Compliance Requirement: L Condition: Annual Federal Financial Reports (FFR) and Program Performance Reports (PPR) were not completed and submitted to the federal agency on time as required by the terms and conditions of the award. 8 of 12 reports reviewed were submitted late. Criteria: Federal grant agreements and 2 CFR Part §200.328, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, require recipients to submit FFR and PPR within specified deadlines (typically within 90 days of the award period). Cause and effect: Staffing resource constraints led to noncompliance with terms and conditions of the federal awards and the Uniform Guidance. Recommendation: I recommend that management review its current processes and procedures to ensure reports are submitted timely, reviewed, and ensure evidence is retained to support the compilation, review, and submission of the reports and ensure compliance with Uniform Guidance. Views of Responsible Officials: All FFR and PPR reporting requirements for all federal grants and agreements are tracked in a master spreadsheet, with reminders to all program and project managers at least 2 weeks in advance of reporting due dates.
Finding 2022-002: Lack of documentation of review and approval - Material Weakness Program name: Office for Coastal Management Assistance Listing: 11.473 Federal award Identification number: 20 NFWF 339630 Federal award year: 9/1/2020 - 8/31/2023 Federal awarding agency: U.S. Department of Commerce Criteria - In accordance with 2 CFR 200.303, recipients and subrecipients must establish, document 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: * Payroll: Ensuring labor charges are accurate, allowable, and properly approved (2 CFR 200.430). * Expenses: Ensuring proper documentation and approval. (2 CFR 200.400(d) ) * Reporting: Ensuring financial reports are accurate, complete, and reviewed prior to submission (2 CFR 200.328). Condition - The Organization has limited written processes of certain transaction classes. There was a pervasive lack of documentation of approval over transactions, including payroll, expenses, and reporting. Cause - The Organization did not maintain or consistently apply documentation protocols for internal control reviews. Formal documentation practices were not in place during the audit period. 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. Questioned costs - None identified. 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. Identification of Repeat Findings - This is not a repeat finding. Recommendation - We recommend that the Organization ensure updated policies and procedures are implemented and consistently applied. This includes: * Documented review and approval of all transactions related to payroll, expenses, and reporting. * Maintenance of written evidence supporting such reviews. * Regular training and internal monitoring to ensure control procedures are consistently followed. Management response - See corrective action plan
2022-108 Lack of Documentation Related to Reporting (prior two years 2021-108 and 2020-104) (initially reported 2018) Assistance Listing Number: 93.224 and 93.527 Name of Federal Agency: Department of Health and Human Services, HRSA Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) and Grants for New and Expanded Services Under the Health Center Program Compliance Requirement: Reporting Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H80CS06452 (2022) and COVID-19 ARP H8FCS40324 (2021) Finding Type: Significant Deficiency in Internal Control Known Questioned Costs: $0 Condition: The Organization did not maintain proper documentation in support of reporting requirements. Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Also, under compliance requirements for reporting 2 CFR 200.328 states that information must be collected with the frequency required by the terms and conditions of the federal award for effective monitoring of the federal awards. Cause: Supporting records used to populate the Uniform Data System (UDS) report were not retained by the Organization. Effect: The Organization could submit incorrect information. Recommendation: Documentation should be prepared, reviewed, and retained to support the reporting. The documentation should clearly document who prepared the information, who reviewed the information, and that the reviewer considered whether the information was complete and accurate. Views of Responsible Officials and Planned Corrective Action: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Organization has reviewed and updated its grant drawdown procedures to include only actual cost and for the request to be reviewed and approved by someone other than the preparer prior to submission. The corrective action for this finding has been approved and implemented by the Organization.
2022-108 Lack of Documentation Related to Reporting (prior two years 2021-108 and 2020-104) (initially reported 2018) Assistance Listing Number: 93.224 and 93.527 Name of Federal Agency: Department of Health and Human Services, HRSA Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) and Grants for New and Expanded Services Under the Health Center Program Compliance Requirement: Reporting Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H80CS06452 (2022) and COVID-19 ARP H8FCS40324 (2021) Finding Type: Significant Deficiency in Internal Control Known Questioned Costs: $0 Condition: The Organization did not maintain proper documentation in support of reporting requirements. Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Also, under compliance requirements for reporting 2 CFR 200.328 states that information must be collected with the frequency required by the terms and conditions of the federal award for effective monitoring of the federal awards. Cause: Supporting records used to populate the Uniform Data System (UDS) report were not retained by the Organization. Effect: The Organization could submit incorrect information. Recommendation: Documentation should be prepared, reviewed, and retained to support the reporting. The documentation should clearly document who prepared the information, who reviewed the information, and that the reviewer considered whether the information was complete and accurate. Views of Responsible Officials and Planned Corrective Action: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Organization has reviewed and updated its grant drawdown procedures to include only actual cost and for the request to be reviewed and approved by someone other than the preparer prior to submission. The corrective action for this finding has been approved and implemented by the Organization.
2022-108 Lack of Documentation Related to Reporting (prior two years 2021-108 and 2020-104) (initially reported 2018) Assistance Listing Number: 93.224 and 93.527 Name of Federal Agency: Department of Health and Human Services, HRSA Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) and Grants for New and Expanded Services Under the Health Center Program Compliance Requirement: Reporting Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H80CS06452 (2022) and COVID-19 ARP H8FCS40324 (2021) Finding Type: Significant Deficiency in Internal Control Known Questioned Costs: $0 Condition: The Organization did not maintain proper documentation in support of reporting requirements. Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Also, under compliance requirements for reporting 2 CFR 200.328 states that information must be collected with the frequency required by the terms and conditions of the federal award for effective monitoring of the federal awards. Cause: Supporting records used to populate the Uniform Data System (UDS) report were not retained by the Organization. Effect: The Organization could submit incorrect information. Recommendation: Documentation should be prepared, reviewed, and retained to support the reporting. The documentation should clearly document who prepared the information, who reviewed the information, and that the reviewer considered whether the information was complete and accurate. Views of Responsible Officials and Planned Corrective Action: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Organization has reviewed and updated its grant drawdown procedures to include only actual cost and for the request to be reviewed and approved by someone other than the preparer prior to submission. The corrective action for this finding has been approved and implemented by the Organization.
2022-108 Lack of Documentation Related to Reporting (prior two years 2021-108 and 2020-104) (initially reported 2018) Assistance Listing Number: 93.224 and 93.527 Name of Federal Agency: Department of Health and Human Services, HRSA Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) and Grants for New and Expanded Services Under the Health Center Program Compliance Requirement: Reporting Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H80CS06452 (2022) and COVID-19 ARP H8FCS40324 (2021) Finding Type: Significant Deficiency in Internal Control Known Questioned Costs: $0 Condition: The Organization did not maintain proper documentation in support of reporting requirements. Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Also, under compliance requirements for reporting 2 CFR 200.328 states that information must be collected with the frequency required by the terms and conditions of the federal award for effective monitoring of the federal awards. Cause: Supporting records used to populate the Uniform Data System (UDS) report were not retained by the Organization. Effect: The Organization could submit incorrect information. Recommendation: Documentation should be prepared, reviewed, and retained to support the reporting. The documentation should clearly document who prepared the information, who reviewed the information, and that the reviewer considered whether the information was complete and accurate. Views of Responsible Officials and Planned Corrective Action: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Organization has reviewed and updated its grant drawdown procedures to include only actual cost and for the request to be reviewed and approved by someone other than the preparer prior to submission. The corrective action for this finding has been approved and implemented by the Organization.
2022-108 Lack of Documentation Related to Reporting (prior two years 2021-108 and 2020-104) (initially reported 2018) Assistance Listing Number: 93.224 and 93.527 Name of Federal Agency: Department of Health and Human Services, HRSA Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) and Grants for New and Expanded Services Under the Health Center Program Compliance Requirement: Reporting Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H80CS06452 (2022) and COVID-19 ARP H8FCS40324 (2021) Finding Type: Significant Deficiency in Internal Control Known Questioned Costs: $0 Condition: The Organization did not maintain proper documentation in support of reporting requirements. Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Also, under compliance requirements for reporting 2 CFR 200.328 states that information must be collected with the frequency required by the terms and conditions of the federal award for effective monitoring of the federal awards. Cause: Supporting records used to populate the Uniform Data System (UDS) report were not retained by the Organization. Effect: The Organization could submit incorrect information. Recommendation: Documentation should be prepared, reviewed, and retained to support the reporting. The documentation should clearly document who prepared the information, who reviewed the information, and that the reviewer considered whether the information was complete and accurate. Views of Responsible Officials and Planned Corrective Action: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Organization has reviewed and updated its grant drawdown procedures to include only actual cost and for the request to be reviewed and approved by someone other than the preparer prior to submission. The corrective action for this finding has been approved and implemented by the Organization.
2022-108 Lack of Documentation Related to Reporting (prior two years 2021-108 and 2020-104) (initially reported 2018) Assistance Listing Number: 93.224 and 93.527 Name of Federal Agency: Department of Health and Human Services, HRSA Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) and Grants for New and Expanded Services Under the Health Center Program Compliance Requirement: Reporting Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H80CS06452 (2022) and COVID-19 ARP H8FCS40324 (2021) Finding Type: Significant Deficiency in Internal Control Known Questioned Costs: $0 Condition: The Organization did not maintain proper documentation in support of reporting requirements. Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Also, under compliance requirements for reporting 2 CFR 200.328 states that information must be collected with the frequency required by the terms and conditions of the federal award for effective monitoring of the federal awards. Cause: Supporting records used to populate the Uniform Data System (UDS) report were not retained by the Organization. Effect: The Organization could submit incorrect information. Recommendation: Documentation should be prepared, reviewed, and retained to support the reporting. The documentation should clearly document who prepared the information, who reviewed the information, and that the reviewer considered whether the information was complete and accurate. Views of Responsible Officials and Planned Corrective Action: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Organization has reviewed and updated its grant drawdown procedures to include only actual cost and for the request to be reviewed and approved by someone other than the preparer prior to submission. The corrective action for this finding has been approved and implemented by the Organization.
2022-108 Lack of Documentation Related to Reporting (prior two years 2021-108 and 2020-104) (initially reported 2018) Assistance Listing Number: 93.224 and 93.527 Name of Federal Agency: Department of Health and Human Services, HRSA Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) and Grants for New and Expanded Services Under the Health Center Program Compliance Requirement: Reporting Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H80CS06452 (2022) and COVID-19 ARP H8FCS40324 (2021) Finding Type: Significant Deficiency in Internal Control Known Questioned Costs: $0 Condition: The Organization did not maintain proper documentation in support of reporting requirements. Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Also, under compliance requirements for reporting 2 CFR 200.328 states that information must be collected with the frequency required by the terms and conditions of the federal award for effective monitoring of the federal awards. Cause: Supporting records used to populate the Uniform Data System (UDS) report were not retained by the Organization. Effect: The Organization could submit incorrect information. Recommendation: Documentation should be prepared, reviewed, and retained to support the reporting. The documentation should clearly document who prepared the information, who reviewed the information, and that the reviewer considered whether the information was complete and accurate. Views of Responsible Officials and Planned Corrective Action: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Organization has reviewed and updated its grant drawdown procedures to include only actual cost and for the request to be reviewed and approved by someone other than the preparer prior to submission. The corrective action for this finding has been approved and implemented by the Organization.
2022-108 Lack of Documentation Related to Reporting (prior two years 2021-108 and 2020-104) (initially reported 2018) Assistance Listing Number: 93.224 and 93.527 Name of Federal Agency: Department of Health and Human Services, HRSA Program Title: Health Center Program (Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Public Housing Primary Care) and Grants for New and Expanded Services Under the Health Center Program Compliance Requirement: Reporting Pass-through Entity: N/A Federal Grant/Contract Number and Grant Year: H80CS06452 (2022) and COVID-19 ARP H8FCS40324 (2021) Finding Type: Significant Deficiency in Internal Control Known Questioned Costs: $0 Condition: The Organization did not maintain proper documentation in support of reporting requirements. Criteria: 2 CFR section 200.303 requires that nonfederal entities receiving federal awards establish and maintain internal control over the federal awards that provides reasonable assurance that the nonfederal entity is managing the federal awards in compliance with federal statutes, regulations, and the terms and conditions of the federal awards. Also, under compliance requirements for reporting 2 CFR 200.328 states that information must be collected with the frequency required by the terms and conditions of the federal award for effective monitoring of the federal awards. Cause: Supporting records used to populate the Uniform Data System (UDS) report were not retained by the Organization. Effect: The Organization could submit incorrect information. Recommendation: Documentation should be prepared, reviewed, and retained to support the reporting. The documentation should clearly document who prepared the information, who reviewed the information, and that the reviewer considered whether the information was complete and accurate. Views of Responsible Officials and Planned Corrective Action: The Organization has hired a new Chief Financial Officer as well as additional supporting staff within the finance department. The Organization has reviewed and updated its grant drawdown procedures to include only actual cost and for the request to be reviewed and approved by someone other than the preparer prior to submission. The corrective action for this finding has been approved and implemented by the Organization.
Criteria or Specific Requirement: 2 CFR 200.328 and 31 CFR section 35.4(c) requires submission of quarterly and annual project and expenditure reports which are due to the Department of Treasury 30 days after the end of each quarter and April 30th, of the year proceeding, respectively. The project and expenditure report contains specific instructions on how to complete the report. Within the project and expenditure report, ‘Expenditure Categories’ is a critical component to be completed by reporting “obligations” and “expenditures” on each project. As defined in the report, “obligation” is an order placed (such as a contract) and similar transactions that require payment; “expenditure” is when the service has been rendered or the good has been delivered to the entity, and payment is due. Condition: Upon review and testing of the quarterly reports as submitted to the Department of Treasury, it was noted that amounts reported as expenditures for certain projects included amounts that were obligated but not yet incurred (service was not yet rendered or the good was not yet received) until a subsequent quarter. The expenditures as reported were allowable expenditures, but the timing of the expenditures was reported in the incorrect period. In addition, upon testing the expenditures as reported in the unadjusted schedule of expenditures of federal awards (the “schedule”), it was noted that $549,431 was improperly included as expenditures belonging to the fiscal year ended September 30, 2022. The expenditures identified were prematurely recorded in the general ledger since the equipment was not received until after year-end. The City’s schedule of expenditures of federal awards for the fiscal year ended September 30, 2022 required a correction to remove those amounts from the schedule and to add those amounts to the subsequent fiscal year’s schedule. Cause: The Grants Administrator’s lack of understanding of the proper manner in which the obligations and expenditures are required to be reported in the quarterly reports resulted in expenditure amounts being reported in the incorrect quarters. The City’s year-end procedures did not identify certain necessary adjustments in a timely manner in order to remove capital outlay expenditures that were incorrectly recorded during the fiscal year ended September 30, 2022 and were incorrectly included in the unadjusted schedule of expenditures of federal awards. The Grants Administrator utilized the amounts recorded as expenditures in the accounting system to prepare the quarterly reports. Expenditures should be recorded in the City’s general ledger utilizing the date services are rendered and/or goods are received. Proper monthly review of the expenditure accounts should have led to identifying expenditures that were recorded but not yet incurred. Effect or Potential Effect: The two conditions listed above resulted in differences between expenditure amounts as correctly adjusted and reported in the schedule of expenditures of federal awards, versus expenditure amounts as reported and submitted to the Department of Treasury in the quarterly reports. Future reports may be incorrectly completed if obligation amounts and expenditure amounts are not following the criteria to properly enter amounts in the quarterly reports. Questioned Costs: None. Context: During compliance testing of the reporting compliance requirement, it was noted that the total expenditures included in the schedule of expenditures of federal awards for the fiscal year ended September 30, 2022 did not agree to the total expenditures reported in the quarterly expenditure reports as submitted to the Department of Treasury for the same period. During testing of disbursements as included in the schedule of expenditures of federal awards for the major Federal program, and during internal control and compliance testing, from a total of forty-five disbursements it was noted there were four disbursements, amounting to a total of $549,431, recorded within accounts payable as capital outlay expenditures which were improperly recorded in the fiscal year ended September 30, 2022 and improperly included in the schedule of expenditures of federal awards. As evidenced by the invoice date and ship date within the invoices, the equipment was not shipped, and the equipment was not received by the City, until after year-end. The expenditures should be recorded and reported in the fiscal year ended September 30, 2023. Adjustments were made accordingly for proper recording, reporting, and presentation in the financial statements and schedule of expenditures of federal awards. Recommendation: Management should ensure year-end closing procedures are completed in a timely manner and are sufficient to assure accounts and financial statements are prepared in accordance with GAAP. If properly prepared and recorded, the subledgers for expenditures by federal awards will be generated with accurate expenditure amounts for the fiscal year. Management should assess the risk associated with this condition and identify any additional processes that can be incorporated into their existing controls to improve the deficiency; such as, minimizing the likelihood of year-end material audit adjustments through review of transactions and balances for general propriety and accuracy within one month after year-end. Follow-up and inquiries can be made timely for any transactions for which proper recording is unclear to management, if any. The Grants Administrator should maintain an up-to-date listing of expenditures by award (for all federal, state, and local awards) and should communicate with the Finance Department on a monthly basis to review the listing and determine the proper period in which the expenditures should be recorded and presented. The Grants Administrator and Finance Department should prepare a reconciliation of the expenditures as reported in the schedule of expenditures of federal awards for the major Federal program for the fiscal year ended September 30, 2022, as well as expenditures incurred from October 1, 2022 through today, and compare to the expenditures as reported in all quarterly reports through September 30, 2023. An analysis should be completed to determine the differences between the expenditures incurred by quarter versus expenditures as reported by quarter, and to determine the differences in total between expenditures incurred and expenditures reported in the quarterly and annual project and expenditure reports. The Grants Administrator should then review the Department of Treasury’s Project and Expenditure Report User Guide of State and Local Fiscal Recovery Funds, and/or contact the grantor, to determine if reports as previously submitted should be corrected for the timing difference, or to determine what the correct course of action should be.
