FINDING 2025-004 Subject: COVID-19 - Education Stabilization Fund - Cash Management Federal Agency: Department of Education Federal Program: COVID - 19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U200013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Cash Management Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-009. Condition and Context The School Corporation had not properly designed or implemented a system of internal controls, which would include appropriate segregation of duties, that would likely be effective in preventing, or detecting and correcting, noncompliance related to the Cash Management compliance requirement. Reimbursement requests for the program were prepared by one employee and reviewed by another employee; however, the supporting documentation that was provided to the reviewer did not give a clear distinction as to what expenditures were included in the reimbursement. As the documentation provided was not adequate that accompanied the reimbursement request, and the reimbursement requests, as noted below, did not agree to the ledger, the reviewer could not have ensured expenses were paid prior to requesting reimbursement. For 5 of 25 expenditures tested, the School Corporation was unable to provide supporting documentation traceable to the reimbursement request. There were 2 of those expenditures, totaling $1,715, that were for ESSER II's final reimbursement which requested the remainder of the grant award and expenses could not be traced to the documentation provided for the reimbursement amount. There were 3 of the expenditures, totaling $6,665, that were not traceable to an ESSER III reimbursement request. Therefore, as the expenditure could not be traced to a reimbursement request, it could not be determined if the School Corporation paid for the expense prior to requesting reimbursement. INDIANA STATE BOARD OF ACCOUNTS 21 SILVER CREEK SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Additionally, 1 of 25 expenditures tested, for $154, was an expense that occurred after the School Corporation requested reimbursement. The lack of internal controls and noncompliance were systemic issues throughout the audit period for ESSER II and ESSER III. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.305(b) states in part: "For non-Federal entities other than states, payments methods must minimize the time elapsing between the transfer of funds from the United States Treasury or the pass-through entity and the disbursement by the non-Federal entity whether the payment is made by electronic funds transfer, or issuance or redemption of checks, warrants, or payment by other means. . . . (3) Reimbursement is the preferred method when the requirements in this paragraph (b) cannot be met, when the Federal awarding agency sets a specific condition per § 200.208, or when the non-Federal entity requests payment by reimbursement. . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . ." Cause A proper system of internal controls was not designed and implemented by management of the School Corporation, which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. The School Corporation had not developed any policies that would have ensured compliance or that supporting documentation would have been maintained and available for audit related to the Cash Management compliance requirement. INDIANA STATE BOARD OF ACCOUNTS 22 SILVER CREEK SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect The failure to retain and provide appropriate supporting documentation prevented the determination of the School Corporation's compliance with the Cash Management compliance requirement. Noncompliance with the grant agreement and the Cash Management compliance requirement could result in the loss of future federal funds to the School Corporation. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a system of internal controls to ensure that documentation will be maintained and available for audit and comply with the grant agreement and the Cash Management compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding 2025-046 Compliance with Subrecipient Monitoring for Disaster Grants The Federal Emergency Management Agency (FEMA) Disaster Grants program [ALN 97.036] provides supplemental assistance to recipients to assist communities with responding to and recovering from major disasters or emergencies. The program also provides funding for hazard mitigation measures to help communities implement hazard mitigation projects that can protect them from future disasters. The Disaster Grants program is based on a partnership between FEMA, the recipient (in this case, the Department), and, as applicable, the subrecipient (local governments). FEMA is responsible for managing the Disaster Grants program, approving grants, and providing technical assistance to the state, local, tribal, and territorial governments. The Department, as a recipient of Disaster Grants program funds, is responsible for providing technical advice and assistance to eligible subrecipients, providing support for damage survey activities, ensuring that all potential applicants are aware of funding assistance available, and submitting documents necessary for grant awards. A subrecipient is defined in federal regulations [2 CFR 200.1] as an entity, usually but not limited to non-federal entities, that receives a subaward from a pass-through entity to carry out part of a federal award; but does not include an individual that is a beneficiary of such award. A subrecipient may also be a recipient of other federal awards directly from a federal awarding agency. Federal regulations [2 CFR 200.1] define a subaward as an award provided by a pass-through entity (such as the Department) to an entity (subrecipient) to carry out part of a federal grant award received by the pass-through entity. Specifically for this program, the subrecipient is expected to request assistance, as needed; identify the damaged facilities; provide information to support its funding requests; maintain accurate documentation; and perform other work, as necessary. As part of its subrecipient monitoring process, the Department should complete an annual risk assessment to determine the extent of its subrecipient monitoring activities. The risk assessment should include considerations of financial risk factors, such as financial implications of operational and compliance failures; operational risk factors, such as risks resulting from inadequate internal controls; and compliance risks, such as violations with laws, regulations, and internal policies. In addition, the Department should be using monitoring tools to track the status of whether the subrecipient underwent a Single Audit, if applicable, and whether that audit has been reviewed by Department staff and any resulting management decisions issued by those staff to the subrecipient, if applicable, that address the Department’s assessment and planned actions to address any findings or issues identified in the audit During Fiscal Year 2025, the Department passed approximately $76.0 million to 66 subrecipients for responses to various disasters covered by the Department’s Disaster Grants program. In addition, the Department reported that it approved no new subawards during Fiscal Year 2025. All funds passed through to subrecipients by the Department were related to reimbursements for prior period expenses. In total, the Department reported that it had passed through Disaster Grant funding to another 68 subrecipients in prior years who did not receive funding passed through from the Department during Fiscal Year 2025; many of these subrecipients had multiple open projects that had been completed in prior years but were awaiting final approval and close-out from FEMA. What was the purpose of our audit work and what work was performed? The purpose of the audit work was to determine whether the Department had adequate internal controls in place over, and complied with, subrecipient monitoring requirements over the Disaster Grants program during Fiscal Year 2025. Another purpose of the audit work was to determine whether the Department implemented our Fiscal Year 2024 audit recommendation to review all subrecipients’ federally-required Single Audit reports, as required. The Department agreed with the recommendation and planned to implement it by June 2025. As part of our audit work, we performed testwork to determine whether the Department obtained its subrecipients’ Single Audit reports and issued a management decision, if applicable. We also determined whether the Department performed risk assessments on the subrecipients as required by federal regulations. Finally, we performed this testing over a random sample of 9 of 68 subrecipients that received pass-through funding in the current year. How were the results of the audit work measured? We measured the results of our audit work against the following requirements: • Federal regulations [2 CFR 200.332] require the Department to evaluate each subrecipient’s risk of noncompliance with federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate level of subrecipient monitoring based on the Department’s assessment of risk posed by the subrecipients. Additionally, it requires the Department to verify that every subrecipient is audited as required by 2 CFR 200, Subpart F, Audit Requirements, which sets forth the federal regulations around Single Audit threshold requirements for subrecipients. It also covers the federal regulations to consider whether the results of the subrecipient’s audits indicates conditions that necessitate adjustment to the passthrough entity’s—in this case, the Department’s—own records. Further, federal regulations [2 CFR 200.521] require the Department to issue a management decision, which is defined as the Department’s written determination of the adequacy of the subrecipient’s proposed corrective action to address any findings in the subrecipient’s Single Audit reports within 6 months of the federal audit clearinghouse’s acceptance of the audit report. • The Department’s Division of Homeland Security and Emergency Management’s (DHSEM) Subrecipient Monitoring policy states that it “…will perform an annual evaluation of Subrecipient’s risks prior to the start of each State fiscal year, analyzing active awards and assessing Subrecipients for the upcoming year to determine the financial status of each Subrecipient and which subrecipients will receive on-site monitoring which may include desk reviews.” The policy further goes on to indicate that each subrecipient will receive an overall risk score that is used to determine which subrecipients will undergo monitoring review during the fiscal year based on the quantitative and qualitative data used for the assessment inputs. • The DHSEM Subrecipient Monitoring policy also states that “DHSEM will perform reviews of single audit results for Subrecipients who have expended Federal grant funds in excess of $750,000 of which some portion is passed through DHSEM.” • Federal regulations [2 CFR 200.329] stipulate that the non-federal award recipient—in this case the Department—is responsible for oversight of the operations of its federal award-supported activities. The regulations further state that the “non-federal entity” must monitor its activities under federal awards to assure that compliance with applicable federal requirements and performance expectations is being achieved. What problems did the audit work identify? Based on our audit work, we determined that the Department did not fully implement our prior audit recommendation by its planned implementation date of June 30, 2025, and did not complete required subrecipient monitoring activities for its Disaster Grants program. Specifically, we found that the Department did update the risk assessment policies for the 2025 risk assessment and fully assessed risks for subrecipients for Fiscal Year 2025. However, there was one subrecipient that had not yet issued a finalized audit report and, therefore, the Department’s subrecipient monitoring process was pending completion. Why did these problems occur? Although the Department designated staff to obtain and review Single Audit reports for all of its subrecipients, Department staff stated that they were not able to complete their reviews of previously unreviewed Single Audit reports during Fiscal Year 2025, as letters were still being processed for execution and distribution under the updated policies. The Department also subsequently stated that some of these reviews were incomplete due to the subrecipients not yet finalizing their Single Audits with their auditors. Why do these problems matter? By failing to complete all of its reviews of subrecipients’ Single Audit reports, the Department is out of compliance with both federal requirements and with its policy to complete monitoring reviews for each subrecipient. This could result in the Department not timely identifying enforcement actions that may be needed against noncompliant subrecipients and then making revisions, as applicable, to its monitoring risk assessment for the subrecipient. See "Schedule of Findings and Questioned Costs" for table/chart. Recommendation 2025-046 The Department of Public Safety (Department) should continue to implement its subrecipient monitoring policy and ensure the Department is in compliance with federal regulations to review all subrecipients’ Single Audit reports in a timely manner. This should also include the Department completing its reviews of the subrecipients’ prior year’s Single Audit reports and issuing the management decision letters for those reports. Response Department of Public Safety Agree Implementation Date: June 2026 The Department will continue to follow the current Policy and Procedure related to the Single Audit reviews and has allocated an individual to review the Single Audits. This includes issuing a management decision letter if required, in accordance with the timeline established in federal guidance.
Finding Reference 2025-005 Federal Agency: U.S. Department of Homeland Security Pass-Through Agency: Central Office of Recovery, Reconstruction and Resiliency of Puerto Rico (COR3) Program: Disaster Grants – Public Assistance (Presidentially Declared Disaster) (ALN 97.036) Compliance Requirement: Reporting (L) Type of Finding: Significant Deficiency in Internal Controls (SD), Instance of Noncompliance (NC) This finding is similar to prior-year finding 2023-005 and 2024-005. Statement of Condition In our Reporting Test, we evaluated the Quarterly Progress Reports of a total of eleven (11) projects for two quarters of fiscal year 2024-2025. During our audit procedures, we noted that the reports did not agree with the accounting and project records. Criteria 2 CFR 200.302 (a) stated that the state’s and the other non-Federal entity’s financial management system, 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. Also, 2 CFR 200.302 (b) (2) states that the financial management system of each non-Federal entity must provide 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. Cause of Condition The Municipality accounting controls and procedures fail to ensure accurate, current and complete disclosure of the financial results of federal assisted activities. Effect of Condition The expenses reported in the Quarterly Progress Reports do not agree with the accounting records. Recommendation We recommend that Program Administrators reconcile the differences between the quarterly report and the accounting records before the submission of the next submission to the pass-through entity. Questioned Cost None Prior Year Finding Yes. This finding is similar to prior-year finding 2023-005 and 2024-005. Views of Responsible Officials and Planned Corrective Action We concur with the finding. We understand that only two reports did not agree with the accounting records. We have consultants that are responsible for the preparation of these reports. Instructions were given to the consultants in order to correct the reports that do not agree with the accounting records. There was a misunderstanding with the reports, in which the pass-through entity instructed that purchase orders and expenditures incurred should be reported. As subsequently clarified, only the expenditures incurred should be reported as expended. Implementation Date: June 30, 2026 Responsible Person: Meyleen Hernández Rivera Finance Director
FINDING NUMBER 2025-004 FEDERAL AGENCY U.S. DEPARTMENT OF HOMELAND SECURITY PASS-THROUGH AGENCY CENTRAL OFFICE OF RECOVERY, RECONSTRUCTION AND RESILIENCY OF PUERTO RICO (COR3) FEDERAL EMERGENCY MANAGEMENT AGENCY (FEMA) FEDERAL PROGRAM DISASTER GRANTS – PUBLIC ASSISTANCE (PRESIDENTIALLY DECLARED DISASTERS) (ALN 97.036) REQUIREMENT REPORTING (L) TYPE OF FINDING SIGNIFICANT DEFICIENCY (SD) / NONCOMPLIANCE (NC) CONDITION In our Reporting Test, we evaluated the Quarterly Progress Reports of a total of eleven (11) projects for two quarters of fiscal year 2024-2025. During our audit procedures, we noted that the reports did not agree with the accounting and project records. CRITERIA 2 CFR 200.302 (a) states that the states’ and other non-Federal entities’ 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. Also, 2 CFR 200.302 (b) (2) states that the financial management system of each non-Federal entity must provide 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. CAUSE The Municipality’s accounting controls and procedures fail to ensure accurate, current and complete disclosure of the financial results of federal assisted activities. EFFECT The expenses reported in the Quarterly Progress Reports do not agree with the accounting records. RECOMMENDATION We recommend the Program Administrators reconcile the differences between the quarterly report and the accounting records before the submission to the pass-through entity. QUESTIONED COST None. PRIOR YEAR FINDING No. VIEWS OF RESPONSIBLE OFFICIALS AND PLANNED CORRECTIVE We concur with the auditors’ finding. The Municipality acknowledges the differences identified between the expenses reported in the Quarterly Progress Reports (QPRs) and the accounting records. To address this issue, the Municipality will implement a reconciliation process between the accounting records and the QPRs prior to their submission to the pass-through entity. Additionally, management will perform a supervisory review to ensure that the reported expenses agree with the accounting records and supporting documentation. Implementation Date: Fiscal Year 2026-2027. Responsible Person: Miguel Fonseca, Federal Programs Director
Finding Reference 2025-004 Federal Agency: U.S. Department of Homeland Security Pass-Through Agency: Central Office of Recovery, Reconstruction and Resiliency of Puerto Rico (COR3) Program: Disaster Grants – Public Assistance (Presidentially Declared Disaster) (ALN 97.036) Compliance Requirement: Reporting (L) Type of Finding: Significant Deficiency in Internal Controls (SD), Instance of Noncompliance (NC) It is not a prior-year finding. Statement of Condition In our Reporting Test, we evaluated the Quarterly Progress Reports of a total of five (5) projects for two quarters of fiscal year 2024-2025. During our audit procedures, we noted that the reports of two (2) projects did not agree with the accounting and project records. Criteria 2 CFR 200.302 (a) stated that the state’s and the other non-Federal entity’s financial management system, 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. Also, 2 CFR 200.302 (b) (2) states that the financial management system of each non-Federal entity must provide 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. Cause of Condition The Municipality’s accounting controls and procedures fail to ensure accurate, current and complete disclosure of the financial results of federal assisted activities. Effect of Condition The expenses reported in the Quarterly Progress Reports do not agree with the accounting records. Recommendation We recommend that Program Administrators reconcile the differences between the quarterly report and the accounting records before the submission of the next submission to the pass-through entity. Questioned Cost None Views of Responsible Officials and Planned Corrective Action We concur with the finding. During the testing of reports, the Quarterly Progress Reports of five (5) projects, corresponding to two (2) quarters of fiscal year 2024-2025, were evaluated. It was found that in two (2) projects, the quarterly reports did not match the accounting records or the project documentation. Therefore, for the purposes of this audit, the municipal accounting controls and procedures did not ensure that the reported information was accurate, up-to-date, and fully reconciled with the financial records. In light of the above, the reports will be reconciled with the accounting records, and the discrepancies found will be identified, documented, and adjusted in the system where the error originated, as appropriate. Furthermore, from this point forward, once the Quarterly Reports (QPR) are issued, a copy must be sent to the Program Accountant, the Finance Director, and myself for validation and reconciliation prior to official filing, thus preventing situations like this to occur. This process will form part of the internal control required to ensure that the reported information is accurate, current, complete, and consistent with the accounting records, in accordance with applicable federal requirements. Implementation Date: From March 2026. Full implementation is expected in fiscal year 2026-2027. Responsible Person: Mrs. Natasha Vázquez Federal Programs Director
2025-001 Reporting (Significant Deficiency in Internal Controls over Compliance and Instance of Noncompliance) Criteria: The City is required to file quarterly SF-425, Federal Financial Reports for each award and under the requirements of 2 CFR 200.329, the City is required to submit performance reports (COPS Progress Reports) semi-annually during the life of the award for each award. Condition: Four COPS Progress Reports were not submitted timely during the year ended June 30, 2025. Context: During our audit, we tested all reports for timely filing. We tested twelve SF-425 reports and six performance reports and noted four of the performance reports were filed after the due date. Cause: The City has not implemented the proper controls to ensure all required COPS Progress reports are submitted to the federal agency timely. Effect: COPS performance reports were not submitted by their due dates. Questioned Costs: None Repeat Finding: No. Recommendation: We recommend that the City ensure that adequate controls are in place to ensure that report due dates are met. Views of Responsible Officials: Management agrees with the finding.
Questioned Cost $ – Finding No. 2025-001: Reporting (Significant Deficiency) Federal Agency: U.S. Department of Commerce AL Number and Title: 11.029 – Tribal Broadband Connectivity Program (“TBCP”) Award Number and Award Year: NT23TBC0290054 2025 Repeat Finding? No Condition During our audit, we tested the performance reporting for the semi-annual reporting period ended March 31, 2025, and noted that the total expenditures reported did not agree with the federal expenditures reported on SF-425, resulting in a variance. Criteria Per 2 CFR 200.329, recipients must submit accurate and complete performance reports that are consistent with financial data reported on the Federal Financial Report (SF-425). Effect The performance report did not accurately reflect the total federal expenditures for the reporting period, leading to inconsistencies between the financial and performance data submitted to the federal awarding agency. This reduces the reliability of reported information and represents a deficiency in internal control over compliance. Cause and View of Responsible Officials The discrepancy occurred because the program personnel lacked a clear understanding of the difference between cash and accrual basis accounting. As a result, the Cash on hand amount reported on the SF-425 was incorrectly included in the total expenditures on the performance report. The review control did not identify this error prior to submission. Recommendation We recommend that management provide training to staff responsible for preparing and reviewing performance and financial reports to ensure a proper understanding of cash versus accrual basis reporting. Management should also implement a reconciliation and review process to verify that the total federal expenditures reported in the performance report agree to the federal share of expenditure reported on SF-425 prior to submission.
