2023-003: Material weakness in Internal Control / Material Noncompliance – Cash Management (repeat comment) Federal Program: WIOA Cluster (ALN 17.258/17.259/17.278) Criteria: 2 CFR 200.305(b) states, in part: “For Non-Federal entities payment 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…” 2 CFR 200.305(b)(2)(ii) states, in part: “Non-Federal entities must be authorized to submit requests for advance payments and reimbursements….”. 2 CFR 200.302(b)(6) states, in part: “the financial management system of each non-Federal entity must provide for written procedures to implement the requirements of 2 CFR 200.305 – Federal Payment”. Condition: 1) The Consortium requested funds in advance of when the related disbursements were made, 2) the basis for the advances (requests) were not supported by appropriate documentation, and 3) authorization for requesting funds in advance was not obtained. Context: The amount overdrawn for the WIOA Cluster totaled $360,671. It was noted that other programs were also overdrawn as follows: Temporary Assistance for Needy Families Cluster (ALN 93.958): $55,725, Employment Services Cluster (ALN 17.207): $1,389, and Unemployment Insurance (ALN 17.225): $18,660. The total amount of funds overdrawn as of year-end totaled $436,445. Cause: Management oversight. Effect: Funds were requested and received in advance of when the related payments were disbursed without obtaining authorization for advance payments, and without properly documenting the basis for the requested funds. Consequently, the Consortium did not 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. Recommendation: The Consortium should carefully review their policies and procedures and make the necessary changes to assure that cash draws are based on expenditures already incurred and they are supported by transactions recorded in the books and records of the Consortium. Views of Responsible Officials: We agree with the finding. Michigan Works! Southeast will continue to ensure it adheres to the policy standards for cash on hand time limits.
2023-003: Material weakness in Internal Control / Material Noncompliance – Cash Management (repeat comment) Federal Program: WIOA Cluster (ALN 17.258/17.259/17.278) Criteria: 2 CFR 200.305(b) states, in part: “For Non-Federal entities payment 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…” 2 CFR 200.305(b)(2)(ii) states, in part: “Non-Federal entities must be authorized to submit requests for advance payments and reimbursements….”. 2 CFR 200.302(b)(6) states, in part: “the financial management system of each non-Federal entity must provide for written procedures to implement the requirements of 2 CFR 200.305 – Federal Payment”. Condition: 1) The Consortium requested funds in advance of when the related disbursements were made, 2) the basis for the advances (requests) were not supported by appropriate documentation, and 3) authorization for requesting funds in advance was not obtained. Context: The amount overdrawn for the WIOA Cluster totaled $360,671. It was noted that other programs were also overdrawn as follows: Temporary Assistance for Needy Families Cluster (ALN 93.958): $55,725, Employment Services Cluster (ALN 17.207): $1,389, and Unemployment Insurance (ALN 17.225): $18,660. The total amount of funds overdrawn as of year-end totaled $436,445. Cause: Management oversight. Effect: Funds were requested and received in advance of when the related payments were disbursed without obtaining authorization for advance payments, and without properly documenting the basis for the requested funds. Consequently, the Consortium did not 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. Recommendation: The Consortium should carefully review their policies and procedures and make the necessary changes to assure that cash draws are based on expenditures already incurred and they are supported by transactions recorded in the books and records of the Consortium. Views of Responsible Officials: We agree with the finding. Michigan Works! Southeast will continue to ensure it adheres to the policy standards for cash on hand time limits.
2023-003: Material weakness in Internal Control / Material Noncompliance – Cash Management (repeat comment) Federal Program: WIOA Cluster (ALN 17.258/17.259/17.278) Criteria: 2 CFR 200.305(b) states, in part: “For Non-Federal entities payment 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…” 2 CFR 200.305(b)(2)(ii) states, in part: “Non-Federal entities must be authorized to submit requests for advance payments and reimbursements….”. 2 CFR 200.302(b)(6) states, in part: “the financial management system of each non-Federal entity must provide for written procedures to implement the requirements of 2 CFR 200.305 – Federal Payment”. Condition: 1) The Consortium requested funds in advance of when the related disbursements were made, 2) the basis for the advances (requests) were not supported by appropriate documentation, and 3) authorization for requesting funds in advance was not obtained. Context: The amount overdrawn for the WIOA Cluster totaled $360,671. It was noted that other programs were also overdrawn as follows: Temporary Assistance for Needy Families Cluster (ALN 93.958): $55,725, Employment Services Cluster (ALN 17.207): $1,389, and Unemployment Insurance (ALN 17.225): $18,660. The total amount of funds overdrawn as of year-end totaled $436,445. Cause: Management oversight. Effect: Funds were requested and received in advance of when the related payments were disbursed without obtaining authorization for advance payments, and without properly documenting the basis for the requested funds. Consequently, the Consortium did not 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. Recommendation: The Consortium should carefully review their policies and procedures and make the necessary changes to assure that cash draws are based on expenditures already incurred and they are supported by transactions recorded in the books and records of the Consortium. Views of Responsible Officials: We agree with the finding. Michigan Works! Southeast will continue to ensure it adheres to the policy standards for cash on hand time limits.
2023-003: Material weakness in Internal Control / Material Noncompliance – Cash Management (repeat comment) Federal Program: WIOA Cluster (ALN 17.258/17.259/17.278) Criteria: 2 CFR 200.305(b) states, in part: “For Non-Federal entities payment 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…” 2 CFR 200.305(b)(2)(ii) states, in part: “Non-Federal entities must be authorized to submit requests for advance payments and reimbursements….”. 2 CFR 200.302(b)(6) states, in part: “the financial management system of each non-Federal entity must provide for written procedures to implement the requirements of 2 CFR 200.305 – Federal Payment”. Condition: 1) The Consortium requested funds in advance of when the related disbursements were made, 2) the basis for the advances (requests) were not supported by appropriate documentation, and 3) authorization for requesting funds in advance was not obtained. Context: The amount overdrawn for the WIOA Cluster totaled $360,671. It was noted that other programs were also overdrawn as follows: Temporary Assistance for Needy Families Cluster (ALN 93.958): $55,725, Employment Services Cluster (ALN 17.207): $1,389, and Unemployment Insurance (ALN 17.225): $18,660. The total amount of funds overdrawn as of year-end totaled $436,445. Cause: Management oversight. Effect: Funds were requested and received in advance of when the related payments were disbursed without obtaining authorization for advance payments, and without properly documenting the basis for the requested funds. Consequently, the Consortium did not 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. Recommendation: The Consortium should carefully review their policies and procedures and make the necessary changes to assure that cash draws are based on expenditures already incurred and they are supported by transactions recorded in the books and records of the Consortium. Views of Responsible Officials: We agree with the finding. Michigan Works! Southeast will continue to ensure it adheres to the policy standards for cash on hand time limits.
2023-003 – Cash Management Information on the Federal Program: United States Department of Health and Human Services Assistance Listing Number: 93.391Assistance Listing Name: Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Health or Healthcare Crises Pass-through Awards under the Uniform Guidance Requirements: Criteria – CFR § 200.305 Federal payment. section (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 or redemption of checks, warrants, or payment by other means.” Further, “The timing and amount of advance payments must be as close as 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,” and “To the extent available, the non-Federal entity must disburse funds available from program income (including repayments to a revolving fund), rebates, refunds, contract settlements, audit recoveries and interest earned on such funds before requesting additional cash payments. Condition – During our testing of payments received from the Ohio Department of Health, we noted that ODH funded $300,000 to the Organization, however, costs incurred through July 30, 2023 were approximately $195,000 per the SEFA. Management was unable to support the difference between total expenditures reported in the GMIS YTD June Report to the amounts reported in the SEFA, and therefore, it is unknown if the costs were incurred prior to requesting additional cash payments. Cause – United Way of Greater Cleveland does not have policies or procedures that address minimizing the time between receipt funds from the Ohio Department of Health and disbursement for programmatic expenses. Effect – United Way of Greater Cleveland is not in compliance with the provisions of CFR 200.305, in that, the Organization did not adhere to requirements to minimize the time elapsing between the transfer of funds and disbursement by the recipient, or that funds were disbursed prior to requesting additional cash payments. Questioned Costs – None Context – We sampled 7 cash receipts for the OHIZ program, noting a total of $300,000 received under the program as compared to expenditures of approximately $195,000, for which there were no policies or procedures to minimize the time elapsing between receipt and disbursement of such funds. Repeat Finding – This is not a repeat finding. Recommendation – We recommend that United Way of Greater Cleveland draft formal policies and procedures whereby federal funds received in advance of the expenditure are segregated and expended in a manner to minimize the time between date of receipt and date of disbursement. Views of Responsible Officials -
Finding: 2023-004 –Significant Deficiency in Internal Control over Compliance and Noncompliance – Cash Management Identification of federal program: 93.243 Substance Abuse and Mental Health Services Projects of Regional and National Significance Criteria: For purposes of the federal government, 2 CFR Chapter II part 200 Subpart D §200.305 requires 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. Condition: Cash draw downs and receipt of federal funds exceeded the amount expended and ultimately were required to be returned. Cause: The Organization did not have controls in place to minimize the time elapsing between the transfer of funds from the United States Treasury and the disbursement of the funds by the Organization. Effect or potential effect: The Organization is not in compliance with 2 CFR §200.305 Questioned Costs: None Context: For this program, a sample of three drawdowns were selected. Two of the three drawdowns exceeded the amount of expenditures incurred at the time of the drawdown and cumulatively through the period of performance requiring the funds to be returned. Identification of Repeat Finding: Not applicable. Recommendations: Management should implement controls to minimize the time elapsing between the transfer of funds from the United States Treasury and the disbursement of the funds by the Organization. Views of Responsible Officials: Please refer to Corrective Action Plan.
