2024-030 - Noncompliance with Medicaid Federal Matching and Reporting Requirements Related to a Means of Financing Reallocation State Entity: Louisiana Department of Health (LDH) Award Year: 2024 Award Number: 2405LA5MAP Compliance Requirements: Matching, Level of Effort, Earmarking; Reporting Repeat Finding: No See Schedule of Findings and Questioned Costs for chart/table. Condition: LDH did not have evidence that the state share of Medical Assistance Program (Medicaid) expenditures associated with $248,367,729 of federal expenditures reported on the June 30, 2024 CMS-64 quarterly federal expenditure report were expended using state funds as of the date of the report. Criteria: The state is required to pay part of the costs of providing Medicaid services and part of the costs of administering the program. The percentage of federal funding is determined based on the amount of the expenditures and the application of the Federal Medical Assistance Percentage that is determined for each state using a formula outlined in section 1905(b) of the Act (42 USC 1396d). 2 CFR 200.306(b) states that the basic criteria for acceptable matching include that the funds are verifiable from the non-federal entity’s records, are not included as contributions for any other federal award, and are not paid by the federal government under another federal award. The CMS-64 quarterly federal expenditure report requires the state to certify that the required amount of state and/or local funds were available and used to match the state’s allowable expenditures included in the report, and such state and/or local funds were in accordance with all applicable federal requirements for the non-federal share match of expenditures. The CMS-64 report also requires the state to certify that the expenditures included in the report are based on the state's accounting of actual recorded expenditures. Cause: LDH reallocated the means of financing for Medicaid expenditures totaling $118,660,095 from being funded by state funds to federal carryforward funds as of June 30, 2024. As a result, the expenditures were no longer considered eligible state match expenditures, and therefore, the total amount of the Medicaid expenditures (total computable which includes both state and federal shares - $367,027,824) associated with the $118,660,095 should have been excluded from the June 30, 2024 CMS-64 report. However, when LDH prepared the June 30, 2024 CMS-64 report, they only removed the $118,660,095 from the total computable amount. Effect: By not removing the full $367,027,824, LDH reported $248,367,729 in Medicaid expenditures on the CMS-64 report that they were unable to provide evidence that the state share of expenditures were funded with allowable sources, resulting in federal questioned costs of $168,070,442. The certifications attested to by LDH in the CMS-64 report upon submission to CMS were no longer accurate. Recommendation: LDH management should strengthen the system of internal controls over preparation and review of the quarterly CMS-64 reports to ensure expenditures are accurately reported and that the required amount of state and/or local funds are available and used to match the state’s allowable expenditures. Management’s Response and Corrective Action Plan: Management concurred with the finding and provided a corrective action plan (B-32).
Department of Health and Human Services FFAL #93.087, 90CU0095, 9/30/2018 – 9/29/2024 Enhance Safety of Children Affected by Substance Abuse Matching Significant Deficiency in Internal Control over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. In addition, 2 CFR 200.306 establishes that matching funds be verifiable from the non-federal entity’s records and are allowable under Subpart E – Cost Principles and 2 CFR 200.403(g) establishes that costs be adequately documented. Condition: In our sample of expenditures selected for testing, we noted 5.15 hours identified as Medicaid hours for one employee were not removed from the employee’s total hours when calculating the amount of match for the federal program. Cause: The employee’s Medicaid hours were not properly included within a revenues report due to the employee’s provider number not being included within the report parameters. Effect: The Center’s controls did not detect or correct the errors identified, which results in a reasonable possibility that the Center could claim as match disallowed costs under the federal award and would not be able to detect and correct noncompliance in a timely manner. Questioned Costs: Error resulted in $142; however, the Center has identified more than the match requirement under the federal program. Context: A total non-statistical sample of 12 out of 58 match transactions were selected for testing, which accounted for $49,219 out of $233,501 of federal match expenditures. Repeat Finding from Prior Year: Yes, prior year finding 2023-006 Recommendation: We recommend management review the procedures and control processes involving the match claim workbook to ensure compliance with the federal grant. Views of Responsible Officials: Management is in agreement.
Criteria: The requirements for matching are contained in 2 CFR section 200.306, program legislation, Federal awarding agency regulations, and the terms and conditions of the award. The requirements for level of effort and earmarking are contained in program legislation, Federal awarding agency regulations, and the terms and conditions of the award. Per review of the award documents for Certified Community Behavioral Health Clinics Program, key staff have identified the following level of effort requirements: Project Director at 50% Evaluator at 50% Any changes in the key staff including level of effort, involving separation from the projects for 3 or more months, or a 25% reduction in time dedicated to the projects requires prior approval from SAMHSA. Condition: During the audit, we noted that a level of effort for the Evaluator was below the 50% required minimum by the grant agreement. Context: The audit findings represent a systematic problem, see condition above. Effect: By not obtaining minimum level of effort percentages, the Clinic may have level of effort not in compliance with the requirement. Cause: There were ineffective controls in place during the period to ensure minimum level of effort requirement for key staff was tracking properly. Recommendation: We recommend that the Clinic work on improving tracking system for level of effort requirement to make sure the Organization stays in compliance. We would also recommend to contact SAMHSA staff that is identified in the Notice of Award if there is some uncertainty to address it timely. Repeat finding: This is not a repeat finding. Views of responsible officials and planned corrective actions: The Organization will ensure to track minimum level of effort requirement in regard to any key staff to stay in compliance. All invoices will be reviewed to ensure level of effort requirements are in compliance.
FINDING 2024‐001 – Matching, Level of Effort, Earmarking; Significant Deficiency in Internal Control over Compliance U.S. Department of the Treasury Assistance Listing Numbers: 21.027 Federal Program Names: Coronavirus State and Local Fiscal Recovery Funds Program Award Year: Fiscal Year 2022 Criteria: Per 2 CFR § 200.306, the non-federal entity must provide required matching contributions in accordance with the terms and conditions of the federal award. Contributions must be verifiable from the recipient’s records, not be included as contributions for any other federal award, be necessary, and reasonable. Condition and context: During our testing of matching, level of effort, and earmarking, one reimbursement request included all expenditures for reimbursement on the A-19, though the 10% match should have been excluded in accordance with the grant agreement. This was caught by the State of Washington Department of Commerce and subsequently corrected prior to disbursement of the reimbursement request. This was the only instance of noncompliance noted within the sample of 28, of which 25 were randomly selected and 3 were supplemented as they were material to the program. Questioned costs: None. Effect: Without internal controls that are designed and implemented appropriately, an error could occur and result in questioned costs or the need to repay a portion of the federal award. Cause: This was very early in the process of managing federal funding for the Association. Internal controls were not adequate to catch the error, which occurred because of a lack of experience relating to grant management within the Association. Repeat finding: No. Recommendation: We recommend that management implement procedures to ensure the matching expenditures are appropriately excluded from the reimbursement requests prior to submission, and in compliance with 2 CFR § 200.306 prior to being reported. Additional training could benefit the Association’s understanding of grant management and improve internal control processes as a result. Views of responsible officials and planned corrective actions: Management has implemented a formalized checklist for preparing reimbursement requests, which includes a step to verify exclusion of the 10% match. Manual calculations are performed on each match submittal form to verify the requested amount excludes the 10% match. All reimbursement requests are now subject to a dual review and approval process before submission to the granting agency. This was implemented March 2024. Contacts: Betty Buckley, Executive Director Maranda Davis, Grant Management Assistant
REFERENCE: 2024-103 CFDA NUMBER 84.425D – COVID 19 – EDUCATION STABILIZATION FUND CFDA NUMBER 84.425U – COVID 19 – EDUCATION STABILIZATION FUND U.S. DEPARTMENT OF EDUCATION – 2022 U.S. DEPARTMENT OF EDUCATION – 2023 U.S. DEPARTMENT OF EDUCATION – 2024 PASSED THROUGH ARIZONA STATE DEPARTMENT OF EDUCATION GRANT NUMBERS: S425D200038, S425D210038, S425U2100038 QUESTIONED COSTS N/A CONDITION For of 3 of 60 non-payroll transactions tested, documentation was not available to demonstrate that the cost was allowable and approved in the final grant application. The costs were removed from the completion report approved by the Arizona Department of Education on December 19, 2024. Additionally, a fiscal monitoring completed by the Arizona Department of Education in December 2024, that covered the period of March 15, 2020 through September 30, 2023, reported the following unallowable costs, associated with Education Stabilization Funds grants, that the School is required to repay. • $4,982.34 (ESSER I) for continual internet and phone services not included in the approved grant budget; • $547.82 (ESSER I) for an online foreign language program not included in the approved grant budget; • $631.14 (ESSER II) for outdoor play equipment not included in the approved grant budget. • $3,000.00 (ESSER II) for contracted technical coach services not approved in the approved grant budget. The total known questioned costs are $9,161.30. CRITERIA In accordance with OMB Compliance Supplement, Part 6 – Internal Control, non-Federal entities receiving Federal awards establish and maintain internal control over the Federal awards that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards. In accordance with Title 2 of the Code of Federal Regulations, Subtitle A Office of Management and Budget Guidance for Grants and Agreements, Chapter II Office of Management and Budget Guidance, Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart E -Cost Principles 200.403 Factors Affecting Allowability of Costs, except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: a. Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. b. Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. c. Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the recipient or subrecipient. d. Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. e. Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. f. Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. See also § 200.306(b). g. Be adequately documented. See also §§ 200.300 through 200.309 of this part. h. Administrative closeout costs may be incurred until the due date of the final report(s). If incurred, these costs must be liquidated prior to the due date of the final report(s) and charged to the final budget period of the award unless otherwise specified by the Federal agency. All other costs must be incurred during the approved budget period. At its discretion, the Federal agency is authorized to waive prior written approvals to carry forward unobligated balances to subsequent budget periods. See § 200.308(g)(3). EFFECT Program requirements were not complied with. The School did not maintain adequate documentation of all costs charged to the federal program. CAUSE Internal controls were not designed appropriately to ensure that all charges to the federal grant were allowable. RECOMMENDATION AND BENEFIT A control system should be developed and implemented to ensure that documentation of all purchases charged to a federal program include only allowable costs and that the costs are included in the grant applications. Any reviews should be documented. This will help ensure that program requirements are complied. VIEWS OF RESPONSIBLE OFFICIALS See Corrective Action Plan.
REFERENCE: 2024-102 CFDA NUMBER 84.367 – IMPROVING TEACHER QUALITY U.S. DEPARTMENT OF EDUCATION – 2023 PASSED THROUGH ARIZONA STATE DEPARTMENT OF EDUCATION GRANT NUMBER: S367A220049 QUESTIONED COSTS $28,100 CONDITION A fiscal monitoring completed by the Arizona Department of Education in December 2024, covering fiscal year 2023, reported $28,100 in unallowable costs for therapeutic services, not outlined in the approved grant budget, and that the School is required to repay. CRITERIA In accordance with Title 2 of the Code of Federal Regulations, Subtitle A Office of Management and Budget Guidance for Grants and Agreements, Chapter II Office of Management and Budget Guidance, Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Subpart E -Cost Principles 200.403 Factors Affecting Allowability of Costs, except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: a. Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. b. Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. c. Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the recipient or subrecipient. d. Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. e. Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. f. Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. See also § 200.306(b). g. Be adequately documented. See also §§ 200.300 through 200.309 of this part. h. Administrative closeout costs may be incurred until the due date of the final report(s). If incurred, these costs must be liquidated prior to the due date of the final report(s) and charged to the final budget period of the award unless otherwise specified by the Federal agency. All other costs must be incurred during the approved budget period. At its discretion, the Federal agency is authorized to waive prior written approvals to carry forward unobligated balances to subsequent budget periods. See § 200.308(g)(3). In accordance with OMB Compliance Supplement, Part 6 – Internal Control, non-Federal entities receiving Federal awards establish and maintain internal control over the Federal awards that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards. EFFECT Program requirements were not complied with. The School did not maintain adequate documentation of all costs charged to the federal program. CAUSE Internal controls were not designed appropriately to ensure that all charges to the federal grant were allowable. RECOMMENDATION AND BENEFIT A control system should be developed and implemented to ensure that documentation of all purchases charged to a federal program include only allowable costs and that the costs are included in the grant applications. Any reviews should be documented. This will help ensure that program requirements are complied. VIEWS OF RESPONSIBLE OFFICIALS See Corrective Action Plan.
