Finding Number: 2024-001 Federal Program: CDBG – Entitlement Grants Cluster Federal Award Identification Number and Year: B20MC390014 (2020), B21MC390014 (2021), B22MC390014 (2022), B23MC390014 (2023), B24MC390014 (2024), B20MW390014 (2020) Assistance Listing Number (ALN): 14.218 Federal Awarding Agency: Department of Housing and Urban Development Pass-through Entity: None Repeat Finding: No Significant Deficiency and Noncompliance – Reporting Criteria: Unless otherwise approved by OMB, the Federal awarding agency must solicit only the OMB-approved governmentwide data elements for collection of financial information (at time of publication the Federal Financial Report or such future, OMB-approved, governmentwide data elements available from the OMB-designated standards lead. This information must be collected with the frequency required by the terms and conditions of the Federal award, but no less frequently than annually nor more frequently than quarterly except in unusual circumstances. (2 CFR 200.328). The Quarterly Cash on Hand report must be submitted to the respective field office within 30 days after the end of the reporting period. Condition: The City submitted its second quarter 2024 financial reports due July 30, 2024 on November 6, 2024 and its fourth quarter financial reports due January 30, 2025 on April 8, 2025. Questioned Costs: None. Identification of How Questioned Costs Were Computed: N/A Context: Through testing required reporting under terms and conditions of the federal award, we observed the City failed to meet the expected timelines for financial reporting. Specifically, we identified the second and fourth quarter reports were submitted after the stated deadline. These requirements are outlined in the federal award agreement and applicable Uniform Guidance provisions. Cause and Effect: The issue results of lack of monitoring control related to grant reporting requirements. Failure to submit reports as required could result in non-compliance with grant requirements. Recommendation: We recommend that the City implement procedures and internal deadlines for reviewing and timely submitting all reports under federal awards. Views of Responsible Officials and Corrective Action Plan: See Corrective Action Plan.
VA Supportive Services for Veteran Families Program FFAL #64.033, 20-SD-136-23, 10/1/2022 – 3/1/2024 FFAL #64.033, 20-SD-136-24, 10/1/2023 – 12/31/2024 Reporting Material Weakness in Internal Control over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. 2 CFR 200.328 and 2 CFR 200.329 require the auditee to collect financial information and monitor its activities under federal awards to assure compliance with applicable federal requirements and performance expectations are being achieved and report these items in accordance with the program requirements. Condition: No review and approval processes are in place over quarterly progress reports. Cause: Management did not have review procedures and processes in place over the quarterly progress reports. Effect: Without review procedures and processes in place over reporting, demonstrating the program complies with laws, regulations, and other compliance requirements is difficult. Additionally, not having an oversight process over reporting could result in a reasonable possibility reports that are inaccurate or incomplete could be submitted. Questioned Costs: None reported Context/Sampling: Included under the two award letters of the federal program, one annual financial report and one quarterly progress report was reviewed in the Organization’s fiscal year. In addition, two monthly HMIS reports were reviewed in the Organization’s fiscal year. There was a total of 18 reports filed. Repeat Finding from Prior Year: No Recommendation: We recommend management implement procedures and control processes to incorporate an independent review and approval over reporting and retain documentation to support the review was performed. Views of Responsible Officials: Management is in agreement.
VA Supportive Services for Veteran Families Program FFAL #64.033, 20-SD-136-23, 10/1/2022 – 3/1/2024 FFAL #64.033, 20-SD-136-24, 10/1/2023 – 12/31/2024 Reporting Material Weakness in Internal Control over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. 2 CFR 200.328 and 2 CFR 200.329 require the auditee to collect financial information and monitor its activities under federal awards to assure compliance with applicable federal requirements and performance expectations are being achieved and report these items in accordance with the program requirements. Condition: No review and approval processes are in place over quarterly progress reports. Cause: Management did not have review procedures and processes in place over the quarterly progress reports. Effect: Without review procedures and processes in place over reporting, demonstrating the program complies with laws, regulations, and other compliance requirements is difficult. Additionally, not having an oversight process over reporting could result in a reasonable possibility reports that are inaccurate or incomplete could be submitted. Questioned Costs: None reported Context/Sampling: Included under the two award letters of the federal program, one annual financial report and one quarterly progress report was reviewed in the Organization’s fiscal year. In addition, two monthly HMIS reports were reviewed in the Organization’s fiscal year. There was a total of 18 reports filed. Repeat Finding from Prior Year: No Recommendation: We recommend management implement procedures and control processes to incorporate an independent review and approval over reporting and retain documentation to support the review was performed. Views of Responsible Officials: Management is in agreement.
FINDING 2024-004 Subject: Water and Waste Disposal Systems for Rural Communities - Reporting Federal Agency: Department of Agriculture Federal Program: Water and Waste Disposal Systems for Rural Communities Assistance Listings Number: 10.760 Federal Award Number and Year (or Other Identifying Number): FY2024 Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-003. Condition and Context As part of sound management of the federal award, the Town was responsible for implementing a system of internal controls that would ensure compliance with the applicable requirements. The Town had not properly designed or implemented such a system, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. The Town was required to submit the following reporting to the Department of Agriculture annually: • Statement of Budget, Income, and Equity (Form RD 442-2) • Balance Sheet (Form RD 442-3) INDIANA STATE BOARD OF ACCOUNTS 21 TOWN OF PAOLI SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The Form RD 442-2 covers financial operations relating to the Town's wastewater utility and the Form RD 442-3 presents the financial status of the wastewater utility. In both instances, a borrower may submit the financial data on other forms, provided the forms are in a similar format and signed and dated by the organization's official to certify the correctness of the information. Alternatively, an annual audit may be submitted in lieu of the forms. The Town did not submit the Form RD 442-2 during the audit period as required. The Town submitted the Form RD 442-3 reporting 2023 data in 2024 as required. However, this report is intended to be a comparative balance sheet as described in the USDA Rural Utilities Service Borrower's Guide. The Town did not include comparative data for 2022 in the report. There was also no documentation or other evidence of an oversight, review, or approval process for the report that was filed. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . ." 7 CFR 1780.47 states in part: "(a) Borrowers are required to provide RUS an annual audit or financial statements. . . . (e) Borrowers exempt from audits. All borrowers who are exempt from audits, will, within 60 days following the end of each fiscal year, furnish the RUS with annual financial statements, consisting of a verification of the organization's balance sheet and statement of income and expense by an appropriate official of the organization. Forms RD 442-2, 'Statement of Budget, Income and Equity,' and 442-3 may be used. INDIANA STATE BOARD OF ACCOUNTS 22 TOWN OF PAOLI SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (f) Management reports. These reports will furnish management with a means of evaluating prior decisions and serve as a basis for planning future operations and financial strategies. In those cases where revenues from multiple sources are pledged as security for an RUS loan, two reports will be required; one for the project being financed by RUS and one combining the entire operation of the borrower. In those cases where RUS loans are secured by general obligation bonds or assessments and the borrower combines revenues from all sources, one management report combining all such revenues is acceptable. The following management data will be submitted by the borrower to the processing office. These reports at a minimum will include a balance sheet and income and expense statement. . . . (2) Annual management reports. Prior to the beginning of each fiscal year the following will be submitted to the processing office. (If Form RD 442-2 is used as the annual management report, enter data in column three only of Schedule 1, and complete all of Schedule 2.) (i) Two copies of the management reports and proposed 'Annual Budget'. (ii) Financial information may be reported on Form RD 442-2 which includes Schedule 1, 'Statement of Budget, Income and Equity' and Schedule 2, 'Projected Cash Flow' or information in similar format. (iii) A copy of the rate schedule in effect at the time of submission. . . ." Cause The Clerk-Treasurer was only in her first year of her first term in office when these were due. As such, she was unfamiliar with the reporting requirements of the grant. Effect Without a proper system of internal controls in place that operated effectively, the Town did not file one of the two required reports, and the report that was filed was incomplete. As a result, material noncompliance occurred and remained undetected. By not reporting the comparative data, all information needed to determine the true financial status of the Town was not readily available. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the Town's management establish a proper system of internal controls and develop and implement reporting policies and procedures to ensure that all required reports are filed timely, accurately, and contain all the required information. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding Number: 2024-002 - Preparation of the Schedule of Expenditures of Federal Awards Criteria: The District should report federal grant expenditures on an accrual basis of accounting in order to be consistent with the District's financial statements. Per 2 CFR §200.328, recipients of federal awards must submit financial reports such as those required by the Vermont Community Broadband Board (VCBB). Timely and accurate submission of these reports is critical for demonstrating compliance, accountability, and program effectiveness. Condition Found: The District is currently reporting grant expenditures on a cash basis which is not consistent with the financial statements, which are prepared using the accrual basis of accounting. As a result, grant expenditures could be reported in improper periods. Cause and Effect: Having to adjust for accrual account balances resulted in errors that an ongoing accrual accounting process would have helped prevent or detect and correct timely. As a result of this condition, the Schedule of Expenditures of Federal Awards had to be corrected to reflect expenditures that had been accrued in the District's financial statements. Recommendation: We recommend that the District implement policies and procedures to report grant expenditures on the accrual basis of accounting throughout the year. Identification as a Repeat Finding, if applicable A repeat finding; See finding 2023-002 Questioned costs None Management response: Management agrees with the findings and recommendations.
Finding Number: 2024-002 - Preparation of the Schedule of Expenditures of Federal Awards Criteria: The District should report federal grant expenditures on an accrual basis of accounting in order to be consistent with the District's financial statements. Per 2 CFR §200.328, recipients of federal awards must submit financial reports such as those required by the Vermont Community Broadband Board (VCBB). Timely and accurate submission of these reports is critical for demonstrating compliance, accountability, and program effectiveness. Condition Found: The District is currently reporting grant expenditures on a cash basis which is not consistent with the financial statements, which are prepared using the accrual basis of accounting. As a result, grant expenditures could be reported in improper periods. Cause and Effect: Having to adjust for accrual account balances resulted in errors that an ongoing accrual accounting process would have helped prevent or detect and correct timely. As a result of this condition, the Schedule of Expenditures of Federal Awards had to be corrected to reflect expenditures that had been accrued in the District's financial statements. Recommendation: We recommend that the District implement policies and procedures to report grant expenditures on the accrual basis of accounting throughout the year. Identification as a Repeat Finding, if applicable A repeat finding; See finding 2023-002 Questioned costs None Management response: Management agrees with the findings and recommendations.
Condition: During our audit of the District’s compliance with federal program requirements, we noted that the District does not have established internal controls over the reporting process. Specifically, there are no formal procedures in place to ensure the accuracy, completeness, and timeliness of required federal reports. Criteria: In accordance with 2 CFR §200.328(b)(1) and the specific terms and conditions of the federal award agreement, recipients are required to submit performance and/or financial reports quarterly, no later than the 21st day of the following month after the end of each calendar quarter. Timely submission of these reports is essential for the federal awarding agency to monitor progress and compliance with program objectives. Cause: This is the first year the District has been subject to a single audit, exceeding the $750,000 expenditure threshold, and did not have adequate internal controls in place to ensure that reporting deadlines were tracked and met consistently. Oversight of the reporting calendar and assignment of responsibilities were not clearly documented. Effect: Failure to submit required reports on time constitutes noncompliance with federal grant requirements. Late submissions may impede the federal agency’s ability to monitor the project’s progress and may affect future funding decisions or lead to additional oversight. Recommendation: We recommend that the District strengthen its internal control system by implementing a formal tracking mechanism for federal reporting deadlines, assigning responsibility for report preparation and submission, and establishing a review process to ensure timely compliance with all grant reporting requirements. Views of Responsible Officials: See the attached Corrective Action Plan.