FINDING 2025-004 Subject: Child Nutrition Cluster - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children, Fresh Fruit and Vegetable Program Assistance Listings Numbers: 10.553, 10.555, 10.559, 10.582 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023-2024, FY 2024-2025 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation had not designed or implemented a system of internal controls, which would have included appropriate segregation of duties, that would have likely been effective in preventing, or detecting and correcting, noncompliance. The School Corporation transferred $313,369 from the School Lunch fund into the Operations fund. This transfer was labeled as an indirect cost transfer; however, indirect costs were not approved to be charged to the program. This transfer was also not approved by the School Board. The issue was identified and corrected by the current Treasurer prior to June 30, 2025. The lack of internal controls and noncompliance over allowable activities was an isolated instance. Criteria 2 CFR 200.302 states in part: "(a) Each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state's own funds. In addition, the state's and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. . . . (b) The financial management system of each non-Federal entity must provide for the following . . . (1) Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number and year, name of the Federal agency, and name of the pass-through entity, if any. (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . . (3) Records that identify adequately the source and application of funds for federallyfunded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. INDIANA STATE BOARD OF ACCOUNTS 23 PLYMOUTH COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (4) Effective control over, and accountability for, all funds, property, and other assets. . . ." 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.400 states in part: "The application of these cost principles is based on the fundamental premises that: (a) The non-Federal entity is responsible for the efficient and effective administration of the Federal award through the application of sound management practices. (b) The non-Federal entity assumes responsibility for administering Federal funds in a manner consistent with underlying agreements, program objectives, and the terms and conditions of the Federal award. (c) The non-Federal entity, in recognition of its own unique combination of staff, facilities, and experience, has the primary responsibility for employing whatever form of sound organization and management techniques may be necessary in order to assure proper and efficient administration of the Federal award. . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: . . . (g) Be adequately documented. . . ." 2 CFR 200.404 states in part: "A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non- Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to: . . . (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost." INDIANA STATE BOARD OF ACCOUNTS 24 PLYMOUTH COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.508 states in part: "The auditee must: . . . (d) Provide the auditor with access to personnel, accounts, books, records, supporting documentation, and any other information as needed for the auditor to perform the audit required by this part." Federal Register, Vol. 87, No. 18 states in part: "Treasury has divided the Restriction on Use section into . . . (B) other restrictions on use, which include (1) debt service and replenishing reserves, (2) settlements and judgements, and (3) general restrictions. These restrictions apply to all eligible use categories. . . ." Cause The School Corporation had not developed a system of internal controls that would have ensured that all activities and costs were in compliance with the Activities Allowed or Unallowed and the Allowable Costs/Cost Principles compliance requirements. Effect Without the proper design or implementation of the components of a system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system was not capable of effectively preventing, or detecting and correcting, noncompliance as identified in the Condition and Context. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure all activities are allowable. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-006 Subject: Title I Grants to Local Educational Agencies - Activities Allowed or Unallowed, Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listings Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A220014, S010A230014 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation did not have effective internal controls in place to ensure all costs paid from Title I funds and submitted for reimbursement were for allowable activities or allowable costs. As a result, the following compliance issues were noted: On May 26, 2023, a check for $886 was issued for which supporting documentation could not be provided. As a result, it could not be determined if the expense was for an allowable activity or an allowable cost. On August 16, 2024, seven stipends were paid to non-Title I administrative staff from Title I grant funds. Two employees received $5,000 each and five employees received $3,000 each. On December 20, 2024, three stipends for $918 each were paid from Title I grant funds to employees who had previously received a stipend payment on August 16, 2024. These stipends were determined to not be an allowable activity or an allowable cost. The current Treasurer identified the stipend errors. The School Corporation requested and received reimbursement from the seven employees who received these stipends. INDIANA STATE BOARD OF ACCOUNTS 27 PLYMOUTH COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.302 states in part: "(a) Each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state's own funds. In addition, the state's and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. . . . (b) The financial management system of each non-Federal entity must provide for the following . . . (1) Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number and year, name of the Federal agency, and name of the pass-through entity, if any. (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . . (3) Records that identify adequately the source and application of funds for federallyfunded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. (4) Effective control over, and accountability for, all funds, property, and other assets. . . ." 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.400 states in part: "The application of these cost principles is based on the fundamental premises that: (a) The non-Federal entity is responsible for the efficient and effective administration of the Federal award through the application of sound management practices. INDIANA STATE BOARD OF ACCOUNTS 28 PLYMOUTH COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) The non-Federal entity assumes responsibility for administering Federal funds in a manner consistent with underlying agreements, program objectives, and the terms and conditions of the Federal award. (c) The non-Federal entity, in recognition of its own unique combination of staff, facilities, and experience, has the primary responsibility for employing whatever form of sound organization and management techniques may be necessary in order to assure proper and efficient administration of the Federal award. . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (g) Be adequately documented. . . ." 2 CFR 200.404 states in part: "A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non- Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to: . . . (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award's cost." 2 CFR 200.508 states in part: "The auditee must: . . . (d) Provide the auditor access to personnel, accounts, books, records, supporting documentation, and any other information as needed for the auditor to perform the audit required by this part." Federal Register, Vol. 87, No. 18 states in part: "Treasury has divided the Restriction on Use section into . . . (B) other restrictions on use, which include (1) debt service and replenishing reserves, (2) settlements and judgements, and (3) general restrictions. These restrictions apply to all eligible use categories. . . ." Cause The School Corporation did not design and implement an effective internal control system to review all payroll expenditures from the Title I funds, ensuring they were for allowable activities. Effect The failure to design and implement an effective internal control system over payroll expenditures caused noncompliance with the compliance requirements as detailed in the Condition and Context. INDIANA STATE BOARD OF ACCOUNTS 29 PLYMOUTH COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the School Corporation establish a system of internal controls to ensure that grant award fund compliance requirements are appropriately researched prior to spending. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-005 Subject: Child Nutrition Cluster - Reporting Federal Agency: Department of Agriculture Federal Programs: School Breakfast Program, National School Lunch Program, Summer Food Service Program for Children Assistance Listings Numbers: 10.553, 10.555, 10.559 Federal Award Numbers and Years (or Other Identifying Numbers): FY 2023-2024, FY 2024-2025 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Condition and Context Monthly Sponsor Claims for Reimbursement (Claims) were submitted to the Indiana Department of Education based upon the number of meals served for the month. The Claims were prepared by the School Corporation's Food Service Director and a food service management company (FSMC) employee. The School Corporation maintained manual meal count records. A point-of-sale system (POS) was used to summarize the manual counts. For all four Claims tested, there were differences between the Claims submitted and the School Corporation's detail meal count reports, resulting in over and under reporting and reimbursement. The Claims tested contained the following errors: The October 2023 claim reported 27 less meals served (11 breakfast and 16 lunch) than the eligible meals per the School Corporation's detail meal count reports, which resulted in an underclaimed reimbursement totaling $100. The School Corporation also overclaimed snacks by 5, which resulted in over reimbursement of $6. The November 2023 claim reported 2 less lunch meals served than the eligible meals per the School Corporation's detail meal count reports, which resulted in an underclaimed reimbursement totaling $9. The June 2024 claim reported 666 more breakfast meals served than the eligible meals per the School Corporation's detail meal count reports, which resulted in an overclaimed reimbursement totaling $1,946. The claim also reported 527 less lunch meals served than the eligible meals per the School Corporation's detail meal count reports, which resulted in an underclaimed reimbursement totaling $2,704. The net of the errors was $758 underclaimed. INDIANA STATE BOARD OF ACCOUNTS 28 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The May 2025 claim reported 10 less meals served (5 breakfast and 5 lunch) than the eligible meals per the School Corporation's detail meal count reports, which resulted in an underclaimed reimbursement totaling $37. The School Corporation also overclaimed snacks by 10, which resulted in over reimbursement of $12. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . ." Cause The School Corporation did not have effective internal control procedures in place over the Claims submitted. The Claims contained evidence of an oversight or review process in place; however, they did not prevent, or detect and correct, errors. The Claims were prepared based upon summary sheets prepared by the FSMC employees and were not verified back to the source records. Effect The lack of effective internal controls caused a total of $894 not to be claimed for reimbursement, which projected to a loss of funding of $6,272. Noncompliance with the grant agreement and the compliance requirement could result in the loss or repayment of federal funds. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish a proper system of internal controls to ensure compliance with requirements related to reporting. INDIANA STATE BOARD OF ACCOUNTS 29 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-008 Subject: COVID-19 - Education Stabilization Fund - Condition of Records Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U, 84.425W Federal Award Numbers and Years (or Other Identifying Numbers): S425D210013, S425U210013, S425W210015 Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Equipment and Real Property Management; Matching, Level of Effort, Earmarking; Special Tests and Provisions - Wage Rate Requirements Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding numbers were 2023-007 and 2023-009 over the compliance requirements Equipment and Real Property Management and Special Tests and Provisions - Wage Rate Requirements, respectively. Condition and Context The School Corporation received reimbursements totaling $30,316,384 from the COVID-19 - Education Stabilization Fund (ESF) federal awards during the audit period. The reimbursements were associated with three separate federal awards, each of which was required to be accounted for in a separate fund within the School Corporation's financial management system. Expenditures were to be made in accordance with the approved grant applications and budgets, with reimbursement requests subsequently submitted to the Indiana Department of Education (IDOE). The School Corporation was responsible for maintaining detailed disbursement ledgers for each grant fund to support the amounts claimed for reimbursement. As is typical with reimbursement-based grants, the ending cash and investment balances of each grant fund were expected to reflect overdrawn balances until the subsequent reimbursements were received from the IDOE. The $30,316,384 received in ESF funds during the audit period was based on 28 reimbursement requests for expenditures incurred between June 1, 2023 through December 13, 2024. Based on our review of grant fund records and inquiry with management, we identified the following deficiencies: The detailed disbursement ledger for the period of June 1, 2023 through December 13, 2024, excluding June 2024 for Grant #S425U210013 as no reimbursement request was submitted, reflected total expenditures of $23,051,334. This resulted in $7,265,050 in reimbursements that were not adequately supported by detailed records. INDIANA STATE BOARD OF ACCOUNTS 33 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) A review of the submitted reimbursement requests indicated that $1,069,865 was reimbursed for indirect costs; however, a disbursement from the grant funds to other operating funds was not recorded within the School Corporations records. Of the 28 reimbursement requests submitted, only 5 were supported by detailed disbursement ledgers that agreed with the dates and amounts claimed. The remaining 23 reimbursement requests could not be directly reconciled to the supporting documentation provided. Upon further inquiry with management, additional records were provided; however, these records lacked sufficient detail, such as fund number, fund name, check numbers, dates, and vendor names to be useable. Reimbursements received were not posted to each grant fund properly. This resulted in the ARP EESER III fund receipts to be understated by $4,297,935 and the ESSER II and GEER PD funds receipts to be overstated by $4,174,376 and $123,560, respectively. Since this is a reimbursement-based grant, the ending cash and investment balances of each grant fund should either be zero or overdrawn while awaiting reimbursement. However, as of June 30, 2025, the ESSER II and Geer PD funds reported positive cash and investment balances of $5,047,932 and $404,653, respectively. Due to the deficiencies noted above, the School Corporation was unable to provide sufficient appropriate evidence for us to determine populations, and, therefore, audit and base an opinion on the compliance requirements subject to audit that were determined to have a direct and material effect on the program. As a result, the $30,316,384 in reimbursements received during the audit period were considered questioned costs. The lack of internal controls and noncompliance were material and systemic throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302 states in part: "(a) . . . 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. See also § 200.450. INDIANA STATE BOARD OF ACCOUNTS 34 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) The financial management system of each non-Federal entity must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337): (1) Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number and year, name of the Federal agency, and name of the pass-through entity, if any. (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. . . . (3) Records that identify adequately the source and application of funds for federallyfunded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income, and interest and be supported by source documentation. (4) Effective control over, and accountability, for all funds, property, and assets. The non- Federal entity must adequately safeguard all assets and ensure that they are used solely for authorized purposes. See § 200.303. (5) Comparison of expenditures with budget amounts for each Federal award. (6) Written procedures to implement the requirements of § 200.305. (7) Written procedures for determining the allowability of costs in accordance with subpart E of this part and the terms and conditions of the Federal award." 2 CFR 200.1 states in part: ". . . Questioned cost means a cost that is questioned by the auditor because of an audit finding: (1) Which resulted from a violation or possible violation of a statute, regulation, or the terms and conditions of a Federal award, including for funds used to match Federal funds; (2) Where the costs, at the time of the audit, are not supported by adequate documentation; or (3) Where the costs incurred appear unreasonable and do not reflect the actions a prudent person would take in the circumstances. (4) Questioned costs are not an improper payment until reviewed and confirmed to be improper as defined in OMB Circular A-123 appendix C. (See also the definition of Improper payment in this section)." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. INDIANA STATE BOARD OF ACCOUNTS 35 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." 2 CFR 200.313(d) states in part: ". . . (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. (2) A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years. (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. (4) Adequate maintenance procedures must be developed to keep the property in good condition. . . ." 29 CFR 5.5 states in part: "(a) Required contract clauses. The Agency head will cause or require the contracting officer to require the contracting officer to [sic] insert in full, or (for contracts covered by the Federal Acquisition Regulation (48 CFR chapter 1)) by reference, in any contract in excess of $2,000 which is entered into for the actual construction, alteration and/or repair, including painting and decorating, of a public building or public work, or building or work financed in whole or in part from Federal funds or in accordance with guarantees of a Federal agency or financed from funds obtained by pledge of any contract of a Federal agency to make a loan, grant or annual contribution (except where a different meaning is expressly indicated), and which is subject to the labor standards provisions of any of the laws referenced by § 5.1, the following clauses . . . (1) Minimum wages— (i) Wage rates and fringe benefits. All laborers and mechanics employed or working upon the site of the work (or otherwise working in construction or development of the project under a development statute), will be paid unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account (except such payroll deductions as are permitted by regulations issued by the Secretary of Labor under the Copeland Act (29 CFR part 3)), the full amount of basic hourly wages and bona fide fringe benefits (or cash equivalents thereof) due at time of payment computed at rates not less than those contained in the wage determination of the Secretary of Labor which is attached hereto and made a part hereof, regardless of any contractual relationship which may be alleged to exist between the contractor and such laborers and mechanics. . . . (3) Records and certified payrolls— (ii) Certified payroll requirements— INDIANA STATE BOARD OF ACCOUNTS 36 SCHOOL CITY OF EAST CHICAGO SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (A) Frequency and method of submission. The contractor or subcontractor must submit weekly, for each week in which any DBA- or Related Acts-covered work is performed, certified payrolls to the [write in name of appropriate Federal agency] if the agency is a party to the contract, but if the agency is not such a party, the contractor will submit the certified payrolls to the applicant, sponsor, owner, or other entity, as the case may be, that maintains such records, for transmission to the [write in name of agency]. . . ." 2 CFR 200 Appendix II to Part 200 states in part: "In addition to other provisions required by the Federal agency or non-Federal entity; all contracts made by the non-Federal entity under the Federal award must contain provisions covering the following, as applicable. . . . (D) Davis-Bacon Act, as amended (40 U.S.C. 3141-3148). When required by Federal program legislation, all prime construction contracts in excess of $2,000 awarded by non- Federal entities must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, and 3146-3148) as supplemented by Department of Labor regulations (29 CFR Part 5, 'Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction'). In accordance with the statute, contractors must be required to pay wages to laborers and mechanics at a rate not less than the prevailing wages specified in a wage determination made by the Secretary of Labor. In addition, contractors must be required to pay wages not less than once a week. . . ." Cause The School Corporation experienced turnover in key personnel over the federal program, which contributed to the lack of appropriate supporting records. A proper system of internal controls was not designed to ensure continuity of policies, procedures, and records when personnel transitions occurred. Effect Noncompliance with the grant agreement and the compliance requirements could result in the repayment of federal funds. Questioned Costs We identified $30,316,384 in known questioned costs as noted in the Condition and Context. Recommendation We recommended that the School Corporation's management develop policies and procedures to ensure continuity of school records during a personnel change and that all reimbursement requests are properly supported by detail records. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-002 Subject: TRIO Cluster - Reporting Federal Agency: US Department of Education Federal Programs: TRIO Student Support Services, TRIO Talent Search, TRIO Upward Bound Assistance Listings Numbers: 84.042A, 84.044, 84.047 Federal Award Numbers and Years (or Other Identifying Numbers): P042A200749, P042A200690, P042A201220, P042A201222, P044A220683, P047A221086, P047A221077 Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2024-003. Condition and Context An effective internal control system was not in place at the College to ensure compliance with requirements related to the Reporting compliance requirement. The following errors on the fiscal year 2024 Annual Performance Report (APR) were noted: For TRIO Student Support Services at the Indianapolis Campus, key line items were tested for 24 students. For 1 student, field 31 "Undergraduate Degree/Certificate Completed at Grantee Institution" was inaccurately reported. For TRIO Student Support Services at the Northwest (Lake) Campus, key line items were tested for 22 students. o For 1 student, field 15 "Eligibility" was inaccurately reported. o For 2 students, field 18 "Date of First Project Service" was inaccurately reported. o For 1 student, field 19 "College Grade Level (entry into project)" was inaccurately reported. o For 7 students, field 23 "Enrollment Status (at end of academic year)" was inaccurately reported. o For 1 student, field 24 "Academic Standing" was inaccurately reported. o For 3 students, field 31 "Undergraduate Degree/Certificate Completed at Grantee Institution" was inaccurately reported. For TRIO Student Support Services at the Richmond Campus, key line items were tested for 25 students. o For 2 students, field 17 "First Enrollment Date (at grantee institution)" was inaccurately reported. INDIANA STATE BOARD OF ACCOUNTS 20 IVY TECH COMMUNITY COLLEGE OF INDIANA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) o For 1 student, field 22 "Participant Status (during academic year)" was inaccurately reported. o For 8 students, field 23 "Enrollment Status (at end of academic year)" was inaccurately reported. o For 1 student, field 27 "College Grade Level (at end of academic year)" was inaccurately reported. For TRIO Talent Search at the Northwest (Lake) Campus, key line items were tested for 40 students. o For 10 students, the College could not provide supporting documentation for item A1 "Persisted in school for the next academic year at the next grade level or graduated high school." o For 2 students, the College inaccurately reported that the students persisted in the next academic year at the next grade level; however, the students did not advance to the next grade level. For TRIO Upward Bound at the Indianapolis Campus, key line items were tested for 10 students. For 1 student, field 17 "Reading Language Arts or Math Proficiency Not Achieved" was inaccurately reported. For TRIO Upward Bound at the Muncie Campus, key line items were tested for 9 students. o For 3 students, field 16 "Eligibility" was inaccurately reported. o For 1 student, field 17 "Reading Language Arts or Math Proficiency Not Achieved" was inaccurately reported. o For 1 student, field 19 "Pre-Algebra or Algebra Course Not Successfully Completed by Beginning of 10th Grade" was inaccurately reported. The lack of effective internal controls and noncompliance was a systemic issue at four of the five campuses that were reported on the TRIO Cluster program during the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." INDIANA STATE BOARD OF ACCOUNTS 21 IVY TECH COMMUNITY COLLEGE OF INDIANA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 2 CFR 200.329(c)(1) states in part: "The recipient or subrecipient must submit performance reports as required by the Federal award. . . ." 34 CFR 646.32(c) states in part: "Recordkeeping. A grantee must maintain participant records that show– (1) The basis for the grantee's determination that each participant is eligible to participate in the project under § 646.3; (2) The grantee's basis for determining the academic need for each participant; (3) The services that are provided to each participant; (4) The performance and progress of each participant by cohort for the duration of the participant's attendance at the grantee's institution . . ." Cause The College's management had not developed an effective system of internal controls that would have ensured compliance with the Reporting compliance requirement. The College had not developed policies and procedures to verify that the TRIO Cluster reporting agreed with supporting records. Effect Without the proper implementation of an effectively designed system of internal controls, the College cannot ensure reporting for the TRIO Cluster is accurate and in agreement with supporting records. Noncompliance with the reporting requirement could have resulted in the loss of federal funds to the College. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the College's management strengthen the internal controls related to the compliance requirement listed above. We also recommended strengthening its policies and procedures to ensure reporting for the TRIO Cluster programs agree with supporting records of the College. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding Reference 2025-006 Federal Agency: U.S. Department of Health and Human Services Federal Program Title and ALN: Child Care and Development Block Grant (CCDF Cluster) (ALN 93.575) Compliance Requirement: Reporting – Financial Reporting (L) (MW) Type of finding: Material Weakness in Internal Control (MW), Instance of Noncompliance (NC) Statement of Condition During our audit procedures, we noted that the Program did not maintain an adequate set of accounting records that present the financial position and results of its operations of the program. In addition, required financial reports were not submitted within the established reporting deadlines. CriteriaTitle 2 U.S. Code of Federal Regulations (CFR) 200.328 and 200.329 require subrecipients to submit accurate, complete, and timely performance and financial reports in accordance with the terms and conditions of the Federal award. Additionally, 2 CFR 200.303 requires non-Federal entities to establish and maintain effective internal control over Federal programs to provide reasonable assurance that Federal awards are managed in compliance with Federal statutes, regulations, and the terms and conditions of the award. Additionally, the subaward agreement and reporting guidelines issued by the pass-through entity (ACUDEN) also establish specific reporting deadlines and require that reported financial information be supported by the subrecipient’s accounting records. Cause of Condition The program staff faced performance challenges due to a lack of staff which caused the accounting records to be delayed. Effect of Condition As a result of the inadequate maintenance of accounting records and untimely preparation of financial reports, the Municipality failed to submit the required report within the 30 calendar days required by the regulation, which leads to the noncompliance of the reporting requirement. Recommendation We recommend that management strengthen internal controls over financial reporting by: • Ensuring accounting records are maintained current and reconciled on a monthly basis; • Establishing formal written reporting procedures with clear timelines; • Assigning personnel responsible for report preparation and review; and • Implementing supervisory review procedures to verify that reports agree with underlying accounting records prior to submission. Questioned Costs None Prior-Year Finding This is a new finding. View of Responsible Official and Planned Corrective Action Plan The Municipality agrees with the finding and stated that it will implement corrective actions to improve compliance with reporting requirements. Management plans to formalize reporting procedures, assign responsible personnel, and require reconciliations between reported amounts and accounting records prior to submission of reports to ACUDEN, along with enhanced supervisory review. Implementation Date: July 1, 2026 Responsible Person: Mr. Luis A. Velez Rivera, Finance Director
Section III – Major Federal Award Program Findings and Questioned Costs Finding Reference 2025-005 Federal Agency: U.S. Department of Homeland Security Pass-through Agency: P.R. Central Office for Recovery, Reconstruction and Resiliency (COR3) Program: Disaster Grants - Public Assistance (Presidentially Declared Disasters (Assistance Listing No. 97.036) Compliance Requirement: Reporting (L) Type of Finding: Significant Deficiency in Internal Controls (SD), Instance of Noncompliance (NC) Statement of Condition In our Reporting Test, we evaluated the Quarterly Progress Reports of a total of seven (7) projects for two quarters of fiscal year 2024-2025. During our audit procedures, we identified that the reports did not agree with the accounting records. During our audit procedures, we identified that the reports noted that the reports did not agree with the accounting records. Criteria 2 CFR 200.302 (a) states that the states’ and other non-Federal entities’ 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. Also, 2 CFR 200.302 (b) (2) states that the financial management system of each non-Federal entity must provide 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. Cause of Condition The Municipality’s accounting controls and procedures fail to ensure accurate, current and complete disclosure of the financial results of federal assisted activities. Effect of Condition The expenses reported in the Quarterly Progress Reports do not agree with the accounting records. Recommendation We recommend the Program Administrators reconcile the differences between the quarterly report and the accounting records before the following submissions to the pass-through entity. Questioned Cost None. Prior Year Finding No. Views of Responsible Officials and Planned Corrective Action We concur with the finding. Adopted Measures • Expense Synchronization: A protocol will be implemented requiring contracted consultants to record and report incurred expenses only when a validated disbursement voucher is available, thereby ensuring the integrity of the financial flow. • Reconciliation: The office will conduct a detailed comparison between the draft quarterly report and the general ledger to identify and correct any discrepancies prior to final submission. • Compliance Timeline: An internal deadline will be established for the submission of the report, ensuring attainment of the minimum percentage required under the Quality Activities category through accurate financial data. Expected Outcome To ensure that all financial information submitted is complete, accurate, and fully aligned with the Municipality’s accounting records, thereby eliminating the risk of audit findings. Implementation Date: March 2026. Responsible persons: • Person responsible for the implementation: Mr. Carlos Flores, Federal Program’s Subdirector • Person responsible for the supervision: Mrs. Yolanda Maldonado, Federal Program’s Director
2025-001 Submission of Required Performance Reports Federal Agency: Department of Housing and Urban Development Program Game: Community Project Funding Assistance Listing Number: 14.251 Economic Development Initiative Federal Award Identification Number: B-23-CP-CA-0083 B-23-CP-CA-0106 Questioned Costs: $0 Criteria: Under 2 CFR §200.329 (Monitoring and reporting program performance) and the terms and conditions of the federal award agreement, recipients are required to submit periodic performance reports to the federal awarding agency that compare actual accomplishments with the objectives of the federal program. These reports must be submitted according to the schedule established in the grant agreement. Condition: During testing of compliance with federal award requirements, we noted that the auditee did not submit the required performance reports on a semi-annual basis. The reports were due no later than 30 days after the end of each 6 month reporting period beginning the first January or June after the date the grant agreement is signed. The grant agreement was signed in July 2024. Cause: The auditee did not have adequate internal controls in place to ensure that required federal performance reporting deadlines were tracked and reports were prepared and submitted timely. Effect: Failure to submit required performance reports may limit the federal awarding agency’s ability to monitor program performance and determine whether federal funds are being used in accordance with program objectives. Recommendation: We recommend that the auditee implement procedures to ensure compliance with federal performance reporting requirements. Such procedures should include assigning clear responsibility for report preparation and submission, maintaining a reporting calendar for all federal award requirements, and implementing supervisory review to confirm that required reports are submitted timely. Management’s Plan for Corrective Action: Management agrees with the finding and plans to implement procedures to ensure timely submission of required performance reports. We will ensure that the grant administrator develops processes for a reporting calendar, preparing required reports, and documenting submission. Management expects these procedures to be implemented beginning in the next reporting cycle. Management has subsequently completed and submitted all of the required performance reports to remedy the identified deficiency.