Federal Agency: U.S. Department of Defense Program/Cluster: Community Economic Adjustment Assistance for Responding to Threats to the Resilience of a Military Installation Federal Assistance Listing Number: 12.003 Award No.: MIR1973-22-01 Award Year: 2023 Compliance Requirement: Matching, Level of Effort and Earmarking Type of Finding: Significant Deficiency in Internal Control over Compliance, Instance of Noncompliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR 200.430(g)(4) Salaries and wages of employees used in meeting cost sharing requirements on Federal awards must be supported in the same manner as salaries and wages claimed for reimbursement from Federal awards. 2 CFR 200.306(f) requires that if services furnished by a third-party organization are claimed as a cost-sharing match, these services must be valued at the employee’s regular rate of pay, plus an amount of fringe benefits that is reasonable, necessary, allocable, and otherwise allowable. Condition: We noted personnel services furnished by third-party organizations totaled $31,025 for the life of the grant, including $10,854 in fiscal year 2024. For the services furnished by third-party organizations as a local match of costs, the City valued the personnel time based on budgeted rates. The City could not provide documentation supporting the actual cost incurred by the third-party organization to support the in-kind services claimed. Cause: The City’s policies and procedures for in-kind services furnished by third-party organizations toward the grant did not include obtaining documentation to support the actual costs incurred and value of services claimed. Effect: The City did not comply with required local match of expenses for the grant. Questioned Costs: We identified questioned costs totaling $2,435 for unsubstantiated costs furnished by third-party organizations claimed as local cost share expenditures. Context/Sampling: A nonstatistical sample of 13 out of 54 local cost share expenditures were tested. This represents $9,114 of local cost share expenditures out of a total of $46,809 incurred for fiscal year 2024. Upon further investigation, the questioned costs were isolated to contributed services furnished by third-party organizations which totaled $10,854 in the fiscal year 2024. Repeat Finding from Prior Year(s): No. Recommendation: We recommend the City establish policies and procedures and documentation standards to comply with the Uniform Guidance standards for documentation of personnel expenses used to meet the local share of expenses. Views of Responsible Officials: Management concurs with the finding. See separate corrective action plan.
2024-003: Significant Deficiency in Internal Controls over Compliance and Compliance – Setup and Monitoring of Reporting and Match Agency: U.S. Department of Transportation, Federal Aviation Administration Program(s) and Federal Award Listing Number(s): Airport Improvement Program ALN: 20.106 FAIN: 3-02-0133-092-2022, 3-02-0133-098-2023, 3-02-0133-100-2023 New or Repeat: New Criteria: 2 CFR 200.303 requires internal controls to ensure accuracy in financial reporting, while 2 CFR 200.306 mandates proper tracking and documentation of matching contributions. Condition: Internal controls were not sufficiently designed and implemented to ensure that matching funds were correctly allocated in accordance with grant requirements. As a result, errors in the match setup were not detected in a timely manner, leading to discrepancies between the financial data provided for audit and the City and Borough’s prepared reports submitted to the grantor. Internal controls over reporting were not designed or implemented to detect and correct the errors prior to report submission. Context: The City and Borough’s financial system was not properly configured to allocate matching funds correctly, resulting in discrepancies in reported amounts. Specifically, an under-allocation to an Airport Improvement Program (AIP) grant and an over-allocation to the match occurred in one project of $474,704 and an under-allocation to match and over-allocation of $107,651 to two other AIP grants occurred. Effect: Overall expenses were under-allocated to the AIP and over-allocated to match funding. The overall impact of these errors resulted in discrepancies between reported amounts and supporting documentation. Due to amount reported as AIP costs being under-reported, this is considered immaterial non-compliance and is reported as an other matter. Questioned costs: No questioned costs as overall program impact was the under-allocation of expenses to the grants as of June 30, 2024. The City and Borough elected not to adjust the amounts reported in the schedule of expenditures of federal awards, since allocations and reports can be corrected in the following reporting year. Cause: Internal controls were not designed or implemented to detect the incorrect system configuration for allocating project expenses between grant and match funds in a timely manner, nor was the report preparation review process sufficiently designed or implemented to detect and correct the under-and over-allocations of project costs being reported. Recommendation: We recommend the City and Borough improve monitoring controls over the setup for project expense allocations and the review controls over report preparation process to ensure that errors are detected and corrected in a timely manner. View of responsible officials: Management concurs with this finding, see corrective action plan.
2024-003: Significant Deficiency in Internal Controls over Compliance and Compliance – Setup and Monitoring of Reporting and Match Agency: U.S. Department of Transportation, Federal Aviation Administration Program(s) and Federal Award Listing Number(s): Airport Improvement Program ALN: 20.106 FAIN: 3-02-0133-092-2022, 3-02-0133-098-2023, 3-02-0133-100-2023 New or Repeat: New Criteria: 2 CFR 200.303 requires internal controls to ensure accuracy in financial reporting, while 2 CFR 200.306 mandates proper tracking and documentation of matching contributions. Condition: Internal controls were not sufficiently designed and implemented to ensure that matching funds were correctly allocated in accordance with grant requirements. As a result, errors in the match setup were not detected in a timely manner, leading to discrepancies between the financial data provided for audit and the City and Borough’s prepared reports submitted to the grantor. Internal controls over reporting were not designed or implemented to detect and correct the errors prior to report submission. Context: The City and Borough’s financial system was not properly configured to allocate matching funds correctly, resulting in discrepancies in reported amounts. Specifically, an under-allocation to an Airport Improvement Program (AIP) grant and an over-allocation to the match occurred in one project of $474,704 and an under-allocation to match and over-allocation of $107,651 to two other AIP grants occurred. Effect: Overall expenses were under-allocated to the AIP and over-allocated to match funding. The overall impact of these errors resulted in discrepancies between reported amounts and supporting documentation. Due to amount reported as AIP costs being under-reported, this is considered immaterial non-compliance and is reported as an other matter. Questioned costs: No questioned costs as overall program impact was the under-allocation of expenses to the grants as of June 30, 2024. The City and Borough elected not to adjust the amounts reported in the schedule of expenditures of federal awards, since allocations and reports can be corrected in the following reporting year. Cause: Internal controls were not designed or implemented to detect the incorrect system configuration for allocating project expenses between grant and match funds in a timely manner, nor was the report preparation review process sufficiently designed or implemented to detect and correct the under-and over-allocations of project costs being reported. Recommendation: We recommend the City and Borough improve monitoring controls over the setup for project expense allocations and the review controls over report preparation process to ensure that errors are detected and corrected in a timely manner. View of responsible officials: Management concurs with this finding, see corrective action plan.
2024-003: Significant Deficiency in Internal Controls over Compliance and Compliance – Setup and Monitoring of Reporting and Match Agency: U.S. Department of Transportation, Federal Aviation Administration Program(s) and Federal Award Listing Number(s): Airport Improvement Program ALN: 20.106 FAIN: 3-02-0133-092-2022, 3-02-0133-098-2023, 3-02-0133-100-2023 New or Repeat: New Criteria: 2 CFR 200.303 requires internal controls to ensure accuracy in financial reporting, while 2 CFR 200.306 mandates proper tracking and documentation of matching contributions. Condition: Internal controls were not sufficiently designed and implemented to ensure that matching funds were correctly allocated in accordance with grant requirements. As a result, errors in the match setup were not detected in a timely manner, leading to discrepancies between the financial data provided for audit and the City and Borough’s prepared reports submitted to the grantor. Internal controls over reporting were not designed or implemented to detect and correct the errors prior to report submission. Context: The City and Borough’s financial system was not properly configured to allocate matching funds correctly, resulting in discrepancies in reported amounts. Specifically, an under-allocation to an Airport Improvement Program (AIP) grant and an over-allocation to the match occurred in one project of $474,704 and an under-allocation to match and over-allocation of $107,651 to two other AIP grants occurred. Effect: Overall expenses were under-allocated to the AIP and over-allocated to match funding. The overall impact of these errors resulted in discrepancies between reported amounts and supporting documentation. Due to amount reported as AIP costs being under-reported, this is considered immaterial non-compliance and is reported as an other matter. Questioned costs: No questioned costs as overall program impact was the under-allocation of expenses to the grants as of June 30, 2024. The City and Borough elected not to adjust the amounts reported in the schedule of expenditures of federal awards, since allocations and reports can be corrected in the following reporting year. Cause: Internal controls were not designed or implemented to detect the incorrect system configuration for allocating project expenses between grant and match funds in a timely manner, nor was the report preparation review process sufficiently designed or implemented to detect and correct the under-and over-allocations of project costs being reported. Recommendation: We recommend the City and Borough improve monitoring controls over the setup for project expense allocations and the review controls over report preparation process to ensure that errors are detected and corrected in a timely manner. View of responsible officials: Management concurs with this finding, see corrective action plan.
2024-003: Significant Deficiency in Internal Controls over Compliance and Compliance – Setup and Monitoring of Reporting and Match Agency: U.S. Department of Transportation, Federal Aviation Administration Program(s) and Federal Award Listing Number(s): Airport Improvement Program ALN: 20.106 FAIN: 3-02-0133-092-2022, 3-02-0133-098-2023, 3-02-0133-100-2023 New or Repeat: New Criteria: 2 CFR 200.303 requires internal controls to ensure accuracy in financial reporting, while 2 CFR 200.306 mandates proper tracking and documentation of matching contributions. Condition: Internal controls were not sufficiently designed and implemented to ensure that matching funds were correctly allocated in accordance with grant requirements. As a result, errors in the match setup were not detected in a timely manner, leading to discrepancies between the financial data provided for audit and the City and Borough’s prepared reports submitted to the grantor. Internal controls over reporting were not designed or implemented to detect and correct the errors prior to report submission. Context: The City and Borough’s financial system was not properly configured to allocate matching funds correctly, resulting in discrepancies in reported amounts. Specifically, an under-allocation to an Airport Improvement Program (AIP) grant and an over-allocation to the match occurred in one project of $474,704 and an under-allocation to match and over-allocation of $107,651 to two other AIP grants occurred. Effect: Overall expenses were under-allocated to the AIP and over-allocated to match funding. The overall impact of these errors resulted in discrepancies between reported amounts and supporting documentation. Due to amount reported as AIP costs being under-reported, this is considered immaterial non-compliance and is reported as an other matter. Questioned costs: No questioned costs as overall program impact was the under-allocation of expenses to the grants as of June 30, 2024. The City and Borough elected not to adjust the amounts reported in the schedule of expenditures of federal awards, since allocations and reports can be corrected in the following reporting year. Cause: Internal controls were not designed or implemented to detect the incorrect system configuration for allocating project expenses between grant and match funds in a timely manner, nor was the report preparation review process sufficiently designed or implemented to detect and correct the under-and over-allocations of project costs being reported. Recommendation: We recommend the City and Borough improve monitoring controls over the setup for project expense allocations and the review controls over report preparation process to ensure that errors are detected and corrected in a timely manner. View of responsible officials: Management concurs with this finding, see corrective action plan.
2024-003: Significant Deficiency in Internal Controls over Compliance and Compliance – Setup and Monitoring of Reporting and Match Agency: U.S. Department of Transportation, Federal Aviation Administration Program(s) and Federal Award Listing Number(s): Airport Improvement Program ALN: 20.106 FAIN: 3-02-0133-092-2022, 3-02-0133-098-2023, 3-02-0133-100-2023 New or Repeat: New Criteria: 2 CFR 200.303 requires internal controls to ensure accuracy in financial reporting, while 2 CFR 200.306 mandates proper tracking and documentation of matching contributions. Condition: Internal controls were not sufficiently designed and implemented to ensure that matching funds were correctly allocated in accordance with grant requirements. As a result, errors in the match setup were not detected in a timely manner, leading to discrepancies between the financial data provided for audit and the City and Borough’s prepared reports submitted to the grantor. Internal controls over reporting were not designed or implemented to detect and correct the errors prior to report submission. Context: The City and Borough’s financial system was not properly configured to allocate matching funds correctly, resulting in discrepancies in reported amounts. Specifically, an under-allocation to an Airport Improvement Program (AIP) grant and an over-allocation to the match occurred in one project of $474,704 and an under-allocation to match and over-allocation of $107,651 to two other AIP grants occurred. Effect: Overall expenses were under-allocated to the AIP and over-allocated to match funding. The overall impact of these errors resulted in discrepancies between reported amounts and supporting documentation. Due to amount reported as AIP costs being under-reported, this is considered immaterial non-compliance and is reported as an other matter. Questioned costs: No questioned costs as overall program impact was the under-allocation of expenses to the grants as of June 30, 2024. The City and Borough elected not to adjust the amounts reported in the schedule of expenditures of federal awards, since allocations and reports can be corrected in the following reporting year. Cause: Internal controls were not designed or implemented to detect the incorrect system configuration for allocating project expenses between grant and match funds in a timely manner, nor was the report preparation review process sufficiently designed or implemented to detect and correct the under-and over-allocations of project costs being reported. Recommendation: We recommend the City and Borough improve monitoring controls over the setup for project expense allocations and the review controls over report preparation process to ensure that errors are detected and corrected in a timely manner. View of responsible officials: Management concurs with this finding, see corrective action plan.
