2023-001 U.S. Department of Education Passed-through the Commonwealth of Massachusetts Department of Elementary and Secondary Education Special Education Cluster (IDEA) – ALN 84.027 & 84.173 Special Education Cluster (IDEA) – ALN 84.027X & 84.173X Compliance Finding and Material Weakness in Internal Controls Over Compliance Criteria: A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). Condition: Tuition invoices and payroll costs were charged to a 2023 grant that were for services rendered prior to the grant start date. Cause: The School did not review manual journal entries for period of performance compliance when reclassifying grant expenditures from other accounts. Effect: The School was not compliant with period of performance requirements of the grant. Questioned Costs: $225,827.29 Repeat Finding from Prior Year: No. Recommendation: The School should implement procedures to review all manual journal entries for period of performance compliance before posting to the general ledger. Views of Responsible Official: Management agrees with the finding.
2023-001 U.S. Department of Education Passed-through the Commonwealth of Massachusetts Department of Elementary and Secondary Education Special Education Cluster (IDEA) – ALN 84.027 & 84.173 Special Education Cluster (IDEA) – ALN 84.027X & 84.173X Compliance Finding and Material Weakness in Internal Controls Over Compliance Criteria: A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). Condition: Tuition invoices and payroll costs were charged to a 2023 grant that were for services rendered prior to the grant start date. Cause: The School did not review manual journal entries for period of performance compliance when reclassifying grant expenditures from other accounts. Effect: The School was not compliant with period of performance requirements of the grant. Questioned Costs: $225,827.29 Repeat Finding from Prior Year: No. Recommendation: The School should implement procedures to review all manual journal entries for period of performance compliance before posting to the general ledger. Views of Responsible Official: Management agrees with the finding.
2023-001 U.S. Department of Education Passed-through the Commonwealth of Massachusetts Department of Elementary and Secondary Education Special Education Cluster (IDEA) – ALN 84.027 & 84.173 Special Education Cluster (IDEA) – ALN 84.027X & 84.173X Compliance Finding and Material Weakness in Internal Controls Over Compliance Criteria: A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). Condition: Tuition invoices and payroll costs were charged to a 2023 grant that were for services rendered prior to the grant start date. Cause: The School did not review manual journal entries for period of performance compliance when reclassifying grant expenditures from other accounts. Effect: The School was not compliant with period of performance requirements of the grant. Questioned Costs: $225,827.29 Repeat Finding from Prior Year: No. Recommendation: The School should implement procedures to review all manual journal entries for period of performance compliance before posting to the general ledger. Views of Responsible Official: Management agrees with the finding.
2023-001 U.S. Department of Education Passed-through the Commonwealth of Massachusetts Department of Elementary and Secondary Education Special Education Cluster (IDEA) – ALN 84.027 & 84.173 Special Education Cluster (IDEA) – ALN 84.027X & 84.173X Compliance Finding and Material Weakness in Internal Controls Over Compliance Criteria: A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). Condition: Tuition invoices and payroll costs were charged to a 2023 grant that were for services rendered prior to the grant start date. Cause: The School did not review manual journal entries for period of performance compliance when reclassifying grant expenditures from other accounts. Effect: The School was not compliant with period of performance requirements of the grant. Questioned Costs: $225,827.29 Repeat Finding from Prior Year: No. Recommendation: The School should implement procedures to review all manual journal entries for period of performance compliance before posting to the general ledger. Views of Responsible Official: Management agrees with the finding.
2023-001 U.S. Department of Education Passed-through the Commonwealth of Massachusetts Department of Elementary and Secondary Education Special Education Cluster (IDEA) – ALN 84.027 & 84.173 Special Education Cluster (IDEA) – ALN 84.027X & 84.173X Compliance Finding and Material Weakness in Internal Controls Over Compliance Criteria: A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). Condition: Tuition invoices and payroll costs were charged to a 2023 grant that were for services rendered prior to the grant start date. Cause: The School did not review manual journal entries for period of performance compliance when reclassifying grant expenditures from other accounts. Effect: The School was not compliant with period of performance requirements of the grant. Questioned Costs: $225,827.29 Repeat Finding from Prior Year: No. Recommendation: The School should implement procedures to review all manual journal entries for period of performance compliance before posting to the general ledger. Views of Responsible Official: Management agrees with the finding.
Reference Number: 2023-003 Prior Year Finding: No Federal Agency: U.S. Department of Agriculture State Agency: Department of Public Health Federal Program: WIC Special Supplemental Nutrition Program for Women, Infants, and Children Assistance Listing Number: 10.557 Award Number and Year: 224MA702WI003 (10/1/2021 – 9/30/2022) Compliance Requirement: Period of Performance Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: Compliance: A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). A period of performance may contain one or more budget periods. Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Department of Public Health (Department) charged costs to the federal grant after the end of the grant’s allowable period of performance. Context: One of forty expenditure transactions selected for testing was incurred after the end of the grant’s period of performance. The period of performance ended on September 30, 2022 and the expenditure was incurred on October 10, 2022. Funds were not encumbered prior to the end of the period of performance. Cause: The Department’s procedures and internal controls were not operating sufficiently to ensure that expenditures were charged to the correct grant year. The Department had a contract in place with the vendor but did not encumber funds for the transaction prior to September 30, 2022. Therefore, the expenditures should have been charged to the FFY2023 grant period. Effect: Costs could be deemed unallowable by the awarding agency if funds are expended and/or obligated after the allowable period of performance. Questioned costs: None above reportable threshold. Recommendation: The Department should review and enhance its procedures and internal controls to ensure that it charges expenditures to the program that are incurred within an award’s allowable period of performance. The Department should ensure that it encumbers funds prior to the end of the period of performance when appropriate. Views of responsible officials: Management agrees with the finding.
Federal Agency: Department of Education Cluster/Program: Special Education Cluster AL Number(s): 84.027 Award Year: 2023 Compliance Requirement: Period of Performance Type of Finding Compliance Internal Control over Compliance – Significant Deficiency Criteria or Specific Requirement A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). Management of the School District is also responsible for establishing and maintaining effective internal control over compliance with federal requirements that have a direct and material effect on a federal pro¬gram. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of per¬forming their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. Condition and Context There were several payroll charges and invoices for costs that occurred prior to the start of the School District’s fiscal year 2023 IDEA special education grant. Since these costs occurred outside of the authorized period of performance, they are not eligible to be charged to that grant. Cause The School District has not established adequate procedures to ensure costs charged to the grant are within the authorized period of performance. Effect or Potential Effect Due to the weakness in internal control noted above, there are known and questioned costs reported related to salaries and contracted services incurred prior to the period of performance and charged to the grant. Questioned Costs The payroll charges and invoices for costs in question are below $25,000. Recommendation The School District should implement controls to ensure that no costs are incurred for a grant prior to the authorized period of performance. Views of Responsible Official Management agrees with the finding. Planned Corrective Action Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.
Finding number: 2023 011 Federal agency: U.S. Department of Education Pass through agency: Commonwealth Department of Elementary and Secondary Education Program: Special Education (IDEA) Cluster ALN #: 84.027; 84.173 Award number: 240 532934 2022 0035; 240 714716 2023 0035 Award year: August 23, 2021 to September 30, 2024 Finding: Internal Control over Payroll Costs and Period of Performance Prior Year Finding: No Type of Finding: Material Weakness Criteria Allowable Costs – Payroll In accordance with 2 CFR 200.430(i)(1), charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non Federal entity, not exceeding 100% of compensated activities; (iv) Encompass both Federally assisted and all other activities compensated by the non Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non Federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non Federal entity; and (vi) Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Period of Performance A non federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass through entity made the federal award that were authorized by the federal awarding agency or pass through entity (2 CFR sections 200.308, 200.309, and 200.403(h)). A period of performance may contain one or more budget periods. LEAs and SEAs must obligate funds during the 27 months, extending from July 1 of the fiscal year for which the funds were appropriated through September 30 of the second following fiscal year. This maximum period includes a 15 month period of initial availability plus a 12 month period for carryover. Additionally, 2 CFR 200.303 indicates that non Federal entities receiving Federal awards must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition During our testing of allowable costs and period of performance associated with payroll charges, we noted that the City of Boston Public Schools (BPS) documents time and attendance of employees on daily timesheets signed by the employee, and that these timesheets are approved by the Department Head/Supervisor on a Department Time Summary Report (DTSR). However, for 39 of our sample of 40 payroll transactions charged to the program, we noted that the DTSR was either not located or not approved by the Department Head/Supervisor. Cause This appears to be due to the insufficient retention and documentation over the review and approval of payroll charges. Effect Insufficient review of payroll documentation increases the risk of inaccurate payroll costs being allocated to a grant award. Whether Sampling was Statistically Valid The sample was not intended to be, and was not, a statistically valid sample. Questioned Costs: None Recommendation We recommend that BPS re enforce its policies and procedures to ensure their review of payroll changes via signoff on the Department Time Summary is appropriately documented and records are retained. View of Responsible Officials from the Auditee BPS has updated DTSR training and guidance for timekeepers to ensure that any similar technical issues are addressed quickly and manually adjusted if needed. Training was given in August 2024.
Finding number: 2023 011 Federal agency: U.S. Department of Education Pass through agency: Commonwealth Department of Elementary and Secondary Education Program: Special Education (IDEA) Cluster ALN #: 84.027; 84.173 Award number: 240 532934 2022 0035; 240 714716 2023 0035 Award year: August 23, 2021 to September 30, 2024 Finding: Internal Control over Payroll Costs and Period of Performance Prior Year Finding: No Type of Finding: Material Weakness Criteria Allowable Costs – Payroll In accordance with 2 CFR 200.430(i)(1), charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non Federal entity, not exceeding 100% of compensated activities; (iv) Encompass both Federally assisted and all other activities compensated by the non Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non Federal entity’s written policy; (v) Comply with the established accounting policies and practices of the non Federal entity; and (vi) Support the distribution of the employee’s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Period of Performance A non federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass through entity made the federal award that were authorized by the federal awarding agency or pass through entity (2 CFR sections 200.308, 200.309, and 200.403(h)). A period of performance may contain one or more budget periods. LEAs and SEAs must obligate funds during the 27 months, extending from July 1 of the fiscal year for which the funds were appropriated through September 30 of the second following fiscal year. This maximum period includes a 15 month period of initial availability plus a 12 month period for carryover. Additionally, 2 CFR 200.303 indicates that non Federal entities receiving Federal awards must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition During our testing of allowable costs and period of performance associated with payroll charges, we noted that the City of Boston Public Schools (BPS) documents time and attendance of employees on daily timesheets signed by the employee, and that these timesheets are approved by the Department Head/Supervisor on a Department Time Summary Report (DTSR). However, for 39 of our sample of 40 payroll transactions charged to the program, we noted that the DTSR was either not located or not approved by the Department Head/Supervisor. Cause This appears to be due to the insufficient retention and documentation over the review and approval of payroll charges. Effect Insufficient review of payroll documentation increases the risk of inaccurate payroll costs being allocated to a grant award. Whether Sampling was Statistically Valid The sample was not intended to be, and was not, a statistically valid sample. Questioned Costs: None Recommendation We recommend that BPS re enforce its policies and procedures to ensure their review of payroll changes via signoff on the Department Time Summary is appropriately documented and records are retained. View of Responsible Officials from the Auditee BPS has updated DTSR training and guidance for timekeepers to ensure that any similar technical issues are addressed quickly and manually adjusted if needed. Training was given in August 2024.