Finding 2023-014 – C. Cash Management Information on Federal Program(s) – Research and Development Cluster (ALN 43.009, ALN 93.859) Criteria or Specific Requirement - 2 CFR §200.305(b)(1) indicates that advance payments to a non-Federal entity must be limited to the minimum amounts needed and be timed to be in accordance with 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 administratively feasible to the actual disbursements by the non-Federal entity for direct program or project costs and the proportionate share of any allowable indirect costs. Condition – The University was unable to reconcile amounts drawn with amounts expended; the total amount drawn exceeded the amount expended for the fiscal year. Certain program funds were also moved out the bank account used for federal draws and comingled with nonfederal dollars in the University’s operating bank account which resulted in a portion of the funds being used for non-program purposes. Upon identifying this issue, the University subsequent repaid the funds back, however this did not occur in a timely fashion. Cause - Administrative oversight and insufficient internal control. Effect or Potential Effect – Noncompliance with cash management requirements. Questioned Costs – None. Context – For 4 of 6 drawdowns selected for testing, the University was unable to reconcile the amounts drawn with the amounts expended to evidence that the funds were used in a timely manner. Indication of Repeat Finding - No similar findings noted in the prior year. Recommendation – We recommend that the University enhance its internal controls over compliance to ensure that documentation supporting its draws is retained and that time elapsed between transfer and disbursement of federal funds is minimized. We also recommend that the University enhances its internal controls to ensure funds are not comingled with non-program funds to prevent program funds from being used for non-program purposes. Views of Responsible Officials – The University acknowledges that the internal controls surrounding the cash management of the Federal Research and Development Programs was not in compliance for federal standards. The University is in the process of enhancing the internal controls and cash management procedures to prevent this from happening in the future. Going forward all federal grant funds that are allocated for the Challenger Learning Center will go directly into the appropriate bank account and will be drawn down and spent in the correct time frame. When operating expenses are incurred for the Challenger Learning Center the payment will be processed from the University’s general checking and the federal grant funds will reimburse the University that day. The same is also true for the payroll expenses incurred by the Challenger Learning Center. Wages will be paid out of the university’s general checking account and then reimbursed to the university from the bank account that hold the federal grant funds.
Finding 2023-014 – C. Cash Management Information on Federal Program(s) – Research and Development Cluster (ALN 43.009, ALN 93.859) Criteria or Specific Requirement - 2 CFR §200.305(b)(1) indicates that advance payments to a non-Federal entity must be limited to the minimum amounts needed and be timed to be in accordance with 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 administratively feasible to the actual disbursements by the non-Federal entity for direct program or project costs and the proportionate share of any allowable indirect costs. Condition – The University was unable to reconcile amounts drawn with amounts expended; the total amount drawn exceeded the amount expended for the fiscal year. Certain program funds were also moved out the bank account used for federal draws and comingled with nonfederal dollars in the University’s operating bank account which resulted in a portion of the funds being used for non-program purposes. Upon identifying this issue, the University subsequent repaid the funds back, however this did not occur in a timely fashion. Cause - Administrative oversight and insufficient internal control. Effect or Potential Effect – Noncompliance with cash management requirements. Questioned Costs – None. Context – For 4 of 6 drawdowns selected for testing, the University was unable to reconcile the amounts drawn with the amounts expended to evidence that the funds were used in a timely manner. Indication of Repeat Finding - No similar findings noted in the prior year. Recommendation – We recommend that the University enhance its internal controls over compliance to ensure that documentation supporting its draws is retained and that time elapsed between transfer and disbursement of federal funds is minimized. We also recommend that the University enhances its internal controls to ensure funds are not comingled with non-program funds to prevent program funds from being used for non-program purposes. Views of Responsible Officials – The University acknowledges that the internal controls surrounding the cash management of the Federal Research and Development Programs was not in compliance for federal standards. The University is in the process of enhancing the internal controls and cash management procedures to prevent this from happening in the future. Going forward all federal grant funds that are allocated for the Challenger Learning Center will go directly into the appropriate bank account and will be drawn down and spent in the correct time frame. When operating expenses are incurred for the Challenger Learning Center the payment will be processed from the University’s general checking and the federal grant funds will reimburse the University that day. The same is also true for the payroll expenses incurred by the Challenger Learning Center. Wages will be paid out of the university’s general checking account and then reimbursed to the university from the bank account that hold the federal grant funds.
Federal Agency: Various Federal Program Title: Research and Development Cluster Assistance Listing Number: 43.008 and 93.433 Federal Award Identification Number: NNX15AP43A-2023, 90RTEM0009-2023 Award Period: 7/1/22-6/30/23 Type of Finding: Significant Deficiency in Internal Control over Compliance; Compliance, Other Matters Condition: The University did not make payments to subrecipients within 30 days after receipt of invoices. Criteria or specific requirement: Uniform Grant 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. Per 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. Context: During our testing of 28 subrecipient payments, from a statistically valid sample, we identified 2 payments were not submitted within 30 days after receiving invoice from the subrecipients. One payment was 39 days beyond the required 30 days and the second payment was 565 days beyond the required 30 days. Questioned costs: N/A Cause: The University did not have an effective control in place to ensure subrecipient payments were paid timely. Effect: The University was not in compliance with the regulation to make payments to subrecipients within the required timeframe. Repeat finding: No Recommendation: We recommend that the University review and update current procedures to ensure subrecipient payments are paid timely. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.
Federal Agency: Various Federal Program Title: Research and Development Cluster Assistance Listing Number: 43.008 and 93.433 Federal Award Identification Number: NNX15AP43A-2023, 90RTEM0009-2023 Award Period: 7/1/22-6/30/23 Type of Finding: Significant Deficiency in Internal Control over Compliance; Compliance, Other Matters Condition: The University did not make payments to subrecipients within 30 days after receipt of invoices. Criteria or specific requirement: Uniform Grant 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. Per 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. Context: During our testing of 28 subrecipient payments, from a statistically valid sample, we identified 2 payments were not submitted within 30 days after receiving invoice from the subrecipients. One payment was 39 days beyond the required 30 days and the second payment was 565 days beyond the required 30 days. Questioned costs: N/A Cause: The University did not have an effective control in place to ensure subrecipient payments were paid timely. Effect: The University was not in compliance with the regulation to make payments to subrecipients within the required timeframe. Repeat finding: No Recommendation: We recommend that the University review and update current procedures to ensure subrecipient payments are paid timely. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.
Federal Agency: Various Federal Program Title: Research and Development Cluster Assistance Listing Number: 43.008 and 93.433 Federal Award Identification Number: NNX15AP43A-2023, 90RTEM0009-2023 Award Period: 7/1/22-6/30/23 Type of Finding: Significant Deficiency in Internal Control over Compliance; Compliance, Other Matters Condition: The University did not make payments to subrecipients within 30 days after receipt of invoices. Criteria or specific requirement: Uniform Grant 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. Per 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. Context: During our testing of 28 subrecipient payments, from a statistically valid sample, we identified 2 payments were not submitted within 30 days after receiving invoice from the subrecipients. One payment was 39 days beyond the required 30 days and the second payment was 565 days beyond the required 30 days. Questioned costs: N/A Cause: The University did not have an effective control in place to ensure subrecipient payments were paid timely. Effect: The University was not in compliance with the regulation to make payments to subrecipients within the required timeframe. Repeat finding: No Recommendation: We recommend that the University review and update current procedures to ensure subrecipient payments are paid timely. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.
Federal Agency: Various Federal Program Title: Research and Development Cluster Assistance Listing Number: 43.008 and 93.433 Federal Award Identification Number: NNX15AP43A-2023, 90RTEM0009-2023 Award Period: 7/1/22-6/30/23 Type of Finding: Significant Deficiency in Internal Control over Compliance; Compliance, Other Matters Condition: The University did not make payments to subrecipients within 30 days after receipt of invoices. Criteria or specific requirement: Uniform Grant 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. Per 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. Context: During our testing of 28 subrecipient payments, from a statistically valid sample, we identified 2 payments were not submitted within 30 days after receiving invoice from the subrecipients. One payment was 39 days beyond the required 30 days and the second payment was 565 days beyond the required 30 days. Questioned costs: N/A Cause: The University did not have an effective control in place to ensure subrecipient payments were paid timely. Effect: The University was not in compliance with the regulation to make payments to subrecipients within the required timeframe. Repeat finding: No Recommendation: We recommend that the University review and update current procedures to ensure subrecipient payments are paid timely. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.
Federal Agency: Various Federal Program Title: Research and Development Cluster Assistance Listing Number: 43.008 and 93.433 Federal Award Identification Number: NNX15AP43A-2023, 90RTEM0009-2023 Award Period: 7/1/22-6/30/23 Type of Finding: Significant Deficiency in Internal Control over Compliance; Compliance, Other Matters Condition: The University did not make payments to subrecipients within 30 days after receipt of invoices. Criteria or specific requirement: Uniform Grant 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. Per 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. Context: During our testing of 28 subrecipient payments, from a statistically valid sample, we identified 2 payments were not submitted within 30 days after receiving invoice from the subrecipients. One payment was 39 days beyond the required 30 days and the second payment was 565 days beyond the required 30 days. Questioned costs: N/A Cause: The University did not have an effective control in place to ensure subrecipient payments were paid timely. Effect: The University was not in compliance with the regulation to make payments to subrecipients within the required timeframe. Repeat finding: No Recommendation: We recommend that the University review and update current procedures to ensure subrecipient payments are paid timely. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.
Federal Agency: Various Federal Program Title: Research and Development Cluster Assistance Listing Number: 43.008 and 93.433 Federal Award Identification Number: NNX15AP43A-2023, 90RTEM0009-2023 Award Period: 7/1/22-6/30/23 Type of Finding: Significant Deficiency in Internal Control over Compliance; Compliance, Other Matters Condition: The University did not make payments to subrecipients within 30 days after receipt of invoices. Criteria or specific requirement: Uniform Grant 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. Per 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. Context: During our testing of 28 subrecipient payments, from a statistically valid sample, we identified 2 payments were not submitted within 30 days after receiving invoice from the subrecipients. One payment was 39 days beyond the required 30 days and the second payment was 565 days beyond the required 30 days. Questioned costs: N/A Cause: The University did not have an effective control in place to ensure subrecipient payments were paid timely. Effect: The University was not in compliance with the regulation to make payments to subrecipients within the required timeframe. Repeat finding: No Recommendation: We recommend that the University review and update current procedures to ensure subrecipient payments are paid timely. Views of responsible officials: Management agrees with the finding and has developed a plan to correct the finding.
