FINDING REFERENCE NUMBER 2023-046 (See Finding Reference Number 2023-018) FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AWARD NUMBER ALL AWARDS COMPLIANCE REQUIREMENT REPORTING – FINANCIAL STATEMENT ACCOUNTING RECORDS TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS CRITERIA 2 CFR Part 200, Section 302 and 45 CFR Part 75, Section 302- Financial management and standards for financial management systems state that: (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 funds. All recipient and subrecipient 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 the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (b) 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. (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. STATEMENT OF CONDITION Internal controls for creating financial reports about state and Federal funds received and spent through the Puerto Rico Integrated Financial System (PRIFAS) have not been put in place by the PRDF. The PRDF lacks an adequate system of internal controls to stop, identify, and fix errors. There was no supervision or review procedure in place to identify and allow for the correction of errors before submission and before the financial data was entered into PRIFAS. There was a delay in getting timely and correct financial information for the year under audit, and the PRDF staff had difficulties preparing and presenting the cash receipt and disbursement report, which included the schedule of federal spending for the audit. The following weaknesses were discovered when the PRDF's initial Financial Statement was reviewed: • Transactions that weren't related to the fiscal year being reported were included in the initial financial data. • The Office of the Secretariat and the four Programmatic Administrations lack uniform policies and procedures to guarantee that the amounts and disclosures in the PRDF's financial reports, financial statement notes, and necessary supplemental information are correctly recognized and reported. • Reports for several significant programs were prepared informally and, in some instances, only by one person, which resulted in significant mistakes in some of the programs. As a result, errors in the reports across the programs were not investigated or fixed. Additionally, we saw that for various financial reports, the PRIFAS data was not considered in the reconciliation process. • Several significant transactions were not entered into the PRIFAS by the Administration for Families and Children (ADFAN, by its Spanish Acronym) Finance Department, they were recorded as encumbrances, and not actual expenditures. This led to an understatement of expenditures in the PRDF's general fund of about $52,300,494. Additionally, Federal spending in one of the major programs was understated by $6,886,156. PERSPECTIVE INFORMATION The PRDF failed to properly registered in its accounting system all transactions needed to prepared the financial statement and to produce accurate financial reports for Federal grants that they received and expended during the fiscal year. No reconciliation procedures are performed regularly to identified errors in recording transactions in PRIFAS. This cause that when the PRDF prepared cash received and disbursement financial statement and the SEFA for audit purposes was incomplete and misstated (see Finding Reference Number 2023-017). STATEMENT OF CAUSE To make sure that all the PRDF's transactions had been accurately documented and reported, the PRDF did not thoroughly examine the financial data that was created and submitted in PRIFAS and used to prepare the financial statement and supplementary information. Due to lack of supervision or a review procedure to identify errors prior to submission, the ADFAN Finance Director recorded transactions as encumbrances, instead of actual expenditures. POSSIBLE ASSERTED EFFECT The PRDF is unable to provide accurate, up-to-date, and comprehensive disclosure of state and Federal funds activities in compliance with the agreement's requirements due to inadequate and inconsistent financial accounting reporting methods. IDENTIFICATION OF REPEAT FINDING No reported as prior audit finding. RECOMMENDATIONS To comply with the requirements of state and local agreements and enable the PRDF to monitor trustworthy financial data for use within the agency and for upcoming audits, we recommend the PRDF update its accounting practices and policies to provide for an accurate, comprehensive, and timely financial reporting system. Implementing an accounting and financial management system that enables the creation of financial data and reports needed by the various oversight organizations. The process should involve defining precise procedures for the creation and evaluation of financial reports, with different roles allocated to various people.
FINDING REFERENCE NUMBER 2023-046 (See Finding Reference Number 2023-018) FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AWARD NUMBER ALL AWARDS COMPLIANCE REQUIREMENT REPORTING – FINANCIAL STATEMENT ACCOUNTING RECORDS TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS CRITERIA 2 CFR Part 200, Section 302 and 45 CFR Part 75, Section 302- Financial management and standards for financial management systems state that: (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 funds. All recipient and subrecipient 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 the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (b) 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. (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. STATEMENT OF CONDITION Internal controls for creating financial reports about state and Federal funds received and spent through the Puerto Rico Integrated Financial System (PRIFAS) have not been put in place by the PRDF. The PRDF lacks an adequate system of internal controls to stop, identify, and fix errors. There was no supervision or review procedure in place to identify and allow for the correction of errors before submission and before the financial data was entered into PRIFAS. There was a delay in getting timely and correct financial information for the year under audit, and the PRDF staff had difficulties preparing and presenting the cash receipt and disbursement report, which included the schedule of federal spending for the audit. The following weaknesses were discovered when the PRDF's initial Financial Statement was reviewed: • Transactions that weren't related to the fiscal year being reported were included in the initial financial data. • The Office of the Secretariat and the four Programmatic Administrations lack uniform policies and procedures to guarantee that the amounts and disclosures in the PRDF's financial reports, financial statement notes, and necessary supplemental information are correctly recognized and reported. • Reports for several significant programs were prepared informally and, in some instances, only by one person, which resulted in significant mistakes in some of the programs. As a result, errors in the reports across the programs were not investigated or fixed. Additionally, we saw that for various financial reports, the PRIFAS data was not considered in the reconciliation process. • Several significant transactions were not entered into the PRIFAS by the Administration for Families and Children (ADFAN, by its Spanish Acronym) Finance Department, they were recorded as encumbrances, and not actual expenditures. This led to an understatement of expenditures in the PRDF's general fund of about $52,300,494. Additionally, Federal spending in one of the major programs was understated by $6,886,156. PERSPECTIVE INFORMATION The PRDF failed to properly registered in its accounting system all transactions needed to prepared the financial statement and to produce accurate financial reports for Federal grants that they received and expended during the fiscal year. No reconciliation procedures are performed regularly to identified errors in recording transactions in PRIFAS. This cause that when the PRDF prepared cash received and disbursement financial statement and the SEFA for audit purposes was incomplete and misstated (see Finding Reference Number 2023-017). STATEMENT OF CAUSE To make sure that all the PRDF's transactions had been accurately documented and reported, the PRDF did not thoroughly examine the financial data that was created and submitted in PRIFAS and used to prepare the financial statement and supplementary information. Due to lack of supervision or a review procedure to identify errors prior to submission, the ADFAN Finance Director recorded transactions as encumbrances, instead of actual expenditures. POSSIBLE ASSERTED EFFECT The PRDF is unable to provide accurate, up-to-date, and comprehensive disclosure of state and Federal funds activities in compliance with the agreement's requirements due to inadequate and inconsistent financial accounting reporting methods. IDENTIFICATION OF REPEAT FINDING No reported as prior audit finding. RECOMMENDATIONS To comply with the requirements of state and local agreements and enable the PRDF to monitor trustworthy financial data for use within the agency and for upcoming audits, we recommend the PRDF update its accounting practices and policies to provide for an accurate, comprehensive, and timely financial reporting system. Implementing an accounting and financial management system that enables the creation of financial data and reports needed by the various oversight organizations. The process should involve defining precise procedures for the creation and evaluation of financial reports, with different roles allocated to various people.
FINDING REFERENCE NUMBER 2023-046 (See Finding Reference Number 2023-018) FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AWARD NUMBER ALL AWARDS COMPLIANCE REQUIREMENT REPORTING – FINANCIAL STATEMENT ACCOUNTING RECORDS TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS CRITERIA 2 CFR Part 200, Section 302 and 45 CFR Part 75, Section 302- Financial management and standards for financial management systems state that: (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 funds. All recipient and subrecipient 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 the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (b) 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. (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. STATEMENT OF CONDITION Internal controls for creating financial reports about state and Federal funds received and spent through the Puerto Rico Integrated Financial System (PRIFAS) have not been put in place by the PRDF. The PRDF lacks an adequate system of internal controls to stop, identify, and fix errors. There was no supervision or review procedure in place to identify and allow for the correction of errors before submission and before the financial data was entered into PRIFAS. There was a delay in getting timely and correct financial information for the year under audit, and the PRDF staff had difficulties preparing and presenting the cash receipt and disbursement report, which included the schedule of federal spending for the audit. The following weaknesses were discovered when the PRDF's initial Financial Statement was reviewed: • Transactions that weren't related to the fiscal year being reported were included in the initial financial data. • The Office of the Secretariat and the four Programmatic Administrations lack uniform policies and procedures to guarantee that the amounts and disclosures in the PRDF's financial reports, financial statement notes, and necessary supplemental information are correctly recognized and reported. • Reports for several significant programs were prepared informally and, in some instances, only by one person, which resulted in significant mistakes in some of the programs. As a result, errors in the reports across the programs were not investigated or fixed. Additionally, we saw that for various financial reports, the PRIFAS data was not considered in the reconciliation process. • Several significant transactions were not entered into the PRIFAS by the Administration for Families and Children (ADFAN, by its Spanish Acronym) Finance Department, they were recorded as encumbrances, and not actual expenditures. This led to an understatement of expenditures in the PRDF's general fund of about $52,300,494. Additionally, Federal spending in one of the major programs was understated by $6,886,156. PERSPECTIVE INFORMATION The PRDF failed to properly registered in its accounting system all transactions needed to prepared the financial statement and to produce accurate financial reports for Federal grants that they received and expended during the fiscal year. No reconciliation procedures are performed regularly to identified errors in recording transactions in PRIFAS. This cause that when the PRDF prepared cash received and disbursement financial statement and the SEFA for audit purposes was incomplete and misstated (see Finding Reference Number 2023-017). STATEMENT OF CAUSE To make sure that all the PRDF's transactions had been accurately documented and reported, the PRDF did not thoroughly examine the financial data that was created and submitted in PRIFAS and used to prepare the financial statement and supplementary information. Due to lack of supervision or a review procedure to identify errors prior to submission, the ADFAN Finance Director recorded transactions as encumbrances, instead of actual expenditures. POSSIBLE ASSERTED EFFECT The PRDF is unable to provide accurate, up-to-date, and comprehensive disclosure of state and Federal funds activities in compliance with the agreement's requirements due to inadequate and inconsistent financial accounting reporting methods. IDENTIFICATION OF REPEAT FINDING No reported as prior audit finding. RECOMMENDATIONS To comply with the requirements of state and local agreements and enable the PRDF to monitor trustworthy financial data for use within the agency and for upcoming audits, we recommend the PRDF update its accounting practices and policies to provide for an accurate, comprehensive, and timely financial reporting system. Implementing an accounting and financial management system that enables the creation of financial data and reports needed by the various oversight organizations. The process should involve defining precise procedures for the creation and evaluation of financial reports, with different roles allocated to various people.
FINDING REFERENCE NUMBER 2023-046 (See Finding Reference Number 2023-018) FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AWARD NUMBER ALL AWARDS COMPLIANCE REQUIREMENT REPORTING – FINANCIAL STATEMENT ACCOUNTING RECORDS TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS CRITERIA 2 CFR Part 200, Section 302 and 45 CFR Part 75, Section 302- Financial management and standards for financial management systems state that: (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 funds. All recipient and subrecipient 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 the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (b) 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. (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. STATEMENT OF CONDITION Internal controls for creating financial reports about state and Federal funds received and spent through the Puerto Rico Integrated Financial System (PRIFAS) have not been put in place by the PRDF. The PRDF lacks an adequate system of internal controls to stop, identify, and fix errors. There was no supervision or review procedure in place to identify and allow for the correction of errors before submission and before the financial data was entered into PRIFAS. There was a delay in getting timely and correct financial information for the year under audit, and the PRDF staff had difficulties preparing and presenting the cash receipt and disbursement report, which included the schedule of federal spending for the audit. The following weaknesses were discovered when the PRDF's initial Financial Statement was reviewed: • Transactions that weren't related to the fiscal year being reported were included in the initial financial data. • The Office of the Secretariat and the four Programmatic Administrations lack uniform policies and procedures to guarantee that the amounts and disclosures in the PRDF's financial reports, financial statement notes, and necessary supplemental information are correctly recognized and reported. • Reports for several significant programs were prepared informally and, in some instances, only by one person, which resulted in significant mistakes in some of the programs. As a result, errors in the reports across the programs were not investigated or fixed. Additionally, we saw that for various financial reports, the PRIFAS data was not considered in the reconciliation process. • Several significant transactions were not entered into the PRIFAS by the Administration for Families and Children (ADFAN, by its Spanish Acronym) Finance Department, they were recorded as encumbrances, and not actual expenditures. This led to an understatement of expenditures in the PRDF's general fund of about $52,300,494. Additionally, Federal spending in one of the major programs was understated by $6,886,156. PERSPECTIVE INFORMATION The PRDF failed to properly registered in its accounting system all transactions needed to prepared the financial statement and to produce accurate financial reports for Federal grants that they received and expended during the fiscal year. No reconciliation procedures are performed regularly to identified errors in recording transactions in PRIFAS. This cause that when the PRDF prepared cash received and disbursement financial statement and the SEFA for audit purposes was incomplete and misstated (see Finding Reference Number 2023-017). STATEMENT OF CAUSE To make sure that all the PRDF's transactions had been accurately documented and reported, the PRDF did not thoroughly examine the financial data that was created and submitted in PRIFAS and used to prepare the financial statement and supplementary information. Due to lack of supervision or a review procedure to identify errors prior to submission, the ADFAN Finance Director recorded transactions as encumbrances, instead of actual expenditures. POSSIBLE ASSERTED EFFECT The PRDF is unable to provide accurate, up-to-date, and comprehensive disclosure of state and Federal funds activities in compliance with the agreement's requirements due to inadequate and inconsistent financial accounting reporting methods. IDENTIFICATION OF REPEAT FINDING No reported as prior audit finding. RECOMMENDATIONS To comply with the requirements of state and local agreements and enable the PRDF to monitor trustworthy financial data for use within the agency and for upcoming audits, we recommend the PRDF update its accounting practices and policies to provide for an accurate, comprehensive, and timely financial reporting system. Implementing an accounting and financial management system that enables the creation of financial data and reports needed by the various oversight organizations. The process should involve defining precise procedures for the creation and evaluation of financial reports, with different roles allocated to various people.