Finding 2023-004 – Period of Performance Federal Agency: Department of Health and Human Services Federal program title: Block Grants for Community Mental Health Services Assistance Listing Number: 93.958 Pass-Through Agency: Illinois Department of Human Services Pass-Through Number: 45CBB04278; 45CBB03514; 45CBB00648 Award Period: 07/01/2022 – 06/30/2023 Criteria or specific requirement: A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award's period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). A period of performance may contain one or more budget periods. Condition: Costs outside of the period of performance were charged to the grant. Questioned Costs: $7,253 Context: Four (4) of the sixteen (16) transactions selected for testing. Cause: The Organization did not have a control in place to ensure the proper cut-off of expense charged to federal awards. Effect: The Organization allocated unallowable costs to the federal grant. Repeat Finding: No Recommendation: Management should review and revise its process for allocating costs to federal grants to include additional layers of review related to the cut-off of grant expenditures. Particular attention should be focused on the first and last month of the grant budget period. Views of responsible officials: There is no disagreement with the audit finding.
U.S. Department of Health and Human Services Maternal, Infant, and Early Childhood Home Visiting Assistance Listing #93.870 Finding 2023-004 Material Weakness, Material Noncompliance – Allowable Costs/Activities Criteria – Per 2 CFR Part 200, Subpart E (2 CFR Section 200.403): (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 – Prepaid gift cards for grocery and gas were purchased in bulk and recorded as federal expenses. However, not all cards were distributed to eligible beneficiaries as of June 30, 2023, and therefore should not have been expensed as not all criteria for allowable costs had been met. Questioned Costs – Approximately $50,580 in expenses were reported that had not yet met all of the allowable cost criteria to be considered federal expenses. Context – The Organization distributed prepaid gift cards to eligible beneficiaries as needed throughout the year ended June 30, 2023. However, not all of the prepaid gift cards had been distributed by June 30, 2023. Effect – By reporting federal expenses prior to meeting all criteria for allowable costs, the Organization runs the risk that amounts may be determined as unallowed by the federal awarding agency and the Organization may have to return the federal funds. Cause – Current processes of the Organization record the purchase of gift cards as an expense, prior to all allowable cost requirements being met. Recommendation – We recommend the Organization improve policies and procedures to record the purchase of gift cards as a prepaid transaction and only expense these items when all allowable cost criteria are met. Management’s Response – Management will improve policies and procedures to record the purchase of gift cards as a prepaid transaction and expense the gift cards when all allowable cost criteria are met. Management will also get input from grant funders when necessary.
U.S. Department of Health and Human Services Maternal, Infant, and Early Childhood Home Visiting Assistance Listing #93.870 Finding 2023-004 Material Weakness, Material Noncompliance – Allowable Costs/Activities Criteria – Per 2 CFR Part 200, Subpart E (2 CFR Section 200.403): (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 – Prepaid gift cards for grocery and gas were purchased in bulk and recorded as federal expenses. However, not all cards were distributed to eligible beneficiaries as of June 30, 2023, and therefore should not have been expensed as not all criteria for allowable costs had been met. Questioned Costs – Approximately $50,580 in expenses were reported that had not yet met all of the allowable cost criteria to be considered federal expenses. Context – The Organization distributed prepaid gift cards to eligible beneficiaries as needed throughout the year ended June 30, 2023. However, not all of the prepaid gift cards had been distributed by June 30, 2023. Effect – By reporting federal expenses prior to meeting all criteria for allowable costs, the Organization runs the risk that amounts may be determined as unallowed by the federal awarding agency and the Organization may have to return the federal funds. Cause – Current processes of the Organization record the purchase of gift cards as an expense, prior to all allowable cost requirements being met. Recommendation – We recommend the Organization improve policies and procedures to record the purchase of gift cards as a prepaid transaction and only expense these items when all allowable cost criteria are met. Management’s Response – Management will improve policies and procedures to record the purchase of gift cards as a prepaid transaction and expense the gift cards when all allowable cost criteria are met. Management will also get input from grant funders when necessary.
2023-006 Non-compliance with Compliance Requirements Program Name/ Assistance Listing Number: 93. 959 Block Grants for Prevention and Treatment of Substance Abuse and 93.788 Multiple Approach Response Strategies (MARS) Federal Agency: Department of Health and Human Services Federal Award Identification: Unknown Type of Finding: Material Weakness Compliance Requirement: Allowable Costs/Cost Principles Criteria: Per 2 CFR §200.305(b), non-Federal entities are responsible for administering Federal funds in a manner consistent with underlying agreements, program objectives, and the terms and conditions of the Federal award. According to 2 CFR §200.403, costs must meet the following general criteria to be allowable under Federal awards: (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award concerning types or amounts of cost items. (c) Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity. (g) Be adequately documented. See also 2 CFR §200.300 through 200.309 of this part. (h) Costs must be incurred during the approved budget period. The Federal awarding agency is authorized, at its discretion, to waive prior written approvals to carryforward unobligated balances to subsequent budget periods pursuant to 2 CFR §200.308(e)(3). Condition: During the review of the schedule of expenditures of federal awards, the auditor noted the following conditions: 1. Non-Conforming Expenditures: An expenditure under the MARS Carry Over did not conform to the limitations set forth in the federal award budget. Specifically, $20,892 was charged for Garage Repairs, whereas the grant budget for equipment was only $1,200, designated specifically for two software purchases at $600 each. 2. Inadequate Documentation: a) The FASD Grant had a period that ended on March 14, 2023. Although the grant period was extended, this extension was not documented, b) A $26,383 FASD expenditure was reallocated to MARS 2.0 Carry Over without substantialjustification for the reclassification, and c) An adjustment of $24,044 was made from MARS 2.0 Carry Over FY 2022 without adequate supporting documentation. 3. Expenditures Outside the Approved Grant Period: a) the FASD total award of $340,000 was reported as fully expended in the 2023 fiscal year-end expenditure report (“Close-Out Report”) submitted to the Grants and Funding Management System on January 31, 2024. However, the Schedule of Federal Expenditure showed only $312,707 in expenditures. The remaining $27, 293 was indicated as a carryover for FY 2024. Of the $312,707 in expenditures, $71,277 were incurred after March 14, 2023, with only $21,395 falling within the 45-day closeout period following that date, b) $26,800 in unallowable costs were incurred under the MARS 2.0 Carry Over 45 days after the performance period ended on September 29, 2022, specifically for payroll processing, and c) $1,813 in costs were incurred before the performance period for the “Mars One-Pill Can Kill” grant dated February 1, 2023 to September 29, 2023. There was no prior grant. 4. Misclassification: $2,010 in MARS 3.0 expenditures were incorrectly classified under FASD. Cause of Condition: Insufficient understanding of program requirements. There is no formal monitoring of program expenditures on a periodic basis to ensure that the Organization’s expenditures and activities align with their grant budget and period of performance. Inconsistent adherence to record retention policies, resulting from the temporary hybrid working-from-home arrangements due to the pandemic, has led to insufficient support for all federal expenditures. The Organization lacks written policies and procedures for allocating expenditures across different programs. Effect: The current procedures for administering Federal funds are inadequately designed to ensure that costs and activities are managed in a manner consistent with the underlying agreements and the terms and conditions of the Federal award. These deficiencies could lead to misstatements in the SEFA that are not corrected promptly and could result in the charging of unallowable costs. Questioned Cost: $179,117 Recommendation: We recommend the following actions: 1. Training: Program administrators should receive adequatetraining and acquire knowledge of the compliancerequirements for each specific program to ensure adherence to these requirements. 2. Periodic Program Monitoring: The organization should establish a periodic review process for each program budget to ensure alignment with each line item in the budget. 3. Formal Procedures: The organization should document its procedures for expense allocation to ensure consistency timeliness, and accuracy. 4. Adequate Staffing: The organization should ensure that processes are staffed with knowledgeable personnel capableof reviewing and adhering to established policies and procedures. Description of the Nature and Extent of Issues Reported: We consider the following materiality for consideration of material noncompliance for the major program 93.959 at 5% of the total awards expended amounting to $51,253. View of Responsible Official: Management agrees with the finding and will implement corrective action.
Federal Agency: Department of Health and Human Services Federal Program Name: Child Care and Development Programs Assistance Listing Number: 93.575 Federal Award Identification Number and Year: 19-S225-00-2 – 2022 Pass-Through Agency: California Department of Education Pass-Through Number: 10163 Award Period: 7/1/2022-6/30/2023 Compliance Requirement Affected: H - period of availability/performance Type of Finding: Significant Deficiency Criteria or specific requirement: A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award's period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). A period of performance may contain one or more budget periods. Condition: During test of non-payroll expenditures charged to the Child Care and Development Programs, one of the supporting documents indicated that costs in the amount of $1,625 charged to program was paid in the award period, but was incurred prior to the award period. Cause: The invoice was paid in the award year and internal controls over compliance failed to identify the ineligibility of the expense. Effect: $1,625 of ineligible expenses were charged to the federal program. Questioned Costs: $1,625 of known and likely cost. Repeat finding: Not a repeat finding. Recommendation: We recommend the Organization review its internal control processes over compliance to ensure adequate review of period of performance. Views of responsible officials and Corrective Action Plan: Background and Contributing Factors: At the time of the expenditure in question, our organization was relying on Charter Impact to manage our accounting and grant reporting. Unfortunately, Charter Impact did not fulfill its contractual obligations, including timely submission of grant reports and ensuring compliance with federal guidelines. Their failure to submit accurate and timely grant reports, contributed to the lapse in internal controls that led to the ineligible expense being charged to the federal program. 2023-002 Internal Control over Compliance (Continued) 500 Corrective Action Plan: 1. Implementation of Sage Accounting Software: We have since implemented a comprehensive financial accounting software system, Sage, which allows us to track expenditures more accurately and ensure compliance with federal grant requirements. The system includes built-in safeguards to flag non-compliant expenditures. 2. Review and Strengthening of Internal Controls: Life Source International Charter School will be implementing additional internal control systems & processes that include an additional review of back up documents before monthly reports are filed. A copy of all backup documents in support of all monthly reports will be kept at both Life Source International Charter School and the outside entities providing services and making reports on behalf of Life Source International Charter School. 3. Staff Training and Capacity Building: Our staff has received training on federal grant compliance, including the specific criteria governing the period of performance and allowable costs under federal awards. Additionally, with the Sage system in place, staff are now better equipped to manage compliance and reporting accurately. 4. Commitment to Ongoing Compliance: We are committed to continually improving our internal control processes to ensure compliance with all federal regulations. Findings and Questioned Costs – State Compliance There were no findings or questioned costs related to state awards for June 30, 2023.
DEPARTMENT OF REHABILITATION SERVICES PERIOD OF PERFORMANCE Significant Deficiency 2023-007 Strengthen Controls to Ensure Compliance with the Period of Performance for the Social Security Disability Insurance Program. ALN Number(s) 96.001 Social Security-Disability Insurance 96.006 Supplemental Security Income Federal Award No. 2104MSD100 2204MSD100 2304MSD100 Questioned Costs $13,517 Criteria Per the Code of Federal Regulations (2 CFR 200.308, 200.309, and 200.403(h)), A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity. A period of performance may contain one or more budget periods. Code of Federal Regulations (2 CFR 200.303(a)), a non-Federal entity must: “Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Condition Program expenditures were not charged to the grant within the period of performance. We identified the following: • Two instances in which the expenditure was charged to the grant prior to the start of the grant, • Three instances in which the expenditure was charged after the grant’s end date. Cause The Department charging the grants outside of the period of performance was due to an error that was not identified during the review process. In addition, one expenditure supported costs for an annual agreement in which the service period started in one grant period and ended in another grant period. The Department elected to charge the costs to the grant starting after to expenditure incurred date, since most of the service would occur during that grant’s period. Effect The grantor may deem the costs charged outside of the period of performance as unallowable. Recommendation We recommend that the department enhance its internal controls to ensure all costs are incurred within the period of performance specified in the notice of award. Repeat Finding No. Statistically Valid No.