Section III – Major Federal Award Program Findings and Questioned Costs Finding Reference 2025-003 Federal Agency: U.S. Department of Homeland Security Pass-through Agency: Central Office of Recovery, Reconstruction and Resiliency of Puerto Rico (COR3) Federal Emergency Management Agency (FEMA) Program: Disaster Grants – Public Assistance (Presidentially Declared Disaster) (ALN 97.036) Compliance Requirement: Reporting (L) Type of Finding: Significant Deficiency in Internal Controls (SD), Instance of Noncompliance (NC) Statement of Condition: In our Reporting Test, we evaluated the Quarterly Progress Reports of a total of four (4) projects for two quarters of fiscal year 2024-2025. During our audit procedures, we noted that the reports did not agree with the accounting and project records. Criteria: 2 CFR 200.302 (a) states that the states’ and other non-Federal entities’ 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. Also, 2 CFR 200.302 (b) (2) states that the financial management system of each non-Federal entity must provide 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. Cause of Condition: The Municipality’s accounting controls and procedures fail to ensure accurate, current and complete disclosure of the financial results of federal assisted activities. Effect of Condition: The expenses reported in the Quarterly Progress Reports do not agree with the accounting records. Recommendation: We recommend the Program Administrators reconcile the differences between the quarterly report and the accounting records before the submission to the pass-through entity. Questioned Costs: None. Prior Year Findings: Yes. This finding is similar to prior-year finding 2024-003 and 2023-003. Views of Responsible Officials and Planned Corrective Actions: We concur with the findings. During the past year, the Corrective Action Plan (PAC) has been implemented and expense reconciliation efforts have been ongoing. Currently, we are in the process of collecting all supporting documentation related to work performed for projects funded by FEMA. It is expected that the reconciliation of expenses will be completed over the next few quarters, and that expense reporting will continue during the quarters in which payments are made. Implementation Date: Fiscal Year 2025-2026. Responsible Person: José A. Torres Otero Program Accountant
Finding No: 2025-003– Internal control deficiencies over accounting and identification of federal funds received from the Federal Emergency Management Agency (FEMA) that should be included on SEFA Federal Programs ALN 97.036, Disaster Grants - Public Assistance (Presidentially Declared Disasters) Name of Federal Agency U.S. Department of Homeland Security (Pass-through program from The Central Office of Recovery, Reconstruction and Resiliency) Category Internal Control; Compliance. Compliance Requirement Activities Allowed/Unallowed, Allowable Costs/Cost Principles, Period of Performance, Project Accounting. Criteria 2 CFR Part 200 Subpart D Subsection 200.302 states the following: The recipient's and subrecipient's financial management system must provide for the following: 1. Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity. 2. Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand. 3. Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. 4. Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes. See § 200.303. 5. Comparison of expenditures with budget amounts for each Federal award. 6. Written procedures to implement the requirements of § 200.305. 7. Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award. Condition During our procedures concerning the Administration’s funds received from FEMA we noticed that the reimbursement funds received from FEMA were not recognized as income during the year ended June 30, 2025. Cause The Administration recognized the reimbursement as an accrual and not as income during the year ended June 30, 2025. They have recognized only the amount that they disbursed during the year at their discretion. This accounting is correct when the funds received are capital advances. Effect This can result in amounts not to be included in the Schedule of Expenditures and Federal Awards in the correct period and understate SEFA. Also, the Administration could be subject to penalties or sanctions from the Federal Grantor. Context The Administration identified $6,543 as federal expenditures from prior years capital advances of FEMA awards but did not identify as expended the amount of $11,063 from advances. In addition, the Administration received reimbursements of $1,413,451 in the fiscal year, however management did not identify this amount as federal expenditures until the audit procedures was performed. Identification of repeat finding None. Questioned costs None, as adjustments were made during the audit to correct the misstatement. Recommendation We recommend validating, with the staff in charge of Engineering, the type of funds received from FEMA, if they are reimbursements or capital advances. When the funds received are reimbursements they should be recognized as income in the year received. If the funds are capital advances they should be recognized as unearned revenue and as income in the year in which they are disbursed. Views of responsible officials and planned corrective actions We agreed with the auditors’ finding and recommendation. See further details regarding this matter within the Corrective Action Plan.
FINDING 2025-004 Subject: Title I Grants to Local Educational Agencies - Special Tests and Provisions - Participation of Private School Children Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listings Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A220014, S010A230014, S010A240014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Special Test and Provisions - Participation of Private School Children Audit Findings: Material Weakness, Other Matters Condition and Context The School Corporation did not provide supporting documentation for the amounts disbursed for Participation of Private School Children. No time sheets or logs were provided to support the hours paid to employees for working with the private school children. The lack of effective internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following . . . INDIANA STATE BOARD OF ACCOUNTS 22 METROPOLITAN SCHOOL DISTRICT OF SOUTHWEST ALLEN COUNTY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . ." Cause The School Corporation had not developed a system of internal controls that would have ensured that records were maintained and made available for audit related to the Special Tests and Provisions - Participation of Private School Children compliance requirement. Effect The lack of appropriate documentation prevented the determination of the School Corporation's compliance with the Special Tests and Provisions - Participation of Private School Children compliance requirement. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management establish internal controls to ensure compliance and comply with the Special Test and Provisions - Participation of Private School Children compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding No. 2025-072 Federal Awarding Agency: United States Department of Agriculture (USDA) Impact: Significant Deficiency AL Number and Title: 10.859 Assistance to High Energy Cost Rural Communities Federal Award Number: AK0031-E84 Applicable Compliance Requirement: Allowable Costs/Cost Principles, Special Tests and Provisions Condition: Alaska Energy Authority (AEA) did not have controls in place for review of progress reports for this program. During our testing of reports, we noted that two of the five reports sampled did not have evidence of a formal review before submission. Context: We tested a sample of five reports and found two exceptions as noted in the condition. This is a condition identified per review of AEA’s compliance with specified requirements not using a statistically valid sample. Cause: AEA did not have controls in place to ensure that progress reports were reviewed by personnel independent of the preparers prior to submission to the federal agency. Criteria: 2 CFR 200.303, Internal Controls, requires that non-federal entities receiving federal awards establish and maintain internal control designed to reasonably ensure compliance with federal statues, regulations, and the terms and conditions of the federal award. Effect: Reports may contain inaccuracies, be incomplete, or fail to comply with the requirements outlined in 2 CFR 200.329 and the federal award. Questioned Costs: None Recommendation: AEA should establish procedures requiring all reports be reviewed and approved by personnel independent of the preparer prior to submission to federal agencies. Views of Responsible Officials: Management agrees with this finding.
Finding 2025-001: Reporting - Significant Deficiency Name of Federal Agency: U.S. Department of the Treasury Federal Program Name and Assistance Listing Number: COVID-19 - Coronavirus State and Local Fiscal Recovery Funds, 21.027 Federal Award Identification Numbers and Years: 194586 (2024), 196178 (2024) Name of Pass-through Entity: California Community Foundation Criteria: According to 2 CFR 200.329, management is responsible for ensuring that all reports are submitted timely, in accordance with organizational policies and compliance requirements. Condition: During the audit we noted that the Organization had not retained documentation showing that the required reports were submitted timely for subawards 194586 and 196178. Cause: The Organization's financial management did not retain documentation indicating that the reports were submitted timely. Effect or Potential Effect: This condition may lead to non-compliance with reporting requirements. Questioned Costs: N/A Context: This issue was noted across multiple reporting instances. While management submitted complete and accurate reports, documentation confirming timely submission was not retained. Identification as a Repeat Finding: This is a repeat finding. See 2024-003. Recommendation: We recommend that the Organization implement policies, procedures, and controls to ensure that there are documented and retrievable records to indicate that reports were submitted timely. Views of Responsible Officials: Management concurs with the finding and will ensure that records are maintained to indicate timely submission of reports.
Finding Reference: 2025-006 Federal Agency: U.S. Department of Health and Human Services Federal Program Title and ALN: Child Care and Development Block Grant (CCDF Cluster) (ALN 93.575) Compliance Requirement: Reporting – Financial Reporting (L) (MW) Type of finding: Significant Deficiency in Internal Control (SD), Instance of Noncompliance (NC) Statement of Condition: During our audit procedures, we noted that during fiscal year 2024-2025, the Program did not submit the required accumulated expenditure reports within the 15-day reporting deadlines established. In addition, the final financial reports required under the award were not submitted within the 90-day deadline. Criteria Title 2 Code of Federal Regulations (CFR) Sections 200.328 and 200.329 require subrecipients to submit accurate, complete, and timely financial and performance reports in accordance with the terms and conditions of the Federal award. In addition, the subaward agreement and reporting guidelines issued by ACUDEN establish specific deadlines for the submission of required financial reports, including final reports. Cause of Condition: The condition resulted, in part, from resource constraints experienced by the Program during the fiscal year, which affected the timely preparation and submission of required financial reports to ACUDEN. Effect of Condition: The untimely submission of accumulated expenditure reports and final financial reports may impair the pass-through entity's ability to effectively monitor program activities and financial performance on a timely basis and resulted in noncompliance with the reporting requirements established under the award. Recommendation: We recommend that Program management strengthen its procedures for monitoring reporting requirements and deadlines to ensure that all required financial reports, including final reports, are submitted timely in accordance with the terms and conditions of the award. Questioned Costs: None Prior-Year Finding: This is a new finding. View of Responsible Official and Planned Corrective Action Plan: Management established corrective measures immediately upon identifying the deficiency related to the untimely submission of the required reports. The Municipality implemented formal procedures to monitor reporting deadlines and ensure the timely submission of reports required by ACUDEN. Management will continue monitoring compliance with these corrective measures to ensure the timely submission of reports in future periods. Implementation Date: July 1, 2026 Responsible Person Mrs. Mayra Ortiz Arroyo, Finance and Budget Director
Finding 2025-013 – Noncompliance with Reporting Over Major Federal Program - Coronavirus State and Local Fiscal Recovery Funds (Repeat Finding – 2023-013, 2024-013) PASS-THROUGH GRANTOR: Direct Grant FEDERAL AGENCY: U.S. Department of Treasury ASSISTANCE LISTING: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Reporting QUESTIONED COSTS: $-0- Condition: During the test of 100% of expenditures for the Coronavirus State and Local Fiscal Recovery Funds, totaling $5,176,520, thirty (32) expenditures totaling $2,780,668, were not accurately reported in the proper period on the quarterly reports, and two expenditures to subrecipients totaling $121,362, were improperly classified as “Revenue Replacement” expense instead of using the “Infrastructure” expense category as required by the Reporting compliance requirement. Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal expenditures are made in accordance with federal compliance requirements. Effect of Condition: This condition resulted in noncompliance with grant requirements. Recommendation: OSAI recommends the County design and implement a system of internal controls to ensure the accuracy and completeness of reports and to ensure compliance with federal requirements. Management Response: Chairman of the Board of County Commissioners: The Board of County Commissioners will take measures to ensure future compliance with all requirements of federal grants. Criteria: Accountability and stewardship should be overall goals in management’s accounting of federal funds. Internal controls should be designed to monitor compliance with laws and regulations pertaining to grant contracts. Title 2 CFR § 200.303(a) Internal Controls reads (a) reads as follows: The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Controls Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Compliance and Reporting Guidance, State and Local Fiscal Recovery Funds (10. Reporting.) reads as follows: All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. In addition, where appropriate, your organization needs to establish controls to ensure completion and timely submission of all mandatory performance and/or compliance reporting. Further, 2 CFR § 200.329 Monitoring and Reporting Program Performance (c)(1) reads as follows The non-Federal entity must submit performance reports at the interval required by the Federal awarding agency or pass-through entity to best inform improvements in program outcomes and productivity. Intervals must be no less frequent than annually nor more frequent 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. Reports submitted annually by the non-Federal entity and/or pass-through entity must be due no later than 90 calendar days after the reporting period. Reports submitted quarterly or semiannually must be due no later than 30 calendar days after the reporting period. Alternatively, the Federal awarding agency or pass-through entity may require annual reports before the anniversary dates of multiple year Federal awards. The final performance report submitted by the non-Federal entity and/or pass-through entity must be due no later than 120 calendar days after the period of performance end date. A subrecipient must submit to the pass-through entity, no later than 90 calendar days after the period of performance end date, all final performance reports as required by the terms and conditions of the Federal award. See also § 200.344. If a justified request is submitted by a non-Federal entity, the Federal agency may extend the due date for any performance report.
Finding 2025-014 – Noncompliance with Reporting Over Major Federal Program – Coronavirus State and Local Fiscal Recovery Funds (Repeat Finding – 2022-014, 2023-014, 2024-014) PASS-THROUGH GRANTOR: Direct Grant FEDERAL AGENCY: U.S. Department of Treasury ASSISTANCE LISTING: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Reporting QUESTIONED COSTS: $0 Condition: During the test of sixty-five (65) expenditures for the Coronavirus State and Local Fiscal Recovery Funds, totaling $4,254,839, seventeen (17) expenditures, totaling $1,280,024, were not accurately reported in the proper period on the quarterly reports as required by the program. Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal expenditures are properly reported in accordance with federal compliance requirements. Effect of Condition: This condition resulted in noncompliance with grant requirements. Recommendation: OSAI recommends the County design and implement a system of internal controls to ensure the accuracy and completeness of reports and to ensure compliance with federal requirements. Management Response: Chairman of the Board of County Commissioners: The Board of County Commissioners have hired a grant administrator to assist with the reporting process. We will ensure that the reports are accurate and reported in the proper period. Criteria: GAO Standards – Section 2 – Establishing an Effective Internal Control System – OV2.23 states in part: Objectives of an Entity – Compliance Objectives Management conducts activities in accordance with applicable laws and regulations. As part of specifying compliance objectives, the entity determines which laws and regulations apply to the entity. Management is expected to set objectives that incorporate these requirements. Title 2 CFR § 200.303(a) Internal Controls reads (a) reads as follows: The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Additionally, Compliance and Reporting Guidance, State and Local Fiscal Recovery Funds (10. Reporting.) reads as follows: 10. Reporting. All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. In addition, where appropriate, your organization needs to establish controls to ensure completion and timely submission of all mandatory performance and/or compliance reporting. See Part 2 of this guidance for a full overview of recipient reporting responsibilities. Further, 2 CFR § 200.329 Monitoring and Reporting Program Performance (c)(1) reads as follows: The non-Federal entity must submit performance reports at the interval required by the Federal awarding agency or pass-through entity to best inform improvements in program outcomes and productivity. Intervals must be no less frequent than annually nor more frequent 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. Reports submitted annually by the non-Federal entity and/or pass-through entity must be due no later than 90 calendar days after the reporting period. Reports submitted quarterly or semiannually must be due no later than 30 calendar days after the reporting period. Alternatively, the Federal awarding agency or pass-through entity may require annual reports before the anniversary dates of multiple year Federal awards. The final performance report submitted by the non-Federal entity and/or pass-through entity must be due no later than 120 calendar days after the period of performance end date. A subrecipient must submit to the pass-through entity, no later than 90 calendar days after the period of performance end date, all final performance reports as required by the terms and conditions of the Federal award. See also § 200.344. If a justified request is submitted by a non-Federal entity, the Federal agency may extend the due date for any performance report.