Finding Number: 2022-005 Prior Year Finding Number: 2021-005 Compliance Requirement: Reporting Program: U.S. Department of the Treasury COVID-19 ? Emergency Rental Assistance (ERA) Program ALN: 21.023 Award #: N/A Award Year: 12/27/2020 ? 09/30/2025 Government Department/Agency: Department of Human Services Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR Section 200.328 Financial Reporting: ?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.? The 2022 Compliance Supplement outlines the Special Reports required under the Emergency Rental Assistances program, and the key data elements, and the submission requirements. The Reporting Guidance is located on the Treasury?s website for the ERA program. Monthly Special Reports were required to be submitted on a monthly basis, beginning in April 2021 for ERA1 and June 2021 for ERA2, generally by the 15th of the following month unless otherwise specified within the Reporting Guidance. As outlined in the 2022 Compliance Supplement, the key data elements for the monthly reports included (1) the total number of participant households that received ERA assistance of any kind and (2) the total amount of ERA funds expended by the ERA grantee to or for participating households on behalf of eligible households. The program also requires ERA recipients to certify the reports submitted. As outlined in the 2022 Compliance Supplement, the key data elements for the quarterly reports included (1) the cumulative amount obligated by the grantee; and (2) the cumulative amount expended by the grantee. The program also requires ERA recipients to certify the reports submitted. Condition ? We noted the following for one of nine quarterly and monthly reports tested: ? For one quarterly report (the ERA1 Quarter 1 2022 Report), the key data elements (1) the cumulative amount obligated by the grantee; and (2) the cumulative amount expended by the grantee were not included in the quarterly report. Questioned Costs ? None. Context ? This is a condition identified per review of the Department of Human Services? compliance with specified requirements using a statistically valid sample. Effect ? Without proper internal controls and policies and procedures in place, the required financial and special reports are either not submitted or not submitted with accurate information. Cause ? Per discussion with management, it was noted that at the time the report was submitted they didn?t have access to key data elements to be input into the quarterly report. However, BDO could not verify that this was the case as there was no documentation around the same. Management did not establish controls to make sure that all the required information as noted in the compliance supplement was submitted to the Treasury Department. Recommendation ? We recommend that the Department of Human Services fully implement its current corrective action plan to deploy policies and procedures and controls to ensure reports are submitted with accurate information. Related Noncompliance ? Noncompliance. Views of Responsible Officials and Planned Corrective Actions ? The Department of Human Services (DHS) concurs with the finding that we could not substantiate that cumulative expenditure and obligation data were included in the ERA1 Quarter 1 2022 Report, which was submitted on April 15, 2022 in the U.S. Department of the Treasury?s COVID-19 Relief Hub reporting portal. DHS believes that updates in the reporting format and fields caused this issue. U.S. Treasury Reporting staff has confirmed that when new fields are added or changed to reports within the reporting portal, these changes override prior submitted reports. In response to a similar finding for the fiscal year 2021 ERA single audit where original submission data was overridden by formatting updates, DHS began saving screen shots of reported data within Treasury?s reporting portal. This practice began in June 2022 and will continue for the duration of the ERA program, through ERA2 closeout reporting. This will ensure that even if Treasury reporting portal functionality changes in the future, there is clear supporting documentation of the information submitted. The District?s corrective action is described in the Management?s Corrective Action Plan included as Appendix B of the attached Management?s Section.
Finding Number: 2022-008 Prior Year Finding Number: 2021-010 Compliance Requirement: Reporting Program: U.S. Department of Education COVID-19 ? Education Stabilization Fund Higher Education Emergency Relief Fund (HEERF) Student Aid Portion ALN #: 84.425E Award #: P425E201913 - 20B Award Year: 04/24/2020 ? 06/30/2023 COVID-19 ? Education Stabilization Fund HEERF Institutional Aid Portion ALN: 84.425F Award #: P425F202580 - 20B Award Year: 05/07/2020 ? 06/30/2023 COVID-19 ? Education Stabilization Fund HEERF Historically Black Colleges and Universities (HBCUs) ALN: 84.425J Award #: P425J200098 - 20C Award Year: 05/01/2020 ? 06/30/2023 Government Department/Agency: University of the District of Columbia Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. There are three components to reporting for HEERF: 1) public reporting on the (a)(1) Student Aid Portion; 2) public reporting on the (a)(1) Institutional Portion (a)(2) and (a)(3) subprograms (Quarterly Reporting Form), as applicable; and 3) the annual report. The CARES Act 18004(e) and the Coronavirus Response and Relief Supplemental Appropriations Act (CRRSAA) 314(e) requires an institution receiving funds under HEERF I and HEERF II to submit a report to the secretary, at such time in such a manner as the secretary may require. While ARP does not explicitly identify procedures by which institutions must report on their uses of HEERF grant funds, Education Department exercises this reporting authority under 2 CFR section 200.328 and 2 CFR section 200.329. Condition ? During our testing of the quarterly public reporting requirements for HEERF Student Aid Portion and HEERF Institutional Portion, we noted the following: ? For three (3) out of six (6) reports, University of the District of Columbia (UDC) was not able to provide evidence of the timely posting of the quarterly public reports to the UDC website because the webmaster?s web posting audit log, which expires after 60 days, had not been retained by UDC. ? For three (3) out of six (6) reports, UDC was not able to provide evidence that the quarterly public reports were reviewed prior to posting to the UDC website because the evidence had not been retained by UDC. UDC implemented its corrective action plan on June 30, 2022, and the exceptions identified above relate to reporting transactions made prior to the above-mentioned implementation date. We also examined one report made post the above-mentioned implementation date and we noted that UDC had kept all evidence of review of the report and the evidence of the report being published in the UDC website. Questioned Costs ? None. Context ? This is a condition identified per review of UDC?s compliance with specified reporting requirements related to the program using a statistically valid sample. Effect ? Without adequate controls in place to ensure that reports are posted timely and proof that the reports were reviewed leads to noncompliance of the reporting requirements under the program. Cause ? UDC does not have adequate controls in place to ensure that documents are maintained related to the review and the timely posting of reports to the UDC website. Recommendation ? We recommend for UDC to continue to maintain documentation of the timely submission of reports and proof of review of reports as required to ensure compliance with reporting requirements. Related Noncompliance ? Noncompliance. Views of Responsible Officials and Planned Corrective Actions ? UDC OCFO agrees with the conditions and recommendations of this finding. As noted in the condition above, UDC implemented corrective action to remediate the conditions and recommendations reported in the prior year when findings were issued. The District?s corrective action is described in the Management?s Corrective Action Plan included as Appendix B of the attached Management?s Section.
Finding Number: 2022-008 Prior Year Finding Number: 2021-010 Compliance Requirement: Reporting Program: U.S. Department of Education COVID-19 ? Education Stabilization Fund Higher Education Emergency Relief Fund (HEERF) Student Aid Portion ALN #: 84.425E Award #: P425E201913 - 20B Award Year: 04/24/2020 ? 06/30/2023 COVID-19 ? Education Stabilization Fund HEERF Institutional Aid Portion ALN: 84.425F Award #: P425F202580 - 20B Award Year: 05/07/2020 ? 06/30/2023 COVID-19 ? Education Stabilization Fund HEERF Historically Black Colleges and Universities (HBCUs) ALN: 84.425J Award #: P425J200098 - 20C Award Year: 05/01/2020 ? 06/30/2023 Government Department/Agency: University of the District of Columbia Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. There are three components to reporting for HEERF: 1) public reporting on the (a)(1) Student Aid Portion; 2) public reporting on the (a)(1) Institutional Portion (a)(2) and (a)(3) subprograms (Quarterly Reporting Form), as applicable; and 3) the annual report. The CARES Act 18004(e) and the Coronavirus Response and Relief Supplemental Appropriations Act (CRRSAA) 314(e) requires an institution receiving funds under HEERF I and HEERF II to submit a report to the secretary, at such time in such a manner as the secretary may require. While ARP does not explicitly identify procedures by which institutions must report on their uses of HEERF grant funds, Education Department exercises this reporting authority under 2 CFR section 200.328 and 2 CFR section 200.329. Condition ? During our testing of the quarterly public reporting requirements for HEERF Student Aid Portion and HEERF Institutional Portion, we noted the following: ? For three (3) out of six (6) reports, University of the District of Columbia (UDC) was not able to provide evidence of the timely posting of the quarterly public reports to the UDC website because the webmaster?s web posting audit log, which expires after 60 days, had not been retained by UDC. ? For three (3) out of six (6) reports, UDC was not able to provide evidence that the quarterly public reports were reviewed prior to posting to the UDC website because the evidence had not been retained by UDC. UDC implemented its corrective action plan on June 30, 2022, and the exceptions identified above relate to reporting transactions made prior to the above-mentioned implementation date. We also examined one report made post the above-mentioned implementation date and we noted that UDC had kept all evidence of review of the report and the evidence of the report being published in the UDC website. Questioned Costs ? None. Context ? This is a condition identified per review of UDC?s compliance with specified reporting requirements related to the program using a statistically valid sample. Effect ? Without adequate controls in place to ensure that reports are posted timely and proof that the reports were reviewed leads to noncompliance of the reporting requirements under the program. Cause ? UDC does not have adequate controls in place to ensure that documents are maintained related to the review and the timely posting of reports to the UDC website. Recommendation ? We recommend for UDC to continue to maintain documentation of the timely submission of reports and proof of review of reports as required to ensure compliance with reporting requirements. Related Noncompliance ? Noncompliance. Views of Responsible Officials and Planned Corrective Actions ? UDC OCFO agrees with the conditions and recommendations of this finding. As noted in the condition above, UDC implemented corrective action to remediate the conditions and recommendations reported in the prior year when findings were issued. The District?s corrective action is described in the Management?s Corrective Action Plan included as Appendix B of the attached Management?s Section.
Finding Number: 2022-008 Prior Year Finding Number: 2021-010 Compliance Requirement: Reporting Program: U.S. Department of Education COVID-19 ? Education Stabilization Fund Higher Education Emergency Relief Fund (HEERF) Student Aid Portion ALN #: 84.425E Award #: P425E201913 - 20B Award Year: 04/24/2020 ? 06/30/2023 COVID-19 ? Education Stabilization Fund HEERF Institutional Aid Portion ALN: 84.425F Award #: P425F202580 - 20B Award Year: 05/07/2020 ? 06/30/2023 COVID-19 ? Education Stabilization Fund HEERF Historically Black Colleges and Universities (HBCUs) ALN: 84.425J Award #: P425J200098 - 20C Award Year: 05/01/2020 ? 06/30/2023 Government Department/Agency: University of the District of Columbia Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. There are three components to reporting for HEERF: 1) public reporting on the (a)(1) Student Aid Portion; 2) public reporting on the (a)(1) Institutional Portion (a)(2) and (a)(3) subprograms (Quarterly Reporting Form), as applicable; and 3) the annual report. The CARES Act 18004(e) and the Coronavirus Response and Relief Supplemental Appropriations Act (CRRSAA) 314(e) requires an institution receiving funds under HEERF I and HEERF II to submit a report to the secretary, at such time in such a manner as the secretary may require. While ARP does not explicitly identify procedures by which institutions must report on their uses of HEERF grant funds, Education Department exercises this reporting authority under 2 CFR section 200.328 and 2 CFR section 200.329. Condition ? During our testing of the quarterly public reporting requirements for HEERF Student Aid Portion and HEERF Institutional Portion, we noted the following: ? For three (3) out of six (6) reports, University of the District of Columbia (UDC) was not able to provide evidence of the timely posting of the quarterly public reports to the UDC website because the webmaster?s web posting audit log, which expires after 60 days, had not been retained by UDC. ? For three (3) out of six (6) reports, UDC was not able to provide evidence that the quarterly public reports were reviewed prior to posting to the UDC website because the evidence had not been retained by UDC. UDC implemented its corrective action plan on June 30, 2022, and the exceptions identified above relate to reporting transactions made prior to the above-mentioned implementation date. We also examined one report made post the above-mentioned implementation date and we noted that UDC had kept all evidence of review of the report and the evidence of the report being published in the UDC website. Questioned Costs ? None. Context ? This is a condition identified per review of UDC?s compliance with specified reporting requirements related to the program using a statistically valid sample. Effect ? Without adequate controls in place to ensure that reports are posted timely and proof that the reports were reviewed leads to noncompliance of the reporting requirements under the program. Cause ? UDC does not have adequate controls in place to ensure that documents are maintained related to the review and the timely posting of reports to the UDC website. Recommendation ? We recommend for UDC to continue to maintain documentation of the timely submission of reports and proof of review of reports as required to ensure compliance with reporting requirements. Related Noncompliance ? Noncompliance. Views of Responsible Officials and Planned Corrective Actions ? UDC OCFO agrees with the conditions and recommendations of this finding. As noted in the condition above, UDC implemented corrective action to remediate the conditions and recommendations reported in the prior year when findings were issued. The District?s corrective action is described in the Management?s Corrective Action Plan included as Appendix B of the attached Management?s Section.