Finding 2023-004 – Period of Performance Federal Agency: Department of Health and Human Services Federal program title: Block Grants for Community Mental Health Services Assistance Listing Number: 93.958 Pass-Through Agency: Illinois Department of Human Services Pass-Through Number: 45CBB04278; 45CBB03514; 45CBB00648 Award Period: 07/01/2022 – 06/30/2023 Criteria or specific requirement: A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award's period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). A period of performance may contain one or more budget periods. Condition: Costs outside of the period of performance were charged to the grant. Questioned Costs: $7,253 Context: Four (4) of the sixteen (16) transactions selected for testing. Cause: The Organization did not have a control in place to ensure the proper cut-off of expense charged to federal awards. Effect: The Organization allocated unallowable costs to the federal grant. Repeat Finding: No Recommendation: Management should review and revise its process for allocating costs to federal grants to include additional layers of review related to the cut-off of grant expenditures. Particular attention should be focused on the first and last month of the grant budget period. Views of responsible officials: There is no disagreement with the audit finding.
Assistance Listing, Federal Agency, and Program Name - 21.027, U.S. Department of the Treasury, COVID 19 Coronavirus State and Local Fiscal Recovery Funds Federal Award Identification Number and Year - N/A Pass through Entity - Illinois Department of Public Health (38080704K and 38080714K) & Illinois Department of Healthcare and Family Services (ARPA231010 and ARPA231002) Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - A non federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass through entity made the federal award that were authorized by the federal awarding agency or pass through entity (2 CFR sections 200.308 200.309 and 200.403(h)). A period of performance may contain one or more budget periods. Condition - The Organization's controls did not identify expenses submitted to the State of Illinois, for reimbursement, were outside of the period of performance. Questioned Costs - $3,441,315 Identification of How Questioned Costs Were Computed - PM obtained the entire list of expenses submitted to the State of Illinois to assess the amount of questioned costs. The listing submitted to the State of Illinois was filtered to show the invoices that were outside of the period of performance. Context - In our testing of 40 allowability samples, we identified 12 invoices whereby the expense was incurred outside the period of performance, i.e., July 1, 2022 - June 30, 2023. As noted above, PM filtered the complete listing of expenses charged to the grant and discovered that $3,441,315 was charged to grant and outside of the period of performance. The questioned costs are included in the approximate $13.5M reported on the SEFA for the year ended June 30, 2023 under ALN 21.027. Cause and Effect - The lack of effective period of performance controls did not identify invoices that were outside the period of performance. The lack of controls resulted in a material amount of questioned costs and an opinion modification of 21.027, COVID 19 Coronavirus State and Local Fiscal Recovery Funds. Recommendation - As the grant period as ended for the grant, we recommend that the Organization work with the funding agency to remedy the noncompliance. In addition, we recommend that the Organization reassess its period of performance controls to identify where enhancements or additional controls are needed. Views of Responsible Officials and Corrective Action Plan - Background: Sinai began the process of risk assessment in the government grants area at the end of 2022. At that time, Sinai engaged outside counsel to assist in this process. In December of 2023, Sinai created the Office of Government Grant Administration (OGGA) and developed a comprehensive grant compliance policy and procedure. The Audit and Compliance Committee of the Board was updated on this initiative. In 2024, the OGGA created a Grant Compliance Manual which sets forth processes and procedures in grant management to ensure compliance with government regulations. Unfortunately, these controls were not implemented until after the relevant time period at issue in this audit. In 2025, Sinai is continuing to improve its compliance procedures with respect to government grants, and has developed the following plan: 1. Working Group: Sinai will implement a process of convening a Working Group for each government grant, which will consist of a representative from Finance, the OGGA, and the stakeholder involved (i.e., nursing, medicine, etc.) The Working group will be responsible for, among other things, ensuring that that the reported qualifying expenditures are incurred during the period of performance of the grant. In other words, allowable costs will be discussed early in the process, so that there is fulsome understanding among the key individuals involved. 2. Record-Keeping: The OGGA will also establish shared folders to house all of the pertinent documentation relative to the grant. 3. Invoice/Supporting Documentation Review. The Grant Accounting Manager will review all invoices and other supportive documentation to ensure that allowable costs are submitted for reimbursement. This compliance check will be completed prior to submission of the documentation for reimbursement. Monthly reviews of these activities will be performed by the Grant Accountant, the Compliance Grant Manager, and other OGGA staff as needed. Proactive review to prevent or resolve issues in the upcoming month’s billings should be pursued. 4. Annual Assessment. The Chief Compliance Officer, with the assistance of the General Counsel, will meet with the OGGA team annually to assess procedures and risk controls; a report of this assessment will be made to the Audit and Compliance Committee of the Board of Directors
Assistance Listing, Federal Agency, and Program Name - 21.027, U.S. Department of the Treasury, COVID 19 Coronavirus State and Local Fiscal Recovery Funds Federal Award Identification Number and Year - N/A Pass through Entity - Illinois Department of Public Health (38080704K and 38080714K) & Illinois Department of Healthcare and Family Services (ARPA231010 and ARPA231002) Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - A non federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass through entity made the federal award that were authorized by the federal awarding agency or pass through entity (2 CFR sections 200.308 200.309 and 200.403(h)). A period of performance may contain one or more budget periods. Condition - The Organization's controls did not identify expenses submitted to the State of Illinois, for reimbursement, were outside of the period of performance. Questioned Costs - $3,441,315 Identification of How Questioned Costs Were Computed - PM obtained the entire list of expenses submitted to the State of Illinois to assess the amount of questioned costs. The listing submitted to the State of Illinois was filtered to show the invoices that were outside of the period of performance. Context - In our testing of 40 allowability samples, we identified 12 invoices whereby the expense was incurred outside the period of performance, i.e., July 1, 2022 - June 30, 2023. As noted above, PM filtered the complete listing of expenses charged to the grant and discovered that $3,441,315 was charged to grant and outside of the period of performance. The questioned costs are included in the approximate $13.5M reported on the SEFA for the year ended June 30, 2023 under ALN 21.027. Cause and Effect - The lack of effective period of performance controls did not identify invoices that were outside the period of performance. The lack of controls resulted in a material amount of questioned costs and an opinion modification of 21.027, COVID 19 Coronavirus State and Local Fiscal Recovery Funds. Recommendation - As the grant period as ended for the grant, we recommend that the Organization work with the funding agency to remedy the noncompliance. In addition, we recommend that the Organization reassess its period of performance controls to identify where enhancements or additional controls are needed. Views of Responsible Officials and Corrective Action Plan - Background: Sinai began the process of risk assessment in the government grants area at the end of 2022. At that time, Sinai engaged outside counsel to assist in this process. In December of 2023, Sinai created the Office of Government Grant Administration (OGGA) and developed a comprehensive grant compliance policy and procedure. The Audit and Compliance Committee of the Board was updated on this initiative. In 2024, the OGGA created a Grant Compliance Manual which sets forth processes and procedures in grant management to ensure compliance with government regulations. Unfortunately, these controls were not implemented until after the relevant time period at issue in this audit. In 2025, Sinai is continuing to improve its compliance procedures with respect to government grants, and has developed the following plan: 1. Working Group: Sinai will implement a process of convening a Working Group for each government grant, which will consist of a representative from Finance, the OGGA, and the stakeholder involved (i.e., nursing, medicine, etc.) The Working group will be responsible for, among other things, ensuring that that the reported qualifying expenditures are incurred during the period of performance of the grant. In other words, allowable costs will be discussed early in the process, so that there is fulsome understanding among the key individuals involved. 2. Record-Keeping: The OGGA will also establish shared folders to house all of the pertinent documentation relative to the grant. 3. Invoice/Supporting Documentation Review. The Grant Accounting Manager will review all invoices and other supportive documentation to ensure that allowable costs are submitted for reimbursement. This compliance check will be completed prior to submission of the documentation for reimbursement. Monthly reviews of these activities will be performed by the Grant Accountant, the Compliance Grant Manager, and other OGGA staff as needed. Proactive review to prevent or resolve issues in the upcoming month’s billings should be pursued. 4. Annual Assessment. The Chief Compliance Officer, with the assistance of the General Counsel, will meet with the OGGA team annually to assess procedures and risk controls; a report of this assessment will be made to the Audit and Compliance Committee of the Board of Directors
Assistance Listing, Federal Agency, and Program Name - 21.027, U.S. Department of the Treasury, COVID 19 Coronavirus State and Local Fiscal Recovery Funds Federal Award Identification Number and Year - N/A Pass through Entity - Illinois Department of Public Health (38080704K and 38080714K) & Illinois Department of Healthcare and Family Services (ARPA231010 and ARPA231002) Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - A non federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass through entity made the federal award that were authorized by the federal awarding agency or pass through entity (2 CFR sections 200.308 200.309 and 200.403(h)). A period of performance may contain one or more budget periods. Condition - The Organization's controls did not identify expenses submitted to the State of Illinois, for reimbursement, were outside of the period of performance. Questioned Costs - $3,441,315 Identification of How Questioned Costs Were Computed - PM obtained the entire list of expenses submitted to the State of Illinois to assess the amount of questioned costs. The listing submitted to the State of Illinois was filtered to show the invoices that were outside of the period of performance. Context - In our testing of 40 allowability samples, we identified 12 invoices whereby the expense was incurred outside the period of performance, i.e., July 1, 2022 - June 30, 2023. As noted above, PM filtered the complete listing of expenses charged to the grant and discovered that $3,441,315 was charged to grant and outside of the period of performance. The questioned costs are included in the approximate $13.5M reported on the SEFA for the year ended June 30, 2023 under ALN 21.027. Cause and Effect - The lack of effective period of performance controls did not identify invoices that were outside the period of performance. The lack of controls resulted in a material amount of questioned costs and an opinion modification of 21.027, COVID 19 Coronavirus State and Local Fiscal Recovery Funds. Recommendation - As the grant period as ended for the grant, we recommend that the Organization work with the funding agency to remedy the noncompliance. In addition, we recommend that the Organization reassess its period of performance controls to identify where enhancements or additional controls are needed. Views of Responsible Officials and Corrective Action Plan - Background: Sinai began the process of risk assessment in the government grants area at the end of 2022. At that time, Sinai engaged outside counsel to assist in this process. In December of 2023, Sinai created the Office of Government Grant Administration (OGGA) and developed a comprehensive grant compliance policy and procedure. The Audit and Compliance Committee of the Board was updated on this initiative. In 2024, the OGGA created a Grant Compliance Manual which sets forth processes and procedures in grant management to ensure compliance with government regulations. Unfortunately, these controls were not implemented until after the relevant time period at issue in this audit. In 2025, Sinai is continuing to improve its compliance procedures with respect to government grants, and has developed the following plan: 1. Working Group: Sinai will implement a process of convening a Working Group for each government grant, which will consist of a representative from Finance, the OGGA, and the stakeholder involved (i.e., nursing, medicine, etc.) The Working group will be responsible for, among other things, ensuring that that the reported qualifying expenditures are incurred during the period of performance of the grant. In other words, allowable costs will be discussed early in the process, so that there is fulsome understanding among the key individuals involved. 2. Record-Keeping: The OGGA will also establish shared folders to house all of the pertinent documentation relative to the grant. 3. Invoice/Supporting Documentation Review. The Grant Accounting Manager will review all invoices and other supportive documentation to ensure that allowable costs are submitted for reimbursement. This compliance check will be completed prior to submission of the documentation for reimbursement. Monthly reviews of these activities will be performed by the Grant Accountant, the Compliance Grant Manager, and other OGGA staff as needed. Proactive review to prevent or resolve issues in the upcoming month’s billings should be pursued. 4. Annual Assessment. The Chief Compliance Officer, with the assistance of the General Counsel, will meet with the OGGA team annually to assess procedures and risk controls; a report of this assessment will be made to the Audit and Compliance Committee of the Board of Directors