Finding Number 2023-009: Costs Incurred & Paid Prior to Reimbursements (Significant Deficiency over Internal Control and Instance of Noncompliance – Cash Management; Period of Performance) FALN Number 16.575 U.S. Department of Justice, Office of Victims of Crime – Crime Victim Assistance, Award Number 94-3302014, Award Year 2022-2023 Criteria: 2023 Compliance Supplement stated that program costs must be paid by non-federal entity funds before submitting a payment request (2 CFR section 200.305(b)(3)) (i.e., the non-federal entity must disburse funds for program purposes before requesting payment from the federal awarding agency or pass-through entity). In addition, a non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance. Condition/Context: As a result of our audit procedures to evaluate the summary schedule of prior audit findings, we noted 1 sample of $1,000 nonpayroll expenditures that was submitted for reimbursement prior to the expenditure being incurred. Repeat Finding from Prior Year(s): Yes, Finding Number 2022-007 Cause and Effect: The Health System did not have proper controls in place to ensure expenditures are incurred and paid for prior to reimbursements, and that expenditures are incurred within the period of performance of the contract, which resulted in noncompliance with the compliance requirements of the program. Questioned Cost: None Recommendation: We recommend management implement policies and procedures to ensure funds are disbursed for expenditures incurred prior to reimbursement requests, and that expenditures are incurred within the contract’s performance period. Views of Responsible Officials and Planned Corrective Action: Management agrees with the finding. The Health System will review, modify, and implement policies and procedures over the program to ensure funds are disbursed for expenditures incurred prior to requesting reimbursement and that expenditures are incurred within the contract’s performance period.
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.
Condition: During testing of grant reimbursements, we noted NCHE received reimbursement for program costs before it paid for those costs. Criteria: In accordance with 2 CFR 200.305(b)(3), program costs must be paid by non-federal entity funds before submitting a reimbursement request. Cause of Condition: NCHE does not have adequate polices in place to ensure program costs have been paid before a reimbursement request is submitted. Effect: The lack of adequate policies may result in noncompliance with federal program cash management requirements. Recommendation: We recommend NCHE implement policies and procedures that outline the process for requesting reimbursement in line with 2 CFR 200.305(b)(3). Uniform Guidance states that a non-federal entity must distribute funds for program purposes before requesting payment from the federal awarding agency or pass through entity. Management Response: Management accepts the finding and recommendation.
Condition: During testing of grant reimbursements, we noted NCHE received reimbursement for program costs before it paid for those costs. Criteria: In accordance with 2 CFR 200.305(b)(3), program costs must be paid by non-federal entity funds before submitting a reimbursement request. Cause of Condition: NCHE does not have adequate polices in place to ensure program costs have been paid before a reimbursement request is submitted. Effect: The lack of adequate policies may result in noncompliance with federal program cash management requirements. Recommendation: We recommend NCHE implement policies and procedures that outline the process for requesting reimbursement in line with 2 CFR 200.305(b)(3). Uniform Guidance states that a non-federal entity must distribute funds for program purposes before requesting payment from the federal awarding agency or pass through entity. Management Response: Management accepts the finding and recommendation.
Condition: During testing of grant reimbursements, we noted NCHE received reimbursement for program costs before it paid for those costs. Criteria: In accordance with 2 CFR 200.305(b)(3), program costs must be paid by non-federal entity funds before submitting a reimbursement request. Cause of Condition: NCHE does not have adequate polices in place to ensure program costs have been paid before a reimbursement request is submitted. Effect: The lack of adequate policies may result in noncompliance with federal program cash management requirements. Recommendation: We recommend NCHE implement policies and procedures that outline the process for requesting reimbursement in line with 2 CFR 200.305(b)(3). Uniform Guidance states that a non-federal entity must distribute funds for program purposes before requesting payment from the federal awarding agency or pass through entity. Management Response: Management accepts the finding and recommendation.
Finding Reference Number: 2023-014 NH Department of Energy Low Income Home Energy Assistance and COVID-19 Low Income Home Energy Assistance. (Assistance Listing #93.568) Federal Award Numbers: 2001NHLEA, 2001NHLIE4, 2001NH5C3, 2101NHLIEA, 2101NHE5C6, 2201NHLIEA, 2101NHLIE4, 2201NHLIEE, 2201NHLIEI, 2301NHLIEA, 2301NHLIEE, 2301NHLIEI Federal Award Year: 2020, 2021, 2022, 2023 U.S. Department of Health and Human Services Compliance Requirement: Cash Management Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: 2022-027 Statistically Valid Sample: No Criteria U.S. Department of the Treasury (Treasury) regulations at 31 CFR 204 part 205 implement the Cash Management Act of 1990 (CMIA). Subpart A of those regulations requires state recipients to enter into Treasury-State Agreements that prescribe specific methods of drawing down federal funds (funding techniques) for federal programs listed in the Catalog of Federal Domestic assistance that meet the funding threshold for a major federal program under the CMIA. Treasury-State Agreements also specify the terms and conditions under which an interest liability would be incurred. Pass-through entities must monitor cash drawdowns by their subrecipients to ensure that the time elapsing between the transfer of federal funds to the subrecipient and their disbursement for program purposes is minimized as required by the applicable cash management requirements in the federal award to the recipient (2 CFR section 200.305(b)(1)). Additionally, Title 45 U.S. Code of Federal Regulation Part 75 (45 CFR 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HS Awards, section 75.303(a), Internal Controls, states the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During our testwork over performed over cash management related to the Low-Income Home Energy Assistance program, we noted the following: A. Under the State of New Hampshire’s Cash Management Agreement (CMIA), direct expenditures are to be drawn using the actual draw – monthly technique. Under this technique, the funds are to be requested monthly based on actual costs incurred during that 1-month period. The funding technique is interest neutral. During our testwork over the cash draw process, we noted the following: a. For 4 of 9 cash draws selected for testwork, the New Hampshire Department of Energy (the Department) did not draw funds timely resulting in the cash draw to be delinquent. Each of the 4 cash draw covered multiple months of activity. As the clearance pattern within the CMIA agreement is interest neutral, there was no interest impact because of the cash draws not being performed timely. B. The Department advances payments to subrecipients to ensure that they have sufficient cash on hand to pay for benefit payments. The Department passed through $52,485,098 to subrecipients during the year ended June 30, 2023. During our testwork over compliance with cash management, we noted that for the 4 cash advance payment samples selected for testwork, the Department was not able to provide sufficient evidence to support that the cash advance was spent within a time period that minimizes the time elapsed between the transfer of federal funds to the subrecipient and their disbursement for program purposes. The Department’s normal disbursement cycle of every 30 days. As such, it does not appear that the Department sufficiently minimized the time elapsing between the transfer of federal funds to the subrecipient and their disbursement for program purposes. Cause The cause of the condition found was primarily due to insufficient resources to monitor and track cash draws to ensure they are performed timely in accordance with the clearance patten established within the CMIA agreement and to ensure that subrecipients either utilize advance funds timely or effectively evaluate the amount of funds they need on hand at the time of the advance payment. Effect The effect of the condition found is that the Department did not comply with the provisions of the CMIA as it relates to the timing of cash draws. In addition, the Department did not have sufficient policies and procedures in place to ensure the time elapsed between the transfer of federal funds to the subrecipient and their disbursement of funds for program purposes is minimized. As such the Department was not in compliance with 2 CFR section 200.305(b)(1). Questioned Costs None. Recommendation We recommend that the Department review its existing internal controls, policies, and procedures to ensure that all cash draws are performed timely and in accordance with the CMIA agreement. In addition, we recommend that the Department review its existing internal controls, policies and procedures relating to advancing funds to subrecipients to ensure that excess cash held by the subrecipients does not exceed 30 days. View of Responsible Officials: Management concurs with the finding above.
Finding Reference Number: 2023-014 NH Department of Energy Low Income Home Energy Assistance and COVID-19 Low Income Home Energy Assistance. (Assistance Listing #93.568) Federal Award Numbers: 2001NHLEA, 2001NHLIE4, 2001NH5C3, 2101NHLIEA, 2101NHE5C6, 2201NHLIEA, 2101NHLIE4, 2201NHLIEE, 2201NHLIEI, 2301NHLIEA, 2301NHLIEE, 2301NHLIEI Federal Award Year: 2020, 2021, 2022, 2023 U.S. Department of Health and Human Services Compliance Requirement: Cash Management Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: 2022-027 Statistically Valid Sample: No Criteria U.S. Department of the Treasury (Treasury) regulations at 31 CFR 204 part 205 implement the Cash Management Act of 1990 (CMIA). Subpart A of those regulations requires state recipients to enter into Treasury-State Agreements that prescribe specific methods of drawing down federal funds (funding techniques) for federal programs listed in the Catalog of Federal Domestic assistance that meet the funding threshold for a major federal program under the CMIA. Treasury-State Agreements also specify the terms and conditions under which an interest liability would be incurred. Pass-through entities must monitor cash drawdowns by their subrecipients to ensure that the time elapsing between the transfer of federal funds to the subrecipient and their disbursement for program purposes is minimized as required by the applicable cash management requirements in the federal award to the recipient (2 CFR section 200.305(b)(1)). Additionally, Title 45 U.S. Code of Federal Regulation Part 75 (45 CFR 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HS Awards, section 75.303(a), Internal Controls, states the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During our testwork over performed over cash management related to the Low-Income Home Energy Assistance program, we noted the following: A. Under the State of New Hampshire’s Cash Management Agreement (CMIA), direct expenditures are to be drawn using the actual draw – monthly technique. Under this technique, the funds are to be requested monthly based on actual costs incurred during that 1-month period. The funding technique is interest neutral. During our testwork over the cash draw process, we noted the following: a. For 4 of 9 cash draws selected for testwork, the New Hampshire Department of Energy (the Department) did not draw funds timely resulting in the cash draw to be delinquent. Each of the 4 cash draw covered multiple months of activity. As the clearance pattern within the CMIA agreement is interest neutral, there was no interest impact because of the cash draws not being performed timely. B. The Department advances payments to subrecipients to ensure that they have sufficient cash on hand to pay for benefit payments. The Department passed through $52,485,098 to subrecipients during the year ended June 30, 2023. During our testwork over compliance with cash management, we noted that for the 4 cash advance payment samples selected for testwork, the Department was not able to provide sufficient evidence to support that the cash advance was spent within a time period that minimizes the time elapsed between the transfer of federal funds to the subrecipient and their disbursement for program purposes. The Department’s normal disbursement cycle of every 30 days. As such, it does not appear that the Department sufficiently minimized the time elapsing between the transfer of federal funds to the subrecipient and their disbursement for program purposes. Cause The cause of the condition found was primarily due to insufficient resources to monitor and track cash draws to ensure they are performed timely in accordance with the clearance patten established within the CMIA agreement and to ensure that subrecipients either utilize advance funds timely or effectively evaluate the amount of funds they need on hand at the time of the advance payment. Effect The effect of the condition found is that the Department did not comply with the provisions of the CMIA as it relates to the timing of cash draws. In addition, the Department did not have sufficient policies and procedures in place to ensure the time elapsed between the transfer of federal funds to the subrecipient and their disbursement of funds for program purposes is minimized. As such the Department was not in compliance with 2 CFR section 200.305(b)(1). Questioned Costs None. Recommendation We recommend that the Department review its existing internal controls, policies, and procedures to ensure that all cash draws are performed timely and in accordance with the CMIA agreement. In addition, we recommend that the Department review its existing internal controls, policies and procedures relating to advancing funds to subrecipients to ensure that excess cash held by the subrecipients does not exceed 30 days. View of Responsible Officials: Management concurs with the finding above.