FINDING REFERENCE NUMBER 2023-046 (See Finding Reference Number 2023-018) FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AWARD NUMBER ALL AWARDS COMPLIANCE REQUIREMENT REPORTING – FINANCIAL STATEMENT ACCOUNTING RECORDS TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS CRITERIA 2 CFR Part 200, Section 302 and 45 CFR Part 75, Section 302- Financial management and standards for financial management systems state that: (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 funds. All recipient and subrecipient 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 the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (b) 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. (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. STATEMENT OF CONDITION Internal controls for creating financial reports about state and Federal funds received and spent through the Puerto Rico Integrated Financial System (PRIFAS) have not been put in place by the PRDF. The PRDF lacks an adequate system of internal controls to stop, identify, and fix errors. There was no supervision or review procedure in place to identify and allow for the correction of errors before submission and before the financial data was entered into PRIFAS. There was a delay in getting timely and correct financial information for the year under audit, and the PRDF staff had difficulties preparing and presenting the cash receipt and disbursement report, which included the schedule of federal spending for the audit. The following weaknesses were discovered when the PRDF's initial Financial Statement was reviewed: • Transactions that weren't related to the fiscal year being reported were included in the initial financial data. • The Office of the Secretariat and the four Programmatic Administrations lack uniform policies and procedures to guarantee that the amounts and disclosures in the PRDF's financial reports, financial statement notes, and necessary supplemental information are correctly recognized and reported. • Reports for several significant programs were prepared informally and, in some instances, only by one person, which resulted in significant mistakes in some of the programs. As a result, errors in the reports across the programs were not investigated or fixed. Additionally, we saw that for various financial reports, the PRIFAS data was not considered in the reconciliation process. • Several significant transactions were not entered into the PRIFAS by the Administration for Families and Children (ADFAN, by its Spanish Acronym) Finance Department, they were recorded as encumbrances, and not actual expenditures. This led to an understatement of expenditures in the PRDF's general fund of about $52,300,494. Additionally, Federal spending in one of the major programs was understated by $6,886,156. PERSPECTIVE INFORMATION The PRDF failed to properly registered in its accounting system all transactions needed to prepared the financial statement and to produce accurate financial reports for Federal grants that they received and expended during the fiscal year. No reconciliation procedures are performed regularly to identified errors in recording transactions in PRIFAS. This cause that when the PRDF prepared cash received and disbursement financial statement and the SEFA for audit purposes was incomplete and misstated (see Finding Reference Number 2023-017). STATEMENT OF CAUSE To make sure that all the PRDF's transactions had been accurately documented and reported, the PRDF did not thoroughly examine the financial data that was created and submitted in PRIFAS and used to prepare the financial statement and supplementary information. Due to lack of supervision or a review procedure to identify errors prior to submission, the ADFAN Finance Director recorded transactions as encumbrances, instead of actual expenditures. POSSIBLE ASSERTED EFFECT The PRDF is unable to provide accurate, up-to-date, and comprehensive disclosure of state and Federal funds activities in compliance with the agreement's requirements due to inadequate and inconsistent financial accounting reporting methods. IDENTIFICATION OF REPEAT FINDING No reported as prior audit finding. RECOMMENDATIONS To comply with the requirements of state and local agreements and enable the PRDF to monitor trustworthy financial data for use within the agency and for upcoming audits, we recommend the PRDF update its accounting practices and policies to provide for an accurate, comprehensive, and timely financial reporting system. Implementing an accounting and financial management system that enables the creation of financial data and reports needed by the various oversight organizations. The process should involve defining precise procedures for the creation and evaluation of financial reports, with different roles allocated to various people.
FINDING REFERENCE NUMBER 2023-046 (See Finding Reference Number 2023-018) FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AWARD NUMBER ALL AWARDS COMPLIANCE REQUIREMENT REPORTING – FINANCIAL STATEMENT ACCOUNTING RECORDS TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS CRITERIA 2 CFR Part 200, Section 302 and 45 CFR Part 75, Section 302- Financial management and standards for financial management systems state that: (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 funds. All recipient and subrecipient 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 the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (b) 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. (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. STATEMENT OF CONDITION Internal controls for creating financial reports about state and Federal funds received and spent through the Puerto Rico Integrated Financial System (PRIFAS) have not been put in place by the PRDF. The PRDF lacks an adequate system of internal controls to stop, identify, and fix errors. There was no supervision or review procedure in place to identify and allow for the correction of errors before submission and before the financial data was entered into PRIFAS. There was a delay in getting timely and correct financial information for the year under audit, and the PRDF staff had difficulties preparing and presenting the cash receipt and disbursement report, which included the schedule of federal spending for the audit. The following weaknesses were discovered when the PRDF's initial Financial Statement was reviewed: • Transactions that weren't related to the fiscal year being reported were included in the initial financial data. • The Office of the Secretariat and the four Programmatic Administrations lack uniform policies and procedures to guarantee that the amounts and disclosures in the PRDF's financial reports, financial statement notes, and necessary supplemental information are correctly recognized and reported. • Reports for several significant programs were prepared informally and, in some instances, only by one person, which resulted in significant mistakes in some of the programs. As a result, errors in the reports across the programs were not investigated or fixed. Additionally, we saw that for various financial reports, the PRIFAS data was not considered in the reconciliation process. • Several significant transactions were not entered into the PRIFAS by the Administration for Families and Children (ADFAN, by its Spanish Acronym) Finance Department, they were recorded as encumbrances, and not actual expenditures. This led to an understatement of expenditures in the PRDF's general fund of about $52,300,494. Additionally, Federal spending in one of the major programs was understated by $6,886,156. PERSPECTIVE INFORMATION The PRDF failed to properly registered in its accounting system all transactions needed to prepared the financial statement and to produce accurate financial reports for Federal grants that they received and expended during the fiscal year. No reconciliation procedures are performed regularly to identified errors in recording transactions in PRIFAS. This cause that when the PRDF prepared cash received and disbursement financial statement and the SEFA for audit purposes was incomplete and misstated (see Finding Reference Number 2023-017). STATEMENT OF CAUSE To make sure that all the PRDF's transactions had been accurately documented and reported, the PRDF did not thoroughly examine the financial data that was created and submitted in PRIFAS and used to prepare the financial statement and supplementary information. Due to lack of supervision or a review procedure to identify errors prior to submission, the ADFAN Finance Director recorded transactions as encumbrances, instead of actual expenditures. POSSIBLE ASSERTED EFFECT The PRDF is unable to provide accurate, up-to-date, and comprehensive disclosure of state and Federal funds activities in compliance with the agreement's requirements due to inadequate and inconsistent financial accounting reporting methods. IDENTIFICATION OF REPEAT FINDING No reported as prior audit finding. RECOMMENDATIONS To comply with the requirements of state and local agreements and enable the PRDF to monitor trustworthy financial data for use within the agency and for upcoming audits, we recommend the PRDF update its accounting practices and policies to provide for an accurate, comprehensive, and timely financial reporting system. Implementing an accounting and financial management system that enables the creation of financial data and reports needed by the various oversight organizations. The process should involve defining precise procedures for the creation and evaluation of financial reports, with different roles allocated to various people.
FINDING REFERENCE NUMBER 2023-046 (See Finding Reference Number 2023-018) FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AWARD NUMBER ALL AWARDS COMPLIANCE REQUIREMENT REPORTING – FINANCIAL STATEMENT ACCOUNTING RECORDS TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS CRITERIA 2 CFR Part 200, Section 302 and 45 CFR Part 75, Section 302- Financial management and standards for financial management systems state that: (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 funds. All recipient and subrecipient 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 the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (b) 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. (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. STATEMENT OF CONDITION Internal controls for creating financial reports about state and Federal funds received and spent through the Puerto Rico Integrated Financial System (PRIFAS) have not been put in place by the PRDF. The PRDF lacks an adequate system of internal controls to stop, identify, and fix errors. There was no supervision or review procedure in place to identify and allow for the correction of errors before submission and before the financial data was entered into PRIFAS. There was a delay in getting timely and correct financial information for the year under audit, and the PRDF staff had difficulties preparing and presenting the cash receipt and disbursement report, which included the schedule of federal spending for the audit. The following weaknesses were discovered when the PRDF's initial Financial Statement was reviewed: • Transactions that weren't related to the fiscal year being reported were included in the initial financial data. • The Office of the Secretariat and the four Programmatic Administrations lack uniform policies and procedures to guarantee that the amounts and disclosures in the PRDF's financial reports, financial statement notes, and necessary supplemental information are correctly recognized and reported. • Reports for several significant programs were prepared informally and, in some instances, only by one person, which resulted in significant mistakes in some of the programs. As a result, errors in the reports across the programs were not investigated or fixed. Additionally, we saw that for various financial reports, the PRIFAS data was not considered in the reconciliation process. • Several significant transactions were not entered into the PRIFAS by the Administration for Families and Children (ADFAN, by its Spanish Acronym) Finance Department, they were recorded as encumbrances, and not actual expenditures. This led to an understatement of expenditures in the PRDF's general fund of about $52,300,494. Additionally, Federal spending in one of the major programs was understated by $6,886,156. PERSPECTIVE INFORMATION The PRDF failed to properly registered in its accounting system all transactions needed to prepared the financial statement and to produce accurate financial reports for Federal grants that they received and expended during the fiscal year. No reconciliation procedures are performed regularly to identified errors in recording transactions in PRIFAS. This cause that when the PRDF prepared cash received and disbursement financial statement and the SEFA for audit purposes was incomplete and misstated (see Finding Reference Number 2023-017). STATEMENT OF CAUSE To make sure that all the PRDF's transactions had been accurately documented and reported, the PRDF did not thoroughly examine the financial data that was created and submitted in PRIFAS and used to prepare the financial statement and supplementary information. Due to lack of supervision or a review procedure to identify errors prior to submission, the ADFAN Finance Director recorded transactions as encumbrances, instead of actual expenditures. POSSIBLE ASSERTED EFFECT The PRDF is unable to provide accurate, up-to-date, and comprehensive disclosure of state and Federal funds activities in compliance with the agreement's requirements due to inadequate and inconsistent financial accounting reporting methods. IDENTIFICATION OF REPEAT FINDING No reported as prior audit finding. RECOMMENDATIONS To comply with the requirements of state and local agreements and enable the PRDF to monitor trustworthy financial data for use within the agency and for upcoming audits, we recommend the PRDF update its accounting practices and policies to provide for an accurate, comprehensive, and timely financial reporting system. Implementing an accounting and financial management system that enables the creation of financial data and reports needed by the various oversight organizations. The process should involve defining precise procedures for the creation and evaluation of financial reports, with different roles allocated to various people.
FINDING REFERENCE NUMBER 2023-046 (See Finding Reference Number 2023-018) FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AWARD NUMBER ALL AWARDS COMPLIANCE REQUIREMENT REPORTING – FINANCIAL STATEMENT ACCOUNTING RECORDS TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS CRITERIA 2 CFR Part 200, Section 302 and 45 CFR Part 75, Section 302- Financial management and standards for financial management systems state that: (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 funds. All recipient and subrecipient 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 the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (b) 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. (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. STATEMENT OF CONDITION Internal controls for creating financial reports about state and Federal funds received and spent through the Puerto Rico Integrated Financial System (PRIFAS) have not been put in place by the PRDF. The PRDF lacks an adequate system of internal controls to stop, identify, and fix errors. There was no supervision or review procedure in place to identify and allow for the correction of errors before submission and before the financial data was entered into PRIFAS. There was a delay in getting timely and correct financial information for the year under audit, and the PRDF staff had difficulties preparing and presenting the cash receipt and disbursement report, which included the schedule of federal spending for the audit. The following weaknesses were discovered when the PRDF's initial Financial Statement was reviewed: • Transactions that weren't related to the fiscal year being reported were included in the initial financial data. • The Office of the Secretariat and the four Programmatic Administrations lack uniform policies and procedures to guarantee that the amounts and disclosures in the PRDF's financial reports, financial statement notes, and necessary supplemental information are correctly recognized and reported. • Reports for several significant programs were prepared informally and, in some instances, only by one person, which resulted in significant mistakes in some of the programs. As a result, errors in the reports across the programs were not investigated or fixed. Additionally, we saw that for various financial reports, the PRIFAS data was not considered in the reconciliation process. • Several significant transactions were not entered into the PRIFAS by the Administration for Families and Children (ADFAN, by its Spanish Acronym) Finance Department, they were recorded as encumbrances, and not actual expenditures. This led to an understatement of expenditures in the PRDF's general fund of about $52,300,494. Additionally, Federal spending in one of the major programs was understated by $6,886,156. PERSPECTIVE INFORMATION The PRDF failed to properly registered in its accounting system all transactions needed to prepared the financial statement and to produce accurate financial reports for Federal grants that they received and expended during the fiscal year. No reconciliation procedures are performed regularly to identified errors in recording transactions in PRIFAS. This cause that when the PRDF prepared cash received and disbursement financial statement and the SEFA for audit purposes was incomplete and misstated (see Finding Reference Number 2023-017). STATEMENT OF CAUSE To make sure that all the PRDF's transactions had been accurately documented and reported, the PRDF did not thoroughly examine the financial data that was created and submitted in PRIFAS and used to prepare the financial statement and supplementary information. Due to lack of supervision or a review procedure to identify errors prior to submission, the ADFAN Finance Director recorded transactions as encumbrances, instead of actual expenditures. POSSIBLE ASSERTED EFFECT The PRDF is unable to provide accurate, up-to-date, and comprehensive disclosure of state and Federal funds activities in compliance with the agreement's requirements due to inadequate and inconsistent financial accounting reporting methods. IDENTIFICATION OF REPEAT FINDING No reported as prior audit finding. RECOMMENDATIONS To comply with the requirements of state and local agreements and enable the PRDF to monitor trustworthy financial data for use within the agency and for upcoming audits, we recommend the PRDF update its accounting practices and policies to provide for an accurate, comprehensive, and timely financial reporting system. Implementing an accounting and financial management system that enables the creation of financial data and reports needed by the various oversight organizations. The process should involve defining precise procedures for the creation and evaluation of financial reports, with different roles allocated to various people.