Assistance Listing, Federal Agency, and Program Name - 21.027, U.S. Department of the Treasury, COVID 19 Coronavirus State and Local Fiscal Recovery Funds Federal Award Identification Number and Year - N/A Pass through Entity - Illinois Department of Public Health (38080704K and 38080714K) & Illinois Department of Healthcare and Family Services (ARPA231010 and ARPA231002) Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - A non federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass through entity made the federal award that were authorized by the federal awarding agency or pass through entity (2 CFR sections 200.308 200.309 and 200.403(h)). A period of performance may contain one or more budget periods. Condition - The Organization's controls did not identify expenses submitted to the State of Illinois, for reimbursement, were outside of the period of performance. Questioned Costs - $3,441,315 Identification of How Questioned Costs Were Computed - PM obtained the entire list of expenses submitted to the State of Illinois to assess the amount of questioned costs. The listing submitted to the State of Illinois was filtered to show the invoices that were outside of the period of performance. Context - In our testing of 40 allowability samples, we identified 12 invoices whereby the expense was incurred outside the period of performance, i.e., July 1, 2022 - June 30, 2023. As noted above, PM filtered the complete listing of expenses charged to the grant and discovered that $3,441,315 was charged to grant and outside of the period of performance. The questioned costs are included in the approximate $13.5M reported on the SEFA for the year ended June 30, 2023 under ALN 21.027. Cause and Effect - The lack of effective period of performance controls did not identify invoices that were outside the period of performance. The lack of controls resulted in a material amount of questioned costs and an opinion modification of 21.027, COVID 19 Coronavirus State and Local Fiscal Recovery Funds. Recommendation - As the grant period as ended for the grant, we recommend that the Organization work with the funding agency to remedy the noncompliance. In addition, we recommend that the Organization reassess its period of performance controls to identify where enhancements or additional controls are needed. Views of Responsible Officials and Corrective Action Plan - Background: Sinai began the process of risk assessment in the government grants area at the end of 2022. At that time, Sinai engaged outside counsel to assist in this process. In December of 2023, Sinai created the Office of Government Grant Administration (OGGA) and developed a comprehensive grant compliance policy and procedure. The Audit and Compliance Committee of the Board was updated on this initiative. In 2024, the OGGA created a Grant Compliance Manual which sets forth processes and procedures in grant management to ensure compliance with government regulations. Unfortunately, these controls were not implemented until after the relevant time period at issue in this audit. In 2025, Sinai is continuing to improve its compliance procedures with respect to government grants, and has developed the following plan: 1. Working Group: Sinai will implement a process of convening a Working Group for each government grant, which will consist of a representative from Finance, the OGGA, and the stakeholder involved (i.e., nursing, medicine, etc.) The Working group will be responsible for, among other things, ensuring that that the reported qualifying expenditures are incurred during the period of performance of the grant. In other words, allowable costs will be discussed early in the process, so that there is fulsome understanding among the key individuals involved. 2. Record-Keeping: The OGGA will also establish shared folders to house all of the pertinent documentation relative to the grant. 3. Invoice/Supporting Documentation Review. The Grant Accounting Manager will review all invoices and other supportive documentation to ensure that allowable costs are submitted for reimbursement. This compliance check will be completed prior to submission of the documentation for reimbursement. Monthly reviews of these activities will be performed by the Grant Accountant, the Compliance Grant Manager, and other OGGA staff as needed. Proactive review to prevent or resolve issues in the upcoming month’s billings should be pursued. 4. Annual Assessment. The Chief Compliance Officer, with the assistance of the General Counsel, will meet with the OGGA team annually to assess procedures and risk controls; a report of this assessment will be made to the Audit and Compliance Committee of the Board of Directors
Block Grants for Prevention and Treatment of Substance Abuse ALN No. 93.959 U.S. Department of Health and Human Services Opioid STR ALN No. 93.788 U.S. Department of Health and Human Services Criteria or Specific Requirement – Activities Allowed and Unallowed and Cost Principles – 2 CFR Part 200, Subpart E, and Period of Performance – 2 CFR sections 200.308, 200.309, and 200.403(h) Condition – A sample of 80 expenditures were selected from each of the following populations: • ALN No. 93.959 – 1,631 items totaling $1,399,666 • ALN No. 93.788 – 1,728 items totaling $2,664,710 The samples were not, and are not intended to be, statistically valid. Of the 80 expenditures tested from each grant program, the following were determined to lack appropriate supporting documentation to support being charged to grant program: • ALN No. 93.959 - 47 items totaling $48,756, including projected errors over the total population totaling $582,093 • ALN No. 93.788 - 7 items totaling $30,061, including projected errors over the total population totaling $138,133 The Organization did not have adequate supporting documentation demonstrating actual time and effort reporting and lacked evidence of supporting invoices. Cause – The Organization charged budgeted percentages to the grant programs without a system in place to monitor and track that actual time and effort was consistent with budgeted percentages. In addition, the Organization charged expenditures to the grant programs without evidence of supporting invoices. Effect or potential effect – Costs charged to the grant programs could have varied from actual time and effort. In addition, costs charged to the grant could not be supported by actual invoices. Questioned costs – • ALN No. 93.959 - $48,756 • ALN No. 93.788 - $30,061 Context – The Organization did not have a reasonable methodology of allocating costs to these grant programs and did not maintain proper supporting invoices. Identification as a repeat finding, if applicable – Repeat finding (2022-003). Recommendation – Management should implement policies and procedures that strengthen internal control over compliance in relation to activities allowed and cost principles. The policy and procedure should be designed to ensure that a reasonable allocation methodology is implemented and followed or that time and effort is certified by the employee on a regular basis. In addition, management should implement a document retention policy consistent with 2 CFR 200.334.
Block Grants for Prevention and Treatment of Substance Abuse ALN No. 93.959 U.S. Department of Health and Human Services Opioid STR ALN No. 93.788 U.S. Department of Health and Human Services Criteria or Specific Requirement – Activities Allowed and Unallowed and Cost Principles – 2 CFR Part 200, Subpart E, and Period of Performance – 2 CFR sections 200.308, 200.309, and 200.403(h) Condition – A sample of 80 expenditures were selected from each of the following populations: • ALN No. 93.959 – 1,631 items totaling $1,399,666 • ALN No. 93.788 – 1,728 items totaling $2,664,710 The samples were not, and are not intended to be, statistically valid. Of the 80 expenditures tested from each grant program, the following were determined to lack appropriate supporting documentation to support being charged to grant program: • ALN No. 93.959 - 47 items totaling $48,756, including projected errors over the total population totaling $582,093 • ALN No. 93.788 - 7 items totaling $30,061, including projected errors over the total population totaling $138,133 The Organization did not have adequate supporting documentation demonstrating actual time and effort reporting and lacked evidence of supporting invoices. Cause – The Organization charged budgeted percentages to the grant programs without a system in place to monitor and track that actual time and effort was consistent with budgeted percentages. In addition, the Organization charged expenditures to the grant programs without evidence of supporting invoices. Effect or potential effect – Costs charged to the grant programs could have varied from actual time and effort. In addition, costs charged to the grant could not be supported by actual invoices. Questioned costs – • ALN No. 93.959 - $48,756 • ALN No. 93.788 - $30,061 Context – The Organization did not have a reasonable methodology of allocating costs to these grant programs and did not maintain proper supporting invoices. Identification as a repeat finding, if applicable – Repeat finding (2022-003). Recommendation – Management should implement policies and procedures that strengthen internal control over compliance in relation to activities allowed and cost principles. The policy and procedure should be designed to ensure that a reasonable allocation methodology is implemented and followed or that time and effort is certified by the employee on a regular basis. In addition, management should implement a document retention policy consistent with 2 CFR 200.334.
US Department of Education Program Title: Education Stabilization Fund CFDA Number(s): 84.425C, 84.425D, 84.425U, 84.425W Federal Award Number: 201201-2122, 213712-2021, 213742-2122,213713-2122 & 2223 (COVID-19) Federal Award Year: July 1, 2022 to June 30, 2023 Pass-Through Entity: Passed-Through Michigan Department of Education Type of Compliance: Significant Deficiency (Activities Allowed/Unallowed and Allowable Costs) Criteria: The OMB requires that recipients of federal funds report deviations from the approved budget and request approvals from Federal awarding agencies for any revisions [2 CFR Part 200.308(b)]. Condition: The District submitted a final expenditure report to the State where certain line-item expenditures were reported in such a way that caused the report to appear over budget by greater than 10%. Cause: This condition was the result of the lack of oversight by appropriate personnel to review the final expenditure report before it was submitted to the State. Effect: As a result of this condition, the District did not fully comply with the budgeting requirement of expenditures being within 10% of the approved budget due to reporting expenditures in the wrong areas on the final expenditure report. Questioned Costs: None Perspective Information: The incident at hand appears to be an isolated instance as the business manager position has been turned over 3 times in the past 3 years. The District’s general ledger had expenditures that were properly spent in accordance with the approved budget and correctly classified in the general ledger, however, the District simply reported the wrong numbers on the Final Expenditure Report for certain Activities and Objects, but the correct amounts were spent in accordance with the approved budget. All of final expenditure report submissions after the incident did not have this same problem and were reported accurately. Recommendation: We recommend the District have appropriate personnel review the final expenditure report before final submission to the State. Views of Responsible Officials: There is a new business manager responsible for any future final expenditure report submissions. They will closely monitor this situation going forward to avoid this from happening in the future.
US Department of Education Program Title: Education Stabilization Fund CFDA Number(s): 84.425C, 84.425D, 84.425U, 84.425W Federal Award Number: 201201-2122, 213712-2021, 213742-2122,213713-2122 & 2223 (COVID-19) Federal Award Year: July 1, 2022 to June 30, 2023 Pass-Through Entity: Passed-Through Michigan Department of Education Type of Compliance: Significant Deficiency (Activities Allowed/Unallowed and Allowable Costs) Criteria: The OMB requires that recipients of federal funds report deviations from the approved budget and request approvals from Federal awarding agencies for any revisions [2 CFR Part 200.308(b)]. Condition: The District submitted a final expenditure report to the State where certain line-item expenditures were reported in such a way that caused the report to appear over budget by greater than 10%. Cause: This condition was the result of the lack of oversight by appropriate personnel to review the final expenditure report before it was submitted to the State. Effect: As a result of this condition, the District did not fully comply with the budgeting requirement of expenditures being within 10% of the approved budget due to reporting expenditures in the wrong areas on the final expenditure report. Questioned Costs: None Perspective Information: The incident at hand appears to be an isolated instance as the business manager position has been turned over 3 times in the past 3 years. The District’s general ledger had expenditures that were properly spent in accordance with the approved budget and correctly classified in the general ledger, however, the District simply reported the wrong numbers on the Final Expenditure Report for certain Activities and Objects, but the correct amounts were spent in accordance with the approved budget. All of final expenditure report submissions after the incident did not have this same problem and were reported accurately. Recommendation: We recommend the District have appropriate personnel review the final expenditure report before final submission to the State. Views of Responsible Officials: There is a new business manager responsible for any future final expenditure report submissions. They will closely monitor this situation going forward to avoid this from happening in the future.