Finding 2023-004: Timely Remittance of Earned Interest Federal Programs ALN: 93.575, 93.596, 93.558 Criteria: The Organization is required to remit all interest earned on federally funded advances to DEL within 30 days after the fiscal year end per DEL Program Guidance 240.01 Cash Management and 2 CFR 200.305(9). Condition: The Organization failed to remit all earned interest to DEL within the 30 day deadline in accordance with the grant agreement. Cause: The Organization experienced high management turnover which delayed the calculation of interest earned and remittance to DEL. Effect: The Organization did not meet the remittance submission deadline requirement as set forth by DEL Program Guidance 240.01 Cash Management and 2 CFR 200.305(9). The earned interest was remitted August 2, 2023. Recommendation: We recommend the Organization designate an individual to calculate interest earned and closely monitor the submission deadline.
Finding 2023-004: Timely Remittance of Earned Interest Federal Programs ALN: 93.575, 93.596, 93.558 Criteria: The Organization is required to remit all interest earned on federally funded advances to DEL within 30 days after the fiscal year end per DEL Program Guidance 240.01 Cash Management and 2 CFR 200.305(9). Condition: The Organization failed to remit all earned interest to DEL within the 30 day deadline in accordance with the grant agreement. Cause: The Organization experienced high management turnover which delayed the calculation of interest earned and remittance to DEL. Effect: The Organization did not meet the remittance submission deadline requirement as set forth by DEL Program Guidance 240.01 Cash Management and 2 CFR 200.305(9). The earned interest was remitted August 2, 2023. Recommendation: We recommend the Organization designate an individual to calculate interest earned and closely monitor the submission deadline.
Finding 2023-004: Timely Remittance of Earned Interest Federal Programs ALN: 93.575, 93.596, 93.558 Criteria: The Organization is required to remit all interest earned on federally funded advances to DEL within 30 days after the fiscal year end per DEL Program Guidance 240.01 Cash Management and 2 CFR 200.305(9). Condition: The Organization failed to remit all earned interest to DEL within the 30 day deadline in accordance with the grant agreement. Cause: The Organization experienced high management turnover which delayed the calculation of interest earned and remittance to DEL. Effect: The Organization did not meet the remittance submission deadline requirement as set forth by DEL Program Guidance 240.01 Cash Management and 2 CFR 200.305(9). The earned interest was remitted August 2, 2023. Recommendation: We recommend the Organization designate an individual to calculate interest earned and closely monitor the submission deadline.
Finding 2023-004: Timely Remittance of Earned Interest Federal Programs ALN: 93.575, 93.596, 93.558 Criteria: The Organization is required to remit all interest earned on federally funded advances to DEL within 30 days after the fiscal year end per DEL Program Guidance 240.01 Cash Management and 2 CFR 200.305(9). Condition: The Organization failed to remit all earned interest to DEL within the 30 day deadline in accordance with the grant agreement. Cause: The Organization experienced high management turnover which delayed the calculation of interest earned and remittance to DEL. Effect: The Organization did not meet the remittance submission deadline requirement as set forth by DEL Program Guidance 240.01 Cash Management and 2 CFR 200.305(9). The earned interest was remitted August 2, 2023. Recommendation: We recommend the Organization designate an individual to calculate interest earned and closely monitor the submission deadline.
Finding 2023-004: Timely Remittance of Earned Interest Federal Programs ALN: 93.575, 93.596, 93.558 Criteria: The Organization is required to remit all interest earned on federally funded advances to DEL within 30 days after the fiscal year end per DEL Program Guidance 240.01 Cash Management and 2 CFR 200.305(9). Condition: The Organization failed to remit all earned interest to DEL within the 30 day deadline in accordance with the grant agreement. Cause: The Organization experienced high management turnover which delayed the calculation of interest earned and remittance to DEL. Effect: The Organization did not meet the remittance submission deadline requirement as set forth by DEL Program Guidance 240.01 Cash Management and 2 CFR 200.305(9). The earned interest was remitted August 2, 2023. Recommendation: We recommend the Organization designate an individual to calculate interest earned and closely monitor the submission deadline.
Finding 2023-004: Timely Remittance of Earned Interest Federal Programs ALN: 93.575, 93.596, 93.558 Criteria: The Organization is required to remit all interest earned on federally funded advances to DEL within 30 days after the fiscal year end per DEL Program Guidance 240.01 Cash Management and 2 CFR 200.305(9). Condition: The Organization failed to remit all earned interest to DEL within the 30 day deadline in accordance with the grant agreement. Cause: The Organization experienced high management turnover which delayed the calculation of interest earned and remittance to DEL. Effect: The Organization did not meet the remittance submission deadline requirement as set forth by DEL Program Guidance 240.01 Cash Management and 2 CFR 200.305(9). The earned interest was remitted August 2, 2023. Recommendation: We recommend the Organization designate an individual to calculate interest earned and closely monitor the submission deadline.
Finding 2023-004: Timely Remittance of Earned Interest Federal Programs ALN: 93.575, 93.596, 93.558 Criteria: The Organization is required to remit all interest earned on federally funded advances to DEL within 30 days after the fiscal year end per DEL Program Guidance 240.01 Cash Management and 2 CFR 200.305(9). Condition: The Organization failed to remit all earned interest to DEL within the 30 day deadline in accordance with the grant agreement. Cause: The Organization experienced high management turnover which delayed the calculation of interest earned and remittance to DEL. Effect: The Organization did not meet the remittance submission deadline requirement as set forth by DEL Program Guidance 240.01 Cash Management and 2 CFR 200.305(9). The earned interest was remitted August 2, 2023. Recommendation: We recommend the Organization designate an individual to calculate interest earned and closely monitor the submission deadline.
Finding 2023-004: Timely Remittance of Earned Interest Federal Programs ALN: 93.575, 93.596, 93.558 Criteria: The Organization is required to remit all interest earned on federally funded advances to DEL within 30 days after the fiscal year end per DEL Program Guidance 240.01 Cash Management and 2 CFR 200.305(9). Condition: The Organization failed to remit all earned interest to DEL within the 30 day deadline in accordance with the grant agreement. Cause: The Organization experienced high management turnover which delayed the calculation of interest earned and remittance to DEL. Effect: The Organization did not meet the remittance submission deadline requirement as set forth by DEL Program Guidance 240.01 Cash Management and 2 CFR 200.305(9). The earned interest was remitted August 2, 2023. Recommendation: We recommend the Organization designate an individual to calculate interest earned and closely monitor the submission deadline.
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT 2023-002 (repeat finding of 2022-001) Continuum of Care Program, ALN #14.267 Condition and Criteria: According to 2 CFR Section 200.305(b)(3) all reimbursement requests should be based on supporting documentation that shows the cost was incurred before the request for payment and that the payment to vendor was made. All the cash drawdown reports did not have adequate supporting documentation for the drawdown request. Cause: The reason for the lack of support in the drawdowns is due to using budgeted or estimated grant amounts as a basis for the request instead of actual expenses. Effect: The effect is that the Organization could have either requested funds before actual expenses and not be in compliance with the cash management requirements under Uniform Grant Guidance or the Organization could be shorting themselves funds during the grant period and causing cash flow issues. Context: In reviewing all the cash drawdown requests, we could not find the supporting documentation to support the expense was incurred before the drawdown request. We also could not determine that the cash payment was made to the vendor before the Organization requested it from the vendor. Auditor’s Recommendation: We recommend that when a check is paid, the expense is allocated through the accounting system. At the time a grant voucher is prepared, only actual expenses should be requested. We recommend that each reimbursement request agrees to what is allocated through the accounting system by grant or program for actual expenses. This will help support the request and, if needed, a method to provide the actual invoice for the expense being requested. Management response: Supportive Strategies has set up cost centers in our accounting software so all grant vouchers/expenses are allocated to the proper grant.