Condition: During our review of the District’s reporting procedures, we noted that the District does not have a documented or formalized internal review process for the preparation and submission of required quarterly reports. Reports are typically prepared and submitted by a single individual without supervisory review or approval. Criteria: In accordance with 2 CFR §200.328(b)(1), non-Federal entities are required to submit performance and/or financial reports on a regular basis as specified in the terms and conditions of the award. Effective internal controls, as outlined in 2 CFR §200.303, require that entities establish and maintain processes to ensure reliable reporting and compliance with federal requirements. Cause: This is the first year the District has been subject to a single audit, exceeding the $750,000 expenditure threshold, and has not yet developed formal policies or procedures for reviewing and approving required financial and programmatic reports. Effect: The absence of a formal review process increases the risk of reporting errors, late submissions, or omissions that could lead to noncompliance with federal reporting requirements. It also reduces the ability to detect and correct potential reporting deficiencies before submission to the federal awarding agency. Recommendation: We recommend that the District develop and implement formal policies and procedures to ensure that federal reports are reviewed for accuracy, completeness, and timeliness prior to submission. Management should assign responsibility for report preparation and review, implement checklists or reconciliation processes, and provide training to staff involved in federal reporting. Views of Responsible Officials: See the attached Corrective Action Plan.
Section III - Findings or questioned costs for Federal awards, including those specified by the Uniform Guidance. 2024-003 Compliance with Reporting Requirements for COVID-19 State and Local Fiscal Recovery Funds Federal Program, Assistance Listing Number, Federal Award Year, Federal Agency COVID-19 State and Local Fiscal Recovery Funds – American Rescue Plan Act, 21.027, 2024, U.S. Department of Treasury Criteria or Specific Requirement Uniform Guidance 2 CFR 200.328 and 31 CFR section 45.4(c) require accurate reporting for key line items within Federal performance reports. Condition Found Reports submitted to the Department of the Treasury for COVID-19 State and Local Fiscal Recovery Funds did not include all expenditures applicable to the reporting period. Cause: After spending approximately 30 years with the Police Jury, the Treasurer retired in November 2024, and a new Treasurer was not hired until the end of May 2025. Additionally, two other accounting staff members (approximately 29% of accounting personnel) resigned/retired during the late 2024/early 2025 timeframe. A consulting CPA assisted with operations in the interim between Treasurers. The Treasurer is responsible for ensuring that internal controls are properly designed and operating effectively, and for managing most of the financial close processes. The limited staff exercised diligence to accomplish much of the financial close process, but timeliness was an issue as the staff was operating with an increased workload, and not all responsibilities handled by the Treasurer were fully addressed. Effect: Cumulative expenditures reported to the Department of the Treasury were understated by $382,277 of $10,254,543 total expenditures. Questioned Costs N/A Recommendations to Prevent Future Occurrences The Police Jury should ensure the new Treasurer is proactive in the next financial close process and reviews their policies and procedures and the Louisiana Legislative Auditor’s best practices to ensure that internal controls are properly designed, implemented, and maintained to ensure accurate and timely financial close and reporting. Management’s Response Refer to corrective action plan.
2024-001 Internal Control over Compliance and Compliance with Reporting Criteria: CFR Section §200.328(c) states in part: “The recipient or subrecipient must submit financial reports as required by the Federal award. Reports submitted annually by the recipient or subrecipient must be due no later than 90 calendar days after the reporting period. Reports submitted quarterly or semiannually must be due no later than 30 calendar days after the reporting period.” Condition: The internal controls implemented to ensure the timely submission of the quarterly financial report and quarterly performance report within 30 days after the end of the reporting period did not function as intended. During our testing of reporting compliance, BDO noted that the following reports were not submitted on time due to staff unavailability for preparation and submission: • One financial report (quarter 1) for ALN 19.801 • One financial report (quarter 2) and one programmatic report (quarter 1) for ALN 98.001 Cause: The Organization's internal controls, designed to ensure compliance with reporting regulations, failed to function as intended. As a result, they did not effectively address the requirement to submit financial reports in a timely manner and meet the established deadlines. Effect: The failure of the Organization's internal controls to operate as designed has led to delays in the submission of the required financial reports, potentially resulting in non-compliance with the requirements of CFR Section §200.328(c). Questioned Costs: None. Context: The nature of these findings is detailed in the condition section above. Repeat Finding: This finding is not a repeat finding from prior year. Recommendation: We recommend that management evaluate the current controls to confirm they are strong and capable of effectively meeting the requirements for timely financial report submission. Additionally, management should ensure there are sufficient staff members available to prepare and submit the reports. Views of Responsible Officials: Management agrees with the finding and recommendations set forth within and has developed a corrective action plan to address the instances of noncompliance identified and lapses in prescribed internal controls.
2024-001 Internal Control over Compliance and Compliance with Reporting Criteria: CFR Section §200.328(c) states in part: “The recipient or subrecipient must submit financial reports as required by the Federal award. Reports submitted annually by the recipient or subrecipient must be due no later than 90 calendar days after the reporting period. Reports submitted quarterly or semiannually must be due no later than 30 calendar days after the reporting period.” Condition: The internal controls implemented to ensure the timely submission of the quarterly financial report and quarterly performance report within 30 days after the end of the reporting period did not function as intended. During our testing of reporting compliance, BDO noted that the following reports were not submitted on time due to staff unavailability for preparation and submission: • One financial report (quarter 1) for ALN 19.801 • One financial report (quarter 2) and one programmatic report (quarter 1) for ALN 98.001 Cause: The Organization's internal controls, designed to ensure compliance with reporting regulations, failed to function as intended. As a result, they did not effectively address the requirement to submit financial reports in a timely manner and meet the established deadlines. Effect: The failure of the Organization's internal controls to operate as designed has led to delays in the submission of the required financial reports, potentially resulting in non-compliance with the requirements of CFR Section §200.328(c). Questioned Costs: None. Context: The nature of these findings is detailed in the condition section above. Repeat Finding: This finding is not a repeat finding from prior year. Recommendation: We recommend that management evaluate the current controls to confirm they are strong and capable of effectively meeting the requirements for timely financial report submission. Additionally, management should ensure there are sufficient staff members available to prepare and submit the reports. Views of Responsible Officials: Management agrees with the finding and recommendations set forth within and has developed a corrective action plan to address the instances of noncompliance identified and lapses in prescribed internal controls.
2024-001 Internal Control over Compliance and Compliance with Reporting Criteria: CFR Section §200.328(c) states in part: “The recipient or subrecipient must submit financial reports as required by the Federal award. Reports submitted annually by the recipient or subrecipient must be due no later than 90 calendar days after the reporting period. Reports submitted quarterly or semiannually must be due no later than 30 calendar days after the reporting period.” Condition: The internal controls implemented to ensure the timely submission of the quarterly financial report and quarterly performance report within 30 days after the end of the reporting period did not function as intended. During our testing of reporting compliance, BDO noted that the following reports were not submitted on time due to staff unavailability for preparation and submission: • One financial report (quarter 1) for ALN 19.801 • One financial report (quarter 2) and one programmatic report (quarter 1) for ALN 98.001 Cause: The Organization's internal controls, designed to ensure compliance with reporting regulations, failed to function as intended. As a result, they did not effectively address the requirement to submit financial reports in a timely manner and meet the established deadlines. Effect: The failure of the Organization's internal controls to operate as designed has led to delays in the submission of the required financial reports, potentially resulting in non-compliance with the requirements of CFR Section §200.328(c). Questioned Costs: None. Context: The nature of these findings is detailed in the condition section above. Repeat Finding: This finding is not a repeat finding from prior year. Recommendation: We recommend that management evaluate the current controls to confirm they are strong and capable of effectively meeting the requirements for timely financial report submission. Additionally, management should ensure there are sufficient staff members available to prepare and submit the reports. Views of Responsible Officials: Management agrees with the finding and recommendations set forth within and has developed a corrective action plan to address the instances of noncompliance identified and lapses in prescribed internal controls.
2024-001 – Congressionally Mandated Projects Assistance Listing #66.202 – Reporting Condition During our review of reporting requirements under the Congressionally Mandated Projects program, we noted that the quarterly performance report for the quarter ended December 31, 2024, was submitted to the Environmental Protection Agency (“EPA”) in June 2025 – 5 months past the required submission deadline of January 30, 2025. Criteria Per the grant agreement and the EPA’s grant-specific programmatic terms and conditions for EPA community grants, recipients are required to submit quarterly performance reports no later than 30 days following the end of each federal fiscal quarter. This requirement is also consistent with 2 CFR § 200.328(b)(1), which mandates that recipients submit performance reports in accordance with the frequency required by the federal awarding agency. Cause The delay occurred due to an oversight within the department administering the grant. Effect Failure to submit required reports on time may result in noncompliance with grant terms and could adversely impact the entity’s ability to receive continued or future federal funding. Additionally, untimely reporting limits the EPA’s ability to monitor project performance and ensure accountability for federal funds. Questioned Costs None Recommendation We recommend that management establish a formal grants calendar with automated reminders for all reporting deadlines and designate individuals responsible for preparing and submitting reports. Additionally, periodic training should be provided to ensure that all responsible personnel are aware of federal reporting requirements. View of Responsible Official The Town will establish procedures to ensure timely reporting.
2024-002 – Coronavirus State and Local Fiscal Recovery Funds Assistance Listing #21.027 – Reporting Condition The auditee submitted one or more required quarterly Project and Expenditure Reports to the U.S. Department of the Treasury after the established submission deadlines. For example, the report for the quarter ending December 31, 2024, was submitted on February 11, 2025, which was 11 days past the deadline of January 31, 2025. Criteria According to the U.S. Department of the Treasury’s Compliance and Reporting Guidance for State and Local Fiscal Recovery Funds (most recently updated April 29, 2025), recipients are required to submit quarterly Project and Expenditure Reports no later than 30 days after the end of each calendar quarter. Timely submission is required to maintain compliance with federal grant reporting requirements under 2 CFR §200.328(b)(1), which states that recipients must submit performance reports by the required due dates. Cause The delay in submitting the reports was primarily due to confusion on how to report obligated amounts in the Project and Expenditure Report. Specifically uncertain about how to report obligations in accordance with Treasury guidance, which delayed the completion and submission of the report. Effect Late submission of required federal reports may result in noncompliance with grant terms and conditions, increased scrutiny from the granting agency, and potential impacts on future funding. Furthermore, untimely reporting can hinder transparency and federal oversight of how SLFRF funds are being used. Questioned Costs None Recommendation We recommend that management implement stronger internal controls to ensure timely preparation and submission of all required federal reports. This may include designating a responsible official for compliance tracking, developing a calendar of reporting deadlines with automated reminders, and performing periodic reviews to ensure submission timelines are met. Management should also ensure that staff responsible for federal reporting are adequately trained on applicable requirements and deadlines. View of Responsible Official The Town will establish policies and procedures to comply with SLFRF reporting and guidelines to ensure timely and accurate reporting.