Health Center Program Cluster – Assistance Listing Nos. 93.224 and 93.527 U.S Department of Health and Human Services Award No. 5 H80CS00681-23-07, June 1, 2024 – May 31, 2025 Award No. 6 H80CS00681-24-04, June 1, 2025 – May 31, 2026 Criteria or Specific Requirement – Reporting – 2 CFR 200.329 Condition – The Organization is required to prepare and submit an annual Uniform Data System (UDS) for each calendar year for the Health Center Program Cluster. This report is to be prepared using accurate financial information. Cause – The Organization was unable to provide supporting documentation that agreed to the line items tested on the report. Effect or potential effect– Potential errors were made on the annual UDS report. Questioned Costs – None Context – The Organization’s annual UDS report was selected for testing. Of the ten inputs tested, four exceptions were noted related to the annual UDS report. Identification as a repeat finding, if applicable – Not a repeat finding. Recommendation – The Organization should revise polices and procedures over federal reporting to ensure reports are prepared using accurate information and supporting documentation for federal grant reports should be maintained. Views of Responsible Officials and Planned Corrective Actions – Management Response - Management concurs with the auditor's finding. The Organization acknowledges that a mistake was made on Table 9E-Other Revenue, where grant income, from the Early Childhood Development (ECD) grant, was listed in the incorrect location. The ECD grant should have been listed under Federal Grants: UHI Grant Revenue. Additionally, the Organization's UDS preparer, completed a transposition error when entering a salary amount in Table 8A. Corrective Action Planned - Management has engaged with an independent 3rd party accounting firm to review current processes, assist with strengthening internal controls and month-end/year-end closing procedures, and provide assistance in completing the Organization's annual UDS report. Completion Date - Completed 1/1/2026 Responsible Contact Person - Margret Guy, Director of Revenue; Julie Brilley, CEO
Federal agency: Federal Aviation Administration Federal program title: Airport Improvement Program Assistance Listing Number: 20.106 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: July 1, 2024 to June 30, 2025 Type of Finding: Significant Deficiency in Internal Control over Compliance, Other Matter Criteria: Federal Aviation Administration (FAA) guidelines require Airport Improvement Program recipients to submit periodic financial reports, including SF-425 (Federal Financial Report), Form 5100-127 (Operating and Financial Summary), Form 5100-126 (Financial Government Payment Report), Form 5370-1 (Construction Progress and Inspection Report), and Form SF-271 (Requests for Reimbursement) in accordance with 2 CFR §200.328 and §200.329. Condition: During our testing, we noted that 3 of the 5 grants tested for SF-425 were not submitted for Fiscal year ended June 30, 2025. Questioned costs: None Context: Three of the five SF-425 reports selected for testing that were required to be submitted during the fiscal year were not prepared by the County and, therefore, were not submitted to the grantor agency. As a result, these reports were unavailable for audit. Cause: The Aviation Department continued working through a backlog of previously unsubmitted grant reports. The Department has been coordinating with the FAA to address historical non‑submission and ensure all required reports are submitted. While progress has been made, the volume of prior‑year reports and ongoing staffing constraints have contributed to delays in completing and submitting the remaining backlog. Effect: The County’s failure to submit all the required reports for each of its three Airport Improvement Program grants resulted in noncompliance with FAA reporting requirements under 2 CFR §200.328 and §200.329. This lack of reporting may impact the County’s ability to demonstrate proper stewardship of federal funds, delay reimbursement processing, and potentially affect future grant eligibility or funding decisions. Repeat Finding: Finding is a repeat finding from the prior year (2024-006). Recommendation: CLA recommends that the County continue providing staff with training related to identifying and complying with grant reporting requirements. In addition, CLA recommends that the County maintain and enhance tracking procedures, such as a monitoring checklist, to ensure all required grant reports including those related to prior‑year activity are submitted accurately and in a timely manner. Views of responsible officials: There is no disagreement with the audit finding.
Finding No: 2025-006 – Internal control deficiencies over accounting for federal funds received Federal Programs ALN 97.036, Disaster Grants - Public Assistance (Presidentially Declared Disasters) ALN 21.027, Coronavirus State and Local Fiscal Recovery Funds Name of Federal Agency ALN 21.027, Coronavirus State and Local Fiscal Recovery Funds Category U.S. Department of Treasury U.S. Department of Homeland Security Compliance Requirement Activities Allowed/Unallowed, Allowable Costs/Cost Principles, Period of Performance, Project Accounting. Criteria 2 CFR Part 200 Subpart D Subsection 200.302 states the following: The recipient's and subrecipient's financial management system must provide for the following: 1. Identification of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number, year the Federal award was issued, and name of the Federal agency or pass-through entity. 2. Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. When a federal agency or pass-through entity requires reporting on an accrual basis from a recipient or subrecipient that maintains its records other than on an accrual basis, the recipient or subrecipient must not be required to establish an accrual accounting system. This recipient or subrecipient may develop accrual data for its reports based on an analysis of the documentation on hand. Puerto Rico Ports Authority (A Component Unit of the Commonwealth of Puerto Rico) Schedule of Findings and Questioned Costs – (Continued) Year Ended June 30, 2025 - 102 - Part III – Federal Award Findings and Questioned Costs – (continued) Finding No: 2025-006 – Internal control deficiencies over accounting for federal funds received Criteria – (continued) 3. Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. 4. Effective control over and accountability for all funds, property, and assets. The recipient or subrecipient must safeguard all assets and ensure they are used solely for authorized purposes. See § 200.303. 5. Comparison of expenditures with budget amounts for each Federal award. 6. Written procedures to implement the requirements of § 200.305. 7. Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award. In addition, the 2 CFR Compliance Supplement states the following under Special Test and Provisions – Project Accounting: For large projects, the recipient is required to make an accounting to Federal Emergency Management Agency (FEMA) of eligible costs. Similarly, the subrecipient must make an accounting to the recipient. In submitting the accounting, the entity is required to certify that reported costs were incurred in performance of eligible work, that the approved work was completed, that the project is in compliance with the provisions of the FEMA-State Agreement, all grant conditions were met, and that payments for that project were made in accordance with the applicable payment provisions. For improved and alternate projects, if the total cost of the projects does not equal or exceed the approved eligible costs, then the auditor should expect to see an adjustment to reduce eligible costs (44 CFR section 206.205). For Small Projects, FEMA does not adjust estimated costs to the actual incurred amount. The Subrecipient must certify that they completed the approved SOW, and the Recipient must certify that they made all payments in accordance with the FEMA-State/Territory/Tribe agreement. This is typically completed on a Small Project Completion Certification. Puerto Rico Ports Authority (A Component Unit of the Commonwealth of Puerto Rico) Schedule of Findings and Questioned Costs – (Continued) Year Ended June 30, 2025 - 103 - Part III – Federal Award Findings and Questioned Costs – (continued) Finding No: 2025-006 – Internal control deficiencies over accounting for federal funds received Condition During our procedures over the Authority’s funds received from FEMA we noticed the following: 1. Return of interest earned on FEMA-related funds totaling approximately $211,853 was not timely recorded in the general ledger and was subsequently recorded through a post-closing entry dated January 26, 2026. 2. Management initially misclassified approximately $6 million received under the Coronavirus State and Local Fiscal Recovery Funds as state funds rather than federal awards. As a result, the amount was originally excluded from the Schedule of Expenditures of Federal Awards (the Schedule). Cause The condition was caused by the Authority's lack of personnel on the federal funds management office which has been present during prior audit periods, the early retirement program established under Act No. 80 of August 3, 2020 – “Law for Incentivized Retirement Program and Justice for Our Servants” (Act No. 80), and the resignation of some personnel from their occupied position and left the Authority willingly as stated in finding 2025-004 are the main causes for the condition. Effect Inadequate accounting and controls over federal funds can cause incorrect revenue recognition as capital advances are recognized as revenue when used appropriately and not when received. In addition, this can cause amounts to be included on the Schedule incorrectly as some of the activities received as capital advances have not actually occurred. It also creates risk of allocating funds in the incorrect federal awards as some of these have similar uses and assistance listing numbers. Also, the Authority could be subject to penalties or sanctions from the Federal Grantor. Puerto Rico Ports Authority (A Component Unit of the Commonwealth of Puerto Rico) Schedule of Findings and Questioned Costs – (Continued) Year Ended June 30, 2025 - 104 - Part III – Federal Award Findings and Questioned Costs – (continued) Finding No: 2025-006 – Internal control deficiencies over accounting for federal funds received Context The Authority recognized as federal award revenue of $6 million approximately, as contributions from the Commonwealth of Puerto Rico and therefore were originally not included in the Schedule. Also, $211,853 on the bank accounts where FEMA funds were deposited had to be returned since the funds cannot be deposited in an interest-bearing account. Journal entry recognizing this return was subsequently recorded through a post-closing entry dated January 26, 2026. Identification of repeat finding This is a repeat finding from the immediate previous audit, Finding 2025-006 Questioned costs None as adjustments were made during the audit to correct the misstatement. Recommendation We recommend the Authority’s Federal Funds Management Office (FFMO) and finance department coordinate with the external consultant who handles federal funds received from FEMA to better identify and classify funds received. In addition, we recommend the Authority to address the FFMO personnel limitations by hiring additional personnel for the Authority, re-shifting task between current personnel or by relaying on outsourced third party providers. Views of responsible officials and planned corrective actions We agreed with the auditors’ finding and recommendation. See further details regarding this matter within the Corrective Action Plan provided on pages 108-114.
Finding 2025-015 – Noncompliance with Reporting Over Major Federal Program – Coronavirus State and Local Fiscal Recovery Funds PASS-THROUGH GRANTOR: Direct Grant FEDERAL AGENCY: U.S. Department of Treasury ASSISTANCE LISTING: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds FEDERAL AWARD YEAR: 2021 CONTROL CATEGORY: Reporting QUESTIONED COSTS: $-0- Condition: During the test of 100% of expenditures for the Coronavirus State and Local Fiscal Recovery Funds totaling $10,706,312, reflected five (5) expenditures totaling $10,182,497, were not accurately reported in the proper period on the quarterly reports as required by the Reporting compliance requirement. Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal expenditures are properly reported in accordance with federal compliance requirements. Effect of Condition: This condition resulted in noncompliance with grant requirements. Recommendation: OSAI recommends the County design and implement a system of internal controls to ensure the accuracy and completeness of reports and to ensure compliance with federal requirements. Management Response: Chairman of the Board of County Commissioners: The BOCC will ensure that the reports are accurate and reported in the proper period. Criteria: GAO Standards – Section 2 – Establishing an Effective Internal Control System – OV2.23 states in part: Objectives of an Entity – Compliance Objectives Management conducts activities in accordance with applicable laws and regulations. As part of specifying compliance objectives, the entity determines which laws and regulations apply to the entity. Management is expected to set objectives that incorporate these requirements. 2 CFR § 200.303 Internal Controls (a) reads as follows: The non-Federal entity must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Additionally, Compliance and Reporting Guidance, State and Local Fiscal Recovery Funds (10. Reporting.) reads as follows: All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. In addition, where appropriate, your organization needs to establish controls to ensure completion and timely submission of all mandatory performance and/or compliance reporting. Further, 2 CFR § 200.329 Monitoring and Reporting Program Performance (c)(1) reads as follows: The non-Federal entity must submit performance reports at the interval required by the Federal awarding agency or pass-through entity to best inform improvements in program outcomes and productivity. Intervals must be no less frequent than annually nor more frequent 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. Reports submitted annually by the non-Federal entity and/or pass-through entity must be due no later than 90 calendar days after the reporting period. Reports submitted quarterly or semiannually must be due no later than 30 calendar days after the reporting period. Alternatively, the Federal awarding agency or pass-through entity may require annual reports before the anniversary dates of multiple year Federal awards. The final performance report submitted by the non-Federal entity and/or pass-through entity must be due no later than 120 calendar days after the period of performance end date. A subrecipient must submit to the pass-through entity, no later than 90 calendar days after the period of performance end date, all final performance reports as required by the terms and conditions of the Federal award. See also § 200.344. If a justified request is submitted by a non-Federal entity, the Federal agency may extend the due date for any performance report.
Reporting Federal Agency: U.S. Department of Agriculture Federal Program Title: Child Nutrition Cluster (CNC) State Administering Department: California Department of Education ALN: 10.553, 10.555, 10.556, 10.559, 10.582 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 247CACA3N1199; October 1, 2023 – September 30, 2024 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Title 2 – Federal Financial Assistance Subtitle A – Office of Management and Budget Guidance for Grants and Agreements. Chapter II – Office of Management and Budget Guidance. Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D – Post Federal Award Requirements. § 200.303 - Internal controls (2 CFR 200.303): The recipient and subrecipient must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). § 200.302 – Financial management (b) The recipient's and subrecipient's financial management system must provide for the following: (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. (3) Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. Title 2 – Federal Financial Assistance Subtitle A – Office of Management and Budget Guidance for Grants and Agreements Chapter I – Office of Management and Budget Government-Wide Guidance for Federal Financial Assistance Part 170 – Reporting Subaward and Executive Compensation Information Subpart A – General § 170.105 Applicability (a) Applicability in general. This part applies to a Federal agency’s Federal financial assistance as defined in § 170.300. This part applies to all recipients and subrecipients of Federal awards who meet the reporting requirements of paragraph (c) of this section, unless exempt under Federal statute or by paragraph (d) of this section. Appendix A to Part 170—Award Term I. Reporting Subawards and Executive Compensation (a) Reporting of first-tier subawards — (1) Applicability. Unless the recipient is exempt as provided in paragraph (d) of this award term, the recipient must report each subaward that equals or exceeds $30,000 in Federal funds for a subaward to an entity or Federal agency. The recipient must also report a subaward if a modification increases the Federal funding to an amount that equals or exceeds $30,000. All reported subawards should reflect the total amount of the subaward. (2) Reporting Requirements. (i) The recipient must report each subaward described in paragraph (a)(1) of this award term to the Federal Funding Accountability and Transparency Act (FFATA) subaward reporting functionality (formerly FSRS and now reported through SAM.gov) at http://www.fsrs.gov. (ii) For subaward information, report no later than the end of the month following the month in which the subaward was issued. (c) Reporting of total compensation of subrecipient executives — (1) Applicability. Unless a first-tier subrecipient is exempt as provided in paragraph (d) of this appendix, the recipient must report the executive total compensation of each of the subrecipient's five most highly compensated executives for the subrecipient's preceding completed fiscal year, if: (i) The total Federal funding authorized to date under the subaward equals or exceeds $30,000; (ii) In the subrecipient's preceding fiscal year, the subrecipient received: (A) 80 percent or more of its annual gross revenues from Federal procurement contracts (and subcontracts) and Federal awards (and subawards) subject to the Transparency Act; and, (B) $25,000,000 or more in annual gross revenues from Federal procurement contracts (and subcontracts), and Federal awards (and subawards) subject to the Transparency Act; and (iii) The public does not have access to information about the compensation of the executives through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986 after receiving this subaward. (To determine if the public has access to the compensation information, see the U.S. Security and Exchange Commission total compensation filings at http://www.sec.gov/answers/execomp.htm.) (2) Reporting Requirements. Subrecipients must report to the recipient their executive total compensation described in paragraph (c)(1) of this appendix. The recipient is required to submit this information to the Federal Funding Accountability and Transparency Act (FFATA) subaward reporting functionality (formerly FSRS and now reported through SAM.gov) at http://www.fsrs.gov no later than the end of the month following the month in which the subaward was made. As of March 2025, this functionality has been migrated to SAM.gov, which now serves as the system of record for FFATA subaward reporting. Condition: Audit procedures included testing FFATA reporting submissions for 40 subrecipients to evaluate compliance with federal reporting requirements and the design and implementation of internal controls over the FFATA reporting process. Our testing identified that FFATA reports for 40 of the 40 subrecipients were not submitted within the required reporting timeframe. Although the reports were ultimately submitted and the information reported was complete and accurate, the submissions were delayed following the federal government's transition from the FFATA Subaward Reporting System (FSRS.gov) to the SAM.gov Subaward Reporting platform. The transition eliminated the bulk upload functionality previously used by the Department, significantly increasing the manual effort required to complete FFATA reporting while the Department worked to implement the new reporting process. Questioned costs: None Context: See “Condition.” Cause: During fiscal year 2024-25, the U.S. General Services Administration (GSA) transitioned FFATA reporting from FSRS.gov to the SAM.gov Subaward Reporting system. As part of this transition, the bulk upload functionality previously utilized by the Department was not initially available in the new system, significantly increasing the resources needed to prepare and submit FFATA reports. The increased reporting burden, coupled with staffing constraints and technical challenges encountered during implementation of the new reporting platform, contributed to delays in submitting FFATA reports within federally required timeframes. Effect: As a result of the elimination of the bulk upload process, staffing limitations, and implementation challenges associated with the federal reporting system transition, FFATA reports for 40 of 40 subrecipients were not submitted within the federally required reporting deadlines, resulting in noncompliance with FFATA reporting requirements. However, all required reports were ultimately submitted and contained complete and accurate information. Repeat finding: No Recommendation: The Department should evaluate staffing and resource needs associated with FFATA reporting and establish contingency procedures to address significant changes in federal reporting processes. Management should continue to monitor federal system changes, document implementation challenges, and maintain communication with federal agencies when external system limitations affect reporting timeliness. Additionally, the Department should identify and implement process improvements, including available automated reporting solutions and workarounds, to mitigate the impact of future system changes and help ensure FFATA reports are submitted within required timeframes. Views of responsible officials: Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report.
Reporting Federal Agency: U.S. Department of Agriculture Federal Program Title: Summer Electronic Benefit Transfer Program for Children State Administering Department: California Department of Social Services (CDSS) ALN: 10.646 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 257CDSS7N1175; October 1, 2024 - September 30, 2025 257CDSS6N1803; October 1, 2024 - September 30, 2025 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Title 2 – Federal Financial Assistance Subtitle A – Office of Management and Budget Guidance for Grants and Agreements. Chapter II – Office of Management and Budget Guidance. Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D – Post Federal Award Requirements. § 200.303 - Internal controls (2 CFR 200.303): The recipient and subrecipient must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). § 200.302 – Financial management (b) The recipient's and subrecipient's financial management system must provide for the following: (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. §200.328 Financial reporting (c) The recipient or subrecipient must submit financial reports as required by the Federal award. Reports submitted annually by the recipient or subrecipient must be due no later than 90 calendar days after the reporting period. Reports submitted quarterly or semiannually must be due no later than 30 calendar days after the reporting period. (d) The final financial report submitted by the recipient must be due no later than 120 calendar days after the conclusion of the period of performance. A subrecipient must submit a final financial report to a pass-through entity no later than 90 calendar days after the conclusion of the period of performance. Title 7 – Agriculture Subtitle B - Regulations of the Department of Agriculture Chapter II - Food and Nutrition Service, Department of Agriculture Subchapter C - Supplemental Nutrition Assistance and Food Distribution Program Part 274 – Issuance and Use of Program Benefits § 274.1 Issuance system approval standards (a) Basic issuance requirements. State agencies shall establish issuance and accountability systems which ensure that only certified eligible households receive benefits; that Program benefits are timely distributed in the correct amounts; and that benefit issuance and reconciliation activities are properly conducted and accurately reported to FNS. § 274.4 Reconciliation and reporting (c) Required reports. The State agency shall review and submit the following reports to FNS on a monthly basis: (1) Form FNS-46, Issuance Reconciliation Report, shall be submitted by each State agency operating an issuance system. The report shall be prepared at the level of the State agency where the actual reconciliation of posted benefits and the master issuance file occurs. (i) The State agency shall identify and report the number and value of all issuances which do not reconcile with the master issuance file. All unreconciled issuances shall be identified as specified on this reporting document. (ii) The report shall be received by FNS no later than 90 days following the end of the report month. Condition: Audit procedures included a review of 3 FNS-46 reports selected from a population of 12 reports submitted during the audit period to determine whether reports were filed in accordance with federal reporting deadlines. Of the 3 reports tested, 2 were not submitted within the required timeframe. Specifically, the reports were submitted 23 and 38 days after the applicable federal due dates. As a result, the Department did not consistently comply with federal reporting requirements for timely submission of FNS-46 reports. Questioned costs: None Context: See “Condition.” Cause: The Department did not maintain sufficiently precise internal controls to ensure FNS-46 reports were prepared, reviewed, and submitted in accordance with federally established reporting deadlines. Specifically, monitoring and supervisory review procedures were not designed or operating at a level of precision sufficient to identify and correct delays in report preparation and submission before the applicable due dates. As a result, late submissions were not detected and resolved in a timely manner. Effect: Failure to submit FNS-46 reports in a timely manner delays federal oversight of S-EBT issuance activity and increases the risk that reconciliation issues, including improper or unsupported issuances, are not promptly identified and resolved. Continued delays may result in noncompliance with federal reporting requirements and reduce the usefulness of reported information for program oversight. Repeat finding: No Recommendation: We recommend that the Department implement controls to ensure timely submission of FNS-46 reports, including establishing a formal reporting calendar aligned with the 90-day requirement, assigning clear responsibility for report preparation and review, and implementing monitoring procedures to track progress and escalate delays. Controls should operate with sufficient precision to ensure all required reports are completed and submitted within prescribed deadlines. Views of responsible officials: Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report.
