FINDING NO: 2023-028 (Repeat 2022-087) STATE AGENCY: State of Oklahoma, Office of Management and Enterprise Services FEDERAL AGENCY: US Department of Treasury ALN: 21.023 FEDERAL PROGRAM NAME: Emergency Rental Assistance (ERA 1 and ERA 2) FEDERAL AWARD NUMBER: ERA0028 and ERAE0259 FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed and Allowable Costs/Cost Principles QUESTIONED COSTS: $5,585,127 Criteria: U.S Department of the Treasury Emergency Rental Assistance Grantee Award Form (8) (a-b) Compliance with Applicable Law and Regulations, states in part, “a. Recipient agrees to comply with the requirements of Section 501 and Treasury interpretive guidance regarding such requirements. Recipient also agrees to comply with all other applicable federal statutes, regulations, and executive orders, and Recipient shall provide for such compliance in any agreements it enters into with other parties relating to this award. b. Federal regulations applicable to this award include, without limitation, the following: i. Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 2 C.F.R. Part 200, other than such provisions as Treasury may determine are inapplicable to this Award and subject to such exceptions as may be otherwise provided by Treasury.” 2 CFR § 200.303(a) – Internal Controls states in part, “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.” The Consolidated Appropriations Act § Section 501 (c)(5) Use of Funds - Administrative Costs states in part, “A. IN GENERAL.- Not more than 10 percent of the amount paid to an eligible grantee under this section may be used for administrative costs attributable to providing financial assistance and housing stability services under paragraphs (2) and (3), respectively, including for data collection and reporting requirements related to such funds. B. No OTHER ADMINISTRATIVE COSTS.- Amounts paid under this section shall not be used for any administrative costs other than to the extent allowed under subparagraph (A)” The American Rescue Plan Act of 2021 § Section 3201 (d)(1)(C) Use of Funds – Administrative Costs states in part, “Not more than 15 percent of the total amount paid to an eligible grantee under this section may be used for administrative costs attributable to providing financial assistance, housing stability services, and other affordable rental housing and eviction prevention activities, including for data collection and reporting requirements related to such funds.” 2 CFR § 200.334 – Retention requirements for records states in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.” 2 CFR § 200.337 Access to records states in part, “(a) Records of non-Federal entities. The Federal awarding agency, Inspectors General, the Comptroller General of the United States, and the pass-through entity, or any of their authorized representatives, must have the right of access to any documents, papers, or other records of the non-Federal entity which are pertinent to the Federal award, in order to make audits, examinations, excerpts, and transcripts. The right also includes timely and reasonable access to the non-Federal entity's personnel for the purpose of interview and discussion related to such documents.” The US Department of Treasury Emergency Rental Assistance (ERA) FAQ #29 states in part “A grantee may permit a subrecipient to incur more than 10 or 15 percent, as applicable, of the amount of the subaward issued to that subrecipient as long as the total of all administrative costs incurred by the grantee and all subrecipients, whether as direct or indirect costs, does not exceed 10 or 15 percent, as applicable, of the total amount of the award provided to the grantee from Treasury.” Condition and Context: While documenting controls over subrecipient program and administrative expenditures for the ERA 1 and ERA 2 grants, we noted that OMES did not require the subrecipients to submit supporting documentation for expenditures charged to the programs. Further, we determined one subrecipient, Communities Foundation of Oklahoma (CFO) did not have sufficient internal controls over program or administrative expenditures to ensure they were for allowable costs and activities. While reviewing all administrative management fees, we noted one of the subrecipients charged the ERA 1 and ERA 2 grants $5,585,126.89 in unallowable administrative costs (management fees) that were retained by the subrecipient and were not attributable to providing financial assistance and housing stability services. The management fees the subrecipient charged to the grant do not represent actual admin expenditures, but rather an arbitrary amount retained by CFO (Questioned costs - $5,585,126.89). See management fees referenced in finding 2023-091. In addition, during our testwork for the ERA 1 program administrative limit, we noted that administrative costs charged to the program exceeded the 10% allowable limit by 5.81%, or $1,259,429. Cause: OMES personnel responsible for oversight of the ERA 1 and ERA 2 grants do not normally oversee Federal grant programs, and do not have adequate experience with administering Federal grant funds and understanding the types of activities that may be supported by the ERA 1 and ERA 2 grants. OMES did not ensure the personnel responsible for oversight of the ERA 1 And ERA 2 grants received the proper training to understand and did not ensure they used available resources to help them understand, the grant requirements. OMES did not ensure the subrecipients established and maintained effective internal control over the Federal award to provide reasonable assurance that the non-Federal entity was managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. OMES advanced to one subrecipient a set rate of 10% (ERA 1) and 15% (ERA 2) and to another subrecipient 9.3% (ERA 1) of program funds for administrative costs instead of reimbursing administrative costs actually incurred by the subrecipient that were attributable to providing financial assistance and housing stability services under the ERA 1 and ERA 2 programs. OMES did not obtain, review, approve, or maintain adequate supporting documentation for administrative costs. Effect: Unallowable costs, totaling $5,585,126.89, were charged to the ERA program by one subrecipient as administrative costs. Recommendation: We recommend that OMES develop and implement internal controls to ensure it has the knowledge and experience to administer current and future ERA grants in accordance with applicable Federal laws and grant requirements, including ensuring that grant subrecipients are properly informed of Federal requirements related to allowable costs. In addition, we recommend that OMES ensure subrecipients have established effective internal controls over the Federal award to provide reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Further, we recommend that OMES ensure adequate supporting documentation for administrative costs charged to the program is obtained, reviewed, approved, and maintained by OMES to ensure subrecipients are only paid or reimbursed for allowable activities and costs based on that supporting documentation. Views of Responsible Official(s) Contact Person: Brandy Manek Anticipated Completion Date: Brandy Manek Corrective Action Planned: The Office of Management and Enterprise Services partially agrees with the finding. See corrective action plan located in the corrective action plan section of this report. Auditor Response: CFO: Condition and Context 1 Response - SAI requested CFO’s ERA accounting data on 9/27/2024. On 1/15/2025 CFO provided spreadsheets of CFO ERA expenditures for FFY21-FFY23. SAI noted the CFO expenditures only accounted for 28.05% of all management fees paid to CFO and therefore, the management fees “expended” by CCP to pay CFO were retained without representing actual admin expenditures. CFO: Condition and Context 2 Response - The ERA 1 program’s period of performance ended within the SFY23 audit period; therefore, SAI performed testwork to determine whether the 10% administrative limit was exceeded using data for the entirety of the ERA 1 program (FFY21-FFY23). We noted the 10% limit was exceeded by 5.81% or $1,259,429.
FINDING NO: 2023-088 (Repeat 2022-085) STATE AGENCY: State of Oklahoma, Office of Management and Enterprise Services FEDERAL AGENCY: US Department of Treasury ALN: 21.023 FEDERAL PROGRAM NAME: Emergency Rental Assistance (ERA 1 and ERA 2) FEDERAL AWARD NUMBER: ERA028 and ERAE0259 FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; and Allowable Costs/Cost Principles QUESTIONED COSTS: $2,410,251 Criteria: U.S. Department of the Treasury Emergency Rental Assistance Grantee Award Form (8) (a-b) Compliance with Applicable Law and Regulations, states in part, “a. Recipient agrees to comply with the requirements of Section 501 and Treasury interpretive guidance regarding such requirements. Recipient also agrees to comply with all other applicable federal statutes, regulations, and executive orders, and Recipient shall provide for such compliance in any agreements it enters into with other parties relating to this award. b. Federal regulations applicable to this award include, without limitation, the following: i. Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 2 C.F.R. Part 200, other than such provisions as Treasury may determine are inapplicable to this Award and subject to such exceptions as may be otherwise provided by Treasury.” 2 CFR § 200.303(a) – Internal Controls states in part, “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.” The Consolidated Appropriations Act § Section 501 (c)(5) Use of Funds - Administrative Costs states in part, “A. IN GENERAL.- Not more than 10 percent of the amount paid to an eligible grantee under this section may be used for administrative costs attributable to providing financial assistance and housing stability services under paragraphs (2) and (3), respectively, including for data collection and reporting requirements related to such funds. B. No OTHER ADMINISTRATIVE COSTS.- Amounts paid under this section shall not be used for any administrative costs other than to the extent allowed under subparagraph (A)” 2 CFR § 200.334 – Retention requirements for records state in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.” 2 CFR § 200.337 – Access to records states in part, “(a) Records of non-Federal entities. The Federal awarding agency, Inspectors General, the Comptroller General of the United States, and the pass-through entity, or any of their authorized representatives, must have the right of access to any documents, papers, or other records of the non-Federal entity which are pertinent to the Federal award, in order to make audits, examinations, excerpts, and transcripts. The right also includes timely and reasonable access to the non-Federal entity's personnel for the purpose of interview and discussion related to such documents.” 