FINDING REFERENCE NUMBER 2023-046 (See Finding Reference Number 2023-018) FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AWARD NUMBER ALL AWARDS COMPLIANCE REQUIREMENT REPORTING – FINANCIAL STATEMENT ACCOUNTING RECORDS TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS CRITERIA 2 CFR Part 200, Section 302 and 45 CFR Part 75, Section 302- Financial management and standards for financial management systems state that: (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 funds. All recipient and subrecipient 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 the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (b) 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. (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. STATEMENT OF CONDITION Internal controls for creating financial reports about state and Federal funds received and spent through the Puerto Rico Integrated Financial System (PRIFAS) have not been put in place by the PRDF. The PRDF lacks an adequate system of internal controls to stop, identify, and fix errors. There was no supervision or review procedure in place to identify and allow for the correction of errors before submission and before the financial data was entered into PRIFAS. There was a delay in getting timely and correct financial information for the year under audit, and the PRDF staff had difficulties preparing and presenting the cash receipt and disbursement report, which included the schedule of federal spending for the audit. The following weaknesses were discovered when the PRDF's initial Financial Statement was reviewed: • Transactions that weren't related to the fiscal year being reported were included in the initial financial data. • The Office of the Secretariat and the four Programmatic Administrations lack uniform policies and procedures to guarantee that the amounts and disclosures in the PRDF's financial reports, financial statement notes, and necessary supplemental information are correctly recognized and reported. • Reports for several significant programs were prepared informally and, in some instances, only by one person, which resulted in significant mistakes in some of the programs. As a result, errors in the reports across the programs were not investigated or fixed. Additionally, we saw that for various financial reports, the PRIFAS data was not considered in the reconciliation process. • Several significant transactions were not entered into the PRIFAS by the Administration for Families and Children (ADFAN, by its Spanish Acronym) Finance Department, they were recorded as encumbrances, and not actual expenditures. This led to an understatement of expenditures in the PRDF's general fund of about $52,300,494. Additionally, Federal spending in one of the major programs was understated by $6,886,156. PERSPECTIVE INFORMATION The PRDF failed to properly registered in its accounting system all transactions needed to prepared the financial statement and to produce accurate financial reports for Federal grants that they received and expended during the fiscal year. No reconciliation procedures are performed regularly to identified errors in recording transactions in PRIFAS. This cause that when the PRDF prepared cash received and disbursement financial statement and the SEFA for audit purposes was incomplete and misstated (see Finding Reference Number 2023-017). STATEMENT OF CAUSE To make sure that all the PRDF's transactions had been accurately documented and reported, the PRDF did not thoroughly examine the financial data that was created and submitted in PRIFAS and used to prepare the financial statement and supplementary information. Due to lack of supervision or a review procedure to identify errors prior to submission, the ADFAN Finance Director recorded transactions as encumbrances, instead of actual expenditures. POSSIBLE ASSERTED EFFECT The PRDF is unable to provide accurate, up-to-date, and comprehensive disclosure of state and Federal funds activities in compliance with the agreement's requirements due to inadequate and inconsistent financial accounting reporting methods. IDENTIFICATION OF REPEAT FINDING No reported as prior audit finding. RECOMMENDATIONS To comply with the requirements of state and local agreements and enable the PRDF to monitor trustworthy financial data for use within the agency and for upcoming audits, we recommend the PRDF update its accounting practices and policies to provide for an accurate, comprehensive, and timely financial reporting system. Implementing an accounting and financial management system that enables the creation of financial data and reports needed by the various oversight organizations. The process should involve defining precise procedures for the creation and evaluation of financial reports, with different roles allocated to various people.
FINDING REFERENCE NUMBER 2023-046 (See Finding Reference Number 2023-018) FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AWARD NUMBER ALL AWARDS COMPLIANCE REQUIREMENT REPORTING – FINANCIAL STATEMENT ACCOUNTING RECORDS TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS CRITERIA 2 CFR Part 200, Section 302 and 45 CFR Part 75, Section 302- Financial management and standards for financial management systems state that: (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 funds. All recipient and subrecipient 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 the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (b) 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. (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. STATEMENT OF CONDITION Internal controls for creating financial reports about state and Federal funds received and spent through the Puerto Rico Integrated Financial System (PRIFAS) have not been put in place by the PRDF. The PRDF lacks an adequate system of internal controls to stop, identify, and fix errors. There was no supervision or review procedure in place to identify and allow for the correction of errors before submission and before the financial data was entered into PRIFAS. There was a delay in getting timely and correct financial information for the year under audit, and the PRDF staff had difficulties preparing and presenting the cash receipt and disbursement report, which included the schedule of federal spending for the audit. The following weaknesses were discovered when the PRDF's initial Financial Statement was reviewed: • Transactions that weren't related to the fiscal year being reported were included in the initial financial data. • The Office of the Secretariat and the four Programmatic Administrations lack uniform policies and procedures to guarantee that the amounts and disclosures in the PRDF's financial reports, financial statement notes, and necessary supplemental information are correctly recognized and reported. • Reports for several significant programs were prepared informally and, in some instances, only by one person, which resulted in significant mistakes in some of the programs. As a result, errors in the reports across the programs were not investigated or fixed. Additionally, we saw that for various financial reports, the PRIFAS data was not considered in the reconciliation process. • Several significant transactions were not entered into the PRIFAS by the Administration for Families and Children (ADFAN, by its Spanish Acronym) Finance Department, they were recorded as encumbrances, and not actual expenditures. This led to an understatement of expenditures in the PRDF's general fund of about $52,300,494. Additionally, Federal spending in one of the major programs was understated by $6,886,156. PERSPECTIVE INFORMATION The PRDF failed to properly registered in its accounting system all transactions needed to prepared the financial statement and to produce accurate financial reports for Federal grants that they received and expended during the fiscal year. No reconciliation procedures are performed regularly to identified errors in recording transactions in PRIFAS. This cause that when the PRDF prepared cash received and disbursement financial statement and the SEFA for audit purposes was incomplete and misstated (see Finding Reference Number 2023-017). STATEMENT OF CAUSE To make sure that all the PRDF's transactions had been accurately documented and reported, the PRDF did not thoroughly examine the financial data that was created and submitted in PRIFAS and used to prepare the financial statement and supplementary information. Due to lack of supervision or a review procedure to identify errors prior to submission, the ADFAN Finance Director recorded transactions as encumbrances, instead of actual expenditures. POSSIBLE ASSERTED EFFECT The PRDF is unable to provide accurate, up-to-date, and comprehensive disclosure of state and Federal funds activities in compliance with the agreement's requirements due to inadequate and inconsistent financial accounting reporting methods. IDENTIFICATION OF REPEAT FINDING No reported as prior audit finding. RECOMMENDATIONS To comply with the requirements of state and local agreements and enable the PRDF to monitor trustworthy financial data for use within the agency and for upcoming audits, we recommend the PRDF update its accounting practices and policies to provide for an accurate, comprehensive, and timely financial reporting system. Implementing an accounting and financial management system that enables the creation of financial data and reports needed by the various oversight organizations. The process should involve defining precise procedures for the creation and evaluation of financial reports, with different roles allocated to various people.
FINDING REFERENCE NUMBER 2023-046 (See Finding Reference Number 2023-018) FEDERAL PROGRAM ALL FEDERAL PROGRAMS ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AWARD NUMBER ALL AWARDS COMPLIANCE REQUIREMENT REPORTING – FINANCIAL STATEMENT ACCOUNTING RECORDS TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS CRITERIA 2 CFR Part 200, Section 302 and 45 CFR Part 75, Section 302- Financial management and standards for financial management systems state that: (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 funds. All recipient and subrecipient 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 the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (b) 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. (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. STATEMENT OF CONDITION Internal controls for creating financial reports about state and Federal funds received and spent through the Puerto Rico Integrated Financial System (PRIFAS) have not been put in place by the PRDF. The PRDF lacks an adequate system of internal controls to stop, identify, and fix errors. There was no supervision or review procedure in place to identify and allow for the correction of errors before submission and before the financial data was entered into PRIFAS. There was a delay in getting timely and correct financial information for the year under audit, and the PRDF staff had difficulties preparing and presenting the cash receipt and disbursement report, which included the schedule of federal spending for the audit. The following weaknesses were discovered when the PRDF's initial Financial Statement was reviewed: • Transactions that weren't related to the fiscal year being reported were included in the initial financial data. • The Office of the Secretariat and the four Programmatic Administrations lack uniform policies and procedures to guarantee that the amounts and disclosures in the PRDF's financial reports, financial statement notes, and necessary supplemental information are correctly recognized and reported. • Reports for several significant programs were prepared informally and, in some instances, only by one person, which resulted in significant mistakes in some of the programs. As a result, errors in the reports across the programs were not investigated or fixed. Additionally, we saw that for various financial reports, the PRIFAS data was not considered in the reconciliation process. • Several significant transactions were not entered into the PRIFAS by the Administration for Families and Children (ADFAN, by its Spanish Acronym) Finance Department, they were recorded as encumbrances, and not actual expenditures. This led to an understatement of expenditures in the PRDF's general fund of about $52,300,494. Additionally, Federal spending in one of the major programs was understated by $6,886,156. PERSPECTIVE INFORMATION The PRDF failed to properly registered in its accounting system all transactions needed to prepared the financial statement and to produce accurate financial reports for Federal grants that they received and expended during the fiscal year. No reconciliation procedures are performed regularly to identified errors in recording transactions in PRIFAS. This cause that when the PRDF prepared cash received and disbursement financial statement and the SEFA for audit purposes was incomplete and misstated (see Finding Reference Number 2023-017). STATEMENT OF CAUSE To make sure that all the PRDF's transactions had been accurately documented and reported, the PRDF did not thoroughly examine the financial data that was created and submitted in PRIFAS and used to prepare the financial statement and supplementary information. Due to lack of supervision or a review procedure to identify errors prior to submission, the ADFAN Finance Director recorded transactions as encumbrances, instead of actual expenditures. POSSIBLE ASSERTED EFFECT The PRDF is unable to provide accurate, up-to-date, and comprehensive disclosure of state and Federal funds activities in compliance with the agreement's requirements due to inadequate and inconsistent financial accounting reporting methods. IDENTIFICATION OF REPEAT FINDING No reported as prior audit finding. RECOMMENDATIONS To comply with the requirements of state and local agreements and enable the PRDF to monitor trustworthy financial data for use within the agency and for upcoming audits, we recommend the PRDF update its accounting practices and policies to provide for an accurate, comprehensive, and timely financial reporting system. Implementing an accounting and financial management system that enables the creation of financial data and reports needed by the various oversight organizations. The process should involve defining precise procedures for the creation and evaluation of financial reports, with different roles allocated to various people.
FINDING REFERENCE NUMBER 2023-051 (See Finding Reference Number 2023-021) FEDERAL PROGRAM (ALN – 93.568) LOW-INCOME HOME ENERGY ASSISTANCE U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES AWARD NUMBERS 2101PRLIEA (Federal Award Years: 2021 through 2023) ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM) COMPLIANCE REQUIREMENT REPORTING TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS CRITERIA Uniform Guidance at 2 CFR § 200.302, Financial Management, establishes that: (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 funds. All recipient and subrecipient 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 the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. (See § 200.450.) (b) The recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337): (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. … (6) Written procedures to implement the requirements of § 200.305 and (7) Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award. STATEMENT OF CONDITION As part of our audit procedures over the reporting requirement for LIHEAP program, we selected two reports submitted during our fiscal year. We noted that the administrative expenditures do not reconcile with the accounting information from PRIFAS. In addition, for the amount of encumbrances of $11,032,784.51, the amount of $9,943,769.52 was not supported by a detail. QUESTIONED COSTS No questioned costs identified. PERSPECTIVE INFORMATION This is a systematic deficiency. Procedures and internal controls manuals should provide for and ensure the segregation of duties, and the reconciliation of financial information reported to federal agencies against the accounting records used to prepare financial statements and SEFA. ADSEF failure to support reported amounts with verifiable documentation and the absence of independent review increases the risk of inaccurate or misstated financial data being reported to the Federal awarding agency. STATEMENT OF CAUSE During our interviews and understanding of the internal controls over financial reporting, we noted that only one person prepares, submits and certifies the SF– 425 reports. No proper segregation of duties exists, that allows for validation of all accounting data before submitting the reports. In addition, the procedures manual for preparing reports does not establish a clear process for obtaining information, validating it, recording it, preparing it, and reporting it, as well as the responsibilities and segregation of duties to ensure that the reported information is consistent with ADSEF's accounting records. ADSEF lacks internal controls that allow for the timely validation and reconciliation of financial information. Furthermore, they lack a written procedures manual detailing the processes to follow in obtaining accounting data and reporting it to the Federal government, ensuring that the responsibility does not fall on a single individual. POSSIBLE ASSERTED EFFECT ADSEF does not ensure that the reports are accurate and traceable to the accounting database used to prepare their financial reports to the Federal Agencies and their financial statement. IDENTIFICATION OF REPEAT FINDING No reported as prior audit finding. RECOMMENDATIONS We recommend ADSEF to establish written procedures and internal controls manuals to provide and document the segregation of duties related to the reporting compliance requirement.