Identification of the Federal Program: Federal Agency and Program Name: U.S. Department of Health and Human Services Hospital Preparedness Program (HPP) Ebola Preparedness and Response Activities Award Year(s): 2024 Assistance Listing #: 93.817 Criteria or Specific Requirement (Including Statutory, Regulatory or Other Citation): 2 CFR 200.303 requires that 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 and the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” 2 CFR section 200.328(c) requires that recipients of Federal funding “must submit financial reports as required by the Federal award.” Condition: For one of the two Federal Financial Reports (FFRs) submitted in FY 2024, incorrect project/grant period dates and federal share of expenditures amount was reported in the FFR. Cause: Corewell did not have sufficient internal controls to follow the FFR instructions and report the correct amounts. Effect or Potential Effect: The information reported and provided to the Federal awarding agency could be incomplete or inaccurate. Questioned Costs: None Context: Corewell submitted 2 FFR reports in FY 2024. The FFR instructions required reporting the cumulative Federal share of expenditures amount ($2,253,211) from the date of inception of the award (9/30/2022) through the end date of the reporting period specified. However, Corewell reported only the current period expenditures ($933,054) for the current grant year and consequently, this error also resulted in incorrect amount reported for Unliquidated balance of Federal funds. The total federal expenditures for HPP for FY 2024 were $1,292,999. Identification as a Repeat Finding: This is not a repeat finding.Recommendation: We recommend management strengthen its internal controls and procedures over review of the data in the FFR prior to submission of the report(s). Views of Responsible Officials: Management will develop a written protocol and tracking matrix to record and track all federally funded projects that report through the Payment Management System (PMS) to ensure the correct period of performance report is created and a second level of review performed on a timely basis in accordance with sponsor requirements prior to submission.
Federal Agency: U.S. Department of Health and Human Services Assistance Listing Numbers: 93.623 Federal Program Titles: Transitional Living for Homeless Youth; Basic Center Grant Type of Finding: • Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: The Code of Federal Regulations 2 CFR 200.328, Financial Reporting, requires that non-Federal entities must submit quarterly Federal Financial Reports within the timeframe prescribed by the terms and conditions of the Federal award. Condition: During our testing, we noted that the Organization did not submit the Federal Financial Reports within the timeframe outlined in the grant agreement. Questioned Costs: None. Context: During our testing of financial reports, The Adams Group, LLC noted the 2nd quarter and 4th quarter Federal Financial Reports for ALN 93.623 were submitted outside of the prescribed timeframe. Effect: The organization is not compliant with the reporting requirements of the cognizant oversight agency. Repeat Finding: This is not a repeat finding. Recommendation: We recommend that the Organization implement a process to review the reporting requirements for all federal awards to ensure timely submission of reports. Views of Responsible Officials: Management agrees with the finding.
Finding 2024-002 – Reporting – Significant Deficiency in Internal Controls Over Compliance and Noncompliance Federal program information: Funding agency: Department of Energy Title: Performance Partnership Grants ALN Number: 66.605 Award year and number: 2022-2026 Criteria: In accordance with 2 CFR 200.327 and 2 CFR 200.328 (Uniform Guidance), recipients of federal funds must file complete, accurate, and timely financial reports using the prescribed standard reporting forms (e.g., SF-425). These reports must be supported by the recipient’s underlying accounting records and signed by authorized personnel. Condition/Context: The Tribe was unable to provide documentation demonstrating that the required Federal Financial Report (FFR) for the year ended September 30, 2024, was submitted. As a result, we could not determine whether the FFR was filed in a timely manner or whether it included the proper authorization signature. Cause/Effect: The apparent lack of formal procedures or controls for retaining evidence of FFR submissions contributed to the unavailability of supporting documentation. The absence of evidence of submission and authorization could result in noncompliance with federal reporting requirements. If the report was not submitted timely or was not signed by authorized personnel, the Tribe may be subject to adverse consequences, including potential questioning of costs, additional oversight, or delays in future funding. Repeat Finding – This is not a repeat finding. Auditor’s Recommendations: The Tribe should implement and maintain a standardized process, which includes clearly documented procedures, for retaining evidence of financial report submissions. This process should ensure that each FFR is filed promptly, reviewed by appropriate officials, and accompanied by documentation showing the submission date, authorized signature, and confirmation of receipt from the federal agency, if available. Management’s Response: The Tribe has drafted a comprehensive Financial Management Policies and Procedures Manual, which includes a section specific to grants management and procurement, that will provide guidance for month end close, asset management and preparation of the Schedule of Expenditures of Federal Awards, Reporting, etc. The Financial Management Policies and Procedures Manual will be presented to the Tribal Council for review and adoption by December 2025. Additionally, the Tribe has a third-party CPA firm to conduct mandatory Uniform Guidance training and regular grant compliance and accounting training for all program and accounting staff working with grant awards.
FINDING 2024-002 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): ARP Act Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Condition and Context Recipients are required to submit quarterly or annually Project and Expenditure (P&E) reports to the U.S. Department of the Treasury (Treasury). The reporting periods, as well as the respective due dates, are based upon type of recipient and its population, as well as the recipient's allocation amount. Information to be reported includes projects funded, expenditures, and contracts for the appropriate reporting period. The City was classified as a city with a population below 250,000 residents that received an allocation of more than $10 million in COVID-19 - Coronavirus State and Local Fiscal Recovery Funds. The quarterly reports were to cover one calendar quarter and must be submitted to the Treasury by the last day of the month following the end of the period covered. The City submitted all required P&E reports during the audit period. The internal controls in place were not effective and did not prevent, or detect and correct, errors in the P&E reports prior to submission. All four quarterly reports submitted contained errors; obligations and expenditures were understated by the following amounts: Current Current Period Cumulative Period Cumulative Obligation Obligation Expenditure Expenditure 2023 Q4 P&E Report $ 79,009 $ 89,009 $ 79,009 $ 89,009 2024 Q1 P&E Report 379,005 89,009 379,005 468,014 2024 Q2 P&E Report 1,331,499 79,009 1,331,499 468,014 2024 Q3 P&E Report 2,208,957 79,009 2,208,957 468,014 Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.328 states: "Unless otherwise approved by OMB, the Federal awarding agency must solicit only the OMB-approved governmentwide data elements for collection of financial information (at time of publication the Federal Financial Report or such future, OMB-approved, governmentwide data elements available from the OMB-designated standards lead. This information must be collected with the frequency required by the terms and conditions of the Federal award, but no less frequently than annually nor more frequently than quarterly except in unusual circumstances, for example where more frequent reporting is necessary for the effective monitoring of the Federal award or could significantly affect program outcomes, and preferably in coordination with performance reporting. The Federal awarding agency must use OMB-approved common information collections, as applicable, when providing financial and performance reporting information." 31 CFR 35.4(c) states: "During the period of performance, recipients shall provide to the Secretary or her delegate, as applicable, periodic reports providing detailed accounting of the uses of funds, modifications to a State or Territory's tax revenue sources, and such other information as the Secretary or her delegate, as applicable, may require for the administration of this section. In addition to regular reporting requirements, the Secretary may request other additional information as may be necessary or appropriate, including as may be necessary to prevent evasions of the requirements of this subpart. False statements or claims made to the Secretary may result in criminal, civil, or administrative sanctions, including fines, imprisonment, civil damages and penalties, debarment from participating in Federal awards or contracts, and/or any other remedy available by law." Cause The City's management did not have effective internal controls in place to ensure proper amounts were reported prior to submission. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of federal funding to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the City strengthen its system of internal controls over the preparation and review of federal reports to ensure appropriate reviews, approvals, and oversight are effective in preventing, or detecting and correcting, noncompliance. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Assistance Listing Number(s): 93.575 Name of Federal Program or Cluster: CCDF Cluster Name of Federal Agency: Department of Health and Human Services Name of Pass-through Entities: Iowa County Department of Social Services, Jefferson County Human Services Department, Waukesha County Department of Health and Human Services, Dane County Department of Human Services, Supporting Families Together Association, Inc., and 4C-for Children, Inc. Pass-through Entities Identifying Numbers: 2024-04, 87242, 437002-G16-0000756-R05-02, and 437002- G16-0000756-R06-02 Award Periods: July 1, 2023 through June 30, 2024, July 1, 2024 through June 30, 2025, and January 1, 2024 through December 31, 2024 Criteria or Specific Requirement: In accordance with 2 CFR Part 200, Subpart D (§200.328) non-federal entities must meet reporting requirements, including proper documentation and monitoring to demonstrate compliance. The Uniform Guidance requires that controls be in place to ensure that these compliance requirements are consistently met per §200.303. Condition: The entity did not have adequate internal controls in place to ensure that financial reporting was complete and accurate. Financial reports were prepared by a single individual without documented review or approval. Cause: There are an absence of formal policies and procedures, insufficient training of staff responsible for compliance, and a lack of segregation of duties related to review and approval of financial reports. Effect or Potential Effect: There is an increased risk that the entity may not be in compliance with applicable reporting requirements. Recommendation: We recommend that the entity implement formal written policies and procedures to establish segregation of duties where reports are reviewed and approved by someone independent of their preparation. These procedures should include regular reconciliations, management review, and appropriate documentation retention. Additionally, staff should be trained on federal compliance requirements, and responsibilities should be clearly assigned to ensure adequate segregation of duties. Views of Responsible Officials: Management agrees with the finding and is considering options to implement the recommendations.
Assistance Listing Number(s): 93.575 Name of Federal Program or Cluster: CCDF Cluster Name of Federal Agency: Department of Health and Human Services Name of Pass-through Entities: Iowa County Department of Social Services, Jefferson County Human Services Department, Waukesha County Department of Health and Human Services, Dane County Department of Human Services, Supporting Families Together Association, Inc., and 4C-for Children, Inc. Pass-through Entities Identifying Numbers: 2024-04, 87242, 437002-G16-0000756-R05-02, and 437002- G16-0000756-R06-02 Award Periods: July 1, 2023 through June 30, 2024, July 1, 2024 through June 30, 2025, and January 1, 2024 through December 31, 2024 Criteria or Specific Requirement: In accordance with 2 CFR Part 200, Subpart D (§200.328) non-federal entities must meet reporting requirements, including proper documentation and monitoring to demonstrate compliance. The Uniform Guidance requires that controls be in place to ensure that these compliance requirements are consistently met per §200.303. Condition: The entity did not have adequate internal controls in place to ensure that financial reporting was complete and accurate. Financial reports were prepared by a single individual without documented review or approval. Cause: There are an absence of formal policies and procedures, insufficient training of staff responsible for compliance, and a lack of segregation of duties related to review and approval of financial reports. Effect or Potential Effect: There is an increased risk that the entity may not be in compliance with applicable reporting requirements. Recommendation: We recommend that the entity implement formal written policies and procedures to establish segregation of duties where reports are reviewed and approved by someone independent of their preparation. These procedures should include regular reconciliations, management review, and appropriate documentation retention. Additionally, staff should be trained on federal compliance requirements, and responsibilities should be clearly assigned to ensure adequate segregation of duties. Views of Responsible Officials: Management agrees with the finding and is considering options to implement the recommendations.
Assistance Listing Number(s): 93.575 Name of Federal Program or Cluster: CCDF Cluster Name of Federal Agency: Department of Health and Human Services Name of Pass-through Entities: Iowa County Department of Social Services, Jefferson County Human Services Department, Waukesha County Department of Health and Human Services, Dane County Department of Human Services, Supporting Families Together Association, Inc., and 4C-for Children, Inc. Pass-through Entities Identifying Numbers: 2024-04, 87242, 437002-G16-0000756-R05-02, and 437002- G16-0000756-R06-02 Award Periods: July 1, 2023 through June 30, 2024, July 1, 2024 through June 30, 2025, and January 1, 2024 through December 31, 2024 Criteria or Specific Requirement: In accordance with 2 CFR Part 200, Subpart D (§200.328) non-federal entities must meet reporting requirements, including proper documentation and monitoring to demonstrate compliance. The Uniform Guidance requires that controls be in place to ensure that these compliance requirements are consistently met per §200.303. Condition: The entity did not have adequate internal controls in place to ensure that financial reporting was complete and accurate. Financial reports were prepared by a single individual without documented review or approval. Cause: There are an absence of formal policies and procedures, insufficient training of staff responsible for compliance, and a lack of segregation of duties related to review and approval of financial reports. Effect or Potential Effect: There is an increased risk that the entity may not be in compliance with applicable reporting requirements. Recommendation: We recommend that the entity implement formal written policies and procedures to establish segregation of duties where reports are reviewed and approved by someone independent of their preparation. These procedures should include regular reconciliations, management review, and appropriate documentation retention. Additionally, staff should be trained on federal compliance requirements, and responsibilities should be clearly assigned to ensure adequate segregation of duties. Views of Responsible Officials: Management agrees with the finding and is considering options to implement the recommendations.