2 CFR § 200.403 – Factors affecting allowability of costs states in part, “Except where otherwise authorized by statute, costs must meet the following criteria to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles.” Condition and Context: When reviewing SFY23 payroll administrative expenditures, we noted that Communities Foundation of Oklahoma paid $2,372,400 in bonuses to 146 employees. Of these bonuses, 47 people received between $10,000 - $19,999, and 44 people received more than $20,000. We found the expenditures to be unallowable; we found no guidance that stated ERA administrative funds could be expended on bonuses. Also, while testing 116 of 5,284 payroll administrative expenditures we noted the following: • For 4 of 116, or 3.45% of claims tested, the contract was for an unreasonable rate and the invoices provided were not itemized and specific enough to determine if the time spent was for an allowable activity related to ERA 1 or ERA 2. • For 9 of 116, or 7.76% of claims tested, the payment was for more than the contracted rate. • For 23 of 116, or 19.83% of claims tested, the subrecipient was unable to provide a contract for the period paid. • For 9 of 116, or 7.76% of claims tested, the contract was not signed by the Executive Director and was not valid. • For 22 of 115, or 19.13% of claims tested, the payroll cost was allowable; however, the expense was attributable to multiple jurisdictions and only 90.33% of the cost should have been charged to the State of Oklahoma, but the subrecipient was unable to support the allocation was completed and that 100% of the cost was not charged to the State. The issues noted above resulted in total questioned cost of $37,851. We are unable to note the questioned costs per exception due to the same sample items being noted on multiple exceptions. Cause: OMES personnel responsible for oversight of the ERA 1 and ERA 2 grants do not normally oversee Federal grant programs; they do not understand the types of activities that may be supported by the ERA 1 and ERA 2 grants, nor do they have adequate experience with administering Federal grant funds. OMES did not establish and maintain effective internal control over the Federal award that provides reasonable assurance that OMES is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. OMES did not ensure that the subrecipients established and maintained effective internal control over the Federal award to provide reasonable assurance that the non-Federal entity was managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Effect: Unallowable payroll costs totaling $2,410,251, including unallowable bonus payments of $2,372,400, were charged to the ERA program as payroll administrative expenditures. These funds could have been used toward Oklahoma applicants in need of ERA funding. Recommendation: We recommend that OMES develop and implement internal controls to ensure it administers current and future ERA grants in accordance with applicable Federal laws and grant requirements, including ensuring that grant subrecipients are properly informed of federal requirements related to allowable costs. In addition, we recommend that OMES ensure the subrecipient has established effective internal controls over the Federal award to provide reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. We recommend that OMES ensure adequate supporting documentation for administrative expenditures incurred is obtained, reviewed, and maintained by OMES to ensure subrecipients only expend ERA funds for allowable activities and costs. We recommend that OMES only reimburse subrecipients for administrative costs based on supporting documentation of actual costs incurred. We recommend OMES ensure the personnel responsible for oversight for the ERA grant obtain the necessary training and knowledge to ensure compliance with the Federal grant requirements. Views of Responsible Official(s) Contact Person: Brandy Manek Anticipated Completion Date: Ongoing throughout the life of the grant Corrective Action Planned: The Office of Management and Enterprise Services partially agrees with the finding. See corrective action plan located in the corrective action plan section of this report. Auditor Response: Per 2 CFR 200.430(f), the payroll bonuses were not approved per the contract with the State Oklahoma. Further, the bonus policy created by CFO was not written until 2024, which is after the audit period. CFO states the contractors ‘continued to be paid the same remuneration in the time period between the expiration of the original contracts and when the new contracts and/or addendums were created and signed’; however, for nine of 10, SAI did not receive a contract that was for the rate paid for the contractor. OMES states ‘The entities were addressing more urgent matter to assist the people of Oklahoma with the objectives of the program and did not have the bandwidth to draft and sign new agreements.’ SAI disagrees with the lack of bandwidth. We reviewed the number of contracts received per contractors mentioned above and found that we received anywhere from two to six contracts per contractor. In addition, CFO closed their application portal on 8/31/2022, which is a month prior to the first missing contract date. We do understand that applications were still being reviewed and payments were being made; however, we find that CFO had the capacity to create, and sign amended contracts for the time periods being paid.
FINDING NO: 2023-089 (Repeat 2022-086 & 2022-087) STATE AGENCY: State of Oklahoma, Office of Management and Enterprise Services FEDERAL AGENCY: US Department of Treasury ALN: 21.023 FEDERAL PROGRAM NAME: Emergency Rental Assistance (ERA 1 and ERA 2) FEDERAL AWARD NUMBER: ERA028 and ERAE0259 FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; and Allowable Costs/Cost Principles QUESTIONED COSTS: $90,669 Criteria: U.S Department of the Treasury Emergency Rental Assistance Grantee Award Form (8) (a-b) Compliance with Applicable Law and Regulations, states in part, “a. Recipient agrees to comply with the requirements of Section 501 and Treasury interpretive guidance regarding such requirements. Recipient also agrees to comply with all other applicable federal statutes, regulations, and executive orders, and Recipient shall provide for such compliance in any agreements it enters into with other parties relating to this award. b. Federal regulations applicable to this award include, without limitation, the following: i. Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 2 C.F.R. Part 200, other than such provisions as Treasury may determine are inapplicable to this Award and subject to such exceptions as may be otherwise provided by Treasury.” 2 CFR § 200.303(a) – Internal Controls states in part, “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.” The Consolidated Appropriations Act § Section 501 (c)(5) Use of Funds - Administrative Costs states in part, “A. IN GENERAL.- Not more than 10 percent of the amount paid to an eligible grantee under this section may be used for administrative costs attributable to providing financial assistance and housing stability services under paragraphs (2) and (3), respectively, including for data collection and reporting requirements related to such funds. B. No OTHER ADMINISTRATIVE COSTS.- Amounts paid under this section shall not be used for any administrative costs other than to the extent allowed under subparagraph (A)” 2 CFR § 200.334 – Retention requirements for records state in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.” 2 CFR § 200.337 Access to records states in part, “(a) Records of non-Federal entities. The Federal awarding agency, Inspectors General, the Comptroller General of the United States, and the pass-through entity, or any of their authorized representatives, must have the right of access to any documents, papers, or other records of the non-Federal entity which are pertinent to the Federal award, in order to make audits, examinations, excerpts, and transcripts. The right also includes timely and reasonable access to the non-Federal entity's personnel for the purpose of interview and discussion related to such documents.” Condition and Context: While documenting controls over subrecipient administrative expenditures for the ERA 1 and ERA 2 grants, we noted that OMES did not require the subrecipients to submit supporting documentation for administrative expenditures charged to the programs. Further, we determined one of the subrecipients, Communities Foundation of Oklahoma (CFO), did not have sufficient internal controls over administrative expenditures to ensure they were for allowable costs and activities. While testing all 17-credit card administrative expenditures totaling $86,267 for, CFO we noted the following: • For 15 of 17, or 88.24%, of credit cards tested, the payment included at least one expenditure for unallowable costs. These unallowable costs also included gift cards. ($53,248.41 questioned costs) • For $28,661 of allowable credit card administrative expenditures, the expense was attributable to multiple jurisdictions and only 90.33% of the cost should have been charged to the State of Oklahoma; however, CFO was unable to support the proper allocation was completed and that 100% of the cost was not charged to the State. We determined we would question 9.67% of the allowable expenditures ($2,771.52 questioned costs), since the State paid for expenditures that were the responsibility of other jurisdictions. Note: all credit card transactions were ‘multi’ jurisdictions; however, the unallowable costs are questioned in the first bullet. While testing 48 of 251 non-payroll and non-credit card administrative expenditures, totaling $875,026 we noted the following: • For 3 of 48, or 6.25%, of claims tested, the costs were for services to non-profit Shelterwell, which is an organization that was formed by the Executive Director of Community Cares Partners (CCP) with CCP team members after CCP stopped accepting ERA applications. Shelterwell works with tenants and landlords to provide education and mediation between tenants and landlords but is not legally part of Communities Foundation of Oklahoma (CFO)/CCP and does not directly provide rental assistance. Therefore, all payments to Shelterwell do not directly support the administration of the ERA program and are not allowable administrative costs. ($3,847.90 questioned costs) • For 3 of 48, or 6.25%, of claims tested, the costs were for services for non-profit SidexSide (formerly LastMile) also created by CFO/CCP, which is an organization that provides job skills training and connects employers with participants seeking employment. SidexSide is not legally part of CFO/CCP and does not directly provide rental assistance; therefore, payments made to SidexSide do not directly support the administration of ERA program and are not allowable administrative costs. ($8,824.00 questioned costs) • For 4 of 48, or 8.33%, of claims tested, the costs were unallowable and included items such as trainings unrelated to ERA, gift cards, alcohol, and food. ($1,549.76 questioned costs) • For 1 of 48, or 2.08%, of claims tested, the costs were for the Afghan Legal Network project which partnered with CFO to provide ERA funds to Afghanistan refugees; SAI determined these costs are unallowable as the refugees were not Oklahoma residents, and not eligible for assistance. Therefore, administrative costs related to this project were also unallowable. ($498.00 questioned costs) • For 1 of 48, or 2.08%, of claims tested, the cost was unrelated to ERA and unallowable. CFO/CCP has refunded the expense using private funds after SAI determined it was unallowable. ($250.00 questioned costs) • For 29 of 48, or 60.42%, of claims tested, the cost was allowable; however, the expense was attributable to multiple jurisdictions and only 90.33% of the cost should have been charged to the State. However, CFO/CCP was unable to support the proper allocation was completed and that 100% of the cost was not charged to the State. We question 9.67% of the allowable expenditures ($19,679.00 questioned costs) The issues noted above for the credit card expenditures and non-payroll admin expenditures resulted in a total questioned cost of $90,669. Cause: OMES personnel responsible for oversight of the ERA 1 and ERA 2 grants do not normally oversee Federal grant programs, do not understand the types of activities that may be supported by the ERA 1 and ERA 2 grants, and do not have adequate experience with administering Federal grant funds. OMES did not ensure the personnel responsible for oversight of the ERA 1 And ERA 2 grants received the proper training to understand and did not ensure they used available resources to help them understand, the grant requirements. OMES did not establish and maintain effective internal control over the Federal award that provides reasonable assurance that OMES manages the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. OMES did not ensure that the subrecipients established and maintained effective internal control over the Federal award to provide reasonable assurance that the non-Federal entity was managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. OMES advanced a set rate of 10% (ERA 1) and 15% (ERA 2) and to another subrecipient 9.3% (ERA 1) of program funds for administrative costs instead of reimbursing administrative costs actually incurred by the subrecipient that were attributable to providing financial assistance and housing stability services under the ERA 