US Department of Education Program Title: Education Stabilization Fund CFDA Number(s): 84.425C, 84.425D, 84.425U, 84.425W Federal Award Number: 201201-2122, 213712-2021, 213742-2122,213713-2122 & 2223 (COVID-19) Federal Award Year: July 1, 2022 to June 30, 2023 Pass-Through Entity: Passed-Through Michigan Department of Education Type of Compliance: Significant Deficiency (Activities Allowed/Unallowed and Allowable Costs) Criteria: The OMB requires that recipients of federal funds report deviations from the approved budget and request approvals from Federal awarding agencies for any revisions [2 CFR Part 200.308(b)]. Condition: The District submitted a final expenditure report to the State where certain line-item expenditures were reported in such a way that caused the report to appear over budget by greater than 10%. Cause: This condition was the result of the lack of oversight by appropriate personnel to review the final expenditure report before it was submitted to the State. Effect: As a result of this condition, the District did not fully comply with the budgeting requirement of expenditures being within 10% of the approved budget due to reporting expenditures in the wrong areas on the final expenditure report. Questioned Costs: None Perspective Information: The incident at hand appears to be an isolated instance as the business manager position has been turned over 3 times in the past 3 years. The District’s general ledger had expenditures that were properly spent in accordance with the approved budget and correctly classified in the general ledger, however, the District simply reported the wrong numbers on the Final Expenditure Report for certain Activities and Objects, but the correct amounts were spent in accordance with the approved budget. All of final expenditure report submissions after the incident did not have this same problem and were reported accurately. Recommendation: We recommend the District have appropriate personnel review the final expenditure report before final submission to the State. Views of Responsible Officials: There is a new business manager responsible for any future final expenditure report submissions. They will closely monitor this situation going forward to avoid this from happening in the future.
US Department of Education Program Title: Education Stabilization Fund CFDA Number(s): 84.425C, 84.425D, 84.425U, 84.425W Federal Award Number: 201201-2122, 213712-2021, 213742-2122,213713-2122 & 2223 (COVID-19) Federal Award Year: July 1, 2022 to June 30, 2023 Pass-Through Entity: Passed-Through Michigan Department of Education Type of Compliance: Significant Deficiency (Activities Allowed/Unallowed and Allowable Costs) Criteria: The OMB requires that recipients of federal funds report deviations from the approved budget and request approvals from Federal awarding agencies for any revisions [2 CFR Part 200.308(b)]. Condition: The District submitted a final expenditure report to the State where certain line-item expenditures were reported in such a way that caused the report to appear over budget by greater than 10%. Cause: This condition was the result of the lack of oversight by appropriate personnel to review the final expenditure report before it was submitted to the State. Effect: As a result of this condition, the District did not fully comply with the budgeting requirement of expenditures being within 10% of the approved budget due to reporting expenditures in the wrong areas on the final expenditure report. Questioned Costs: None Perspective Information: The incident at hand appears to be an isolated instance as the business manager position has been turned over 3 times in the past 3 years. The District’s general ledger had expenditures that were properly spent in accordance with the approved budget and correctly classified in the general ledger, however, the District simply reported the wrong numbers on the Final Expenditure Report for certain Activities and Objects, but the correct amounts were spent in accordance with the approved budget. All of final expenditure report submissions after the incident did not have this same problem and were reported accurately. Recommendation: We recommend the District have appropriate personnel review the final expenditure report before final submission to the State. Views of Responsible Officials: There is a new business manager responsible for any future final expenditure report submissions. They will closely monitor this situation going forward to avoid this from happening in the future.
2023-005 – PERIOD OF PERFORMANCE Type: Significant Deficiency in Internal Control / Non-compliance Program: ALN 84.425 Education Stabilization Fund, COVID-19 - ESSER II – Credit Recovery Criteria: As detailed by 2 CFR 200.308, 2 CFR 200.309, and 2 CFR 200 403(h), A non-federal entity may only charge allowable costs incurred 1) during the approved budget period, or 2) before the approved budget period if authorized by the federal awarding agency or pass-through entity. Condition: During testing of amounts charged to the grants, it was noted that an amount charged to the grant was incurred outside the approved budget period of performance. Cause/Effect: This condition appears to be the result of a misunderstanding of costs allowed under this grant. These costs were not in compliance with 2 CFR 200. Recommendation: We recommend that the District review all grant agreements to gain a thorough understanding of the period of performance for each grant and then establish/modify internal controls to assure that only costs incurred within the approved budget period of performance are charged to the grant. View of Responsible Official: Management is in agreement with this recommendation
2023 – 002 INTERNAL CONTROLS OVER DISBURSEMENTS Significant Deficiency U.S. DEPARTMENTS OF EDUCATION Federal Assistance No. 84.425U COVID-19: ARP - Elementary and Secondary Schools Emergency Relief Passthrough Agency: New Mexico Public Education Department Award Period: July 1, 2022 – June 30, 2023 Allowable Costs/Cost Principles Condition: During the testing there was an invoice in the amount of $299,271 that was paid of twice during June 2023. The expenditure was submitted for reimbursement from federal funds. The District was notified by the vendor of the double payment while asking to use it as credit against a separate invoice. Criteria: PART 200—UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS § 200.303 Internal controls. 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). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. (e) Take reasonable measures to safeguard protected personally identifiable information and other information the Federal awarding agency or pass-through entity designates as sensitive or the non-Federal entity considers sensitive consistent with applicable Federal, State, local, and tribal laws regarding privacy and responsibility over confidentiality. § 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 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). Cause: The facilities department submitted the invoice to the finance department for payment at the beginning of June and towards the end of June. The accounts payable clerk bypassed the system error that the invoice number had been entered previously. Questioned costs: $299,271 was the amount of the duplicate payment. The expenditure from the duplicate payment was not reported in the schedule of expenditures in federal awards and was reported as a receivable from the vendor in the financial statements for Fund 24330. Effect or potential effect: Expenditures could be overstated, as well as revenues, if invoices are paid more than once and then also reimbursed. As a result, a receivable and unearned income must be recognized. Recommendation: Training should be given to accounts payable staff regarding the importance system warnings and the need to monitor invoices form the vendors. A tracking system should be implemented for tracking major projects to ensure than invoices are not reported more than once. Invoices should be stamped received upon receipt, marked when applied to a major project, and marked recorded once entered into the accounting system. Management’s response: Executive Director of Finance: Management agrees with this finding. The school district converted to a new financial ERP system as of July 1, 2023. The new ERP system flags any duplicate invoice numbers that maybe entered. The Accounts Payable (A/P) staff will verify if payment has already been made. On occasion, payment requests do not have an invoice number. To prevent duplicate payments, the Accounts Payable staff require original invoices and uses a system generated invoice number, or a will use a manual entry numbering convention to prevent duplicate invoice numbers. The invoice data is entered by an Accounts Payable specialist and reviewed by the Accounts Payable Manager. On occasion, A/P must request corrected invoices from vendors who try and reuse invoice numbers. The A/P Manager reviews invoice numbers during the check run for accuracy. Purchasing and A/P will also periodically review the vendor database for duplicate vendors. For construction projects that list a pay application number instead of an invoice number, A/P will implement a consistent invoice numbering convention to avoid duplicate payments. The A/P specialists will also review the PO payment history prior to processing. Responsible party(ies) for corrective action(s): Accounts Payable Manager Corrective action(s) timeline: December 1, 2023
2023 – 002 INTERNAL CONTROLS OVER DISBURSEMENTS Significant Deficiency U.S. DEPARTMENTS OF EDUCATION Federal Assistance No. 84.425U COVID-19: ARP - Elementary and Secondary Schools Emergency Relief Passthrough Agency: New Mexico Public Education Department Award Period: July 1, 2022 – June 30, 2023 Allowable Costs/Cost Principles Condition: During the testing there was an invoice in the amount of $299,271 that was paid of twice during June 2023. The expenditure was submitted for reimbursement from federal funds. The District was notified by the vendor of the double payment while asking to use it as credit against a separate invoice. Criteria: PART 200—UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS § 200.303 Internal controls. 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). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. (e) Take reasonable measures to safeguard protected personally identifiable information and other information the Federal awarding agency or pass-through entity designates as sensitive or the non-Federal entity considers sensitive consistent with applicable Federal, State, local, and tribal laws regarding privacy and responsibility over confidentiality. § 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 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). Cause: The facilities department submitted the invoice to the finance department for payment at the beginning of June and towards the end of June. The accounts payable clerk bypassed the system error that the invoice number had been entered previously. Questioned costs: $299,271 was the amount of the duplicate payment. The expenditure from the duplicate payment was not reported in the schedule of expenditures in federal awards and was reported as a receivable from the vendor in the financial statements for Fund 24330. Effect or potential effect: Expenditures could be overstated, as well as revenues, if invoices are paid more than once and then also reimbursed. As a result, a receivable and unearned income must be recognized. Recommendation: Training should be given to accounts payable staff regarding the importance system warnings and the need to monitor invoices form the vendors. A tracking system should be implemented for tracking major projects to ensure than invoices are not reported more than once. Invoices should be stamped received upon receipt, marked when applied to a major project, and marked recorded once entered into the accounting system. Management’s response: Executive Director of Finance: Management agrees with this finding. The school district converted to a new financial ERP system as of July 1, 2023. The new ERP system flags any duplicate invoice numbers that maybe entered. The Accounts Payable (A/P) staff will verify if payment has already been made. On occasion, payment requests do not have an invoice number. To prevent duplicate payments, the Accounts Payable staff require original invoices and uses a system generated invoice number, or a will use a manual entry numbering convention to prevent duplicate invoice numbers. The invoice data is entered by an Accounts Payable specialist and reviewed by the Accounts Payable Manager. On occasion, A/P must request corrected invoices from vendors who try and reuse invoice numbers. The A/P Manager reviews invoice numbers during the check run for accuracy. Purchasing and A/P will also periodically review the vendor database for duplicate vendors. For construction projects that list a pay application number instead of an invoice number, A/P will implement a consistent invoice numbering convention to avoid duplicate payments. The A/P specialists will also review the PO payment history prior to processing. Responsible party(ies) for corrective action(s): Accounts Payable Manager Corrective action(s) timeline: December 1, 2023
2023 – 002 INTERNAL CONTROLS OVER DISBURSEMENTS Significant Deficiency U.S. DEPARTMENTS OF EDUCATION Federal Assistance No. 84.425U COVID-19: ARP - Elementary and Secondary Schools Emergency Relief Passthrough Agency: New Mexico Public Education Department Award Period: July 1, 2022 – June 30, 2023 Allowable Costs/Cost Principles Condition: During the testing there was an invoice in the amount of $299,271 that was paid of twice during June 2023. The expenditure was submitted for reimbursement from federal funds. The District was notified by the vendor of the double payment while asking to use it as credit against a separate invoice. Criteria: PART 200—UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS § 200.303 Internal controls. 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). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. (e) Take reasonable measures to safeguard protected personally identifiable information and other information the Federal awarding agency or pass-through entity designates as sensitive or the non-Federal entity considers sensitive consistent with applicable Federal, State, local, and tribal laws regarding privacy and responsibility over confidentiality. § 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 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). Cause: The facilities department submitted the invoice to the finance department for payment at the beginning of June and towards the end of June. The accounts payable clerk bypassed the system error that the invoice number had been entered previously. Questioned costs: $299,271 was the amount of the duplicate payment. The expenditure from the duplicate payment was not reported in the schedule of expenditures in federal awards and was reported as a receivable from the vendor in the financial statements for Fund 24330. Effect or potential effect: Expenditures could be overstated, as well as revenues, if invoices are paid more than once and then also reimbursed. As a result, a receivable and unearned income must be recognized. Recommendation: Training should be given to accounts payable staff regarding the importance system warnings and the need to monitor invoices form the vendors. A tracking system should be implemented for tracking major projects to ensure than invoices are not reported more than once. Invoices should be stamped received upon receipt, marked when applied to a major project, and marked recorded once entered into the accounting system. Management’s response: Executive Director of Finance: Management agrees with this finding. The school district converted to a new financial ERP system as of July 1, 2023. The new ERP system flags any duplicate invoice numbers that maybe entered. The Accounts Payable (A/P) staff will verify if payment has already been made. On occasion, payment requests do not have an invoice number. To prevent duplicate payments, the Accounts Payable staff require original invoices and uses a system generated invoice number, or a will use a manual entry numbering convention to prevent duplicate invoice numbers. The invoice data is entered by an Accounts Payable specialist and reviewed by the Accounts Payable Manager. On occasion, A/P must request corrected invoices from vendors who try and reuse invoice numbers. The A/P Manager reviews invoice numbers during the check run for accuracy. Purchasing and A/P will also periodically review the vendor database for duplicate vendors. For construction projects that list a pay application number instead of an invoice number, A/P will implement a consistent invoice numbering convention to avoid duplicate payments. The A/P specialists will also review the PO payment history prior to processing. Responsible party(ies) for corrective action(s): Accounts Payable Manager Corrective action(s) timeline: December 1, 2023