2023-005 Inadequate Cash Management Procedures and Noncompliance with Drawdown Requirements Program Name/ Assistance Listing Number: 93. 959 Block Grants for Prevention and Treatment of Substance Abuse Federal Agency: Department of Health and Human Services Federal Award Identification: Unknown Type of Finding: Material Weakness Compliance Requirement: Cash Management Criteria: Per 2 CFR §200.305(b), non-Federal entities must minimize the time elapsing between the transfer of funds from the U.S. Treasury and the disbursement of those funds for program purposes. Furthermore, entities must have written procedures that clearly outline the timing and methods for drawing down federal funds in accordance with cash management requirements. These procedures should be documented, reviewed, approved, and periodically revised to ensure ongoing compliance. Condition: During our testing of cash management procedures, we noted that Cleveland UMADAOP's written procedures lacked crucial information, including when the policies were prepared, approved, implemented, reviewed, and revised. Additionally, the organization's current drawdown procedure, which involves dividing the total award amount into four equal quarterly drawdowns, may not comply with the cash management requirements. This method does not necessarily align with the requirement the Cleveland UMADAOP needs to drawdown only the amount that they need and minimize the time elapsing from the receipt of federal funds and the disbursement for program expenditures. Cause of Condition: Cleveland UMADAOP may not have fully understood the compliance requirements related to cash management, specifically the need to align drawdowns with actual cash needs rather than on a predetermined quarterly basis. The lack of detailed documentation and approval processes for cash management policies indicates potential gaps in internal controls and oversight. Effect: The use of a predetermined drawdown schedule that is not based on actual cash needs could lead to excess federal funds being held unnecessarily, increasing the risk of non-compliance with cash management requirements. Additionally, the absence of comprehensive documentation for cash management procedures could result in inconsistencies in implementation, a lack of accountability, and difficulties in ensuring that policies remain current and effective. Questioned Cost: Not quantifiable. Recommendation: Cleveland UMADAOP should revise its cash management procedures to ensure they are in full compliance with federal requirements. Cleveland UMADAOP should adopt a drawdown process that is based on actual cash needs, minimizing the time elapsing between the drawdown of federal funds and their disbursement for program expenditures. Additionally, the organization should update its written procedures to include documentation of when the policies were prepared, approved, implemented, reviewed, and revised. This will help ensure that cash management practices are transparent, consistent, and compliant with applicable regulations. Finally, the organization should consider training relevant staff on the updated procedures and the importance of compliance with cash management requirements. Description of the Nature and Extent of Issues Reported: We consider the following materiality for consideration of material noncompliance for the major program 93.959 at 5% of the total awards expended amounting to $51,253. View of Responsible Official: Management agrees with the finding and will implement corrective action.
2023-006 Non-compliance with Compliance Requirements Program Name/ Assistance Listing Number: 93. 959 Block Grants for Prevention and Treatment of Substance Abuse and 93.788 Multiple Approach Response Strategies (MARS) Federal Agency: Department of Health and Human Services Federal Award Identification: Unknown Type of Finding: Material Weakness Compliance Requirement: Allowable Costs/Cost Principles Criteria: Per 2 CFR §200.305(b), non-Federal entities are responsible for administering Federal funds in a manner consistent with underlying agreements, program objectives, and the terms and conditions of the Federal award. According to 2 CFR §200.403, costs must meet the following general criteria to be allowable under Federal awards: (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award concerning types or amounts 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. See also 2 CFR §200.300 through 200.309 of this part. (h) Costs must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carryforward unobligated balances to subsequent budget periods pursuant to 2 CFR §200.308(e)(3). Condition: During the review of the schedule of expenditures of federal awards, the auditor noted the following conditions: 1. Non-Conforming Expenditures: An expenditure under the MARS Carry Over did not conform to the limitations set forth in the federal award budget. Specifically, $20,892 was charged for Garage Repairs, whereas the grant budget for equipment was only $1,200, designated specifically for two software purchases at $600 each. 2. Inadequate Documentation: a) The FASD Grant had a period that ended on March 14, 2023. Although the grant period was extended, this extension was not documented, b) A $26,383 FASD expenditure was reallocated to MARS 2.0 Carry Over without substantialjustification for the reclassification, and c) An adjustment of $24,044 was made from MARS 2.0 Carry Over FY 2022 without adequate supporting documentation. 3. Expenditures Outside the Approved Grant Period: a) the FASD total award of $340,000 was reported as fully expended in the 2023 fiscal year-end expenditure report (“Close-Out Report”) submitted to the Grants and Funding Management System on January 31, 2024. However, the Schedule of Federal Expenditure showed only $312,707 in expenditures. The remaining $27, 293 was indicated as a carryover for FY 2024. Of the $312,707 in expenditures, $71,277 were incurred after March 14, 2023, with only $21,395 falling within the 45-day closeout period following that date, b) $26,800 in unallowable costs were incurred under the MARS 2.0 Carry Over 45 days after the performance period ended on September 29, 2022, specifically for payroll processing, and c) $1,813 in costs were incurred before the performance period for the “Mars One-Pill Can Kill” grant dated February 1, 2023 to September 29, 2023. There was no prior grant. 4. Misclassification: $2,010 in MARS 3.0 expenditures were incorrectly classified under FASD. Cause of Condition: Insufficient understanding of program requirements. There is no formal monitoring of program expenditures on a periodic basis to ensure that the Organization’s expenditures and activities align with their grant budget and period of performance. Inconsistent adherence to record retention policies, resulting from the temporary hybrid working-from-home arrangements due to the pandemic, has led to insufficient support for all federal expenditures. The Organization lacks written policies and procedures for allocating expenditures across different programs. Effect: The current procedures for administering Federal funds are inadequately designed to ensure that costs and activities are managed in a manner consistent with the underlying agreements and the terms and conditions of the Federal award. These deficiencies could lead to misstatements in the SEFA that are not corrected promptly and could result in the charging of unallowable costs. Questioned Cost: $179,117 Recommendation: We recommend the following actions: 1. Training: Program administrators should receive adequatetraining and acquire knowledge of the compliancerequirements for each specific program to ensure adherence to these requirements. 2. Periodic Program Monitoring: The organization should establish a periodic review process for each program budget to ensure alignment with each line item in the budget. 3. Formal Procedures: The organization should document its procedures for expense allocation to ensure consistency timeliness, and accuracy. 4. Adequate Staffing: The organization should ensure that processes are staffed with knowledgeable personnel capableof reviewing and adhering to established policies and procedures. Description of the Nature and Extent of Issues Reported: We consider the following materiality for consideration of material noncompliance for the major program 93.959 at 5% of the total awards expended amounting to $51,253. View of Responsible Official: Management agrees with the finding and will implement corrective action.
Finding 2023-003 Controls: Internal Controls over Cash Management Assistance Listing Numbers and Title: 93.566 Refugee and Entrant Assistance State/Replacement Designee Administered Programs Federal Agency: U.S. Department of Health and Human Services Pass through Entity: Oklahoma Department of Human Services Pass through Entity Award Number: 8309026721 Finding type: Significant Deficiency Criteria: Section 2 CFR200.303(a) requires non-Federal entities to establish and maintain effective internal controls over compliance with Federal laws, regulations, and the terms and conditions of Federal awards. Management is responsible for implementing internal controls to ensure that proper segregation of duties exist over cash management process. 2 CFR 200.305, Federal Payments, requires non-Federal entities to requst funds in accordance with program terms. Condition: During the course of audit, we noted that not all submissions for request for reimbursement were reviewed by someone other than the preparer prior to submission. Cause: This award was new to CCEOK in 2023 and administrative assignments were not established immediately. CCEOK later performed a retrospective review as a part of year end closing procedures to ensure that reimbursement requests were corrected and properly stated. Effect: CCEOK’s interrnal controls do not ensure proper review of reimbursement request and has potential to lead to improper reimbursement. Questioned cost: None. Recommendation: We recommend CCEOK implement procedures that all contract reimbursements be reviewed by someone independent from the preparer prior to submission.
2023-008 – Inadequate Policies and Procedures (Significant Deficiency in Internal Controls over Compliance) Federal Program Information Federal Award Title and ALN: COVID-19 Coronavirus State and Local Fiscal Recovery Funds, 21.027 Federal Awarding Agency: U.S. Department of the Treasury Federal Award ID Number: N/A Federal Award Year: 2023 Federal Award Title and ALN: Formula Grants for Rural Areas and Tribal Transit Program, 20.509 Federal Awarding Agency: U.S. Department of the Transportation Pass-Through Entity: New Mexico Department of Transportation Federal Award ID Number: N/A Federal Award Year: 2023 Condition - The County does not maintain written procedures as required by 2 CFR 200, Subparts D and E of the Uniform Guidance. Criteria - Per 2 CFR 200.302(b)(6), Financial Management, the financial management system of each non-federal entity must provide the following: Written procedures to implement the requirements of 200.305 Federal Payment. Per 2 CFR 200.302(b)(7), Financial Management, the financial management system of each nonfederal entity must provide the following: 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. Cause - The County does not have written procedures for the federal program's financial management requirements. Effect - Not having written procedures for the aforementioned puts the County in direct violation of Federal requirements over Federal programs under the Uniform Guidance, which could result in a loss of programs, funds and/or repayment of federal monies already awarded back to the Federal government. Auditor’s Recommendation - The County should establish the required written procedures for federal monies and have them available to all personnel who work with federal programs. Views of Responsible Officials and Planned Corrective Action – The County will have written procedures for the federal program financial management requirements submitted to the Grant County Board of Commissioners for approval and implemented by all personnel. Responsible Official – Andrea Montoya, Deputy County Manager and Robert Placencio, Finance Director Timeline and Estimated Completion Date – No later than August 31, 2024.