1 and ERA 2 programs. OMES did not obtain, review, approve, or maintain adequate supporting documentation for administrative costs. Effect: Unallowable costs, totaling $120,106.53, were charged to the ERA program as administrative expenditures by CFO for SFY 2023. Recommendation: We recommend that OMES develop and implement internal controls to ensure it has the knowledge and experience to administer current and future ERA grants in accordance with applicable Federal laws and grant requirements, including ensuring that grant subrecipients are properly informed of Federal requirements related to allowable costs. In addition, we recommend that OMES ensure subrecipients have established effective internal controls over the Federal award to provide reasonable assurance that the subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Lastly, we recommend that OMES ensure adequate supporting documentation for administrative costs charged to the program is obtained, reviewed, approved, and maintained to ensure subrecipients are only reimbursed for allowable activities and costs based on proper supporting documentation. Views of Responsible Official(s) Contact Person: Brandy Manek Anticipated Completion Date: Ongoing throughout the life of the grant Corrective Action Planned: The Office of Management and Enterprise Services partially agrees with the finding. See corrective action plan located in the corrective action plan section of this report. Auditor Response: CFO Response 1. - SAI questioned these costs as they were not refunded until SAI inquired about them. CFO Response 2 – The response at 2023-028, condition and context 2, does not fit with the context and condition noted in this finding. CFO Response 3 – This was cleared and removed from the finding. CFO Response 4 – While Treasury allowed grantees to make subawards to other entities, these subawards should have been made to existing entities. Shelterwell was created by CFO and Shelterwell is required to pay CFO a percentage to perform their accounting function. Additionally, the services being provided by Shelterwell do not fall under the umbrella of those allowed under housing stability. CFO Response 5 – While Treasury allowed grantees to make subawards to other entities, these subawards should have been made to existing entities. Side x Side was created by CFO and Side x Side is required to pay CFO a percentage to perform their accounting function. Additionally, the expenses being questioned for Side x Side do not fall under the umbrella of those allowed under housing stability as these were for. consulting, website design, and nonprofit/professional development trainings CFO Response 6 – CFO concurred CFO Response 7 – CFO concurred CFO Response 8 – CFO concurred CFO Response 9 – The response at 2023-028, condition and context 2, does not fit with the context and condition noted in this finding.
FINDING NO: 2023-092 (Repeat Finding 2022-028) STATE AGENCY: State of Oklahoma, Office of Management and Enterprise Services (OMES) FEDERAL AGENCY: US Department of Treasury (Treasury) ALN: 21.023 FEDERAL PROGRAM NAME: Emergency Rental Assistance (ERA 1 and ERA 2) FEDERAL AWARD NUMBER: ERA0028 and ERAE0259 FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Reporting QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.303 – Internal Controls 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.” 2 CFR § 200.334 – Retention requirements for records states in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.” The US Department of Treasury Emergency Rental Assistance: Closeout Resource states in part, “Per the ERA 2 Award Terms, financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to the ERA1 award must be retained for a period of five years after all funds have been expended or returned to Treasury.” The US Department of Treasury Emergency Rental Assistance Reallocation Guidance (as of 9/6/2022) states, “Grantees are encouraged to partner with local nonprofit organizations and governmental agencies to expedite the obligation process and delivery of assistance to eligible households. However, Grantees may not use subrecipient agreements with these entities to avoid meeting the statutory obligation deadlines, and funds will not be considered obligated based solely on the fact they are subject to an agreement that provides for another entity to administer assistance on the Grantee’s behalf.” Condition and Context: While performing testwork of the Q1 2023 Compliance Report (January 1, 2023 – March 31, 2023), we noted the following: • The report did not include the demographics section, which is a required reporting element. Per Treasury Guidance, the State is required to retain documentation for five years after all funds have been expended or returned. They State contacted Treasury to obtain the original submission that includes the demographic section and Treasury noted it is a common issue for that section to be missing when downloaded from the reporting portal. Treasury was unable to provide the original report but provided an excel spreadsheet with the information used in the report. However, the excel spreadsheet provided only included 16 of the 21 reporting elements that were missing from the report and the State did not retain all supporting documentation. The required reporting element "Cumulative Total Dollar Amount of ERA Award Funds Approved (Obligated) for Administrative Expenses" was not included on the report or information provided by Treasury. • The State considers amounts expended as soon as they have left the State's coffers and have been distributed to the subrecipients rather than reporting actual expenditures for program assistance. Per Treasury guidance, funds will not be considered obligated based solely on the fact they are subject to an agreement that provides for another entity to administer assistance on the Grantee's behalf. Therefore, the required reporting elements were not appropriately included and or supported by underlying data of actual expenditures. • The State was unable to provide underlying data for the cumulative administrative expenditures; therefore, we were unable to determine if the amounts reported trace to supporting documentation. Further, this indicates the report was not appropriately reviewed by OMES personnel prior to submission. SAI calculated the State overstated cumulative expenditures by $41,024,695.56. • The amount reported for 'Cumulative Number of Unique Households Receiving Housing Stability' does not trace to supporting documentation. Although the support provided was not for the reporting period and covered more than a year after the report was due, SAI still filtered the supporting data to only include dates through the reporting period and determined the reported number of unique households was 9,812 larger than the supporting data indicated. While performing procedures for ERA 1 period of performance, we noted program assistance payments that were canceled or returned to the subrecipient were after the period of performance ended. The State did not amend prior period reports to reflect the changes in number of participant households or amount of program expenditures in those periods. Cause: OMES did not establish and maintain effective internal control over the Federal award that provides reasonable assurance that the State is managing the Federal award in compliance with federal statutes, regulations, and the terms and conditions of the Federal award. OMES personnel responsible for oversight of the ERA grant do not understand the reporting requirements, do not normally oversee Federal grant programs, and do not have adequate experience with administering Federal grant funds. OMES did not retain supporting documentation as required by Treasury. OMES fully relied on the subrecipients to administer the program and meet reporting requirements with little guidance. Effect: OMES did not accurately and correctly report ERA program expenditures on federal reports. In addition, not all reporting elements were present or accurately presented. Lastly, prior ERA reports were overstated and do not accurately reflect refunds of program expenditures. Recommendation: We recommend the OMES develop and implement internal controls to ensure that program obligations and expenditures are accurately reported. In addition, we also recommend OMES obtain, review and retain reports and supporting documentation, before submitting to the Federal agency. Lastly, we recommend the OMES personnel responsible for oversight of the ERA grant obtain the necessary training and knowledge to ensure compliance with federal reporting requirements. Views of Responsible Official(s) Contact Person: Brandy Manek Anticipated Completion Date: Ongoing throughout the life of the grant Corrective Action Planned: The Office of Management and Enterprise Services partially agrees with the finding. See corrective action plan located in the corrective action plan section of this report. Auditor Response: The demographic data originally provided to the State did not include the required reporting element “Cumulative Total Dollar Amount of ERA Award Funds Approved (Obligated) for Administrative Expenses”. The support provided in response to the finding for administrative expenses was for the Cleveland County Project not the State of Oklahoma portion. Further, the State was unable to provide their underlying data for the Cumulative administrative expenditures to support the reported amounts. No additional support was provided for the discrepancies between the reported amounts and underlying support from the subrecipient. Therefore, these findings will stand.
FINDING NO: 2023-102 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Subrecipient Monitoring QUESTIONED COSTS: $348,761 Criteria: 2 CFR § 200.303 – Internal Controls 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.” 2 CFR § 200.334 – Retention requirements for records states, in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.” Condition and Context: The State of Oklahoma transfers all CSLFRF funds to state agencies so they can work directly with the subrecipient to ensure the project(s) are executed correctly. The State of Oklahoma had seven (7) state agencies make payments totaling $51,454,078 to subrecipients during SFY 2023. For the three (3) state agencies selected for testing, we sampled 14 of 43 subrecipient payments totaling $5,192,951 from a population of $8,694,772; and noted the following issue: • An Oklahoma State Department of Health (OSDH) subrecipient was reimbursed $825,223.40 on 6/16/23; however, $429,592.97 was later determined unallowed on 8/21/23 after an internal review. The subrecipient purchased pharmacy supplies which were unallowed. The subrecipient was only approved to purchase buildings and perform renovations in accordance with the contract and funding packet between OSDH and the subrecipient. The subrecipient then submitted an additional $80,831.48 of allowable costs on 11/8/23 to be applied against the unallowed costs he was already reimbursed. The remaining $348,761.49 was to be paid by the subrecipient for future capital expenditures. We requested supporting documentation for the $348,761.49 submitted by subrecipient for future capital expenditures; however, support could not be provided. Cause: The Oklahoma State Department of Health (OSDH) did not obtain and adequately review all supporting documents prior to payment. Effect: Unallowable costs, totaling $348,761.49, were charged to the CSLFRF program and not supported. Recommendation: We recommend the Oklahoma State Department of Health (OSDH) strengthen their internal controls to ensure adequate supporting documentation for program expenditures incurred is obtained, reviewed, and maintained to ensure subrecipients are expending CSLFRF funds for allowable costs. Views of Responsible Official(s) Contact Person: OMES: Parker Wise OSDH: Diane Brown, Danielle Smith, Tracey Douglas Anticipated Completion Date: 5/1/2025 Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-102 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Subrecipient Monitoring QUESTIONED COSTS: $348,761 Criteria: 2 CFR § 200.303 – Internal Controls 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.” 