Criteria or Specific Requirement: 2 CFR 200.328 and 31 CFR section 35.4(c) requires submission of quarterly and annual project and expenditure reports which are due to the Department of Treasury 30 days after the end of each quarter and April 30th, of the year proceeding, respectively. The project and expenditure report contains specific instructions on how to complete the report. Within the project and expenditure report, ‘Expenditure Categories’ is a critical component to be completed by reporting “obligations” and “expenditures” on each project. As defined in the report, “obligation” is an order placed (such as a contract) and similar transactions that require payment; “expenditure” is when the service has been rendered or the good has been delivered to the entity, and payment is due. Condition: Upon review and testing of the quarterly reports as submitted to the Department of Treasury, it was noted that amounts reported as expenditures for certain projects included amounts that were obligated but not yet incurred (service was not yet rendered or the good was not yet received) until a subsequent quarter. The expenditures as reported were allowable expenditures, but the timing of the expenditures was reported in the incorrect period. In addition, upon testing the expenditures as reported in the unadjusted schedule of expenditures of federal awards (the “schedule”), it was noted that $549,431 was improperly included as expenditures belonging to the fiscal year ended September 30, 2022. The expenditures identified were prematurely recorded in the general ledger since the equipment was not received until after year-end. The City’s schedule of expenditures of federal awards for the fiscal year ended September 30, 2022 required a correction to remove those amounts from the schedule and to add those amounts to the subsequent fiscal year’s schedule. Cause: The Grants Administrator’s lack of understanding of the proper manner in which the obligations and expenditures are required to be reported in the quarterly reports resulted in expenditure amounts being reported in the incorrect quarters. The City’s year-end procedures did not identify certain necessary adjustments in a timely manner in order to remove capital outlay expenditures that were incorrectly recorded during the fiscal year ended September 30, 2022 and were incorrectly included in the unadjusted schedule of expenditures of federal awards. The Grants Administrator utilized the amounts recorded as expenditures in the accounting system to prepare the quarterly reports. Expenditures should be recorded in the City’s general ledger utilizing the date services are rendered and/or goods are received. Proper monthly review of the expenditure accounts should have led to identifying expenditures that were recorded but not yet incurred. Effect or Potential Effect: The two conditions listed above resulted in differences between expenditure amounts as correctly adjusted and reported in the schedule of expenditures of federal awards, versus expenditure amounts as reported and submitted to the Department of Treasury in the quarterly reports. Future reports may be incorrectly completed if obligation amounts and expenditure amounts are not following the criteria to properly enter amounts in the quarterly reports. Questioned Costs: None. Context: During compliance testing of the reporting compliance requirement, it was noted that the total expenditures included in the schedule of expenditures of federal awards for the fiscal year ended September 30, 2022 did not agree to the total expenditures reported in the quarterly expenditure reports as submitted to the Department of Treasury for the same period. During testing of disbursements as included in the schedule of expenditures of federal awards for the major Federal program, and during internal control and compliance testing, from a total of forty-five disbursements it was noted there were four disbursements, amounting to a total of $549,431, recorded within accounts payable as capital outlay expenditures which were improperly recorded in the fiscal year ended September 30, 2022 and improperly included in the schedule of expenditures of federal awards. As evidenced by the invoice date and ship date within the invoices, the equipment was not shipped, and the equipment was not received by the City, until after year-end. The expenditures should be recorded and reported in the fiscal year ended September 30, 2023. Adjustments were made accordingly for proper recording, reporting, and presentation in the financial statements and schedule of expenditures of federal awards. Recommendation: Management should ensure year-end closing procedures are completed in a timely manner and are sufficient to assure accounts and financial statements are prepared in accordance with GAAP. If properly prepared and recorded, the subledgers for expenditures by federal awards will be generated with accurate expenditure amounts for the fiscal year. Management should assess the risk associated with this condition and identify any additional processes that can be incorporated into their existing controls to improve the deficiency; such as, minimizing the likelihood of year-end material audit adjustments through review of transactions and balances for general propriety and accuracy within one month after year-end. Follow-up and inquiries can be made timely for any transactions for which proper recording is unclear to management, if any. The Grants Administrator should maintain an up-to-date listing of expenditures by award (for all federal, state, and local awards) and should communicate with the Finance Department on a monthly basis to review the listing and determine the proper period in which the expenditures should be recorded and presented. The Grants Administrator and Finance Department should prepare a reconciliation of the expenditures as reported in the schedule of expenditures of federal awards for the major Federal program for the fiscal year ended September 30, 2022, as well as expenditures incurred from October 1, 2022 through today, and compare to the expenditures as reported in all quarterly reports through September 30, 2023. An analysis should be completed to determine the differences between the expenditures incurred by quarter versus expenditures as reported by quarter, and to determine the differences in total between expenditures incurred and expenditures reported in the quarterly and annual project and expenditure reports. The Grants Administrator should then review the Department of Treasury’s Project and Expenditure Report User Guide of State and Local Fiscal Recovery Funds, and/or contact the grantor, to determine if reports as previously submitted should be corrected for the timing difference, or to determine what the correct course of action should be.
Finding Number: 2022-005 Prior Year Finding Number: 2021-005 Compliance Requirement: Reporting Program: U.S. Department of the Treasury COVID-19 ? Emergency Rental Assistance (ERA) Program ALN: 21.023 Award #: N/A Award Year: 12/27/2020 ? 09/30/2025 Government Department/Agency: Department of Human Services Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. Per 2 CFR Section 200.328 Financial Reporting: ?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.? The 2022 Compliance Supplement outlines the Special Reports required under the Emergency Rental Assistances program, and the key data elements, and the submission requirements. The Reporting Guidance is located on the Treasury?s website for the ERA program. Monthly Special Reports were required to be submitted on a monthly basis, beginning in April 2021 for ERA1 and June 2021 for ERA2, generally by the 15th of the following month unless otherwise specified within the Reporting Guidance. As outlined in the 2022 Compliance Supplement, the key data elements for the monthly reports included (1) the total number of participant households that received ERA assistance of any kind and (2) the total amount of ERA funds expended by the ERA grantee to or for participating households on behalf of eligible households. The program also requires ERA recipients to certify the reports submitted. As outlined in the 2022 Compliance Supplement, the key data elements for the quarterly reports included (1) the cumulative amount obligated by the grantee; and (2) the cumulative amount expended by the grantee. The program also requires ERA recipients to certify the reports submitted. Condition ? We noted the following for one of nine quarterly and monthly reports tested: ? For one quarterly report (the ERA1 Quarter 1 2022 Report), the key data elements (1) the cumulative amount obligated by the grantee; and (2) the cumulative amount expended by the grantee were not included in the quarterly report. Questioned Costs ? None. Context ? This is a condition identified per review of the Department of Human Services? compliance with specified requirements using a statistically valid sample. Effect ? Without proper internal controls and policies and procedures in place, the required financial and special reports are either not submitted or not submitted with accurate information. Cause ? Per discussion with management, it was noted that at the time the report was submitted they didn?t have access to key data elements to be input into the quarterly report. However, BDO could not verify that this was the case as there was no documentation around the same. Management did not establish controls to make sure that all the required information as noted in the compliance supplement was submitted to the Treasury Department. Recommendation ? We recommend that the Department of Human Services fully implement its current corrective action plan to deploy policies and procedures and controls to ensure reports are submitted with accurate information. Related Noncompliance ? Noncompliance. Views of Responsible Officials and Planned Corrective Actions ? The Department of Human Services (DHS) concurs with the finding that we could not substantiate that cumulative expenditure and obligation data were included in the ERA1 Quarter 1 2022 Report, which was submitted on April 15, 2022 in the U.S. Department of the Treasury?s COVID-19 Relief Hub reporting portal. DHS believes that updates in the reporting format and fields caused this issue. U.S. Treasury Reporting staff has confirmed that when new fields are added or changed to reports within the reporting portal, these changes override prior submitted reports. In response to a similar finding for the fiscal year 2021 ERA single audit where original submission data was overridden by formatting updates, DHS began saving screen shots of reported data within Treasury?s reporting portal. This practice began in June 2022 and will continue for the duration of the ERA program, through ERA2 closeout reporting. This will ensure that even if Treasury reporting portal functionality changes in the future, there is clear supporting documentation of the information submitted. The District?s corrective action is described in the Management?s Corrective Action Plan included as Appendix B of the attached Management?s Section.
Finding Number: 2022-008 Prior Year Finding Number: 2021-010 Compliance Requirement: Reporting Program: U.S. Department of Education COVID-19 ? Education Stabilization Fund Higher Education Emergency Relief Fund (HEERF) Student Aid Portion ALN #: 84.425E Award #: P425E201913 - 20B Award Year: 04/24/2020 ? 06/30/2023 COVID-19 ? Education Stabilization Fund HEERF Institutional Aid Portion ALN: 84.425F Award #: P425F202580 - 20B Award Year: 05/07/2020 ? 06/30/2023 COVID-19 ? Education Stabilization Fund HEERF Historically Black Colleges and Universities (HBCUs) ALN: 84.425J Award #: P425J200098 - 20C Award Year: 05/01/2020 ? 06/30/2023 Government Department/Agency: University of the District of Columbia Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. There are three components to reporting for HEERF: 1) public reporting on the (a)(1) Student Aid Portion; 2) public reporting on the (a)(1) Institutional Portion (a)(2) and (a)(3) subprograms (Quarterly Reporting Form), as applicable; and 3) the annual report. The CARES Act 18004(e) and the Coronavirus Response and Relief Supplemental Appropriations Act (CRRSAA) 314(e) requires an institution receiving funds under HEERF I and HEERF II to submit a report to the secretary, at such time in such a manner as the secretary may require. While ARP does not explicitly identify procedures by which institutions must report on their uses of HEERF grant funds, Education Department exercises this reporting authority under 2 CFR section 200.328 and 2 CFR section 200.329. Condition ? During our testing of the quarterly public reporting requirements for HEERF Student Aid Portion and HEERF Institutional Portion, we noted the following: ? For three (3) out of six (6) reports, University of the District of Columbia (UDC) was not able to provide evidence of the timely posting of the quarterly public reports to the UDC website because the webmaster?s web posting audit log, which expires after 60 days, had not been retained by UDC. ? For three (3) out of six (6) reports, UDC was not able to provide evidence that the quarterly public reports were reviewed prior to posting to the UDC website because the evidence had not been retained by UDC. UDC implemented its corrective action plan on June 30, 2022, and the exceptions identified above relate to reporting transactions made prior to the above-mentioned implementation date. We also examined one report made post the above-mentioned implementation date and we noted that UDC had kept all evidence of review of the report and the evidence of the report being published in the UDC website. Questioned Costs ? None. Context ? This is a condition identified per review of UDC?s compliance with specified reporting requirements related to the program using a statistically valid sample. Effect ? Without adequate controls in place to ensure that reports are posted timely and proof that the reports were reviewed leads to noncompliance of the reporting requirements under the program. Cause ? UDC does not have adequate controls in place to ensure that documents are maintained related to the review and the timely posting of reports to the UDC website. Recommendation ? We recommend for UDC to continue to maintain documentation of the timely submission of reports and proof of review of reports as required to ensure compliance with reporting requirements. Related Noncompliance ? Noncompliance. Views of Responsible Officials and Planned Corrective Actions ? UDC OCFO agrees with the conditions and recommendations of this finding. As noted in the condition above, UDC implemented corrective action to remediate the conditions and recommendations reported in the prior year when findings were issued. The District?s corrective action is described in the Management?s Corrective Action Plan included as Appendix B of the attached Management?s Section.
Finding Number: 2022-008 Prior Year Finding Number: 2021-010 Compliance Requirement: Reporting Program: U.S. Department of Education COVID-19 ? Education Stabilization Fund Higher Education Emergency Relief Fund (HEERF) Student Aid Portion ALN #: 84.425E Award #: P425E201913 - 20B Award Year: 04/24/2020 ? 06/30/2023 COVID-19 ? Education Stabilization Fund HEERF Institutional Aid Portion ALN: 84.425F Award #: P425F202580 - 20B Award Year: 05/07/2020 ? 06/30/2023 COVID-19 ? Education Stabilization Fund HEERF Historically Black Colleges and Universities (HBCUs) ALN: 84.425J Award #: P425J200098 - 20C Award Year: 05/01/2020 ? 06/30/2023 Government Department/Agency: University of the District of Columbia Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. There are three components to reporting for HEERF: 1) public reporting on the (a)(1) Student Aid Portion; 2) public reporting on the (a)(1) Institutional Portion (a)(2) and (a)(3) subprograms (Quarterly Reporting Form), as applicable; and 3) the annual report. The CARES Act 18004(e) and the Coronavirus Response and Relief Supplemental Appropriations Act (CRRSAA) 314(e) requires an institution receiving funds under HEERF I and HEERF II to submit a report to the secretary, at such time in such a manner as the secretary may require. While ARP does not explicitly identify procedures by which institutions must report on their uses of HEERF grant funds, Education Department exercises this reporting authority under 2 CFR section 200.328 and 2 CFR section 200.329. Condition ? During our testing of the quarterly public reporting requirements for HEERF Student Aid Portion and HEERF Institutional Portion, we noted the following: ? For three (3) out of six (6) reports, University of the District of Columbia (UDC) was not able to provide evidence of the timely posting of the quarterly public reports to the UDC website because the webmaster?s web posting audit log, which expires after 60 days, had not been retained by UDC. ? For three (3) out of six (6) reports, UDC was not able to provide evidence that the quarterly public reports were reviewed prior to posting to the UDC website because the evidence had not been retained by UDC. UDC implemented its corrective action plan on June 30, 2022, and the exceptions identified above relate to reporting transactions made prior to the above-mentioned implementation date. We also examined one report made post the above-mentioned implementation date and we noted that UDC had kept all evidence of review of the report and the evidence of the report being published in the UDC website. Questioned Costs ? None. Context ? This is a condition identified per review of UDC?s compliance with specified reporting requirements related to the program using a statistically valid sample. Effect ? Without adequate controls in place to ensure that reports are posted timely and proof that the reports were reviewed leads to noncompliance of the reporting requirements under the program. Cause ? UDC does not have adequate controls in place to ensure that documents are maintained related to the review and the timely posting of reports to the UDC website. Recommendation ? We recommend for UDC to continue to maintain documentation of the timely submission of reports and proof of review of reports as required to ensure compliance with reporting requirements. Related Noncompliance ? Noncompliance. Views of Responsible Officials and Planned Corrective Actions ? UDC OCFO agrees with the conditions and recommendations of this finding. As noted in the condition above, UDC implemented corrective action to remediate the conditions and recommendations reported in the prior year when findings were issued. The District?s corrective action is described in the Management?s Corrective Action Plan included as Appendix B of the attached Management?s Section.
Finding Number: 2022-008 Prior Year Finding Number: 2021-010 Compliance Requirement: Reporting Program: U.S. Department of Education COVID-19 ? Education Stabilization Fund Higher Education Emergency Relief Fund (HEERF) Student Aid Portion ALN #: 84.425E Award #: P425E201913 - 20B Award Year: 04/24/2020 ? 06/30/2023 COVID-19 ? Education Stabilization Fund HEERF Institutional Aid Portion ALN: 84.425F Award #: P425F202580 - 20B Award Year: 05/07/2020 ? 06/30/2023 COVID-19 ? Education Stabilization Fund HEERF Historically Black Colleges and Universities (HBCUs) ALN: 84.425J Award #: P425J200098 - 20C Award Year: 05/01/2020 ? 06/30/2023 Government Department/Agency: University of the District of Columbia Criteria - The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statues, regulations, and the terms and conditions of the Federal award. There are three components to reporting for HEERF: 1) public reporting on the (a)(1) Student Aid Portion; 2) public reporting on the (a)(1) Institutional Portion (a)(2) and (a)(3) subprograms (Quarterly Reporting Form), as applicable; and 3) the annual report. The CARES Act 18004(e) and the Coronavirus Response and Relief Supplemental Appropriations Act (CRRSAA) 314(e) requires an institution receiving funds under HEERF I and HEERF II to submit a report to the secretary, at such time in such a manner as the secretary may require. While ARP does not explicitly identify procedures by which institutions must report on their uses of HEERF grant funds, Education Department exercises this reporting authority under 2 CFR section 200.328 and 2 CFR section 200.329. Condition ? During our testing of the quarterly public reporting requirements for HEERF Student Aid Portion and HEERF Institutional Portion, we noted the following: ? For three (3) out of six (6) reports, University of the District of Columbia (UDC) was not able to provide evidence of the timely posting of the quarterly public reports to the UDC website because the webmaster?s web posting audit log, which expires after 60 days, had not been retained by UDC. ? For three (3) out of six (6) reports, UDC was not able to provide evidence that the quarterly public reports were reviewed prior to posting to the UDC website because the evidence had not been retained by UDC. UDC implemented its corrective action plan on June 30, 2022, and the exceptions identified above relate to reporting transactions made prior to the above-mentioned implementation date. We also examined one report made post the above-mentioned implementation date and we noted that UDC had kept all evidence of review of the report and the evidence of the report being published in the UDC website. Questioned Costs ? None. Context ? This is a condition identified per review of UDC?s compliance with specified reporting requirements related to the program using a statistically valid sample. Effect ? Without adequate controls in place to ensure that reports are posted timely and proof that the reports were reviewed leads to noncompliance of the reporting requirements under the program. Cause ? UDC does not have adequate controls in place to ensure that documents are maintained related to the review and the timely posting of reports to the UDC website. Recommendation ? We recommend for UDC to continue to maintain documentation of the timely submission of reports and proof of review of reports as required to ensure compliance with reporting requirements. Related Noncompliance ? Noncompliance. Views of Responsible Officials and Planned Corrective Actions ? UDC OCFO agrees with the conditions and recommendations of this finding. As noted in the condition above, UDC implemented corrective action to remediate the conditions and recommendations reported in the prior year when findings were issued. The District?s corrective action is described in the Management?s Corrective Action Plan included as Appendix B of the attached Management?s Section.
REPORTING, I DID NOT NOTE ANY ANNUAL REPORTS FILED FOR THE ARP GRANT. PER 2 CFR, SECTION 200.328 AND 200.329, THE NVT MUST COMPLY WITH ANY FINANCIAL AND PROGRAMMATIC REPORTING REQUIREMENTS. NO QUESTIONED COSTS. MANAGEMENT DID NOT HAVE CONTROLS IN PLACE TO ENSURE THAT ALL GRANT REPORTS WERE FILED TIMELY. I WAS NOT ABLE TO REVIEW THE ANNUAL REQUIRED REPORT FOR THE ARP GRANT. THE NVT IS DELINQUENT IN ITS REPORTING FOR THIS GRANT. MANAGEMENT NEEDS TO ENSURE THAT ALL GRANT REPORTS ARE DONE AND SUBMITTED TIMELY AND RETAINED WITHIN THE GRANT FILES OF THE NVT. THIS FINDING WAS NOTED AS FINDING 2021-002.