2024-003: Significant Deficiency in Internal Controls over Compliance and Compliance – Setup and Monitoring of Reporting and Match Agency: U.S. Department of Transportation, Federal Aviation Administration Program(s) and Federal Award Listing Number(s): Airport Improvement Program ALN: 20.106 FAIN: 3-02-0133-092-2022, 3-02-0133-098-2023, 3-02-0133-100-2023 New or Repeat: New Criteria: 2 CFR 200.303 requires internal controls to ensure accuracy in financial reporting, while 2 CFR 200.306 mandates proper tracking and documentation of matching contributions. Condition: Internal controls were not sufficiently designed and implemented to ensure that matching funds were correctly allocated in accordance with grant requirements. As a result, errors in the match setup were not detected in a timely manner, leading to discrepancies between the financial data provided for audit and the City and Borough’s prepared reports submitted to the grantor. Internal controls over reporting were not designed or implemented to detect and correct the errors prior to report submission. Context: The City and Borough’s financial system was not properly configured to allocate matching funds correctly, resulting in discrepancies in reported amounts. Specifically, an under-allocation to an Airport Improvement Program (AIP) grant and an over-allocation to the match occurred in one project of $474,704 and an under-allocation to match and over-allocation of $107,651 to two other AIP grants occurred. Effect: Overall expenses were under-allocated to the AIP and over-allocated to match funding. The overall impact of these errors resulted in discrepancies between reported amounts and supporting documentation. Due to amount reported as AIP costs being under-reported, this is considered immaterial non-compliance and is reported as an other matter. Questioned costs: No questioned costs as overall program impact was the under-allocation of expenses to the grants as of June 30, 2024. The City and Borough elected not to adjust the amounts reported in the schedule of expenditures of federal awards, since allocations and reports can be corrected in the following reporting year. Cause: Internal controls were not designed or implemented to detect the incorrect system configuration for allocating project expenses between grant and match funds in a timely manner, nor was the report preparation review process sufficiently designed or implemented to detect and correct the under-and over-allocations of project costs being reported. Recommendation: We recommend the City and Borough improve monitoring controls over the setup for project expense allocations and the review controls over report preparation process to ensure that errors are detected and corrected in a timely manner. View of responsible officials: Management concurs with this finding, see corrective action plan.
2024-003: Significant Deficiency in Internal Controls over Compliance and Compliance – Setup and Monitoring of Reporting and Match Agency: U.S. Department of Transportation, Federal Aviation Administration Program(s) and Federal Award Listing Number(s): Airport Improvement Program ALN: 20.106 FAIN: 3-02-0133-092-2022, 3-02-0133-098-2023, 3-02-0133-100-2023 New or Repeat: New Criteria: 2 CFR 200.303 requires internal controls to ensure accuracy in financial reporting, while 2 CFR 200.306 mandates proper tracking and documentation of matching contributions. Condition: Internal controls were not sufficiently designed and implemented to ensure that matching funds were correctly allocated in accordance with grant requirements. As a result, errors in the match setup were not detected in a timely manner, leading to discrepancies between the financial data provided for audit and the City and Borough’s prepared reports submitted to the grantor. Internal controls over reporting were not designed or implemented to detect and correct the errors prior to report submission. Context: The City and Borough’s financial system was not properly configured to allocate matching funds correctly, resulting in discrepancies in reported amounts. Specifically, an under-allocation to an Airport Improvement Program (AIP) grant and an over-allocation to the match occurred in one project of $474,704 and an under-allocation to match and over-allocation of $107,651 to two other AIP grants occurred. Effect: Overall expenses were under-allocated to the AIP and over-allocated to match funding. The overall impact of these errors resulted in discrepancies between reported amounts and supporting documentation. Due to amount reported as AIP costs being under-reported, this is considered immaterial non-compliance and is reported as an other matter. Questioned costs: No questioned costs as overall program impact was the under-allocation of expenses to the grants as of June 30, 2024. The City and Borough elected not to adjust the amounts reported in the schedule of expenditures of federal awards, since allocations and reports can be corrected in the following reporting year. Cause: Internal controls were not designed or implemented to detect the incorrect system configuration for allocating project expenses between grant and match funds in a timely manner, nor was the report preparation review process sufficiently designed or implemented to detect and correct the under-and over-allocations of project costs being reported. Recommendation: We recommend the City and Borough improve monitoring controls over the setup for project expense allocations and the review controls over report preparation process to ensure that errors are detected and corrected in a timely manner. View of responsible officials: Management concurs with this finding, see corrective action plan.
2024-003: Significant Deficiency in Internal Controls over Compliance and Compliance – Setup and Monitoring of Reporting and Match Agency: U.S. Department of Transportation, Federal Aviation Administration Program(s) and Federal Award Listing Number(s): Airport Improvement Program ALN: 20.106 FAIN: 3-02-0133-092-2022, 3-02-0133-098-2023, 3-02-0133-100-2023 New or Repeat: New Criteria: 2 CFR 200.303 requires internal controls to ensure accuracy in financial reporting, while 2 CFR 200.306 mandates proper tracking and documentation of matching contributions. Condition: Internal controls were not sufficiently designed and implemented to ensure that matching funds were correctly allocated in accordance with grant requirements. As a result, errors in the match setup were not detected in a timely manner, leading to discrepancies between the financial data provided for audit and the City and Borough’s prepared reports submitted to the grantor. Internal controls over reporting were not designed or implemented to detect and correct the errors prior to report submission. Context: The City and Borough’s financial system was not properly configured to allocate matching funds correctly, resulting in discrepancies in reported amounts. Specifically, an under-allocation to an Airport Improvement Program (AIP) grant and an over-allocation to the match occurred in one project of $474,704 and an under-allocation to match and over-allocation of $107,651 to two other AIP grants occurred. Effect: Overall expenses were under-allocated to the AIP and over-allocated to match funding. The overall impact of these errors resulted in discrepancies between reported amounts and supporting documentation. Due to amount reported as AIP costs being under-reported, this is considered immaterial non-compliance and is reported as an other matter. Questioned costs: No questioned costs as overall program impact was the under-allocation of expenses to the grants as of June 30, 2024. The City and Borough elected not to adjust the amounts reported in the schedule of expenditures of federal awards, since allocations and reports can be corrected in the following reporting year. Cause: Internal controls were not designed or implemented to detect the incorrect system configuration for allocating project expenses between grant and match funds in a timely manner, nor was the report preparation review process sufficiently designed or implemented to detect and correct the under-and over-allocations of project costs being reported. Recommendation: We recommend the City and Borough improve monitoring controls over the setup for project expense allocations and the review controls over report preparation process to ensure that errors are detected and corrected in a timely manner. View of responsible officials: Management concurs with this finding, see corrective action plan.
2024-003: Significant Deficiency in Internal Controls over Compliance and Compliance – Setup and Monitoring of Reporting and Match Agency: U.S. Department of Transportation, Federal Aviation Administration Program(s) and Federal Award Listing Number(s): Airport Improvement Program ALN: 20.106 FAIN: 3-02-0133-092-2022, 3-02-0133-098-2023, 3-02-0133-100-2023 New or Repeat: New Criteria: 2 CFR 200.303 requires internal controls to ensure accuracy in financial reporting, while 2 CFR 200.306 mandates proper tracking and documentation of matching contributions. Condition: Internal controls were not sufficiently designed and implemented to ensure that matching funds were correctly allocated in accordance with grant requirements. As a result, errors in the match setup were not detected in a timely manner, leading to discrepancies between the financial data provided for audit and the City and Borough’s prepared reports submitted to the grantor. Internal controls over reporting were not designed or implemented to detect and correct the errors prior to report submission. Context: The City and Borough’s financial system was not properly configured to allocate matching funds correctly, resulting in discrepancies in reported amounts. Specifically, an under-allocation to an Airport Improvement Program (AIP) grant and an over-allocation to the match occurred in one project of $474,704 and an under-allocation to match and over-allocation of $107,651 to two other AIP grants occurred. Effect: Overall expenses were under-allocated to the AIP and over-allocated to match funding. The overall impact of these errors resulted in discrepancies between reported amounts and supporting documentation. Due to amount reported as AIP costs being under-reported, this is considered immaterial non-compliance and is reported as an other matter. Questioned costs: No questioned costs as overall program impact was the under-allocation of expenses to the grants as of June 30, 2024. The City and Borough elected not to adjust the amounts reported in the schedule of expenditures of federal awards, since allocations and reports can be corrected in the following reporting year. Cause: Internal controls were not designed or implemented to detect the incorrect system configuration for allocating project expenses between grant and match funds in a timely manner, nor was the report preparation review process sufficiently designed or implemented to detect and correct the under-and over-allocations of project costs being reported. Recommendation: We recommend the City and Borough improve monitoring controls over the setup for project expense allocations and the review controls over report preparation process to ensure that errors are detected and corrected in a timely manner. View of responsible officials: Management concurs with this finding, see corrective action plan.
2024-003: Significant Deficiency in Internal Controls over Compliance and Compliance – Setup and Monitoring of Reporting and Match Agency: U.S. Department of Transportation, Federal Aviation Administration Program(s) and Federal Award Listing Number(s): Airport Improvement Program ALN: 20.106 FAIN: 3-02-0133-092-2022, 3-02-0133-098-2023, 3-02-0133-100-2023 New or Repeat: New Criteria: 2 CFR 200.303 requires internal controls to ensure accuracy in financial reporting, while 2 CFR 200.306 mandates proper tracking and documentation of matching contributions. Condition: Internal controls were not sufficiently designed and implemented to ensure that matching funds were correctly allocated in accordance with grant requirements. As a result, errors in the match setup were not detected in a timely manner, leading to discrepancies between the financial data provided for audit and the City and Borough’s prepared reports submitted to the grantor. Internal controls over reporting were not designed or implemented to detect and correct the errors prior to report submission. Context: The City and Borough’s financial system was not properly configured to allocate matching funds correctly, resulting in discrepancies in reported amounts. Specifically, an under-allocation to an Airport Improvement Program (AIP) grant and an over-allocation to the match occurred in one project of $474,704 and an under-allocation to match and over-allocation of $107,651 to two other AIP grants occurred. Effect: Overall expenses were under-allocated to the AIP and over-allocated to match funding. The overall impact of these errors resulted in discrepancies between reported amounts and supporting documentation. Due to amount reported as AIP costs being under-reported, this is considered immaterial non-compliance and is reported as an other matter. Questioned costs: No questioned costs as overall program impact was the under-allocation of expenses to the grants as of June 30, 2024. The City and Borough elected not to adjust the amounts reported in the schedule of expenditures of federal awards, since allocations and reports can be corrected in the following reporting year. Cause: Internal controls were not designed or implemented to detect the incorrect system configuration for allocating project expenses between grant and match funds in a timely manner, nor was the report preparation review process sufficiently designed or implemented to detect and correct the under-and over-allocations of project costs being reported. Recommendation: We recommend the City and Borough improve monitoring controls over the setup for project expense allocations and the review controls over report preparation process to ensure that errors are detected and corrected in a timely manner. View of responsible officials: Management concurs with this finding, see corrective action plan.
2024-003: Significant Deficiency in Internal Controls over Compliance and Compliance – Setup and Monitoring of Reporting and Match Agency: U.S. Department of Transportation, Federal Aviation Administration Program(s) and Federal Award Listing Number(s): Airport Improvement Program ALN: 20.106 FAIN: 3-02-0133-092-2022, 3-02-0133-098-2023, 3-02-0133-100-2023 New or Repeat: New Criteria: 2 CFR 200.303 requires internal controls to ensure accuracy in financial reporting, while 2 CFR 200.306 mandates proper tracking and documentation of matching contributions. Condition: Internal controls were not sufficiently designed and implemented to ensure that matching funds were correctly allocated in accordance with grant requirements. As a result, errors in the match setup were not detected in a timely manner, leading to discrepancies between the financial data provided for audit and the City and Borough’s prepared reports submitted to the grantor. Internal controls over reporting were not designed or implemented to detect and correct the errors prior to report submission. Context: The City and Borough’s financial system was not properly configured to allocate matching funds correctly, resulting in discrepancies in reported amounts. Specifically, an under-allocation to an Airport Improvement Program (AIP) grant and an over-allocation to the match occurred in one project of $474,704 and an under-allocation to match and over-allocation of $107,651 to two other AIP grants occurred. Effect: Overall expenses were under-allocated to the AIP and over-allocated to match funding. The overall impact of these errors resulted in discrepancies between reported amounts and supporting documentation. Due to amount reported as AIP costs being under-reported, this is considered immaterial non-compliance and is reported as an other matter. Questioned costs: No questioned costs as overall program impact was the under-allocation of expenses to the grants as of June 30, 2024. The City and Borough elected not to adjust the amounts reported in the schedule of expenditures of federal awards, since allocations and reports can be corrected in the following reporting year. Cause: Internal controls were not designed or implemented to detect the incorrect system configuration for allocating project expenses between grant and match funds in a timely manner, nor was the report preparation review process sufficiently designed or implemented to detect and correct the under-and over-allocations of project costs being reported. Recommendation: We recommend the City and Borough improve monitoring controls over the setup for project expense allocations and the review controls over report preparation process to ensure that errors are detected and corrected in a timely manner. View of responsible officials: Management concurs with this finding, see corrective action plan.