2 CFR § 200.334 – Retention requirements for records states, in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.” Condition and Context: The State of Oklahoma transfers all CSLFRF funds to state agencies so they can work directly with the subrecipient to ensure the project(s) are executed correctly. The State of Oklahoma had seven (7) state agencies make payments totaling $51,454,078 to subrecipients during SFY 2023. For the three (3) state agencies selected for testing, we sampled 14 of 43 subrecipient payments totaling $5,192,951 from a population of $8,694,772; and noted the following issue: • An Oklahoma State Department of Health (OSDH) subrecipient was reimbursed $825,223.40 on 6/16/23; however, $429,592.97 was later determined unallowed on 8/21/23 after an internal review. The subrecipient purchased pharmacy supplies which were unallowed. The subrecipient was only approved to purchase buildings and perform renovations in accordance with the contract and funding packet between OSDH and the subrecipient. The subrecipient then submitted an additional $80,831.48 of allowable costs on 11/8/23 to be applied against the unallowed costs he was already reimbursed. The remaining $348,761.49 was to be paid by the subrecipient for future capital expenditures. We requested supporting documentation for the $348,761.49 submitted by subrecipient for future capital expenditures; however, support could not be provided. Cause: The Oklahoma State Department of Health (OSDH) did not obtain and adequately review all supporting documents prior to payment. Effect: Unallowable costs, totaling $348,761.49, were charged to the CSLFRF program and not supported. Recommendation: We recommend the Oklahoma State Department of Health (OSDH) strengthen their internal controls to ensure adequate supporting documentation for program expenditures incurred is obtained, reviewed, and maintained to ensure subrecipients are expending CSLFRF funds for allowable costs. Views of Responsible Official(s) Contact Person: OMES: Parker Wise OSDH: Diane Brown, Danielle Smith, Tracey Douglas Anticipated Completion Date: 5/1/2025 Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-102 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Subrecipient Monitoring QUESTIONED COSTS: $348,761 Criteria: 2 CFR § 200.303 – Internal Controls 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.” 2 CFR § 200.334 – Retention requirements for records states, in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.” Condition and Context: The State of Oklahoma transfers all CSLFRF funds to state agencies so they can work directly with the subrecipient to ensure the project(s) are executed correctly. The State of Oklahoma had seven (7) state agencies make payments totaling $51,454,078 to subrecipients during SFY 2023. For the three (3) state agencies selected for testing, we sampled 14 of 43 subrecipient payments totaling $5,192,951 from a population of $8,694,772; and noted the following issue: • An Oklahoma State Department of Health (OSDH) subrecipient was reimbursed $825,223.40 on 6/16/23; however, $429,592.97 was later determined unallowed on 8/21/23 after an internal review. The subrecipient purchased pharmacy supplies which were unallowed. The subrecipient was only approved to purchase buildings and perform renovations in accordance with the contract and funding packet between OSDH and the subrecipient. The subrecipient then submitted an additional $80,831.48 of allowable costs on 11/8/23 to be applied against the unallowed costs he was already reimbursed. The remaining $348,761.49 was to be paid by the subrecipient for future capital expenditures. We requested supporting documentation for the $348,761.49 submitted by subrecipient for future capital expenditures; however, support could not be provided. Cause: The Oklahoma State Department of Health (OSDH) did not obtain and adequately review all supporting documents prior to payment. Effect: Unallowable costs, totaling $348,761.49, were charged to the CSLFRF program and not supported. Recommendation: We recommend the Oklahoma State Department of Health (OSDH) strengthen their internal controls to ensure adequate supporting documentation for program expenditures incurred is obtained, reviewed, and maintained to ensure subrecipients are expending CSLFRF funds for allowable costs. Views of Responsible Official(s) Contact Person: OMES: Parker Wise OSDH: Diane Brown, Danielle Smith, Tracey Douglas Anticipated Completion Date: 5/1/2025 Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-102 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Subrecipient Monitoring QUESTIONED COSTS: $348,761 Criteria: 2 CFR § 200.303 – Internal Controls 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.” 2 CFR § 200.334 – Retention requirements for records states, in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.” Condition and Context: The State of Oklahoma transfers all CSLFRF funds to state agencies so they can work directly with the subrecipient to ensure the project(s) are executed correctly. The State of Oklahoma had seven (7) state agencies make payments totaling $51,454,078 to subrecipients during SFY 2023. For the three (3) state agencies selected for testing, we sampled 14 of 43 subrecipient payments totaling $5,192,951 from a population of $8,694,772; and noted the following issue: • An Oklahoma State Department of Health (OSDH) subrecipient was reimbursed $825,223.40 on 6/16/23; however, $429,592.97 was later determined unallowed on 8/21/23 after an internal review. The subrecipient purchased pharmacy supplies which were unallowed. The subrecipient was only approved to purchase buildings and perform renovations in accordance with the contract and funding packet between OSDH and the subrecipient. The subrecipient then submitted an additional $80,831.48 of allowable costs on 11/8/23 to be applied against the unallowed costs he was already reimbursed. The remaining $348,761.49 was to be paid by the subrecipient for future capital expenditures. We requested supporting documentation for the $348,761.49 submitted by subrecipient for future capital expenditures; however, support could not be provided. Cause: The Oklahoma State Department of Health (OSDH) did not obtain and adequately review all supporting documents prior to payment. Effect: Unallowable costs, totaling $348,761.49, were charged to the CSLFRF program and not supported. Recommendation: We recommend the Oklahoma State Department of Health (OSDH) strengthen their internal controls to ensure adequate supporting documentation for program expenditures incurred is obtained, reviewed, and maintained to ensure subrecipients are expending CSLFRF funds for allowable costs. Views of Responsible Official(s) Contact Person: OMES: Parker Wise OSDH: Diane Brown, Danielle Smith, Tracey Douglas Anticipated Completion Date: 5/1/2025 Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-102 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Subrecipient Monitoring QUESTIONED COSTS: $348,761 Criteria: 2 CFR § 200.303 – Internal Controls 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.” 2 CFR § 200.334 – Retention requirements for records states, in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.” Condition and Context: The State of Oklahoma transfers all CSLFRF funds to state agencies so they can work directly with the subrecipient to ensure the project(s) are executed correctly. The State of Oklahoma had seven (7) state agencies make payments totaling $51,454,078 to subrecipients during SFY 2023. For the three (3) state agencies selected for testing, we sampled 14 of 43 subrecipient payments totaling $5,192,951 from a population of $8,694,772; and noted the following issue: • An Oklahoma State Department of Health (OSDH) subrecipient was reimbursed $825,223.40 on 6/16/23; however, $429,592.97 was later determined unallowed on 8/21/23 after an internal review. The subrecipient purchased pharmacy supplies which were unallowed. The subrecipient was only approved to purchase buildings and perform renovations in accordance with the contract and funding packet between OSDH and the subrecipient. The subrecipient then submitted an additional $80,831.48 of allowable costs on 11/8/23 to be applied against the unallowed costs he was already reimbursed. The remaining $348,761.49 was to be paid by the subrecipient for future capital expenditures. We requested supporting documentation for the $348,761.49 submitted by subrecipient for future capital expenditures; however, support could not be provided. Cause: The Oklahoma State Department of Health (OSDH) did not obtain and adequately review all supporting documents prior to payment. Effect: Unallowable costs, totaling $348,761.49, were charged to the CSLFRF program and not supported. Recommendation: We recommend the Oklahoma State Department of Health (OSDH) strengthen their internal controls to ensure adequate supporting documentation for program expenditures incurred is obtained, reviewed, and maintained to ensure subrecipients are expending CSLFRF funds for allowable costs. Views of Responsible Official(s) Contact Person: OMES: Parker Wise OSDH: Diane Brown, Danielle Smith, Tracey Douglas Anticipated Completion Date: 5/1/2025 Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-102 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Subrecipient Monitoring QUESTIONED COSTS: $348,761 Criteria: 2 CFR § 200.303 – Internal Controls 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.” 2 CFR § 200.334 – Retention requirements for records states, in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.” Condition and Context: The State of Oklahoma transfers all CSLFRF funds to state agencies so they can work directly with the subrecipient to ensure the project(s) are executed correctly. The State of Oklahoma had seven (7) state agencies make payments totaling $51,454,078 to subrecipients during SFY 2023. For the three (3) state agencies selected for testing, we sampled 14 of 43 subrecipient payments totaling $5,192,951 from a population of $8,694,772; and noted the following issue: • An Oklahoma State Department of Health (OSDH) subrecipient was reimbursed $825,223.40 on 6/16/23; however, $429,592.97 was later determined unallowed on 8/21/23 after an internal review. The subrecipient purchased pharmacy supplies which were unallowed. The subrecipient was only approved to purchase buildings and perform renovations in accordance with the contract and funding packet between OSDH and the subrecipient. The subrecipient then submitted an additional $80,831.48 of allowable costs on 11/8/23 to be applied against the unallowed costs he was already reimbursed. The remaining $348,761.49 was to be paid by the subrecipient for future capital expenditures. We requested supporting documentation for the $348,761.49 submitted by subrecipient for future capital expenditures; however, support could not be provided. Cause: The Oklahoma State Department of Health (OSDH) did not obtain and adequately review all supporting documents prior to payment. Effect: Unallowable costs, totaling $348,761.49, were charged to the CSLFRF program and not supported. Recommendation: We recommend the Oklahoma State Department of Health (OSDH) strengthen their internal controls to ensure adequate supporting documentation for program expenditures incurred is obtained, reviewed, and maintained to ensure subrecipients are expending CSLFRF funds for allowable costs. Views of Responsible Official(s) Contact Person: OMES: Parker Wise OSDH: Diane Brown, Danielle Smith, Tracey Douglas Anticipated Completion Date: 5/1/2025 Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-102 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Subrecipient Monitoring QUESTIONED COSTS: $348,761 Criteria: 2 CFR § 200.303 – Internal Controls 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.” 