Reporting Federal Agency: U.S. Department of Labor Federal Program Title: Unemployment Insurance State Administering Department: Employment Development Department (EDD) ALN: 17.225 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: UI347022055A6; April 1, 2020 – June 30, 2025 UI387882255A6; April 1, 2022 – May 22, 2025 23A60UR000018; January 1, 2023 – September 30, 2025 23A55UD000003; February 27, 2023 – September 30, 2025 23A60UB000081; April 1, 2023 – May 22, 2025 23A55UD000007; April 27, 2023 – April 26, 2026 24A55UT000026; October 1, 2023 – September 30, 2024 24A60UD000027; February 19, 2024 – February 19, 2027 25A55UE000010; July 1, 2024 – December 31, 2025 25A60UD000072; January 8, 2025 – January 8, 2028 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Material Weakness in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Title 2 – Federal Financial Assistance Subtitle A – Office of Management and Budget Guidance for Grants and Agreements. Chapter II – Office of Management and Budget Guidance. Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D – Post Federal Award Requirements. § 200.303 - Internal controls (2 CFR 200.303): The recipient and subrecipient must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). § 200.302 – Financial management (b) The recipient's and subrecipient's financial management system must provide for the following: (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. (3) Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. Subtitle B – Federal Agency Regulations for Grants and Agreements Chapter XXIX – Department of Labor Part 2900 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards Subpart D – Post Federal Award Requirements § 2900.14 – Financial reporting In addition to the guidance set forth in 2 CFR 200.328, for Federal awards from the Department of Labor, the DOL awarding agency will prescribe whether the report will be on a cash or an accrual basis. If the DOL awarding agency requires reporting on an accrual basis and the recipient's accounting system is not on the accrual basis, the recipient will not be required to convert its accounting system, but must develop and report such accrual information through best estimates based on an analysis of the documentation on hand. ETA-9130 Reporting Requirements 1) Submission of the ETA-9130 is required on a quarterly basis. Reporting quarter end dates shall correspond to the following calendar quarter end dates: March 31, June 30, September 30, and December 31. A final quarter ETA-9130 is required at the completion of the quarter, encompassing the grant award end date, or at the completion of the quarter in which all funds have been expended, whichever comes first. 2) Quarterly reports, including the final quarter report, are required to be submitted no later than 45 calendar days after the end of each specified reporting period. The reporting due dates are: May 15, August 15, November 15, and February 15. The deadlines for ETA-9130 submissions do not change, even in instances when the reporting due date falls on a weekend or holiday. The e-reporting system is available 24 hours a day, 7 days a week, and reports can be submitted in advance of the due date. 3) All financial data is required to be reported cumulative from grant inception, through the end of each reporting period. Expenditure data is required to be reported on an accrual basis. 4) A separate ETA-9130 is required for each program and each fund source (subaccount) awarded to a grant recipient. 5) All sections of the report must be completed unless otherwise noted in the grant agreement Condition: Audit procedures included a review of the entire population of Form 9130 reports for administrative expenses, consisting of 22 reports. Our testing identified that certain reported amounts did not agree to the underlying general ledger for 12 reports, resulting in a total variance of $32,843,139. Additionally, audit procedures identified that internal controls over reporting were not operating effectively to ensure the timely and accurate submission of reports. Specifically, six reports were not submitted by the required due dates, and 12 reports contained inaccuracies at the time of submission, and controls were not performed with sufficient precision to verify that reported information was complete and accurate in accordance with federal reporting requirements. Questioned costs: None Context: See “Condition.” Cause: The controls over the preparation and review of Form 9130 reports that were not performed with sufficient precision to identify and resolve discrepancies between reported amounts and the underlying general ledger. Specifically, controls were not designed or operating at a level precise enough to ensure that reported data was accurate, reconciled, and submitted in a timely manner in accordance with federal requirements. As a result, variances and reporting errors were not detected or corrected prior to submission. Effect: The lack of a robust and thorough reconciliation process between Form 9130 reports and the Administrative Fund (870) general ledger may lead to inaccurate reporting. Repeat finding: Yes – 2024-003 Recommendation: Management should establish a formal reconciliation process to ensure that Form 9130 administrative expense reports align with the general ledger. This process should include assigning responsibility to a designated finance team member for performing and documenting reconciliations, implementing a monthly reconciliation schedule, and promptly investigating and resolving any variances with documented approvals. Additionally, financial reporting policies should be updated to incorporate reconciliation requirements, and staff should receive training on compliance and reconciliation procedures to strengthen internal controls and reduce the risk of reporting inaccuracies. Views of responsible officials: Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report.
Reporting Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Aging Cluster State Administering Department: California Department of Aging ALN: 93.044, 93.045, 93.053 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 2401CAOACM; October 1, 2023 – September 30, 2025 2401CAOAHD; October 1, 2023 – September 30, 2025 2401CAOANS; October 1, 2023 – September 30, 2025 2401CAOASS; October 1, 2023 – September 30, 2025 2501CAOACM; October 1, 2024 – September 30, 2026 2501CAOAHD; October 1, 2024 – September 30, 2026 2501CAOANS; October 1, 2024 – September 30, 2026 2501CAOASS; October 1, 2024 – September 30, 2026 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Title 2 – Federal Financial Assistance Subtitle A – Office of Management and Budget Guidance for Grants and Agreements. Chapter II – Office of Management and Budget Guidance. Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D – Post Federal Award Requirements. § 200.303 - Internal controls (2 CFR 200.303): The recipient and subrecipient must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). § 200.302 – Financial management (b) The recipient's and subrecipient's financial management system must provide for the following: (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. (3) Maintaining records that sufficiently identify the amount, source, and expenditure of Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. Title 2 – Federal Financial Assistance Subtitle A – Office of Management and Budget Guidance for Grants and Agreements Chapter I – Office of Management and Budget Government-Wide Guidance for Federal Financial Assistance Part 170 – Reporting Subaward and Executive Compensation Information Subpart A – General § 170.105 Applicability (a) Applicability in general. This part applies to a Federal agency’s Federal financial assistance as defined in § 170.300. This part applies to all recipients and subrecipients of Federal awards who meet the reporting requirements of paragraph (c) of this section, unless exempt under Federal statute or by paragraph (d) of this section. Appendix A to Part 170—Award Term I. Reporting Subawards and Executive Compensation (a) Reporting of first-tier subawards — (1) Applicability. Unless the recipient is exempt as provided in paragraph (d) of this award term, the recipient must report each subaward that equals or exceeds $30,000 in Federal funds for a subaward to an entity or Federal agency. The recipient must also report a subaward if a modification increases the Federal funding to an amount that equals or exceeds $30,000. All reported subawards should reflect the total amount of the subaward. (2) Reporting Requirements. (i) The recipient must report each subaward described in paragraph (a)(1) of this award term to the Federal Funding Accountability and Transparency Act (FFATA) subaward reporting functionality (formerly FSRS and now reported through SAM.gov) at http://www.fsrs.gov. (ii) For subaward information, report no later than the end of the month following the month in which the subaward was issued. (c) Reporting of total compensation of subrecipient executives — (1) Applicability. Unless a first-tier subrecipient is exempt as provided in paragraph (d) of this appendix, the recipient must report the executive total compensation of each of the subrecipient's five most highly compensated executives for the subrecipient's preceding completed fiscal year, if: (i) The total Federal funding authorized to date under the subaward equals or exceeds $30,000; (ii) In the subrecipient's preceding fiscal year, the subrecipient received: (A) 80 percent or more of its annual gross revenues from Federal procurement contracts (and subcontracts) and Federal awards (and subawards) subject to the Transparency Act; and, (B) $25,000,000 or more in annual gross revenues from Federal procurement contracts (and subcontracts), and Federal awards (and subawards) subject to the Transparency Act; and (iii) The public does not have access to information about the compensation of the executives through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986 after receiving this subaward. (To determine if the public has access to the compensation information, see the U.S. Security and Exchange Commission total compensation filings at http://www.sec.gov/answers/execomp.htm.) (2) Reporting Requirements. Subrecipients must report to the recipient their executive total compensation described in paragraph (c)(1) of this appendix. The recipient is required to submit this information to the FFATA subaward reporting functionality (formerly FSRS and now reported through SAM.gov) at http://www.fsrs.gov no later than the end of the month following the month in which the subaward was made. As of March 2025, this functionality has been migrated to SAM.gov, which now serves as the system of record for FFATA subaward reporting. Condition: Audit procedures included a review of 60 FFATA reporting submissions associated with subrecipients. During this review, we assessed compliance with federal reporting requirements and evaluated the adequacy of internal controls over the FFATA reporting process. Of the 60 subrecipients examined, we identified that FFATA reporting was not performed timely for 31 subrecipients. Additionally, audit procedures further determined that reporting was only being performed once annually for all sampled subrecipients, rather than on an ongoing basis as required. The department lacked documented procedures and monitoring mechanisms to ensure timely and accurate reporting, including verification that subrecipient data was submitted in accordance with federal requirements. Questioned costs: None Context: See “Condition.” Cause: Procedures to perform the required FFATA reporting were not established by the Department. The absence of documented policies, assigned responsibilities, and monitoring mechanisms create an environment which may result in noncompliance with federal reporting. Effect: The lack of established procedures and internal controls for FFATA reporting resulted in noncompliance, with 31 out of 60 subrecipients not reported timely as required. Repeat finding: Yes, 2024-013 Recommendation: The Department should implement a robust process and related internal controls to ensure timely and accurate FFATA reporting. These controls should include developing written policies and procedures that outline the steps for collecting subrecipient data, preparing reports, and submitting them within required timelines; assigning accountability by designating specific personnel responsible for compliance; and implementing a monitoring and review process to verify completion and accuracy of reporting. Additionally, training programs should be established to ensure staff understand reporting requirements, and automated tracking tools or checklists should be utilized to provide transparency and reduce the risk of missed submissions. By introducing these internal controls, the Department can strengthen its compliance framework, mitigate the risk of federal funding repercussions, and enhance overall operational integrity. Views of responsible officials: Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report.
Subrecipient Monitoring Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Epidemiology and Laboratory Capacity for ProgramInfectious Diseases (ELC) State Administering Department: California Department of Public Health ALN: 93.323 Pass-Through Agency: Heluna Health Pass-Through Number(s): 95-2557063 Award Number and Period: NU50CK000539; August 1, 2019 – July 31, 2027 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Title 2 – Federal Financial Assistance Subtitle A – Office of Management and Budget Guidance for Grants and Agreements. Chapter II – Office of Management and Budget Guidance. Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D – Post Federal Award Requirements. § 200.303 - Internal controls (2 CFR 200.303): The recipient and subrecipient must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). § 200.302 – Financial management (b) The recipient's and subrecipient's financial management system must provide for the following: (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. (3) Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. § 200.332 – Requirements for pass-though entities A pass-through entity must: (b) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the information provided below. A pass-through entity must provide the best available information when some of the information below is unavailable. A pass-through entity must provide the unavailable information when it is obtained. Required information includes: (1) Federal award identification. (i) Subrecipient's name (must match the name associated with its unique entity identifier); (ii) Subrecipient's unique entity identifier; (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date; (v) Subaward Period of Performance Start and End Date; (vi) Subaward Budget Period Start and End Date; (vii) Amount of Federal Funds Obligated in the subaward; (viii) Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity, including the current financial obligation; (ix) Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; (x) Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA); (xi) Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity; (xii) Assistance Listings title and number; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at the time of disbursement; (xiii) Identification of whether the Federal award is for research and development; and (xiv) Indirect cost rate for the Federal award (including if the de minimis rate is used in accordance with § 200.414). Condition: Audit procedures included a review of eleven subrecipient agreements to determine whether the pass-through entity included the information required to be communicated to subrecipients in accordance with Uniform Guidance. Of the eleven agreements tested, all eleven (100%) did not contain one or more required federal award identification elements. Specifically, the agreements omitted the subrecipient’s Unique Entity Identifier (UEI), the Federal Award Identification Number (FAIN), the Federal award date, the applicable Assistance Listing Number (ALN), identification of whether the award was designated as research and development (R&D), and the applicable indirect cost rate for the federal award, including whether the de minimis indirect cost rate authorized under 2 CFR §200.414 was being used. As a result, the subrecipient agreements did not include all information required to be provided to subrecipients under 2 CFR §200.332(b). Questioned costs: None Context: See “Condition.” Cause: Controls designed to ensure the inclusion of all federally required award identification information in subrecipient agreements were not operating with sufficient precision to identify and prevent the omission of required elements prior to execution of the agreements. As a result, agreements were issued without all information required under 2 CFR §200.332(b), including the UEI, FAIN, Federal award date, ALN, identification of whether the award was designated as R&D, and the applicable indirect cost rate. Effect: The omission of required federal award information from subrecipient agreements may limit subrecipients' understanding of applicable federal award requirements and increase the risk of noncompliance with federal regulations. Incomplete award information may also result in inaccurate or inconsistent administration, monitoring, and reporting of federal awards by subrecipients and the pass-through entity. Repeat finding: Yes – 2024-009 Recommendation: Public Health should ensure every subaward includes all requirements imposed on the subrecipient so that the federal award is used in accordance with Federal statutes, regulations and the terms and conditions of the federal award. Views of responsible officials: Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report.
Reporting Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Foster Care Title IV-E State Administering Department: California Department of Social Services (CDSS) ALN: 93.658 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 2501CAFOST; October 1, 2024- September 30, 2025 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Title 2 – Federal Financial Assistance Subtitle A – Office of Management and Budget Guidance for Grants and Agreements. Chapter II – Office of Management and Budget Guidance. Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D – Post Federal Award Requirements. § 200.303 - Internal controls (2 CFR 200.303): The recipient and subrecipient must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). § 200.302 – Financial management (b) The recipient's and subrecipient's financial management system must provide for the following: (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. (3) Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. Title 2 – Federal Financial Assistance Subtitle A – Office of Management and Budget Guidance for Grants and Agreements Chapter I – Office of Management and Budget Government-Wide Guidance for Federal Financial Assistance Part 170 – Reporting Subaward and Executive Compensation Information Subpart A – General § 170.105 Applicability (a) Applicability in general. This part applies to a Federal agency’s Federal financial assistance as defined in § 170.300. This part applies to all recipients and subrecipients of Federal awards who meet the reporting requirements of paragraph (c) of this section, unless exempt under Federal statute or by paragraph (d) of this section. Appendix A to Part 170—Award Term I. Reporting Subawards and Executive Compensation (a) Reporting of first-tier subawards — (1) Applicability. Unless the recipient is exempt as provided in paragraph (d) of this award term, the recipient must report each subaward that equals or exceeds $30,000 in Federal funds for a subaward to an entity or Federal agency. The recipient must also report a subaward if a modification increases the Federal funding to an amount that equals or exceeds $30,000. All reported subawards should reflect the total amount of the subaward. (2) Reporting Requirements. (i) The recipient must report each subaward described in paragraph (a)(1) of this award term to the Federal Funding Accountability and Transparency Act (FFATA) subaward reporting functionality (formerly FSRS and now reported through SAM.gov) at http://www.fsrs.gov. (ii) For subaward information, report no later than the end of the month following the month in which the subaward was issued. (c) Reporting of total compensation of subrecipient executives — (1) Applicability. Unless a first-tier subrecipient is exempt as provided in paragraph (d) of this appendix, the recipient must report the executive total compensation of each of the subrecipient's five most highly compensated executives for the subrecipient's preceding completed fiscal year, if: (i) The total Federal funding authorized to date under the subaward equals or exceeds $30,000; (ii) In the subrecipient's preceding fiscal year, the subrecipient received: (A) 80 percent or more of its annual gross revenues from Federal procurement contracts (and subcontracts) and Federal awards (and subawards) subject to the Transparency Act; and, (B) $25,000,000 or more in annual gross revenues from Federal procurement contracts (and subcontracts), and Federal awards (and subawards) subject to the Transparency Act; and (iii) The public does not have access to information about the compensation of the executives through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986 after receiving this subaward. (To determine if the public has access to the compensation information, see the U.S. Security and Exchange Commission total compensation filings at http://www.sec.gov/answers/execomp.htm.) (2) Reporting Requirements. Subrecipients must report to the recipient their executive total compensation described in paragraph (c)(1) of this appendix. The recipient is required to submit this information to the FFATA subaward reporting functionality (formerly FSRS and now reported through SAM.gov) at http://www.fsrs.gov no later than the end of the month following the month in which the subaward was made. As of March 2025, this functionality has been migrated to SAM.gov, which now serves as the system of record for FFATA subaward reporting. Condition: Audit procedures included a review of the entire population of 58 FFATA subaward submissions for the Foster Care program reported in SAM.gov during the year ended June 30, 2025, and a comparison of those submissions to the related funding actions. Testing identified that all 58 subawards, representing 100 percent of the population, were reported after the required reporting deadline. Based on inquiry and review of supporting documentation, CDSS prepared and submitted the FFATA reporting file; however, certain submitted records were rejected by the reporting system and required correction and resubmission. Because the submission and review process was performed too close to the applicable reporting deadline, there was insufficient time to identify, resolve, and successfully resubmit the rejected records before the deadline. As a result, FFATA subaward information was not reported within the timeframe required by federal reporting requirements. The results of testing indicate that controls over FFATA reporting did not operate with sufficient precision to ensure submitted records were timely reviewed, validated, and accepted prior to applicable reporting deadlines. Accordingly, FFATA reporting was not consistently completed in a timely manner in accordance with federal requirements. Questioned costs: None Context: See “Condition.” Cause: CDSS did not maintain controls over the FFATA reporting process that operated with sufficient precision to ensure subaward submissions were completed, validated, and accepted before applicable federal reporting deadlines. Specifically, FFATA reports were submitted too near the reporting deadline to allow sufficient time to identify, investigate, and correct rejected submissions. In addition, CDSS did not have monitoring procedures to review submission status, follow up on system-generated rejection notices, and verify that all submitted records had been successfully accepted in SAM.gov before the reporting deadline. As a result, submission errors were not resolved timely, resulting in late reporting of all reportable subawards. Effect: Untimely reporting reduced the timeliness, transparency, and reliability of publicly available federal spending information and limited the ability of federal agencies, oversight bodies, and the public to promptly monitor the distribution of federal funds to subrecipients. In addition, the lack of controls to timely identify and resolve rejected submissions increases the risk that future FFATA reporting deadlines may not be met. Repeat finding: No Recommendation: We recommend that CDSS strengthen its department-wide controls over FFATA reporting to ensure reportable subawards are identified, reviewed, and submitted within required federal reporting deadlines. Specifically, CDSS should establish and implement centralized procedures to track subaward actions, amendments, allocation changes, and other reportable funding events; monitor applicable FFATA reporting deadlines; and maintain documentation demonstrating that reportable subawards have been evaluated and reported timely. In addition, CDSS should implement review controls that operate with sufficient precision to verify that all reportable subawards have been identified, reporting deadlines have been met, and FFATA submissions are complete, accurate, and supported by underlying award documentation prior to submission in SAM.gov. These procedures should include documented supervisory review, reconciliation of reportable subaward activity to source documentation, and periodic monitoring to identify and resolve untimely or omitted submissions. Views of responsible officials: Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report. Response to views of responsible officials: We acknowledge CDSS's position that an initial FFATA submission was made on November 27, 2024, and that only two records required correction and resubmission. However, CDSS did not provide sufficient documentation to support the asserted November 27 submission date, such as submission confirmations, systemgenerated reports, audit logs, or other contemporaneous evidence demonstrating that the subaward information was successfully submitted before the reporting deadline. The audit evidence available for inspection reflected a submission date after the required deadline for all 58 Foster Care subawards. Although CDSS indicated that only two records failed during the original upload process, documentation supporting that assertion and the cause of the upload failure was not provided for audit review. Accordingly, based on the evidence available, we were unable to verify that FFATA reporting requirements were met by the applicable deadline. Therefore, we continue to conclude that the finding is valid as presented.