FINDING REFERENCE NUMBER 2023-056 (See Finding Reference Number 2023-025) FEDERAL PROGRAMS (ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF) (ALN – 93.560) PAYMENT TO TERRITORIES – ADULT U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES AWARD NUMBERS 2021G996117; 2022G996117; 2023996117 (Federal Award Years: 2021 through 2023) 2022G9922PT; 2301PRTABD (Federal Award Years: 2022 through 2023) ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM) COMPLIANCE REQUIREMENT REPORTING – FINANCIAL TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS CRITERIA The 2 CFR 200 §200.302, Financial Management, establishes that: “(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 funds. All recipient and subrecipient 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 the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. See § 200.450. (b) The recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337): (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. … (6) Written procedures to implement the requirements of § 200.305 and (7) Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award. STATEMENT OF CONDITION As part of our audit procedures over the reporting requirement for TANF and Payment to Territories – Adult programs, we selected two reports submitted during our fiscal year. We found the following deficiencies: i. Administrative expenditures related to both programs are recorded under the same accounting account number, and the assistance listing number of TANF. That is, in PRIFAS, the administrative expenditures of both programs are not segregated by grant award and assistance listing number. ii. The ACF-196TR reports report expenditures under both programs that are not reconciled with the PRIFAS accounting system, specifically in administrative expenditures. We requested evidence of the expenditures incurred or details that were used to prepare the reports; this information was not available, and it was generated upon our request. iii. In both reports evaluated, the amounts reported on lines 2 and 3, related to the amounts that the TANF program transfers to two other federal programs, are recorded inconsistently. During the quarters from October to June, these lines report the amount of the budget that is allowed to be transferred, without validating whether the Federal programs incurred any expenditures. In the quarterly report of September, the expenditure for these lines is reported based on the amount of drawdowns incurred. This practice is inconsistent and does not reflect the actual expenditure incurred. iv. In the quarterly report of June 2023, an expenditure of $3,733,668 was reported on line 5(a). According to PRIFAS, the reported expenditure was $1,988,000. QUESTIONED COSTS Undetermined. PERSPECTIVE INFORMATION This is a systematic deficiency. Procedures and internal controls manuals should provide for and ensure the segregation of duties, and the reconciliation of financial information reported to federal agencies against the accounting records used to prepare financial statements and SEFA. In addition, the financial management system should provide to account separately the administrative expenditures incurred among all Federal programs administered. ADSEF failure to support reported amounts with verifiable documentation and the absence of independent review increases the risk of inaccurate or misstated financial data being reported to the federal awarding agency. STATEMENT OF CAUSE During our interviews and understanding of the internal controls over financial reporting, we noted that only one person prepares, submits and certifies the ACF-196TR reports. No proper segregation of duties exists, that allows for validation of all accounting data before submitting the reports. In addition, the procedures manual for preparing reports does not establish a clear process for obtaining information, validating it, recording it, preparing it, and reporting it, as well as the responsibilities and segregation of duties to ensure that the reported information is consistent with ADSEF's accounting records. PRIFAS accounting data base as configured, does not provide for the administrative expenditures incurred from the TANF and Payment to Territories – Adult program to be segregated. ADSEF lacks internal controls that allow for the timely validation and reconciliation of financial information. Furthermore, they lack a written procedures manual detailing the processes to follow in obtaining accounting data and reporting it to the federal government, ensuring that the responsibility does not fall on a single individual. POSSIBLE ASSERTED EFFECT ADSEF does not ensure that the reports are accurate and traceable to the accounting database used to prepare their financial reports to the Federal Agencies and their financial statement. IDENTIFICATION OF REPEAT FINDING No reported as prior audit finding. RECOMMENDATIONS We recommend ADSEF to establish written procedures and internal controls manuals to provide and document the segregation of duties related to the reporting compliance requirement. Additionally, work with the Puerto Rico Department of the Treasury to provide accounting records to segregate the administrative expenditures of both programs.
FINDING REFERENCE NUMBER 2023-056 (See Finding Reference Number 2023-025) FEDERAL PROGRAMS (ALN – 93.558) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES (TANF) (ALN – 93.560) PAYMENT TO TERRITORIES – ADULT U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES AWARD NUMBERS 2021G996117; 2022G996117; 2023996117 (Federal Award Years: 2021 through 2023) 2022G9922PT; 2301PRTABD (Federal Award Years: 2022 through 2023) ADMINISTRATION ADMINISTRATION FOR SOCIOECONOMIC DEVELOPMENT OF THE FAMILY (ADSEF, BY ITS SPANISH ACRONYM) COMPLIANCE REQUIREMENT REPORTING – FINANCIAL TYPE OF FINDING MATERIAL NONCOMPLIANCE AND MATERIAL WEAKNESS CRITERIA The 2 CFR 200 §200.302, Financial Management, establishes that: “(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 funds. All recipient and subrecipient 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 the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. See § 200.450. (b) The recipient's and subrecipient's financial management system must provide for the following (see §§ 200.334, 200.335, 200.336, and 200.337): (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. … (6) Written procedures to implement the requirements of § 200.305 and (7) Written procedures for determining the allowability of costs in accordance with subpart E and the terms and conditions of the Federal award. STATEMENT OF CONDITION As part of our audit procedures over the reporting requirement for TANF and Payment to Territories – Adult programs, we selected two reports submitted during our fiscal year. We found the following deficiencies: i. Administrative expenditures related to both programs are recorded under the same accounting account number, and the assistance listing number of TANF. That is, in PRIFAS, the administrative expenditures of both programs are not segregated by grant award and assistance listing number. ii. The ACF-196TR reports report expenditures under both programs that are not reconciled with the PRIFAS accounting system, specifically in administrative expenditures. We requested evidence of the expenditures incurred or details that were used to prepare the reports; this information was not available, and it was generated upon our request. iii. In both reports evaluated, the amounts reported on lines 2 and 3, related to the amounts that the TANF program transfers to two other federal programs, are recorded inconsistently. During the quarters from October to June, these lines report the amount of the budget that is allowed to be transferred, without validating whether the Federal programs incurred any expenditures. In the quarterly report of September, the expenditure for these lines is reported based on the amount of drawdowns incurred. This practice is inconsistent and does not reflect the actual expenditure incurred. iv. In the quarterly report of June 2023, an expenditure of $3,733,668 was reported on line 5(a). According to PRIFAS, the reported expenditure was $1,988,000. QUESTIONED COSTS Undetermined. PERSPECTIVE INFORMATION This is a systematic deficiency. Procedures and internal controls manuals should provide for and ensure the segregation of duties, and the reconciliation of financial information reported to federal agencies against the accounting records used to prepare financial statements and SEFA. In addition, the financial management system should provide to account separately the administrative expenditures incurred among all Federal programs administered. ADSEF failure to support reported amounts with verifiable documentation and the absence of independent review increases the risk of inaccurate or misstated financial data being reported to the federal awarding agency. STATEMENT OF CAUSE During our interviews and understanding of the internal controls over financial reporting, we noted that only one person prepares, submits and certifies the ACF-196TR reports. No proper segregation of duties exists, that allows for validation of all accounting data before submitting the reports. In addition, the procedures manual for preparing reports does not establish a clear process for obtaining information, validating it, recording it, preparing it, and reporting it, as well as the responsibilities and segregation of duties to ensure that the reported information is consistent with ADSEF's accounting records. PRIFAS accounting data base as configured, does not provide for the administrative expenditures incurred from the TANF and Payment to Territories – Adult program to be segregated. ADSEF lacks internal controls that allow for the timely validation and reconciliation of financial information. Furthermore, they lack a written procedures manual detailing the processes to follow in obtaining accounting data and reporting it to the federal government, ensuring that the responsibility does not fall on a single individual. POSSIBLE ASSERTED EFFECT ADSEF does not ensure that the reports are accurate and traceable to the accounting database used to prepare their financial reports to the Federal Agencies and their financial statement. IDENTIFICATION OF REPEAT FINDING No reported as prior audit finding. RECOMMENDATIONS We recommend ADSEF to establish written procedures and internal controls manuals to provide and document the segregation of duties related to the reporting compliance requirement. Additionally, work with the Puerto Rico Department of the Treasury to provide accounting records to segregate the administrative expenditures of both programs.
Condition: During the test of 100% of projects, thirty-five (35) projects, for the Coronavirus and Local Fiscal Recovery Funds, the following noncompliance with the Reporting compliance requirement was noted: • Eighteen (18) projects were coded as revenue loss and were a subrecipient relationship. • Seventeen (17) projects were coded as revenue loss and should have been coded to an Administrative code. • Four (4) projects were coded as a subrecipient and should not have been. After the review of the quarterly reports, the following exceptions were noted: • The second quarter report was over reported by $643,303, • 911 Trust Authority reported $195,398 in cumulative expenditures on the report; however, no disbursements were made in fiscal year 2022 or fiscal year 2023. • North West Rogers County Fire Protection District reported $171,219 in cumulative expenditures; however, no disbursements were made in fiscal year 2022 and fiscal year 2023. • Emergency Management reported $333,169 in cumulative expenditures; however, there were only expenditures totaling $18,313. • School Resource Officers reported $135,778 in cumulative expenditures; however, there were only expenditures totaled $41,447. • Expenditures for the jail security electronics upgrade was not reported; however, there were expenditures totaling $132,501. 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 implement internal controls to ensure compliance with these requirements. Management Response: Board of County Commissioners: The Board of County Commissioners is responsible for the overall fiscal concerns of the county. See OKLA. STAT. Title 19, § 345. The Board of County Commissioners, with the cooperation and participation of all elected officials, reviews, develops and implements policies and procedures to create a strong internal control environment. The Board of County Commissioners will work with all elected officials, the third-party administrator, and federal, state and local partners to develop policies, procedures, and internal controls designed to accurately track grants, including the application process, verification, oversight, and reporting of grant requirements. These policies and procedures will be designed to identify requirements for recipients and sub-recipients of grants, ensure accurate equipment and real property management, procurement, recipient and subrecipient monitoring and reporting. Further, policies will ensure a proper understanding of all grant requirements and compliance of the same. To assist in this process, the Board of County Commissioners engaged a third-party administrator to oversee the grant process, including application, eligibility, review, requirements, contracting, recipient tracking and oversight, and documentation and reporting. The Board of County Commissioners will work with the third-party administrator to ensure proper grant administration. 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 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). 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 gays 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 2023-003 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 and Year (or Other Identifying Number): S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters 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. The School Corporation was required to submit an annual data report to the Indiana Department of Education via JotForm, a form/report builder. Data to be submitted included, but was not limited to, current period expenditures, prior period expenditures, and expenditures per activity. During the audit period the School Corporation submitted two ESSER I reports, two ESSER II reports, and two ESSER III reports, for a total of six reports. The annual data reports were prepared by the Treasurer and reviewed by a second knowledgeable individual; however, this process did not allow for the prevention, or detection and correction, of errors prior to submission. Due to the lack of effective internal controls, one of the six annual data reports was not supported by the School Corporation's records. For the ESSER III, Year 2 report, which covered the period of July 1, 2021 to June 30, 2022, total expenses per the report were $688,778. However, the School Corporation's ledger had total expenses for the award, for that time period, of $784,638. INDIANA STATE BOARD OF ACCOUNTS 18 OAK HILL UNITED SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The lack of internal controls and noncompliance were isolated to the ESSER III, Year 2 report. 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. . . ." 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." 34 CFR 76.731 states: "A State and a subgrantee shall keep records to show its compliance with program requirements." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, the ESSER III, Year 2 report was not supported by the School Corporation's records. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. 19 INDIANA STATE BOARD OF ACCOUNTS OAK HILL UNITED SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure that all expenditures are reported on the reports submitted on behalf of the COVID-19 - Education Stabilization Fund program funds. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-003 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 and Year (or Other Identifying Number): S425U210013 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters 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. The School Corporation was required to submit an annual data report to the Indiana Department of Education via JotForm, a form/report builder. Data to be submitted included, but was not limited to, current period expenditures, prior period expenditures, and expenditures per activity. During the audit period the School Corporation submitted two ESSER I reports, two ESSER II reports, and two ESSER III reports, for a total of six reports. The annual data reports were prepared by the Treasurer and reviewed by a second knowledgeable individual; however, this process did not allow for the prevention, or detection and correction, of errors prior to submission. Due to the lack of effective internal controls, one of the six annual data reports was not supported by the School Corporation's records. For the ESSER III, Year 2 report, which covered the period of July 1, 2021 to June 30, 2022, total expenses per the report were $688,778. However, the School Corporation's ledger had total expenses for the award, for that time period, of $784,638. INDIANA STATE BOARD OF ACCOUNTS 18 OAK HILL UNITED SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) The lack of internal controls and noncompliance were isolated to the ESSER III, Year 2 report. 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. . . ." 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." 34 CFR 76.731 states: "A State and a subgrantee shall keep records to show its compliance with program requirements." Cause A proper system of internal controls was not designed by management of the School Corporation. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the School Corporation's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, the ESSER III, Year 2 report was not supported by the School Corporation's records. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the School Corporation. Questioned Costs There were no questioned costs identified. 19 INDIANA STATE BOARD OF ACCOUNTS OAK HILL UNITED SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Recommendation We recommended that management of the School Corporation establish a proper system of internal controls and develop policies and procedures to ensure that all expenditures are reported on the reports submitted on behalf of the COVID-19 - Education Stabilization Fund program funds. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
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 Control (SD), Instance of Noncompliance (NC) 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 2022-2023. Our audit procedures revealed that Quarterly Progress Reports were not submitted for one of the quarters for four of the five projects evaluated. Criteria 2 CFR 200.328 (c) states that the recipient or subrecipient must submit financial reports as required by the Federal award. […] Reports submitted quarterly or semiannually must be due no later than 30 calendar days after the reporting period. 2 CFR 200.329 (c) (1) states that the recipient or subrecipient must submit performance reports as required by the Federal award. […] Reports submitted quarterly or semiannually must be due no later than 30 calendar days after the reporting period. […] 2 CFR 200.332 (b) (3) states that any additional requirements that the pass-through entity imposes on the subrecipient for the pass-through entity to meet its responsibilities under the Federal award. This includes information and certifications […] required for submitting financial and performance reports that the pass-through entity must provide to the Federal agency. 44 CFR 206.204 (f) states that progress reports will be submitted by the recipient to the Regional Administrator quarterly. […] COR3, as a pass-through entity, requires Subrecipients to complete and submit a quarterly progress report for each Project Worksheet (“PW”) through the Disaster Recovery Solution (“DRS”) Platform. This information is then submitted to the Federal Emergency Management Agency (FEMA). Quarterly Progress Reports cannot be edited or submitted after the deadline. Cause of Condition The Municipality did not manage time effectively to complete the Quarterly Progress Reports as required by the Federal award. Effect of Condition The Municipality failed in the submission of Quarterly Progress Reports as required by the Federal award. Recommendation We recommend the Program Administrators manage time effectively to complete the Quarterly Progress Reports timely. Questioned Costs None. Views of Responsible Officials and Planned Corrective Action We will give instructions to the accounting staff in charge of the preparation of the quarterly progress reports of the Program, in order to comply with the FEMA reporting requirements. Responsible Official: Mrs. Irma M. Vargas Aguirre, Finance and Budget Director Implementation Date: December 31, 2025
Condition: Expenditures for the federal program, Coronavirus State and Local Fiscal Recovery Funds were not accurately reported on the Compliance Report. Federal expenditures were underreported by $1,661,921. The County reported $0, resulting in an understatement of $1,661,921. This was due to the County failing to report expenditures on a cash basis. 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 could result in noncompliance with grant requirements. Recommendation: OSAI recommends the County gain an understanding of the grant requirements for this program and implement internal controls to ensure compliance with these grant requirements. Management Response: Chairman of the Board of County Commissioners: This issue originated under the prior County Clerk’s administration where key reporting processes were not followed. The Board of County Commissioners and the other elected officials have made correcting this a top priority. Together, we are: • developing a comprehensive SOP to ensure accurate and timely tracking and reporting of federal funds, • improving communication and oversight between all county offices to ensure consistent reporting standards, • and ensuring annual compliance with federal reporting requirements. Our collective goal is to implement the policies and structures that will keep Osage County operating with the highest standard of accountability and excellence. County Clerk: I was not the County Clerk in office at this time. To correct this issue, the County plans to develop a SOP to timely and accurately track and report on federal funds. The SOP will be reviewed, adopted, and monitored by the Board of County Commissioners. County Treasurer: The County was under the understanding that once we established, we were reporting as revenue loss, we would not have to submit the report annually. The final reporting was submitted prior to deadline. Criteria: 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, you 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.