2023 – 002 INTERNAL CONTROLS OVER DISBURSEMENTS Significant Deficiency U.S. DEPARTMENTS OF EDUCATION Federal Assistance No. 84.425U COVID-19: ARP - Elementary and Secondary Schools Emergency Relief Passthrough Agency: New Mexico Public Education Department Award Period: July 1, 2022 – June 30, 2023 Allowable Costs/Cost Principles Condition: During the testing there was an invoice in the amount of $299,271 that was paid of twice during June 2023. The expenditure was submitted for reimbursement from federal funds. The District was notified by the vendor of the double payment while asking to use it as credit against a separate invoice. Criteria: PART 200—UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS § 200.303 Internal controls. 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). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. (e) Take reasonable measures to safeguard protected personally identifiable information and other information the Federal awarding agency or pass-through entity designates as sensitive or the non-Federal entity considers sensitive consistent with applicable Federal, State, local, and tribal laws regarding privacy and responsibility over confidentiality. § 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 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). Cause: The facilities department submitted the invoice to the finance department for payment at the beginning of June and towards the end of June. The accounts payable clerk bypassed the system error that the invoice number had been entered previously. Questioned costs: $299,271 was the amount of the duplicate payment. The expenditure from the duplicate payment was not reported in the schedule of expenditures in federal awards and was reported as a receivable from the vendor in the financial statements for Fund 24330. Effect or potential effect: Expenditures could be overstated, as well as revenues, if invoices are paid more than once and then also reimbursed. As a result, a receivable and unearned income must be recognized. Recommendation: Training should be given to accounts payable staff regarding the importance system warnings and the need to monitor invoices form the vendors. A tracking system should be implemented for tracking major projects to ensure than invoices are not reported more than once. Invoices should be stamped received upon receipt, marked when applied to a major project, and marked recorded once entered into the accounting system. Management’s response: Executive Director of Finance: Management agrees with this finding. The school district converted to a new financial ERP system as of July 1, 2023. The new ERP system flags any duplicate invoice numbers that maybe entered. The Accounts Payable (A/P) staff will verify if payment has already been made. On occasion, payment requests do not have an invoice number. To prevent duplicate payments, the Accounts Payable staff require original invoices and uses a system generated invoice number, or a will use a manual entry numbering convention to prevent duplicate invoice numbers. The invoice data is entered by an Accounts Payable specialist and reviewed by the Accounts Payable Manager. On occasion, A/P must request corrected invoices from vendors who try and reuse invoice numbers. The A/P Manager reviews invoice numbers during the check run for accuracy. Purchasing and A/P will also periodically review the vendor database for duplicate vendors. For construction projects that list a pay application number instead of an invoice number, A/P will implement a consistent invoice numbering convention to avoid duplicate payments. The A/P specialists will also review the PO payment history prior to processing. Responsible party(ies) for corrective action(s): Accounts Payable Manager Corrective action(s) timeline: December 1, 2023
2023 – 002 INTERNAL CONTROLS OVER DISBURSEMENTS Significant Deficiency U.S. DEPARTMENTS OF EDUCATION Federal Assistance No. 84.425U COVID-19: ARP - Elementary and Secondary Schools Emergency Relief Passthrough Agency: New Mexico Public Education Department Award Period: July 1, 2022 – June 30, 2023 Allowable Costs/Cost Principles Condition: During the testing there was an invoice in the amount of $299,271 that was paid of twice during June 2023. The expenditure was submitted for reimbursement from federal funds. The District was notified by the vendor of the double payment while asking to use it as credit against a separate invoice. Criteria: PART 200—UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS § 200.303 Internal controls. 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). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. (e) Take reasonable measures to safeguard protected personally identifiable information and other information the Federal awarding agency or pass-through entity designates as sensitive or the non-Federal entity considers sensitive consistent with applicable Federal, State, local, and tribal laws regarding privacy and responsibility over confidentiality. § 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 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). Cause: The facilities department submitted the invoice to the finance department for payment at the beginning of June and towards the end of June. The accounts payable clerk bypassed the system error that the invoice number had been entered previously. Questioned costs: $299,271 was the amount of the duplicate payment. The expenditure from the duplicate payment was not reported in the schedule of expenditures in federal awards and was reported as a receivable from the vendor in the financial statements for Fund 24330. Effect or potential effect: Expenditures could be overstated, as well as revenues, if invoices are paid more than once and then also reimbursed. As a result, a receivable and unearned income must be recognized. Recommendation: Training should be given to accounts payable staff regarding the importance system warnings and the need to monitor invoices form the vendors. A tracking system should be implemented for tracking major projects to ensure than invoices are not reported more than once. Invoices should be stamped received upon receipt, marked when applied to a major project, and marked recorded once entered into the accounting system. Management’s response: Executive Director of Finance: Management agrees with this finding. The school district converted to a new financial ERP system as of July 1, 2023. The new ERP system flags any duplicate invoice numbers that maybe entered. The Accounts Payable (A/P) staff will verify if payment has already been made. On occasion, payment requests do not have an invoice number. To prevent duplicate payments, the Accounts Payable staff require original invoices and uses a system generated invoice number, or a will use a manual entry numbering convention to prevent duplicate invoice numbers. The invoice data is entered by an Accounts Payable specialist and reviewed by the Accounts Payable Manager. On occasion, A/P must request corrected invoices from vendors who try and reuse invoice numbers. The A/P Manager reviews invoice numbers during the check run for accuracy. Purchasing and A/P will also periodically review the vendor database for duplicate vendors. For construction projects that list a pay application number instead of an invoice number, A/P will implement a consistent invoice numbering convention to avoid duplicate payments. The A/P specialists will also review the PO payment history prior to processing. Responsible party(ies) for corrective action(s): Accounts Payable Manager Corrective action(s) timeline: December 1, 2023
2023 – 002 INTERNAL CONTROLS OVER DISBURSEMENTS Significant Deficiency U.S. DEPARTMENTS OF EDUCATION Federal Assistance No. 84.425U COVID-19: ARP - Elementary and Secondary Schools Emergency Relief Passthrough Agency: New Mexico Public Education Department Award Period: July 1, 2022 – June 30, 2023 Allowable Costs/Cost Principles Condition: During the testing there was an invoice in the amount of $299,271 that was paid of twice during June 2023. The expenditure was submitted for reimbursement from federal funds. The District was notified by the vendor of the double payment while asking to use it as credit against a separate invoice. Criteria: PART 200—UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS § 200.303 Internal controls. 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). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. (e) Take reasonable measures to safeguard protected personally identifiable information and other information the Federal awarding agency or pass-through entity designates as sensitive or the non-Federal entity considers sensitive consistent with applicable Federal, State, local, and tribal laws regarding privacy and responsibility over confidentiality. § 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 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). Cause: The facilities department submitted the invoice to the finance department for payment at the beginning of June and towards the end of June. The accounts payable clerk bypassed the system error that the invoice number had been entered previously. Questioned costs: $299,271 was the amount of the duplicate payment. The expenditure from the duplicate payment was not reported in the schedule of expenditures in federal awards and was reported as a receivable from the vendor in the financial statements for Fund 24330. Effect or potential effect: Expenditures could be overstated, as well as revenues, if invoices are paid more than once and then also reimbursed. As a result, a receivable and unearned income must be recognized. Recommendation: Training should be given to accounts payable staff regarding the importance system warnings and the need to monitor invoices form the vendors. A tracking system should be implemented for tracking major projects to ensure than invoices are not reported more than once. Invoices should be stamped received upon receipt, marked when applied to a major project, and marked recorded once entered into the accounting system. Management’s response: Executive Director of Finance: Management agrees with this finding. The school district converted to a new financial ERP system as of July 1, 2023. The new ERP system flags any duplicate invoice numbers that maybe entered. The Accounts Payable (A/P) staff will verify if payment has already been made. On occasion, payment requests do not have an invoice number. To prevent duplicate payments, the Accounts Payable staff require original invoices and uses a system generated invoice number, or a will use a manual entry numbering convention to prevent duplicate invoice numbers. The invoice data is entered by an Accounts Payable specialist and reviewed by the Accounts Payable Manager. On occasion, A/P must request corrected invoices from vendors who try and reuse invoice numbers. The A/P Manager reviews invoice numbers during the check run for accuracy. Purchasing and A/P will also periodically review the vendor database for duplicate vendors. For construction projects that list a pay application number instead of an invoice number, A/P will implement a consistent invoice numbering convention to avoid duplicate payments. The A/P specialists will also review the PO payment history prior to processing. Responsible party(ies) for corrective action(s): Accounts Payable Manager Corrective action(s) timeline: December 1, 2023
2023 – 002 INTERNAL CONTROLS OVER DISBURSEMENTS Significant Deficiency U.S. DEPARTMENTS OF EDUCATION Federal Assistance No. 84.425U COVID-19: ARP - Elementary and Secondary Schools Emergency Relief Passthrough Agency: New Mexico Public Education Department Award Period: July 1, 2022 – June 30, 2023 Allowable Costs/Cost Principles Condition: During the testing there was an invoice in the amount of $299,271 that was paid of twice during June 2023. The expenditure was submitted for reimbursement from federal funds. The District was notified by the vendor of the double payment while asking to use it as credit against a separate invoice. Criteria: PART 200—UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS § 200.303 Internal controls. 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). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. (e) Take reasonable measures to safeguard protected personally identifiable information and other information the Federal awarding agency or pass-through entity designates as sensitive or the non-Federal entity considers sensitive consistent with applicable Federal, State, local, and tribal laws regarding privacy and responsibility over confidentiality. § 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 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). Cause: The facilities department submitted the invoice to the finance department for payment at the beginning of June and towards the end of June. The accounts payable clerk bypassed the system error that the invoice number had been entered previously. Questioned costs: $299,271 was the amount of the duplicate payment. The expenditure from the duplicate payment was not reported in the schedule of expenditures in federal awards and was reported as a receivable from the vendor in the financial statements for Fund 24330. Effect or potential effect: Expenditures could be overstated, as well as revenues, if invoices are paid more than once and then also reimbursed. As a result, a receivable and unearned income must be recognized. Recommendation: Training should be given to accounts payable staff regarding the importance system warnings and the need to monitor invoices form the vendors. A tracking system should be implemented for tracking major projects to ensure than invoices are not reported more than once. Invoices should be stamped received upon receipt, marked when applied to a major project, and marked recorded once entered into the accounting system. Management’s response: Executive Director of Finance: Management agrees with this finding. The school district converted to a new financial ERP system as of July 1, 2023. The new ERP system flags any duplicate invoice numbers that maybe entered. The Accounts Payable (A/P) staff will verify if payment has already been made. On occasion, payment requests do not have an invoice number. To prevent duplicate payments, the Accounts Payable staff require original invoices and uses a system generated invoice number, or a will use a manual entry numbering convention to prevent duplicate invoice numbers. The invoice data is entered by an Accounts Payable specialist and reviewed by the Accounts Payable Manager. On occasion, A/P must request corrected invoices from vendors who try and reuse invoice numbers. The A/P Manager reviews invoice numbers during the check run for accuracy. Purchasing and A/P will also periodically review the vendor database for duplicate vendors. For construction projects that list a pay application number instead of an invoice number, A/P will implement a consistent invoice numbering convention to avoid duplicate payments. The A/P specialists will also review the PO payment history prior to processing. Responsible party(ies) for corrective action(s): Accounts Payable Manager Corrective action(s) timeline: December 1, 2023