Assistance Listing Number(s): 93.575 Name of Federal Program or Cluster: CCDF Cluster Name of Federal Agency: Department of Health and Human Services Name of Pass-through Entities: Iowa County Department of Social Services, Jefferson County Human Services Department, Waukesha County Department of Health and Human Services, Dane County Department of Human Services, Supporting Families Together Association, Inc., and 4C-for Children, Inc. Pass-through Entities Identifying Numbers: 2024-04, 87242, 437002-G16-0000756-R05-02, and 437002- G16-0000756-R06-02 Award Periods: July 1, 2023 through June 30, 2024, July 1, 2024 through June 30, 2025, and January 1, 2024 through December 31, 2024 Criteria or Specific Requirement: In accordance with 2 CFR Part 200, Subpart D (§200.328) non-federal entities must meet reporting requirements, including proper documentation and monitoring to demonstrate compliance. The Uniform Guidance requires that controls be in place to ensure that these compliance requirements are consistently met per §200.303. Condition: The entity did not have adequate internal controls in place to ensure that financial reporting was complete and accurate. Financial reports were prepared by a single individual without documented review or approval. Cause: There are an absence of formal policies and procedures, insufficient training of staff responsible for compliance, and a lack of segregation of duties related to review and approval of financial reports. Effect or Potential Effect: There is an increased risk that the entity may not be in compliance with applicable reporting requirements. Recommendation: We recommend that the entity implement formal written policies and procedures to establish segregation of duties where reports are reviewed and approved by someone independent of their preparation. These procedures should include regular reconciliations, management review, and appropriate documentation retention. Additionally, staff should be trained on federal compliance requirements, and responsibilities should be clearly assigned to ensure adequate segregation of duties. Views of Responsible Officials: Management agrees with the finding and is considering options to implement the recommendations.
Assistance Listing Number(s): 93.575 Name of Federal Program or Cluster: CCDF Cluster Name of Federal Agency: Department of Health and Human Services Name of Pass-through Entities: Iowa County Department of Social Services, Jefferson County Human Services Department, Waukesha County Department of Health and Human Services, Dane County Department of Human Services, Supporting Families Together Association, Inc., and 4C-for Children, Inc. Pass-through Entities Identifying Numbers: 2024-04, 87242, 437002-G16-0000756-R05-02, and 437002- G16-0000756-R06-02 Award Periods: July 1, 2023 through June 30, 2024, July 1, 2024 through June 30, 2025, and January 1, 2024 through December 31, 2024 Criteria or Specific Requirement: In accordance with 2 CFR Part 200, Subpart D (§200.328) non-federal entities must meet reporting requirements, including proper documentation and monitoring to demonstrate compliance. The Uniform Guidance requires that controls be in place to ensure that these compliance requirements are consistently met per §200.303. Condition: The entity did not have adequate internal controls in place to ensure that financial reporting was complete and accurate. Financial reports were prepared by a single individual without documented review or approval. Cause: There are an absence of formal policies and procedures, insufficient training of staff responsible for compliance, and a lack of segregation of duties related to review and approval of financial reports. Effect or Potential Effect: There is an increased risk that the entity may not be in compliance with applicable reporting requirements. Recommendation: We recommend that the entity implement formal written policies and procedures to establish segregation of duties where reports are reviewed and approved by someone independent of their preparation. These procedures should include regular reconciliations, management review, and appropriate documentation retention. Additionally, staff should be trained on federal compliance requirements, and responsibilities should be clearly assigned to ensure adequate segregation of duties. Views of Responsible Officials: Management agrees with the finding and is considering options to implement the recommendations.
Assistance Listing Number(s): 93.575 Name of Federal Program or Cluster: CCDF Cluster Name of Federal Agency: Department of Health and Human Services Name of Pass-through Entities: Iowa County Department of Social Services, Jefferson County Human Services Department, Waukesha County Department of Health and Human Services, Dane County Department of Human Services, Supporting Families Together Association, Inc., and 4C-for Children, Inc. Pass-through Entities Identifying Numbers: 2024-04, 87242, 437002-G16-0000756-R05-02, and 437002- G16-0000756-R06-02 Award Periods: July 1, 2023 through June 30, 2024, July 1, 2024 through June 30, 2025, and January 1, 2024 through December 31, 2024 Criteria or Specific Requirement: In accordance with 2 CFR Part 200, Subpart D (§200.328) non-federal entities must meet reporting requirements, including proper documentation and monitoring to demonstrate compliance. The Uniform Guidance requires that controls be in place to ensure that these compliance requirements are consistently met per §200.303. Condition: The entity did not have adequate internal controls in place to ensure that financial reporting was complete and accurate. Financial reports were prepared by a single individual without documented review or approval. Cause: There are an absence of formal policies and procedures, insufficient training of staff responsible for compliance, and a lack of segregation of duties related to review and approval of financial reports. Effect or Potential Effect: There is an increased risk that the entity may not be in compliance with applicable reporting requirements. Recommendation: We recommend that the entity implement formal written policies and procedures to establish segregation of duties where reports are reviewed and approved by someone independent of their preparation. These procedures should include regular reconciliations, management review, and appropriate documentation retention. Additionally, staff should be trained on federal compliance requirements, and responsibilities should be clearly assigned to ensure adequate segregation of duties. Views of Responsible Officials: Management agrees with the finding and is considering options to implement the recommendations.
Assistance Listing Number(s): 93.575 Name of Federal Program or Cluster: CCDF Cluster Name of Federal Agency: Department of Health and Human Services Name of Pass-through Entities: Iowa County Department of Social Services, Jefferson County Human Services Department, Waukesha County Department of Health and Human Services, Dane County Department of Human Services, Supporting Families Together Association, Inc., and 4C-for Children, Inc. Pass-through Entities Identifying Numbers: 2024-04, 87242, 437002-G16-0000756-R05-02, and 437002- G16-0000756-R06-02 Award Periods: July 1, 2023 through June 30, 2024, July 1, 2024 through June 30, 2025, and January 1, 2024 through December 31, 2024 Criteria or Specific Requirement: In accordance with 2 CFR Part 200, Subpart D (§200.328) non-federal entities must meet reporting requirements, including proper documentation and monitoring to demonstrate compliance. The Uniform Guidance requires that controls be in place to ensure that these compliance requirements are consistently met per §200.303. Condition: The entity did not have adequate internal controls in place to ensure that financial reporting was complete and accurate. Financial reports were prepared by a single individual without documented review or approval. Cause: There are an absence of formal policies and procedures, insufficient training of staff responsible for compliance, and a lack of segregation of duties related to review and approval of financial reports. Effect or Potential Effect: There is an increased risk that the entity may not be in compliance with applicable reporting requirements. Recommendation: We recommend that the entity implement formal written policies and procedures to establish segregation of duties where reports are reviewed and approved by someone independent of their preparation. These procedures should include regular reconciliations, management review, and appropriate documentation retention. Additionally, staff should be trained on federal compliance requirements, and responsibilities should be clearly assigned to ensure adequate segregation of duties. Views of Responsible Officials: Management agrees with the finding and is considering options to implement the recommendations.
Assistance Listing Number(s): 93.575 Name of Federal Program or Cluster: CCDF Cluster Name of Federal Agency: Department of Health and Human Services Name of Pass-through Entities: Iowa County Department of Social Services, Jefferson County Human Services Department, Waukesha County Department of Health and Human Services, Dane County Department of Human Services, Supporting Families Together Association, Inc., and 4C-for Children, Inc. Pass-through Entities Identifying Numbers: 2024-04, 87242, 437002-G16-0000756-R05-02, and 437002- G16-0000756-R06-02 Award Periods: July 1, 2023 through June 30, 2024, July 1, 2024 through June 30, 2025, and January 1, 2024 through December 31, 2024 Criteria or Specific Requirement: In accordance with 2 CFR Part 200, Subpart D (§200.328) non-federal entities must meet reporting requirements, including proper documentation and monitoring to demonstrate compliance. The Uniform Guidance requires that controls be in place to ensure that these compliance requirements are consistently met per §200.303. Condition: The entity did not have adequate internal controls in place to ensure that financial reporting was complete and accurate. Financial reports were prepared by a single individual without documented review or approval. Cause: There are an absence of formal policies and procedures, insufficient training of staff responsible for compliance, and a lack of segregation of duties related to review and approval of financial reports. Effect or Potential Effect: There is an increased risk that the entity may not be in compliance with applicable reporting requirements. Recommendation: We recommend that the entity implement formal written policies and procedures to establish segregation of duties where reports are reviewed and approved by someone independent of their preparation. These procedures should include regular reconciliations, management review, and appropriate documentation retention. Additionally, staff should be trained on federal compliance requirements, and responsibilities should be clearly assigned to ensure adequate segregation of duties. Views of Responsible Officials: Management agrees with the finding and is considering options to implement the recommendations.
Criteria: Federal and state grant agreements typically require recipients to maintain effective internal controls over financial reporting. These include accurate and timely submission of required reports; proper documentation and retention of supporting records and review and approval processes to ensure compliance and accuracy. These requirements are also consistent with principles outline in Uniform Guidance (2 CFR Part 200), particularly sections 200.303 (Internal Controls) and 200.328 (Monitoring and Reporting Program Performance). Condition: The Association’s controls were not effective to ensure it was reporting expenditures related to excess meal costs. This internal control deficiency is considered to be a significant deficiency. Context: Our procedures included examining cash disbursements and related invoices for allowable costs. Cause: The Association included 100% of costs related to the nutrition program. In prior years, the Association recorded nutrition reimbursement revenue received from the State as a reduction in expense. When creating reimbursement requests from the Head Start program, only the excess meal costs were included. The Association changed its accounting practice in 2024 and recorded State meal reimbursement as revenue. However, they did not change how they prepared reimbursement requests from Head Start. As a result, 100% of meal costs were included in reimbursement requests. The Association reconciled this program with the final claim for 2024, which was prepared in 2025. Therefore, there are no questioned costs, as only the excess cost of meals was charged to the program. Effect: Weak internal controls over grant drawdowns and reporting increase the risk of reimbursement for unallowable costs; inaccurate performance reporting and potential loss of funding or reputational damage. Recommendation: The Association establish controls that allow for accurate reporting of expenditures when requesting reimbursement from grantors. View of responsible officials: There is no disagreement with this audit finding.