2023-008 Improve Controls and Compliance with Reporting Federal Program Information Federal Agency: U.S. Department of Treasury Award Name(s): COVID-19 Coronavirus State and Local Fiscal Recovery Fund Assistance Listing Number(s): 21.027 Award Year: 2023 Compliance Requirement: Reporting Type of Finding Compliance Internal Control over Compliance – Material Weakness Criteria or Specific Requirement Recipients of American Rescue Plan Act (ARPA) State and Local Fiscal Recovery Funds are required by Uniform Guidance (2 CFR § 200.328–200.329) and program requirements to submit accurate and timely quarterly performance and evaluation reports to the federal awarding agency. The City must maintain documentation supporting the submission and content of required reports as part of effective internal control over compliance. Condition and Context As part of our testing of the ARPA program, the City was unable to provide the requested quarterly performance and evaluation reports as required to be submitted under the program. Cause The City did not have adequate controls in place to ensure the timely preparation, submission, and retention of required quarterly performance and evaluation reports. Effect or Potential Effect Failure to prepare, submit, and retain quarterly performance and evaluation reports results in noncompliance with ARPA program requirements and undermines transparency and accountability for federal funds received. Questioned Costs No questioned costs are reported. Identification as a Repeat Finding This was not a finding in the prior year. Recommendation The City should establish and implement formal procedures to ensure all required quarterly performance and evaluation reports are prepared, submitted, and retained in accordance with program requirements. SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (CONTINUED) Management should regularly monitor compliance with reporting deadlines and maintain adequate documentation. Views of Responsible Official Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.
2023-010 Improve Controls and Compliance with Reporting Federal Program Information Federal Agency: U.S. Department of Housing and Urban Development Award Name(s): CDBG Entitlement Grants Cluster Assistance Listing Number(s): 14.218 Award Year: 2023 Compliance Requirement: Reporting Type of Finding Compliance Internal Control over Compliance – Material Weakness Criteria or Specific Requirement Per Uniform Guidance (2 CFR § 200.328–200.329) and program-specific requirements for Community Development Block Grants/Entitlement Grants, recipients must submit required financial and programmatic reports accurately and timely to the federal awarding agency. Effective internal controls must be in place to ensure compliance with all reporting deadlines. Condition and Context The City did not file required financial and programmatic reports in a timely manner as stipulated under the grant program. Multiple reports were submitted after their respective deadlines, including the Consolidated Annual Performance and Evaluation Report (CAPER) which is required to be submitted 90 days after the close of a jurisdiction’s program year but was actually submitted in October of 2025. SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS (CONTINUED) Cause The City lacked adequate internal controls and procedures to ensure timely preparation, review, and submission of required reports to the federal awarding agency. Effect or Potential Effect Failure to file financial and programmatic reports on time constitutes noncompliance with federal program requirements and reduces transparency and accountability regarding the use of federal funds. Questioned Costs No questioned costs are reported. Identification as a Repeat Finding This is a repeat of prior year finding 2022-005. Recommendation The City should establish and implement formal procedures and controls to monitor reporting deadlines, ensure timely completion and submission of required financial and programmatic reports, and maintain documentation evidencing compliance with all reporting requirements. Views of Responsible Official Management’s corrective action plan is included at the end of this report after the Schedule of Prior Year Findings.
Community Development Financial Institutions Rapid Response Program (CDFI RRP), Assistance Listing Number: 21.024 U.S. Department of the Treasury Program Year 2022 Criteria or specific requirement – Reporting (2 CFR section 200.328 and 200.329) Condition – The Credit Union reported the incorrect amount of cumulative awards expended in the 2022 Use of Awards Report. Cause – The Credit Union’s controls did not ensure the proper amounts were reported. Effect – The Credit Union reported the incorrect amount of awards expended during 2022. Questioned costs – N/A Context – The Credit Union is required to submit three reports for the year ended December 31, 2022. All of the required reports were tested. The 2022 Use of Awards report reported $828,265 as the cumulative use of award, rather than the actual total cumulative use of $1,826,265 that was actually expended during the year. Identification as a repeat finding, if applicable – N/A Recommendation – Management should review and update controls over federal grant reporting to ensure reports are prepared using complete and accurate information. Views of responsible officials and planned corrective actions – The input error was corrected prior to end of the audit. The credit union's CDFI analyst was contacted by the Chief Strategic Officer and the analyst opened the data field for editing in the AMIS system. The Chief Strategic Officer made the correction in the AMIS system and submitted the corrected information. The Chief Strategic Officer has assigned CDFI reporting responsibilities to the Director of Strategy. Future submissions will be performed by the Director of Strategy and reviewed by the Chief Strategic Officer prior to submission.
Finding 2022-004 Compliance Requirement: Internal Control over Compliance and Compliance with Reporting (Preparation of Schedule of Expenditures of Federal Awards) Prior Year Finding Number: N/A Program: ALN 14.267 U.S. Department of Housing and Urban Development – Continuum of Care Program ALN 16.575 U.S. Department of Justice – Victims of Crime Acts Program ALN 21.027 U.S. Department of Treasury – Victims of Crime Acts Program Criteria - The Code of Federal Regulation (CFR) Section 200.510(b) states in part: “The auditee must also prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with CFR Section 200.502. Basis for determining Federal awards expended.” The SEFA must provide total federal awards expended for each individual Federal program. In accordance with Section 200.302 Financial Management, a non-federal entity’s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. The financial management system of each non-Federal entity must provide for the following: (1) Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in Section 200.328 Financial Reporting and Section 200.329 Monitoring and Reporting Program Performance. (3) Records that identify adequately the source and application of funds for federally funded activities. (4) Effective control over, and accountability for, all funds, property, and other assets. Condition – The SEFA as prepared by management did not originally include one federal grant with federal expenditures during the year and one grant for which the Assistance Listing Number (ALN) did not match the grant documents. Cause - The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not operate as designed due to new funding received in the current year. Effect – The original SEFA was incomplete. Questioned Costs: None. Context: The conditions outlined above are based on our testing of the Organization’s major program and our overall testing of the accuracy of the SEFA. The nature of this findings is detailed in the condition section above. Recommendation- We recommend management attend federal award trainings and information to ensure the documented policies and procedures can be performed as described. This will ensure the federal funds are reported accurately on the SEFA and that programs are reported under the correct ALN. Views of Responsible Officials – The Organization concurs with the auditor’s findings and recommendations. The Organization will continue to review federal award guidance and requirements to ensure compliance with current and future federal awards. Refer to the Organization’s corrective action plan for further details.
Finding 2022-004 Compliance Requirement: Internal Control over Compliance and Compliance with Reporting (Preparation of Schedule of Expenditures of Federal Awards) Prior Year Finding Number: N/A Program: ALN 14.267 U.S. Department of Housing and Urban Development – Continuum of Care Program ALN 16.575 U.S. Department of Justice – Victims of Crime Acts Program ALN 21.027 U.S. Department of Treasury – Victims of Crime Acts Program Criteria - The Code of Federal Regulation (CFR) Section 200.510(b) states in part: “The auditee must also prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with CFR Section 200.502. Basis for determining Federal awards expended.” The SEFA must provide total federal awards expended for each individual Federal program. In accordance with Section 200.302 Financial Management, a non-federal entity’s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. The financial management system of each non-Federal entity must provide for the following: (1) Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in Section 200.328 Financial Reporting and Section 200.329 Monitoring and Reporting Program Performance. (3) Records that identify adequately the source and application of funds for federally funded activities. (4) Effective control over, and accountability for, all funds, property, and other assets. Condition – The SEFA as prepared by management did not originally include one federal grant with federal expenditures during the year and one grant for which the Assistance Listing Number (ALN) did not match the grant documents. Cause - The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not operate as designed due to new funding received in the current year. Effect – The original SEFA was incomplete. Questioned Costs: None. Context: The conditions outlined above are based on our testing of the Organization’s major program and our overall testing of the accuracy of the SEFA. The nature of this findings is detailed in the condition section above. Recommendation- We recommend management attend federal award trainings and information to ensure the documented policies and procedures can be performed as described. This will ensure the federal funds are reported accurately on the SEFA and that programs are reported under the correct ALN. Views of Responsible Officials – The Organization concurs with the auditor’s findings and recommendations. The Organization will continue to review federal award guidance and requirements to ensure compliance with current and future federal awards. Refer to the Organization’s corrective action plan for further details.
Finding 2022-004 Compliance Requirement: Internal Control over Compliance and Compliance with Reporting (Preparation of Schedule of Expenditures of Federal Awards) Prior Year Finding Number: N/A Program: ALN 14.267 U.S. Department of Housing and Urban Development – Continuum of Care Program ALN 16.575 U.S. Department of Justice – Victims of Crime Acts Program ALN 21.027 U.S. Department of Treasury – Victims of Crime Acts Program Criteria - The Code of Federal Regulation (CFR) Section 200.510(b) states in part: “The auditee must also prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with CFR Section 200.502. Basis for determining Federal awards expended.” The SEFA must provide total federal awards expended for each individual Federal program. In accordance with Section 200.302 Financial Management, a non-federal entity’s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. The financial management system of each non-Federal entity must provide for the following: (1) Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in Section 200.328 Financial Reporting and Section 200.329 Monitoring and Reporting Program Performance. (3) Records that identify adequately the source and application of funds for federally funded activities. (4) Effective control over, and accountability for, all funds, property, and other assets. Condition – The SEFA as prepared by management did not originally include one federal grant with federal expenditures during the year and one grant for which the Assistance Listing Number (ALN) did not match the grant documents. Cause - The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not operate as designed due to new funding received in the current year. Effect – The original SEFA was incomplete. Questioned Costs: None. Context: The conditions outlined above are based on our testing of the Organization’s major program and our overall testing of the accuracy of the SEFA. The nature of this findings is detailed in the condition section above. Recommendation- We recommend management attend federal award trainings and information to ensure the documented policies and procedures can be performed as described. This will ensure the federal funds are reported accurately on the SEFA and that programs are reported under the correct ALN. Views of Responsible Officials – The Organization concurs with the auditor’s findings and recommendations. The Organization will continue to review federal award guidance and requirements to ensure compliance with current and future federal awards. Refer to the Organization’s corrective action plan for further details.
Finding 2022-004 Compliance Requirement: Internal Control over Compliance and Compliance with Reporting (Preparation of Schedule of Expenditures of Federal Awards) Prior Year Finding Number: N/A Program: ALN 14.267 U.S. Department of Housing and Urban Development – Continuum of Care Program ALN 16.575 U.S. Department of Justice – Victims of Crime Acts Program ALN 21.027 U.S. Department of Treasury – Victims of Crime Acts Program Criteria - The Code of Federal Regulation (CFR) Section 200.510(b) states in part: “The auditee must also prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with CFR Section 200.502. Basis for determining Federal awards expended.” The SEFA must provide total federal awards expended for each individual Federal program. In accordance with Section 200.302 Financial Management, a non-federal entity’s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. The financial management system of each non-Federal entity must provide for the following: (1) Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in Section 200.328 Financial Reporting and Section 200.329 Monitoring and Reporting Program Performance. (3) Records that identify adequately the source and application of funds for federally funded activities. (4) Effective control over, and accountability for, all funds, property, and other assets. Condition – The SEFA as prepared by management did not originally include one federal grant with federal expenditures during the year and one grant for which the Assistance Listing Number (ALN) did not match the grant documents. Cause - The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not operate as designed due to new funding received in the current year. Effect – The original SEFA was incomplete. Questioned Costs: None. Context: The conditions outlined above are based on our testing of the Organization’s major program and our overall testing of the accuracy of the SEFA. The nature of this findings is detailed in the condition section above. Recommendation- We recommend management attend federal award trainings and information to ensure the documented policies and procedures can be performed as described. This will ensure the federal funds are reported accurately on the SEFA and that programs are reported under the correct ALN. Views of Responsible Officials – The Organization concurs with the auditor’s findings and recommendations. The Organization will continue to review federal award guidance and requirements to ensure compliance with current and future federal awards. Refer to the Organization’s corrective action plan for further details.