Reporting Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Child Care and Development Block Grant/Child Care Mandatory and Matching Funds of the Child Care and Development Fund State Administering Department: California Department of Social Services (CDSS) ALN: 93.575, 93.596 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 2101CACDC6; October 1, 2020 – September 30, 2024 2334CACCDD; October 1, 2022 – September 30, 2025 2334CACCDF; October 1, 2022 – September 30, 2025 2334CACCDM; October 1, 2022 – September 30, 2025 2434CACCDD; October 1, 2023 – September 30, 2026 2434CACCDF; October 1, 2023 – September 30, 2026 2434CACCDM; October 1, 2023 – September 30, 2025 2534CACCDD; October 1, 2024 – September 30, 2027 2534CACCDF; October 1, 2024 – September 30, 2027 2534CACCDM; October 1, 2024 – September 30, 2026 2534CACCDY; December 21, 2024 – September 30, 2028 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Material Weakness in Internal Control over Complianceand Material Noncompliance Criteria or specific requirement: Title 2 – Federal Financial Assistance Subtitle A – Office of Management and Budget Guidance for Grants and Agreements. Chapter II – Office of Management and Budget Guidance. Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D – Post Federal Award Requirements. § 200.303 - Internal controls (2 CFR 200.303): The recipient and subrecipient must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). § 200.302 – Financial management (b) The recipient's and subrecipient's financial management system must provide for the following: (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. (3) Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. §200.328 Financial reporting (c) The recipient or subrecipient must submit financial reports as required by the Federal award. Reports submitted annually by the recipient or subrecipient must be due no later than 90 calendar days after the reporting period. Reports submitted quarterly or semiannually must be due no later than 30 calendar days after the reporting period. (d) The final financial report submitted by the recipient must be due no later than 120 calendar days after the conclusion of the period of performance. A subrecipient must submit a final financial report to a pass-through entity no later than 90 calendar days after the conclusion of the period of performance. § 200.329 Monitoring and reporting program performance (a) Monitoring by the recipient and subrecipient The recipient and subrecipient are responsible for the oversight of the Federal award. The recipient and subrecipient must monitor their activities under Federal awards to ensure they are compliant with all requirements and meeting performance expectations. Monitoring by the recipient and subrecipient must cover each program, function, or activity. See also § 200.332. Title 45 – Public Welfare Subtitle A – Department of Health and Human Services Subchapter A – General Administration Part 98 – Child Care and Development Fund Subpart G – Financial Management § 98.60 – Availability of funds (d) The following obligation and liquidation provisions apply to States and Territories: (1) Discretionary Fund allotments shall be obligated in the fiscal year in which funds are awarded or in the succeeding fiscal year. Unliquidated obligations as of the end of the succeeding fiscal year shall be liquidated within one year. (2)(i) Mandatory Funds for States requesting Matching Funds per § 98.55 shall be obligated in the fiscal year in which the funds are granted and are available until expended. (4) Both the Federal and non-Federal share of the Matching Fund shall be obligated in the fiscal year in which the funds are granted and liquidated no later than the end of the succeeding fiscal year. (5) Determination of whether funds have been obligated and liquidated will be based on State or local law or, if there is no applicable State or local law, the regulation at 2 CFR 200.1, Expenditures and Obligations. § 98.65 Audits and financial reporting (a) Each Lead Agency shall have an audit conducted after the close of each program period in accordance with 2 CFR part 200, subpart F, and the Single Audit Act Amendments of 1996. (b) Lead Agencies are responsible for ensuring that subgrantees are audited in accordance with appropriate audit requirements. (c) Not later than 30 days after the completion of the audit, Lead Agencies shall submit a copy of their audit report to the legislature of the State or, if applicable, to the Tribal Council(s). Lead Agencies shall also submit a copy of their audit report to the HHS Inspector General for Audit Services, as well as to their cognizant agency, if applicable. (d) Any amounts determined through an audit not to have been expended in accordance with these statutory or regulatory provisions, or with the Plan, and that are subsequently disallowed by the Department shall be repaid to the Federal government, or the Secretary will offset such amounts against any other CCDF funds to which the Lead Agency is or may be entitled. (e) Lead Agencies shall provide access to appropriate books, documents, papers and records to allow the Secretary to verify that CCDF funds have been expended in accordance with the statutory and regulatory requirements of the program, and with the Plan. (f) The audit required in paragraph (a) of this section shall be conducted by an agency that is independent of the State, Territory or Tribe as defined by generally accepted government auditing standards issued by the Comptroller General, or a public accountant who meets such independent standards. (g) Lead Agencies shall submit financial reports, in a manner specified by ACF, quarterly for each fiscal year until funds are expended. (h) At a minimum, a State or territorial Lead Agency's quarterly report shall include the following information on expenditures under CCDF grant funds, including Discretionary (which includes realloted funding and any funds transferred from the TANF block grant), Mandatory, and Matching Funds (which includes redistributed funding); and State Matching and Maintenance-of- Effort (MOE) Funds: (1) Child care administration; (2) Quality activities, including any sub-categories of quality activities as required by ACF; (3) Direct services for both grant or contracted slots and certificates; (4) Non-direct services, including: (i) Establishment and maintenance of computerized child care information systems; (ii) Certificate program cost/eligibility determination; (iii) All other non-direct services; and (5) Such other information as specified by the Secretary. § 98.67 – Fiscal requirements (c) Fiscal control and accounting procedures shall be sufficient to permit: (1) Preparation of reports required by the Secretary under this subpart and under subpart H; and (2) The tracing of funds to a level of expenditure adequate to establish that such funds have not been used in violation of the provisions of this part. Condition: Audit procedures included a review of the entire population of ACF-696 financial reports submitted for the CCDF Cluster. Our testing identified that certain reported amounts did not agree or reconcile to the underlying general ledger, resulting in a total variance of $491,119,535. Additionally, audit procedures identified that internal controls over reporting were not operating effectively to ensure the accurate submission of reports. Specifically, certain reports contained inaccuracies at the time of submission, and controls were not performed with sufficient precision to verify that reported information was complete and accurate in accordance with federal reporting requirements. Questioned costs: None Context: See “Condition.” Cause: The controls over the preparation and review of ACF-696 reports were not performed with sufficient precision to identify and resolve discrepancies between reported amounts and the underlying general ledger. Specifically, controls were not designed or operating at a level precise enough to ensure that reported data was accurate, reconciled, and submitted in a timely manner in accordance with federal requirements. As a result, variances and reporting errors were not detected or corrected prior to submission. Effect: Without a documented reconciliation between the ACF-696 reports and the general ledger, the Department cannot demonstrate that reported expenditures were accurate, complete, and supported by accounting records. This increases the risk that expenditures, obligations, liquidations, unobligated balances, or expenditure categories reported to ACF may be misstated. Inaccurate ACF-696 reporting may affect ACF’s ability to monitor compliance with CCDF spending, obligation, liquidation, and availability requirements. Repeat finding: Yes – 2024-015 Recommendation: Management should establish a formal reconciliation process to ensure that ACF-696 expense reports align with the general ledger. This process should include assigning responsibility to a designated finance team member for performing and documenting reconciliations, implementing a monthly reconciliation schedule, and promptly investigating and resolving any variances with documented approvals. Additionally, financial reporting policies should be updated to incorporate reconciliation requirements, and staff should receive training on compliance and reconciliation procedures to strengthen internal controls and reduce the risk of reporting inaccuracies. Views of responsible officials: Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report. Response to views of responsible officials: We acknowledge management's explanation that variances between the ACF-696 reports and the general ledger resulted from timing differences associated with subsequent cost allocations, accruals, and other adjustments. However, the issue identified during the audit was not the existence of timing differences, but that the reconciliation process did not adequately identify, explain, and support significant variances. Audit testing identified unreconciled variances totaling $491,119,535 between the ACF-696 reports and the general ledger. Although management indicated that adjustments were reported in subsequent quarters, documentation supporting a complete and accurate reconciliation was not available at the time of report preparation and submission. As a result, controls did not operate with sufficient precision to ensure reported amounts were accurate, complete, and supported by the Department's accounting records. Accordingly, we continue to conclude that the finding is valid as presented. We appreciate management's planned corrective actions to formalize the reconciliation process and strengthen oversight of ACF-696 reporting.
Reporting Federal Agency: U.S. Department of Health and Human ServicesFederal Program Title: Child Care and Development Block Grant/Child Care Mandatory and Matching Funds of the Child Care and Development Fund State Administering Department: California Department of Social Services (CDSS) ALN: 93.575, 93.596 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 2534CACCDD; October 1, 2024 – September 30, 2027 2534CACCDF; October 1, 2024 – September 30, 2027 2534CACCDM; October 1, 2024 – September 30, 2026 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Title 2 – Federal Financial Assistance Subtitle A – Office of Management and Budget Guidance for Grants and Agreements. Chapter II – Office of Management and Budget Guidance. Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D – Post Federal Award Requirements. § 200.303 - Internal controls (2 CFR 200.303): The recipient and subrecipient must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). § 200.302 – Financial management (b) The recipient's and subrecipient's financial management system must provide for the following: (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. (3) Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. Title 2 – Federal Financial Assistance Subtitle A – Office of Management and Budget Guidance for Grants and Agreements Chapter I – Office of Management and Budget Government-Wide Guidance for Federal Financial Assistance Part 170 – Reporting Subaward and Executive Compensation Information Subpart A – General § 170.105 Applicability (a) Applicability in general. This part applies to a Federal agency’s Federal financial assistance as defined in § 170.300. This part applies to all recipients and subrecipients of Federal awards who meet the reporting requirements of paragraph (c) of this section, unless exempt under Federal statute or by paragraph (d) of this section. Appendix A to Part 170—Award Term I. Reporting Subawards and Executive Compensation (a) Reporting of first-tier subawards — (1) Applicability. Unless the recipient is exempt as provided in paragraph (d) of this award term, the recipient must report each subaward that equals or exceeds $30,000 in Federal funds for a subaward to an entity or Federal agency. The recipient must also report a subaward if a modification increases the Federal funding to an amount that equals or exceeds $30,000. All reported subawards should reflect the total amount of the subaward. (2) Reporting Requirements. (i) The recipient must report each subaward described in paragraph (a)(1) of this award term to the Federal Funding Accountability and Transparency Act (FFATA) subaward reporting functionality (formerly FSRS and now reported through SAM.gov) at http://www.fsrs.gov. (ii) For subaward information, report no later than the end of the month following the month in which the subaward was issued. (c) Reporting of total compensation of subrecipient executives — (1) Applicability. Unless a first-tier subrecipient is exempt as provided in paragraph (d) of this appendix, the recipient must report the executive total compensation of each of the subrecipient's five most highly compensated executives for the subrecipient's preceding completed fiscal year, if: (i) The total Federal funding authorized to date under the subaward equals or exceeds $30,000; (ii) In the subrecipient's preceding fiscal year, the subrecipient received: (A) 80 percent or more of its annual gross revenues from Federal procurement contracts (and subcontracts) and Federal awards (and subawards) subject to the Transparency Act; and, (B) $25,000,000 or more in annual gross revenues from Federal procurement contracts (and subcontracts), and Federal awards (and subawards) subject to the Transparency Act; and (iii) The public does not have access to information about the compensation of the executives through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986 after receiving this subaward. (To determine if the public has access to the compensation information, see the U.S. Security and Exchange Commission total compensation filings at http://www.sec.gov/answers/execomp.htm.) (2) Reporting Requirements. Subrecipients must report to the recipient their executive total compensation described in paragraph (c)(1) of this appendix. The recipient is required to submit this information to the FFATA subaward reporting functionality (formerly FSRS and now reported through SAM.gov) at http://www.fsrs.gov no later than the end of the month following the month in which the subaward was made. As of March 2025, this functionality has been migrated to SAM.gov, which now serves as the system of record for FFATA subaward reporting. Condition: Audit procedures included a review of 60 FFATA subaward submissions for the CCDF Cluster reported in SAM.gov and a comparison of those submissions to underlying agreements and funding allocations applicable to FY 2024–25. Our testing identified that CDSS did not consistently perform or retain a documented evaluation of whether agreements constituted subawards or procurement contracts in accordance with 2 CFR § 200.331 prior to FFATA reporting. FFATA submissions did not align with the timing and structure of funding communicated through Child Care Bulletins, including allocation amendments and contract modifications, and all submissions tested contained errors in key data elements, including subrecipient identification and linkage to the prime award. In addition, CDSS included agreements in FFATA reporting without documented support that the substance of the relationship met the definition of a subaward, while agreements with subaward characteristics were not consistently identified and reported, resulting in reported amounts that did not consistently reflect underlying funding actions. Accordingly, controls over FFATA reporting were not performed with sufficient precision to ensure that agreements were appropriately classified and that reported information was complete and accurate in accordance with federal reporting requirements. Questioned costs: None Context: See “Condition.” Cause: The condition occurred because CDSS has not established an effective, centralized process to identify, evaluate, track, and report first-tier subawards subject to FFATA across its federal programs. CDSS did not maintain a complete reporting workflow that links funding actions, allocation amendments, agreement modifications, subrecipient classifications, and SAM.gov reporting deadlines. As a result, FFATA reporting relied on manual program-level processes that did not consistently ensure reportable subawards were identified, supported, reviewed, and submitted by the required deadline. Effect: Failure to timely and accurately report FFATA subaward information results in noncompliance with federal reporting requirements and reduces the transparency and reliability of publicly available federal spending data. Late, incomplete, or inaccurate reporting limits the ability of federal agencies, oversight bodies, and the public to determine how federal funds were passed through to subrecipients. Because similar FFATA deficiencies were identified across multiple CDSS-administered programs, there is an increased risk that reporting errors may continue or affect other federal programs unless CDSS implements a department-wide corrective action. Repeat finding: Yes – 2024-014 Recommendation: We recommend that CDSS revise its department-wide FFATA reporting procedures to address errors resulting from reliance on manual tracking, decentralized spreadsheets, and program-level processes that do not consistently capture funding actions, allocation amendments, agreement modifications, reporting deadlines, and SAM.gov submission status. Revised procedures should require program-specific review of each federal program’s funding structure and supporting documentation to determine whether agreements, allocations, amendments, or other funding actions are reportable subawards or procurement contracts, and whether new or updated FFATA reporting is required. CDSS should also require documented review before submission to verify that reported subrecipient information, award amounts, Assistance Listing numbers, prime award linkages, and reporting dates agree to underlying award documents, allocation letters, amendments, and agreements. These controls should help ensure FFATA submissions are accurate, timely, supported, and aligned with the unique funding structure of each CDSS-administered federal program. CDSS should consider utilizing a grant management solution to manage the full grant lifecycle more efficiently and ensure compliance with federal reporting requirements. The solution should support centralized tracking of awards, subawards, amendments, reporting deadlines, supporting documentation, review responsibilities, automated reminders, and submission status. This would reduce reliance on manual tracking and decentralized spreadsheets, improve accountability over responsible personnel, and strengthen CDSS’s ability to complete FFATA reporting accurately and timely. Views of responsible officials: Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report.
Special Tests and Provisions Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Child Care and Development Block Grant/Child Care Mandatory and Matching Funds of the Child Care and Development Fund State Administering Department: California Department of Social Services (CDSS) ALN: 93.575, 93.596 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 2434CACCDD; October 1, 2023 - September 30, 2026 2434CACCDF; October 1, 2023 - September 30, 2026 2434CACCDM; October 1, 2023 - September 30, 2025 2534CACCDD; October 1, 2024 - September 30, 2027 2534CACCDF; October 1, 2024 - September 30, 2027 2534CACCDM; October 1, 2024 - September 30, 2026 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Title 2 – Federal Financial Assistance Subtitle A – Office of Management and Budget Guidance for Grants and Agreements. Chapter II – Office of Management and Budget Guidance. Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D – Post Federal Award Requirements. § 200.303 - Internal controls (2 CFR 200.303): The recipient and subrecipient must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). § 200.329 Monitoring and reporting program performance (a) Monitoring by the recipient and subrecipient The recipient and subrecipient are responsible for the oversight of the Federal award. The recipient and subrecipient must monitor their activities under Federal awards to ensure they are compliant with all requirements and meeting performance expectations. Monitoring by the recipient and subrecipient must cover each program, function, or activity. See also § 200.332. Title 45 – Public Welfare Subtitle A – Department of Health and Human Services Subchapter A – General Administration Part 98 – Child Care and Development Fund Subpart B – General Application Procedures § 98.11 – Administration under contracts and agreements Lead Agencies have broad authority to administer and operate the CCDF program through other governmental, nongovernmental, or public or private local agencies; however, the Lead Agency must retain overall responsibility for the administration of the program and ensure that administrative and implementation responsibilities undertaken by agencies other than the Lead Agency are governed by written agreements specifying the mutual roles and responsibilities of the Lead Agency and other agencies in meeting CCDF requirements. The approved FFY 2025–2027 CCDF State Plan identifies CDSS as the Lead Agency and states that activities performed by agencies other than CDSS are governed through written agreements, including contracts and grant award notifications, that include required elements such as tasks to be performed, schedules for completing tasks, budgets, and performance measures. The State Plan further describes CDSS’s monitoring process for contractors, including standard review instruments, corrective action follow-up, fiscal and program reporting, and contractor review requirements. Condition: Audit procedures included testing a sample of 60 CCDF contractors to determine whether CDSS performed on-site monitoring visits in accordance with the contractor review cycle specified in the approved State Plan and related monitoring procedures. Of the 60 contractors tested, 2 contractors did not receive an on-site monitoring visit within the required review period. Specifically, the contractors had not received an on-site visit within four years, although the State Plan and related monitoring procedures require contractor reviews to be performed within a three-year cycle. As a result, CDSS did not consistently perform required monitoring procedures within the timeframe established for oversight of CCDF contractors. Questioned costs: None Context: See “Condition.” Cause: CDSS did not maintain internal controls that operated with sufficient precision to ensure all CCDF contractors were scheduled for and received required on-site monitoring visits within the established review cycle. Specifically, monitoring controls were not designed or performed at a level sufficient to identify overdue contractor reviews, track the status of required visits, and ensure timely completion of on-site monitoring for all applicable contractors. Effect: Failure to perform timely on-site monitoring visits reduces CDSS’s ability to determine whether contractors are operating in accordance with written agreements, State Plan requirements, and applicable CCDF program requirements. Untimely monitoring increases the risk that contractor noncompliance, performance deficiencies, or unsupported program activities are not identified and corrected promptly, which may affect CDSS’s ability to retain effective oversight and overall responsibility for the CCDF program. Repeat finding: No Recommendation: We recommend that CDSS strengthen internal controls over CCDF contractor monitoring by implementing procedures to ensure all contractors are scheduled for and receive required on-site monitoring visits within the review cycle established in the approved State Plan and related monitoring procedures. These procedures should include maintaining a complete monitoring schedule, tracking the date of each contractor’s last review, identifying upcoming and overdue reviews, and requiring documented supervisory review to ensure monitoring visits are completed timely. CDSS should also establish a process to periodically reconcile the monitoring schedule to the population of active CCDF contractors and promptly follow up on overdue reviews. These controls should help ensure CDSS performs contractor oversight consistently, documents compliance with written agreement monitoring requirements, and retains effective responsibility for CCDF administration. Views of responsible officials: Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report. Response to views of responsible officials: We acknowledge CDSS's response regarding resource constraints, risk-based prioritization, and its interpretation of the "as resources permit" language in Title 5, California Code of Regulations, Section 18023(b). However, the approved State Plan and related monitoring procedures in effect during the audit period established a three-year review cycle for contractor monitoring. Audit testing identified that 2 of 60 CCDF contractors did not receive an on-site monitoring visit for more than four years. While CDSS employed a risk-based approach to prioritize monitoring activities, the required reviews were not completed within the established review cycle for the contractors identified in our testing. Accordingly, the finding is based on CDSS's failure to consistently perform monitoring reviews within the established review cycle and the lack of controls to ensure overdue reviews were identified, tracked, and completed timely. Therefore, we continue to conclude that the finding is valid as presented.