FINDING 2024-002 Subject: Economic Development Cluster - Reporting Federal Agency: Department of Commerce Federal Program: Economic Adjustment Assistance Assistance Listings Number: 11.307 Federal Award Number and Year (or Other Identifying Number): 06-79-06420 Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Condition and Context An effective system of internal controls was not in place at the City in order to ensure compliance with the grant agreement and the reporting compliance requirement. The grant agreement for the City's construction project states that the City is to submit a Federal Financial Report (SF-425) on a semi-annual basis. The SF-425 report includes, among other line items: cash receipts, cash disbursements, cash on hand, total federal funds authorized, and total recipient share required. Both of the submitted SF-425 reports were tested. Additionally, the City was required to submit progress reports on a quarterly basis. Two of the quarterly reports were selected for testing. Both the SF-425 reports and the quarterly progress reports were prepared and submitted by one employee of the City. Evidence of an established internal control over the reports tested was not available for audit. The data submitted in the SF-425 report submitted by the City for the reporting period ending on September 30, 2024, contained the following errors: Cash receipts were understated by $1,037,155. INDIANA STATE BOARD OF ACCOUNTS 19 CITY OF KOKOMO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cash disbursements were understated by $1,037,155. The lack of internal controls and noncompliance was isolated to the award 06-79-06420, EDA-Davis Road construction project. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337): (1) Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number and year, name of the Federal agency, and name of the pass-through entity, if any. (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. If a Federal awarding agency requires reporting on an accrual basis from a recipient that maintains its records on other than an accrual basis, the recipient must not be required to establish an accrual accounting system. This recipient may develop accrual data for its reports on the basis of an analysis of the documentation on hand. . . . (3) Records that identify adequately the source and application of funds for federallyfunded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. . . ." Cause Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the City's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. The errors were due to federal reimbursements not being included as cash receipts and cash disbursements in the SF-425 reports. INDIANA STATE BOARD OF ACCOUNTS 20 CITY OF KOKOMO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Without the proper implementation of an effectively designed system of internal controls over reporting, the City could not ensure that the reports submitted were accurate. In addition, not meeting the Economic Development Cluster reporting requirements increases the likelihood that the public will not have access to transparent and accurate information regarding expenditures of federal awards. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the City design and implement a proper system of internal controls, including policies and procedures, to ensure that the City provides the Department of Commerce with complete and accurate information for the SF-425 and quarterly reports. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-006 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): FY2023 Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Condition and Context Recipients are required to submit quarterly or annual Project and Expenditure (P&E) reports to the U.S. Department of the Treasury (Treasury). The reporting periods, as well as the respective due dates, are based upon type of recipient and its population, as well as the recipient's allocation amount. Information to be reported includes projects funded, expenditures, and contracts for the appropriate reporting period. The City was classified as a metropolitan city with a population below 250,000 residents that received an allocation of more than $10 million in COVID-19 - Coronavirus State and Local Fiscal Recovery Funds. The quarterly reports were to cover one calendar quarter and must be submitted to the Treasury by the last day of the month following the end of the period covered. The City submitted all required P&E reports during the audit period. The internal controls in place were not effective and did not prevent, or detect and correct, errors in the P&E reports prior to submission. In a test of two of the four submitted reports, errors were identified as noted below: Quarter 2 report (April 1, 2024 to June 30, 2024) • The Total Cumulative Expenditures reported were understated by $2,185,409. Quarter 3 report (July 1, 2024 to September 30, 2024) • The Total Cumulative Expenditures reported were understated by $2,366,082. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 26 CITY OF GARY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.328 states: "Unless otherwise approved by OMB, the Federal awarding agency must solicit only the OMBapproved governmentwide data elements for collection of financial information (at time of publication the Federal Financial Report or such future, OMB-approved, governmentwide data elements available from the OMB-designated standards lead. This information must be collected with the frequency required by the terms and conditions of the Federal award, but no less frequently than annually nor more frequently than quarterly except in unusual circumstances, for example where more frequent reporting is necessary for the effective monitoring of the Federal award or could significantly affect program outcomes, and preferably in coordination with performance reporting. The Federal awarding agency must use OMBapproved common information collections, as applicable, when providing financial and performance reporting information." 31 CFR 35.4(c) states: "Reporting and requests for other information. During the period of performance, recipients shall provide to the Secretary or her delegate, as applicable, periodic reports providing detailed accounting of the uses of funds, modifications to a State or Territory's tax revenue sources, and such other information as the Secretary or her delegate, as applicable, may require for the administration of this section. In addition to regular reporting requirements, the Secretary may request other additional information as may be necessary or appropriate, including as may be necessary to prevent evasions of the requirements of this subpart. False statements or claims made to the Secretary may result in criminal, civil, or administrative sanctions, including fines, imprisonment, civil damages and penalties, debarment from participating in Federal awards or contracts, and/or any other remedy available by law." Cause The City's management did not have effective internal controls in place to ensure proper amounts were reported prior to submission. A consultant prepared the reports based on calculations from a spreadsheet, which did not agree to the City's ledgers due to timing and reconciling differences. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of federal funding to the City. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 27 CITY OF GARY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that management of the City strengthen its system of internal controls over the preparation and review of federal reports to ensure appropriate reviews, approvals, and oversight are effective in preventing, or detecting and correcting, noncompliance. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-003 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Period of Performance Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): 2024 Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/ Cost Principles, Period of Performance Audit Findings: Material Weakness, Other Matters Condition and Context As part of sound management of the federal award, the City was responsible for implementing a system of internal controls that would ensure compliance with the applicable requirements. The City had not properly designed or implemented such a system, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. Prior to the receipt of direct COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF), all eligible entities were required to execute a Financial Assistance Agreement (Agreement), which included the Award Terms and Conditions that recipients must comply with in carrying out the objectives of their award. Per the Agreement, the City was responsible for the effective administration of the federal award, as well as the application of sound management practices and administration of federal funds in a manner consistent with program objectives and terms and conditions of the award. Recipients may use SLFRF funds for any eligible expenses subject to the restrictions set forth in sections 602 and 603 of the Social Security Act, as added by section 9901 of the American Rescue Plan Act of 2021. The SLFRF program provides substantial flexibility for each recipient to meet local needs within four separate eligible use categories. Recipients may use SLFRF funds to: • Respond to the COVID-19 public health emergency and its negative economic impacts; • Respond to workers performing essential work during the COVID-19 public health emergency by providing premium pay to eligible workers of eligible employers that have eligible workers who are performing essential work; • Provide government services, to the extent COVID-19 caused a reduction in revenues collected in the most recent full fiscal year of the recipient; and • Make necessary investments in water, sewer, or broadband infrastructure. The City elected to receive the standard revenue loss allowance, allowing it to claim its total SLFRF allocation of $3,821,386 as revenue loss to use for government services. The allocated funds may only be used to cover costs incurred from the period beginning on March 3, 2021, and ending on December 31, 2024. Obligations for costs incurred are required to be liquidated no later than December 31, 2026. INDIANA STATE BOARD OF ACCOUNTS 18 CITY OF VINCENNES SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) During the audit period, the City completed one transfer of SLFRF funds from the Coronavirus State and Local Fi fund to the Grant Stipends fund in the amount of $30,000. The transfer was described as a reimbursement for stipends paid to essential workers. There was no documentation provided for audit to determine if the transfer was for allowable activities, met the cost objectives of the award, or that the associated expenditures were within the period of performance. The Grant Stipends fund was established in 2022, with total expenditures from the fund from 2022, 2023, and 2024 of only $28,009. Additionally, the transfer of SLFRF funds was commingled with other receipts into the Grant Stipends fund. Because the $30,000 transfer of SLFRF funds exceeded the total disbursements out of the Grant Stipends fund and because the City did not have an appropriate system in place to account for the federal expenditures separately from other grant and operating expenditures, we were unable to determine what, if any, expenditures from the Grant Stipends fund should be included in the population of federal expenditures under the award. Without a complete population of expenditures, we were unable to determine the City's compliance with the Activities Allowed or Unallowed, the Allowable Costs/Cost Principles, and the Period of Performance compliance requirements. As such, the $30,000 transferred from the Coronavirus State and Local Fi fund is considered questioned costs. The City also did not have written procedures for determining the allowability of costs in accordance with subpart E of 2 CFR 200. The lack of effective internal controls and noncompliance were isolated to the situations described above. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.300(b) states in part: "The non-Federal entity is responsible for complying with all requirements of the Federal award. . . ." 2 CFR 200.302 states in part: "(a) Each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state's own funds. In addition, the state's and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. . . . INDIANA STATE BOARD OF ACCOUNTS 19 CITY OF VINCENNES SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) The financial management system of each non-Federal entity must provide for the following . . . (1) Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number and year, name of the Federal agency, and name of the pass-through entity, if any. (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . . (3) Records that identify adequately the source and application of funds for federallyfunded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. (4) Effective control over, and accountability for, all funds, property, and other assets. . . . (7) Written procedures for determining the allowability of costs in accordance with subpart E of this part and the terms and conditions of the Federal award." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. . . . (g) be adequately documented. . . ." Cause A proper system of internal controls over the SLFRF expenditures was not designed by management of the City to ensure the SLFRF funds were being used appropriately. The City did not have policies and procedures in place to ensure that expenditures of federal awards were allowable and occurred within the period of performance. The City initiated a transfer of SLFRF funds from the grant fund to another fund without proper supporting documentation. The City was unable to differentiate expenditures made from federal and nonfederal funds within its ledger for the Grant Stipends fund. Effect Without the proper implementation of an effectively designed system of internal controls, a population of expenditures associated with the Grant Stipends fund could not be determined. As such, the City cannot ensure nor can we determine that expenditures of the grant were not unallowable, within the proper period, and adhered to established practices and policies. As a result, noncompliance in the form of questioned costs occurred and remained undetected. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. INDIANA STATE BOARD OF ACCOUNTS 20 CITY OF VINCENNES SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs Questioned costs in the amount of $30,000 were identified as noted in the Condition and Context. Recommendation We recommended the City's management establish a proper system of internal controls and develop policies and procedures to ensure that expenditures of federal awards are allowable and occur within the period of performance. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-005 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): 2024 Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Condition and Context As part of sound management of the federal award, the City was responsible for implementing a system of internal controls that would ensure compliance with the applicable requirements. The City had not properly designed or implemented such a system, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. Recipients are required to submit an initial interim report and quarterly or annually submit Project and Expenditure (P&E) reports to the U.S. Department of the Treasury (Treasury). The reporting periods, as well as the respective due dates are based upon type of recipient and its population, as well as the recipient's allocation amount. Information to be reported includes projects funded, expenditures, and contracts for the appropriate reporting period. The City was classified as a city with a population below 250,000 residents that was allocated less than $10 million in COVID-19 - Coronavirus State and Local Fiscal Recovery Funds (SLFRF). As such, an annual P&E report, covering one calendar year from April 1, 2023 to March 31, 2024, was prepared and submitted by the Clerk-Treasurer to the Treasury by April 30, 2024. The P&E report data to be submitted included, but was not limited to, current period and total cumulative obligations and current period and total cumulative expenditures. We were unable to trace the annual P&E report to the City's records. The errors identified were as follows: Total cumulative obligations were overstated by $1,732,149. Current period obligations were understated by $2,089,238. Current period expenditures and total cumulative expenditures were both overstated by $38,398. In addition, the P&E report required obligations and expenditures to be reported by project. The City completed the report utilizing total amounts for all projects. There were 11 projects appropriated using the SLFRF award. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 23 CITY OF VINCENNES SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following: . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . ." 31 CFR 35.4(c) states in part: "Reporting and requests for other information. During the period of performance, recipients shall provide to the Secretary periodic reports providing detailed accounting of the uses of funds, . . ." Compliance and Reporting Guidance, State and Local Fiscal Recovery Funds, page 13, states in part: ". . . 10. Reporting. All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. . . ." Cause The City officials appropriated the entire SLFRF award in May 2022 and reported the entire award amount as obligated in the P&E reports completed in 2023 and 2024. City officials were not aware that appropriating the funds alone does not constitute obligations of the award. Additionally, correcting adjustments made after the report was submitted partially contributed to the differences noted in expenditures. City officials were also not aware that obligations and expenditures could not be reported in total but should be reported by project. Effect Without a proper system of internal controls in place that operated effectively, the City did not file an accurate annual P&E report as required under the federal award. As such, the City did not accurately report current period obligations, cumulative obligations, current period expenditures, and cumulative expenditures when filing the P&E report for the period April 1, 2023 to March 31, 2024. As a result, material noncompliance occurred and remained undetected. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. INDIANA STATE BOARD OF ACCOUNTS 24 CITY OF VINCENNES SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that the City's management establish a proper system of internal controls and develop and implement reporting policies and procedures to ensure that all required reports are complete and accurate when submitted. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
2 CFR 1000.10 gives regulatory effect to the Department of Treasury for 2 CFR part 200. 2 CFR 200.302 states, in part, the non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.302 further states, in part, the financial management system of each non-Federal entity must provide for accurate, current, and complete disclosures of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. Additionally, the Ohio Department of Development (ODOD) Water and Wastewater Infrastructure Program Grant Agreement provides in Exhibit II that "Program reports must be submitted on a quarterly basis. Program reports must be submitted by close of business, on the second Friday at the end of each quarter". Due to deficiencies in the Village’s internal controls over reporting, the Village did not submit quarterly program reports for any quarter in 2024. Failure to submit required quarterly program reports could result in the Village not receiving the reimbursements that it is entitled to. The Village should implement internal controls to ensure that reports are submitted by the required deadlines per reporting requirements.