2024-003: Significant Deficiency in Internal Controls over Compliance and Compliance – Setup and Monitoring of Reporting and Match Agency: U.S. Department of Transportation, Federal Aviation Administration Program(s) and Federal Award Listing Number(s): Airport Improvement Program ALN: 20.106 FAIN: 3-02-0133-092-2022, 3-02-0133-098-2023, 3-02-0133-100-2023 New or Repeat: New Criteria: 2 CFR 200.303 requires internal controls to ensure accuracy in financial reporting, while 2 CFR 200.306 mandates proper tracking and documentation of matching contributions. Condition: Internal controls were not sufficiently designed and implemented to ensure that matching funds were correctly allocated in accordance with grant requirements. As a result, errors in the match setup were not detected in a timely manner, leading to discrepancies between the financial data provided for audit and the City and Borough’s prepared reports submitted to the grantor. Internal controls over reporting were not designed or implemented to detect and correct the errors prior to report submission. Context: The City and Borough’s financial system was not properly configured to allocate matching funds correctly, resulting in discrepancies in reported amounts. Specifically, an under-allocation to an Airport Improvement Program (AIP) grant and an over-allocation to the match occurred in one project of $474,704 and an under-allocation to match and over-allocation of $107,651 to two other AIP grants occurred. Effect: Overall expenses were under-allocated to the AIP and over-allocated to match funding. The overall impact of these errors resulted in discrepancies between reported amounts and supporting documentation. Due to amount reported as AIP costs being under-reported, this is considered immaterial non-compliance and is reported as an other matter. Questioned costs: No questioned costs as overall program impact was the under-allocation of expenses to the grants as of June 30, 2024. The City and Borough elected not to adjust the amounts reported in the schedule of expenditures of federal awards, since allocations and reports can be corrected in the following reporting year. Cause: Internal controls were not designed or implemented to detect the incorrect system configuration for allocating project expenses between grant and match funds in a timely manner, nor was the report preparation review process sufficiently designed or implemented to detect and correct the under-and over-allocations of project costs being reported. Recommendation: We recommend the City and Borough improve monitoring controls over the setup for project expense allocations and the review controls over report preparation process to ensure that errors are detected and corrected in a timely manner. View of responsible officials: Management concurs with this finding, see corrective action plan.
2024-003: Significant Deficiency in Internal Controls over Compliance and Compliance – Setup and Monitoring of Reporting and Match Agency: U.S. Department of Transportation, Federal Aviation Administration Program(s) and Federal Award Listing Number(s): Airport Improvement Program ALN: 20.106 FAIN: 3-02-0133-092-2022, 3-02-0133-098-2023, 3-02-0133-100-2023 New or Repeat: New Criteria: 2 CFR 200.303 requires internal controls to ensure accuracy in financial reporting, while 2 CFR 200.306 mandates proper tracking and documentation of matching contributions. Condition: Internal controls were not sufficiently designed and implemented to ensure that matching funds were correctly allocated in accordance with grant requirements. As a result, errors in the match setup were not detected in a timely manner, leading to discrepancies between the financial data provided for audit and the City and Borough’s prepared reports submitted to the grantor. Internal controls over reporting were not designed or implemented to detect and correct the errors prior to report submission. Context: The City and Borough’s financial system was not properly configured to allocate matching funds correctly, resulting in discrepancies in reported amounts. Specifically, an under-allocation to an Airport Improvement Program (AIP) grant and an over-allocation to the match occurred in one project of $474,704 and an under-allocation to match and over-allocation of $107,651 to two other AIP grants occurred. Effect: Overall expenses were under-allocated to the AIP and over-allocated to match funding. The overall impact of these errors resulted in discrepancies between reported amounts and supporting documentation. Due to amount reported as AIP costs being under-reported, this is considered immaterial non-compliance and is reported as an other matter. Questioned costs: No questioned costs as overall program impact was the under-allocation of expenses to the grants as of June 30, 2024. The City and Borough elected not to adjust the amounts reported in the schedule of expenditures of federal awards, since allocations and reports can be corrected in the following reporting year. Cause: Internal controls were not designed or implemented to detect the incorrect system configuration for allocating project expenses between grant and match funds in a timely manner, nor was the report preparation review process sufficiently designed or implemented to detect and correct the under-and over-allocations of project costs being reported. Recommendation: We recommend the City and Borough improve monitoring controls over the setup for project expense allocations and the review controls over report preparation process to ensure that errors are detected and corrected in a timely manner. View of responsible officials: Management concurs with this finding, see corrective action plan.
Finding 2024-003 – Reporting Name of Federal Agency: Department of Labor- Federal Program Name and Assistance Listing Number: YouthBuild Program -17.274 Federal Award Identification Number and Year: YB-38231-22-60-A-36 May 02, 2022 through September 01, 2025. Criteria In accordance with the Funding Opportunity Announcement, the Company is required to provide and expend cash, in-kind or third party resources equivalent to exactly 25 percent of the grant award amount as "matching" funds. Match can be in the form of cash, in-kind contributions and third-party contributions and must meet the requirement found at 2 CFR 200.306, 2 CFR 200.403, 2 CFR 200.434, and 2 CFR 2900.8. 2 CFR 2900.8 requires that match is recognized at the time in which the funds are expended. The matching funds are required to be reported in the quarterly financial reports submitted by the Company. Condition The Company did not record in-kind matching funds contributions and related expense for the year ending June 30, 2024. In addition, the Company did not report their in-kind matching funds contributions or the related expenses on the quarterly financial report to the Department of Labor. Cause Internal controls over reporting of in-kind contributions and in-kind expenses were not operating effectively. Effect This resulted in an understatement of revenue and expense of $702,250 for the year ending June 30, 2024. In addition, the Company was not in compliance with the reporting requirements of the YouthBuild program. Questioned Costs N/A. Context A sample of 2 financial reports out of 2 financial reports required during the year ended June 30, 2024 did not report the in-kind contribution of matching funds. Identification as a Repeat Finding This finding is not a repeat finding. Recommendation We recommend that management reviews its internal controls over reporting of the ETA-9130 Financial Report to ensure complete and accurate reports. Additionally, we recommend that management strengthens its policies and procedures to ensure proper recognition and recording of revenue from in-kind contributions and related expenses. Views of Responsible Officials The Crenulated will request a quarterly in-kind contribution report from DOE and will ensure the in-kind contributions are recorded in the financial statements. The Crenulated plans to hire an in-house
Finding Reference Number: 2024-008 NH Fish and Game Department Fish and Wildlife Cluster (Assistance Listing #15.605, #15.611, #15.626) Federal Award Numbers: F22AF00995-00, F22AF00929-00, F23AF03086-00, F22AF00514-01, F22AF02616-02, F21AF04100-02, F21AF03886-03 Federal Award Year: 2021, 2022, 2023 U.S. Department of Interior Compliance Requirement: Matching Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: N/A Statistically Valid Sample: The sample was not intended to be, and was not, a statistically valid sample. Criteria In-kind match requirement is to test records to corroborate the values placed on in-kind contributions (including third party in-kind contributions) are in accordance with 2 CFR 200.306, 200.434, and 200.414, and the terms and conditions of the award. Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide 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 To meet the federal match required under the program, the New Hampshire Fish and Game Department (the Department) utilizes in-kind match that is earned from volunteer hours and costs contributed by its third party subrecipient. During our testwork over in-kind match, we identified the following: A. For 7 of 9 subrecipient invoices selected for testwork used to support the Department’s in-kind match, we were unable to obtain documentation to support the amount of the in-kind match earned. For each of the 7 sample selections, the value of the in-kind contribution was handwritten on the subrecipient's invoice for unrelated services. There was no documentation obtained to support the accuracy of this handwritten amount. Upon inquiry, the Department confirmed that no further verification was performed to ensure the subrecipient's in-kind match was accurate and based upon costs in support of the grant associated with the in-kind match. B. For 1 of 4 volunteer in-kind match contribution calculations, the Department incorrectly allocated volunteer hours using the prior fiscal year rates, resulting in an excess of in-kind match being recorded as earned. In addition, we were unable to verify the existence of 1 of the volunteer timesheets used in this calculation for this sample selection. Cause The cause of the condition found is primarily due to insufficient internal controls to ensure that the value of the match contributed by its subrecipient is complete and accurate. Due to the long-standing and collaborative relationship between the Department and the subrecipient, the Department has not developed or implemented formalized policies and procedures related to validating the existence of in-kind match earned. Further, related to the volunteer hours, the cause of the condition is due to human error. With over 250 timesheets to process, the volume of data and calculations are susceptible to error. Effect The effect of the condition found is that the Department did not have appropriate documentation to support the in-kind match earned and applied against its federal award in support of federal funds that were drawn. This could lead to unallowable costs being charged to the grant if the sufficient match was not made. Questioned Costs: $201,250 Recommendation We recommend that the Department implement written policies and procedures surrounding the tracking of in-kind match. Internal controls should be implemented to ensure the accuracy of the in-kind match earned, including ensuring that there is supporting documentation to substantiate the amount earned. The existing policies and procedures should also be enhanced related to volunteer time to monitor to ensure that all required timesheets are completed before using the volunteer time in support of its matching requirement and that the appropriate rate is used when determining the value of the volunteer in-kind match. View of Responsible Officials: Management concurs with this finding except for the questioned cost amount. Rejoinder: As documented within the condition found, we were unable to obtain sufficient documentation to support in-kind matching costs. As a result of our audit procedures, we identified questioned costs of $201,250.
Finding Reference Number: 2024-008 NH Fish and Game Department Fish and Wildlife Cluster (Assistance Listing #15.605, #15.611, #15.626) Federal Award Numbers: F22AF00995-00, F22AF00929-00, F23AF03086-00, F22AF00514-01, F22AF02616-02, F21AF04100-02, F21AF03886-03 Federal Award Year: 2021, 2022, 2023 U.S. Department of Interior Compliance Requirement: Matching Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: N/A Statistically Valid Sample: The sample was not intended to be, and was not, a statistically valid sample. Criteria In-kind match requirement is to test records to corroborate the values placed on in-kind contributions (including third party in-kind contributions) are in accordance with 2 CFR 200.306, 200.434, and 200.414, and the terms and conditions of the award. Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide 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 To meet the federal match required under the program, the New Hampshire Fish and Game Department (the Department) utilizes in-kind match that is earned from volunteer hours and costs contributed by its third party subrecipient. During our testwork over in-kind match, we identified the following: A. For 7 of 9 subrecipient invoices selected for testwork used to support the Department’s in-kind match, we were unable to obtain documentation to support the amount of the in-kind match earned. For each of the 7 sample selections, the value of the in-kind contribution was handwritten on the subrecipient's invoice for unrelated services. There was no documentation obtained to support the accuracy of this handwritten amount. Upon inquiry, the Department confirmed that no further verification was performed to ensure the subrecipient's in-kind match was accurate and based upon costs in support of the grant associated with the in-kind match. B. For 1 of 4 volunteer in-kind match contribution calculations, the Department incorrectly allocated volunteer hours using the prior fiscal year rates, resulting in an excess of in-kind match being recorded as earned. In addition, we were unable to verify the existence of 1 of the volunteer timesheets used in this calculation for this sample selection. Cause The cause of the condition found is primarily due to insufficient internal controls to ensure that the value of the match contributed by its subrecipient is complete and accurate. Due to the long-standing and collaborative relationship between the Department and the subrecipient, the Department has not developed or implemented formalized policies and procedures related to validating the existence of in-kind match earned. Further, related to the volunteer hours, the cause of the condition is due to human error. With over 250 timesheets to process, the volume of data and calculations are susceptible to error. Effect The effect of the condition found is that the Department did not have appropriate documentation to support the in-kind match earned and applied against its federal award in support of federal funds that were drawn. This could lead to unallowable costs being charged to the grant if the sufficient match was not made. Questioned Costs: $201,250 Recommendation We recommend that the Department implement written policies and procedures surrounding the tracking of in-kind match. Internal controls should be implemented to ensure the accuracy of the in-kind match earned, including ensuring that there is supporting documentation to substantiate the amount earned. The existing policies and procedures should also be enhanced related to volunteer time to monitor to ensure that all required timesheets are completed before using the volunteer time in support of its matching requirement and that the appropriate rate is used when determining the value of the volunteer in-kind match. View of Responsible Officials: Management concurs with this finding except for the questioned cost amount. Rejoinder: As documented within the condition found, we were unable to obtain sufficient documentation to support in-kind matching costs. As a result of our audit procedures, we identified questioned costs of $201,250.