Reporting Federal Agency: U.S. Department of Health and Human Services Federal Program Title: Social Services Block Grant State Administering Department: California Department of Social Services (CDSS) ALN: 93.667 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 2501CASOSR; October 1, 2024 - September 30, 2026 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Title 2 – Federal Financial Assistance Subtitle A – Office of Management and Budget Guidance for Grants and Agreements. Chapter II – Office of Management and Budget Guidance. Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D – Post Federal Award Requirements. § 200.303 - Internal controls (2 CFR 200.303): The recipient and subrecipient must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). § 200.302 – Financial management (b) The recipient's and subrecipient's financial management system must provide for the following: (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. (3) Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. Title 2 – Federal Financial Assistance Subtitle A – Office of Management and Budget Guidance for Grants and Agreements Chapter I – Office of Management and Budget Government-Wide Guidance for Federal Financial Assistance Part 170 – Reporting Subaward and Executive Compensation Information Subpart A – General § 170.105 Applicability (a) Applicability in general. This part applies to a Federal agency’s Federal financial assistance as defined in § 170.300. This part applies to all recipients and subrecipients of Federal awards who meet the reporting requirements of paragraph (c) of this section, unless exempt under Federal statute or by paragraph (d) of this section. Appendix A to Part 170—Award Term I. Reporting Subawards and Executive Compensation (a) Reporting of first-tier subawards — (1) Applicability. Unless the recipient is exempt as provided in paragraph (d) of this award term, the recipient must report each subaward that equals or exceeds $30,000 in Federal funds for a subaward to an entity or Federal agency. The recipient must also report a subaward if a modification increases the Federal funding to an amount that equals or exceeds $30,000. All reported subawards should reflect the total amount of the subaward. (2) Reporting Requirements. (i) The recipient must report each subaward described in paragraph (a)(1) of this award term to the Federal Funding Accountability and Transparency Act (FFATA) subaward reporting functionality (formerly FSRS and now reported through SAM.gov) at http://www.fsrs.gov. (ii) For subaward information, report no later than the end of the month following the month in which the subaward was issued. (c) Reporting of total compensation of subrecipient executives — (1) Applicability. Unless a first-tier subrecipient is exempt as provided in paragraph (d) of this appendix, the recipient must report the executive total compensation of each of the subrecipient's five most highly compensated executives for the subrecipient's preceding completed fiscal year, if: (i) The total Federal funding authorized to date under the subaward equals or exceeds $30,000; (ii) In the subrecipient's preceding fiscal year, the subrecipient received: (A) 80 percent or more of its annual gross revenues from Federal procurement contracts (and subcontracts) and Federal awards (and subawards) subject to the Transparency Act; and, (B) $25,000,000 or more in annual gross revenues from Federal procurement contracts (and subcontracts), and Federal awards (and subawards) subject to the Transparency Act; and (iii) The public does not have access to information about the compensation of the executives through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986 after receiving this subaward. (To determine if the public has access to the compensation information, see the U.S. Security and Exchange Commission total compensation filings at http://www.sec.gov/answers/execomp.htm.) (2) Reporting Requirements. Subrecipients must report to the recipient their executive total compensation described in paragraph (c)(1) of this appendix. The recipient is required to submit this information to the FFATA subaward reporting functionality (formerly FSRS and now reported through SAM.gov) at http://www.fsrs.gov no later than the end of the month following the month in which the subaward was made. As of March 2025, this functionality has been migrated to SAM.gov, which now serves as the system of record for FFATA subaward reporting. Condition: Audit procedures included a review of FFATA subaward submissions for the Social Services Block Grant reported in SAM.gov and a comparison of those submissions to funding actions applicable to FY 2024–25. Our testing identified that no subawards were reported within the required timeframe. Questioned costs: None Context: See “Condition.” Cause: The condition occurred because CDSS has not established an effective, centralized process to identify, evaluate, track, and report first-tier subawards subject to FFATA across its federal programs. CDSS did not maintain a complete reporting workflow that links funding actions, allocation amendments, agreement modifications, subrecipient classifications, and SAM.gov reporting deadlines. As a result, FFATA reporting relied on manual program-level processes that did not consistently ensure reportable subawards were identified, supported, reviewed, and submitted by the required deadline. Effect: Failure to timely and accurately report FFATA subaward information results in noncompliance with federal reporting requirements and reduces the transparency and reliability of publicly available federal spending data. Late, incomplete, or inaccurate reporting limits the ability of federal agencies, oversight bodies, and the public to determine how federal funds were passed through to subrecipients. Because similar FFATA deficiencies were identified across multiple CDSS-administered programs, there is an increased risk that reporting errors may continue or affect other federal programs unless CDSS implements a department-wide corrective action. Repeat finding: No Recommendation: We recommend that CDSS revise its department-wide FFATA reporting procedures to address errors resulting from reliance on manual tracking, decentralized spreadsheets, and program-level processes that do not consistently capture funding actions, allocation amendments, agreement modifications, reporting deadlines, and SAM.gov submission status. Revised procedures should require program-specific review of each federal program’s funding structure and supporting documentation to determine whether agreements, allocations, amendments, or other funding actions are reportable subawards or procurement contracts, and whether new or updated FFATA reporting is required. CDSS should also require documented review before submission to verify that reported subrecipient information, award amounts, Assistance Listing numbers, prime award linkages, and reporting dates agree to underlying award documents, allocation letters, amendments, and agreements. These controls should help ensure FFATA submissions are accurate, timely, supported, and aligned with the unique funding structure of each CDSS-administered federal program. CDSS should consider utilizing a grant management solution to manage the full grant lifecycle more efficiently and ensure compliance with federal reporting requirements. The solution should support centralized tracking of awards, subawards, amendments, reporting deadlines, supporting documentation, review responsibilities, automated reminders, and submission status. This would reduce reliance on manual tracking and decentralized spreadsheets, improve accountability over responsible personnel, and strengthen CDSS’s ability to complete FFATA reporting accurately and timely. Views of responsible officials: Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report.
Reporting Federal Agency: Federal Emergency Management Agency Federal Program Title: Disaster Grants - Public Assistance State Administering Department: Governor’s Office of Emergency Services ALN: 97.036 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 4407DRCAP00000001; November 12, 2018 – September 30, 2022 4431DRCAP00000001; May 1, 2019 – September 30, 2022 4482DRCAP00000001; January 20, 2020 – September 30, 2025 4558DRCAP00000001; August 24, 2021 – September 30, 2025 4683DRCAP00000001; December 27, 2022 – September 30, 2025 4699DRCAP00000001; April 3, 2023 – September 30, 2025 4750DRCAP00000001; August 19, 2023 – September 30, 2025 4769DRCAP00000001; January 31, 2024 – September 30, 2025 Statistically Valid Sample: No, and not intended to be a statistically valid sample Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance Criteria or specific requirement: Title 2 – Federal Financial Assistance Subtitle A – Office of Management and Budget Guidance for Grants and Agreements. Chapter II – Office of Management and Budget Guidance. Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. Subpart D – Post Federal Award Requirements. § 200.303 - Internal controls (2 CFR 200.303): The recipient and subrecipient must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). § 200.302 – Financial management (b) The recipient's and subrecipient's financial management system must provide for the following: (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in §§ 200.328 and 200.329. (3) Maintaining records that sufficiently identify the amount, source, and expenditure of Federal funds for Federal awards. These records must contain information necessary to identify Federal awards, authorizations, financial obligations, unobligated balances, as well as assets, expenditures, income, and interest. All records must be supported by source documentation. Title 2 – Federal Financial Assistance Subtitle A – Office of Management and Budget Guidance for Grants and Agreements Chapter I – Office of Management and Budget Government-Wide Guidance for Federal Financial Assistance Part 170 – Reporting Subaward and Executive Compensation Information Subpart A – General § 170.105 Applicability (a) Applicability in general. This part applies to a Federal agency’s Federal financial assistance as defined in § 170.300. This part applies to all recipients and subrecipients of Federal awards who meet the reporting requirements of paragraph (c) of this section, unless exempt under Federal statute or by paragraph (d) of this section. Appendix A to Part 170—Award Term I. Reporting Subawards and Executive Compensation (a) Reporting of first-tier subawards — (1) Applicability. Unless the recipient is exempt as provided in paragraph (d) of this award term, the recipient must report each subaward that equals or exceeds $30,000 in Federal funds for a subaward to an entity or Federal agency. The recipient must also report a subaward if a modification increases the Federal funding to an amount that equals or exceeds $30,000. All reported subawards should reflect the total amount of the subaward. (2) Reporting Requirements. (i) The recipient must report each subaward described in paragraph (a)(1) of this award term to the Federal Funding Accountability and Transparency Act (FFATA) subaward reporting functionality (formerly FSRS and now reported through SAM.gov) at http://www.fsrs.gov. (ii) For subaward information, report no later than the end of the month following the month in which the subaward was issued. (c) Reporting of total compensation of subrecipient executives — (1) Applicability. Unless a first-tier subrecipient is exempt as provided in paragraph (d) of this appendix, the recipient must report the executive total compensation of each of the subrecipient's five most highly compensated executives for the subrecipient's preceding completed fiscal year, if: (i) The total Federal funding authorized to date under the subaward equals or exceeds $30,000; (ii) In the subrecipient's preceding fiscal year, the subrecipient received: (A) 80 percent or more of its annual gross revenues from Federal procurement contracts (and subcontracts) and Federal awards (and subawards) subject to the Transparency Act; and, (B) $25,000,000 or more in annual gross revenues from Federal procurement contracts (and subcontracts), and Federal awards (and subawards) subject to the Transparency Act; and (iii) The public does not have access to information about the compensation of the executives through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986 after receiving this subaward. (To determine if the public has access to the compensation information, see the U.S. Security and Exchange Commission total compensation filings at http://www.sec.gov/answers/execomp.htm.) (2) Reporting Requirements. Subrecipients must report to the recipient their executive total compensation described in paragraph (c)(1) of this appendix. The recipient is required to submit this information to the FFATA subaward reporting functionality (formerly FSRS and now reported through SAM.gov) at http://www.fsrs.gov no later than the end of the month following the month in which the subaward was made. As of March 2025, this functionality has been migrated to SAM.gov, which now serves as the system of record for FFATA subaward reporting. Condition: Audit procedures included testing 60 FFATA reporting submissions related to subrecipients to evaluate compliance with federal reporting requirements and the design and implementation of internal controls over the FFATA reporting process. Our testing identified that FFATA reports for 36 of the 60 subrecipients were not submitted timely in accordance with federal requirements. While the reports were ultimately complete and accurate, controls over the reporting process were not performed with sufficient precision to ensure timely submission. Questioned costs: None Context: See “Condition.” Cause: During the fiscal year, the Department revised its procedures for performing FFATA reporting; however, the updated procedures and related controls were not consistently implemented across all subrecipient reporting activities. As a result, certain reports were processed outside of the revised control framework, contributing to delays in timely submission. Effect: The lack of established procedures and internal controls for FFATA reporting resulted in noncompliance, with 36 out of 60 subrecipients not reported timely as required. Repeat finding: Yes – 2024-020 Recommendation: The Department should strengthen controls over FFATA reporting by ensuring that revised procedures are fully implemented and consistently applied to all subrecipient reporting activities. This should include establishing clear protocols to identify all reports subject to FFATA requirements, monitoring compliance with reporting deadlines, and performing periodic reviews to verify that controls are operating with sufficient precision to ensure timely submission. Additionally, the Department should provide training and communication to relevant personnel on updated procedures and implement supervisory review controls to detect and remediate untimely filings. Views of responsible officials: Management’s response is reported in “Management’s Response and Corrective Action Plan” included in a separate section at the end of this report.
Finding 2025-005 Late Reporting and Noncompliance with Reporting Requirements Federal Agency: U.S. Department of Commerce Federal Program: Economic Development Cluster ALN: 11.307 Award Numbers: ED23SEA0G0012 Award Year: 2025 Type of Finding: Significant deficiency and noncompliance. Criteria: All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlined in Part 2 of this guidance. Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. The nonfederal entity must submit performance reports at the interval required by the federal awarding agency or pass-through entity to best inform improvements in program outcomes and productivity as outlined in 2 CFR 200.329. Condition and context: The City did not adhere to the program requirement of submitting the financial and performance report by the deadlines set forth in the grant award. Cause: The City was not able to provide the necessary reporting documents in the required time frames set forth in the grant award. Effect: The City is not in compliance with reporting requirements. Questioned Costs: None noted. Repeat finding: This is not a repeat finding. Recommendation: The City needs to improve processes for preparing and submitting financial information timely. Management’s Response: Management concurs with the finding. See Corrective Action Plan.
Criteria: Under the terms and conditions of the CARES Act Coronavirus Relief Fund awards and federal reporting guidelines (2 CFR 200.328 / 2 CFR 200.329), non-federal entities are required to submit quarterly financial and performance reports within ten days following the end of each reporting quarter. Additionally, the Cash on Hand quarterly reports must be submitted within thirty days after each quarter-end. Condition: During our audit of the County’s CARES Act funds for the fiscal year, we noted the required quarterly compliance and reporting submissions were not filed. Additionally, two Cash on Hand quarterly reports were not submitted within 30 days of the end of the quarter. Context: See above condition. Cause: Management oversight. Effect: The County was not in compliance with reporting requirements. Recommendation: We recommend that the County establish procedures to ensure proper reporting in a timely manner. Views of Responsible Official and Planned Corrective Action: We concur. We will establish procedures to ensure timely submission of all required reports.
Federal Program: ALN 93.600-Head Start Category: Compliance/Internal control significant deficiency Compliance Requirement: Reporting Criteria: In accordance with 2 CFR §§ 200.328(c) and 200.329(a), recipients are required to submit reports required by the Federal award within the prescribed timeframes and maintain adequate monitoring procedures to ensure compliance with all applicable Federal requirements. In accordance with 45 CFR § 75.343, non-Federal entities are required to submit reports at least annually on the status of real property in which the Federal Government retains an interest. Accordingly, Head Start grantees, including those with no covered real property to report, are required to submit the SF-429 Real Property Status Report and SF-429 Attachment A annually by the due date. Condition: The SF-429 Real Property Status Report was not submitted within the required due date. Cause: Turnover of key personnel responsible for preparing and/or reviewing the report. Questioned cost: No real property was included under the Head Start award 02CH012049; therefore, no questioned costs were identified. Effect or potential effect: The reports being submitted late and in non-compliance with reporting requirements. Recommendation: We recommend that BGCPR enhance onboarding and transition procedures for key personnel, including formal training, documented reporting processes, and automated deadline tracking, to ensure timely submission of required reports Views of officials responsible: Due to the BCPR’s transition period, the reports were submitted late. After the new Finance Director started in June 25, 2025. On January 30, 2026, we received system access, all reports were submitted on February 4, 2026. This matter was presented in the most recent focus Area II monitoring by the Agency, with no complaints noted. We will request additional system access for reporting purposes in case the person responsible is unavailable. Anticipated completion date: September 30, 2026
Reporting Federal Agency: Department of Housing and Urban Development Federal Program: Economic Development Initiative, Community Project Funding, and Miscellaneous Grants Assistance Listing Number: 14.251 Award Period: February 5, 2024 – August 31, 2031 Type of Finding: • Significant Deficiency in Internal Control over Compliance • Other Matter Criteria or specific requirement: Per 2 CFR 200.327–200.329 and applicable award terms, nonfederal entities are required to submit accurate and timely financial and performance reports as specified by the federal awarding agency. Condition: Four (4) of four (4) reports tested were not submitted by the required deadlines. Questioned costs: None. Context: We tested 4 required reports for the major program; none (0 of 4) were submitted in accordance with required deadlines. Cause: The deficiency appears to be due to inadequate monitoring of reporting deadlines and the absence of a formal review or tracking process to ensure timely submission. Effect: Failure to submit reports timely may result in noncompliance with grant requirements, potential delays in funding, and increased risk of additional oversight by the awarding agency. Repeat finding: No. Recommendation: We recommend the Organization implement a formal reporting calendar and review control process to track due dates, ensure timely submission, and retain documentation of report filings in accordance with federal requirements. View of responsible officials: There is no disagreement with the audit finding.