Finding 2022-004 Compliance Requirement: Internal Control over Compliance and Compliance with Reporting (Preparation of Schedule of Expenditures of Federal Awards) Prior Year Finding Number: N/A Program: ALN 14.267 U.S. Department of Housing and Urban Development – Continuum of Care Program ALN 16.575 U.S. Department of Justice – Victims of Crime Acts Program ALN 21.027 U.S. Department of Treasury – Victims of Crime Acts Program Criteria - The Code of Federal Regulation (CFR) Section 200.510(b) states in part: “The auditee must also prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with CFR Section 200.502. Basis for determining Federal awards expended.” The SEFA must provide total federal awards expended for each individual Federal program. In accordance with Section 200.302 Financial Management, a non-federal entity’s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. The financial management system of each non-Federal entity must provide for the following: (1) Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in Section 200.328 Financial Reporting and Section 200.329 Monitoring and Reporting Program Performance. (3) Records that identify adequately the source and application of funds for federally funded activities. (4) Effective control over, and accountability for, all funds, property, and other assets. Condition – The SEFA as prepared by management did not originally include one federal grant with federal expenditures during the year and one grant for which the Assistance Listing Number (ALN) did not match the grant documents. Cause - The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not operate as designed due to new funding received in the current year. Effect – The original SEFA was incomplete. Questioned Costs: None. Context: The conditions outlined above are based on our testing of the Organization’s major program and our overall testing of the accuracy of the SEFA. The nature of this findings is detailed in the condition section above. Recommendation- We recommend management attend federal award trainings and information to ensure the documented policies and procedures can be performed as described. This will ensure the federal funds are reported accurately on the SEFA and that programs are reported under the correct ALN. Views of Responsible Officials – The Organization concurs with the auditor’s findings and recommendations. The Organization will continue to review federal award guidance and requirements to ensure compliance with current and future federal awards. Refer to the Organization’s corrective action plan for further details.
Finding 2022-004 Compliance Requirement: Internal Control over Compliance and Compliance with Reporting (Preparation of Schedule of Expenditures of Federal Awards) Prior Year Finding Number: N/A Program: ALN 14.267 U.S. Department of Housing and Urban Development – Continuum of Care Program ALN 16.575 U.S. Department of Justice – Victims of Crime Acts Program ALN 21.027 U.S. Department of Treasury – Victims of Crime Acts Program Criteria - The Code of Federal Regulation (CFR) Section 200.510(b) states in part: “The auditee must also prepare a schedule of expenditures of Federal awards (SEFA) for the period covered by the auditee’s financial statements which must include the total Federal awards expended as determined in accordance with CFR Section 200.502. Basis for determining Federal awards expended.” The SEFA must provide total federal awards expended for each individual Federal program. In accordance with Section 200.302 Financial Management, a non-federal entity’s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. The financial management system of each non-Federal entity must provide for the following: (1) Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in Section 200.328 Financial Reporting and Section 200.329 Monitoring and Reporting Program Performance. (3) Records that identify adequately the source and application of funds for federally funded activities. (4) Effective control over, and accountability for, all funds, property, and other assets. Condition – The SEFA as prepared by management did not originally include one federal grant with federal expenditures during the year and one grant for which the Assistance Listing Number (ALN) did not match the grant documents. Cause - The internal controls established for the review and approval of the SEFA to ensure its completeness and accuracy did not operate as designed due to new funding received in the current year. Effect – The original SEFA was incomplete. Questioned Costs: None. Context: The conditions outlined above are based on our testing of the Organization’s major program and our overall testing of the accuracy of the SEFA. The nature of this findings is detailed in the condition section above. Recommendation- We recommend management attend federal award trainings and information to ensure the documented policies and procedures can be performed as described. This will ensure the federal funds are reported accurately on the SEFA and that programs are reported under the correct ALN. Views of Responsible Officials – The Organization concurs with the auditor’s findings and recommendations. The Organization will continue to review federal award guidance and requirements to ensure compliance with current and future federal awards. Refer to the Organization’s corrective action plan for further details.
Criteria: In accordance with 2 CFR 200.328 and 2 CFR 200.329, the College is required to prepare and publicly post quarterly reports related to the student aid and institutional portions of HEERF expenditures. Condition: During our audit, we selected one of the four quarterly reports to test the accuracy of the reporting. Our testing indicated certain amounts on the quarterly report that did not agree to the expenditures for the quarter. Questioned Costs: None Effect: The College was not in compliance with HEERF reporting requirements. Cause: Certain HEERF I expenditures were improperly excluded from the report and some misunderstanding of requirements of certain items in the report. Recommendation: We recommend reconciliation of quarterly reports to related grant documentation and review of the reports by an appropriate team member to ensure accuracy. Views of responsible officials and planned corrective action: The College agrees with this finding and will adhere to the corrective action plan on page 34 in this audit report.
Criteria: In accordance with 2 CFR 200.328 and 2 CFR 200.329, the College is required to prepare and publicly post quarterly reports related to the student aid and institutional portions of HEERF expenditures. Condition: During our audit, we selected one of the four quarterly reports to test the accuracy of the reporting. Our testing indicated certain amounts on the quarterly report that did not agree to the expenditures for the quarter. Questioned Costs: None Effect: The College was not in compliance with HEERF reporting requirements. Cause: Certain HEERF I expenditures were improperly excluded from the report and some misunderstanding of requirements of certain items in the report. Recommendation: We recommend reconciliation of quarterly reports to related grant documentation and review of the reports by an appropriate team member to ensure accuracy. Views of responsible officials and planned corrective action: The College agrees with this finding and will adhere to the corrective action plan on page 34 in this audit report.
Criteria: In accordance with 2 CFR 200.328 and 2 CFR 200.329, the College is required to prepare and publicly post quarterly reports related to the student aid and institutional portions of HEERF expenditures. Condition: During our audit, we selected one of the four quarterly reports to test the accuracy of the reporting. Our testing indicated certain amounts on the quarterly report that did not agree to the expenditures for the quarter. Questioned Costs: None Effect: The College was not in compliance with HEERF reporting requirements. Cause: Certain HEERF I expenditures were improperly excluded from the report and some misunderstanding of requirements of certain items in the report. Recommendation: We recommend reconciliation of quarterly reports to related grant documentation and review of the reports by an appropriate team member to ensure accuracy. Views of responsible officials and planned corrective action: The College agrees with this finding and will adhere to the corrective action plan on page 34 in this audit report.
2 CFR § 300.1 states the Department of Health and Human Services adopts the Office of Management and Budget (OMB) Guidance in 2 CFR part 200, and has codified the text, with HHS-specific amendments in 45 CFR part 75. Thus, this part gives regulatory effect to the OMB guidance and supplements the guidance as needed for the Department. 2 CFR § 200.329(a) states the non-Federal entity is responsible for oversight of the operations of the Federal award supported activities. The non-Federal entity must monitor its activities under Federal awards to assure compliance with applicable Federal requirements and performance expectations are being achieved. Monitoring by the non-Federal entity must cover each program, function or activity. 45 CFR § 75.302(a) states 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. Section (b) states, in part, 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 CFDA title and number, Federal award identification number and year, name of the HHS awarding 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 §§ 75.341 and 75.342. (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, 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. The non-Federal entity must adequately safeguard all assets and assure that they are used solely for authorized purposes. (5) Comparison of expenditures with budget amounts for each Federal award. (6) Written procedures to implement the requirements of § 75.305. (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. The COVID-19 Provider Relief Fund (PRF) and American Rescue Plan (ARP) Rural Distribution program is administered by the Health Resources and Services Administration (HRSA) and supports eligible health care providers in the battle against the COVID-19 pandemic by providing relief funds to eligible providers of health care services and support for health care-related expenses or lost revenues attributable to coronavirus. PRF recipients must only use payments for eligible expenses. 2022 OMB Compliance Supplement, Part 4, 93.498. Providers who accepted PRF and/or ARP payment(s) agreed to the Terms and Conditions of the program, which include a requirement to report on the use of the funds. See Reporting and Auditing, Health Resources & Services Administration, https://www.hrsa.gov/provider-relief/reporting-auditing. Entities receiving PRF funds are required to submit financial and other information in the Provider Relief Fund Reporting Portal. The PRF amounts to be reported on the County’s Schedule of Expenditures of Federal Awards (SEFA) are based on the PRF report. 2022 OMB Compliance Supplement. Reporting Entities are required to maintain adequate documentation to substantiate that the PRF funds were used for health care-related expenses or lost revenues that are attributable to coronavirus and COVID-19. See PRB Reporting and Auditing FAQ, Health Resources & Services Administration, https://www.hrsa.gov/provider-relief/faq/reporting?categories=210&keywords= . Logan County Logan Acres Care Center Department (the Center) completed and submitted its PRF report based solely on the amounts received; however, the Center did not submit and maintain detailed, complete financial records on the actual expenditures of the PRF funds. As a result, the exact expenditures associated with the grant were unidentifiable which was contrary to the requirements imposed on recipients of PRF funds. Logan County Logan Acres Care Center Department should implement procedures to verify grants are separately accounted for with respect to receipts and expenditures. Failure to maintain detailed financial records can result in unallowable federal grant expenditures and/or reimbursements to the grantor.
2 CFR 1000.10 provides that, except for the deviations set forth elsewhere in this Part, the Department of Treasury adopts the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards set forth at 2 CFR Part 200. 2 CFR 200.302(b) states, in part, that the financial management system of each non-Federal entity must provide for the 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. The City did not have proper internal controls in place to ensure the accurate submission of the Project and Expenditure Reports. During testing of Project and Expenditure Reports for the Coronavirus State and Local Fiscal Recovery Funds (AL #21.027), we noted that: ? The City did not properly report cumulative obligations on the report required by July 31, 2022. The City over-reported cumulative obligations due to including a funding project more than once for $880,000 to the Justice Center Design project; and ? The City did not properly report cumulative obligations nor current period expenditures on the report required by October 31, 2022. The City over-reported cumulative obligations by $880,000 due to including a funding project more than once to the Justice Center Design project. The City also over-reported current period expenditures due to including the current period expenditures of $175,741 for a funding project more than once to Rehiring Staff project. Failure to have the proper controls in place to ensure the timely and accurate submission of the Project and Expenditure Reports could result in Treasury taking action against the City for failure to comply with programmatic requirements. The City should implement and have controls in place to ensure the quarterly Project and Expenditure Reports are accurate.
2 CFR 1000.10 provides that, except for the deviations set forth elsewhere in this Part, the Department of Treasury adopts the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards set forth at 2 CFR Part 200. 2 CFR 200.302(b) states, in part, that the financial management system of each non-Federal entity must provide for the 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. The City did not have proper internal controls in place to ensure the accurate submission of the Project and Expenditure Reports. During testing of Project and Expenditure Reports for the Coronavirus State and Local Fiscal Recovery Funds (AL #21.027), we noted that: ? The City did not properly report cumulative obligations on the report required by July 31, 2022. The City over-reported cumulative obligations due to including a funding project more than once for $880,000 to the Justice Center Design project; and ? The City did not properly report cumulative obligations nor current period expenditures on the report required by October 31, 2022. The City over-reported cumulative obligations by $880,000 due to including a funding project more than once to the Justice Center Design project. The City also over-reported current period expenditures due to including the current period expenditures of $175,741 for a funding project more than once to Rehiring Staff project. Failure to have the proper controls in place to ensure the timely and accurate submission of the Project and Expenditure Reports could result in Treasury taking action against the City for failure to comply with programmatic requirements. The City should implement and have controls in place to ensure the quarterly Project and Expenditure Reports are accurate.
2 CFR 1000.10 provides that, except for the deviations set forth elsewhere in this Part, the Department of Treasury adopts the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards set forth at 2 CFR Part 200. 2 CFR 200.302(b) states, in part, that the financial management system of each non-Federal entity must provide for the 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. The City did not have proper internal controls in place to ensure the accurate submission of the Project and Expenditure Reports. During testing of Project and Expenditure Reports for the Coronavirus State and Local Fiscal Recovery Funds (AL #21.027), we noted that: ? The City did not properly report cumulative obligations on the report required by July 31, 2022. The City over-reported cumulative obligations due to including a funding project more than once for $880,000 to the Justice Center Design project; and ? The City did not properly report cumulative obligations nor current period expenditures on the report required by October 31, 2022. The City over-reported cumulative obligations by $880,000 due to including a funding project more than once to the Justice Center Design project. The City also over-reported current period expenditures due to including the current period expenditures of $175,741 for a funding project more than once to Rehiring Staff project. Failure to have the proper controls in place to ensure the timely and accurate submission of the Project and Expenditure Reports could result in Treasury taking action against the City for failure to comply with programmatic requirements. The City should implement and have controls in place to ensure the quarterly Project and Expenditure Reports are accurate.