Finding Reference Number: 2024-008 NH Fish and Game Department Fish and Wildlife Cluster (Assistance Listing #15.605, #15.611, #15.626) Federal Award Numbers: F22AF00995-00, F22AF00929-00, F23AF03086-00, F22AF00514-01, F22AF02616-02, F21AF04100-02, F21AF03886-03 Federal Award Year: 2021, 2022, 2023 U.S. Department of Interior Compliance Requirement: Matching Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: N/A Statistically Valid Sample: The sample was not intended to be, and was not, a statistically valid sample. Criteria In-kind match requirement is to test records to corroborate the values placed on in-kind contributions (including third party in-kind contributions) are in accordance with 2 CFR 200.306, 200.434, and 200.414, and the terms and conditions of the award. Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide 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 To meet the federal match required under the program, the New Hampshire Fish and Game Department (the Department) utilizes in-kind match that is earned from volunteer hours and costs contributed by its third party subrecipient. During our testwork over in-kind match, we identified the following: A. For 7 of 9 subrecipient invoices selected for testwork used to support the Department’s in-kind match, we were unable to obtain documentation to support the amount of the in-kind match earned. For each of the 7 sample selections, the value of the in-kind contribution was handwritten on the subrecipient's invoice for unrelated services. There was no documentation obtained to support the accuracy of this handwritten amount. Upon inquiry, the Department confirmed that no further verification was performed to ensure the subrecipient's in-kind match was accurate and based upon costs in support of the grant associated with the in-kind match. B. For 1 of 4 volunteer in-kind match contribution calculations, the Department incorrectly allocated volunteer hours using the prior fiscal year rates, resulting in an excess of in-kind match being recorded as earned. In addition, we were unable to verify the existence of 1 of the volunteer timesheets used in this calculation for this sample selection. Cause The cause of the condition found is primarily due to insufficient internal controls to ensure that the value of the match contributed by its subrecipient is complete and accurate. Due to the long-standing and collaborative relationship between the Department and the subrecipient, the Department has not developed or implemented formalized policies and procedures related to validating the existence of in-kind match earned. Further, related to the volunteer hours, the cause of the condition is due to human error. With over 250 timesheets to process, the volume of data and calculations are susceptible to error. Effect The effect of the condition found is that the Department did not have appropriate documentation to support the in-kind match earned and applied against its federal award in support of federal funds that were drawn. This could lead to unallowable costs being charged to the grant if the sufficient match was not made. Questioned Costs: $201,250 Recommendation We recommend that the Department implement written policies and procedures surrounding the tracking of in-kind match. Internal controls should be implemented to ensure the accuracy of the in-kind match earned, including ensuring that there is supporting documentation to substantiate the amount earned. The existing policies and procedures should also be enhanced related to volunteer time to monitor to ensure that all required timesheets are completed before using the volunteer time in support of its matching requirement and that the appropriate rate is used when determining the value of the volunteer in-kind match. View of Responsible Officials: Management concurs with this finding except for the questioned cost amount. Rejoinder: As documented within the condition found, we were unable to obtain sufficient documentation to support in-kind matching costs. As a result of our audit procedures, we identified questioned costs of $201,250.
2024-022 - Inadequate Controls over and Noncompliance with Matching and Reporting Requirements Related to the Cost Share Process State Entity: Louisiana Department of Health (LDH) Award Year: 2024 Award Number: 2405LA5MAP Compliance Requirements: Matching, Level of Effort, Earmarking; Reporting Repeat Finding: No See Schedule of Findings and Questioned Costs for chart/table. Condition: The Louisiana Department of Health (LDH) did not have adequate controls in place to ensure the Federal Medical Assistance Percentage (FMAP) was appropriately updated in the cost share tables within LaGov for two out of four quarters (50%) in fiscal year ending June 30, 2024 for the Medical Assistance Program (Medicaid). The FMAP rate in the cost share tables was 1.5% higher than the rates established in the Federal Register for the quarters ending March 31, 2024 and June 30, 2024. Criteria: The state is required to pay part of the costs of providing Medicaid services and part of the costs of administering the program. The percentage of federal funding is determined based on the amount of the expenditures and application of the FMAP that is determined for each state using a formula outlined in section 1905(b) of the Act (42 USC 1396d). 2 CFR 200.306(b) states that the basic criteria for acceptable matching include that the funds are verifiable from the non-federal entity’s records, are not included as contributions for any other federal award, and are not paid by the federal government under another federal award. The CMS-64 quarterly federal expenditure report requires the state to certify that the required amount of state and/or local funds were available and used to match the state’s allowable expenditures included in the report, and such state and/or local funds were in accordance with all applicable federal requirements for the non-federal share match of expenditures. The CMS-64 report also requires the state to certify that the expenditures included in the report are based on the state's accounting of actual recorded expenditures. Cause: The cost share tables that automatically calculate the federal and state share of expenditures were not properly updated for the period January 1, 2024 through June 30, 2024. Effect: Using the incorrect FMAP to allocate the state share of expenditures caused more expenditures to be allocated to federal funds. This error resulted in federal questioned costs of $87,591,863. Due to this, LDH was unable to provide evidence that the state match requirement was met for the federal expenditures reported on the March 31, 2024 and June 30, 2024 CMS-64 federal expenditure reports. Recommendation: LDH management should ensure the cost share tables are appropriately updated for all periods during the fiscal year. In addition, LDH should strengthen controls over preparation and review of the quarterly CMS-64 federal expenditure reports to ensure that the appropriate federal match is applied to qualifying expenditures and the required amount of state and/or local funds are available and used to match the state’s allowable expenditures. Management’s Response and Corrective Action Plan: Management concurred with the finding and provided a corrective action plan (B-10).
2024-030 - Noncompliance with Medicaid Federal Matching and Reporting Requirements Related to a Means of Financing Reallocation State Entity: Louisiana Department of Health (LDH) Award Year: 2024 Award Number: 2405LA5MAP Compliance Requirements: Matching, Level of Effort, Earmarking; Reporting Repeat Finding: No See Schedule of Findings and Questioned Costs for chart/table. Condition: LDH did not have evidence that the state share of Medical Assistance Program (Medicaid) expenditures associated with $248,367,729 of federal expenditures reported on the June 30, 2024 CMS-64 quarterly federal expenditure report were expended using state funds as of the date of the report. Criteria: The state is required to pay part of the costs of providing Medicaid services and part of the costs of administering the program. The percentage of federal funding is determined based on the amount of the expenditures and the application of the Federal Medical Assistance Percentage that is determined for each state using a formula outlined in section 1905(b) of the Act (42 USC 1396d). 2 CFR 200.306(b) states that the basic criteria for acceptable matching include that the funds are verifiable from the non-federal entity’s records, are not included as contributions for any other federal award, and are not paid by the federal government under another federal award. The CMS-64 quarterly federal expenditure report requires the state to certify that the required amount of state and/or local funds were available and used to match the state’s allowable expenditures included in the report, and such state and/or local funds were in accordance with all applicable federal requirements for the non-federal share match of expenditures. The CMS-64 report also requires the state to certify that the expenditures included in the report are based on the state's accounting of actual recorded expenditures. Cause: LDH reallocated the means of financing for Medicaid expenditures totaling $118,660,095 from being funded by state funds to federal carryforward funds as of June 30, 2024. As a result, the expenditures were no longer considered eligible state match expenditures, and therefore, the total amount of the Medicaid expenditures (total computable which includes both state and federal shares - $367,027,824) associated with the $118,660,095 should have been excluded from the June 30, 2024 CMS-64 report. However, when LDH prepared the June 30, 2024 CMS-64 report, they only removed the $118,660,095 from the total computable amount. Effect: By not removing the full $367,027,824, LDH reported $248,367,729 in Medicaid expenditures on the CMS-64 report that they were unable to provide evidence that the state share of expenditures were funded with allowable sources, resulting in federal questioned costs of $168,070,442. The certifications attested to by LDH in the CMS-64 report upon submission to CMS were no longer accurate. Recommendation: LDH management should strengthen the system of internal controls over preparation and review of the quarterly CMS-64 reports to ensure expenditures are accurately reported and that the required amount of state and/or local funds are available and used to match the state’s allowable expenditures. Management’s Response and Corrective Action Plan: Management concurred with the finding and provided a corrective action plan (B-32).
Department of Health and Human Services FFAL #93.087, 90CU0095, 9/30/2018 – 9/29/2024 Enhance Safety of Children Affected by Substance Abuse Matching Significant Deficiency in Internal Control over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. In addition, 2 CFR 200.306 establishes that matching funds be verifiable from the non-federal entity’s records and are allowable under Subpart E – Cost Principles and 2 CFR 200.403(g) establishes that costs be adequately documented. Condition: In our sample of expenditures selected for testing, we noted 5.15 hours identified as Medicaid hours for one employee were not removed from the employee’s total hours when calculating the amount of match for the federal program. Cause: The employee’s Medicaid hours were not properly included within a revenues report due to the employee’s provider number not being included within the report parameters. Effect: The Center’s controls did not detect or correct the errors identified, which results in a reasonable possibility that the Center could claim as match disallowed costs under the federal award and would not be able to detect and correct noncompliance in a timely manner. Questioned Costs: Error resulted in $142; however, the Center has identified more than the match requirement under the federal program. Context: A total non-statistical sample of 12 out of 58 match transactions were selected for testing, which accounted for $49,219 out of $233,501 of federal match expenditures. Repeat Finding from Prior Year: Yes, prior year finding 2023-006 Recommendation: We recommend management review the procedures and control processes involving the match claim workbook to ensure compliance with the federal grant. Views of Responsible Officials: Management is in agreement.
Criteria: The requirements for matching are contained in 2 CFR section 200.306, program legislation, Federal awarding agency regulations, and the terms and conditions of the award. The requirements for level of effort and earmarking are contained in program legislation, Federal awarding agency regulations, and the terms and conditions of the award. Per review of the award documents for Certified Community Behavioral Health Clinics Program, key staff have identified the following level of effort requirements: Project Director at 50% Evaluator at 50% Any changes in the key staff including level of effort, involving separation from the projects for 3 or more months, or a 25% reduction in time dedicated to the projects requires prior approval from SAMHSA. Condition: During the audit, we noted that a level of effort for the Evaluator was below the 50% required minimum by the grant agreement. Context: The audit findings represent a systematic problem, see condition above. Effect: By not obtaining minimum level of effort percentages, the Clinic may have level of effort not in compliance with the requirement. Cause: There were ineffective controls in place during the period to ensure minimum level of effort requirement for key staff was tracking properly. Recommendation: We recommend that the Clinic work on improving tracking system for level of effort requirement to make sure the Organization stays in compliance. We would also recommend to contact SAMHSA staff that is identified in the Notice of Award if there is some uncertainty to address it timely. Repeat finding: This is not a repeat finding. Views of responsible officials and planned corrective actions: The Organization will ensure to track minimum level of effort requirement in regard to any key staff to stay in compliance. All invoices will be reviewed to ensure level of effort requirements are in compliance.