FINDING 2025-005 Subject: Special Education Cluster (IDEA) - Condition of Records Federal Agency: Department of Education Federal Programs: Special Education Grants to States, COVID-19 - Special Education Grants to States, Special Education Preschool Grants, COVID-19 - Special Education Preschool Grants Assistance Listings Numbers: 84.027, 84.027X, 84.173, 84.173X Federal Award Numbers and Years (or Other Identifying Numbers): 23611-051-PN01,24611-051-PN01, 22611-051-ARP, 23619-051-PN01, 25619-051-PN01, 22619-051-ARP Pass-Through Entity: Indiana Department of Education Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Matching, Level of Effort, Earmarking; Period of Performance; Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation received reimbursements totaling $12,668,761 from the Special Education Cluster (IDEA) federal awards during the audit period. The reimbursements were associated with six separate federal awards, each of which was required to be accounted for in a separate fund within the School Corporation's financial management system. Expenditures were to be made in accordance with the approved grant applications and budgets, with reimbursement requests subsequently submitted to the Indiana Department of Education (IDOE). The School Corporation was responsible for maintaining detailed disbursement ledgers for each grant fund to support the amounts claimed for reimbursement. As is typical with reimbursement-based grants, the ending cash and investment balances of each grant fund were expected to reflect overdrawn balances until the subsequent reimbursements were received from the IDOE. The $12,668,761 received in the Special Education Cluster (IDEA) funds during the audit period was based on 23 reimbursement requests for expenditures incurred. Based on our review of grant fund records and inquiry with management, we identified the following deficiencies: The reimbursement requests for the reimbursements received during the audit period included dates of July 1, 2021 to March 31, 2025. It was not easily determined what was requested for reimbursement for the earlier dates due to the School Corporation including in the "Dates Included in this Request" section descriptions such as "Entire Grant Period" and "Start to March 21, 2025". The supporting documentation with the reimbursement requests did not always have detail or specifically state which disbursements were included in the amount for the request. Several had documentation that showed detail for a period of time then a calculation was done to subtract what was previously requested for reimbursement. The total received in reimbursements was $12,668,761. The total detailed disbursement ledgers for the population that could be determined reflected total expenditures of $15,894,839. This resulted in $3,226,078 in disbursements in excess of what the School Corporation requested for reimbursement. Of the six federal awards reported on the Schedule Expenditures of Awards, four reached the award's performance end date, and of those four, three reported a Grant Balance After Reimbursement on the last Reimbursement Form. o Grant 23619-051-PN01 reported a Grant Balance After Reimbursement of $1,367 on February 26, 2024. The dates included in this final request were "01/01/24 - 01/31/24." INDIANA STATE BOARD OF ACCOUNTS 29 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) o Grant 22611-051-ARP reported a Grant Balance After Reimbursement of $55,581 on December 15, 2023. The dates included in this final request were "06/01/23 - 09/30/23." o Grant 22619-051-ARP reported a Grant Balance After Reimbursement of $82,677 on December 13, 2023. The dates included in this final request were "Entire Grant Period." Of the 23 reimbursement requests submitted, only 10 were supported by detailed disbursement ledgers that agreed with the dates and amounts claimed. The remaining 13 reimbursement requests could not be directly reconciled to the supporting documentation provided. Upon further inquiry with management, additional information was provided; however, these records lacked sufficient detail, such as transactions, reasons for overspending, and which transactions were not requested for reimbursement due to overspending. Due to the deficiencies noted above, the School Corporation was unable to provide sufficient appropriate evidence for us to determine populations, and, therefore, audit and base an opinion on the compliance requirements subject to audit that were determined to have a direct and material effect on the program. As a result, the $12,668,761 in reimbursements received during the audit period were considered questioned costs. The lack of internal controls and noncompliance were material and systemic throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302 states in part: "(a) . . . 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. See also § 200.450. (b) The financial management system of each non-Federal entity must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337): INDIANA STATE BOARD OF ACCOUNTS 30 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (1) Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number and year, name of the Federal agency, and name of the pass-through entity, if any. (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . . (3) Records that identify adequately the source and application of funds for federallyfunded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income, and interest and be supported by source documentation. (4) Effective control over, and accountability, for all funds, property, and assets. The non- Federal entity must adequately safeguard all assets and ensure that they are used solely for authorized purposes. See § 200.303. (5) Comparison of expenditures with budget amounts for each Federal award. (6) Written procedures to implement the requirements of § 200.305. (7) Written procedures for determining the allowability of costs in accordance with subpart E of this part and the terms and conditions of the Federal award." 2 CFR 200.1 states in part: "Questioned cost means a cost that is questioned by the auditor because of an audit finding: (1) Which resulted from a violation or possible violation of a statute, regulation, or the terms and conditions of a Federal award, including for funds used to match Federal funds; (2) Where the costs, at the time of the audit, are not supported by adequate documentation; or (3) Where the costs incurred appear unreasonable and do not reflect the actions a prudent person would take in the circumstances. (4) Questioned costs are not an improper payment until reviewed and confirmed to be improper as defined in OMB Circular A-123 appendix C. (See also the definition of Improper payment in this section)." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. INDIANA STATE BOARD OF ACCOUNTS 31 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." 2 CFR 200.1 states in part: ". . . Financial obligations, when referencing a recipient's or subrecipient's use of funds under a Federal award, means orders placed for property and services, contracts and subawards made, and similar transactions that require payment. Period of performance means the total estimated time interval between the start of an initial Federal award and the planned end date, which may include one or more funded portions, or budget periods. Identification of the period of performance in the Federal award per § 200.211(b)(5) does not commit the awarding agency to fund the award beyond the currently approved budget period. Unliquidated financial obligations means, for financial reports prepared on a cash basis, financial obligations incurred by the non-Federal entity that have not been paid (liquidated). . . ." 2 CFR 200.309 states: "If a Federal awarding agency or pass-through entity approves an extension, or if a recipient extends under § 200.308(e)(2), the Period of Performance will be amended to end at the completion of the extension. If termination occurs, the Period of Performance will be amended to end upon the effective date of termination. If a renewal award is issued, a distinct Period of Performance will begin." 2 CFR 200.320 states in part: "The non-Federal entity must have and use documented procurement procedures, consistent with the standards of this section and §§ 200.317, 200.318, and 200.319 for any of the following methods of procurement used for the acquisition of property or services required under a Federal award or sub-award. . . ." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." INDIANA STATE BOARD OF ACCOUNTS 32 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) 511 IAC 7-34-7(b) states: "The public agency, in providing special education and related services to students in nonpublic schools must expend at least an amount that is the same proportion of the public agency total subgrant under 20 U.S.C. 1411(f) as the number of nonpublic school students with disabilities, who are enrolled by their parents in nonpublic schools within its boundaries, is to the total number of students with disabilities of the same age range." Cause The School Corporation experienced turnover in key personnel over the federal program which contributed to the lack of appropriate supporting records. A proper system of internal controls was not designed to ensure continuity of policies, procedures, and records when personnel transitions occurred. Effect Noncompliance with the grant agreement and the compliance requirements could result in the repayment of federal funds. Questioned Costs We identified $12,668,761 in questioned costs as noted in the Condition and Context. Recommendation We recommended that the School Corporation's management develop policies and procedures to ensure continuity of school records during a personnel change, and that all reimbursement requests are properly supported by detailed records. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-014 Subject: Teacher and School Leader Incentive Grants (formerly the Teacher Incentive Fund) - Condition of Records Federal Agency: Department of Education Federal Program: Teacher and School Leader Incentive Grants (formerly the Teacher Incentive Fund) Assistance Listings Number: 84.374 Federal Award Number and Year (or Other Identifying Number): S374A200039 Compliance Requirements: Matching, Level of Effort, Earmarking; Period of Performance; Reporting Audit Findings: Material Weakness, Modified Opinion Condition and Context The School Corporation received reimbursements totaling $3,530,669 from Teacher and School Leader Incentive Grants (formerly the Teacher Incentive Fund) (TSL) federal awards during the audit period. Expenditures were to be made in accordance with the approved grant applications and budgets, with reimbursement requests subsequently submitted to the U.S. Department of Education. The School Corporation was responsible for complying with requirements of the grant per the grant agreements. We found the following deficiencies: Matching, Level of Effort, Earmarking The School Corporation did not provide documentation of how the matching requirement was met. Grant award letters were not provided; therefore, we could not ensure the required percentage local match was met. Period of Performance Grant award letters would indicate the period of the grant in which expenditures are allowed to be reimbursed. However, those letters were never provided. Therefore, we could not test to ensure compliance with the Period of Performance compliance requirement. Reporting According to our understanding of the grant, there should have been two final Annual Performance Reports and two mid-year Annual Performance Reports submitted within the audit period. Two reports were provided; however, they were from outside the audit period. Since the appropriate reports were not provided for audit, we could not test to ensure compliance with the Reporting compliance requirement. There were multiple Directors over the Teacher and School Leader Incentive Grants (formerly the Teacher Incentive Fund) during the audit period. At the time the audit was conducted, no previous Directors were employed with the School Corporation and there were no current employees that were knowledgeable of the grant and its requirements. The lack of internal controls and failure to maintain and provide adequate supporting documentation were systemic issues throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 50 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.334 states in part: "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. . . ." 2 CFR 200.302 states in part: "(a) . . . 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. See also § 200.450. (b) The financial management system of each non-Federal entity must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337): (1) Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number and year, name of the Federal agency, and name of the pass-through entity, if any. (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . . (3) Records that identify adequately the source and application of funds for federallyfunded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income, and interest and be supported by source documentation. (4) Effective control over, and accountability, for all funds, property, and assets. The non- Federal entity must adequately safeguard all assets and ensure that they are used solely for authorized purposes. See § 200.303. INDIANA STATE BOARD OF ACCOUNTS 51 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (5) Comparison of expenditures with budget amounts for each Federal award. (6) Written procedures to implement the requirements of § 200.305. (7) Written procedures for determining the allowability of costs in accordance with subpart E of this part and the terms and conditions of the Federal award." Cause The School Corporation experienced turnover in key personnel over the federal program, which contributed to the lack of appropriate documentation. A proper system of internal controls was not designed to ensure continuity of policies, procedures, and records when personnel transitions occurred. Effect Noncompliance with the grant agreement and the compliance requirements could result in the repayment of federal funds. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the School Corporation's management develop policies and procedures to ensure continuity of school records during a personnel change. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-022 Subject: COVID-19 - Education Stabilization Fund - Reporting Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Number: 84.425U Federal Award Number (or Other Identifying Number): S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-010. Condition and Context During the audit period, the School Corporation received 36 total reimbursements related to the Education Stabilization Fund grant. The School Corporation received 2 ESSER I reimbursements, 8 ESSER II reimbursements, 16 ESSER III reimbursements, and 10 ARP HCY reimbursements. A sample of 15 reimbursements request forms were tested against the School Corporations records for accuracy. Of the 15 reimbursement requests forms tested, 7 totaling $9,583,074 were not supported by the School Corporation's records. The errors detected were isolated to the ESSER III grant. The lack of internal controls and noncompliance were systemic throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 68 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.334 states in part: "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. . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following. . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." Cause The School Corporation did not establish or implement a properly designed internal control system, including appropriate segregation of duties, to ensure the accuracy and reliability of financial data submitted to the Indiana Department of Education. The absence of formal review procedures, oversight mechanisms, and reconciliation processes resulted in the submission of materially misstated reimbursement requests. Contributing factors included inadequate staff training on federal reporting requirements, the lack of documented financial reporting policies, and insufficient allocation of resources to monitor compliance with grant guidelines. Effect As a result, 7 out of 15 reimbursement request forms tested during the audit period were either overstated or understated, reflecting inconsistent and inaccurate financial reporting tied to federal grant activity. These systemic errors represent significant noncompliance and undermine the reliability of reporting used for state and federal oversight. Questioned Costs There were no questioned costs identified. INDIANA STATE BOARD OF ACCOUNTS 69 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation The School Corporation should strengthen its financial reporting processes related to federal grant activity by implementing a formal internal control system that ensures accuracy, consistency, and proper documentation. This includes reconciling financial records with data submitted through JotForm, establishing review procedures for reimbursement requests, and assigning qualified personnel to verify all reports prior to submission. Staff responsible for grant management and financial reporting should receive necessary support and resources regarding federal documentation standards and reporting requirements. The School Corporation should adopt standardized documentation policies and procedures across all departments to ensure compliance and oversight. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2025-023 Subject: Title I Grants to Local Educational Agencies - Reporting Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listings Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A210014, S010A220014, S010A230014, S010A240014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2023-006. Condition and Context The School Corporation was required to submit reimbursement requests and final expenditure reports that included, among other data, both current and prior period expenditures. However, the required reports for federal awards did not capture all activity for the reporting period and were not supported by the School Corporation's records. Reimbursement Requests The School Corporation uses reimbursement requests to claim allowable expenses paid from the Title I funds. These requests must be based on and supported by transactions recorded within the School Corporation's Title I accounts. Although internal controls were in place, they were not effective in ensuring the accuracy of the reimbursement requests. Of the 11 reimbursement requests selected for testing, 9 could not be verified against either the summary-level detail attached to the request or a detailed transaction listing. Because the amounts requested for reimbursement could not be traced to underlying records or to reports that accumulated or summarized the data, the accuracy and completeness of the reimbursement requests could not be verified. INDIANA STATE BOARD OF ACCOUNTS 70 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Final Expenditure Reports There was no documented internal control to show a review and oversight process was in place to ensure the accuracy and completeness of the final expenditure reports. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.334 states in part: "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. . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following: . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . . (3) 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. . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." INDIANA STATE BOARD OF ACCOUNTS 71 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause The School Corporation did not design or implement an effective internal control system to ensure the accuracy and compliance of reimbursement and final expenditure reporting processes. Specifically, the School Corporation did not have established procedures requiring the retention of detailed supporting documentation for reimbursement requests, and oversight responsibilities were not consistently carried out or evidenced over the reimbursement requests and final expenditure reports. Effect Because the School Corporation did not retain detailed documentation to support reimbursement requests or provide evidence of the required review of final expenditure reports, the audit team could not verify the accuracy or completeness of expenditures charged to the grant. As a result, the risk of misreporting, misallocation of federal funds, and potential violations of grant requirements were heightened. Questioned Costs There were no questioned costs identified. Recommendation The School Corporation should establish and implement a formal internal control system to ensure accurate financial reporting and compliance with federal grant requirements. This system should include documented review procedures, clear segregation of duties, and consistent oversight of reimbursement requests and expenditure reports. All financial submissions should be supported by verifiable documentation and reconciled with internal records prior to submission. Additionally, the School Corporation should provide necessary support and resources to staff responsible for ensuring grant compliance. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding 2025-012 – Noncompliance with Reporting Over Major Federal Program – Coronavirus State and Local Fiscal Recovery Funds (Repeat Finding – 2024-012) PASS-THROUGH GRANTOR: Direct Grant FEDERAL AGENCY: U.S. Department of Treasury ASSISTANCE LISTING: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds FEDERAL AWARD YEAR: 2025 CONTROL CATEGORY: ReportingQUESTIONED COSTS: $-0- Condition: During the review of the annual report for calendar year 2024, consisting of seventeen (17) projects for the Coronavirus State and Local Fiscal Recovery Funds, it was noted that the annual report was not submitted before the April 30th deadline. Additionally, the annual report submitted incorrectly reported obligations and expenditures as noted below: Current Period Obligations Cumulative Obligations Current Period Expenditure Cumulative Expenditure As Reported $1,672,657 $6,377,231 $591,072 $5,608,334 Correct $0 $6,398,069 $556,145 $5,115,562 Variance $1,672,657 ($20,838) $34,927 $492,772 Cause of Condition: Policies and procedures have not been designed and implemented to ensure federal expenditures are properly reported in accordance with federal compliance requirements. Effect of Condition: This condition resulted in noncompliance with federal grant guidelines. Recommendation: OSAI recommends the County gain an understanding of the requirements for this program and design and implement internal controls to ensure compliance with these requirements. Management Response: Chairman Board of County Commissioners: The BOCC acknowledges the finding and I will improve reconciliation and review procedures used in preparing federal reports. County officials involved in grant reporting will work together to ensure repotted obligations and expenditures are reconciled to supporting records before submission. County Clerk: The County Clerk will work with the Board of County Commissioners to adopt policies and procedures for federal awards. County Treasurer: The County Treasurer acknowledges the finding. The Treasurer's Office will continue maintaining accurate accounting records and providing financial information used in federal reporting. The Treasurer's Office will work with county officials and reporting personnel to encourage additional review and reconciliation procedures prior to submission of federal reports. Criteria: Accountability and stewardship should be overall goals in management’s accounting of federal funds. Internal controls should be designed to monitor compliance with laws and regulations pertaining to grant contracts. Title 2 CFR § 200.303(a) Internal Controls, reads as follows: The non-federal entity must: Establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federalaward. 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). Compliance and Reporting Guidance, State and Local Fiscal Recovery Funds (10. Reporting) reads as follows: All recipients of federal funds must complete financial, performance, and compliance reporting as required and outlines in Part 2 of this guidance. Expenditures may be reported on a cash of accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles. In addition, where appropriate, your organization needs to establish internal controls to ensure completion and timely submission of all mandatory performance and/or compliance reporting. Further, 2 CFR 200.329-Monitoring and reporting Program Performance (c)(1) reads as follows: (c)(1) The non-Federal entity must submit performance reports at the interval required by the Federal awarding agency or pass-through entity to best inform improvements in program outcomes and productivity. Intervals must be no less frequent than annually nor more frequent 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. Reports submitted annually by the non-Federal entity and/or pass-through entity must be due no later than 90 calendar days after the reporting period. Reports submitted quarterly or semiannually must be due no later than 30 calendar days after the reporting period. Alternatively, the Federal awarding agency or pass-through entity may require annual reports before the anniversary dates of multiple year Federal awards. The final performance report submitted by the non-Federal entity and/or pass-through entity must be due no later than 120 calendar days after the period of performance end date. A subrecipient must submit to the pass-through entity, no later than 90 calendar days after the period of performance end date, all final performance reports as required by the terms and conditions of the Federal award. See also §200.344. If a justified request is submitted by a non-Federal entity, the Federal agency may extend the due date for any performance report.
Coronavirus State and Local Fiscal Recovery Funds Assistance Listing No. 21.027 U.S. Department of Treasury Missouri Primary Care Association Criteria or specific requirement – Reporting (2 CFR 200.329) Condition – The Organization’s internal controls over compliance were not able to ensure progress reporting required to be submitted to the pass-through entity was completed timely. Cause – The Organization does not have internal controls over compliance in place to ensure all grant reporting requirements are satisfied timely. Effect or potential effect – The Organization did not submit the required quarterly and annual performance reports in a timely manner. Questioned costs – None Context – The Organization is required to submit quarterly status reports and an annual performance report to the pass-through entity in a timely manner. Identification as a repeat finding, if applicable – Not a repeat finding Recommendation – The Organization should consider implementing a grant reporting calendar for all grants with reporting requirements.
CFDA Number: 93.224 Federal Program or Cluster: Health Center Program Cluster Grantor Agency: U.S. Department of Health and Human Services Federal Award Identification: H8FCS41177 Compliance Requirements: Reporting Type of Finding: Noncompliance/Material Weakness in Internal Control over Compliance Quiestioned Costs: None Criteria: 2 CFR Part 200, Section 200.302 Financial management requires that the Organization's financial management system must provide for the following: 1) Identification of all Federal awards received and expended and the Federal programs under which they were received..; and 2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements in Sections 200.328 and 200.329. Section 200.328 Financial reporting states that the required financial reporting consists of the Federal Financial Report (SF-425). Condition: The SF-425 Federal Financial Report filed by the Organization for the H8FCS41177 Federal award reported that cash disbursements of $2,675,250, the total amount of the Federal award, had been made. However, $1,248,456 of those cash disbursements were determined during our audit to not be allowable due to not being obligated and/or liquidated by the period of performance deadlines. The cash disbursements reported on the SF-425 were not readily determinable from the Organization's general ledger accounts. Cause: Organization personnel were not aware of the period of performance with respect to this federal award. The Organization's previous CEO retired approximately May 31, 2024. Per inquiry of the Organizaton's CFO, their understanding was that the deadline to obligate for this federal award was December 31, 2024, and the deadline to expend or liquidate was December 31, 2026. The Organizaton's chart of accounts and general ledger do not include separate and distinct accounts or classes to which federal award expenditures are recorded. Effect or Potential Effect: The SF-425 Federal Financial Report filed by the Organization included cash disbursements of $1,248,456 that were not chargeable to the Federal award because they were not obligated before the period of performance end date and/or the payment was not made before the deadline to liquidate obligations. Context: We requested detail of expenditures for the Federal award and were provided with manual spreadsheets lacking all the transactional details needed. Information from the general ledger did not agree with cash disbursements reported on the SF-425. The general ledger information indicated $1,185,164 of the Federal award had not yet been disbursed at the time the SF-425 was filed. Repeat Finding: No Recommendation: We recommend that the Organization provide grants management training to all its financial staff and management covering the Uniform Guidance/OMB Guidance for Federal Financial Assistance. We also recommend that the Organization develop and implement policies and procedures for financial and performance report preparation to ensure information is supported by proper documentation and agrees with the general ledger. These policies and procedures should also include a requirement that all reports are reviewed by a member of management who is not involved in the preparation of the reports. Views of Responsible Officials: We agree with the finding. We have never received proper training. See Corrective Action Plan for Reference 2025-007.
Criteria: Per CFR 200.329(c)(1) The recipient or subrecipient must submit performance reports as required by the Federal award. Intervals must be no less frequent than annually nor more frequent than quarterly except if specific conditions are applied. Reports submitted annually by the recipient or subrecipient must be due no later than 90 calendar days after the reporting period. Reports submitted quarterly or semiannually must be due no later than 30 calendar days after the reporting period. Alternatively, the Federal agency or pass-through entity may require annual reports before the anniversary dates of multiple-year Federal awards.” Per the executed grant agreements, the grants require a quarterly report to be submitted within 30 days of the conclusion of each quarter and an annual report within 60 days at the conclusion of each calendar year. Condition: During our testing of the Organization’s compliance with the reporting requirements, we noted no quarterly or annual reports were submitted to Hamilton County. Only Final Reports were submitted once Hamilton County reached out. Cause: Controls were not in place to ensure required reports were submitted due to a lack of understanding the reporting requirements within the grant agreement. Effect: The untimely submission of the reports prevents the pass-through entity from effectively monitoring the progress of the funded project and making informed decisions. Additionally, consistent failure to meet reporting requirements could negatively impact the Organization’s ability for future federal awards. Questioned Costs: None Context: This is not a systemic problem. Repeat Finding: This is not a repeat finding. Recommendation: We recommend the Organization establish procedures for the preparation, review and timely submission of all reporting requirements. This can include implementing a system to track reporting deadlines and timely submission as well as designating individuals with the responsibilities of preparation, review, and submission of reports. Additionally, we recommend the Organization designate someone to review the grant documents for all compliance requirements to ensure nothing is missed. Management Response: The Advancement and Finance teams will create an updated Grants Management process. The Grants Management process will be documented and clearly define roles for Advancement and Finance staff. Additionally, a flowchart will be created to define what type of grant has been awarded (conditional vs. unconditional). The process will ensure all awarded grants are reviewed for all performance, outcomes, invoicing, and reporting requirements. The process will define who sets up calendar reminders for grant milestones (i.e., reporting) and how Program staff will be selected to receive these calendar reminders.