2 CFR § 1201.1 except as otherwise provided in this part, the Department of Transportation adopts the Office of Management and Budget Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR part 200). 2 CFR § 200.328 states unless otherwise approved by Office of Management and Budget (OMB), the Federal awarding agency must solicit only the OMB-approved governmentwide data elements for collection of financial information (at time of publication the Federal Financial Report or such future, OMB-approved, governmentwide data elements available from the OMB-designated standards lead). This information must be collected with the frequency required by the terms and conditions of the Federal award, but no less frequently than annually nor more frequently than quarterly except in unusual circumstances. The Federal awarding agency must use OMB approved common information collections, as applicable, when providing financial and performance reporting information. The District’s grant agreement states on or before the 20th day of the first month of each quarter and until the budget period end date of December 31, 2026, the Recipient shall submit to the U.S. Department of Transportation (USDOT) a Quarterly Project Progress Report and Recertification. During testing we noted two out of four (50%) of the District’s quarterly reports were submitted to USDOT with the incorrect expenditures. Due to the deficient internal control structure, elements of the reporting requirements were not properly submitted during Fiscal Year 2024. Failure to properly submit quarterly reports could result in USODOT taking action against the District for failure to comply with programmatic requirements. The District should implement policies and procedures to review the reports prior to submission to USODOT, to help ensure the reports are complete and accurate.
Criteria or Specific Requirements: In accordance with 2 CFR §170, prime awardees awarded a federal grant are required to file a Federal Funding Accountability and Transparency Act (FFATA) subaward report by the end of the month following the month in which the prime awardee obligates any subaward equal to or greater than $30,000. This requirement also applies when a modification increases the Federal funding obligation of a subaward to an amount that equals or exceeds $30,000. Further, the Organization is subject to financial reporting requirements. In accordance with 2 CFR §200.328, Federal Financial Reports (FFR) must be submitted at the frequency required by the terms and conditions of the award. Condition: During the review of reporting compliance for the major programs, it was determined that the Organization did not file the FFATA reports for program 98.001 within the required timeframe. Specifically, there were two modifications during the year under audit that increased the Federal funding obligation of the subaward by $30,000 or more, and both reports were filed after the month following the month in which the modifications were made, contrary to FFATA requirements. We examined two of the four required federal financial reports and all required FFATA filings, and the only exceptions identified were in the FFATA filings. Cause: Internal controls over financial reporting were not operating effectively to ensure FFATA reports were filed in a timely manner. In addition, management was not fully aware of the specific FFATA reporting requirements applicable to prime awardees. Effect: Failure to submit the FFATA report by the end of the month following the obligation of a subaward of $30,000 or more results in noncompliance with 2 CFR §170. Perspective Information: None. Questioned Costs: None. Repeat Finding: None. Recommendations: We recommend that management and relevant staff participate in training specifically on FFATA reporting requirements to ensure a clear understanding of obligations and deadlines. In addition, management should formalize and document procedures for FFATA reporting, such as maintaining a calendar of due dates, assigning responsibility for preparation and review, and implementing a sign-off process to confirm timely submission. The previous audit firm did not find this to be an issue, and we were told that reporting to FFATA was needed once a year for the previous year’s disbursements and that is what we have done. Now we will report every time we pass the $30,000 disbursement to a subrecipient.
Program: COVID-19 – Coronavirus State and Local Fiscal Recovery Funds Assistance Listing Number: 21.027 Compliance Requirement: Reporting Federal Agency: Department of Treasury Criteria: Under the requirements of 2 CFR 200.328 and 31 CFR Section 35.4(c).70, performance reports should include various data including current period expenditures. Condition: The County’s first quarter 2024 performance report incorrectly included expenditures that were incurred throughout fiscal year 2023. Questioned Costs: N/A Context: Of the County’s four reports selected for testing under the program, the County incorrectly included 2023 expenditures in the first quarter report. Effect: The County did not report the expenditures in the proper period as required. Cause: The County did not have adequate controls or procedures in place to identify the applicable reporting requirement and ensure the information was filed accurately and timely. Identification as a Repeat Finding: Yes Recommendation: Management should implement policies and procedures to ensure required reports are completed accurately and filed by their respective due dates as required by the grant agreement and Uniform Guidance. Views of Responsible Officials and Planned Corrective Actions: We agree with the finding. See separate report for planned corrective actions.
Agency: U.S. Department of Housing and Urban Development (HUD) Federal program: Community Development Block Grant – Disaster Recovery (CDBG-DR) ALN: 14.228 Compliance requirement: Reporting Category: Compliance / Internal Control over Compliance Questioned Costs: None Repeat finding: No Condition: Monthly progress reports required under the CDBG-DR program were not filed within the required deadline of the 5th day following the reporting month. Although management prepared the reports, submission to the PRDOH system was delayed until the prior month’s report was reviewed and approved. As a result, all reports were ultimately submitted late. Criteria: 2 CFR 200.328 and the subrecipient agreement requires subrecipients to submit performance and financial reports by the deadlines established by the awarding agency. PRDOH has established that monthly reports must be filed no later than the 5th day of the month following the reporting period. Cause: Management indicated that reports were completed on time but could not be filed until PRDOH cleared the previous month’s report. This dependency caused delays outside of the Organization’s direct control. Effect: The Organization was not in compliance with established reporting deadlines. While no questioned costs were identified, late submission reduces the timeliness of information available for monitoring and increases the risk of additional oversight or restrictions by PRDOH. Recommendation: We recommend that management maintain evidence that reports are prepared by the required due date, even if PRDOH system delays prevent immediate submission. Copies of completed reports and correspondence with PRDOH should be retained to demonstrate compliance efforts. Management should also formally communicate with PRDOH regarding systemic delays and seek clarification to minimize future reporting exceptions.
2024-004 Corporation for National and Community Service Federal Financial Assistance Listing #94.012, 22BIICA001 10/1/2022 – 9/30/2025, 23BIACA001 10/1/2023 – 9/30/2026, 23BIFNY001 10/1/2023 – 9/30/2026 Americorps September 11th National Day of Service and Remembrance Grants Reporting Material Weakness in Internal Controls over Compliance and Material Noncompliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and conditions of the federal award. 2 CFR 200.328 and 2 CFR 200.329 require the auditee to collect financial information and monitor its activities under federal awards to assure compliance with applicable federal requirements and performance expectations are being achieved and report these items in accordance with the program requirements. 2 CFR Part 170 establishes requirements for recipients’ reporting of information on subawards as required by the Federal Funding Accountability and Transparency Act of 2006 (FFATA). Condition: Reporting of information on subawards as required by the Federal Funding Accountability and Transparency Act of 2006 (FFATA) was not completed for each of the four subrecipients in which pass through funds exceeded $30,000. Cause: There was a misunderstanding with management over reporting requirements surrounding amounts passed through to subrecipients. Effect: Not having a clear understanding of FFATA reporting requirements lead to required information not being reported. Questioned Costs: None reported. Context/Sampling: There was a total of six federal financial reports, of which 2 were selected for testing. There were a total of four FFATA reports, of which 2 were selected for testing. Repeat Finding from Prior Year: Yes, prior year finding 2023-005. Recommendation: We recommend that management review procedures and control processes to ensure they comply with the federal requirements noted above. Views of Responsible Officials: Management is in agreement.
Finding Number: 2024-002 Federal Program: Airport Improvement Program Federal Award Identification Number: 3-39-0060-021-2023 Assistance Listing Number (ALN): 20.106 Federal Awarding Agency: U.S. Department of Transportation Pass-through Entity: None Repeat Finding: No Significant Deficiency and Noncompliance – Reporting Criteria: Unless otherwise approved by OMB, the Federal awarding agency must solicit only the OMB-approved governmentwide data elements for collection of financial information (at time of publication the Federal Financial Report or such future, OMB-approved, governmentwide data elements available from the OMB-designated standards lead). This information must be collected with the frequency required by the terms and conditions of the Federal award, but no less frequently than annually nor more frequently than quarterly except in unusual circumstances, for example where more frequent reporting is necessary for the effective monitoring of the Federal award or could significantly affect program outcomes, and preferably in coordination with performance reporting. The Federal awarding agency must use OMB-approved common information collections, as applicable, when providing financial and performance reporting information. (2 CFR 200.328) Until the grant is completed and closed, recipients are responsible for submitting formal reports as follows: A signed/dated Standard Form-270 (non-construction projects) or Standard Form-271 or equivalent (construction projects) and Standard Form-425 annually, due 90 days after the end of each federal fiscal year in which this grant is open (due December 31 of each year this grant is open). Condition: Errors were identified in the cash basis Standard Form-271 and Standard Form-425 reports submitted by the City. Questioned Costs: None. Identification of How Questioned Costs Were Computed: N/A Context: Standard Form-425 and Standard Form-271 included grant expenses in the amount of $1,359,343 which were paid after the reporting period closed. Cause and Effect: The Standard Form-425 and Standard Form-271 covered the reporting period of 10/1/23 through 9/30/24. The City improperly included expenses that were paid shortly after period end. Recommendation: The City should implement controls to ensure the required reports are accurate prior to submission. Officials’ Response: See Corrective Action Plan.
Program name: State and Local Fiscal Recover Funds Assistance Listing: 21.027 Federal award Identification number: 43210256 Federal award year: All Federal awarding agency: U.S. Department of Treasury Criteria: In accordance with 2 CFR 200.303, non-Federal entities must establish and maintain effective internal control over Federal awards. These controls should be in compliance with Federal statutes, regulations, and the terms and conditions of the award, and should align with standards such as the “Standards for Internal Control in the Federal Government” (Green Book) or the COSO framework.. This includes controls over: 1) Payroll: Ensuring labor charges are accurate, allowable, and properly approved (2 CFR 200.430). 2) Reporting: Ensuring financial reports are accurate, complete, and reviewed prior to submission (2CFR 200.328). Condition: The Company has limited written processes of certain transaction classes. There was a pervasive lack of documentation of approval over transactions, including payroll, vendor payments, cash management, and reporting. Cause: The Company did not maintain or consistently apply documentation protocols for internal control reviews. Formal documentation practices were not in place during the audit period. Effect or Potential Effect: Lack of documentation as evidence that controls over compliance were being performed. Documentation should be maintained as evidence that sufficient control activities are in place and would effectively prevent or detect and correct noncompliance. Controls must be followed for every transaction and documentation of the control being performed must be maintained. Repeat finding: This is not a repeat finding. Questioned costs: There are no questioned costs associated with this finding. Perspective: The deficiency was pervasive across multiple compliance areas and was not isolated to a specific transaction or department. The scope indicates a systemic control weakness during the audit period. Recommendation: We recommend that the Company ensure updated policies and procedures are implemented and consistently applied. This includes: 1) Documented review and approval of all transactions related to payroll, cash management, and reporting. 2) Maintenance of written evidence supporting such reviews. 3) Regular training and internal monitoring to ensure control procedures are consistently followed. Management’s response and corrective action plan (unaudited): See corrective action plan.