FINDING 2024‐001 – Matching, Level of Effort, Earmarking; Significant Deficiency in Internal Control over Compliance U.S. Department of the Treasury Assistance Listing Numbers: 21.027 Federal Program Names: Coronavirus State and Local Fiscal Recovery Funds Program Award Year: Fiscal Year 2022 Criteria: Per 2 CFR § 200.306, the non-federal entity must provide required matching contributions in accordance with the terms and conditions of the federal award. Contributions must be verifiable from the recipient’s records, not be included as contributions for any other federal award, be necessary, and reasonable. Condition and context: During our testing of matching, level of effort, and earmarking, one reimbursement request included all expenditures for reimbursement on the A-19, though the 10% match should have been excluded in accordance with the grant agreement. This was caught by the State of Washington Department of Commerce and subsequently corrected prior to disbursement of the reimbursement request. This was the only instance of noncompliance noted within the sample of 28, of which 25 were randomly selected and 3 were supplemented as they were material to the program. Questioned costs: None. Effect: Without internal controls that are designed and implemented appropriately, an error could occur and result in questioned costs or the need to repay a portion of the federal award. Cause: This was very early in the process of managing federal funding for the Association. Internal controls were not adequate to catch the error, which occurred because of a lack of experience relating to grant management within the Association. Repeat finding: No. Recommendation: We recommend that management implement procedures to ensure the matching expenditures are appropriately excluded from the reimbursement requests prior to submission, and in compliance with 2 CFR § 200.306 prior to being reported. Additional training could benefit the Association’s understanding of grant management and improve internal control processes as a result. Views of responsible officials and planned corrective actions: Management has implemented a formalized checklist for preparing reimbursement requests, which includes a step to verify exclusion of the 10% match. Manual calculations are performed on each match submittal form to verify the requested amount excludes the 10% match. All reimbursement requests are now subject to a dual review and approval process before submission to the granting agency. This was implemented March 2024. Contacts: Betty Buckley, Executive Director Maranda Davis, Grant Management Assistant
FINDING 2023-003 Subject: COVID-19: Coronavirus State and Local Fiscal Recovery Funds - Body Camera - Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Period of Performance Federal Agency: Department of the Treasury Federal Program: COVID-19: Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): 71391 Pass-Through Entity: Indiana Department of Homeland Security Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/ Cost Principles, Period of Performance Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 17 CITY OF MICHIGAN CITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The City's Police Department applied for and was awarded a body camera grant from the Indiana Department of Homeland Security (IDHS). The City's Police Department sought reimbursement from the IDHS in October of 2023. An invoice from Utility, dated October 28, 2022, in the amount of $600,000 for body cameras was submitted for the reimbursement. The invoice was originally paid by the City with American Rescue Plan Act (ARPA) funds on April 3, 2023. The City received reimbursement of $61,740 from the IDHS on December 5, 2023, which was receipted into the City's Grant Fund along with the City's local match in the amount of $30,870. The Controller's Office did an adjustment on December 31, 2023, in the amount of $92,610, to reimburse the ARP Coronavirus LF Recovery Fund and decrease the Grant Fund, for the reimbursement of $61,740 and the local share of $30,870. However, per the grant agreement with the IDHS, "If the subrecipient incurs a financial obligation prior to approval of the State, then the subrecipient will be required to reimburse the State for the amount of funds that were not approved." As such, the expenditure was not an allowable activity or allowable cost and was outside of the period of performance due to the City incurring the expense prior to signing the grant agreement with the IDHS on March 3, 2023. The lack of internal controls and noncompliance were isolated to the purchase noted above. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (c) Be consistent with policies and procedures that apply uniformly to both federallyfinanced and other activities of the non-Federal entity. . . . (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. . . ." 2 CFR 200.306(b) states: "For all Federal awards, any shared costs or matching funds and all contributions, including cash and third-party in-kind contributions, must be accepted as part of the non-Federal entity's cost sharing or matching when such contributions meet all of the following criteria: (1) Are verifiable from the non-Federal entity's records; INDIANA STATE BOARD OF ACCOUNTS 18 CITY OF MICHIGAN CITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (2) Are not included as contributions for any other Federal award; (3) Are necessary and reasonable for accomplishment of project or program objectives; (4) Are allowable under subpart E of this part; (5) Are not paid by the Federal Government under another Federal award, except where the Federal statute authorizing a program specifically provides that Federal funds made available for such program can be applied to matching or cost sharing requirements of other Federal programs; (6) Are provided for in the approved budget when required by the Federal awarding agency; and (7) Conform to other provisions of this part, as applicable." The Grant Agreement states in part: "Any purchases made by the Subrecipient that are not authorized by the U.S. Department of the Treasury allowability guidelines, the Subrecipient's Project or State, will not be reimbursed under this grant." "Pre-award costs, as defined in 2 CFR 200.458, may not be paid with funding from this award." 2 CFR 200.458 states: "Pre-award costs are those incurred prior to the effective date of the Federal award or subaward directly pursuant to the negotiation and in anticipation of the Federal award where such costs are necessary for efficient and timely performance of the scope of work. Such costs are allowable only to the extent that they would have been allowable if incurred after the date of the Federal award and only with the written approval of the Federal awarding agency. If charged to the award, these costs must be charged to the initial budget period of the award, unless otherwise specified by the Federal awarding agency or pass-through entity." Cause Management had not developed a system of internal controls that would have prevented or detected material noncompliance. The City did not ensure that the policies and procedures in place related to allowable or unallowable activities, allowable costs and cost principles, and period of performance were complied with at the acceptance of the grant from the IDHS. 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, an invoice that was previously paid with other federal award funds was submitted for reimbursement to another agency. The original invoice was outside of the period of performance and unallowable as related to the award from the IDHS. Furthermore, noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs We identified $61,740 in questioned costs as noted above in the Condition and Context. INDIANA STATE BOARD OF ACCOUNTS 19 CITY OF MICHIGAN CITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that management of the City establish a proper system of internal controls, including strengthening its policies and procedures to ensure all costs submitted for reimbursement are not already reimbursed by another federal award and are within the period of performance. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Federal Agency: Department of Justice Federal Assistance Listing Number: 16.756 Program: Court Appointed Special Advocates Award Number: 15JDP-21-GK-02762-CASA Criteria: The Uniform Guidance in 2 CFR §200.403 states that for costs to be allowable under federal awards, they must be adequately documented and there must be sufficient documentation. “Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under federal awards: a) Be necessary and reasonable for the performance of the federal award and be allocable thereto under these principles. b) Conform to any limitations or exclusions set forth in these principles or in the federal award as to types or amount of cost items. c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-federal entity. d) Be accorded consistent treatment. A cost may not be assigned to a federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the federal award as an indirect cost. e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. See also §200.306(b). g) Be adequately documented. See also §200.300 through §200.309. h) Cost must be incurred during the approved budget period. The federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to §200.308(e)(3).” Condition: National CASA/GAL allocated expenditures to programs during 2023 based on a direct allocation methodology. This allocation is done manually, and the support was inconsistently maintained. During our testing of costs (excluding salaries), we noted in accordance with §200.403(g) that: • 4 of 60 transactions was partially charged in the incorrect fiscal period, though within the period of performance. The cost of these 4 transactions were $5,246. • 2 of 60 transactions had an error in the allocation rate utilized. The cost of these 8 transactions were $33. • 4 of 60 transactions lacked documentation of review and approval of the allocation of costs made through journal entries. Cause: National CASA/GAL did not have procedures in place to document, and maintain the documentation of, the review and approval of the allocation methodology and the allocation of costs (journal entries). Effect or Potential Effect: Without adequate controls in place to ensure costs are allowable and reimbursable, including controls over review of allocation methodologies, National CASA/GAL could incorrectly charge expenditures to the federal programs. Known Questioned Costs: $5,279 Likely Questioned Costs: $131,271 Context: This is a condition identified per review of National CASA/GAL’s compliance with specified requirements not using a statistically valid sample. Nonpayroll costs in 2023 were $3,612,154. The sample tested consisted of 60 transactions totaling $145,247. Questioned costs consist of amounts lacking underlying support or amounts in excess of supported allocations. Identification as a Repeat Finding: 2022-004 and 2022-008. Recommendation: We recommend that policies and procedures be updated to ensure underlying support, as well as support for allocations, is appropriately maintained as required by §200.403. Views of Responsible Officials: Management concurs with the finding that documentation of support and allocation of costs should be maintained. Policies and procedures were enhanced in 2023 and through 2024 to ensure compliance.
Matching Federal Agency: U.S. Department of Housing and Urban Development Program: Continuum of Care Program (ALN 14.267) Federal Assistance Identification Number or Pass-Through Numbers: MN0311L5K002007, MN0364L5K002005, MN0372L5K002105 Federal Award Years: Year ended December 31, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria: 2 CFR 200.303(a), requires that 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. 24 CFR 578.73(a) requires that the recipient must match all grant funds, except for leasing funds, with no less than 25 percent of funds or in-kind contributions from other sources. For grantees where there is more than one grant agreement, the 25 percent match must be provided on a grant-by-grant basis. Cash match must be used for the costs of activities that are eligible as program costs under 24 CFR 578 Subpart D. 2 CFR 200.306(b)(1) requires that any shared costs or matching funds must be verifiable from the non-Federal entity’s records. Condition: While we were able to test a manual compensating control over matching, we were not able to review and test the automated application controls and related ITGCs within the State’s MAXIS system. The State was not able to provide information regarding the design and implementation of MAXIS system controls, nor were we able to test those controls directly. Cause: The State was not able to provide information regarding the design and effectiveness of MAXIS system controls nor were we able to test those controls directly due to complexities of data privacy and resources within the State. Effect: There is an increased risk of noncompliance with the matching requirement. Context: Applies to the automated application controls over matching. Questioned Costs: None Repeat Finding?: Yes Recommendation: We suggest that the County encourage the State to provide an independent audit of the design and implementation of MAXIS system controls. View of responsible officials of the auditee: Hennepin County has reviewed and agrees with the finding and recommendation.
U.S. Department of State Professional & Cultural Exchange Programs Assistance Listing #19.415 Finding 2023-004 Material Weakness, Material Non-compliance – Matching Criteria: 2 CFR 200.306 requires cost sharing to be verifiable from a non-federal entity's records. Condition: Cost sharing amounts were not readily verifiable. Questioned Costs: Approximately $69,000 in adjustments were made in 2023 to recapture cost share amounts that occurred in a previous period(s). Context: Adjustments were made to capture cost share expenses for both current and prior periods, which were not previously tracked, which led to expense accounts in the current year with a credit balance, indicating cost share amounts could not be readily substantiated by underlying source documentation. Effect: By not maintaining adequate and consistent documentation for cost share amounts, the Organization may not be able to readily prevent, detect, and correct potential errors in matching. The Organization must maintain written records to support all allowable costs which are claimed as being its contribution. Such records are subject to audit. In the event the Organization does not provide the minimum amount of cost sharing as stipulated in the Organization’s approved budget, the Department of State’s contribution may be reduced in kind. Cause: Current processes do not include maintaining adequate documentation to track and record cost share amounts. Recommendation: The Organization should improve policies & procedures to document how cost share amounts are tracked in the accounting system to ensure amounts are verifiable. Management’s Response: Management considers this resolved as of August 2024. For 2023 and prior, there were no cost sharing amounts booked to the General Ledger. When applicable, cost share was calculated prior to a drawdown by reducing a drawdown request by any necessary cost share commitment. For 2023, Greenheart made several one-time adjustments to move costs to a new cost share account in the general ledger. This way, Greenheart can track total cost share. As previously stated, Greenheart did not previously allocate cost sharing items to a cost sharing account in the General Ledger. In 2024, a new template was created for grant expense submissions which identifies Cost Share coding from the time that a payment request is made. The grants team is responsible for completing this file and identifying how much of any expense incurred should be considered cost share. This approach allows for supporting documentation to be available for all cost share items and eliminates the need for adjusting journal entries to break out cost share.
U.S. Department of State Professional & Cultural Exchange Programs Assistance Listing #19.415 Finding 2023-004 Material Weakness, Material Non-compliance – Matching Criteria: 2 CFR 200.306 requires cost sharing to be verifiable from a non-federal entity's records. Condition: Cost sharing amounts were not readily verifiable. Questioned Costs: Approximately $69,000 in adjustments were made in 2023 to recapture cost share amounts that occurred in a previous period(s). Context: Adjustments were made to capture cost share expenses for both current and prior periods, which were not previously tracked, which led to expense accounts in the current year with a credit balance, indicating cost share amounts could not be readily substantiated by underlying source documentation. Effect: By not maintaining adequate and consistent documentation for cost share amounts, the Organization may not be able to readily prevent, detect, and correct potential errors in matching. The Organization must maintain written records to support all allowable costs which are claimed as being its contribution. Such records are subject to audit. In the event the Organization does not provide the minimum amount of cost sharing as stipulated in the Organization’s approved budget, the Department of State’s contribution may be reduced in kind. Cause: Current processes do not include maintaining adequate documentation to track and record cost share amounts. Recommendation: The Organization should improve policies & procedures to document how cost share amounts are tracked in the accounting system to ensure amounts are verifiable. Management’s Response: Management considers this resolved as of August 2024. For 2023 and prior, there were no cost sharing amounts booked to the General Ledger. When applicable, cost share was calculated prior to a drawdown by reducing a drawdown request by any necessary cost share commitment. For 2023, Greenheart made several one-time adjustments to move costs to a new cost share account in the general ledger. This way, Greenheart can track total cost share. As previously stated, Greenheart did not previously allocate cost sharing items to a cost sharing account in the General Ledger. In 2024, a new template was created for grant expense submissions which identifies Cost Share coding from the time that a payment request is made. The grants team is responsible for completing this file and identifying how much of any expense incurred should be considered cost share. This approach allows for supporting documentation to be available for all cost share items and eliminates the need for adjusting journal entries to break out cost share.
2 CFR § 2400.101 gives regulatory effect to the Department of Housing and Urban Development for 2 CFR § 200.303(a) which requires that 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. 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 § 2400.101 gives regulatory effect to the Department of Housing and Urban Development for 2 CFR § 200.403 which states except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. See also § 200.306(b). (g) Be adequately documented. See also §§ 200.300 through 200.309 of this part. (h) Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to § 200.308(e)(3). State ex rel. McClure v. Hagerman, 155 Ohio St. 320 (1951) provides that expenditures made by a governmental unit should serve a public purpose. Typically, the determination of what constitutes a “proper public purpose” rests with the judgment of the governmental entity, unless such determination is arbitrary or unreasonable. Even if a purchase is reasonable, Ohio Attorney General Opinion 82-006 indicates that it must be memorialized by a duly enacted ordinance or resolution and may have a prospective effect only. Auditor of State Bulletin 2003-005 Expenditure of Public Funds/Proper “Public Purpose” states, in part, the Auditor of State’s Office will only question expenditures where the legislative determination of a public purpose is manifestly arbitrary and incorrect. The Lima-Allen County Regional Planning Commission, administrator of the Community Housing Impact and Preservation Program - CHIP (#B-C-21-1AB-1) for Allen County, incurred a charge of $4,386 for Admin January 2023 charges on invoice #106558 dated February 7, 2023 from the Great Lakes Community Action Partnership. On July 6, 2023, check number 7330652 was issued by Allen County which included payment of $4,386 on invoice number 106558. On August 3, 2023, check number 7332670 was issued by Allen County which included payment of $4,386 on invoice number 106558 which was approved by Tara Bales, Executive Director of the Lima-Allen County Regional Planning Commission. As a result, possibly due to the failure of an existing control or procedure, invoice number 106558 was paid twice resulting an overpayment of $4,386. On October 2, 2024, the Great Lakes Community Action Partnership refunded the overpayment with check number 20765 in the amount of $4,386. This refund was recorded in the Community Development Grant Fund (2414). The Lima-Allen County Regional Planning Commission should implement an additional control(s) and/or procedure(s) to prevent the duplicate payment of invoices.