2023-008 – Inadequate Policies and Procedures (Significant Deficiency in Internal Controls over Compliance) Federal Program Information Federal Award Title and ALN: COVID-19 Coronavirus State and Local Fiscal Recovery Funds, 21.027 Federal Awarding Agency: U.S. Department of the Treasury Federal Award ID Number: N/A Federal Award Year: 2023 Federal Award Title and ALN: Formula Grants for Rural Areas and Tribal Transit Program, 20.509 Federal Awarding Agency: U.S. Department of the Transportation Pass-Through Entity: New Mexico Department of Transportation Federal Award ID Number: N/A Federal Award Year: 2023 Condition - The County does not maintain written procedures as required by 2 CFR 200, Subparts D and E of the Uniform Guidance. Criteria - Per 2 CFR 200.302(b)(6), Financial Management, the financial management system of each non-federal entity must provide the following: Written procedures to implement the requirements of 200.305 Federal Payment. Per 2 CFR 200.302(b)(7), Financial Management, the financial management system of each nonfederal entity must provide the following: 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. Cause - The County does not have written procedures for the federal program's financial management requirements. Effect - Not having written procedures for the aforementioned puts the County in direct violation of Federal requirements over Federal programs under the Uniform Guidance, which could result in a loss of programs, funds and/or repayment of federal monies already awarded back to the Federal government. Auditor’s Recommendation - The County should establish the required written procedures for federal monies and have them available to all personnel who work with federal programs. Views of Responsible Officials and Planned Corrective Action – The County will have written procedures for the federal program financial management requirements submitted to the Grant County Board of Commissioners for approval and implemented by all personnel. Responsible Official – Andrea Montoya, Deputy County Manager and Robert Placencio, Finance Director Timeline and Estimated Completion Date – No later than August 31, 2024.
2023-008 – Inadequate Policies and Procedures (Significant Deficiency in Internal Controls over Compliance) Federal Program Information Federal Award Title and ALN: COVID-19 Coronavirus State and Local Fiscal Recovery Funds, 21.027 Federal Awarding Agency: U.S. Department of the Treasury Federal Award ID Number: N/A Federal Award Year: 2023 Federal Award Title and ALN: Formula Grants for Rural Areas and Tribal Transit Program, 20.509 Federal Awarding Agency: U.S. Department of the Transportation Pass-Through Entity: New Mexico Department of Transportation Federal Award ID Number: N/A Federal Award Year: 2023 Condition - The County does not maintain written procedures as required by 2 CFR 200, Subparts D and E of the Uniform Guidance. Criteria - Per 2 CFR 200.302(b)(6), Financial Management, the financial management system of each non-federal entity must provide the following: Written procedures to implement the requirements of 200.305 Federal Payment. Per 2 CFR 200.302(b)(7), Financial Management, the financial management system of each nonfederal entity must provide the following: 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. Cause - The County does not have written procedures for the federal program's financial management requirements. Effect - Not having written procedures for the aforementioned puts the County in direct violation of Federal requirements over Federal programs under the Uniform Guidance, which could result in a loss of programs, funds and/or repayment of federal monies already awarded back to the Federal government. Auditor’s Recommendation - The County should establish the required written procedures for federal monies and have them available to all personnel who work with federal programs. Views of Responsible Officials and Planned Corrective Action – The County will have written procedures for the federal program financial management requirements submitted to the Grant County Board of Commissioners for approval and implemented by all personnel. Responsible Official – Andrea Montoya, Deputy County Manager and Robert Placencio, Finance Director Timeline and Estimated Completion Date – No later than August 31, 2024.
FINDING 2023-004 Subject: Twenty-First Century Community Learning Centers - Cash Management, Program Income and Reporting Federal Agency: Department of Education Federal Program: Twenty-First Century Community Learning Centers Assistance Listings Number: 84.287 Federal Award Numbers and Years (or Other Identifying Numbers): A58-1-21DL-0153, A58-1-21DL-5176, A58-2-22DL-0018, A58-3-23DL-0027 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Cash Management, Program Income, and Reporting Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation utilized grant funds to operate an After School Care Safe Harbor Program. As part of the programs, the students were charged monthly fees to help cover the related costs. Per the grant guidelines, families cannot be turned away for nonpayment of fees, and any fees collected are to be reinvested into the programs. Reimbursement requests are to deduct the program income received from allowable costs prior to claiming reimbursement. During the audit period, the School Corporation collected fees for the Before School Care Program and the After School Care Safe Harbor Program in the same manner. Fees collected for both programs were collected and receipted into the After School fund. For the years ended June 30, 2022, and June 30, 2023, the School Corporation receipted a total of $45,723 and $41,513, respectively, into the After School fund. Cash Management The School Corporation submitted 18 reimbursement requests in the audit period. Costs were paid prior to requesting reimbursement as required; however, due to the lack of adequate program income records the reimbursements were not reduced by the program income received. INDIANA STATE BOARD OF ACCOUNTS 26 MICHIGAN CITY AREA SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Program Income Although the School Corporation received approval from the grantor agency to collect program income, the School Corporation did not properly track students' attendance and payments, both if paid and how much paid; therefore, we were unable to determine the amount of program income related to each program. Additionally, the School Corporation did not maintain program income in a separate fund but comingled it with other nongrant funded program revenues. Finally, the School Corporation did not deduct program income from allowable costs prior to claiming reimbursement. Reporting Reimbursement Requests The School Corporation submitted 18 reimbursement requests in the audit period. Of those, 3 reimbursement requests were selected for testing. Of the 3 reimbursement requests inspected, none were reduced by program income received, and 1 was not properly supported by School Corporation records. The reimbursement was overstated by $14,700 when compared to the ledger. Based on additional procedures performed, the total requested reimbursements for the audit period were understated by $32,605 when compared to the ledger. Year End Reports End of Year reports are to be submitted within 60 days of the contract end date. A total of four End of Year Reports were submitted in the audit period and two were selected for testing. Of the two End of Year reports selected for testing, neither properly included program income received during the year due to inadequate tracking of program income. The lack of controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.305(b)(5) states in part: "To the extent available, the non-Federal entity must disburse funds available from program income (including repayments to a revolving fund), rebates, refunds, contract settlements, audit recoveries, and interest earned on such funds before requesting additional cash payments." INDIANA STATE BOARD OF ACCOUNTS 27 MICHIGAN CITY AREA SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.307 states in part: "(a) General. Non-Federal entities are encouraged to earn income to defray program costs where appropriate. . . . (e) Use of program income. If the Federal awarding agency does not specify in its regulations or the terms and conditions of the Federal award, or give prior approval for how program income is to be used, paragraph (e)(1) of this section must apply. For Federal awards made to IHEs and nonprofit research institutions, if the Federal awarding agency does not specify in its regulations or the terms and conditions of the Federal award how program income is to be used, paragraph (e)(2) of this section must apply. In specifying alternatives to paragraphs (e)(1) and (2) of this section, the Federal awarding agency may distinguish between income earned by the recipient and income earned by subrecipients and between the sources, kinds, or amounts of income. When the Federal awarding agency authorizes the approaches in paragraphs (e)(2) and (3) of this section, program income in excess of any amounts specified must also be deducted from expenditures. (1) Deduction. 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. Program income that the non- Federal entity did not anticipate at the time of the Federal award must be used to reduce the Federal award and non- Federal entity contributions rather than to increase the funds committed to the project. (2) Addition. With prior approval of the Federal awarding agency (except for IHEs and nonprofit research institutions, as described in this paragraph (e)) program income may be added to the Federal award by the Federal agency and the non-Federal entity. The program income must be used for the purposes and under the conditions of the Federal award. (3) Cost sharing or matching. With prior approval of the Federal awarding agency, program income may be used to meet the cost sharing or matching requirement of the Federal award. The amount of the Federal award remains the same. . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following: . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." 34 CFR 76.731 states: "A State and a subgrantee shall keep records to show its compliance with program requirements." INDIANA STATE BOARD OF ACCOUNTS 28 MICHIGAN CITY AREA SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause A proper system of internal controls was not designed by management of the School Corporation, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, program income was not properly documented resulting in noncompliance with the Cash Management, Program Income, and Reporting compliance requirements. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding by the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and strengthen its policies and procedures to ensure proper tracking of program income to ensure all activity and reports submitted on behalf of the Twenty-First Century Community Learning Centers program funds are accurate. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-004 Subject: Twenty-First Century Community Learning Centers - Cash Management, Program Income and Reporting Federal Agency: Department of Education Federal Program: Twenty-First Century Community Learning Centers Assistance Listings Number: 84.287 Federal Award Numbers and Years (or Other Identifying Numbers): A58-1-21DL-0153, A58-1-21DL-5176, A58-2-22DL-0018, A58-3-23DL-0027 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Cash Management, Program Income, and Reporting Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation utilized grant funds to operate an After School Care Safe Harbor Program. As part of the programs, the students were charged monthly fees to help cover the related costs. Per the grant guidelines, families cannot be turned away for nonpayment of fees, and any fees collected are to be reinvested into the programs. Reimbursement requests are to deduct the program income received from allowable costs prior to claiming reimbursement. During the audit period, the School Corporation collected fees for the Before School Care Program and the After School Care Safe Harbor Program in the same manner. Fees collected for both programs were collected and receipted into the After School fund. For the years ended June 30, 2022, and June 30, 2023, the School Corporation receipted a total of $45,723 and $41,513, respectively, into the After School fund. Cash Management The School Corporation submitted 18 reimbursement requests in the audit period. Costs were paid prior to requesting reimbursement as required; however, due to the lack of adequate program income records the reimbursements were not reduced by the program income received. INDIANA STATE BOARD OF ACCOUNTS 26 MICHIGAN CITY AREA SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Program Income Although the School Corporation received approval from the grantor agency to collect program income, the School Corporation did not properly track students' attendance and payments, both if paid and how much paid; therefore, we were unable to determine the amount of program income related to each program. Additionally, the School Corporation did not maintain program income in a separate fund but comingled it with other nongrant funded program revenues. Finally, the School Corporation did not deduct program income from allowable costs prior to claiming reimbursement. Reporting Reimbursement Requests The School Corporation submitted 18 reimbursement requests in the audit period. Of those, 3 reimbursement requests were selected for testing. Of the 3 reimbursement requests inspected, none were reduced by program income received, and 1 was not properly supported by School Corporation records. The reimbursement was overstated by $14,700 when compared to the ledger. Based on additional procedures performed, the total requested reimbursements for the audit period were understated by $32,605 when compared to the ledger. Year End Reports End of Year reports are to be submitted within 60 days of the contract end date. A total of four End of Year Reports were submitted in the audit period and two were selected for testing. Of the two End of Year reports selected for testing, neither properly included program income received during the year due to inadequate tracking of program income. The lack of controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.305(b)(5) states in part: "To the extent available, the non-Federal entity must disburse funds available from program income (including repayments to a revolving fund), rebates, refunds, contract settlements, audit recoveries, and interest earned on such funds before requesting additional cash payments." INDIANA STATE BOARD OF ACCOUNTS 27 MICHIGAN CITY AREA SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.307 states in part: "(a) General. Non-Federal entities are encouraged to earn income to defray program costs where appropriate. . . . (e) Use of program income. If the Federal awarding agency does not specify in its regulations or the terms and conditions of the Federal award, or give prior approval for how program income is to be used, paragraph (e)(1) of this section must apply. For Federal awards made to IHEs and nonprofit research institutions, if the Federal awarding agency does not specify in its regulations or the terms and conditions of the Federal award how program income is to be used, paragraph (e)(2) of this section must apply. In specifying alternatives to paragraphs (e)(1) and (2) of this section, the Federal awarding agency may distinguish between income earned by the recipient and income earned by subrecipients and between the sources, kinds, or amounts of income. When the Federal awarding agency authorizes the approaches in paragraphs (e)(2) and (3) of this section, program income in excess of any amounts specified must also be deducted from expenditures. (1) Deduction. 