2023 – 002 INTERNAL CONTROLS OVER DISBURSEMENTS Significant Deficiency U.S. DEPARTMENTS OF EDUCATION Federal Assistance No. 84.425U COVID-19: ARP - Elementary and Secondary Schools Emergency Relief Passthrough Agency: New Mexico Public Education Department Award Period: July 1, 2022 – June 30, 2023 Allowable Costs/Cost Principles Condition: During the testing there was an invoice in the amount of $299,271 that was paid of twice during June 2023. The expenditure was submitted for reimbursement from federal funds. The District was notified by the vendor of the double payment while asking to use it as credit against a separate invoice. Criteria: PART 200—UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS § 200.303 Internal controls. 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). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. (e) Take reasonable measures to safeguard protected personally identifiable information and other information the Federal awarding agency or pass-through entity designates as sensitive or the non-Federal entity considers sensitive consistent with applicable Federal, State, local, and tribal laws regarding privacy and responsibility over confidentiality. § 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 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). Cause: The facilities department submitted the invoice to the finance department for payment at the beginning of June and towards the end of June. The accounts payable clerk bypassed the system error that the invoice number had been entered previously. Questioned costs: $299,271 was the amount of the duplicate payment. The expenditure from the duplicate payment was not reported in the schedule of expenditures in federal awards and was reported as a receivable from the vendor in the financial statements for Fund 24330. Effect or potential effect: Expenditures could be overstated, as well as revenues, if invoices are paid more than once and then also reimbursed. As a result, a receivable and unearned income must be recognized. Recommendation: Training should be given to accounts payable staff regarding the importance system warnings and the need to monitor invoices form the vendors. A tracking system should be implemented for tracking major projects to ensure than invoices are not reported more than once. Invoices should be stamped received upon receipt, marked when applied to a major project, and marked recorded once entered into the accounting system. Management’s response: Executive Director of Finance: Management agrees with this finding. The school district converted to a new financial ERP system as of July 1, 2023. The new ERP system flags any duplicate invoice numbers that maybe entered. The Accounts Payable (A/P) staff will verify if payment has already been made. On occasion, payment requests do not have an invoice number. To prevent duplicate payments, the Accounts Payable staff require original invoices and uses a system generated invoice number, or a will use a manual entry numbering convention to prevent duplicate invoice numbers. The invoice data is entered by an Accounts Payable specialist and reviewed by the Accounts Payable Manager. On occasion, A/P must request corrected invoices from vendors who try and reuse invoice numbers. The A/P Manager reviews invoice numbers during the check run for accuracy. Purchasing and A/P will also periodically review the vendor database for duplicate vendors. For construction projects that list a pay application number instead of an invoice number, A/P will implement a consistent invoice numbering convention to avoid duplicate payments. The A/P specialists will also review the PO payment history prior to processing. Responsible party(ies) for corrective action(s): Accounts Payable Manager Corrective action(s) timeline: December 1, 2023
FINDING 2023-001 Federal Program Information: Research and Development Cluster (ALN: 47.047) Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): H. Period of Performance - Per Uniform Guidance, (2 CFR sections 200.308), the auditee may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance. Condition: During our testing of research and development expenditures, we noted the following exception: • For 1 of the 25 selected research and development cluster grants had certain expenditures reported on the 2023 schedule of expenditures of federal awards that were incurred subsequent to the period of performance end date. Cause: Administrative oversight with respect to period of performance requirements. Effect or Potential Effect: The School is not properly following its policies and procedures in place to ensure compliance with period of performance requirements. Questioned Costs: $40,147 Context: We tested a sample of 25 research and development cluster grants and found 1 exception as noted in the condition with a total impact of $40,147. This is a condition identified per review of the School’s compliance with specific requirements using a statistically valid sample. Identification as a Repeat Finding: No similar findings noted in the prior year. Recommendation: We recommend that the School enhance its policies and procedures to ensure that expenditures are incurred and recorded during each grants’ respective performance period. Views of Responsible Officials and Planned Corrective Actions: We agree. The expenditures were reported on the schedule of expenditures for federal awards subsequent to the period of performance end date. These funds were not charged to the agency and are considered cost share for the grant as the work on the grant continued past the grant end date. We will review our grant close-out procedures to ensure that grants are closed out in a timely manner based on the grant end date preventing subsequent charges to the grant award.
Finding 2023-002: Questioned Cost – Material Weakness Criteria: A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). Also, costs should not be included as a cost of any other federally financed programs in either the current or prior period. Costs charged to federal grants should be reviewed by an individual familiar with the Cost Principles for Nonprofit Organizations contained in 2 CFR, Section 200 as part of the SEFA review process. Condition: Costs for US Department of Transportation, Mobility Management Grant 20.507 Section 5307 included a $30,000 charge for use of the Data Management System (DMS). The charge is based on a contract rate charged to outside entities that varies depending on the number of users. Management stated the charge was to recoup costs for use of the DMS. Costs for the DMS consist of historical costs to get the system functioning, along with current personnel costs to operate the system and provide the contracted training. The historical costs occurred outside the period of performance and are thus unallowable. Personnel costs are already being charged to the grant through the allocated payroll and benefits of trainers and other personnel, and thus should not also be charged through the contract rate. In addition, if the contract rate includes a profit component this would also be unallowable to charge to the grant. We also noted the same $30,000 charge was included in US Department of Transportation, Enhanced Mobility of Seniors and Individuals with Disabilities, Section 5310. Cause: Paratransit’s internal controls over the determination of allowable costs were not operating effectively. Effect: The DMS costs were removed and replaced with an allowable 10% de minimus overhead charge. Recommendation: We recommend that costs charged to federal grants be reviewed by an individual familiar with the Cost Principles for Nonprofit Organizations contained in 2 CFR, Section 200 as part of the SEFA review process. Management’s Response: See corrective action plan.
2023-001 ALLOWABLE COST, CASH MANAGEMENT, AND PERIOD OF PERFORMANCE - SIGNIFICANT DEFICIENCY Federal Program Unaccompanied Alien Children Program ALN 93.676 Criteria Part 3 of the Compliance Supplement indicates non-federal entities must minimize the time elapsing between the transfer of funds from the US Treasury or pass-through entity and disbursement by the non-federal entity for direct program or project costs and the proportionate share of allowable indirect costs, whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means (2 CFR section 200.305(b)). Part 3 of the Compliance Supplement indicates a non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). A period of performance may contain one or more budget periods. Condition/Cause In July 2022, the Home requested reimbursement and received funding to cover costs that had not yet been incurred or paid for as of June 30, 2023. Effect The Home was reimbursed for costs that were not incurred during the budget period. Additionally, the Home has held onto grant funds for twelve plus months. Questioned Costs Known questioned costs are $52,841. Context The Home budgeted to have new fire alarms installed in the cottages during the July 1, 2021 - June 30, 2022 grant budget period. Due to supply chain issues and labor shortages the alarms were not installed until the Fall of 2023 at which time the Home paid the contractor. Repeat Finding No. Recommendation We recommend the Home contact the funding agency to inquire about returning the funds and any interest earned. We also recommend that the Home revisit and strengthen internal controls over allowable activities, allowable costs, cash management, and period of availability related to grant programs. Management Response See corrective action plan included in this report package.
Reference Number: 2023-008 Prior Year Finding: 2022-017 Federal Agency: U.S. Department of Labor State Agency: Vermont Department of Labor Federal Program: Unemployment Insurance, COVID-19 – Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: UI393532355A50 (10/1/2022 – 12/31/2025) Compliance Requirement: Period of Performance Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: Compliance: A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). A period of performance may contain one or more budget periods. Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Department of Labor (Department) charged costs to the federal grant prior to the allowable start of the period of performance. Payments were also issued without review and approval by supervisory staff. Context: Sixty transactions were selected for testing and the following exceptions were noted: • Five of sixty transactions were charged to the award before the allowable period of performance. The grant award start date was October 1, 2022 but costs, totaling $2,277, were incurred in June, July and September 2022. • The Department’s key control is that all payments are supported by an invoice approved by a program manager who is aware of the grant’s period of performance. Four of sixty transactions did not have evidence of supervisory approval prior to issuance of payment. Section III – Findings and Questioned Costs – Major Federal Programs (Continued) Cause: The Department’s procedures and internal controls were not operating sufficiently to ensure that expenditures charged to the program were incurred within the award’s period of performance. Effect: Costs could be deemed unallowable by the awarding agency if funds are expended outside of the allowable period of performance. Questioned costs: Below the reportable limit. Recommendation: The Department should review and enhance its procedures and internal controls to ensure that it charges expenditures to the program that are incurred within an award’s allowable period of performance. Views of responsible officials: The Department acknowledges and accepts this finding.
Reference Number: 2023-008 Prior Year Finding: 2022-017 Federal Agency: U.S. Department of Labor State Agency: Vermont Department of Labor Federal Program: Unemployment Insurance, COVID-19 – Unemployment Insurance Assistance Listing Number: 17.225 Award Number and Year: UI393532355A50 (10/1/2022 – 12/31/2025) Compliance Requirement: Period of Performance Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Criteria or specific requirement: Compliance: A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). A period of performance may contain one or more budget periods. Control: Per 2 CFR section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Department of Labor (Department) charged costs to the federal grant prior to the allowable start of the period of performance. Payments were also issued without review and approval by supervisory staff. Context: Sixty transactions were selected for testing and the following exceptions were noted: • Five of sixty transactions were charged to the award before the allowable period of performance. The grant award start date was October 1, 2022 but costs, totaling $2,277, were incurred in June, July and September 2022. • The Department’s key control is that all payments are supported by an invoice approved by a program manager who is aware of the grant’s period of performance. Four of sixty transactions did not have evidence of supervisory approval prior to issuance of payment. Section III – Findings and Questioned Costs – Major Federal Programs (Continued) Cause: The Department’s procedures and internal controls were not operating sufficiently to ensure that expenditures charged to the program were incurred within the award’s period of performance. Effect: Costs could be deemed unallowable by the awarding agency if funds are expended outside of the allowable period of performance. Questioned costs: Below the reportable limit. Recommendation: The Department should review and enhance its procedures and internal controls to ensure that it charges expenditures to the program that are incurred within an award’s allowable period of performance. Views of responsible officials: The Department acknowledges and accepts this finding.
Finding Number: 2023-001 – Period of Performance Information on Federal Program: National Endowment for the Humanities ALN: 45.309 ALN Name: Museum Grants for African American History and Culture Context: During testing we identified a 2024 expense in the amount of $24,323 which was inaccurately recorded in fiscal year 2023. Criteria: An entity may charge to the Federal award only allowable costs incurred during the approved budget period of a Federal award’s period of performance (2 CFR sections 200.308, 200.309, and 200.403(h)). Condition: A fiscal year 2024 expense in the amount of $24,323 was inaccurately recorded in fiscal year 2023. Cause: Policies and procedures were not adhered to ensure expenses are recorded in the correct period. Effect or Potential Effect: Expenses of $24,323 were improperly recorded in fiscal year 2023. Questioned Costs: N/A Recommendation: We recommend that the Library ensure its policies and procedures are followed on a consistent basis to ensure the proper recording of expenses in the correct period. Views of Responsible Officials: The Library agrees with the finding. The Library continues to take steps to improve this process. See the Library’s further response to this finding as described in the accompanying management's planned corrective actions, Appendix A.
