure that expenditures are allowable and program income is expended prior to requesting additional cash payments from federal funds. In addition, the School District should implement a monitoring process to ensure that all expenditures are compliant with applicable policies and procedures. Views of Responsible Officials: We concur with this 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'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.