Finding 2024-001 – Reporting Federal Program Information: • COVID-19 Coronavirus State and Local Fiscal Recovery Funds (SLFRF) – A.L.N.# 21.027 • Workforce Innovation and Opportunity Act (WIOA) – A.L.N.# 17.258/259/278 • Temporary Assistance for Needy Families (TANF) – A.L.N.# 93.558 Criteria: 2 CFR 200.327 and 200.328 require that performance and financial reports be accurate, current, and complete. Reports must be supported by the accounting records from which they are prepared. Condition: We noted that quarterly financial reports for SLFRF and the monthly financial reports for WIOA and TANF submitted during FY 2024 did not reconcile to the County’s underlying accounting records. Context: We selected four quarterly reports for the SLFRF program, twelve monthly reports for the WIOA program, and twelve monthly reports for the TANF program, and we noted for the reports selected, amounts reported did not agree to the supporting documentation. Cause: The County identified additional grant expenses or disqualified certain grant expenses and revised existing expenses charged to the grants after the reports were submitted, but the reports had already been filed and could not be amended. Effect: Submitting reports that do not agree to the accounting records may result in inaccurate reporting to the federal awarding agency. This increases the risk of misstating program expenditures, potential questioned costs, and reduced confidence in the accuracy of reported data used for program oversight. Questioned Costs: None. Recommendation: We recommend the County identify all eligible expenses and revisions prior to reporting submissions.
Finding number 2024-004, significant deficiency in internal controls over compliance - reporting Federal Agency: U.S. Department of Justice Federal Program: Justice Reinvestment Initiative, ALN 16.827 Criteria: Per 2 CFR Section 200.328(b)(1), recipients are required to submit performance and financial reports as required by the terms and conditions of their federal award, and such reports must be submitted no later than 30 calendar days after the end of each reporting period, unless otherwise specified by the federal awarding agency. The Department of Justice’s grants financial guide specifies that the Federal Financial Reports (FFRs) must be submitted no later than 30 days after the last day of each quarter. Condition: During our review of federal financial reporting, we noted that two of the four required quarterly Federal Financial Reports (FFRs, SF-425) for the year ended December 31, 2024, were not submitted to the federal awarding agency within the required 30 days after the end of the reporting period. Cause: Inadequate procedures to ensure reports were timely filed. Effect: Failure to submit required federal financial reports on time may result in noncompliance with federal award requirements, could delay reimbursement of expenditures and may impact the grantee’s eligibility for future federal funding. Questioned Costs: None Recommendation: We recommend that the Organization implement and document procedures to ensure that all required federal financial reports are prepared, reviewed and submitted within the required timeframe. Views of Responsible Officials: Management concurs with this finding. See Corrective Action Plan.
Double reported expenses (Material Weakness) Criteria: CFR 200 § 200.328. The recipient or subrecipient must submit timely and accurate financial reports as required by the Federal award. Condition: Expenses were used for both a draw request of funds and reporting of funds for separate federal funding sources. Cause: Tracking of expenditures at the project level and not against the grant funding and lack of segregation of duties related to grant reporting. Effect: Reporting for the federal program was not accurate based on the expenses used. Questioned Costs: $75,827 Perspective: Federal expenditures were found to be used for reporting purposes of the 21.027 funds but then requested in a draw process for the HOME loan expenses (CFDA 14.239). The funding allowed expenditures from the same projects and the timing of the funding overlapped. The Organization was able to identify additional expenditures for the 21.027 funds to cover the questioned costs. Repeat Finding: No Recommendation: We recommend expenditures be tracked against grant funding instead of only the project level, separate preparation and review of reporting, and additional review and oversight of those charged with governance. Views of Responsible Officials: Management acknowledges the control weaknesses as described above and plans to develop proper policies and procedures in order for the funds to be correctly used for each grant source.
Federal Program: Crime Victim Assistance – ALN 16.575, National Family Caregiver Support, Title III, Part E – ALN 93.052, Activities to Support State, Tribal, Local and Territorial (STLT) Health Department Response to Public Heath or Healthcare Crises – ALN 93.391, Hospital Preparedness Program (HPP) Ebola Preparedness and Response Activities – ALN 93.817, Block Grants for Prevention and Treatment of Substance Abuse – ALN 93.959, Non-Profit Security Program – ALN 97.008 Federal Agency: U.S. Department of Justice, U.S Department of Health and Human Services, U.S. Department of Homeland Security Federal Award Year: Various Criteria or Requirement: Per 2 CFR 200.328, The recipient or subrecipient must submit financial reports as required by the Federal award. Reports submitted annually by the recipient or subrecipient must be due no later than 90 calendar days after the reporting period. Reports submitted quarterly or semiannually must be due no later than 30 calendar days after the reporting period. Per 2 CFR 200.329, The recipient or subrecipient must submit performance reports as required by the Federal award. Intervals must be no less frequent than annually nor more frequent than quarterly except if specific conditions are applied (See § 200.208). Reports submitted annually by the recipient or subrecipient must be due no later than 90 calendar days after the reporting period. Reports submitted quarterly or semiannually must be due no later than 30 calendar days after the reporting period. A subrecipient must submit a final performance report to a pass-through entity no later than 90 calendar days after the conclusion of the period of performance. Per the 2024 Compliance Supplement, non-federal entities may be required to submit special reports as required by the terms and conditions of the federal award. Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal controls 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 found, including facts that support the deficiency identified in the finding and information to provide proper perspective for judging the prevalence and consequences of the finding: Of 20 financial reports tested, 9 were either not submitted timely or documentation was not available to substantiate when the report was submitted. Of 23 performance reports tested, 12 were either not submitted timely or documentation was not available to substantiate when the report was submitted. Of 9 special reports tested, 6 were either not submitted timely or documentation was not available to substantiate when the report was submitted. Cause and possible asserted effect: The Health System does not have an effective process and control to ensure timely submission of required reports per the terms and conditions of federal awards and applicable regulations and retainage of evidence of control operation (i.e. evidence of report submission). Identification of questioned costs and how they were computed: None Whether the sampling was a statistically valid sample: The sample was not intended to be, and was not, a statistically valid sample. Identification of whether the audit finding is a repeat of a finding in the immediately prior audit and if so, the applicable prior year finding number: No. This finding was not a finding in the immediate prior year audit. Recommendations: We recommend that the Health System review and enhance its current procedures to ensure that all required reporting applicable to federal awards is accurately identified, submission deadlines are met, and documentation of submissions is properly retained. Views of responsible officals: Management acknowledges the audit finding regarding timely submission of reports and retaining documentation of submissions. We will implement a new combined monitoring and record retention internal control process for financial, performance, and special reporting requirements, to ensure timely submission and retention of supporting documentation for required sponsor reporting. This process will be implemented by December 31, 2025.
Congressional Directives Assistance Listing Number 93.493 U.S. Department of Health and Human Services Criteria or Specific Requirement - Performance and Financial Monitoring and Reporting, 2 CFR Section 200.328-329 Condition - The annual Federal Financial Report was not submitted timely and required performance reporting was not completed during the year. Questioned Costs - N/A Context - The Federal Financial Report for the reporting period ended September 29, 2024 was due December 28, 2024; however, this was not submitted until February 25, 2025. Additionally, two (2) performance reports were due during the year; however, neither were completed. The first was for the period September 30, 2023 - March 31, 2024 and was due April 30, 2024, and the second was for the period April 1, 2024 - September 30, 2024 and was due October 30, 2024. Effect - The Company did not comply with federal reporting requirements. Cause - Management turnover caused uncertainty in assigned responsibilities, including this reporting requirement. Identification as a Repeat Finding - N/A Recommendation - The Company should review reporting requirements in grant award documents for all federal awards to ensure compliance. Views of Responsible Officials and Planned Corrective Actions - Management agrees with the finding. The issue was identified in February 2025 and the required reporting was completed and submitted. Going forward management has established a protocol by which reports for federal funding shall be submitted timely.
Finding Number: 2024-002 Federal Program: COVID-19: Coronavirus State and Local Fiscal Recovery Funds (ARPA) - ARPA Water and Wastewater Infrastructure Program Federal Award Identification Number and Year: DEV-2021-181052 Assistance Listing Number (ALN): 21.027 Federal Awarding Agency: Department of the Treasury Pass-through Entity: Ohio Department of Development Repeat Finding: No Material Weakness and Noncompliance – Reporting Criteria: 2 C.F.R. § 200.328 Financial Reporting states, in part, the Federal agency or pass-through entity must collect financial reports no less than annually. The Federal agency or pass-through entity may not collect financial reports more frequently than quarterly unless a specific condition has been implemented in accordance with § 200.208. To the extent practicable, the Federal agency or pass-through entity should collect financial reports in coordination with performance reports. The recipient must submit quarterly program reports as required by the Federal award. In the Ohio Department of Development Water and Wastewater Infrastructure Program Grant Agreement, Statement of Agreement, Section 6 Reporting Requirements, Exhibit II Reporting, Section 2, Program Reports, all grant award recipients are required to submit program reports on a quarterly basis. Quarterly program reports must be submitted by close of business, on the second Friday, at the end of each quarter. Condition: The City did not submit the required Program Reports for all four quarters of 2024. Questioned Costs: None. Identification of How Questioned Costs Were Computed: N/A Context: Through testing of required reporting under terms and conditions of the federal award, we observed the City did not meet the requirements for performance reporting. The required performance reports for all four quarters of 2024 were not submitted. Cause and Effect: The issue results from a lack of monitoring controls related to grant reporting requirements. Failure to submit reports as required could result in noncompliance with grant requirements. Recommendation: We recommend management implement procedures and processes to ensure that all required reports are submitted on time. Views of Responsible Officials and Corrective Action Plan: See Corrective Action Plan.