FINDING: 2023-004 – Internal Control and Compliance over Period of Performance Federal Agency: Department of Health and Human Services Pass-through Agency: Pennsylvania Department of Community and Economic Development Program: 93.569 Community Services Block Grant and 93.569 COVID-19: Community Services Block Grant Statement of Condition: The Partnership drew federal CSBG funds in December 2022 in the amount of $36,853 to be used for an equipment purchase. The funds were not yet obligated for the purchase, as no contract was in place and Board approval was not yet obtained. In accordance with compliance requirements for CSBG funds, funds granted by the state to subgrantees are available to the subgrantee for obligation during the federal fiscal year that the grant was made and in the following federal fiscal year. Funds were not obligated within the appropriate time period (as of December 31, 2023). Criteria: In accordance with Uniform Guidance period of performance requirements found in 2 CFR section 200.1, 200.308, 200.309, and 200.344, the Partnership is required to ensure that funds are obligated with the required time frame of the period of performance. Effect: The Partnership was not in compliance with the period of performance requirements of the Uniform Guidance. Cause: Procedures in place to ensure that funds were utilized in the proper period of performance were not adequate. Questioned Costs: Unknown Repeat Finding: This is not a repeat finding. Recommendation: We recommend the Partnership establish procedures to ensure the funds are obligated and utilized in the proper period of performance. Views of responsible officials and planned corrective action: Management agrees with the finding. See attached corrective action plan.
FINDING: 2023-004 – Internal Control and Compliance over Period of Performance Federal Agency: Department of Health and Human Services Pass-through Agency: Pennsylvania Department of Community and Economic Development Program: 93.569 Community Services Block Grant and 93.569 COVID-19: Community Services Block Grant Statement of Condition: The Partnership drew federal CSBG funds in December 2022 in the amount of $36,853 to be used for an equipment purchase. The funds were not yet obligated for the purchase, as no contract was in place and Board approval was not yet obtained. In accordance with compliance requirements for CSBG funds, funds granted by the state to subgrantees are available to the subgrantee for obligation during the federal fiscal year that the grant was made and in the following federal fiscal year. Funds were not obligated within the appropriate time period (as of December 31, 2023). Criteria: In accordance with Uniform Guidance period of performance requirements found in 2 CFR section 200.1, 200.308, 200.309, and 200.344, the Partnership is required to ensure that funds are obligated with the required time frame of the period of performance. Effect: The Partnership was not in compliance with the period of performance requirements of the Uniform Guidance. Cause: Procedures in place to ensure that funds were utilized in the proper period of performance were not adequate. Questioned Costs: Unknown Repeat Finding: This is not a repeat finding. Recommendation: We recommend the Partnership establish procedures to ensure the funds are obligated and utilized in the proper period of performance. Views of responsible officials and planned corrective action: Management agrees with the finding. See attached corrective action plan.
Federal Agency: U.S. Department of Homeland Security Federal Program Name: Staffing for Adequate Fire and Emergency Response ALN: 97.083 Award Period: March 14, 2023 – March 13, 2026 Compliance Requirement: Period of Performance Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matters Prior Year Finding: No Criteria or specific requirement: Compliance – A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity (2 CFR sections 200.308 200.309 and 200.403(h)). A period of performance may contain one or more budget periods. Social Services Block Grant funds must be expended by the state in the fiscal year allotted or in the succeeding fiscal year. Control – Per 2 CFR Section 200.303(a), a non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should comply with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Condition: The Department of Homeland Security charged costs to the program that were incurred outside of the grant award’s period of performance. Context: One of the six pay-periods selected for testing, had expenditures totaling $19,871, that were incurred on March 13, 2023, which is prior to the award’s period of performance start date of March 14, 2023. Questioned costs: Known costs of $19,871. Cause: Personnel Costs for March 13, 2023 embedded in the pay period report of March 13, 2023 through March 26, 2023 were submitted as expenditures before the period of performance start date of March 14, 2023. This was caused by an oversight of removing the first day of employment March 13, 2023 from the expenditures when the first reimbursement was submitted for payment to FEMA. Effect: The Department was not compliant with the grant’s period of performance which could result in the grantor’s disallowance of the costs. Recommendation: We recommend that the Department review and enhance its procedures and controls to ensure that expenditures charged to the program are incurred within the grant’s period of performance. Views of responsible officials: We concur with your finding and have taken the following corrective action: 1. The error has been reported to FEMA and the transaction for correcting this error will be submitted with the next reimbursement request as a negative adjustment. 2. We are continuously monitoring the expenditure consistency with the grant award timeline. 3. We are working with our Grant Coordinator to ensure that all of our grants are consistent with the requirements of the award.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Block Grants for Prevention and Treatment of Substance Abuse Assistance Listing Number: 93.959 Federal Award Identification Number and Year: 4512-9069 – 2023 Pass-Through Agency: Commonwealth of Massachusetts – Department of Public Health Pass-Through Number(s): SUBABUSETSSFY2300000702 Award Period: July 1, 2022 - June 30, 2024 Type of Finding: Period of Performance Significant Deficiency in Internal Control over Compliance Other Matters Criteria or specific requirement: 2 CFR sections 200.308, 200.309 and 200.403(h) states a non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity. Condition: Internal controls were not in place to ensure that grant expenses charged to the grant were during the approved federal award's period of performance. Questioned costs: None reportable. Context: For 7 of the 8 transactions tested, we identified the Commission charged expenditures to the grant that were incurred outside of the period of performance, prior to the start date of the grant. Cause: Procedures were not in place to ensure expenditures charged to the grant were incurred during the period of performance. Effect: The expenditures incurred before the period of performance are subject to disallowance and are considered questioned costs. Recommendation: We recommend procedures be implemented to ensure that all costs charged to the grant are incurred within the grant period of performance. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Block Grants for Prevention and Treatment of Substance Abuse Assistance Listing Number: 93.959 Federal Award Identification Number and Year: 4512-9069 – 2023 Pass-Through Agency: Commonwealth of Massachusetts – Department of Public Health Pass-Through Number(s): SUBABUSETSSFY2300000702 Award Period: July 1, 2022 - June 30, 2024 Type of Finding: Period of Performance Significant Deficiency in Internal Control over Compliance Other Matters Criteria or specific requirement: 2 CFR sections 200.308, 200.309 and 200.403(h) states a non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity. Condition: Internal controls were not in place to ensure that grant expenses charged to the grant were during the approved federal award's period of performance. Questioned costs: None reportable. Context: For 7 of the 8 transactions tested, we identified the Commission charged expenditures to the grant that were incurred outside of the period of performance, prior to the start date of the grant. Cause: Procedures were not in place to ensure expenditures charged to the grant were incurred during the period of performance. Effect: The expenditures incurred before the period of performance are subject to disallowance and are considered questioned costs. Recommendation: We recommend procedures be implemented to ensure that all costs charged to the grant are incurred within the grant period of performance. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Block Grants for Prevention and Treatment of Substance Abuse Assistance Listing Number: 93.959 Federal Award Identification Number and Year: 4512-9069 – 2023 Pass-Through Agency: Commonwealth of Massachusetts – Department of Public Health Pass-Through Number(s): SUBABUSETSSFY2300000702 Award Period: July 1, 2022 - June 30, 2024 Type of Finding: Period of Performance Significant Deficiency in Internal Control over Compliance Other Matters Criteria or specific requirement: 2 CFR sections 200.308, 200.309 and 200.403(h) states a non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity. Condition: Internal controls were not in place to ensure that grant expenses charged to the grant were during the approved federal award's period of performance. Questioned costs: None reportable. Context: For 7 of the 8 transactions tested, we identified the Commission charged expenditures to the grant that were incurred outside of the period of performance, prior to the start date of the grant. Cause: Procedures were not in place to ensure expenditures charged to the grant were incurred during the period of performance. Effect: The expenditures incurred before the period of performance are subject to disallowance and are considered questioned costs. Recommendation: We recommend procedures be implemented to ensure that all costs charged to the grant are incurred within the grant period of performance. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Block Grants for Prevention and Treatment of Substance Abuse Assistance Listing Number: 93.959 Federal Award Identification Number and Year: 4512-9069 – 2023 Pass-Through Agency: Commonwealth of Massachusetts – Department of Public Health Pass-Through Number(s): SUBABUSETSSFY2300000702 Award Period: July 1, 2022 - June 30, 2024 Type of Finding: Period of Performance Significant Deficiency in Internal Control over Compliance Other Matters Criteria or specific requirement: 2 CFR sections 200.308, 200.309 and 200.403(h) states a non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity. Condition: Internal controls were not in place to ensure that grant expenses charged to the grant were during the approved federal award's period of performance. Questioned costs: None reportable. Context: For 7 of the 8 transactions tested, we identified the Commission charged expenditures to the grant that were incurred outside of the period of performance, prior to the start date of the grant. Cause: Procedures were not in place to ensure expenditures charged to the grant were incurred during the period of performance. Effect: The expenditures incurred before the period of performance are subject to disallowance and are considered questioned costs. Recommendation: We recommend procedures be implemented to ensure that all costs charged to the grant are incurred within the grant period of performance. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Block Grants for Prevention and Treatment of Substance Abuse Assistance Listing Number: 93.959 Federal Award Identification Number and Year: 4512-9069 – 2023 Pass-Through Agency: Commonwealth of Massachusetts – Department of Public Health Pass-Through Number(s): SUBABUSETSSFY2300000702 Award Period: July 1, 2022 - June 30, 2024 Type of Finding: Period of Performance Significant Deficiency in Internal Control over Compliance Other Matters Criteria or specific requirement: 2 CFR sections 200.308, 200.309 and 200.403(h) states a non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity. Condition: Internal controls were not in place to ensure that grant expenses charged to the grant were during the approved federal award's period of performance. Questioned costs: None reportable. Context: For 7 of the 8 transactions tested, we identified the Commission charged expenditures to the grant that were incurred outside of the period of performance, prior to the start date of the grant. Cause: Procedures were not in place to ensure expenditures charged to the grant were incurred during the period of performance. Effect: The expenditures incurred before the period of performance are subject to disallowance and are considered questioned costs. Recommendation: We recommend procedures be implemented to ensure that all costs charged to the grant are incurred within the grant period of performance. Views of responsible officials: There is no disagreement with the audit finding.
Federal Agency: U.S. Department of Health and Human Services Federal Program Name: Block Grants for Prevention and Treatment of Substance Abuse Assistance Listing Number: 93.959 Federal Award Identification Number and Year: 4512-9069 – 2023 Pass-Through Agency: Commonwealth of Massachusetts – Department of Public Health Pass-Through Number(s): SUBABUSETSSFY2300000702 Award Period: July 1, 2022 - June 30, 2024 Type of Finding: Period of Performance Significant Deficiency in Internal Control over Compliance Other Matters Criteria or specific requirement: 2 CFR sections 200.308, 200.309 and 200.403(h) states a non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance and any costs incurred before the federal awarding agency or pass-through entity made the federal award that were authorized by the federal awarding agency or pass-through entity. Condition: Internal controls were not in place to ensure that grant expenses charged to the grant were during the approved federal award's period of performance. Questioned costs: None reportable. Context: For 7 of the 8 transactions tested, we identified the Commission charged expenditures to the grant that were incurred outside of the period of performance, prior to the start date of the grant. Cause: Procedures were not in place to ensure expenditures charged to the grant were incurred during the period of performance. Effect: The expenditures incurred before the period of performance are subject to disallowance and are considered questioned costs. Recommendation: We recommend procedures be implemented to ensure that all costs charged to the grant are incurred within the grant period of performance. Views of responsible officials: There is no disagreement with the audit finding.