2 CFR § 200.334 – Retention requirements for records states, in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.” Condition and Context: The State of Oklahoma transfers all CSLFRF funds to state agencies so they can work directly with the subrecipient to ensure the project(s) are executed correctly. The State of Oklahoma had seven (7) state agencies make payments totaling $51,454,078 to subrecipients during SFY 2023. For the three (3) state agencies selected for testing, we sampled 14 of 43 subrecipient payments totaling $5,192,951 from a population of $8,694,772; and noted the following issue: • An Oklahoma State Department of Health (OSDH) subrecipient was reimbursed $825,223.40 on 6/16/23; however, $429,592.97 was later determined unallowed on 8/21/23 after an internal review. The subrecipient purchased pharmacy supplies which were unallowed. The subrecipient was only approved to purchase buildings and perform renovations in accordance with the contract and funding packet between OSDH and the subrecipient. The subrecipient then submitted an additional $80,831.48 of allowable costs on 11/8/23 to be applied against the unallowed costs he was already reimbursed. The remaining $348,761.49 was to be paid by the subrecipient for future capital expenditures. We requested supporting documentation for the $348,761.49 submitted by subrecipient for future capital expenditures; however, support could not be provided. Cause: The Oklahoma State Department of Health (OSDH) did not obtain and adequately review all supporting documents prior to payment. Effect: Unallowable costs, totaling $348,761.49, were charged to the CSLFRF program and not supported. Recommendation: We recommend the Oklahoma State Department of Health (OSDH) strengthen their internal controls to ensure adequate supporting documentation for program expenditures incurred is obtained, reviewed, and maintained to ensure subrecipients are expending CSLFRF funds for allowable costs. Views of Responsible Official(s) Contact Person: OMES: Parker Wise OSDH: Diane Brown, Danielle Smith, Tracey Douglas Anticipated Completion Date: 5/1/2025 Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-102 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Subrecipient Monitoring QUESTIONED COSTS: $348,761 Criteria: 2 CFR § 200.303 – Internal Controls 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.” 2 CFR § 200.334 – Retention requirements for records states, in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.” Condition and Context: The State of Oklahoma transfers all CSLFRF funds to state agencies so they can work directly with the subrecipient to ensure the project(s) are executed correctly. The State of Oklahoma had seven (7) state agencies make payments totaling $51,454,078 to subrecipients during SFY 2023. For the three (3) state agencies selected for testing, we sampled 14 of 43 subrecipient payments totaling $5,192,951 from a population of $8,694,772; and noted the following issue: • An Oklahoma State Department of Health (OSDH) subrecipient was reimbursed $825,223.40 on 6/16/23; however, $429,592.97 was later determined unallowed on 8/21/23 after an internal review. The subrecipient purchased pharmacy supplies which were unallowed. The subrecipient was only approved to purchase buildings and perform renovations in accordance with the contract and funding packet between OSDH and the subrecipient. The subrecipient then submitted an additional $80,831.48 of allowable costs on 11/8/23 to be applied against the unallowed costs he was already reimbursed. The remaining $348,761.49 was to be paid by the subrecipient for future capital expenditures. We requested supporting documentation for the $348,761.49 submitted by subrecipient for future capital expenditures; however, support could not be provided. Cause: The Oklahoma State Department of Health (OSDH) did not obtain and adequately review all supporting documents prior to payment. Effect: Unallowable costs, totaling $348,761.49, were charged to the CSLFRF program and not supported. Recommendation: We recommend the Oklahoma State Department of Health (OSDH) strengthen their internal controls to ensure adequate supporting documentation for program expenditures incurred is obtained, reviewed, and maintained to ensure subrecipients are expending CSLFRF funds for allowable costs. Views of Responsible Official(s) Contact Person: OMES: Parker Wise OSDH: Diane Brown, Danielle Smith, Tracey Douglas Anticipated Completion Date: 5/1/2025 Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-102 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Subrecipient Monitoring QUESTIONED COSTS: $348,761 Criteria: 2 CFR § 200.303 – Internal Controls 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.” 2 CFR § 200.334 – Retention requirements for records states, in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.” Condition and Context: The State of Oklahoma transfers all CSLFRF funds to state agencies so they can work directly with the subrecipient to ensure the project(s) are executed correctly. The State of Oklahoma had seven (7) state agencies make payments totaling $51,454,078 to subrecipients during SFY 2023. For the three (3) state agencies selected for testing, we sampled 14 of 43 subrecipient payments totaling $5,192,951 from a population of $8,694,772; and noted the following issue: • An Oklahoma State Department of Health (OSDH) subrecipient was reimbursed $825,223.40 on 6/16/23; however, $429,592.97 was later determined unallowed on 8/21/23 after an internal review. The subrecipient purchased pharmacy supplies which were unallowed. The subrecipient was only approved to purchase buildings and perform renovations in accordance with the contract and funding packet between OSDH and the subrecipient. The subrecipient then submitted an additional $80,831.48 of allowable costs on 11/8/23 to be applied against the unallowed costs he was already reimbursed. The remaining $348,761.49 was to be paid by the subrecipient for future capital expenditures. We requested supporting documentation for the $348,761.49 submitted by subrecipient for future capital expenditures; however, support could not be provided. Cause: The Oklahoma State Department of Health (OSDH) did not obtain and adequately review all supporting documents prior to payment. Effect: Unallowable costs, totaling $348,761.49, were charged to the CSLFRF program and not supported. Recommendation: We recommend the Oklahoma State Department of Health (OSDH) strengthen their internal controls to ensure adequate supporting documentation for program expenditures incurred is obtained, reviewed, and maintained to ensure subrecipients are expending CSLFRF funds for allowable costs. Views of Responsible Official(s) Contact Person: OMES: Parker Wise OSDH: Diane Brown, Danielle Smith, Tracey Douglas Anticipated Completion Date: 5/1/2025 Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-102 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Subrecipient Monitoring QUESTIONED COSTS: $348,761 Criteria: 2 CFR § 200.303 – Internal Controls 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.” 2 CFR § 200.334 – Retention requirements for records states, in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.” Condition and Context: The State of Oklahoma transfers all CSLFRF funds to state agencies so they can work directly with the subrecipient to ensure the project(s) are executed correctly. The State of Oklahoma had seven (7) state agencies make payments totaling $51,454,078 to subrecipients during SFY 2023. For the three (3) state agencies selected for testing, we sampled 14 of 43 subrecipient payments totaling $5,192,951 from a population of $8,694,772; and noted the following issue: • An Oklahoma State Department of Health (OSDH) subrecipient was reimbursed $825,223.40 on 6/16/23; however, $429,592.97 was later determined unallowed on 8/21/23 after an internal review. The subrecipient purchased pharmacy supplies which were unallowed. The subrecipient was only approved to purchase buildings and perform renovations in accordance with the contract and funding packet between OSDH and the subrecipient. The subrecipient then submitted an additional $80,831.48 of allowable costs on 11/8/23 to be applied against the unallowed costs he was already reimbursed. The remaining $348,761.49 was to be paid by the subrecipient for future capital expenditures. We requested supporting documentation for the $348,761.49 submitted by subrecipient for future capital expenditures; however, support could not be provided. Cause: The Oklahoma State Department of Health (OSDH) did not obtain and adequately review all supporting documents prior to payment. Effect: Unallowable costs, totaling $348,761.49, were charged to the CSLFRF program and not supported. Recommendation: We recommend the Oklahoma State Department of Health (OSDH) strengthen their internal controls to ensure adequate supporting documentation for program expenditures incurred is obtained, reviewed, and maintained to ensure subrecipients are expending CSLFRF funds for allowable costs. Views of Responsible Official(s) Contact Person: OMES: Parker Wise OSDH: Diane Brown, Danielle Smith, Tracey Douglas Anticipated Completion Date: 5/1/2025 Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-102 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Subrecipient Monitoring QUESTIONED COSTS: $348,761 Criteria: 2 CFR § 200.303 – Internal Controls 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.” 2 CFR § 200.334 – Retention requirements for records states, in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.” Condition and Context: The State of Oklahoma transfers all CSLFRF funds to state agencies so they can work directly with the subrecipient to ensure the project(s) are executed correctly. The State of Oklahoma had seven (7) state agencies make payments totaling $51,454,078 to subrecipients during SFY 2023. For the three (3) state agencies selected for testing, we sampled 14 of 43 subrecipient payments totaling $5,192,951 from a population of $8,694,772; and noted the following issue: • An Oklahoma State Department of Health (OSDH) subrecipient was reimbursed $825,223.40 on 6/16/23; however, $429,592.97 was later determined unallowed on 8/21/23 after an internal review. The subrecipient purchased pharmacy supplies which were unallowed. The subrecipient was only approved to purchase buildings and perform renovations in accordance with the contract and funding packet between OSDH and the subrecipient. The subrecipient then submitted an additional $80,831.48 of allowable costs on 11/8/23 to be applied against the unallowed costs he was already reimbursed. The remaining $348,761.49 was to be paid by the subrecipient for future capital expenditures. We requested supporting documentation for the $348,761.49 submitted by subrecipient for future capital expenditures; however, support could not be provided. Cause: The Oklahoma State Department of Health (OSDH) did not obtain and adequately review all supporting documents prior to payment. Effect: Unallowable costs, totaling $348,761.49, were charged to the CSLFRF program and not supported. Recommendation: We recommend the Oklahoma State Department of Health (OSDH) strengthen their internal controls to ensure adequate supporting documentation for program expenditures incurred is obtained, reviewed, and maintained to ensure subrecipients are expending CSLFRF funds for allowable costs. Views of Responsible Official(s) Contact Person: OMES: Parker Wise OSDH: Diane Brown, Danielle Smith, Tracey Douglas Anticipated Completion Date: 5/1/2025 Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-102 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Subrecipient Monitoring QUESTIONED COSTS: $348,761 Criteria: 2 CFR § 200.303 – Internal Controls 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.” 