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. Program income that the non- Federal entity did not anticipate at the time of the Federal award must be used to reduce the Federal award and non- Federal entity contributions rather than to increase the funds committed to the project. (2) Addition. With prior approval of the Federal awarding agency (except for IHEs and nonprofit research institutions, as described in this paragraph (e)) program income may be added to the Federal award by the Federal agency and the non-Federal entity. The program income must be used for the purposes and under the conditions of the Federal award. (3) Cost sharing or matching. With prior approval of the Federal awarding agency, program income may be used to meet the cost sharing or matching requirement of the Federal award. The amount of the Federal award remains the same. . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following: . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." 34 CFR 76.731 states: "A State and a subgrantee shall keep records to show its compliance with program requirements." INDIANA STATE BOARD OF ACCOUNTS 28 MICHIGAN CITY AREA SCHOOLS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause A proper system of internal controls was not designed by management of the School Corporation, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, program income was not properly documented resulting in noncompliance with the Cash Management, Program Income, and Reporting compliance requirements. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding by the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and strengthen its policies and procedures to ensure proper tracking of program income to ensure all activity and reports submitted on behalf of the Twenty-First Century Community Learning Centers program funds are accurate. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
2023-006 - Cash Management Federal Program Information: ALN - 66.458 - Clean Water State Revolving Funds Criteria: The following CFR(s) apply to this finding: 2 CFR section 200.302(b)(6)) & 2 CFR section 200.305(b) (3). Condition: During audit procedures, it was identified that the Town did not have a cash management policy in place. Cause: The Town has experienced turnover in the Treasurer’s position over the past few years, which has delayed the policy implementation. Effect: The Town may not have adequate policy and procedures in place to safeguard its most liquid assets. Identification of Questioned Costs: None identified. Context: The population consisted of 6 out of 10 pay requisites deposit of reimbursements from the fiscal year were examined. Out of the 6 selections all 6 were not properly recorded. Repeat Finding: This is a repeat finding of 2022-007. Recommendation: It is recommended that the Town adopt a cash management policy that follows the Uniform Guidance and that the Town implement internal control processes and procedures to ensure that the adopted policy is followed. Views of Responsible Officials and Corrective Action Plan: Client agrees with finding and a version of their response can be found in the Corrective Action Plan. Please see the Corrective Action Plan issued by the Town of Livermore Falls.
2023-006 - Cash Management Federal Program Information: ALN - 66.458 - Clean Water State Revolving Funds Criteria: The following CFR(s) apply to this finding: 2 CFR section 200.302(b)(6)) & 2 CFR section 200.305(b) (3). Condition: During audit procedures, it was identified that the Town did not have a cash management policy in place. Cause: The Town has experienced turnover in the Treasurer’s position over the past few years, which has delayed the policy implementation. Effect: The Town may not have adequate policy and procedures in place to safeguard its most liquid assets. Identification of Questioned Costs: None identified. Context: The population consisted of 6 out of 10 pay requisites deposit of reimbursements from the fiscal year were examined. Out of the 6 selections all 6 were not properly recorded. Repeat Finding: This is a repeat finding of 2022-007. Recommendation: It is recommended that the Town adopt a cash management policy that follows the Uniform Guidance and that the Town implement internal control processes and procedures to ensure that the adopted policy is followed. Views of Responsible Officials and Corrective Action Plan: Client agrees with finding and a version of their response can be found in the Corrective Action Plan. Please see the Corrective Action Plan issued by the Town of Livermore Falls.
2023-006 - Cash Management Federal Program Information: ALN - 66.458 - Clean Water State Revolving Funds Criteria: The following CFR(s) apply to this finding: 2 CFR section 200.302(b)(6)) & 2 CFR section 200.305(b) (3). Condition: During audit procedures, it was identified that the Town did not have a cash management policy in place. Cause: The Town has experienced turnover in the Treasurer’s position over the past few years, which has delayed the policy implementation. Effect: The Town may not have adequate policy and procedures in place to safeguard its most liquid assets. Identification of Questioned Costs: None identified. Context: The population consisted of 6 out of 10 pay requisites deposit of reimbursements from the fiscal year were examined. Out of the 6 selections all 6 were not properly recorded. Repeat Finding: This is a repeat finding of 2022-007. Recommendation: It is recommended that the Town adopt a cash management policy that follows the Uniform Guidance and that the Town implement internal control processes and procedures to ensure that the adopted policy is followed. Views of Responsible Officials and Corrective Action Plan: Client agrees with finding and a version of their response can be found in the Corrective Action Plan. Please see the Corrective Action Plan issued by the Town of Livermore Falls.
2023-006 - Cash Management Federal Program Information: ALN - 66.458 - Clean Water State Revolving Funds Criteria: The following CFR(s) apply to this finding: 2 CFR section 200.302(b)(6)) & 2 CFR section 200.305(b) (3). Condition: During audit procedures, it was identified that the Town did not have a cash management policy in place. Cause: The Town has experienced turnover in the Treasurer’s position over the past few years, which has delayed the policy implementation. Effect: The Town may not have adequate policy and procedures in place to safeguard its most liquid assets. Identification of Questioned Costs: None identified. Context: The population consisted of 6 out of 10 pay requisites deposit of reimbursements from the fiscal year were examined. Out of the 6 selections all 6 were not properly recorded. Repeat Finding: This is a repeat finding of 2022-007. Recommendation: It is recommended that the Town adopt a cash management policy that follows the Uniform Guidance and that the Town implement internal control processes and procedures to ensure that the adopted policy is followed. Views of Responsible Officials and Corrective Action Plan: Client agrees with finding and a version of their response can be found in the Corrective Action Plan. Please see the Corrective Action Plan issued by the Town of Livermore Falls.
Condition: The Organization’s written policies and procedures related to financial management and procurement do not meet the requirements of 2 CFR 200, Subpart D and Subpart E. Criteria: According to 2 CFR Section 200.302.b and 2 CFR Section 200.305 of the Uniform Guidance, the Organization is required to have a written financial management policy. Additionally, according to 2 CFR Section 200.317 – 200.326, the Organization is required to have a written procurement policy. Cause: The Organization was unaware of requirements regarding policies and procedures outlined in the Uniform Guidance. Effect: Written policies necessary for non-Federal entities receiving federal funds were not in place. Repeat Finding: No Questioned Costs: None reported Recommendation: We recommend that the Organization update their written policies and procedures that meet the requirements of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Views of Responsible Officials and Planned Corrective Action: We concur with the auditor’s finding and will update the Organization’s written policies and procedures for the Uniform Guidance requirements.
Condition: The Organization’s written policies and procedures related to financial management and procurement do not meet the requirements of 2 CFR 200, Subpart D and Subpart E. Criteria: According to 2 CFR Section 200.302.b and 2 CFR Section 200.305 of the Uniform Guidance, the Organization is required to have a written financial management policy. Additionally, according to 2 CFR Section 200.317 – 200.326, the Organization is required to have a written procurement policy. Cause: The Organization was unaware of requirements regarding policies and procedures outlined in the Uniform Guidance. Effect: Written policies necessary for non-Federal entities receiving federal funds were not in place. Repeat Finding: No Questioned Costs: None reported Recommendation: We recommend that the Organization update their written policies and procedures that meet the requirements of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Views of Responsible Officials and Planned Corrective Action: We concur with the auditor’s finding and will update the Organization’s written policies and procedures for the Uniform Guidance requirements.
Condition: The Organization’s written policies and procedures related to financial management and procurement do not meet the requirements of 2 CFR 200, Subpart D and Subpart E. Criteria: According to 2 CFR Section 200.302.b and 2 CFR Section 200.305 of the Uniform Guidance, the Organization is required to have a written financial management policy. Additionally, according to 2 CFR Section 200.317 – 200.326, the Organization is required to have a written procurement policy. Cause: The Organization was unaware of requirements regarding policies and procedures outlined in the Uniform Guidance. Effect: Written policies necessary for non-Federal entities receiving federal funds were not in place. Repeat Finding: No Questioned Costs: None reported Recommendation: We recommend that the Organization update their written policies and procedures that meet the requirements of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Views of Responsible Officials and Planned Corrective Action: We concur with the auditor’s finding and will update the Organization’s written policies and procedures for the Uniform Guidance requirements.
Finding 2023-005: Cash Management (Material Weakness) Information on the Federal Programs: Assistance Listing Number 98.001 Criteria: According to Uniform Guidance (2 CFR 200.305(b)), Federal funds must be managed in a way that minimizes the time elapsing between the transfer of funds and the Organization’s disbursement of those funds for program purposes. Additionally, internal controls over cash management should ensure that all drawdowns are approved by designated personnel to prevent improper or premature use of Federal funds. Condition: During our review of Federal grant drawdowns, it was noted that several drawdowns were processed without obtaining the required internal approvals as outlined in Astraea's cash management policies and procedures. Cause: Astraea’s cash management procedures were not consistently followed, leading to missed approvals for certain drawdowns. Effect: Drawdowns without proper internal approval increase the risk of non-compliance with Federal cash management requirements and could result in unauthorized or inaccurate fund usage. Questioned Costs: None noted. Identification as a Repeat Finding, if Applicable: Finding 2022-007 Recommendation: Astraea should reinforce cash management controls by ensuring all Federal drawdowns obtain the appropriate internal approvals before processing. This can be achieved by implementing a checklist or automated workflow to verify compliance with approval requirements.