OTHER, THE NVT DID NOT SUBMIT THE REPORTING PACKAGE TIMELY IN ACCORDANCE WITH THE UNIFORM GUIDANCE REQUIREMENT OF SUBMITTING THE AUDIT WITHIN THE EARLIER OF 30 DAYS AFTER RECEIPT OF THE AUDIT REPORT, OR NINE MONTHS AFTER THE END OF THE AUDIT PERIOD. PER 2 CFR, SECTION 200.328 AND 200.329, THE COUNCIL MUST COMPLY WITH ANY FINANCIAL AND PROGRAMATTIC REPORTING REQUIREMENTS. PER SECTION 200.501, THE NVT MUST HAEV AN AUDIT PERFORMED AND SUBMITTED WITHIN 9 MONTHS OF YEAR END. NO QUESTIONED COSTS. MANAGEMENT DID NOT ENSURE THAT THE AUDITS WERE PERFORMED TIMELY. LATE REPORTING COULD JEOPARDIZE GRANT FUNDING. I RECOMMEND THAT THE COUNCIL ENSURE TIMELY AUDITS FOR FUTURE AUDITS. THIS FINDING WAS NOTED AS FINDING 2020-003 AND 2021-003.
2022-002 ? Internal Control over Compliance and Compliance with Reporting (Preparation of Schedule of Expenditures of Federal Awards) Information on the Federal Program: U.S. Small Business Administration Assistance Listing Number: 59.008 Assistance Listing Name: Economic Injury Disaster Loan Criteria ? The Code of Federal Regulation (CFR) Section ?200.510(b) states in part: ?The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee?s financial statements which must include the total Federal awards expended as determined in accordance with CFR Section ?200.502 Basis for determining Federal awards expended.? The schedule must provide total Federal awards expended for each individual Federal program. In accordance with ?200.302 Financial Management, a 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. 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. (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 Financial Reporting and ?200.329 Monitoring and Reporting Program Performance. (3) Records that identify adequately the source and application of funds for federally funded activities. (4) Effective control over, and accountability for, all funds, property, and other assets. Condition ? During the year ended August 31, 2022, the Center received additional EIDL funds. Prior to the COVID-19 pandemic, the Center did not receive and spend federal dollars in excess of the limit that required a single audit to be performed. Due to the lack of expertise surrounding the preparation of the SEFA and the non-recurring nature of the COVID-19 pandemic relief funding provided by the federal government, the Center was uncertain of some of the specifics on the SEFA statement. Cause ? The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not operate as designed due to new funding received in the current year. Effect ? Management was unaware that the EIDL was a federal award requiring a single audit prior to discussion with the auditors. Questioned Costs: There are no questioned costs related to the items described above. Context: The conditions outlined above are based on our testing of the Center?s major program and our overall testing of the accuracy of the SEFA. The nature of this findings is detailed in the condition section above. Repeat Finding: This is not a repeat finding. Recommendation ? We recommend management attend Federal award trainings and information to ensure the documented policies and procedures can be performed as described. This will ensure the Federal funds are reported accurately on the SEFA and that programs are reported under the correct assistance listing number. Views of Responsible Officials ? Beck Center for the Arts concurs with the finding and the recommendation. The Center will continue to review federal award guidance and requirements to ensure compliance with current and future federal awards. The Center?s corrective action plan is described in Managements Corrective Action Plan included at page 42 of this reporting package.
2022-002 ? Internal Control over Compliance and Compliance with Reporting (Preparation of Schedule of Expenditures of Federal Awards) Information on the Federal Program: U.S. Small Business Administration Assistance Listing Number: 59.008 Assistance Listing Name: Economic Injury Disaster Loan Criteria ? The Code of Federal Regulation (CFR) Section ?200.510(b) states in part: ?The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee?s financial statements which must include the total Federal awards expended as determined in accordance with CFR Section ?200.502 Basis for determining Federal awards expended.? The schedule must provide total Federal awards expended for each individual Federal program. In accordance with ?200.302 Financial Management, a 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. 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. (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 Financial Reporting and ?200.329 Monitoring and Reporting Program Performance. (3) Records that identify adequately the source and application of funds for federally funded activities. (4) Effective control over, and accountability for, all funds, property, and other assets. Condition ? During the year ended August 31, 2022, the Center received additional EIDL funds. Prior to the COVID-19 pandemic, the Center did not receive and spend federal dollars in excess of the limit that required a single audit to be performed. Due to the lack of expertise surrounding the preparation of the SEFA and the non-recurring nature of the COVID-19 pandemic relief funding provided by the federal government, the Center was uncertain of some of the specifics on the SEFA statement. Cause ? The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not operate as designed due to new funding received in the current year. Effect ? Management was unaware that the EIDL was a federal award requiring a single audit prior to discussion with the auditors. Questioned Costs: There are no questioned costs related to the items described above. Context: The conditions outlined above are based on our testing of the Center?s major program and our overall testing of the accuracy of the SEFA. The nature of this findings is detailed in the condition section above. Repeat Finding: This is not a repeat finding. Recommendation ? We recommend management attend Federal award trainings and information to ensure the documented policies and procedures can be performed as described. This will ensure the Federal funds are reported accurately on the SEFA and that programs are reported under the correct assistance listing number. Views of Responsible Officials ? Beck Center for the Arts concurs with the finding and the recommendation. The Center will continue to review federal award guidance and requirements to ensure compliance with current and future federal awards. The Center?s corrective action plan is described in Managements Corrective Action Plan included at page 42 of this reporting package.
Assistance listing program: Education Stabilization Fund - Higher Education Emergency Relief Fund (HEERF) Assistance Listing Number: 84.425E / 84.425F Award identification number: P425F204999 / P425E205418 Award period: September 29, 2020 to June 30, 2023 and July 23, 2020 to May 23, 2022 Federal agency: U.S. Department of Education Pass-through entity: N/A Category: Internal Control / Compliance Finding Type: Material Weakness Compliance requirement: Reporting Condition and context For testing internal controls and compliance with reporting requirements applicable to the HEERF programs, we inquired the Institution about the internal controls and procedures for determining the criteria and methodology used in compiling and reporting the data to be included in the annual and quarterly special reports. We requested a copy of the annual report for the calendar year 2021 and the quarterly reports for the quarter ended on December 31, 2021 related to the institutional aid portion and the student aid portion. As part of our procedures, we tested the method of distribution of grants to ascertain consistency with the method that was actually employed by the Institution to distribute emergency financial aid grants to students. After our examination and tests performed, we noted the following: a) The methodology used to compile the information in the annual report was based on the funds drawdowns which were based on disbursements rather than the actual program expenditures for the Institutional aid funds in accordance with GAAP. b) After examination of the institutional aid portion expenditures amounts reported in the annual special report for the calendar year ended December 31, 2021 to the support provided by the Institution, we noted that the total of institutional annual expenditures was understated by $7,160. c) From the sample of enrollment statistical data selected for verification to the source documents and/or information we noted several differences and were unable to identify some of the information in the source documents in nineteen (19) out of a sample of thirty (30) statistical data lines examined in the annual special report. The exceptions were as follows: d) After examination of the quarterly special report of the student aid portion for the quarter ended December 31, 2021, we noted a difference in the Item #5: ?The total number of students who have received an Emergency Financial Aid Grant to students under the CARES (a)(1) subprogram and the CRRSAA and ARP (a)(1) subprograms?. The total of students that received assistance aid reported was 443; however, the number per the student aid payroll reports examined was 460. Additionally, no support was available to determine if the Institution was timely and accurate in publicly posting the quarterly Student Aid Portion Report selected for testing. e) In one out of a sample of forty (40) disbursements of financial aid to students (2.5%) we noted that the payment made did not agree with the Institution's fund distribution plan to prioritize students with financial need. The aid in excess disbursed to that student was $200. Criteria 2 CFR 200.302 (a) establishes that 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. 2 CFR 200.302 (b) (2) to (4) establish that 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. Records that identify adequately the source and application of funds for federally-funded 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. Effective control over, and accountability for, all funds, property, and other assets. 2 CFR 200.303 (a) to (d) establish that the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal awards that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. 2 CFR 200.334 establishes that financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. Cause The cause of the deficiencies noted were due to the following situations: a) The source of information provided by the Institution related to the financial information was the G5 report. Such information is on a cash basis; therefore, financial information was not reported on an accrual basis of accounting which is the basis of accounting followed by the Institution. Additionally, the Institution did not appropriately design and maintained documentation and/or analysis performed to prepare and complete the financial information required to be reported in the quarterly and annual reports. b) Lack of recordkeeping controls and procedures to document and maintain the source of information used for the financial and statistical data required in the annual and quarterly special reports. c) The Institution used the student EFC per the ISIR/SAR available at the time of the distribution, even though, an ISIR with a valid EFC was not available since the student FAFSA application was selected for verification by USDE. After the Institution completed the verification the student EFC increased from 0 to 3676. Effect Noncompliance with the reporting requirements could lead to significant administrative actions by the grantor, including a reduction in the amounts to be awarded. It could also be interpreted as a failure to achieve the programs objectives. Questioned costs Likely questioned costs are less than $25,000. Identification as a Repeat Finding No repeated finding. Recommendation We recommend the Institution to establish adequate procedures and controls to ensure that financial and statistical data information is properly supported and detailed to allow adequate audit trail of the information. Establish adequate supervisory procedures to identify, in a reasonable period of time, deficiencies or possible deficiencies in the procedures or guidance established by management to ascertain that the Institution reports the information as required by grantors, and that accurate and adequate support is properly maintained. Views of Responsible Officials Refer to the Institutional comments included in the Corrective Action Plan.
Assistance listing program: Education Stabilization Fund - Higher Education Emergency Relief Fund (HEERF) Assistance Listing Number: 84.425E / 84.425F Award identification number: P425F204999 / P425E205418 Award period: September 29, 2020 to June 30, 2023 and July 23, 2020 to May 23, 2022 Federal agency: U.S. Department of Education Pass-through entity: N/A Category: Internal Control / Compliance Finding Type: Material Weakness Compliance requirement: Reporting Condition and context For testing internal controls and compliance with reporting requirements applicable to the HEERF programs, we inquired the Institution about the internal controls and procedures for determining the criteria and methodology used in compiling and reporting the data to be included in the annual and quarterly special reports. We requested a copy of the annual report for the calendar year 2021 and the quarterly reports for the quarter ended on December 31, 2021 related to the institutional aid portion and the student aid portion. As part of our procedures, we tested the method of distribution of grants to ascertain consistency with the method that was actually employed by the Institution to distribute emergency financial aid grants to students. After our examination and tests performed, we noted the following: a) The methodology used to compile the information in the annual report was based on the funds drawdowns which were based on disbursements rather than the actual program expenditures for the Institutional aid funds in accordance with GAAP. b) After examination of the institutional aid portion expenditures amounts reported in the annual special report for the calendar year ended December 31, 2021 to the support provided by the Institution, we noted that the total of institutional annual expenditures was understated by $7,160. c) From the sample of enrollment statistical data selected for verification to the source documents and/or information we noted several differences and were unable to identify some of the information in the source documents in nineteen (19) out of a sample of thirty (30) statistical data lines examined in the annual special report. The exceptions were as follows: d) After examination of the quarterly special report of the student aid portion for the quarter ended December 31, 2021, we noted a difference in the Item #5: ?The total number of students who have received an Emergency Financial Aid Grant to students under the CARES (a)(1) subprogram and the CRRSAA and ARP (a)(1) subprograms?. The total of students that received assistance aid reported was 443; however, the number per the student aid payroll reports examined was 460. Additionally, no support was available to determine if the Institution was timely and accurate in publicly posting the quarterly Student Aid Portion Report selected for testing. e) In one out of a sample of forty (40) disbursements of financial aid to students (2.5%) we noted that the payment made did not agree with the Institution's fund distribution plan to prioritize students with financial need. The aid in excess disbursed to that student was $200. Criteria 2 CFR 200.302 (a) establishes that 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. 2 CFR 200.302 (b) (2) to (4) establish that 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. Records that identify adequately the source and application of funds for federally-funded 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. Effective control over, and accountability for, all funds, property, and other assets. 2 CFR 200.303 (a) to (d) establish that the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal awards that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. 2 CFR 200.334 establishes that financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. Cause The cause of the deficiencies noted were due to the following situations: a) The source of information provided by the Institution related to the financial information was the G5 report. Such information is on a cash basis; therefore, financial information was not reported on an accrual basis of accounting which is the basis of accounting followed by the Institution. Additionally, the Institution did not appropriately design and maintained documentation and/or analysis performed to prepare and complete the financial information required to be reported in the quarterly and annual reports. b) Lack of recordkeeping controls and procedures to document and maintain the source of information used for the financial and statistical data required in the annual and quarterly special reports. c) The Institution used the student EFC per the ISIR/SAR available at the time of the distribution, even though, an ISIR with a valid EFC was not available since the student FAFSA application was selected for verification by USDE. After the Institution completed the verification the student EFC increased from 0 to 3676. Effect Noncompliance with the reporting requirements could lead to significant administrative actions by the grantor, including a reduction in the amounts to be awarded. It could also be interpreted as a failure to achieve the programs objectives. Questioned costs Likely questioned costs are less than $25,000. Identification as a Repeat Finding No repeated finding. Recommendation We recommend the Institution to establish adequate procedures and controls to ensure that financial and statistical data information is properly supported and detailed to allow adequate audit trail of the information. Establish adequate supervisory procedures to identify, in a reasonable period of time, deficiencies or possible deficiencies in the procedures or guidance established by management to ascertain that the Institution reports the information as required by grantors, and that accurate and adequate support is properly maintained. Views of Responsible Officials Refer to the Institutional comments included in the Corrective Action Plan.
Condition: As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Agency. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards state in summary that management should authorize, process, reconcile and close out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The close out process is designed to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity and experience of the current staff do not allow for adequate analysis of grants and contracts, proper allocations of shared costs and support services provided, grantor receivables, deferred revenue, and the reconciliation of bank accounts accurately and in a timely manner. This resulted in adjustments necessary to properly present the financial statements and disclosures of the Agency as of July 31, 2022. We also noted significant weaknesses in internal controls over personnel payroll and the processing, maintaining and reconciling payroll activity to the general ledger and external regulatory reporting (IRS Form 941's, state filings, etc.) Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually). This condition also makes it difficult to prepare accurate external reports required by the various funding sources in a timely manner (i.e., SF-425, LIHEAP reporting, etc.). The systemic cause appears to be the untimely resignation of key personnel, a change in the accounting system, a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of internal accounting controls and monitoring. Policies and procedures are not followed consistently throughout the year. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR ?200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in ??200.327 Financial reporting and 200.328 Monitoring and reporting program performance [2 CFR ?200.302(b)(2)]. Effect: Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Turnover of key staff, change in the accounting system, limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. The implementation of a new accounting system without an adequate close out of the old system was determined to be the systemic cause. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency is determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Agency has hired a new fiscal officer (CFO) and should hire additional staff (grant accountants and a general ledger accountant) to assist the new fiscal officer. New staff should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. Policies and procedures should be updated to adequately address the challenges and dynamics of the community action agency. We believe that the CFO with the supporting staff and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant?s basic responsibilities. Program directors should be involved in the closing process. We further recommend that training be provided to all staff engaged in the financial reporting, allocations and reconciliation functions to ensure that a complete and accurate financial statement close out process is achieved each month and annually. Views of Responsible Officials and Planned Corrective Actions: Management is in the process of assessing the organizational structure and capacity to provide adequate financial reporting. With Board review and approval of the agency?s financial funding sources, the agency will hire additional fiscal clerk to further support financial requirements and segregation of duties to ensure adequate internal controls are fully implemented. The CFO will have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner to eliminate the risk of significant errors occurring. Budget-to-actual schedules will be an integral part of the grant accountant analyst?s basic responsibilities. The fiscal policies and procedures will be updated with the enhancements implemented within the fiscal department. Staff will be trained on revised policies and procedures and uniform guidance regulations. The new automated financial system, will support financial reporting to meet GAAP requirements and to provide informative reports for Board and Management. All enhancements will be implemented by December 31, 2023.