FINDING 2023-003 Subject: COVID-19: Coronavirus State and Local Fiscal Recovery Funds - Body Camera - Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Period of Performance Federal Agency: Department of the Treasury Federal Program: COVID-19: Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): 71391 Pass-Through Entity: Indiana Department of Homeland Security Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/ Cost Principles, Period of Performance Audit Findings: Material Weakness, Other Matters INDIANA STATE BOARD OF ACCOUNTS 17 CITY OF MICHIGAN CITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The City's Police Department applied for and was awarded a body camera grant from the Indiana Department of Homeland Security (IDHS). The City's Police Department sought reimbursement from the IDHS in October of 2023. An invoice from Utility, dated October 28, 2022, in the amount of $600,000 for body cameras was submitted for the reimbursement. The invoice was originally paid by the City with American Rescue Plan Act (ARPA) funds on April 3, 2023. The City received reimbursement of $61,740 from the IDHS on December 5, 2023, which was receipted into the City's Grant Fund along with the City's local match in the amount of $30,870. The Controller's Office did an adjustment on December 31, 2023, in the amount of $92,610, to reimburse the ARP Coronavirus LF Recovery Fund and decrease the Grant Fund, for the reimbursement of $61,740 and the local share of $30,870. However, per the grant agreement with the IDHS, "If the subrecipient incurs a financial obligation prior to approval of the State, then the subrecipient will be required to reimburse the State for the amount of funds that were not approved." As such, the expenditure was not an allowable activity or allowable cost and was outside of the period of performance due to the City incurring the expense prior to signing the grant agreement with the IDHS on March 3, 2023. The lack of internal controls and noncompliance were isolated to the purchase noted above. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (c) Be consistent with policies and procedures that apply uniformly to both federallyfinanced and other activities of the non-Federal entity. . . . (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. . . ." 2 CFR 200.306(b) states: "For all Federal awards, any shared costs or matching funds and all contributions, including cash and third-party in-kind contributions, must be accepted as part of the non-Federal entity's cost sharing or matching when such contributions meet all of the following criteria: (1) Are verifiable from the non-Federal entity's records; INDIANA STATE BOARD OF ACCOUNTS 18 CITY OF MICHIGAN CITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (2) Are not included as contributions for any other Federal award; (3) Are necessary and reasonable for accomplishment of project or program objectives; (4) Are allowable under subpart E of this part; (5) Are not paid by the Federal Government under another Federal award, except where the Federal statute authorizing a program specifically provides that Federal funds made available for such program can be applied to matching or cost sharing requirements of other Federal programs; (6) Are provided for in the approved budget when required by the Federal awarding agency; and (7) Conform to other provisions of this part, as applicable." The Grant Agreement states in part: "Any purchases made by the Subrecipient that are not authorized by the U.S. Department of the Treasury allowability guidelines, the Subrecipient's Project or State, will not be reimbursed under this grant." "Pre-award costs, as defined in 2 CFR 200.458, may not be paid with funding from this award." 2 CFR 200.458 states: "Pre-award costs are those incurred prior to the effective date of the Federal award or subaward directly pursuant to the negotiation and in anticipation of the Federal award where such costs are necessary for efficient and timely performance of the scope of work. Such costs are allowable only to the extent that they would have been allowable if incurred after the date of the Federal award and only with the written approval of the Federal awarding agency. If charged to the award, these costs must be charged to the initial budget period of the award, unless otherwise specified by the Federal awarding agency or pass-through entity." Cause Management had not developed a system of internal controls that would have prevented or detected material noncompliance. The City did not ensure that the policies and procedures in place related to allowable or unallowable activities, allowable costs and cost principles, and period of performance were complied with at the acceptance of the grant from the IDHS. 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, an invoice that was previously paid with other federal award funds was submitted for reimbursement to another agency. The original invoice was outside of the period of performance and unallowable as related to the award from the IDHS. Furthermore, noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs We identified $61,740 in questioned costs as noted above in the Condition and Context. INDIANA STATE BOARD OF ACCOUNTS 19 CITY OF MICHIGAN CITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that management of the City establish a proper system of internal controls, including strengthening its policies and procedures to ensure all costs submitted for reimbursement are not already reimbursed by another federal award and are within the period of performance. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Federal Agency: Department of Justice Federal Assistance Listing Number: 16.756 Program: Court Appointed Special Advocates Award Number: 15JDP-21-GK-02762-CASA Criteria: The Uniform Guidance in 2 CFR §200.403 states that for costs to be allowable under federal awards, they must be adequately documented and there must be sufficient documentation. “Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under federal awards: a) Be necessary and reasonable for the performance of the federal award and be allocable thereto under these principles. b) Conform to any limitations or exclusions set forth in these principles or in the federal award as to types or amount of cost items. c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-federal entity. d) Be accorded consistent treatment. A cost may not be assigned to a federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the federal award as an indirect cost. e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. See also §200.306(b). g) Be adequately documented. See also §200.300 through §200.309. h) Cost must be incurred during the approved budget period. The federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to §200.308(e)(3).” Condition: National CASA/GAL allocated expenditures to programs during 2023 based on a direct allocation methodology. This allocation is done manually, and the support was inconsistently maintained. During our testing of costs (excluding salaries), we noted in accordance with §200.403(g) that: • 4 of 60 transactions was partially charged in the incorrect fiscal period, though within the period of performance. The cost of these 4 transactions were $5,246. • 2 of 60 transactions had an error in the allocation rate utilized. The cost of these 8 transactions were $33. • 4 of 60 transactions lacked documentation of review and approval of the allocation of costs made through journal entries. Cause: National CASA/GAL did not have procedures in place to document, and maintain the documentation of, the review and approval of the allocation methodology and the allocation of costs (journal entries). Effect or Potential Effect: Without adequate controls in place to ensure costs are allowable and reimbursable, including controls over review of allocation methodologies, National CASA/GAL could incorrectly charge expenditures to the federal programs. Known Questioned Costs: $5,279 Likely Questioned Costs: $131,271 Context: This is a condition identified per review of National CASA/GAL’s compliance with specified requirements not using a statistically valid sample. Nonpayroll costs in 2023 were $3,612,154. The sample tested consisted of 60 transactions totaling $145,247. Questioned costs consist of amounts lacking underlying support or amounts in excess of supported allocations. Identification as a Repeat Finding: 2022-004 and 2022-008. Recommendation: We recommend that policies and procedures be updated to ensure underlying support, as well as support for allocations, is appropriately maintained as required by §200.403. Views of Responsible Officials: Management concurs with the finding that documentation of support and allocation of costs should be maintained. Policies and procedures were enhanced in 2023 and through 2024 to ensure compliance.
Matching Federal Agency: U.S. Department of Housing and Urban Development Program: Continuum of Care Program (ALN 14.267) Federal Assistance Identification Number or Pass-Through Numbers: MN0311L5K002007, MN0364L5K002005, MN0372L5K002105 Federal Award Years: Year ended December 31, 2023 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria: 2 CFR 200.303(a), requires that 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. 24 CFR 578.73(a) requires that the recipient must match all grant funds, except for leasing funds, with no less than 25 percent of funds or in-kind contributions from other sources. For grantees where there is more than one grant agreement, the 25 percent match must be provided on a grant-by-grant basis. Cash match must be used for the costs of activities that are eligible as program costs under 24 CFR 578 Subpart D. 2 CFR 200.306(b)(1) requires that any shared costs or matching funds must be verifiable from the non-Federal entity’s records. Condition: While we were able to test a manual compensating control over matching, we were not able to review and test the automated application controls and related ITGCs within the State’s MAXIS system. The State was not able to provide information regarding the design and implementation of MAXIS system controls, nor were we able to test those controls directly. Cause: The State was not able to provide information regarding the design and effectiveness of MAXIS system controls nor were we able to test those controls directly due to complexities of data privacy and resources within the State. Effect: There is an increased risk of noncompliance with the matching requirement. Context: Applies to the automated application controls over matching. Questioned Costs: None Repeat Finding?: Yes Recommendation: We suggest that the County encourage the State to provide an independent audit of the design and implementation of MAXIS system controls. View of responsible officials of the auditee: Hennepin County has reviewed and agrees with the finding and recommendation.
U.S. Department of State Professional & Cultural Exchange Programs Assistance Listing #19.415 Finding 2023-004 Material Weakness, Material Non-compliance – Matching Criteria: 2 CFR 200.306 requires cost sharing to be verifiable from a non-federal entity's records. Condition: Cost sharing amounts were not readily verifiable. Questioned Costs: Approximately $69,000 in adjustments were made in 2023 to recapture cost share amounts that occurred in a previous period(s). Context: Adjustments were made to capture cost share expenses for both current and prior periods, which were not previously tracked, which led to expense accounts in the current year with a credit balance, indicating cost share amounts could not be readily substantiated by underlying source documentation. Effect: By not maintaining adequate and consistent documentation for cost share amounts, the Organization may not be able to readily prevent, detect, and correct potential errors in matching. The Organization must maintain written records to support all allowable costs which are claimed as being its contribution. Such records are subject to audit. In the event the Organization does not provide the minimum amount of cost sharing as stipulated in the Organization’s approved budget, the Department of State’s contribution may be reduced in kind. Cause: Current processes do not include maintaining adequate documentation to track and record cost share amounts. Recommendation: The Organization should improve policies & procedures to document how cost share amounts are tracked in the accounting system to ensure amounts are verifiable. Management’s Response: Management considers this resolved as of August 2024. For 2023 and prior, there were no cost sharing amounts booked to the General Ledger. When applicable, cost share was calculated prior to a drawdown by reducing a drawdown request by any necessary cost share commitment. For 2023, Greenheart made several one-time adjustments to move costs to a new cost share account in the general ledger. This way, Greenheart can track total cost share. As previously stated, Greenheart did not previously allocate cost sharing items to a cost sharing account in the General Ledger. In 2024, a new template was created for grant expense submissions which identifies Cost Share coding from the time that a payment request is made. The grants team is responsible for completing this file and identifying how much of any expense incurred should be considered cost share. This approach allows for supporting documentation to be available for all cost share items and eliminates the need for adjusting journal entries to break out cost share.
U.S. Department of State Professional & Cultural Exchange Programs Assistance Listing #19.415 Finding 2023-004 Material Weakness, Material Non-compliance – Matching Criteria: 2 CFR 200.306 requires cost sharing to be verifiable from a non-federal entity's records. Condition: Cost sharing amounts were not readily verifiable. Questioned Costs: Approximately $69,000 in adjustments were made in 2023 to recapture cost share amounts that occurred in a previous period(s). Context: Adjustments were made to capture cost share expenses for both current and prior periods, which were not previously tracked, which led to expense accounts in the current year with a credit balance, indicating cost share amounts could not be readily substantiated by underlying source documentation. Effect: By not maintaining adequate and consistent documentation for cost share amounts, the Organization may not be able to readily prevent, detect, and correct potential errors in matching. The Organization must maintain written records to support all allowable costs which are claimed as being its contribution. Such records are subject to audit. In the event the Organization does not provide the minimum amount of cost sharing as stipulated in the Organization’s approved budget, the Department of State’s contribution may be reduced in kind. Cause: Current processes do not include maintaining adequate documentation to track and record cost share amounts. Recommendation: The Organization should improve policies & procedures to document how cost share amounts are tracked in the accounting system to ensure amounts are verifiable. Management’s Response: Management considers this resolved as of August 2024. For 2023 and prior, there were no cost sharing amounts booked to the General Ledger. When applicable, cost share was calculated prior to a drawdown by reducing a drawdown request by any necessary cost share commitment. For 2023, Greenheart made several one-time adjustments to move costs to a new cost share account in the general ledger. This way, Greenheart can track total cost share. As previously stated, Greenheart did not previously allocate cost sharing items to a cost sharing account in the General Ledger. In 2024, a new template was created for grant expense submissions which identifies Cost Share coding from the time that a payment request is made. The grants team is responsible for completing this file and identifying how much of any expense incurred should be considered cost share. This approach allows for supporting documentation to be available for all cost share items and eliminates the need for adjusting journal entries to break out cost share.
2 CFR § 2400.101 gives regulatory effect to the Department of Housing and Urban Development for 2 CFR § 200.303(a) which requires that 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. 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 § 2400.101 gives regulatory effect to the Department of Housing and Urban Development for 2 CFR § 200.403 which states except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally-financed and other activities of the non-Federal entity. (d) Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. (e) Be determined in accordance with generally accepted accounting principles (GAAP), except, for state and local governments and Indian tribes only, as otherwise provided for in this part. (f) Not be included as a cost or used to meet cost sharing or matching requirements of any other federally-financed program in either the current or a prior period. See also § 200.306(b). (g) Be adequately documented. See also §§ 200.300 through 200.309 of this part. (h) Cost must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carry forward unobligated balances to subsequent budget periods pursuant to § 200.308(e)(3). State ex rel. McClure v. Hagerman, 155 Ohio St. 320 (1951) provides that expenditures made by a governmental unit should serve a public purpose. Typically, the determination of what constitutes a “proper public purpose” rests with the judgment of the governmental entity, unless such determination is arbitrary or unreasonable. Even if a purchase is reasonable, Ohio Attorney General Opinion 82-006 indicates that it must be memorialized by a duly enacted ordinance or resolution and may have a prospective effect only. Auditor of State Bulletin 2003-005 Expenditure of Public Funds/Proper “Public Purpose” states, in part, the Auditor of State’s Office will only question expenditures where the legislative determination of a public purpose is manifestly arbitrary and incorrect. The Lima-Allen County Regional Planning Commission, administrator of the Community Housing Impact and Preservation Program - CHIP (#B-C-21-1AB-1) for Allen County, incurred a charge of $4,386 for Admin January 2023 charges on invoice #106558 dated February 7, 2023 from the Great Lakes Community Action Partnership. On July 6, 2023, check number 7330652 was issued by Allen County which included payment of $4,386 on invoice number 106558. On August 3, 2023, check number 7332670 was issued by Allen County which included payment of $4,386 on invoice number 106558 which was approved by Tara Bales, Executive Director of the Lima-Allen County Regional Planning Commission. As a result, possibly due to the failure of an existing control or procedure, invoice number 106558 was paid twice resulting an overpayment of $4,386. On October 2, 2024, the Great Lakes Community Action Partnership refunded the overpayment with check number 20765 in the amount of $4,386. This refund was recorded in the Community Development Grant Fund (2414). The Lima-Allen County Regional Planning Commission should implement an additional control(s) and/or procedure(s) to prevent the duplicate payment of invoices.