2022-002 ? SIGNIFICANT DEFICIENCY ? Internal Controls over Reporting U.S. Department of Treasury ? Passed through the State of Alabama Department of Treasury ? COVID 19 Coronavirus State and Local Fiscal Recovery Fund ? ALN #21.027 ? Program Year 2022 Criteria ? Per 2 CFR Subpart D - 200.329(a), non-federal entities are responsible for oversight of the operations of federal award supported activities and must monitor its activities under federal awards to assure compliance with applicable federal requirements and performance expectations are being achieved. In addition, per CFR 200.303(a), non-federal entities are required to establish and maintain effective internal controls over federal awards. Condition ? The Foundation did not maintain supporting documentation of the proper review and approval of the required final report for the federal award program. Cause ? Appropriate policies and procedures were not implemented by the Foundation to maintain documentation of the review and approval of the final report for the federal award program. Effect ? Lack of documentation of monitoring could lead to improper monitoring of federal award activity and possible misuse of funds. Questioned Costs ? None Auditors? Recommendation ? Policies and procedures should be designed, implemented, and monitored to ensure that documentation is maintained for the Foundation?s monitoring of its federal award program in accordance with federal award requirements. Management response and current status ? See management corrective action plan
FINDING 2022-004 Subject: Staffing for Adequate Fire and Emergency Response (SAFER) - Cash Management Federal Agency: Department of Homeland Security Federal Program: Staffing for Adequate Fire and Emergency Response (SAFER) Assistance Listings Number: 97.083 Federal Award Number and Year (or Other Identifying Number): EMW-2019-FF-00944 Compliance Requirement: Cash Management Audit Findings: Material Weakness, Modified Opinion Condition and Context The Township submits request for reimbursements to the Federal Emergency Management Agency of the Department of Homeland Security. The reimbursement method of cash management requires the Township to retain supporting documentation that shows the costs for which reimbursement was requested were paid prior to the reimbursement date. The Township was awarded a SAFER grant to increase the number of firefighters and was approved for personnel and fringe benefits costs, which includes health insurance, for nine additional firefighters. The Township is self-insured and would make payments to third-party administrators and other benefit coordinators. The Township would pay a large dollar amount at the end of each year to its selfinsurance benefit coordinators for the next year's benefit, and then additional payments throughout the year as needed for employee's medical claim coverage. These payments were made from various Township funds and the Payroll Deductions fund. Additionally, the payroll deductions for health insurance, including those for employees paid from the grant, would accumulate in the Payroll Deductions fund, and be used for payments to the benefit coordinators as needed and the payment of the next year's required funding. The amount submitted for reimbursement for health insurance benefits were based upon a calculation. The Township did not have supporting documentation for the calculation of those benefits that were claimed. In addition, the health insurance benefits claimed for reimbursement were not paid out of the SAFER Grant Fund and were not at a transaction level in the ledger. The health insurance benefit submitted for reimbursement could not be tied to a specific payment; thus, we were unable to determine the Township's compliance for the health benefit reimbursements being incurred and paid prior to the Township's request for reimbursement. 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 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. See also ? 200.450. (b) The financial management system of each non-Federal entity must provide for the following (see also ?? 200.334, 200.335, 200.336, and 200.337): (1) Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. Federal program and Federal award identification must include, as applicable, the Assistance Listings title and number, Federal award identification number and year, name of the Federal agency, and name of the pass-through entity, if any. (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in ?? 200.328 and 200.329. If a Federal awarding agency requires reporting on an accrual basis from a recipient that maintains its records on other than an accrual basis, the recipient must not be required to establish an accrual accounting system. This recipient may develop accrual data for its reports on the basis of an analysis of the documentation on hand. Similarly, a pass-through entity must not require a subrecipient to establish an accrual accounting system and must allow the subrecipient to develop accrual data for its reports on the basis of an analysis of the documentation on hand. (3) Records that identify adequately the source and application of funds for federallyfunded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. (4) Effective control over, and accountability for, all funds, property, and other assets. The non-Federal entity must adequately safeguard all assets and assure that they are used solely for authorized purposes. See ? 200.303. . . ." Cause A system of internal controls was not designed or implemented by management of the Township 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. Policies reflect management's expectation of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, health insurance benefits were requested for reimbursement without adequate supporting documentation that the amount was paid prior to the request. Noncompliance with the grant agreement and the cash management compliance requirement could result in the loss of future federal funds to the Township. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the Township establish a proper system of internal controls and develop policies and procedures to ensure expenses are paid prior to requesting reimbursement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-005 Subject: Staffing for Adequate Fire and Emergency Response (SAFER) - Reporting Federal Agency: Department of Homeland Security Federal Program: Staffing for Adequate Fire and Emergency Response (SAFER) Assistance Listings Number: 97.083 Federal Award Number and Year (or Other Identifying Number): EMW-2019-FF-00944 Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Condition and Context Recipients are required to submit Reimbursement Requests, Quarterly Performance Reports, and Semi-Annual SF-425 Federal Financial Reports to the Federal Emergency Management Agency (FEMA). The reporting periods, as well as the respective due dates are based on the calendar year, and recipients must begin to submit reports in the period following the beginning of their period of performance, and throughout the entire period of performance of the grant. Information to be reported includes expenditures for the appropriate reporting period. The Township submitted five reimbursement requests during the audit period. The Director of Finance prepared a sheet with the payroll and benefit amounts to be submitted for reimbursement and provided it to the Assistant Fire Chief. The reimbursement request was filed by the Assistant Fire Chief, without a review or oversight process in place to prevent, or detect and correct, errors and ensure compliance with the reporting compliance requirement. Additionally, the Township did not have a system of internal controls in place to ensure submission of required reports. The Township did not submit the Semi-Annual SF-425 Federal Financial Report that was due by July 30, 2022, or the four Quarterly Performance Reports that were due during the audit period. 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 200.329 states in part: ". . . (b) Reporting program performance. The Federal awarding agency must use OMBapproved common information collections, as applicable, when providing financial and performance reporting information. As appropriate and in accordance with above mentioned information collections, the Federal awarding agency must require the recipient to relate financial data and accomplishments to performance goals and objectives of the Federal award. Also, in accordance with above mentioned common information collections, and when required by the terms and conditions of the Federal award, recipients must provide cost information to demonstrate cost effective practices (e.g., through unit cost data). In some instances (e.g., discretionary research awards), this will be limited to the requirement to submit technical performance reports (to be evaluated in accordance with Federal awarding agency policy). Reporting requirements must be clearly articulated such that, where appropriate, performance during the execution of the Federal award has a standard against which non-Federal entity performance can be measured. (c) Non-construction performance reports. The Federal awarding agency must use standard, governmentwide OMB-approved data elements for collection of performance information including performance progress reports, Research Performance Progress Reports. (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. . . ." Cause A system of internal controls was not designed or implemented by management of the Township which would include segregation of key functions. Embedded within a properly designed and implemented internal control system should be controls consisting of policies and procedures. Policies reflect the management's expectation of what should be done to effect internal control, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, reimbursement requests were completed and filed by one individual and the Semi-Annual SF-425 Federal Financial Report and the four Quarterly Performance Reports due during the audit period were not submitted as required. Noncompliance with the grant agreement and the reporting compliance requirement could result in the loss of future federal funds to the Township. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the Township design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place over reimbursement requestions. In addition, we recommended that management of the Township establish a proper system of internal controls and develop policies and procedures to ensure that all required reports are filed. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-004 Subject: Staffing for Adequate Fire and Emergency Response (SAFER) - Reporting Federal Agency: Department of Homeland Security Federal Program: Staffing for Adequate Fire and Emergency Response (SAFER) Assistance Listings Number: 97.083 Federal Award Numbers and Years (or Other Identifying Numbers): EMW-2017-FH-00374, EMW-2019-FF-01116 Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Condition and Context Recipients are required to submit Reimbursement Requests, Quarterly Performance Reports, and Semi-Annual SF-425 Federal Financial Reports to the Federal Emergency Management Agency (FEMA). The reporting periods, as well as the respective due dates, are based on the calendar year, and recipients must begin to submit reports in the period following the beginning of their period of performance, and throughout the entire period of performance of the grant. Information to be reported includes expenditures for the appropriate reporting period. Reimbursement Requests The District submitted seven Reimbursement Requests during the audit period. The Financial Coordinator prepared a sheet with the payroll and benefit amounts to be submitted for reimbursement and provided it to the Fire Chief. The Reimbursement Requests were filed by the Fire Chief without a review or oversight process in place to prevent, or detect and correct, errors. Quarterly and Programmatic Performance Reports and Semi-Annual SF-425 Federal Financial Reports EMW-2017-FH-00374 (2017 grant) The District had not implemented or designed a system of internal controls to ensure submission of the Quarterly Performance Reports (quarterly reports) or the Semi-Annual SF-425 Federal Financial Reports. During the audit period, the District was required to submit three quarterly reports and two semi-annual reports. The submission dates for the three quarterly reports could not be determined. Additionally, the District did not submit the Semi-Annual SF-425 Federal Financial Reports that were due by January 30, 2022, and July 30, 2022, in a timely manner. The two reports due were submitted 18 and 19 days late, respectively. EMW-2019-FF-01116 (2019 grant) The District had not implemented or designed a system of internal controls to ensure submission of the Programmatic Performance Report (PPR) or the Semi-Annual SF-425 Federal Financial Report (semi-annual report). During the audit period, the District was required to submit one PPR and two semi-annual reports. The submission date for the PPR, that was due April 30, 2022, could not be determined. In addition, the District did not submit the semi-annual reports that were due by January 30, 2022, and July 30, 2022, in a timely manner. The two reports were submitted 30 and 13 days late, respectively. 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 200.329(c)(1) states in part: "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. . . ." Cause A system of internal controls was not designed or implemented by management of the District, 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. Policies reflect management's statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, the seven Quarterly Performance Reports and the four Semi-Annual SF-425 Federal Financial Reports due during the audit period were either not submitted or not submitted timely. Noncompliance with the grant agreement and the Reporting compliance requirement could result in the loss of future federal funds to the District. Questioned Costs There were no questioned costs. Recommendation We recommended that management of the District design and implement a proper system of internal controls, including policies and procedures that would provide segregation of duties to ensure appropriate reviews, approvals, and oversight are taking place over reimbursement requisitions. In addition, we recommended that management of the District establish a proper system of internal controls and develop policies and procedures to ensure that all required reports are filed and filed timely. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Finding 2022-002: Significant deficiency in internal control over reporting. Federal Agency Program: U.S. Department of Treasury, Passed through State of Oregon ? Department of Administrative Services Federal Program: 21.027 Coronavirus State and Local Fiscal Recovery Funds Award Period: January 1, 2022 ? December 31, 2022 Criteria: Title 2 U.S. Code of Federal Regulations (CFR) 200.329 requires that non-Federal entities submit performance reports at the interval required by the Federal awarding agency or pass-through entity. The grant agreement required quarterly and annual reports to be submitted. Condition: The quarterly reports and the annual reporting submitted for 2022 by the Organization did not agree to the quarterly information as per the Organization?s accounting records provided. Total award expenditures for the year agreed to the total annual amount reported. Context: Additional procedures were required to reconcile the Federal Award expenditures to the annual reporting submitted. Cause: The Organization received increased support during the year ended December 31, 2022, increasing the complexities of tracking and reporting of Federal expenditures. Policies and procedures over the review and approval of Federal award reporting were not adequately documented. Effect: Without adequate written policies and procedures over the review and approval of reporting of Federal award expenditures, total expenditures by Federal program may not be properly reported. Questioned costs: None. Repeat Finding: No. Recommendation: The Organization should update its written policies and procedures over the review and approval of Federal Award reporting to ensure complete and accurate reporting of award expenditures. Views of Responsible Officials: Management notes the details of this finding. Management will implement procedures to mitigate the outlined issues in our Corrective Action Plan.
2022-003 ? Performance Reporting Federal Agency: U.S. Small Business Administration Federal Program: Microloan Program Assistance Listing Numbers: 59.046 Federal Award Identification Number and Year: ? SBAOCAML210221 ? 2021 ? SBAOCAML220344 ? 2022 Award Period: January 1, 2022 ? December 31, 2022 Type of Finding: ? Significant Deficiency in Internal Control over Compliance ? Compliance - Other Matter Criteria or Specific Requirement: Federal regulations require submission of performance reports at an interval required by the federal awarding agency. Those reports submitted quarterly must be due no later than 30 calendar days after the reporting period. These requirements are outlined in 2 CFR 200.329(c) Monitoring and reporting program performance. Condition: During our testing, we tested two quarterly performance reports and it was noted both were submitted after the required due date outlined in the grant agreement. Questioned Costs: None Context: During our testing, it was noted the Organization did not have proper procedures in place for ensuring timely submission of the quarterly performance reports as required in the federal fund notice of awards. Cause: Management did not have a system in place to ensure the completion and submission of the required performance reporting by the specified due date. Effect: By submitting untimely performance reports, the Organization is not in compliance with the terms and conditions of the award. This did not result in any disallowed costs. Repeat Finding: No Recommendation: We recommend management develop procedures to ensure the required reporting is completed within the timeline allowed by the granting agency. Views of Responsible Officials: Management agrees with finding.