2 CFR § 200.334 – Retention requirements for records states, in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.” Condition and Context: The State of Oklahoma transfers all CSLFRF funds to state agencies so they can work directly with the subrecipient to ensure the project(s) are executed correctly. The State of Oklahoma had seven (7) state agencies make payments totaling $51,454,078 to subrecipients during SFY 2023. For the three (3) state agencies selected for testing, we sampled 14 of 43 subrecipient payments totaling $5,192,951 from a population of $8,694,772; and noted the following issue: • An Oklahoma State Department of Health (OSDH) subrecipient was reimbursed $825,223.40 on 6/16/23; however, $429,592.97 was later determined unallowed on 8/21/23 after an internal review. The subrecipient purchased pharmacy supplies which were unallowed. The subrecipient was only approved to purchase buildings and perform renovations in accordance with the contract and funding packet between OSDH and the subrecipient. The subrecipient then submitted an additional $80,831.48 of allowable costs on 11/8/23 to be applied against the unallowed costs he was already reimbursed. The remaining $348,761.49 was to be paid by the subrecipient for future capital expenditures. We requested supporting documentation for the $348,761.49 submitted by subrecipient for future capital expenditures; however, support could not be provided. Cause: The Oklahoma State Department of Health (OSDH) did not obtain and adequately review all supporting documents prior to payment. Effect: Unallowable costs, totaling $348,761.49, were charged to the CSLFRF program and not supported. Recommendation: We recommend the Oklahoma State Department of Health (OSDH) strengthen their internal controls to ensure adequate supporting documentation for program expenditures incurred is obtained, reviewed, and maintained to ensure subrecipients are expending CSLFRF funds for allowable costs. Views of Responsible Official(s) Contact Person: OMES: Parker Wise OSDH: Diane Brown, Danielle Smith, Tracey Douglas Anticipated Completion Date: 5/1/2025 Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-102 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Subrecipient Monitoring QUESTIONED COSTS: $348,761 Criteria: 2 CFR § 200.303 – Internal Controls 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.” 2 CFR § 200.334 – Retention requirements for records states, in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.” Condition and Context: The State of Oklahoma transfers all CSLFRF funds to state agencies so they can work directly with the subrecipient to ensure the project(s) are executed correctly. The State of Oklahoma had seven (7) state agencies make payments totaling $51,454,078 to subrecipients during SFY 2023. For the three (3) state agencies selected for testing, we sampled 14 of 43 subrecipient payments totaling $5,192,951 from a population of $8,694,772; and noted the following issue: • An Oklahoma State Department of Health (OSDH) subrecipient was reimbursed $825,223.40 on 6/16/23; however, $429,592.97 was later determined unallowed on 8/21/23 after an internal review. The subrecipient purchased pharmacy supplies which were unallowed. The subrecipient was only approved to purchase buildings and perform renovations in accordance with the contract and funding packet between OSDH and the subrecipient. The subrecipient then submitted an additional $80,831.48 of allowable costs on 11/8/23 to be applied against the unallowed costs he was already reimbursed. The remaining $348,761.49 was to be paid by the subrecipient for future capital expenditures. We requested supporting documentation for the $348,761.49 submitted by subrecipient for future capital expenditures; however, support could not be provided. Cause: The Oklahoma State Department of Health (OSDH) did not obtain and adequately review all supporting documents prior to payment. Effect: Unallowable costs, totaling $348,761.49, were charged to the CSLFRF program and not supported. Recommendation: We recommend the Oklahoma State Department of Health (OSDH) strengthen their internal controls to ensure adequate supporting documentation for program expenditures incurred is obtained, reviewed, and maintained to ensure subrecipients are expending CSLFRF funds for allowable costs. Views of Responsible Official(s) Contact Person: OMES: Parker Wise OSDH: Diane Brown, Danielle Smith, Tracey Douglas Anticipated Completion Date: 5/1/2025 Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-102 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Subrecipient Monitoring QUESTIONED COSTS: $348,761 Criteria: 2 CFR § 200.303 – Internal Controls 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.” 2 CFR § 200.334 – Retention requirements for records states, in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.” Condition and Context: The State of Oklahoma transfers all CSLFRF funds to state agencies so they can work directly with the subrecipient to ensure the project(s) are executed correctly. The State of Oklahoma had seven (7) state agencies make payments totaling $51,454,078 to subrecipients during SFY 2023. For the three (3) state agencies selected for testing, we sampled 14 of 43 subrecipient payments totaling $5,192,951 from a population of $8,694,772; and noted the following issue: • An Oklahoma State Department of Health (OSDH) subrecipient was reimbursed $825,223.40 on 6/16/23; however, $429,592.97 was later determined unallowed on 8/21/23 after an internal review. The subrecipient purchased pharmacy supplies which were unallowed. The subrecipient was only approved to purchase buildings and perform renovations in accordance with the contract and funding packet between OSDH and the subrecipient. The subrecipient then submitted an additional $80,831.48 of allowable costs on 11/8/23 to be applied against the unallowed costs he was already reimbursed. The remaining $348,761.49 was to be paid by the subrecipient for future capital expenditures. We requested supporting documentation for the $348,761.49 submitted by subrecipient for future capital expenditures; however, support could not be provided. Cause: The Oklahoma State Department of Health (OSDH) did not obtain and adequately review all supporting documents prior to payment. Effect: Unallowable costs, totaling $348,761.49, were charged to the CSLFRF program and not supported. Recommendation: We recommend the Oklahoma State Department of Health (OSDH) strengthen their internal controls to ensure adequate supporting documentation for program expenditures incurred is obtained, reviewed, and maintained to ensure subrecipients are expending CSLFRF funds for allowable costs. Views of Responsible Official(s) Contact Person: OMES: Parker Wise OSDH: Diane Brown, Danielle Smith, Tracey Douglas Anticipated Completion Date: 5/1/2025 Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-102 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Subrecipient Monitoring QUESTIONED COSTS: $348,761 Criteria: 2 CFR § 200.303 – Internal Controls 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.” 2 CFR § 200.334 – Retention requirements for records states, in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.” Condition and Context: The State of Oklahoma transfers all CSLFRF funds to state agencies so they can work directly with the subrecipient to ensure the project(s) are executed correctly. The State of Oklahoma had seven (7) state agencies make payments totaling $51,454,078 to subrecipients during SFY 2023. For the three (3) state agencies selected for testing, we sampled 14 of 43 subrecipient payments totaling $5,192,951 from a population of $8,694,772; and noted the following issue: • An Oklahoma State Department of Health (OSDH) subrecipient was reimbursed $825,223.40 on 6/16/23; however, $429,592.97 was later determined unallowed on 8/21/23 after an internal review. The subrecipient purchased pharmacy supplies which were unallowed. The subrecipient was only approved to purchase buildings and perform renovations in accordance with the contract and funding packet between OSDH and the subrecipient. The subrecipient then submitted an additional $80,831.48 of allowable costs on 11/8/23 to be applied against the unallowed costs he was already reimbursed. The remaining $348,761.49 was to be paid by the subrecipient for future capital expenditures. We requested supporting documentation for the $348,761.49 submitted by subrecipient for future capital expenditures; however, support could not be provided. Cause: The Oklahoma State Department of Health (OSDH) did not obtain and adequately review all supporting documents prior to payment. Effect: Unallowable costs, totaling $348,761.49, were charged to the CSLFRF program and not supported. Recommendation: We recommend the Oklahoma State Department of Health (OSDH) strengthen their internal controls to ensure adequate supporting documentation for program expenditures incurred is obtained, reviewed, and maintained to ensure subrecipients are expending CSLFRF funds for allowable costs. Views of Responsible Official(s) Contact Person: OMES: Parker Wise OSDH: Diane Brown, Danielle Smith, Tracey Douglas Anticipated Completion Date: 5/1/2025 Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-102 STATE AGENCY: State of Oklahoma FEDERAL AGENCY: U.S. Department of the Treasury ALN: 21.027 FEDERAL PROGRAM NAME: Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) FEDERAL AWARD NUMBER: N/A FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Period of Performance; Subrecipient Monitoring QUESTIONED COSTS: $348,761 Criteria: 2 CFR § 200.303 – Internal Controls 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.” 2 CFR § 200.334 – Retention requirements for records states, in part, “Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.” Condition and Context: The State of Oklahoma transfers all CSLFRF funds to state agencies so they can work directly with the subrecipient to ensure the project(s) are executed correctly. The State of Oklahoma had seven (7) state agencies make payments totaling $51,454,078 to subrecipients during SFY 2023. For the three (3) state agencies selected for testing, we sampled 14 of 43 subrecipient payments totaling $5,192,951 from a population of $8,694,772; and noted the following issue: • An Oklahoma State Department of Health (OSDH) subrecipient was reimbursed $825,223.40 on 6/16/23; however, $429,592.97 was later determined unallowed on 8/21/23 after an internal review. The subrecipient purchased pharmacy supplies which were unallowed. The subrecipient was only approved to purchase buildings and perform renovations in accordance with the contract and funding packet between OSDH and the subrecipient. The subrecipient then submitted an additional $80,831.48 of allowable costs on 11/8/23 to be applied against the unallowed costs he was already reimbursed. The remaining $348,761.49 was to be paid by the subrecipient for future capital expenditures. We requested supporting documentation for the $348,761.49 submitted by subrecipient for future capital expenditures; however, support could not be provided. Cause: The Oklahoma State Department of Health (OSDH) did not obtain and adequately review all supporting documents prior to payment. Effect: Unallowable costs, totaling $348,761.49, were charged to the CSLFRF program and not supported. Recommendation: We recommend the Oklahoma State Department of Health (OSDH) strengthen their internal controls to ensure adequate supporting documentation for program expenditures incurred is obtained, reviewed, and maintained to ensure subrecipients are expending CSLFRF funds for allowable costs. Views of Responsible Official(s) Contact Person: OMES: Parker Wise OSDH: Diane Brown, Danielle Smith, Tracey Douglas Anticipated Completion Date: 5/1/2025 Corrective Action Planned: The Office of Management Enterprise Services – Grants Management Office agrees with the finding. Please see the corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-059 (Partial Repeat 2022-049) STATE AGENCY: Oklahoma State Department of Education (OSDE) FEDERAL AGENCY: United States Department of Education (USDE) ALN: 84.425 – 84.425D, 84.425U; 84.425R FEDERAL PROGRAM NAME: Education Stabilization Fund (ESF) - Elementary and Secondary Schools Emergency Relief Fund (ESSER II); American Rescue Plan – Elementary and Secondary Schools Emergency Relief Fund (ARP ESSER III); Coronavirus Response and Relief Supplemental Appropriations Act, 2021 – Emergency Assistance To Non-Public Schools (CRRSA EANS) FEDERAL AWARD NUMBER: S425D210024; S425U210024 FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Reporting QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.303(a) – Internal Controls states in part, “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.” 