Finding 2023-005 Cost Share Information on the Federal Programs: Assistance Listing Number #19.415 Criteria or Specific Requirement: Under 2 CFR 200.306 the following criteria apply for cost share funds: (1) Are verifiable in the recipient's or subrecipient's records; (2) Are not included as contributions for any other Federal award; (3) Are necessary and reasonable for achieving the objectives of the Federal award; (4) Are allowable under subpart E; (5) Are not paid by the Federal Government under another Federal award, except where the program's Federal authorizing statute specifically provides that Federal funds made available for the program can be applied to cost sharing requirements of other Federal programs; (6) Are provided for in the approved budget when required by the Federal agency; and (7) Conform to other applicable provisions of this part. Condition: Certain awards under the assistance listing number included cost share requirements, but ICFJ was unable to provide a schedule to identify the cost share requirements met during the year. Cause: ICFJ experienced transition during the fiscal year and certain documents and schedules were unable to be located during the audit process. Effect or Potential Effect: Lack of records related to cost share increase the chance of noncompliance and potential questioned costs. Questioned Costs: None. Context: We noted two out of the four awards within the assistance listing number included a cost share requirement. Neither of these awards ended during the current year. Identification as a Repeat Finding, if Applicable: Not applicable. Recommendation: We recommend that management of ICFJ implement procedures and control processes to track cost share requirements and the progress towards the requirements. Support for the cost share claimed should also be available upon request.
Finding 2023-001 Significant Deficiency – Matching Federal Assistance Listing No. 20.106 U.S. Department of Transportation Airport Improvement Program Criteria: All match funding must be provided in compliance with the requirements of 2 CFR Part 200.306. The Authority’s share of projects costs on an Airport Improvement Grant is defined in 49 USC 47109 and set forth in the grant agreement. The nonfederal share was 10 percent. Condition: Grant number 3-12-0053-040-2022 request for reimbursement number 4 included the nonfederal share for one invoice. Cause: The form used by the Authority contained a formula error that resulted in the Airport Improvement Program share to calculate at 100 percent instead of the required 90 percent. The error was not identified in the Authority’s review process of reimbursement number 4. It was subsequently identified by the Authority during the preparation of a subsequent grant draw. Effect: This condition resulted in an overpayment to the Authority of $62,469. If not corrected in future drawdowns, the grantor agency could deem the Authority to be non-compliant. Questioned Costs: Not applicable. Recommendation: We recommend that the Authority contact the grantor agency to correct the overpayment and also review its internal controls as it relates to complying with matching requirements.
FINDING 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-008 MDHHS, PACAP - Inappropriate PACAP Allocation See Schedule of Findings and Questioned Costs for chart/table. Condition MDHHS did not ensure it used the appropriate Public Assistance Cost Allocation Plan (PACAP) data to allocate expenditures to its federal programs. We noted: a. 2 (1%) of 203 statistic groups for which MDHHS used incorrect data to calculate the PACAP percentages, which affected 6 (40%) of 15 sampled cost pools. b. 2 (13%) of 16 Random Moment Time Studies, which MDHHS used to calculate PACAP percentages, did not have a complete population of participants, which affected 6 (40%) of 15 sampled cost pools. Criteria Federal regulation 45 CFR 95.507 and Appendix VI of federal regulation 2 CFR 200 state costs are allocable to a particular cost objective if the services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Federal regulation 45 CFR 95.517 requires MDHHS to claim federal financial participation for costs associated with a program only in accordance with its approved or amended (at its discretion) PACAP. Federal regulation 2 CFR 200.306 requires that costs used for matching be allowable costs to the federal award. Cause MDHHS informed us its current quality control processes did not detect the errors. Effect MDHHS incorrectly allocated expenditures to various federal programs. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs Undeterminable. Recommendation We recommend MDHHS ensure it uses the appropriate PACAP data to allocate expenditures to its federal programs. Management Views MDHHS disagrees the exceptions identified should rise to the level of a significant deficiency and noncompliance. The comprehensive set of quality control processes continue to operate as designed to identify any errors greater than 5.0% of the total difference of the given statistical group from the previous quarter and none of the errors identified in the finding fell outside of this range. For part a., the auditor's review included all related statistical records within each statistical group for the 15 sampled cost pools. This includes all statistics used in the cost allocation process for the entire fiscal year because the costs that originate in these cost pools are referenced in all other cost pools. After review of all fiscal year 2023 statistical data, 6 individual statistical records out of 6,548 were found to be in error. After recalculating the cost allocated amounts related to this error, we identified that approximately $15,346 was overclaimed to LIHEAP out of $1,732,426,561 (0.0009%) of costs allocated in fiscal year 2023 by MDHHS. The other program areas identified were underclaimed. For part b., MDHHS acknowledges the exclusion of a participant from two quarters (quarter three and quarter four) of the Family Independence Specialists/Eligibility Specialists (FIS/ES) Random Moment Time Study (RMTS) in the sample. Although the actual dollar value impact of excluding a participant is indeterminable, MDHHS concluded the impact would be immaterial because there are over 6,000 RMTS participants each quarter and RMTS results vary little from quarter to quarter from non-programmatic changes. Auditor's Comments to Management Views For part a., we calculated the cost allocated amounts related to the error and identified that approximately $17,317 was overclaimed to LIHEAP out of $141.0 million of second quarter expenditures. However, in combination with part b., we could not conclude overclaims for other federal programs were less than $25,000. For part b., MDHHS used incomplete data to allocate approximately $143.5 million of third quarter expenditures and $171.2 million of fourth quarter expenditures for a total of $314.6 million to various federal and State programs, which may have affected the percentages used to allocate these expenditures. MDHHS did not assess the impact of these incomplete records. Consequently, it has no basis for its "immaterial" statement. Given the errors noted in parts a. and b., we could not determine the combined known questioned costs; however, it is likely that the improper allocation related to the $455.7 million exceeds $25,000 for the federal programs identified. Federal regulation 2 CFR 200.516(a)(3) states that in evaluating the effect of questioned costs on the opinion on noncompliance, the auditor considers the best estimate of total questioned costs (likely questioned costs), not just the questioned costs specifically identified (known questioned costs). The auditor must also report audit findings for known questioned costs when likely questioned costs are greater than $25,000 for a type of compliance requirement for a major program. Therefore, the finding stands as written.
FINDING 2023-024 Fish and Wildlife Cluster, ALN 15.605, 15.611, and 15.626, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; and Matching, Level of Effort, and Earmarking - Inappropriate Telecommunication Expenditures See Schedule of Findings and Questioned Costs for chart/table. Condition The Department of Natural Resources (DNR) did not ensure that telecommunication expenditures charged to the Fish and Wildlife Cluster were incurred for fish and wildlife activities. We reviewed 1 sampled telecommunication transaction related to 196 employees. We sampled 20 of those employees and noted 2 (10%) employees did not work on fish and wildlife activities. Criteria Federal regulation 2 CFR 200.303 requires the auditee to establish and maintain effective internal control over federal awards that provides reasonable assurance the auditee is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of federal awards. Also, Subpart E of federal regulation 2 CFR 200 requires costs charged to federal programs be necessary and reasonable for the administration of the federal award and be in accordance with the relative benefits received by the program. In addition, federal regulation 2 CFR 200.306 requires costs used for matching be allowable costs to the federal award. Cause DNR informed us because of an oversight error, it did not timely identify these employees to be removed from the monthly telecommunication bill. Effect DNR charged the Fish and Wildlife Cluster for telecommunication expenditures related to employees who worked on non-fish and wildlife activities. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs None. Recommendation We recommend DNR ensure that telecommunication expenditures charged to the Fish and Wildlife Cluster are incurred for fish and wildlife activities. Management Views DNR agrees with the finding.
FINDING 2023-024 Fish and Wildlife Cluster, ALN 15.605, 15.611, and 15.626, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; and Matching, Level of Effort, and Earmarking - Inappropriate Telecommunication Expenditures See Schedule of Findings and Questioned Costs for chart/table. Condition The Department of Natural Resources (DNR) did not ensure that telecommunication expenditures charged to the Fish and Wildlife Cluster were incurred for fish and wildlife activities. We reviewed 1 sampled telecommunication transaction related to 196 employees. We sampled 20 of those employees and noted 2 (10%) employees did not work on fish and wildlife activities. Criteria Federal regulation 2 CFR 200.303 requires the auditee to establish and maintain effective internal control over federal awards that provides reasonable assurance the auditee is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of federal awards. Also, Subpart E of federal regulation 2 CFR 200 requires costs charged to federal programs be necessary and reasonable for the administration of the federal award and be in accordance with the relative benefits received by the program. In addition, federal regulation 2 CFR 200.306 requires costs used for matching be allowable costs to the federal award. Cause DNR informed us because of an oversight error, it did not timely identify these employees to be removed from the monthly telecommunication bill. Effect DNR charged the Fish and Wildlife Cluster for telecommunication expenditures related to employees who worked on non-fish and wildlife activities. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs None. Recommendation We recommend DNR ensure that telecommunication expenditures charged to the Fish and Wildlife Cluster are incurred for fish and wildlife activities. Management Views DNR agrees with the finding.
FINDING 2023-024 Fish and Wildlife Cluster, ALN 15.605, 15.611, and 15.626, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; and Matching, Level of Effort, and Earmarking - Inappropriate Telecommunication Expenditures See Schedule of Findings and Questioned Costs for chart/table. Condition The Department of Natural Resources (DNR) did not ensure that telecommunication expenditures charged to the Fish and Wildlife Cluster were incurred for fish and wildlife activities. We reviewed 1 sampled telecommunication transaction related to 196 employees. We sampled 20 of those employees and noted 2 (10%) employees did not work on fish and wildlife activities. Criteria Federal regulation 2 CFR 200.303 requires the auditee to establish and maintain effective internal control over federal awards that provides reasonable assurance the auditee is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of federal awards. Also, Subpart E of federal regulation 2 CFR 200 requires costs charged to federal programs be necessary and reasonable for the administration of the federal award and be in accordance with the relative benefits received by the program. In addition, federal regulation 2 CFR 200.306 requires costs used for matching be allowable costs to the federal award. Cause DNR informed us because of an oversight error, it did not timely identify these employees to be removed from the monthly telecommunication bill. Effect DNR charged the Fish and Wildlife Cluster for telecommunication expenditures related to employees who worked on non-fish and wildlife activities. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs None. Recommendation We recommend DNR ensure that telecommunication expenditures charged to the Fish and Wildlife Cluster are incurred for fish and wildlife activities. Management Views DNR agrees with the finding.
FINDING 2023-024 Fish and Wildlife Cluster, ALN 15.605, 15.611, and 15.626, Activities Allowed or Unallowed; Allowable Costs/Cost Principles; and Matching, Level of Effort, and Earmarking - Inappropriate Telecommunication Expenditures See Schedule of Findings and Questioned Costs for chart/table. Condition The Department of Natural Resources (DNR) did not ensure that telecommunication expenditures charged to the Fish and Wildlife Cluster were incurred for fish and wildlife activities. We reviewed 1 sampled telecommunication transaction related to 196 employees. We sampled 20 of those employees and noted 2 (10%) employees did not work on fish and wildlife activities. Criteria Federal regulation 2 CFR 200.303 requires the auditee to establish and maintain effective internal control over federal awards that provides reasonable assurance the auditee is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of federal awards. Also, Subpart E of federal regulation 2 CFR 200 requires costs charged to federal programs be necessary and reasonable for the administration of the federal award and be in accordance with the relative benefits received by the program. In addition, federal regulation 2 CFR 200.306 requires costs used for matching be allowable costs to the federal award. Cause DNR informed us because of an oversight error, it did not timely identify these employees to be removed from the monthly telecommunication bill. Effect DNR charged the Fish and Wildlife Cluster for telecommunication expenditures related to employees who worked on non-fish and wildlife activities. The federal grantor agency could issue sanctions or disallowances related to noncompliance. Known Questioned Costs None. Recommendation We recommend DNR ensure that telecommunication expenditures charged to the Fish and Wildlife Cluster are incurred for fish and wildlife activities. Management Views DNR agrees with the finding.