Condition: As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Agency. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards state in summary that management should authorize, process, reconcile and close out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The close out process is designed to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity and experience of the current staff do not allow for adequate analysis of grants and contracts, proper allocations of shared costs and support services provided, grantor receivables, deferred revenue, and the reconciliation of bank accounts accurately and in a timely manner. This resulted in adjustments necessary to properly present the financial statements and disclosures of the Agency as of July 31, 2022. We also noted significant weaknesses in internal controls over personnel payroll and the processing, maintaining and reconciling payroll activity to the general ledger and external regulatory reporting (IRS Form 941's, state filings, etc.) Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually). This condition also makes it difficult to prepare accurate external reports required by the various funding sources in a timely manner (i.e., SF-425, LIHEAP reporting, etc.). The systemic cause appears to be the untimely resignation of key personnel, a change in the accounting system, a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of internal accounting controls and monitoring. Policies and procedures are not followed consistently throughout the year. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR ?200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in ??200.327 Financial reporting and 200.328 Monitoring and reporting program performance [2 CFR ?200.302(b)(2)]. Effect: Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Turnover of key staff, change in the accounting system, limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. The implementation of a new accounting system without an adequate close out of the old system was determined to be the systemic cause. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency is determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Agency has hired a new fiscal officer (CFO) and should hire additional staff (grant accountants and a general ledger accountant) to assist the new fiscal officer. New staff should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. Policies and procedures should be updated to adequately address the challenges and dynamics of the community action agency. We believe that the CFO with the supporting staff and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant?s basic responsibilities. Program directors should be involved in the closing process. We further recommend that training be provided to all staff engaged in the financial reporting, allocations and reconciliation functions to ensure that a complete and accurate financial statement close out process is achieved each month and annually. Views of Responsible Officials and Planned Corrective Actions: Management is in the process of assessing the organizational structure and capacity to provide adequate financial reporting. With Board review and approval of the agency?s financial funding sources, the agency will hire additional fiscal clerk to further support financial requirements and segregation of duties to ensure adequate internal controls are fully implemented. The CFO will have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner to eliminate the risk of significant errors occurring. Budget-to-actual schedules will be an integral part of the grant accountant analyst?s basic responsibilities. The fiscal policies and procedures will be updated with the enhancements implemented within the fiscal department. Staff will be trained on revised policies and procedures and uniform guidance regulations. The new automated financial system, will support financial reporting to meet GAAP requirements and to provide informative reports for Board and Management. All enhancements will be implemented by December 31, 2023.
Condition: As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Agency. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards state in summary that management should authorize, process, reconcile and close out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The close out process is designed to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity and experience of the current staff do not allow for adequate analysis of grants and contracts, proper allocations of shared costs and support services provided, grantor receivables, deferred revenue, and the reconciliation of bank accounts accurately and in a timely manner. This resulted in adjustments necessary to properly present the financial statements and disclosures of the Agency as of July 31, 2022. We also noted significant weaknesses in internal controls over personnel payroll and the processing, maintaining and reconciling payroll activity to the general ledger and external regulatory reporting (IRS Form 941's, state filings, etc.) Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually). This condition also makes it difficult to prepare accurate external reports required by the various funding sources in a timely manner (i.e., SF-425, LIHEAP reporting, etc.). The systemic cause appears to be the untimely resignation of key personnel, a change in the accounting system, a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of internal accounting controls and monitoring. Policies and procedures are not followed consistently throughout the year. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR ?200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in ??200.327 Financial reporting and 200.328 Monitoring and reporting program performance [2 CFR ?200.302(b)(2)]. Effect: Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Turnover of key staff, change in the accounting system, limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. The implementation of a new accounting system without an adequate close out of the old system was determined to be the systemic cause. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency is determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Agency has hired a new fiscal officer (CFO) and should hire additional staff (grant accountants and a general ledger accountant) to assist the new fiscal officer. New staff should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. Policies and procedures should be updated to adequately address the challenges and dynamics of the community action agency. We believe that the CFO with the supporting staff and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant?s basic responsibilities. Program directors should be involved in the closing process. We further recommend that training be provided to all staff engaged in the financial reporting, allocations and reconciliation functions to ensure that a complete and accurate financial statement close out process is achieved each month and annually. Views of Responsible Officials and Planned Corrective Actions: Management is in the process of assessing the organizational structure and capacity to provide adequate financial reporting. With Board review and approval of the agency?s financial funding sources, the agency will hire additional fiscal clerk to further support financial requirements and segregation of duties to ensure adequate internal controls are fully implemented. The CFO will have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner to eliminate the risk of significant errors occurring. Budget-to-actual schedules will be an integral part of the grant accountant analyst?s basic responsibilities. The fiscal policies and procedures will be updated with the enhancements implemented within the fiscal department. Staff will be trained on revised policies and procedures and uniform guidance regulations. The new automated financial system, will support financial reporting to meet GAAP requirements and to provide informative reports for Board and Management. All enhancements will be implemented by December 31, 2023.
Condition: As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Agency. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards state in summary that management should authorize, process, reconcile and close out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The close out process is designed to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity and experience of the current staff do not allow for adequate analysis of grants and contracts, proper allocations of shared costs and support services provided, grantor receivables, deferred revenue, and the reconciliation of bank accounts accurately and in a timely manner. This resulted in adjustments necessary to properly present the financial statements and disclosures of the Agency as of July 31, 2022. We also noted significant weaknesses in internal controls over personnel payroll and the processing, maintaining and reconciling payroll activity to the general ledger and external regulatory reporting (IRS Form 941's, state filings, etc.) Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually). This condition also makes it difficult to prepare accurate external reports required by the various funding sources in a timely manner (i.e., SF-425, LIHEAP reporting, etc.). The systemic cause appears to be the untimely resignation of key personnel, a change in the accounting system, a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of internal accounting controls and monitoring. Policies and procedures are not followed consistently throughout the year. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR ?200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in ??200.327 Financial reporting and 200.328 Monitoring and reporting program performance [2 CFR ?200.302(b)(2)]. Effect: Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Turnover of key staff, change in the accounting system, limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. The implementation of a new accounting system without an adequate close out of the old system was determined to be the systemic cause. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency is determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Agency has hired a new fiscal officer (CFO) and should hire additional staff (grant accountants and a general ledger accountant) to assist the new fiscal officer. New staff should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. Policies and procedures should be updated to adequately address the challenges and dynamics of the community action agency. We believe that the CFO with the supporting staff and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant?s basic responsibilities. Program directors should be involved in the closing process. We further recommend that training be provided to all staff engaged in the financial reporting, allocations and reconciliation functions to ensure that a complete and accurate financial statement close out process is achieved each month and annually. Views of Responsible Officials and Planned Corrective Actions: Management is in the process of assessing the organizational structure and capacity to provide adequate financial reporting. With Board review and approval of the agency?s financial funding sources, the agency will hire additional fiscal clerk to further support financial requirements and segregation of duties to ensure adequate internal controls are fully implemented. The CFO will have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner to eliminate the risk of significant errors occurring. Budget-to-actual schedules will be an integral part of the grant accountant analyst?s basic responsibilities. The fiscal policies and procedures will be updated with the enhancements implemented within the fiscal department. Staff will be trained on revised policies and procedures and uniform guidance regulations. The new automated financial system, will support financial reporting to meet GAAP requirements and to provide informative reports for Board and Management. All enhancements will be implemented by December 31, 2023.
Condition: As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Agency. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards state in summary that management should authorize, process, reconcile and close out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The close out process is designed to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity and experience of the current staff do not allow for adequate analysis of grants and contracts, proper allocations of shared costs and support services provided, grantor receivables, deferred revenue, and the reconciliation of bank accounts accurately and in a timely manner. This resulted in adjustments necessary to properly present the financial statements and disclosures of the Agency as of July 31, 2022. We also noted significant weaknesses in internal controls over personnel payroll and the processing, maintaining and reconciling payroll activity to the general ledger and external regulatory reporting (IRS Form 941's, state filings, etc.) Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually). This condition also makes it difficult to prepare accurate external reports required by the various funding sources in a timely manner (i.e., SF-425, LIHEAP reporting, etc.). The systemic cause appears to be the untimely resignation of key personnel, a change in the accounting system, a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of internal accounting controls and monitoring. Policies and procedures are not followed consistently throughout the year. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR ?200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in ??200.327 Financial reporting and 200.328 Monitoring and reporting program performance [2 CFR ?200.302(b)(2)]. Effect: Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Turnover of key staff, change in the accounting system, limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. The implementation of a new accounting system without an adequate close out of the old system was determined to be the systemic cause. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency is determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Agency has hired a new fiscal officer (CFO) and should hire additional staff (grant accountants and a general ledger accountant) to assist the new fiscal officer. New staff should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. Policies and procedures should be updated to adequately address the challenges and dynamics of the community action agency. We believe that the CFO with the supporting staff and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant?s basic responsibilities. Program directors should be involved in the closing process. We further recommend that training be provided to all staff engaged in the financial reporting, allocations and reconciliation functions to ensure that a complete and accurate financial statement close out process is achieved each month and annually. Views of Responsible Officials and Planned Corrective Actions: Management is in the process of assessing the organizational structure and capacity to provide adequate financial reporting. With Board review and approval of the agency?s financial funding sources, the agency will hire additional fiscal clerk to further support financial requirements and segregation of duties to ensure adequate internal controls are fully implemented. The CFO will have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner to eliminate the risk of significant errors occurring. Budget-to-actual schedules will be an integral part of the grant accountant analyst?s basic responsibilities. The fiscal policies and procedures will be updated with the enhancements implemented within the fiscal department. Staff will be trained on revised policies and procedures and uniform guidance regulations. The new automated financial system, will support financial reporting to meet GAAP requirements and to provide informative reports for Board and Management. All enhancements will be implemented by December 31, 2023.
Assistance listing program: Education Stabilization Fund - Higher Education Emergency Relief Fund (HEERF) Assistance Listing Number: 84.425E / 84.425F Award identification number: P425F204999 / P425E205418 Award period: September 29, 2020 to June 30, 2023 and July 23, 2020 to May 23, 2022 Federal agency: U.S. Department of Education Pass-through entity: N/A Category: Internal Control / Compliance Finding Type: Material Weakness Compliance requirement: Reporting Condition and context For testing internal controls and compliance with reporting requirements applicable to the HEERF programs, we inquired the Institution about the internal controls and procedures for determining the criteria and methodology used in compiling and reporting the data to be included in the annual and quarterly special reports. We requested a copy of the annual report for the calendar year 2021 and the quarterly reports for the quarter ended on December 31, 2021 related to the institutional aid portion and the student aid portion. As part of our procedures, we tested the method of distribution of grants to ascertain consistency with the method that was actually employed by the Institution to distribute emergency financial aid grants to students. After our examination and tests performed, we noted the following: a) The methodology used to compile the information in the annual report was based on the funds drawdowns which were based on disbursements rather than the actual program expenditures for the Institutional aid funds in accordance with GAAP. b) After examination of the institutional aid portion expenditures amounts reported in the annual special report for the calendar year ended December 31, 2021 to the support provided by the Institution, we noted that the total of institutional annual expenditures was understated by $7,160. c) From the sample of enrollment statistical data selected for verification to the source documents and/or information we noted several differences and were unable to identify some of the information in the source documents in nineteen (19) out of a sample of thirty (30) statistical data lines examined in the annual special report. The exceptions were as follows: d) After examination of the quarterly special report of the student aid portion for the quarter ended December 31, 2021, we noted a difference in the Item #5: ?The total number of students who have received an Emergency Financial Aid Grant to students under the CARES (a)(1) subprogram and the CRRSAA and ARP (a)(1) subprograms?. The total of students that received assistance aid reported was 443; however, the number per the student aid payroll reports examined was 460. Additionally, no support was available to determine if the Institution was timely and accurate in publicly posting the quarterly Student Aid Portion Report selected for testing. e) In one out of a sample of forty (40) disbursements of financial aid to students (2.5%) we noted that the payment made did not agree with the Institution's fund distribution plan to prioritize students with financial need. The aid in excess disbursed to that student was $200. Criteria 2 CFR 200.302 (a) establishes that 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. 2 CFR 200.302 (b) (2) to (4) establish that 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. Records that identify adequately the source and application of funds for federally-funded 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. Effective control over, and accountability for, all funds, property, and other assets. 2 CFR 200.303 (a) to (d) establish that the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal awards that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. 2 CFR 200.334 establishes that financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. Cause The cause of the deficiencies noted were due to the following situations: a) The source of information provided by the Institution related to the financial information was the G5 report. Such information is on a cash basis; therefore, financial information was not reported on an accrual basis of accounting which is the basis of accounting followed by the Institution. Additionally, the Institution did not appropriately design and maintained documentation and/or analysis performed to prepare and complete the financial information required to be reported in the quarterly and annual reports. b) Lack of recordkeeping controls and procedures to document and maintain the source of information used for the financial and statistical data required in the annual and quarterly special reports. c) The Institution used the student EFC per the ISIR/SAR available at the time of the distribution, even though, an ISIR with a valid EFC was not available since the student FAFSA application was selected for verification by USDE. After the Institution completed the verification the student EFC increased from 0 to 3676. Effect Noncompliance with the reporting requirements could lead to significant administrative actions by the grantor, including a reduction in the amounts to be awarded. It could also be interpreted as a failure to achieve the programs objectives. Questioned costs Likely questioned costs are less than $25,000. Identification as a Repeat Finding No repeated finding. Recommendation We recommend the Institution to establish adequate procedures and controls to ensure that financial and statistical data information is properly supported and detailed to allow adequate audit trail of the information. Establish adequate supervisory procedures to identify, in a reasonable period of time, deficiencies or possible deficiencies in the procedures or guidance established by management to ascertain that the Institution reports the information as required by grantors, and that accurate and adequate support is properly maintained. Views of Responsible Officials Refer to the Institutional comments included in the Corrective Action Plan.
Assistance listing program: Education Stabilization Fund - Higher Education Emergency Relief Fund (HEERF) Assistance Listing Number: 84.425E / 84.425F Award identification number: P425F204999 / P425E205418 Award period: September 29, 2020 to June 30, 2023 and July 23, 2020 to May 23, 2022 Federal agency: U.S. Department of Education Pass-through entity: N/A Category: Internal Control / Compliance Finding Type: Material Weakness Compliance requirement: Reporting Condition and context For testing internal controls and compliance with reporting requirements applicable to the HEERF programs, we inquired the Institution about the internal controls and procedures for determining the criteria and methodology used in compiling and reporting the data to be included in the annual and quarterly special reports. We requested a copy of the annual report for the calendar year 2021 and the quarterly reports for the quarter ended on December 31, 2021 related to the institutional aid portion and the student aid portion. As part of our procedures, we tested the method of distribution of grants to ascertain consistency with the method that was actually employed by the Institution to distribute emergency financial aid grants to students. After our examination and tests performed, we noted the following: a) The methodology used to compile the information in the annual report was based on the funds drawdowns which were based on disbursements rather than the actual program expenditures for the Institutional aid funds in accordance with GAAP. b) After examination of the institutional aid portion expenditures amounts reported in the annual special report for the calendar year ended December 31, 2021 to the support provided by the Institution, we noted that the total of institutional annual expenditures was understated by $7,160. c) From the sample of enrollment statistical data selected for verification to the source documents and/or information we noted several differences and were unable to identify some of the information in the source documents in nineteen (19) out of a sample of thirty (30) statistical data lines examined in the annual special report. The exceptions were as follows: d) After examination of the quarterly special report of the student aid portion for the quarter ended December 31, 2021, we noted a difference in the Item #5: ?The total number of students who have received an Emergency Financial Aid Grant to students under the CARES (a)(1) subprogram and the CRRSAA and ARP (a)(1) subprograms?. The total of students that received assistance aid reported was 443; however, the number per the student aid payroll reports examined was 460. Additionally, no support was available to determine if the Institution was timely and accurate in publicly posting the quarterly Student Aid Portion Report selected for testing. e) In one out of a sample of forty (40) disbursements of financial aid to students (2.5%) we noted that the payment made did not agree with the Institution's fund distribution plan to prioritize students with financial need. The aid in excess disbursed to that student was $200. Criteria 2 CFR 200.302 (a) establishes that 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. 2 CFR 200.302 (b) (2) to (4) establish that 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. Records that identify adequately the source and application of funds for federally-funded 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. Effective control over, and accountability for, all funds, property, and other assets. 2 CFR 200.303 (a) to (d) establish that the non-Federal entity must: (a) Establish and maintain effective internal control over the Federal awards that provides reasonable assurance that the non-Federal entity is managing the Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal awards. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework,? issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). (b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings. 2 CFR 200.334 establishes that financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. Cause The cause of the deficiencies noted were due to the following situations: a) The source of information provided by the Institution related to the financial information was the G5 report. Such information is on a cash basis; therefore, financial information was not reported on an accrual basis of accounting which is the basis of accounting followed by the Institution. Additionally, the Institution did not appropriately design and maintained documentation and/or analysis performed to prepare and complete the financial information required to be reported in the quarterly and annual reports. b) Lack of recordkeeping controls and procedures to document and maintain the source of information used for the financial and statistical data required in the annual and quarterly special reports. c) The Institution used the student EFC per the ISIR/SAR available at the time of the distribution, even though, an ISIR with a valid EFC was not available since the student FAFSA application was selected for verification by USDE. After the Institution completed the verification the student EFC increased from 0 to 3676. Effect Noncompliance with the reporting requirements could lead to significant administrative actions by the grantor, including a reduction in the amounts to be awarded. It could also be interpreted as a failure to achieve the programs objectives. Questioned costs Likely questioned costs are less than $25,000. Identification as a Repeat Finding No repeated finding. Recommendation We recommend the Institution to establish adequate procedures and controls to ensure that financial and statistical data information is properly supported and detailed to allow adequate audit trail of the information. Establish adequate supervisory procedures to identify, in a reasonable period of time, deficiencies or possible deficiencies in the procedures or guidance established by management to ascertain that the Institution reports the information as required by grantors, and that accurate and adequate support is properly maintained. Views of Responsible Officials Refer to the Institutional comments included in the Corrective Action Plan.