FA 2023-003 Improve Controls over Cash Management Compliance Requirement: Cash Management Internal Control Impact: Material Weakness Compliance Impact: Material 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 (Year: 2021) Questioned Costs: None Identified Description: The School District made cash drawdowns in excess of immediate cash needs for the Elementary and Secondary School Emergency Relief Fund program. Background Information: The School District may request Elementary and Secondary Emergency Relief (ESSER) Fund program funds from the Georgia Department of Education (GaDOE) once per month. GaDOE requires the School District to submit DE-0147 – Requests for Reimbursement of Monthly Cash Disbursements through the Grants Accounting Online Reporting System to receive program funds. When a DE-0147 request is submitted and approved, the funds are typically disbursed to the School District through an electronic payment process the next week. The School District submitted DE-0147 requests to receive a total of $3,636,320 in ESSER funds from GaDOE during the fiscal year under review. Criteria: As a recipient of federal awards, the Institution 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 200.305(b) state that “For non-Federal entities other than states, payment methods must minimize the time elapsing between the transfer of funds…the pass-through entity and the disbursement by the non-Federal entity.” In addition, the Uniform Guidance Section 200.302(b)(6) requires the entity to develop written cash management procedures. Condition: A review of all cash drawdowns and disbursements related to the ESSER program was performed to determine if any excessive cash balances were maintained during the fiscal year under review. Cash balances in excess of program materiality were maintained for the ESSER program for 37 days. Additionally, it was noted that the School District did not have appropriate internal controls in place over the cash drawdown process. Cause: In discussing this issue with the School District, they indicated that the lack of review of federal grants resulted in excess cash drawdown requests. Effect: The School District was not in compliance with the Uniform Guidance and GaDOE guidance. In addition, the School District could potentially accrue an interest liability that would be owed back to the federal government. Furthermore, when the School District cannot meet the requirement to minimize the time elapsing between the transfer of funds and disbursement of those funds, provisions included in the Uniform Guidance allow GaDOE to change the method by which the School District is transferred funds and delay the School District’s receipt of these funds. This may include a requirement by GaDOE to submit invoices prior to being reimbursed for program expenditures. Recommendation: The School District should establish procedures to accurately forecast the cash needs of the ESSER program and minimize the time elapsing between the transfer of funds from GaDOE and the disbursement of such funds by the School District. In addition, these procedures should be documented in writing in accordance with the Uniform Guidance Section 200.302(b)(6). Furthermore, management should develop and implement a monitoring process to ensure that these procedures are followed. Views of Responsible Officials: We concur with this finding.
FA 2023-003 Improve Controls over Cash Management Compliance Requirement: Cash Management Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 84.010 - Title I Grants to Local Educational Agencies Federal Award Numbers: S010A210010-21A (Year: 2022), SO10A220010 (Year: 2023) Questioned Costs: None Identified Repeat of Prior Year Findings: FA 2022-003, FA 2021-001, FA 2020-001, FA 2019-001, FA 2018-001, FA 2017-002, FA 2016-001, FA 2015-002, FA 2014-003 Description: The School District made cash drawdowns in excess of immediate cash needs for the Title I Grants to Local Educational Agencies program. Background Information: The School District may request Title I Grants to Local Educational Agencies program funds from the Georgia Department of Education (GaDOE) once per month. GaDOE requires the School District to submit DE-0147 – Requests for Reimbursement of Monthly Cash Disbursements through the Grants Accounting Online Reporting System to receive program funds. When a DE-0147 request is submitted and approved, the funds are typically disbursed to the School District through an electronic payment process the next week. The School District submitted DE-0147 requests to receive a total of $426,546 in Title I funds from GaDOE during the fiscal year under review. 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 200.305(b) state that “For non-Federal entities other than states, payment methods must minimize the time elapsing between the transfer of funds…the pass-through entity and the disbursement by the non-Federal entity.” In addition, the Uniform Guidance Section 200.302(b)(6) requires the entity to develop written cash management procedures. Further, as noted in the Uniform Guidance Section 200.511, management is responsible for implementing reported corrective action to findings from previous audits. lll FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Condition: A review of all cash drawdowns and disbursements related to the Title I program was performed to determine if any excessive cash balances were maintained during the fiscal year under review. Cash balances in excess of program materiality were maintained for the Title I program for 273 days. Additionally, it was noted that the School District did not have appropriate internal controls in place over the cash drawdown process. Cause: In discussing this issue with the School District, they indicated that the lack of review of Federal grants resulted in excess cash drawdown request. Effect: The School District was not in compliance with the Uniform Guidance and GaDOE guidance. In addition, the School District could potentially accrue an interest liability that would be owed back to the federal government. Furthermore, when the School District cannot meet the requirement to minimize the time elapsing between the transfer of funds and disbursement of those funds, provisions included in the Uniform Guidance allow GaDOE to change the method by which the School District is transferred funds and delay the School District’s receipt of these funds. This may include a requirement by GaDOE to submit invoices prior to being reimbursed for program expenditures. Recommendation: The School District should establish procedures to accurately forecast the cash needs of the Title I program and minimize the time elapsing between the transfer of funds from GaDOE and the disbursement of such funds by the School District. In addition, these procedures should be documented in writing in accordance with the Uniform Guidance Section 200.302(b)(6). Furthermore, management should develop and implement a monitoring process to ensure that these procedures are followed. Views of Responsible Officials: We concur with this finding.
FA 2023-003 Improve Controls over Cash Management Compliance Requirement: Cash Management Internal Control Impact: Material Weakness Compliance Impact: Material Noncompliance Federal Awarding Agency: U.S. Department of Education Pass-Through Entity: Georgia Department of Education AL Numbers and Titles: 84.010 - Title I Grants to Local Educational Agencies Federal Award Numbers: S010A210010-21A (Year: 2022), SO10A220010 (Year: 2023) Questioned Costs: None Identified Repeat of Prior Year Findings: FA 2022-003, FA 2021-001, FA 2020-001, FA 2019-001, FA 2018-001, FA 2017-002, FA 2016-001, FA 2015-002, FA 2014-003 Description: The School District made cash drawdowns in excess of immediate cash needs for the Title I Grants to Local Educational Agencies program. Background Information: The School District may request Title I Grants to Local Educational Agencies program funds from the Georgia Department of Education (GaDOE) once per month. GaDOE requires the School District to submit DE-0147 – Requests for Reimbursement of Monthly Cash Disbursements through the Grants Accounting Online Reporting System to receive program funds. When a DE-0147 request is submitted and approved, the funds are typically disbursed to the School District through an electronic payment process the next week. The School District submitted DE-0147 requests to receive a total of $426,546 in Title I funds from GaDOE during the fiscal year under review. 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 200.305(b) state that “For non-Federal entities other than states, payment methods must minimize the time elapsing between the transfer of funds…the pass-through entity and the disbursement by the non-Federal entity.” In addition, the Uniform Guidance Section 200.302(b)(6) requires the entity to develop written cash management procedures. Further, as noted in the Uniform Guidance Section 200.511, management is responsible for implementing reported corrective action to findings from previous audits. lll FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Condition: A review of all cash drawdowns and disbursements related to the Title I program was performed to determine if any excessive cash balances were maintained during the fiscal year under review. Cash balances in excess of program materiality were maintained for the Title I program for 273 days. Additionally, it was noted that the School District did not have appropriate internal controls in place over the cash drawdown process. Cause: In discussing this issue with the School District, they indicated that the lack of review of Federal grants resulted in excess cash drawdown request. Effect: The School District was not in compliance with the Uniform Guidance and GaDOE guidance. In addition, the School District could potentially accrue an interest liability that would be owed back to the federal government. Furthermore, when the School District cannot meet the requirement to minimize the time elapsing between the transfer of funds and disbursement of those funds, provisions included in the Uniform Guidance allow GaDOE to change the method by which the School District is transferred funds and delay the School District’s receipt of these funds. This may include a requirement by GaDOE to submit invoices prior to being reimbursed for program expenditures. Recommendation: The School District should establish procedures to accurately forecast the cash needs of the Title I program and minimize the time elapsing between the transfer of funds from GaDOE and the disbursement of such funds by the School District. In addition, these procedures should be documented in writing in accordance with the Uniform Guidance Section 200.302(b)(6). Furthermore, management should develop and implement a monitoring process to ensure that these procedures are followed. Views of Responsible Officials: We concur with this finding.
Finding 2023-001 Lack of Internal Controls over Cash Management Federal Agency: U.S. Department of the Treasury Federal Programs: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) Assistance Listing Numbers: 21.027 Award Number: SLFRP3171/4774 Award Years: 2021 Type of Finding: Material weakness in internal control over compliance and material noncompliance. Criteria: The requirement for cash management as contained in 2 CFR 200.305, which states advanced cash payments must be used only for applicable grant programs. Condition and Context: Procedures related to cash management were inadequate to ensure that funds drawn down were not used for other grant expenditures. The Village’s cash balances for all governmental funds amounted to $3,569,292 at September 30, 2023. The unearned revenues were $3,789,475 which resulted in a shortfall of $220,183. The unearned revenue for the CSLFRF Fund was $2,941,712. Cause: Lack of internal controls over cash management. Effect: The Village requested and received advances for various federal programs to cover expenditures. Deposits were used to fund other programs of the Village. Questioned Costs: $220,183, which is the shortfall between cash and investment balances and the unearned revenue balances. Repeat Finding: This is a repeat of finding 2022-001, and since this is a repeat finding we believe this to be a systemic issue. Recommendation: We recommend that the Village monitor grant budgets and drawdowns throughout the year and ensure that program funds are not being lent or borrowed between programs in an effort to ensure that unearned revenue balances do not exceed total cash and investments. Management’s Response: Management concurs with this finding. See corrective action plan.