FINDING 2024-004 Subject: Water and Waste Disposal Systems for Rural Communities - Reporting Federal Agency: Department of Agriculture Federal Program: Water and Waste Disposal Systems for Rural Communities Assistance Listings Number: 10.760 Federal Award Numbers and Years (or Other Identifying Numbers): 92-02, 92-03, 92-04, 92-05 Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Condition and Context As part of sound management of the federal award, the City was responsible for implementing a system of internal controls that would ensure compliance with the applicable requirements. The City had not properly designed or implemented such a system, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. The City was required to submit two annual data reports to the Department of Agriculture. The Statement of Budget, Income and Equity (Form RD 442-2) report data to be submitted included, but was not limited to, current income and expenditures and budgeted amounts. The Balance Sheet (Form RD 442-3) report data to be submitted included, but was not limited to, current year assets and liabilities. Per the USDA Rural Utilities Service Borrower's Guide, both reports also required inclusion of comparative information for the prior year. Both reports were selected for testing. We were unable to trace either report to the City's records, nor could we verify the accuracy and completeness of either report. The following errors were identified: • The Form RD 442-2, which covered calendar year 2023, reported total income and expenses of $3,792,018 and $1,615,582, respectively. However, the City's ledger for the same period had total income and expenses of $3,985,851 and $3,740,788, respectively. This resulted in net income being overstated by $2,319,039. Additionally, only one amount was reported as comparative data for prior year activity. We were unable to determine what this amount represented and were unable to verify it to the prior period report or to the City's records. • The Form RD 442-3, which covered calendar year 2023, reported total assets and liabilities of $18,229,653 and $10,503,419, respectively. However, the City's records for the same period had total assets and liabilities of $39,216,648 and $12,758498, respectively. Additionally, no comparative amounts from the prior year were reported. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . ." 7 CFR 1780.47 states in part: "(a) Borrowers are required to provide RUS an annual audit or financial statements. . . . (e) Borrowers exempt from audits. All borrowers who are exempt from audits, will, within 60 days following the end of each fiscal year, furnish the RUS with annual financial statements, consisting of a verification of the organization's balance sheet and statement of income and expense by an appropriate official of the organization. Forms RD 442-2, 'Statement of Budget, Income and Equity,' and 442-3 may be used. (f) Management reports. These reports will furnish management with a means of evaluating prior decisions and serve as a basis for planning future operations and financial strategies. In those cases where revenues from multiple sources are pledged as security for an RUS loan, two reports will be required; one for the project being financed by RUS and one combining the entire operation of the borrower. In those cases where RUS loans are secured by general obligation bonds or assessments and the borrower combines revenues from all sources, one management report combining all such revenues is acceptable. The following management data will be submitted by the borrower to the processing office. These reports at a minimum will include a balance sheet and income and expense statement. . . . (2) Annual management reports. Prior to the beginning of each fiscal year the following will be submitted to the processing office. (If Form RD 442-2 is used as the annual management report, enter data in column three only of Schedule 1, and complete all of Schedule 2.) • The Form RD 442-3, which covered calendar year 2023, reported total assets and liabilities of $18,229,653 and $10,503,419, respectively. However, the City's records for the same period had total assets and liabilities of $39,216,648 and $12,758498, respectively. Additionally, no comparative amounts from the prior year were reported. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . ." 7 CFR 1780.47 states in part: "(a) Borrowers are required to provide RUS an annual audit or financial statements. . . . (e) Borrowers exempt from audits. All borrowers who are exempt from audits, will, within 60 days following the end of each fiscal year, furnish the RUS with annual financial statements, consisting of a verification of the organization's balance sheet and statement of income and expense by an appropriate official of the organization. Forms RD 442-2, 'Statement of Budget, Income and Equity,' and 442-3 may be used. (f) Management reports. These reports will furnish management with a means of evaluating prior decisions and serve as a basis for planning future operations and financial strategies. In those cases where revenues from multiple sources are pledged as security for an RUS loan, two reports will be required; one for the project being financed by RUS and one combining the entire operation of the borrower. In those cases where RUS loans are secured by general obligation bonds or assessments and the borrower combines revenues from all sources, one management report combining all such revenues is acceptable. The following management data will be submitted by the borrower to the processing office. These reports at a minimum will include a balance sheet and income and expense statement. . . . (2) Annual management reports. Prior to the beginning of each fiscal year the following will be submitted to the processing office. (If Form RD 442-2 is used as the annual management report, enter data in column three only of Schedule 1, and complete all of Schedule 2.)• The Form RD 442-3, which covered calendar year 2023, reported total assets and liabilities of $18,229,653 and $10,503,419, respectively. However, the City's records for the same period had total assets and liabilities of $39,216,648 and $12,758498, respectively. Additionally, no comparative amounts from the prior year were reported. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . ." 7 CFR 1780.47 states in part: "(a) Borrowers are required to provide RUS an annual audit or financial statements. . . . (e) Borrowers exempt from audits. All borrowers who are exempt from audits, will, within 60 days following the end of each fiscal year, furnish the RUS with annual financial statements, consisting of a verification of the organization's balance sheet and statement of income and expense by an appropriate official of the organization. Forms RD 442-2, 'Statement of Budget, Income and Equity,' and 442-3 may be used. (f) Management reports. These reports will furnish management with a means of evaluating prior decisions and serve as a basis for planning future operations and financial strategies. In those cases where revenues from multiple sources are pledged as security for an RUS loan, two reports will be required; one for the project being financed by RUS and one combining the entire operation of the borrower. In those cases where RUS loans are secured by general obligation bonds or assessments and the borrower combines revenues from all sources, one management report combining all such revenues is acceptable. The following management data will be submitted by the borrower to the processing office. These reports at a minimum will include a balance sheet and income and expense statement. . . . (2) Annual management reports. Prior to the beginning of each fiscal year the following will be submitted to the processing office. (If Form RD 442-2 is used as the annual management report, enter data in column three only of Schedule 1, and complete all of Schedule 2.) (i) Two copies of the management reports and proposed 'Annual Budget'. (ii) Financial information may be reported on Form RD 442-2 which includes Schedule 1, 'Statement of Budget, Income and Equity' and Schedule 2, 'Projected Cash Flow' or information in similar format. (iii) A copy of the rate schedule in effect at the time of submission. . . ." Cause The Clerk-Treasurer had served in the position for less than two years when the reports for 2024 were due and was inexperienced with the reporting requirements of the award. As a result, the Clerk-Treasurer did not properly prepare the reports. Additionally, the Clerk-Treasurer was solely responsible for preparing and submitting the reports with no oversight, review, or approval process that would have allowed for prevention, or detection and correction, of the noncompliance. Effect Without a proper system of internal controls in place that operated effectively, the City did not file an accurate and complete report for either annual report required under the federal award. As a result, material noncompliance occurred and remained undetected. By not reporting the comparative data, all information needed to determine the financial status of the City was not readily available. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the City's management establish a proper system of internal controls and develop and implement reporting policies and procedures to ensure that all required reports are filed timely, accurately, and contain all the required information. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2024-006 Subject: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds - Reporting Federal Agency: Department of the Treasury Federal Program: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Assistance Listings Number: 21.027 Federal Award Number and Year (or Other Identifying Number): 2024 Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Condition and Context As part of sound management of the federal award, the City was responsible for implementing a system of internal controls that would ensure compliance with the applicable requirements. The City had not properly designed or implemented such a system, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance. The City was required to submit an annual Project and Expenditure (P&E) report to the U.S. Department of the Treasury. The P&E report data to be submitted included, but was not limited to, current period and total cumulative obligations and current period and total cumulative expenditures. We were unable to trace the annual P&E report to the City's records. The errors identified were as follows: • Total cumulative obligations were overstated by $23,337. • Total cumulative expenditures were understated by $171,136. • Current period expenditures were understated by $163,789. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . ." 31 CFR 35.4(c) states in part: "Reporting and requests for other information. During the period of performance, recipients shall provide to the Secretary periodic reports providing detailed accounting of the uses of funds, . . ." Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance, page 10, states in part: ". . . 10. Reporting. All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. . . ." Cause The Clerk-Treasurer had served in the position for two years when the report for 2024 was due and was inexperienced with the reporting requirements of the award. As a result, the Clerk-Treasurer did not properly prepare the report. Additionally, the Clerk-Treasurer was solely responsible for preparing and submitting the report with no oversight, review, or approval process that would have allowed for prevention, or detection and correction, of the noncompliance. Effect Without a proper system of internal controls in place that operated effectively, the City did not file an accurate annual P&E report as required under the federal award. As a result, material noncompliance occurred and remained undetected. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the City's management establish a proper system of internal controls and develop and implement reporting policies and procedures to ensure that all required reports are complete and accurate when submitted. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Compliance Requirement Cash Management and Reporting Type of Finding Material Weakness in Internal Control over Compliance Material Noncompliance Program Port Security Grant Program ALN# 97.056 Federal Agency Department of Homeland Security – Direct Award Federal Award Year 2020, 2021, 2022 and 2023 Grant Number EMW-2022-PU-00022 – IJ#1, IJ#2, EMW-2023-PU-00164 – IJ#1, IJ#2, IJ#3, IJ#4 EMW-2024-PU-05541 – IJ#4 Questioned Costs None Criteria - Federal rules require grant recipients to request reimbursement from the federal government soon after paying expenses, rather than holding costs for long periods. They also require financial reports to be accurate, up to date, and complete. To meet these standards, timely reporting must be supported by timely reimbursement requests so that the reports truly reflect the District’s financial activity. Condition - Although the District submitted the required SF-425 Federal Financial Reports on a timely basis, it did not submit requests for reimbursement timely. Repeatedly, reimbursements were requested nine to twelve months after expenditures were incurred, creating cash flow inefficiencies and increasing risk of misreporting. The total value of these requests were $661,577 Cause - The District failed to establish and implement adequate procedures to ensure reimbursement requests were submitted in coordination with actual cash outflows. This control weakness reflects insufficient oversight of cash management practices and resulted in noncompliance with federal requirements for timely reimbursement.Effect - Delayed reimbursement requests reduce cash management efficiency and create potential inconsistencies between reporting and drawdown activity. Recommendation - The District must establish and enforce policies mandating that reimbursement requests be submitted promptly after vendor payments are made. The District must reconcile reimbursement activity with SF-425 reporting to ensure that expenditures are accurately, timely, and consistently reflected in financial reports submitted to FEMA, in compliance with 2 CFR 200.305 and 2 CFR 200.328
45 CFR part 75 gives regulatory effect to the Department of Health and Human Services for 2 C.F.R. § 200.328 which states, unless otherwise approved by OMB, the Federal awarding agency must solicit only the OMB-approved governmentwide data elements for collection of financial information At time of publication, this consists of the Federal Financial Report (SF-245) or such future, OMB-approved, governmentwide data elements available from the OMB-designated standards lead. This information must be collected with the frequency required by the terms and conditions of the Federal award, but no less frequently than annually nor more frequently than quarterly except in unusual circumstances, for example where more frequent reporting is necessary for the effective monitoring of the Federal award or could significantly affect program outcomes, and preferably in coordination with performance reporting. The Federal awarding agency must use OMB-approved common information collections, as applicable, when providing financial and performance reporting information. Ohio Administrative Code 5101:9-7-29(C)(2)(c) states in part that the County Family Services Agency (CFSA) shall submit the completed quarterly financial statement to the Bureau of County Finance and Technical Assistance (BCFTA) no later than the tenth calendar day of the second month following the quarter the report represents for the following reporting periods: (iv) August tenth for April through June. The County's Subgrant agreement, G-2425-11-6104, with the Ohio Department of Job and Family Services (ODJFS) also states in part that as a subrecipient of the state of Ohio, the subgrantee must utilize a financial management system that meets the requirements established by ODJFS and use the ODJFS designated software programs to report financial and other data according to the standards established by ODJFS. Subgrantee will provide to ODJFS all program and financial reports and updates in accordance with the timeliness schedules, formats and other requirements established by ODJFS. The County submitted (4) quarterly JFS 02820 Reports; however possibly due to the failure of an existing control(s), one out of the four (twenty-five percent) Status Reports were submitted after the required due date. The reporting period of April, May, and June, which was due by August 10, was not submitted until August 15. Failure to submit reports by the required dates could adversely affect future grant awards. The County should monitor and implement a control system and/or additional procedures to ensure required reports are submitted in a timely manner.
Condition and Context: During our audit of the Public Safety Partnership and Community Policing Grant (CFDA 16.710), we were unable to obtain a copy of the required SF-425 (Federal Financial Report) submitted by the County. Criteria: Per 2 CFR 200.334, Non-Federal entities other than States, including those operating Federal programs as subrecipients of States, must retain financial records, supporting documents, and reports pertinent to federal awards for a period of three years from the date of submission of the final expenditure report. In addition, 2 CFR 200.327 and 200.328 require recipients to submit required financial reports, including the SF-425, to demonstrate accountability for grant expenditures. Cause: The County does not have adequate recordkeeping procedures in place to ensure that copies of all submitted federal reports, including the SF-425, are retained and available for audit. Effect: The inability to provide the SF-425 limited our ability to verify compliance with federal reporting requirements. Lack of adequate documentation may result in questioned costs, affect the granting agency’s ability to monitor the use of federal funds, and may place the County at risk of administrative findings in future audits. Recommendation: We recommend that the County implement procedures to ensure that copies of all required federal reports are retained in accordance with federal record retention requirements and made available for audit purposes. Views of Responsible Officials and Planned Corrective Actions: Management agrees with the finding and will establish procedures to ensure that all required federal reports are retained and readily available for future monitoring and audits.