2 CFR § 200.334 Record retention requirements states in part, “The recipient and subrecipient must retain all Federal award records for three years from the date of submission of their final financial report. For awards that are renewed quarterly or annually, the recipient and subrecipient must retain records for three years from the date of submission of their quarterly or annual financial report, respectively. Records to be retained include but are not limited to, financial records, supporting documentation, and statistical records. Federal agencies or pass-through entities may not impose any other record retention requirements except for the following: (a) The records must be retained until all litigation, claims, or audit findings involving the records have been resolved and final action taken if any litigation, claim, or audit is started before the expiration of the three-year period.” United States Department of Education website ESSER Annual Reporting states in part, “All grantees are required to report on ESSER funds received under the Coronavirus Aid, Relief, and Economic Security (CARES) Act; the Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act; and the American Rescue Plan (ARP) Act. Grantees must submit an annual report describing how the State and subrecipients used the awarded funds during the performance period. Similar to CARES Act Year 1 annual reporting, grantees will use the Annual Report Data Collection Tool to submit the State report.” Condition and Context: We were unable to verify compliance with several key line items on the ESSER I, ESSER II, ARP ESSER III, and CRRSA EANS SFY 22 Annual Reports submitted during the audit period due to a lack of supporting documentation (i.e., supporting data and questionnaires sent to LEAs/nonpublic schools to collect the FTE, Student Participation data, and expenditures by category and object code). These key line items include the following: • Line 3.b1 LEA expenditures by category, and object code for ESSER I, ESSER II and ARP ESSER III • Line 3.b10 Number of specific positions supported with ESSER Funds • Line 5.a Full Time Equivalent positions for ESSER I, ESSER II and ARP ESSER III • SEA obligations (including reimbursements) by allowable activity for CRRSA EANS • Other information for Non-public schools receiving services or assistance under CRRSA EANS While documenting controls over the Annual Report we noted one LEA with a subaward/allocation of $16,832,303.63 and re-allocation of $28,177.30 and SFY 22 current expenditures of $5,509,241.03 was not included on the ARP ESSER III Annual Report. While reviewing a sample of 62 of 1,275 LEA subaward allocations and total expenditures reported on the ESSER Annual Reports, we noted the following: • For 25 of 62 (40.32%) subawards tested, the SFY 22 allocations reported on the LEA’s Grant Management System (GMS) application was less than the amount reported on the ESSER II Annual Report, totaling $12,707.62. In addition, OSDE did not provide the supporting documentation for ESSER II re-allocations. Therefore, we were unable to verify whether the total allocation for these LEAs were reported correctly in the ESSER II Annual Report. • For three of 62 (4.84%) subawards tested, the SFY 22 current expenditures reported on the LEA’s GMS Closeout Report or Summary Expenditures reports were less than the amount reported on the ARP ESSER III Annual Report. OSDE was unable to provide support for the variances totaling $218,392.41. Cause: Due to staff turnover and inadequate record retention policies and procedures, OSDE was unable to locate and/or provide all the supporting documentation used by previous staff members to prepare the reports. Effect: The amount reported for the total ARP ESSER III subaward was understated by $16,860,480.93, and the amount reported for the total ARP ESSER III current year expenditures was understated by $5,290,848.62 Information being reported on the USDOE website is not accurate and/or complete. Data previously reported cannot be verified by current staff or other entities required to perform audits or reviews. Recommendation: We recommend OSDE develop and implement appropriate record retention policies and procedures to ensure records are maintained, especially during staff turnovers. We recommend OSDE develop and implement policies and procedures to ensure personnel have an adequate understanding of the requirements for the Annual Report and to ensure the amounts reported are correct. Views of Responsible Official(s) Contact Person: Tammy Smith, Senior Director of Federal Programs | Office of Title Services Anticipated Completion Date: March 2024 Corrective Action Planned: The Oklahoma State Department of Education agrees with the finding. See corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-059 (Partial Repeat 2022-049) STATE AGENCY: Oklahoma State Department of Education (OSDE) FEDERAL AGENCY: United States Department of Education (USDE) ALN: 84.425 – 84.425D, 84.425U; 84.425R FEDERAL PROGRAM NAME: Education Stabilization Fund (ESF) - Elementary and Secondary Schools Emergency Relief Fund (ESSER II); American Rescue Plan – Elementary and Secondary Schools Emergency Relief Fund (ARP ESSER III); Coronavirus Response and Relief Supplemental Appropriations Act, 2021 – Emergency Assistance To Non-Public Schools (CRRSA EANS) FEDERAL AWARD NUMBER: S425D210024; S425U210024 FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Reporting QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.303(a) – Internal Controls states in part, “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.” 2 CFR § 200.334 Record retention requirements states in part, “The recipient and subrecipient must retain all Federal award records for three years from the date of submission of their final financial report. For awards that are renewed quarterly or annually, the recipient and subrecipient must retain records for three years from the date of submission of their quarterly or annual financial report, respectively. Records to be retained include but are not limited to, financial records, supporting documentation, and statistical records. Federal agencies or pass-through entities may not impose any other record retention requirements except for the following: (a) The records must be retained until all litigation, claims, or audit findings involving the records have been resolved and final action taken if any litigation, claim, or audit is started before the expiration of the three-year period.” United States Department of Education website ESSER Annual Reporting states in part, “All grantees are required to report on ESSER funds received under the Coronavirus Aid, Relief, and Economic Security (CARES) Act; the Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act; and the American Rescue Plan (ARP) Act. Grantees must submit an annual report describing how the State and subrecipients used the awarded funds during the performance period. Similar to CARES Act Year 1 annual reporting, grantees will use the Annual Report Data Collection Tool to submit the State report.” Condition and Context: We were unable to verify compliance with several key line items on the ESSER I, ESSER II, ARP ESSER III, and CRRSA EANS SFY 22 Annual Reports submitted during the audit period due to a lack of supporting documentation (i.e., supporting data and questionnaires sent to LEAs/nonpublic schools to collect the FTE, Student Participation data, and expenditures by category and object code). These key line items include the following: • Line 3.b1 LEA expenditures by category, and object code for ESSER I, ESSER II and ARP ESSER III • Line 3.b10 Number of specific positions supported with ESSER Funds • Line 5.a Full Time Equivalent positions for ESSER I, ESSER II and ARP ESSER III • SEA obligations (including reimbursements) by allowable activity for CRRSA EANS • Other information for Non-public schools receiving services or assistance under CRRSA EANS While documenting controls over the Annual Report we noted one LEA with a subaward/allocation of $16,832,303.63 and re-allocation of $28,177.30 and SFY 22 current expenditures of $5,509,241.03 was not included on the ARP ESSER III Annual Report. While reviewing a sample of 62 of 1,275 LEA subaward allocations and total expenditures reported on the ESSER Annual Reports, we noted the following: • For 25 of 62 (40.32%) subawards tested, the SFY 22 allocations reported on the LEA’s Grant Management System (GMS) application was less than the amount reported on the ESSER II Annual Report, totaling $12,707.62. In addition, OSDE did not provide the supporting documentation for ESSER II re-allocations. Therefore, we were unable to verify whether the total allocation for these LEAs were reported correctly in the ESSER II Annual Report. • For three of 62 (4.84%) subawards tested, the SFY 22 current expenditures reported on the LEA’s GMS Closeout Report or Summary Expenditures reports were less than the amount reported on the ARP ESSER III Annual Report. OSDE was unable to provide support for the variances totaling $218,392.41. Cause: Due to staff turnover and inadequate record retention policies and procedures, OSDE was unable to locate and/or provide all the supporting documentation used by previous staff members to prepare the reports. Effect: The amount reported for the total ARP ESSER III subaward was understated by $16,860,480.93, and the amount reported for the total ARP ESSER III current year expenditures was understated by $5,290,848.62 Information being reported on the USDOE website is not accurate and/or complete. Data previously reported cannot be verified by current staff or other entities required to perform audits or reviews. Recommendation: We recommend OSDE develop and implement appropriate record retention policies and procedures to ensure records are maintained, especially during staff turnovers. We recommend OSDE develop and implement policies and procedures to ensure personnel have an adequate understanding of the requirements for the Annual Report and to ensure the amounts reported are correct. Views of Responsible Official(s) Contact Person: Tammy Smith, Senior Director of Federal Programs | Office of Title Services Anticipated Completion Date: March 2024 Corrective Action Planned: The Oklahoma State Department of Education agrees with the finding. See corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-059 (Partial Repeat 2022-049) STATE AGENCY: Oklahoma State Department of Education (OSDE) FEDERAL AGENCY: United States Department of Education (USDE) ALN: 84.425 – 84.425D, 84.425U; 84.425R FEDERAL PROGRAM NAME: Education Stabilization Fund (ESF) - Elementary and Secondary Schools Emergency Relief Fund (ESSER II); American Rescue Plan – Elementary and Secondary Schools Emergency Relief Fund (ARP ESSER III); Coronavirus Response and Relief Supplemental Appropriations Act, 2021 – Emergency Assistance To Non-Public Schools (CRRSA EANS) FEDERAL AWARD NUMBER: S425D210024; S425U210024 FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Reporting QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.303(a) – Internal Controls states in part, “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.” 