Condition: As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Agency. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards state in summary that management should authorize, process, reconcile and close out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The close out process is designed to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity and experience of the current staff do not allow for adequate analysis of grants and contracts, proper allocations of shared costs and support services provided, grantor receivables, deferred revenue, and the reconciliation of bank accounts accurately and in a timely manner. This resulted in adjustments necessary to properly present the financial statements and disclosures of the Agency as of July 31, 2022. We also noted significant weaknesses in internal controls over personnel payroll and the processing, maintaining and reconciling payroll activity to the general ledger and external regulatory reporting (IRS Form 941's, state filings, etc.) Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually). This condition also makes it difficult to prepare accurate external reports required by the various funding sources in a timely manner (i.e., SF-425, LIHEAP reporting, etc.). The systemic cause appears to be the untimely resignation of key personnel, a change in the accounting system, a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of internal accounting controls and monitoring. Policies and procedures are not followed consistently throughout the year. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR ?200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in ??200.327 Financial reporting and 200.328 Monitoring and reporting program performance [2 CFR ?200.302(b)(2)]. Effect: Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Turnover of key staff, change in the accounting system, limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. The implementation of a new accounting system without an adequate close out of the old system was determined to be the systemic cause. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency is determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Agency has hired a new fiscal officer (CFO) and should hire additional staff (grant accountants and a general ledger accountant) to assist the new fiscal officer. New staff should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. Policies and procedures should be updated to adequately address the challenges and dynamics of the community action agency. We believe that the CFO with the supporting staff and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant?s basic responsibilities. Program directors should be involved in the closing process. We further recommend that training be provided to all staff engaged in the financial reporting, allocations and reconciliation functions to ensure that a complete and accurate financial statement close out process is achieved each month and annually. Views of Responsible Officials and Planned Corrective Actions: Management is in the process of assessing the organizational structure and capacity to provide adequate financial reporting. With Board review and approval of the agency?s financial funding sources, the agency will hire additional fiscal clerk to further support financial requirements and segregation of duties to ensure adequate internal controls are fully implemented. The CFO will have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner to eliminate the risk of significant errors occurring. Budget-to-actual schedules will be an integral part of the grant accountant analyst?s basic responsibilities. The fiscal policies and procedures will be updated with the enhancements implemented within the fiscal department. Staff will be trained on revised policies and procedures and uniform guidance regulations. The new automated financial system, will support financial reporting to meet GAAP requirements and to provide informative reports for Board and Management. All enhancements will be implemented by December 31, 2023.
Condition: As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Agency. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards state in summary that management should authorize, process, reconcile and close out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The close out process is designed to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity and experience of the current staff do not allow for adequate analysis of grants and contracts, proper allocations of shared costs and support services provided, grantor receivables, deferred revenue, and the reconciliation of bank accounts accurately and in a timely manner. This resulted in adjustments necessary to properly present the financial statements and disclosures of the Agency as of July 31, 2022. We also noted significant weaknesses in internal controls over personnel payroll and the processing, maintaining and reconciling payroll activity to the general ledger and external regulatory reporting (IRS Form 941's, state filings, etc.) Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually). This condition also makes it difficult to prepare accurate external reports required by the various funding sources in a timely manner (i.e., SF-425, LIHEAP reporting, etc.). The systemic cause appears to be the untimely resignation of key personnel, a change in the accounting system, a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of internal accounting controls and monitoring. Policies and procedures are not followed consistently throughout the year. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR ?200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in ??200.327 Financial reporting and 200.328 Monitoring and reporting program performance [2 CFR ?200.302(b)(2)]. Effect: Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Turnover of key staff, change in the accounting system, limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. The implementation of a new accounting system without an adequate close out of the old system was determined to be the systemic cause. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency is determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Agency has hired a new fiscal officer (CFO) and should hire additional staff (grant accountants and a general ledger accountant) to assist the new fiscal officer. New staff should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. Policies and procedures should be updated to adequately address the challenges and dynamics of the community action agency. We believe that the CFO with the supporting staff and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant?s basic responsibilities. Program directors should be involved in the closing process. We further recommend that training be provided to all staff engaged in the financial reporting, allocations and reconciliation functions to ensure that a complete and accurate financial statement close out process is achieved each month and annually. Views of Responsible Officials and Planned Corrective Actions: Management is in the process of assessing the organizational structure and capacity to provide adequate financial reporting. With Board review and approval of the agency?s financial funding sources, the agency will hire additional fiscal clerk to further support financial requirements and segregation of duties to ensure adequate internal controls are fully implemented. The CFO will have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner to eliminate the risk of significant errors occurring. Budget-to-actual schedules will be an integral part of the grant accountant analyst?s basic responsibilities. The fiscal policies and procedures will be updated with the enhancements implemented within the fiscal department. Staff will be trained on revised policies and procedures and uniform guidance regulations. The new automated financial system, will support financial reporting to meet GAAP requirements and to provide informative reports for Board and Management. All enhancements will be implemented by December 31, 2023.
Condition: As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Agency. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards state in summary that management should authorize, process, reconcile and close out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The close out process is designed to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity and experience of the current staff do not allow for adequate analysis of grants and contracts, proper allocations of shared costs and support services provided, grantor receivables, deferred revenue, and the reconciliation of bank accounts accurately and in a timely manner. This resulted in adjustments necessary to properly present the financial statements and disclosures of the Agency as of July 31, 2022. We also noted significant weaknesses in internal controls over personnel payroll and the processing, maintaining and reconciling payroll activity to the general ledger and external regulatory reporting (IRS Form 941's, state filings, etc.) Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually). This condition also makes it difficult to prepare accurate external reports required by the various funding sources in a timely manner (i.e., SF-425, LIHEAP reporting, etc.). The systemic cause appears to be the untimely resignation of key personnel, a change in the accounting system, a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of internal accounting controls and monitoring. Policies and procedures are not followed consistently throughout the year. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR ?200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in ??200.327 Financial reporting and 200.328 Monitoring and reporting program performance [2 CFR ?200.302(b)(2)]. Effect: Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Turnover of key staff, change in the accounting system, limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. The implementation of a new accounting system without an adequate close out of the old system was determined to be the systemic cause. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency is determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Agency has hired a new fiscal officer (CFO) and should hire additional staff (grant accountants and a general ledger accountant) to assist the new fiscal officer. New staff should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. Policies and procedures should be updated to adequately address the challenges and dynamics of the community action agency. We believe that the CFO with the supporting staff and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant?s basic responsibilities. Program directors should be involved in the closing process. We further recommend that training be provided to all staff engaged in the financial reporting, allocations and reconciliation functions to ensure that a complete and accurate financial statement close out process is achieved each month and annually. Views of Responsible Officials and Planned Corrective Actions: Management is in the process of assessing the organizational structure and capacity to provide adequate financial reporting. With Board review and approval of the agency?s financial funding sources, the agency will hire additional fiscal clerk to further support financial requirements and segregation of duties to ensure adequate internal controls are fully implemented. The CFO will have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner to eliminate the risk of significant errors occurring. Budget-to-actual schedules will be an integral part of the grant accountant analyst?s basic responsibilities. The fiscal policies and procedures will be updated with the enhancements implemented within the fiscal department. Staff will be trained on revised policies and procedures and uniform guidance regulations. The new automated financial system, will support financial reporting to meet GAAP requirements and to provide informative reports for Board and Management. All enhancements will be implemented by December 31, 2023.
Condition: As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Agency. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards state in summary that management should authorize, process, reconcile and close out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The close out process is designed to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity and experience of the current staff do not allow for adequate analysis of grants and contracts, proper allocations of shared costs and support services provided, grantor receivables, deferred revenue, and the reconciliation of bank accounts accurately and in a timely manner. This resulted in adjustments necessary to properly present the financial statements and disclosures of the Agency as of July 31, 2022. We also noted significant weaknesses in internal controls over personnel payroll and the processing, maintaining and reconciling payroll activity to the general ledger and external regulatory reporting (IRS Form 941's, state filings, etc.) Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually). This condition also makes it difficult to prepare accurate external reports required by the various funding sources in a timely manner (i.e., SF-425, LIHEAP reporting, etc.). The systemic cause appears to be the untimely resignation of key personnel, a change in the accounting system, a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of internal accounting controls and monitoring. Policies and procedures are not followed consistently throughout the year. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR ?200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in ??200.327 Financial reporting and 200.328 Monitoring and reporting program performance [2 CFR ?200.302(b)(2)]. Effect: Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Turnover of key staff, change in the accounting system, limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. The implementation of a new accounting system without an adequate close out of the old system was determined to be the systemic cause. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency is determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Agency has hired a new fiscal officer (CFO) and should hire additional staff (grant accountants and a general ledger accountant) to assist the new fiscal officer. New staff should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. Policies and procedures should be updated to adequately address the challenges and dynamics of the community action agency. We believe that the CFO with the supporting staff and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant?s basic responsibilities. Program directors should be involved in the closing process. We further recommend that training be provided to all staff engaged in the financial reporting, allocations and reconciliation functions to ensure that a complete and accurate financial statement close out process is achieved each month and annually. Views of Responsible Officials and Planned Corrective Actions: Management is in the process of assessing the organizational structure and capacity to provide adequate financial reporting. With Board review and approval of the agency?s financial funding sources, the agency will hire additional fiscal clerk to further support financial requirements and segregation of duties to ensure adequate internal controls are fully implemented. The CFO will have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner to eliminate the risk of significant errors occurring. Budget-to-actual schedules will be an integral part of the grant accountant analyst?s basic responsibilities. The fiscal policies and procedures will be updated with the enhancements implemented within the fiscal department. Staff will be trained on revised policies and procedures and uniform guidance regulations. The new automated financial system, will support financial reporting to meet GAAP requirements and to provide informative reports for Board and Management. All enhancements will be implemented by December 31, 2023.
Condition: As part of our auditing procedures, we assisted in the preparation of the financial statements, related disclosures, and the schedule of expenditures of federal awards of the Agency. The preparation of these financial statements in accordance with generally accepted accounting principles (GAAP) and Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, is the responsibility of the grantee. The authoritative and regulatory standards state in summary that management should authorize, process, reconcile and close out each grant and contract in a timely manner to ensure proper accounting and reporting of such activity in accordance with the specific professional standards and regulatory requirements. The close out process is designed to reduce the risk of errors, fraud, material misstatement of financial and compliance reporting and recognition of expenditures (or revenue) in the proper period. We noted that the current system of internal controls over financial statements and compliance is not designed to ensure that the objectives are achieved. Further, the capacity and experience of the current staff do not allow for adequate analysis of grants and contracts, proper allocations of shared costs and support services provided, grantor receivables, deferred revenue, and the reconciliation of bank accounts accurately and in a timely manner. This resulted in adjustments necessary to properly present the financial statements and disclosures of the Agency as of July 31, 2022. We also noted significant weaknesses in internal controls over personnel payroll and the processing, maintaining and reconciling payroll activity to the general ledger and external regulatory reporting (IRS Form 941's, state filings, etc.) Therefore, the risk exists that grant receivables and/or cash from the various programs are not recorded properly during the reporting period (interim and annually). This condition also makes it difficult to prepare accurate external reports required by the various funding sources in a timely manner (i.e., SF-425, LIHEAP reporting, etc.). The systemic cause appears to be the untimely resignation of key personnel, a change in the accounting system, a lack of personnel with the skills, knowledge, and experience with grant accounting and a weakness in the overall system of internal accounting controls and monitoring. Policies and procedures are not followed consistently throughout the year. Context: Review of internal control structure of the organization in accordance with Government Auditing Standards. Criteria: Controls should be in place to ensure that financial statements are prepared in accordance with GAAP. The auditee shall prepare financial statements that reflect its financial position, results of operations or changes in net assets, and, where appropriate, cash flows for the fiscal year audited. The auditee shall also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements. [2 CFR ?200.510(a) and (b)] Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in ??200.327 Financial reporting and 200.328 Monitoring and reporting program performance [2 CFR ?200.302(b)(2)]. Effect: Management may not be able to obtain complete and accurate financial statements on an interim or fiscal year basis to be used for internal or external reporting purposes. Cause: Turnover of key staff, change in the accounting system, limited personnel with knowledge and/or the ability to assist and provide needed information to aid in financial statement preparation. The implementation of a new accounting system without an adequate close out of the old system was determined to be the systemic cause. Recommendation: The degree to which the preparation of the financial statements and related disclosures are prepared by the independent auditor is a control deficiency is determined by the knowledge, skills and experience of those in the organization who are charged with the responsibility of its financial reporting. The Agency has hired a new fiscal officer (CFO) and should hire additional staff (grant accountants and a general ledger accountant) to assist the new fiscal officer. New staff should have the adequate skills, knowledge and experience to oversee and/or perform the necessary accounting functions each month. Policies and procedures should be updated to adequately address the challenges and dynamics of the community action agency. We believe that the CFO with the supporting staff and general ledger accountant should have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner so as to eliminate the risk of significant errors occurring. Budget-to-actual schedules should be an integral part of the grant accountant?s basic responsibilities. Program directors should be involved in the closing process. We further recommend that training be provided to all staff engaged in the financial reporting, allocations and reconciliation functions to ensure that a complete and accurate financial statement close out process is achieved each month and annually. Views of Responsible Officials and Planned Corrective Actions: Management is in the process of assessing the organizational structure and capacity to provide adequate financial reporting. With Board review and approval of the agency?s financial funding sources, the agency will hire additional fiscal clerk to further support financial requirements and segregation of duties to ensure adequate internal controls are fully implemented. The CFO will have the overall responsibility of properly reconciling and closing out the accounting system and grant activity each month in an efficient and timely manner to eliminate the risk of significant errors occurring. Budget-to-actual schedules will be an integral part of the grant accountant analyst?s basic responsibilities. The fiscal policies and procedures will be updated with the enhancements implemented within the fiscal department. Staff will be trained on revised policies and procedures and uniform guidance regulations. The new automated financial system, will support financial reporting to meet GAAP requirements and to provide informative reports for Board and Management. All enhancements will be implemented by December 31, 2023.