FINDING 2022-003 Subject: Water and Waste Disposal Systems for Rural Communities - Reporting Federal Agency: Department of Agriculture Federal Program: Water and Waste Disposal Systems for Rural Communities Assistance Listings Number: 10.760 Federal Award Number and Year (or Other Identifying Number): CY 2020 Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2021-004. Condition and Context The Town had not designed or implemented adequate internal controls and procedures to ensure that reports were prepared, accurate, and submitted in accordance with the applicable compliance requirements for the federal grant. The United States Department of Agriculture (USDA) requires the following two financial reports be submitted annually: 1. Statement of Budget, Income and Equity, (Form RD 442-2) 2. Balance Sheet (Form RD 442-3) The Form RD 442-2 covers financial operations relating to the borrower's water or waste disposal project. The Form RD 442-3 presents the financial status of the borrower's water or waste disposal project. In both instances, a borrower may submit the financial data on other forms, provided the forms are in a similar format and signed and dated by the organization's official to certify the correctness of the information. Alternatively, an annual audit may be submitted in lieu of the forms. The Town was required to file each report, as noted above, during the audit period. Both reports were selected for testing. Per inquiry with the Town and review of its records, the Town attempted to prepare Form RD 442-2; however, the report was never completed, nor was it filed with the appropriate authorities. Additionally, the Town did not file or even attempt to prepare Form RD 442-3. Neither alternative reports nor a financial statement were submitted to the USDA in lieu of the forms. The lack of internal controls and noncompliance were systemic issues, which occurred throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in ?? 200.328 and 200.329. . . ." 7 CFR 1780.47 states in part: "Borrower accounting methods, management reporting and audits. . . . (e) Borrowers exempt from audits. All borrowers who are exempt from audits, will, within 60 days following the end of each fiscal year, furnish the RUS with annual financial statements, consisting of a verification of the organization's balance sheet and statement of income and expense by an appropriate official of the organization. Forms RD 442-2, 'Statement of Budget, Income and Equity,' and 442-3 may be used. (f) Management reports. These reports will furnish management with a means of evaluating prior decisions and serve as a basis for planning future operations and financial strategies. In those cases where revenues from multiple sources are pledged as security for an RUS loan, two reports will be required; one for the project being financed by RUS and one combining the entire operation of the borrower. In those cases where RUS loans are secured by general obligation bonds or assessments and the borrower combines revenues from all sources, one management report combining all such revenues is acceptable. The following management data will be submitted by the borrower to the processing office. These reports at a minimum will include a balance sheet and income and expense statement. . . . (2) Annual management reports. Prior to the beginning of each fiscal year the following will be submitted to the processing office. (If Form RD 442-2 is used as the annual management report, enter data in column three only of Schedule 1, and complete all of Schedule 2.) (i) Two copies of the management reports and proposed 'Annual Budget.' (ii) Financial information may be reported on Form RD 442-2 which includes Schedule 1, 'Statement of Budget, Income and Equity' and Schedule 2, 'Projected Cash Flow' or information in similar format. (iii) A copy of the rate schedule in effect at the time of submission. (g) Substitute for management reports. When RUS loans are secured by the general obligation of the public body or tax assessments which total 100 percent of the debt service requirements, the State program official may authorize an annual audit to substitute for other management reports if the audit is received within nine months after the end of the audit period." Cause A proper system of internal controls was not designed by management of the Town. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the Town's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, required reports were not filed with the USDA. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the Town. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the Town establish a proper system of internal controls and develop policies and procedures to ensure required reports, or allowable alternatives are completed and filed with the USDA. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-007 Subject: CDBG - Entitlement Grants Cluster - Reporting Federal Agency: Department of Housing and Urban Development Federal Programs: Community Development Block Grants/Entitlement Grants, COVID-19 - Community Development Block Grants/Entitlement Grants Assistance Listings Number: 14.218 Federal Award Numbers and Years (or Other Identifying Numbers): B-19-MC-18-0015, B-20-MC-20-0015, B-20-MW-18-0015, B-21-MC-18-0015, B-22-MC-18-0015 Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2021-004. Condition and Context Financial Reporting For each CDBG award, the City is required to submit financial reports to Housing and Urban Development (HUD). The financial reports to be submitted are a quarterly CDBG Cash on Hand (PR29) report and an annual CDBG Financial Summary (PR26). The Community Development Specialist prepared the annual PR26 and quarterly PR29 reports without evidence of a review or an approval process to ensure accuracy of the reports submitted. During the audit period, there were three PR26 reports and six PR29 reports due. Four reports were selected for testing, two PR26 reports and two PR29 reports. One of the two PR26 reports was not supported by the City's records, and one of the two PR29 reports contained errors when reporting cash on hand. Performance Reporting The City is required to enter HUD 60002, Section 3 Summary Report, Economic Opportunities for Low- and Very Low-Income Persons report (Section 3) activities on the closeout screens in the Integrated Disbursement and Information System (IDIS), as well as within the Consolidated Annual Performance and Evaluation Report (CAPER). The Section 3 report was not submitted on the closeout screens in the IDIS as part of the closeout process. The City did submit the Section 3 information within the CAPER; however, the Section 3 information was not supported by the City's records. The City was not able to provide documentation supporting the Section 3 information in the CAPER. Special Reporting for Federal Funding Accountability and Transparency Act (FFATA) Under the requirements of the Federal Funding Accountability and Transparency Act (Pub. L. No. 109-282) (Transparency Act), recipients (i.e., direct recipients) of grants or cooperative agreements who make first tier subawards of $30,000 or more are required to register in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS) and report subaward data through the FSRS. INDIANA STATE BOARD OF ACCOUNTS 28 CITY OF ELKHART SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) There were two subawards that required submission in the FSRS during the audit period. The due date for the information was August 31, 2022, and November 30, 2022, respectively. The information was completed and submitted by the City; however, there was no documentation of the review or oversight process in place to ensure the accuracy of the information submitted. (See Report PDF for Schedule.) 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 A proper system of internal controls was not designed by management of the City. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the City's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, required reports were not accurate nor submitted timely. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the City design and implement a proper system of internal control, including policies and procedures that would provide segregation of duties to ensure required reports are submitted timely and accurately. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-007 Subject: CDBG - Entitlement Grants Cluster - Reporting Federal Agency: Department of Housing and Urban Development Federal Programs: Community Development Block Grants/Entitlement Grants, COVID-19 - Community Development Block Grants/Entitlement Grants Assistance Listings Number: 14.218 Federal Award Numbers and Years (or Other Identifying Numbers): B-19-MC-18-0015, B-20-MC-20-0015, B-20-MW-18-0015, B-21-MC-18-0015, B-22-MC-18-0015 Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2021-004. Condition and Context Financial Reporting For each CDBG award, the City is required to submit financial reports to Housing and Urban Development (HUD). The financial reports to be submitted are a quarterly CDBG Cash on Hand (PR29) report and an annual CDBG Financial Summary (PR26). The Community Development Specialist prepared the annual PR26 and quarterly PR29 reports without evidence of a review or an approval process to ensure accuracy of the reports submitted. During the audit period, there were three PR26 reports and six PR29 reports due. Four reports were selected for testing, two PR26 reports and two PR29 reports. One of the two PR26 reports was not supported by the City's records, and one of the two PR29 reports contained errors when reporting cash on hand. Performance Reporting The City is required to enter HUD 60002, Section 3 Summary Report, Economic Opportunities for Low- and Very Low-Income Persons report (Section 3) activities on the closeout screens in the Integrated Disbursement and Information System (IDIS), as well as within the Consolidated Annual Performance and Evaluation Report (CAPER). The Section 3 report was not submitted on the closeout screens in the IDIS as part of the closeout process. The City did submit the Section 3 information within the CAPER; however, the Section 3 information was not supported by the City's records. The City was not able to provide documentation supporting the Section 3 information in the CAPER. Special Reporting for Federal Funding Accountability and Transparency Act (FFATA) Under the requirements of the Federal Funding Accountability and Transparency Act (Pub. L. No. 109-282) (Transparency Act), recipients (i.e., direct recipients) of grants or cooperative agreements who make first tier subawards of $30,000 or more are required to register in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS) and report subaward data through the FSRS. INDIANA STATE BOARD OF ACCOUNTS 28 CITY OF ELKHART SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) There were two subawards that required submission in the FSRS during the audit period. The due date for the information was August 31, 2022, and November 30, 2022, respectively. The information was completed and submitted by the City; however, there was no documentation of the review or oversight process in place to ensure the accuracy of the information submitted. (See Report PDF for Schedule.) 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 A proper system of internal controls was not designed by management of the City. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the City's management statements of what should be done to effect internal controls, and procedures should consist of actions that would implement these policies. Effect Without the proper implementation of an effectively designed system of internal controls, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, required reports were not accurate nor submitted timely. Noncompliance with the provisions of federal statutes, regulations, and the terms and conditions of the federal award could result in the loss of future federal funding to the City. Questioned Costs There were no questioned costs identified. Recommendation We recommended that management of the City design and implement a proper system of internal control, including policies and procedures that would provide segregation of duties to ensure required reports are submitted timely and accurately. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
Ref. No. Compliance and Internal Control over Compliance Findings 2022-001 Reporting - Significant Deficiency Federal Agency: Department of Health and Human Services Pass-Through Entity: State of Hawaii Department of Human Services Assistance Listing No.: 93.558 Program: Temporary Assistance for Needy Families (TANF) Criteria: Uniform Guidance 2 CFR 200.329(c)(1) states that the non-Federal entity must submit performance repots at the interval required by the Federal awarding agency or pass-through entity to best inform improvements in program outcomes and productivity. The sub-recipient agreement entered into with the State of Hawaii Department of Human Services required that a quarterly Maintenance of Effort (MOE) Expenditure Report be submitted no later than thirty (3) calendar days following the end of each quarter. Condition: During our audit, we noted two (2) quarters reviewed where the quarterly MOE was submitted more than 30 days after the quarter end. Cause: Lack of adherence to reporting requirements exhibited by key accounting personnel. Effect: Without an effective internal control system, untimely reporting could result in the misrepresentation of data and could adversely affect program outcomes and future funding. Recommendation The Organization should improve processes and procedures to ensure that quarterly reports required by the pass-through entity are completed and submitted on a timely basis. Views of Responsible Officials and Planned Corrective Action The Organization agrees with the finding and the recommendation. See Part IV Correction Action Plan.
#2022-009 - Major Federal Award Finding - Reporting Nature of Finding: Compliance Finding - Reporting and Material Weakness in Internal Controls Over Compliance Criteria/Condition: Federal regulations 2 CFR 200.328 - 200.329 provide that required reporting under the federal program must be completed timely and accurately. The federal award agreement includes specific report filing due dates. Segregation of duties is also a key element of internal controls, including controls over compliance, and involves processes whereby the activities of one employee are reviewed or checked by the activities of another individual, and avoids one employee having the ability to perform a transaction or process from beginning to end. We noted during testing that no review procedures are in place surrounding these reports. Cause/Context: Controls were not in place to ensure accurate reporting. Only one individual was involved in the reporting process. Of the two reports tested, one Federal Status Report included an expenditure reported in an inaccurate budget category. Payroll tax costs were divided between the Fringe Benefits/Payroll tax budget line and the Other Expenses line, with a total of $1,554 reported in the incorrect budget category. Additionally, the client failed to identify that submission of a single audit was an applicable reporting requirement for the December 31, 2022 year, resulting in a late single audit filing. Effect: The lack of controls resulted in inaccurate, late, and failed reporting compliance. Recommendation: We recommend that a full-range of controls related to reporting, including federal program reporting be implemented. The Organization should devote the resources necessary to ensure that reports are timely and accurately prepared, reviewed, and approved prior to filing. All controls, including review and approval should be documented and that documentation be maintained. Views of Responsible Officials and Planned Corrective Actions: MARR will retain a CPA consultant to implement a full-range of controls relating to reporting, including federal program reporting. MARR will take such steps as necessary to ensure that reports are timely and accurately prepared, reviewed, and approved prior to filing. All controls, including review and approval will be documented in such documentation to be maintained.
#2022-009 - Major Federal Award Finding - Reporting Nature of Finding: Compliance Finding - Reporting and Material Weakness in Internal Controls Over Compliance Criteria/Condition: Federal regulations 2 CFR 200.328 - 200.329 provide that required reporting under the federal program must be completed timely and accurately. The federal award agreement includes specific report filing due dates. Segregation of duties is also a key element of internal controls, including controls over compliance, and involves processes whereby the activities of one employee are reviewed or checked by the activities of another individual, and avoids one employee having the ability to perform a transaction or process from beginning to end. We noted during testing that no review procedures are in place surrounding these reports. Cause/Context: Controls were not in place to ensure accurate reporting. Only one individual was involved in the reporting process. Of the two reports tested, one Federal Status Report included an expenditure reported in an inaccurate budget category. Payroll tax costs were divided between the Fringe Benefits/Payroll tax budget line and the Other Expenses line, with a total of $1,554 reported in the incorrect budget category. Additionally, the client failed to identify that submission of a single audit was an applicable reporting requirement for the December 31, 2022 year, resulting in a late single audit filing. Effect: The lack of controls resulted in inaccurate, late, and failed reporting compliance. Recommendation: We recommend that a full-range of controls related to reporting, including federal program reporting be implemented. The Organization should devote the resources necessary to ensure that reports are timely and accurately prepared, reviewed, and approved prior to filing. All controls, including review and approval should be documented and that documentation be maintained. Views of Responsible Officials and Planned Corrective Actions: MARR will retain a CPA consultant to implement a full-range of controls relating to reporting, including federal program reporting. MARR will take such steps as necessary to ensure that reports are timely and accurately prepared, reviewed, and approved prior to filing. All controls, including review and approval will be documented in such documentation to be maintained.
2022-006 – Reporting Federal agency: U.S. Department of Health and Human Services Federal program title: Health Centers Cluster Assistance Listing Number: 93.224/93.527 Pass-Through Agency: n/a Pass-Through Number(s): n/a Award Period: 6/1/21-5/31/22 & 6/1/22-5/31/23 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: § 200.329 indicates that the non-federal entity is responsible for oversight of the operations of the Federal award supported activities. The non-Federal entity must monitor its activities under Federal awards to assure compliance with applicable Federal requirements and performance expectations are being achieved. Condition: There were two instances in which documentation was not available to support amounts included within reports submitted. These instances affected the Federal Financial Report and the UDS report. Questioned costs: None. Context: Documentation was not available to support the amount reported on line E, Federal share of expenditures, of the ARPA Federal Financial Report. In addition, there was no documentation to support two key lines items of the UDS report, Table 9E, Lines 1g and 1q, Column A. Cause: Management turnover Effect: Inaccurate reports could be file if there is no underlying documentation to support the amounts reported. Repeat Finding: The finding is a repeat of a finding in the immediately prior year. Prior year finding number was 2021-07. Recommendation: We recommend that the Organization maintain supporting documentation for all reports required to be filed to the federal agency. Views of responsible officials: There is no disagreement with the audit finding.
2022-006 – Reporting Federal agency: U.S. Department of Health and Human Services Federal program title: Health Centers Cluster Assistance Listing Number: 93.224/93.527 Pass-Through Agency: n/a Pass-Through Number(s): n/a Award Period: 6/1/21-5/31/22 & 6/1/22-5/31/23 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: § 200.329 indicates that the non-federal entity is responsible for oversight of the operations of the Federal award supported activities. The non-Federal entity must monitor its activities under Federal awards to assure compliance with applicable Federal requirements and performance expectations are being achieved. Condition: There were two instances in which documentation was not available to support amounts included within reports submitted. These instances affected the Federal Financial Report and the UDS report. Questioned costs: None. Context: Documentation was not available to support the amount reported on line E, Federal share of expenditures, of the ARPA Federal Financial Report. In addition, there was no documentation to support two key lines items of the UDS report, Table 9E, Lines 1g and 1q, Column A. Cause: Management turnover Effect: Inaccurate reports could be file if there is no underlying documentation to support the amounts reported. Repeat Finding: The finding is a repeat of a finding in the immediately prior year. Prior year finding number was 2021-07. Recommendation: We recommend that the Organization maintain supporting documentation for all reports required to be filed to the federal agency. Views of responsible officials: There is no disagreement with the audit finding.
2022-006 – Reporting Federal agency: U.S. Department of Health and Human Services Federal program title: Health Centers Cluster Assistance Listing Number: 93.224/93.527 Pass-Through Agency: n/a Pass-Through Number(s): n/a Award Period: 6/1/21-5/31/22 & 6/1/22-5/31/23 Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria or specific requirement: § 200.329 indicates that the non-federal entity is responsible for oversight of the operations of the Federal award supported activities. The non-Federal entity must monitor its activities under Federal awards to assure compliance with applicable Federal requirements and performance expectations are being achieved. Condition: There were two instances in which documentation was not available to support amounts included within reports submitted. These instances affected the Federal Financial Report and the UDS report. Questioned costs: None. Context: Documentation was not available to support the amount reported on line E, Federal share of expenditures, of the ARPA Federal Financial Report. In addition, there was no documentation to support two key lines items of the UDS report, Table 9E, Lines 1g and 1q, Column A. Cause: Management turnover Effect: Inaccurate reports could be file if there is no underlying documentation to support the amounts reported. Repeat Finding: The finding is a repeat of a finding in the immediately prior year. Prior year finding number was 2021-07. Recommendation: We recommend that the Organization maintain supporting documentation for all reports required to be filed to the federal agency. Views of responsible officials: There is no disagreement with the audit finding.