2 CFR § 3474.1 gives regulatory effect to the Department of Education for 2 CFR § 200.328 which provides the Federal awarding agency must solicit only the standard, OMB-approved governmentwide data elements for collection of financial information. 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 Ohio Department of Education Grants Manual requires, at the end of the grant period, that entities submit a final expenditure report (FER). A FER must be submitted to show how grant funds were expended during the grant period. The amounts submitted by the School District in the Final Expenditure Report for the Education Stabilization Fund Elementary and Secondary School Emergency Relief Grant (ESSER II) (grant year 2022) understated when compared to the underlying system data. This was due to the Treasurer not including expenditures in the amount of $260,404 which were expended during Fiscal Year 2021. In addition, the amounts by object code submitted by the School District in the Final Expenditure Report for the Education Stabilization Fund American Rescue Plan Elementary and Secondary School Emergency Relief Grant (grant year 2022) varied from the underlying system data due to the Treasurer incorrectly posting Purchased Services of $11,733 as Supplies and not including Capital Outlay expenditures in the amount of $158,486. Total expenditures on the Final Expenditure Report were understated by $158,486 when compared to the underlying School District records. These error postings were the result of a lack of proper internal controls and due care when preparing the reports. The Treasurer should properly compile and review the annual Final Expenditure Reports, verifying the correct information is provided to the grantor.
2 CFR § 3474.1 gives regulatory effect to the Department of Education for 2 CFR § 200.328 which provides the Federal awarding agency must solicit only the standard, OMB-approved governmentwide data elements for collection of financial information. 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 Ohio Department of Education Grants Manual requires, at the end of the grant period, that entities submit a final expenditure report (FER). A FER must be submitted to show how grant funds were expended during the grant period. The amounts submitted by the School District in the Final Expenditure Report for the Education Stabilization Fund Elementary and Secondary School Emergency Relief Grant (ESSER II) (grant year 2022) understated when compared to the underlying system data. This was due to the Treasurer not including expenditures in the amount of $260,404 which were expended during Fiscal Year 2021. In addition, the amounts by object code submitted by the School District in the Final Expenditure Report for the Education Stabilization Fund American Rescue Plan Elementary and Secondary School Emergency Relief Grant (grant year 2022) varied from the underlying system data due to the Treasurer incorrectly posting Purchased Services of $11,733 as Supplies and not including Capital Outlay expenditures in the amount of $158,486. Total expenditures on the Final Expenditure Report were understated by $158,486 when compared to the underlying School District records. These error postings were the result of a lack of proper internal controls and due care when preparing the reports. The Treasurer should properly compile and review the annual Final Expenditure Reports, verifying the correct information is provided to the grantor.
U.S. Department of the Treasury COVID-19 – Coronavirus State and Local Fiscal Recovery Funds – CFDA 21.027 Criteria: Per 2 CFR section 200.328 of the Uniform Guidance, each recipient must report program outlays and program income on a cash or accrual basis, as prescribed by the federal awarding agency. The compliance supplement identifies four Key Line Items required to be reported to the federal awarding agency which include (1) current period obligation, (2) cumulative obligation, (3) current period expenditure and (4) cumulative expenditure. Condition: As of the June 30, 2022 reporting date, the City’s Project and Expenditure Reports overstated expenditures by $274,713 and overstated obligations by $14,045,059. Cause: The City did not reconcile the Project and Expenditure report with the City’s general ledger before submitting and reported the unpaid balance of one contract as expended. The City also considered City departments as subrecipients which caused them to report departmental agreements as obligations. Effect: The City did not properly report grant expenditures and obligations in the Project and Expenditure reporting. Questioned Costs: None Repeat Finding from Prior Year: No Recommendation: The City should implement procedures to reconcile the financial information in the Project and Expenditure reports to the City’s general ledger and contract files before submission. Views of Responsible Official: Management agrees with the finding.
2022-002 U.S. Department of the Treasury COVID-19 ? Coronavirus State and Local Fiscal Recovery Funds ? CFDA 21.027 Criteria: Per 2 CFR section 200.328 of the Uniform Guidance, each recipient must report program outlays and program income on a cash or accrual basis, as prescribed by the federal awarding agency. Condition: As of the March 31, 2022, reporting date, the Town underreported federal expenditures by $211,064. Cause: The Town did not reconcile the Project and Expenditure report with the Town?s general ledger before submitting. Effect: The Town did not properly report grant expenditures in the Project and Expenditure report. Questioned Costs: None Repeat Finding from Prior Year: No Recommendation: The Town should implement procedures to reconcile the financial information in the Project and Expenditure reports to the Town?s general ledger before submission. Views of Responsible Official: Management agrees with the finding.
2022-001 Direct Programs ? Department of Education Federal Financial Assistance Listing: 84.425E, 84.425F COVID ? 19: Higher Education Emergency Relief Student Aid Portion, COVID ? 19: Higher Education Emergency Relief Institutional Portion Reporting Significant Deficiency in Internal Controls over Compliance Criteria: The CARES Act 18004(e), CRRSAA 314(e), 2 CFR section 200.328 and 2 CFR section 200.329 requires an institution receiving funds under HEERF I, HEERF II, and HEERF III to submit a report to the secretary, at such time in such a manner as the secretary may require. Condition: During our testing over the reporting for the HEERF student and institutional Funds, there were four reports out 10 reports that were required to be filed during the fiscal year that were not filed within the required timeframe. Cause: The University did not have an adequate control system in place to ensure that the reports required to be filed for HEERF student and institutional funds were filed timely. Effect: The reports required to be filed for the HEERF Student and Institutional funds were not filed timely. Questioned Costs: None Context/Sampling: All reports required to be filed during the year for the HEERF student and institutional funds were tested (a total of 10 reports were filed during the fiscal year). Repeat Finding from Prior Year(s): Yes. Recommendation: Management should have a process in place to ensure that all reports are filed within the required timeframe. Views of Responsible Officials: Management agrees with the finding. Views of Responsible Officials: Management agrees with the finding.
SIGNIFICANT DEFICIENCY 2022-011 Education Stabilization Fund ? Higher Education Emergency Relief Fund ? 84.425 ? Reporting Criteria or specific requirement Every calendar quarter, institutions are required to publicly post certain information on their website related to their HEERF program. Reports should be posted within 10 days following the end of the reporting period. Any changes or updates after initial posting must be conspicuously noted after initial posting and the date of the change must be noted in the ?Date of Report?. In addition, the Department of Education exercises reporting authority under 2 CFR section 200.328-329 to require that institutions submit an annual report on their uses of HEERF funds. Condition Evidence of the date that quarterly reports were uploaded to the College?s website were not saved, and during inquiry with key personnel, it was determined that not all of the reports were uploaded within 10 days following the quarter end. The reports later had to be amended to add required information and update expense amounts, and the changes were not conspicuously noted or dated. In addition, errors were noted within the annual report. Cause The Institution did not have proper controls in place to ensure that reports contained all required information, accurately reflected the records, and were posted timely. Effect Program information was not always reported timely or accurately. Context Reports were amended to add required information related to the estimated total number of eligible students and the total number of students who received aid, as well as to adjust expenditure amounts. Evidence supporting the date that reports were posted could not be determined for any quarterly reports. Recommendation We recommend that the institution implement controls to ensure that reports are completed timely and accurately, and that evidence of submission or upload dates is saved. Views of responsible officials and planned corrective actions See corrective action plan.
SIGNIFICANT DEFICIENCY 2022-011 Education Stabilization Fund ? Higher Education Emergency Relief Fund ? 84.425 ? Reporting Criteria or specific requirement Every calendar quarter, institutions are required to publicly post certain information on their website related to their HEERF program. Reports should be posted within 10 days following the end of the reporting period. Any changes or updates after initial posting must be conspicuously noted after initial posting and the date of the change must be noted in the ?Date of Report?. In addition, the Department of Education exercises reporting authority under 2 CFR section 200.328-329 to require that institutions submit an annual report on their uses of HEERF funds. Condition Evidence of the date that quarterly reports were uploaded to the College?s website were not saved, and during inquiry with key personnel, it was determined that not all of the reports were uploaded within 10 days following the quarter end. The reports later had to be amended to add required information and update expense amounts, and the changes were not conspicuously noted or dated. In addition, errors were noted within the annual report. Cause The Institution did not have proper controls in place to ensure that reports contained all required information, accurately reflected the records, and were posted timely. Effect Program information was not always reported timely or accurately. Context Reports were amended to add required information related to the estimated total number of eligible students and the total number of students who received aid, as well as to adjust expenditure amounts. Evidence supporting the date that reports were posted could not be determined for any quarterly reports. Recommendation We recommend that the institution implement controls to ensure that reports are completed timely and accurately, and that evidence of submission or upload dates is saved. Views of responsible officials and planned corrective actions See corrective action plan.
SIGNIFICANT DEFICIENCY 2022-011 Education Stabilization Fund ? Higher Education Emergency Relief Fund ? 84.425 ? Reporting Criteria or specific requirement Every calendar quarter, institutions are required to publicly post certain information on their website related to their HEERF program. Reports should be posted within 10 days following the end of the reporting period. Any changes or updates after initial posting must be conspicuously noted after initial posting and the date of the change must be noted in the ?Date of Report?. In addition, the Department of Education exercises reporting authority under 2 CFR section 200.328-329 to require that institutions submit an annual report on their uses of HEERF funds. Condition Evidence of the date that quarterly reports were uploaded to the College?s website were not saved, and during inquiry with key personnel, it was determined that not all of the reports were uploaded within 10 days following the quarter end. The reports later had to be amended to add required information and update expense amounts, and the changes were not conspicuously noted or dated. In addition, errors were noted within the annual report. Cause The Institution did not have proper controls in place to ensure that reports contained all required information, accurately reflected the records, and were posted timely. Effect Program information was not always reported timely or accurately. Context Reports were amended to add required information related to the estimated total number of eligible students and the total number of students who received aid, as well as to adjust expenditure amounts. Evidence supporting the date that reports were posted could not be determined for any quarterly reports. Recommendation We recommend that the institution implement controls to ensure that reports are completed timely and accurately, and that evidence of submission or upload dates is saved. Views of responsible officials and planned corrective actions See corrective action plan.
Condition ? As directed by the U.S. Department of Education for all HEERF funding, Mount Carmel College of Nursing (?the College?) is required to prepare quarterly reports for Institutional portions and conspicuously post them on the College?s website in a timely manner. During the audit it was determined that the College did not complete quarterly reports for Q3 and Q4 for fiscal year ending June 30, 2022, for HEERF Institutional portions of funding and hence no public postings were made available on the College?s website. Criteria ? The U.S. Department of Education, under sections 2 CFR 200.328 and 2 CFR 200.329, requires that each quarterly reporting form for both HEERF Institutional and Student Aid Portion must be completed and posted to the institution?s primary website no later than 10 days after the end of each calendar quarter. Cause ? The Senior Finance Director (report preparer) and Director of Financial Aid (report reviewer) for the College both resigned in March 2022 and April 2022, respectively. As a result, the quarterly reports were not prepared within the required timeframe. Effect ? Neither the Institutional nor Student Aid Portion quarterly reporting forms were prepared and posted for Q3 and Q4 of the current fiscal year. This results in noncompliance and could cause a negative impact on future fundings for the College. Questioned costs ? $0 Context ? Two out of four quarterly reports for the fiscal year ended June 30, 2022 were not completed. Repeat Finding from Prior Year ? No Recommendation ? The College?s business administration should have a plan in place to ensure that quarterly reports are prepared timely and have backup plans in place in the event that the preparer or reviewer are not available.
Identification of the Federal Program: U.S. Department of Agriculture ? Community Facilities Loans and Grants Cluster, Community Facilities Loans and Grants ? 10.766 Special Tests and Provisions Material Weakness in Internal Control Over Compliance and Noncompliance Criteria: The Hospital must establish and maintain effective internal control over federal awards that provides reasonable assurance that the Hospital is managing the federal awards in compliance with federal statutes, regulations and terms and conditions of the federal award. 2 CFR 200.327 and 2 CFR 200.328 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 program requirements. Terms and conditions of the federal award require the Hospital to maintain a reserve fund at specified balance levels. Condition: During 2022, the accounts that represented the reserve fund had a balance below that required by the loan resolution agreements and required deposits were not being made to restore the balances to required levels. Cause: The Hospital did not have an effective internal control process in place to ensure the reserve fund had an adequate balance. Effect: The required reserve fund balance at June 30, 2022 is $245,553 and the balance of the Hospital?s reserve funds at year end is $240,166, a shortage of $5,387. Questioned Costs: None reported. Context: Sampling was not used. Recommendation: We recommend that management continue to monitor and enhance its internal controls over federal award compliance and establish a process to review the reserve balance on a recurring basis to determine if additional reserves are needed. Views of Responsible Officials: Management agrees with the finding. See Corrective Action Plan.
2022-007 The Employment Security Department did not have adequate internal controls over and did not comply with requirements to ensure it submitted complete and accurate quarterly performance reports for the Workforce Innovation and Opportunity grant. Assistance Listing Number and Title: 17.258 Workforce Innovation and Opportunity Adult Program 17.259 Workforce Innovation and Opportunity Youth Activities 17.278 Workforce Innovation and Opportunity Dislocated Worker Formula Grants Federal Grantor Name: U.S. Department of Labor Federal Award/Contract Number: AA-33263-19-55-A-53; AA-34801-20-55-A-53; AA-36352-21-55-A-53; AA-33263-19-55-A-53; AA-34801-20-55-A-53; AA-36352-21-55-A-53; AA-33263-19-55-A-53; AA-34801-20-55-A-53; AA-36352-21-55-A-53 Pass-through Entity Name: None Pass-through Award/Contract Number: None Applicable Compliance Component: Reporting Known Questioned Cost Amount: None Background The Employment Security Department (Department) receives federal funding for the Workforce Innovation and Opportunity Act (WIOA) grant from the U.S. Department of Labor (DOL). WIOA authorizes formula grant programs to states to help job seekers access employment, education, training and support services to succeed in the labor market. WIOA provides employment and training programs for adults, dislocated workers, youth, and Wagner-Peyser Act employment services administered by DOL. DOL requires that the Department complete performance reports using a standardized Participant Individual Record Layout (PIRL). The Department must file the PIRL every quarter using DOL?s Workforce Integrated Performance System. DOL also requires that states develop data validation procedures related to the PIRL that include: ? Written description of the process for identifying and correcting errors or missing data, which may include electronic data checks; ? Regular data validation training for appropriate program staff; ? Monitoring protocols, consistent with 2 CFR ? 200.328; ? A regular review of program data for errors, missing data, out-of-range values and anomalies; ? Documentation that missing and erroneous data identified during the review process have been corrected; and ? Regular assessment of the effectiveness of the data validation process and revisions to the process as needed. The Department uses the Efforts to Outcome (ETO) system to determine if participants are eligible for programs under the WIOA grant. Local Workforce Development Boards (LWDBs) enter participant information into ETO, and DOL requires the Department to perform validation procedures to ensure participant data is accurate and complete. Additionally, ETO tracks participants? progress while in the program and upon completion. The Department uses data captured in ETO to compile the data elements reported on the PIRL. In state fiscal year 2022, the Department spent about $66 million in federal WIOA grant funds. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. In prior audits, we reported the Department did not have adequate internal controls over and did not comply with requirements to ensure it submitted complete and accurate quarterly performance reports for the WIOA grant. The prior audit finding numbers were 2021-007 and 2020-012. Description of Condition The Department did not have adequate internal controls over and did not comply with requirements to ensure it submitted complete and accurate quarterly performance reports for the WIOA grant. The Department did not establish an effective review process to ensure data elements of the PIRL quarterly reports were accurate and complete before submitting them to DOL. The Department also did not have adequate written data validation procedures for the PIRL report, as DOL requires. We consider this internal control deficiency to be a material weakness, which led to material noncompliance. Cause of Condition A contracted vendor extracts participant data from a large database and then uses customized code to transform it to produce the data the Department uses to create the PIRL reports. The Department did not review the changes applied to the data extraction process to ensure accurate reporting of WIOA participant information. Effect of Condition We verified the Department submitted all four quarterly PIRL reports to the DOL, as required during fiscal year 2022. We obtained and examined all four reports to determine if the Department accurately prepared them. To identify a population of WIOA participants, data elements 903, 904, and 905 are critical because they represent whether a client participated in the program. Each data element must be completed with one of the following allowable coding options: ? 0 ? Participant did not receive services ? 1 ? Yes, Local Formula ? 2 ? Yes, Statewide ? 3 ? Yes, Both Local Formula and State ? 4 ? Reportable Individual We found participants listed in the quarter one report were missing one or more data elements for 903, 904 and 905. The following tables show the proportion of the fields that were blank compared to the total number of fields. Data Element 903 Quarter Blanks Total Percent 1 167,035 336,693 49.61% 2 0 322,723 0.00% 3 0 316,816 0.00% 4 0 303,472 0.00% Data Element 904 Quarter Blanks Total Percent 1 167,189 336,693 49.66% 2 0 322,723 0.00% 3 0 316,816 0.00% 4 0 303,472 0.00% Data Element 905 Quarter Blanks Total Percent 1 167,200 336,693 49.66% 2 0 322,723 0.00% 3 0 316,816 0.00% 4 0 303,472 0.00% We could not determine the total population of WIOA participants for testing for quarter one because these data elements were incomplete and inaccurate. Further, we could not complete testing over the quarter two, three and four PIRL reports. When we attempted to design our testing over the key data elements, Department management said they could not ensure the that participant information reported would be materially accurate and complete due to the complexity of information that flows into data elements 903, 904 and 905, and due to the Department not validating the changes it made to the ETO data extraction process for effectiveness. Therefore, we could not perform further testing to determine whether the reports were accurate and complete. Since the key data elements were incomplete and inaccurate, we could not test to determine the level of material noncompliance. Without complete data, the Department cannot demonstrate compliance with reporting requirements nor accurately inform its federal grantor of its current level of program participation. Recommendations We recommend the Department: ? Update its written validation procedures for the PIRL report to meet DOL requirements ? Provide training and technical assistance to LWDBs on PIRL data element reporting requirements to ensure they enter all required information into ETO ? Establish a review process to ensure it submits complete and accurate quarterly PIRL reports Department?s Response The Department concurs with the finding. We would like to thank the Office of the State Auditor (SAO) for their work on this area to ensure job seekers in Washington state can access employment, education, training, and support services to succeed in the labor market. We have outlined our response below with respect to the recommendations made by SAO. The Department is conducting a balance of performing and implementing these recommendations concurrently with the WIT replacement project, which is estimated for completion in December 2024. SAO recommendation: Update written validation procedures for the PIRL report to meet DOL requirements. The Data Integrity, Policy and Monitoring teams have completed their Data Element Validation (DEV) policy update, submitted it to DOL and are actively executing DEV per DOL expectations. DOL has not provided guidance or definitions through a Training Employment Guidance Letter or Training Employment Notice related to the designation of a reportable individual. Once issued, we can more effectively train stakeholders, update policy, and hold local areas accountable to what a reportable individual count would be. We will also work with our vendors who provide the data extract from Efforts to Outcome to ensure scripting produces the required outcome. SAO recommendation: Provide training and technical assistance to LWDB?s on PIRL data element reporting requirements to ensure they enter all required information into ETO. ESD?s Data Integrity team has established a technical assistance PIRL reporting process focused on continuous improvement practices including data analysis training efforts. This process has been in place since Q2 2021. ESD will direct stakeholders to the current training processes and procedures which are shared on the Workforce Professional Center website. The agency is already working on a project to create an ETO Registration 101. This work will create a process that will add consistency and a more complete approach to the pre-requisite requirements of our customers as they are added to ETO. This is estimated to be complete in March 2023. The Data Integrity team will also be available for 1:1 specialized technical assistance, regarding their continuous improvement practices and pertinent data analysis, as requested by local areas and one-stop centers. SAO recommendation: Establish a review process to ensure it submits complete and accurate quarterly PIRL reports. The Data Integrity team is heavily involved in the automation and standardization of the Quarterly Report Analysis (QRA) process. Thus far, we have concentrated on setting up a sustainable process and we are working on evaluating all defined areas in the most recent QRAs provided to date. In addition, the Data Integrity team will continue to identify and fix issues when using WIPS and Performance Measure Analysis (for credentials and measurable skill gains). The QRA is in its pilot phase with DOL, and Washington State has proactively established a system and reporting structure prior to it being formally required by DOL. We are seeking and receiving technical assistance with DOL as it relates to the PIRL to further establish internal controls and effectively manage data validation, quality, and integrity. Auditor?s Remarks We thank the Department for its cooperation and assistance throughout the audit. We will review the status of the Department?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Training and Employment Guidance Letter (TEGL) WIOA No. 07-18, dated December 19, 2018 -Operating Guidance for the Workforce Innovation and Opportunity Act, states in part: Guidance for Validating Jointly Required Performance Data Submitted under the Workforce Innovation and Opportunity Act (WIOA) 4. Joint Data Validation Framework. Data validation is a series of internal controls or quality assurance techniques established to verify the accuracy, validity, and reliability of data. Establishing a joint data validation framework based on a consistent approach shared by the Departments will ensure that all program data are consistent and accurately reflect the performance of each core program in each State. To that end, the purposes of validation procedures for jointly required performance data are to: ? Verify that the performance data reported by States to the Departments are valid, accurate, reliable, and comparable across programs; ? Identify anomalies in the data and resolve issues that may cause inaccurate reporting; ? Outline source documentation required for common data elements; and ? Improve program performance accountability through the results of data validation efforts. While States must utilize a data validation strategy, the specific design, implementation, and periodic evaluation of that strategy is left to the discretion of the State so long as those strategies or procedures are consistent with these guidelines. Data validation helps ensure the accuracy of the annual statewide performance reports, safeguards data integrity, and promotes the timely resolution of data anomalies and inaccuracies. As such, it is recommended that States incorporate their data validation procedures into their internal controls procedures, which are required by 2 Code of Federal Regulations (CFR) ?200.303. State VR agencies should also consider related guidance issued in Rehabilitative Services Administration (RSA) Policy Directive 16-04. Each State must develop data validation procedures that include: ? Written procedures for data validation that contain a description of the process for identifying and correcting errors or missing data, which may include electronic data checks; ? Regular data validation training for appropriate program staff (e.g., at least annually); ? Monitoring protocols, consistent with 2 CFR ?200.328, to ensure that program staff are following the written data validation procedures and take appropriate corrective action if those procedures are not being followed; ? A regular review of program data (e.g., quarterly) for errors, missing data, out of-range values, and anomalies; ? Documentation that missing and erroneous data identified during the review process have been corrected; and ? Regular assessment of the effectiveness of the data validation process (e.g., at least annually) and revisions to that process as needed. Performance Accountability, Information, and Reporting System ? OMB Control No.1205-0526, can be found at https:www.dol.gov/agencies/eta/performance/reporting
2022-007 The Employment Security Department did not have adequate internal controls over and did not comply with requirements to ensure it submitted complete and accurate quarterly performance reports for the Workforce Innovation and Opportunity grant. Assistance Listing Number and Title: 17.258 Workforce Innovation and Opportunity Adult Program 17.259 Workforce Innovation and Opportunity Youth Activities 17.278 Workforce Innovation and Opportunity Dislocated Worker Formula Grants Federal Grantor Name: U.S. Department of Labor Federal Award/Contract Number: AA-33263-19-55-A-53; AA-34801-20-55-A-53; AA-36352-21-55-A-53; AA-33263-19-55-A-53; AA-34801-20-55-A-53; AA-36352-21-55-A-53; AA-33263-19-55-A-53; AA-34801-20-55-A-53; AA-36352-21-55-A-53 Pass-through Entity Name: None Pass-through Award/Contract Number: None Applicable Compliance Component: Reporting Known Questioned Cost Amount: None Background The Employment Security Department (Department) receives federal funding for the Workforce Innovation and Opportunity Act (WIOA) grant from the U.S. Department of Labor (DOL). WIOA authorizes formula grant programs to states to help job seekers access employment, education, training and support services to succeed in the labor market. WIOA provides employment and training programs for adults, dislocated workers, youth, and Wagner-Peyser Act employment services administered by DOL. DOL requires that the Department complete performance reports using a standardized Participant Individual Record Layout (PIRL). The Department must file the PIRL every quarter using DOL?s Workforce Integrated Performance System. DOL also requires that states develop data validation procedures related to the PIRL that include: ? Written description of the process for identifying and correcting errors or missing data, which may include electronic data checks; ? Regular data validation training for appropriate program staff; ? Monitoring protocols, consistent with 2 CFR ? 200.328; ? A regular review of program data for errors, missing data, out-of-range values and anomalies; ? Documentation that missing and erroneous data identified during the review process have been corrected; and ? Regular assessment of the effectiveness of the data validation process and revisions to the process as needed. The Department uses the Efforts to Outcome (ETO) system to determine if participants are eligible for programs under the WIOA grant. Local Workforce Development Boards (LWDBs) enter participant information into ETO, and DOL requires the Department to perform validation procedures to ensure participant data is accurate and complete. Additionally, ETO tracks participants? progress while in the program and upon completion. The Department uses data captured in ETO to compile the data elements reported on the PIRL. In state fiscal year 2022, the Department spent about $66 million in federal WIOA grant funds. Federal regulations require recipients to establish and follow internal controls to ensure compliance with program requirements. These controls include understanding grant requirements and monitoring the effectiveness of established controls. In prior audits, we reported the Department did not have adequate internal controls over and did not comply with requirements to ensure it submitted complete and accurate quarterly performance reports for the WIOA grant. The prior audit finding numbers were 2021-007 and 2020-012. Description of Condition The Department did not have adequate internal controls over and did not comply with requirements to ensure it submitted complete and accurate quarterly performance reports for the WIOA grant. The Department did not establish an effective review process to ensure data elements of the PIRL quarterly reports were accurate and complete before submitting them to DOL. The Department also did not have adequate written data validation procedures for the PIRL report, as DOL requires. We consider this internal control deficiency to be a material weakness, which led to material noncompliance. Cause of Condition A contracted vendor extracts participant data from a large database and then uses customized code to transform it to produce the data the Department uses to create the PIRL reports. The Department did not review the changes applied to the data extraction process to ensure accurate reporting of WIOA participant information. Effect of Condition We verified the Department submitted all four quarterly PIRL reports to the DOL, as required during fiscal year 2022. We obtained and examined all four reports to determine if the Department accurately prepared them. To identify a population of WIOA participants, data elements 903, 904, and 905 are critical because they represent whether a client participated in the program. Each data element must be completed with one of the following allowable coding options: ? 0 ? Participant did not receive services ? 1 ? Yes, Local Formula ? 2 ? Yes, Statewide ? 3 ? Yes, Both Local Formula and State ? 4 ? Reportable Individual We found participants listed in the quarter one report were missing one or more data elements for 903, 904 and 905. The following tables show the proportion of the fields that were blank compared to the total number of fields. Data Element 903 Quarter Blanks Total Percent 1 167,035 336,693 49.61% 2 0 322,723 0.00% 3 0 316,816 0.00% 4 0 303,472 0.00% Data Element 904 Quarter Blanks Total Percent 1 167,189 336,693 49.66% 2 0 322,723 0.00% 3 0 316,816 0.00% 4 0 303,472 0.00% Data Element 905 Quarter Blanks Total Percent 1 167,200 336,693 49.66% 2 0 322,723 0.00% 3 0 316,816 0.00% 4 0 303,472 0.00% We could not determine the total population of WIOA participants for testing for quarter one because these data elements were incomplete and inaccurate. Further, we could not complete testing over the quarter two, three and four PIRL reports. When we attempted to design our testing over the key data elements, Department management said they could not ensure the that participant information reported would be materially accurate and complete due to the complexity of information that flows into data elements 903, 904 and 905, and due to the Department not validating the changes it made to the ETO data extraction process for effectiveness. Therefore, we could not perform further testing to determine whether the reports were accurate and complete. Since the key data elements were incomplete and inaccurate, we could not test to determine the level of material noncompliance. Without complete data, the Department cannot demonstrate compliance with reporting requirements nor accurately inform its federal grantor of its current level of program participation. Recommendations We recommend the Department: ? Update its written validation procedures for the PIRL report to meet DOL requirements ? Provide training and technical assistance to LWDBs on PIRL data element reporting requirements to ensure they enter all required information into ETO ? Establish a review process to ensure it submits complete and accurate quarterly PIRL reports Department?s Response The Department concurs with the finding. We would like to thank the Office of the State Auditor (SAO) for their work on this area to ensure job seekers in Washington state can access employment, education, training, and support services to succeed in the labor market. We have outlined our response below with respect to the recommendations made by SAO. The Department is conducting a balance of performing and implementing these recommendations concurrently with the WIT replacement project, which is estimated for completion in December 2024. SAO recommendation: Update written validation procedures for the PIRL report to meet DOL requirements. The Data Integrity, Policy and Monitoring teams have completed their Data Element Validation (DEV) policy update, submitted it to DOL and are actively executing DEV per DOL expectations. DOL has not provided guidance or definitions through a Training Employment Guidance Letter or Training Employment Notice related to the designation of a reportable individual. Once issued, we can more effectively train stakeholders, update policy, and hold local areas accountable to what a reportable individual count would be. We will also work with our vendors who provide the data extract from Efforts to Outcome to ensure scripting produces the required outcome. SAO recommendation: Provide training and technical assistance to LWDB?s on PIRL data element reporting requirements to ensure they enter all required information into ETO. ESD?s Data Integrity team has established a technical assistance PIRL reporting process focused on continuous improvement practices including data analysis training efforts. This process has been in place since Q2 2021. ESD will direct stakeholders to the current training processes and procedures which are shared on the Workforce Professional Center website. The agency is already working on a project to create an ETO Registration 101. This work will create a process that will add consistency and a more complete approach to the pre-requisite requirements of our customers as they are added to ETO. This is estimated to be complete in March 2023. The Data Integrity team will also be available for 1:1 specialized technical assistance, regarding their continuous improvement practices and pertinent data analysis, as requested by local areas and one-stop centers. SAO recommendation: Establish a review process to ensure it submits complete and accurate quarterly PIRL reports. The Data Integrity team is heavily involved in the automation and standardization of the Quarterly Report Analysis (QRA) process. Thus far, we have concentrated on setting up a sustainable process and we are working on evaluating all defined areas in the most recent QRAs provided to date. In addition, the Data Integrity team will continue to identify and fix issues when using WIPS and Performance Measure Analysis (for credentials and measurable skill gains). The QRA is in its pilot phase with DOL, and Washington State has proactively established a system and reporting structure prior to it being formally required by DOL. We are seeking and receiving technical assistance with DOL as it relates to the PIRL to further establish internal controls and effectively manage data validation, quality, and integrity. Auditor?s Remarks We thank the Department for its cooperation and assistance throughout the audit. We will review the status of the Department?s corrective action during our next audit. Applicable Laws and Regulations Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings. Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11. Training and Employment Guidance Letter (TEGL) WIOA No. 07-18, dated December 19, 2018 -Operating Guidance for the Workforce Innovation and Opportunity Act, states in part: Guidance for Validating Jointly Required Performance Data Submitted under the Workforce Innovation and Opportunity Act (WIOA) 4. Joint Data Validation Framework. Data validation is a series of internal controls or quality assurance techniques established to verify the accuracy, validity, and reliability of data. Establishing a joint data validation framework based on a consistent approach shared by the Departments will ensure that all program data are consistent and accurately reflect the performance of each core program in each State. To that end, the purposes of validation procedures for jointly required performance data are to: ? Verify that the performance data reported by States to the Departments are valid, accurate, reliable, and comparable across programs; ? Identify anomalies in the data and resolve issues that may cause inaccurate reporting; ? Outline source documentation required for common data elements; and ? Improve program performance accountability through the results of data validation efforts. While States must utilize a data validation strategy, the specific design, implementation, and periodic evaluation of that strategy is left to the discretion of the State so long as those strategies or procedures are consistent with these guidelines. Data validation helps ensure the accuracy of the annual statewide performance reports, safeguards data integrity, and promotes the timely resolution of data anomalies and inaccuracies. As such, it is recommended that States incorporate their data validation procedures into their internal controls procedures, which are required by 2 Code of Federal Regulations (CFR) ?200.303. State VR agencies should also consider related guidance issued in Rehabilitative Services Administration (RSA) Policy Directive 16-04. Each State must develop data validation procedures that include: ? Written procedures for data validation that contain a description of the process for identifying and correcting errors or missing data, which may include electronic data checks; ? Regular data validation training for appropriate program staff (e.g., at least annually); ? Monitoring protocols, consistent with 2 CFR ?200.328, to ensure that program staff are following the written data validation procedures and take appropriate corrective action if those procedures are not being followed; ? A regular review of program data (e.g., quarterly) for errors, missing data, out of-range values, and anomalies; ? Documentation that missing and erroneous data identified during the review process have been corrected; and ? Regular assessment of the effectiveness of the data validation process (e.g., at least annually) and revisions to that process as needed. Performance Accountability, Information, and Reporting System ? OMB Control No.1205-0526, can be found at https:www.dol.gov/agencies/eta/performance/reporting