2 CFR § 200.334 Record retention requirements states in part, “The recipient and subrecipient must retain all Federal award records for three years from the date of submission of their final financial report. For awards that are renewed quarterly or annually, the recipient and subrecipient must retain records for three years from the date of submission of their quarterly or annual financial report, respectively. Records to be retained include but are not limited to, financial records, supporting documentation, and statistical records. Federal agencies or pass-through entities may not impose any other record retention requirements except for the following: (a) The records must be retained until all litigation, claims, or audit findings involving the records have been resolved and final action taken if any litigation, claim, or audit is started before the expiration of the three-year period.” United States Department of Education website ESSER Annual Reporting states in part, “All grantees are required to report on ESSER funds received under the Coronavirus Aid, Relief, and Economic Security (CARES) Act; the Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act; and the American Rescue Plan (ARP) Act. Grantees must submit an annual report describing how the State and subrecipients used the awarded funds during the performance period. Similar to CARES Act Year 1 annual reporting, grantees will use the Annual Report Data Collection Tool to submit the State report.” Condition and Context: We were unable to verify compliance with several key line items on the ESSER I, ESSER II, ARP ESSER III, and CRRSA EANS SFY 22 Annual Reports submitted during the audit period due to a lack of supporting documentation (i.e., supporting data and questionnaires sent to LEAs/nonpublic schools to collect the FTE, Student Participation data, and expenditures by category and object code). These key line items include the following: • Line 3.b1 LEA expenditures by category, and object code for ESSER I, ESSER II and ARP ESSER III • Line 3.b10 Number of specific positions supported with ESSER Funds • Line 5.a Full Time Equivalent positions for ESSER I, ESSER II and ARP ESSER III • SEA obligations (including reimbursements) by allowable activity for CRRSA EANS • Other information for Non-public schools receiving services or assistance under CRRSA EANS While documenting controls over the Annual Report we noted one LEA with a subaward/allocation of $16,832,303.63 and re-allocation of $28,177.30 and SFY 22 current expenditures of $5,509,241.03 was not included on the ARP ESSER III Annual Report. While reviewing a sample of 62 of 1,275 LEA subaward allocations and total expenditures reported on the ESSER Annual Reports, we noted the following: • For 25 of 62 (40.32%) subawards tested, the SFY 22 allocations reported on the LEA’s Grant Management System (GMS) application was less than the amount reported on the ESSER II Annual Report, totaling $12,707.62. In addition, OSDE did not provide the supporting documentation for ESSER II re-allocations. Therefore, we were unable to verify whether the total allocation for these LEAs were reported correctly in the ESSER II Annual Report. • For three of 62 (4.84%) subawards tested, the SFY 22 current expenditures reported on the LEA’s GMS Closeout Report or Summary Expenditures reports were less than the amount reported on the ARP ESSER III Annual Report. OSDE was unable to provide support for the variances totaling $218,392.41. Cause: Due to staff turnover and inadequate record retention policies and procedures, OSDE was unable to locate and/or provide all the supporting documentation used by previous staff members to prepare the reports. Effect: The amount reported for the total ARP ESSER III subaward was understated by $16,860,480.93, and the amount reported for the total ARP ESSER III current year expenditures was understated by $5,290,848.62 Information being reported on the USDOE website is not accurate and/or complete. Data previously reported cannot be verified by current staff or other entities required to perform audits or reviews. Recommendation: We recommend OSDE develop and implement appropriate record retention policies and procedures to ensure records are maintained, especially during staff turnovers. We recommend OSDE develop and implement policies and procedures to ensure personnel have an adequate understanding of the requirements for the Annual Report and to ensure the amounts reported are correct. Views of Responsible Official(s) Contact Person: Tammy Smith, Senior Director of Federal Programs | Office of Title Services Anticipated Completion Date: March 2024 Corrective Action Planned: The Oklahoma State Department of Education agrees with the finding. See corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-059 (Partial Repeat 2022-049) STATE AGENCY: Oklahoma State Department of Education (OSDE) FEDERAL AGENCY: United States Department of Education (USDE) ALN: 84.425 – 84.425D, 84.425U; 84.425R FEDERAL PROGRAM NAME: Education Stabilization Fund (ESF) - Elementary and Secondary Schools Emergency Relief Fund (ESSER II); American Rescue Plan – Elementary and Secondary Schools Emergency Relief Fund (ARP ESSER III); Coronavirus Response and Relief Supplemental Appropriations Act, 2021 – Emergency Assistance To Non-Public Schools (CRRSA EANS) FEDERAL AWARD NUMBER: S425D210024; S425U210024 FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Reporting QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.303(a) – Internal Controls states in part, “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.” 2 CFR § 200.334 Record retention requirements states in part, “The recipient and subrecipient must retain all Federal award records for three years from the date of submission of their final financial report. For awards that are renewed quarterly or annually, the recipient and subrecipient must retain records for three years from the date of submission of their quarterly or annual financial report, respectively. Records to be retained include but are not limited to, financial records, supporting documentation, and statistical records. Federal agencies or pass-through entities may not impose any other record retention requirements except for the following: (a) The records must be retained until all litigation, claims, or audit findings involving the records have been resolved and final action taken if any litigation, claim, or audit is started before the expiration of the three-year period.” United States Department of Education website ESSER Annual Reporting states in part, “All grantees are required to report on ESSER funds received under the Coronavirus Aid, Relief, and Economic Security (CARES) Act; the Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act; and the American Rescue Plan (ARP) Act. Grantees must submit an annual report describing how the State and subrecipients used the awarded funds during the performance period. Similar to CARES Act Year 1 annual reporting, grantees will use the Annual Report Data Collection Tool to submit the State report.” Condition and Context: We were unable to verify compliance with several key line items on the ESSER I, ESSER II, ARP ESSER III, and CRRSA EANS SFY 22 Annual Reports submitted during the audit period due to a lack of supporting documentation (i.e., supporting data and questionnaires sent to LEAs/nonpublic schools to collect the FTE, Student Participation data, and expenditures by category and object code). These key line items include the following: • Line 3.b1 LEA expenditures by category, and object code for ESSER I, ESSER II and ARP ESSER III • Line 3.b10 Number of specific positions supported with ESSER Funds • Line 5.a Full Time Equivalent positions for ESSER I, ESSER II and ARP ESSER III • SEA obligations (including reimbursements) by allowable activity for CRRSA EANS • Other information for Non-public schools receiving services or assistance under CRRSA EANS While documenting controls over the Annual Report we noted one LEA with a subaward/allocation of $16,832,303.63 and re-allocation of $28,177.30 and SFY 22 current expenditures of $5,509,241.03 was not included on the ARP ESSER III Annual Report. While reviewing a sample of 62 of 1,275 LEA subaward allocations and total expenditures reported on the ESSER Annual Reports, we noted the following: • For 25 of 62 (40.32%) subawards tested, the SFY 22 allocations reported on the LEA’s Grant Management System (GMS) application was less than the amount reported on the ESSER II Annual Report, totaling $12,707.62. In addition, OSDE did not provide the supporting documentation for ESSER II re-allocations. Therefore, we were unable to verify whether the total allocation for these LEAs were reported correctly in the ESSER II Annual Report. • For three of 62 (4.84%) subawards tested, the SFY 22 current expenditures reported on the LEA’s GMS Closeout Report or Summary Expenditures reports were less than the amount reported on the ARP ESSER III Annual Report. OSDE was unable to provide support for the variances totaling $218,392.41. Cause: Due to staff turnover and inadequate record retention policies and procedures, OSDE was unable to locate and/or provide all the supporting documentation used by previous staff members to prepare the reports. Effect: The amount reported for the total ARP ESSER III subaward was understated by $16,860,480.93, and the amount reported for the total ARP ESSER III current year expenditures was understated by $5,290,848.62 Information being reported on the USDOE website is not accurate and/or complete. Data previously reported cannot be verified by current staff or other entities required to perform audits or reviews. Recommendation: We recommend OSDE develop and implement appropriate record retention policies and procedures to ensure records are maintained, especially during staff turnovers. We recommend OSDE develop and implement policies and procedures to ensure personnel have an adequate understanding of the requirements for the Annual Report and to ensure the amounts reported are correct. Views of Responsible Official(s) Contact Person: Tammy Smith, Senior Director of Federal Programs | Office of Title Services Anticipated Completion Date: March 2024 Corrective Action Planned: The Oklahoma State Department of Education agrees with the finding. See corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-059 (Partial Repeat 2022-049) STATE AGENCY: Oklahoma State Department of Education (OSDE) FEDERAL AGENCY: United States Department of Education (USDE) ALN: 84.425 – 84.425D, 84.425U; 84.425R FEDERAL PROGRAM NAME: Education Stabilization Fund (ESF) - Elementary and Secondary Schools Emergency Relief Fund (ESSER II); American Rescue Plan – Elementary and Secondary Schools Emergency Relief Fund (ARP ESSER III); Coronavirus Response and Relief Supplemental Appropriations Act, 2021 – Emergency Assistance To Non-Public Schools (CRRSA EANS) FEDERAL AWARD NUMBER: S425D210024; S425U210024 FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Reporting QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.303(a) – Internal Controls states in part, “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.” 2 CFR § 200.334 Record retention requirements states in part, “The recipient and subrecipient must retain all Federal award records for three years from the date of submission of their final financial report. For awards that are renewed quarterly or annually, the recipient and subrecipient must retain records for three years from the date of submission of their quarterly or annual financial report, respectively. Records to be retained include but are not limited to, financial records, supporting documentation, and statistical records. Federal agencies or pass-through entities may not impose any other record retention requirements except for the following: (a) The records must be retained until all litigation, claims, or audit findings involving the records have been resolved and final action taken if any litigation, claim, or audit is started before the expiration of the three-year period.” United States Department of Education website ESSER Annual Reporting states in part, “All grantees are required to report on ESSER funds received under the Coronavirus Aid, Relief, and Economic Security (CARES) Act; the Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act; and the American Rescue Plan (ARP) Act. Grantees must submit an annual report describing how the State and subrecipients used the awarded funds during the performance period. Similar to CARES Act Year 1 annual reporting, grantees will use the Annual Report Data Collection Tool to submit the State report.” Condition and Context: We were unable to verify compliance with several key line items on the ESSER I, ESSER II, ARP ESSER III, and CRRSA EANS SFY 22 Annual Reports submitted during the audit period due to a lack of supporting documentation (i.e., supporting data and questionnaires sent to LEAs/nonpublic schools to collect the FTE, Student Participation data, and expenditures by category and object code). These key line items include the following: • Line 3.b1 LEA expenditures by category, and object code for ESSER I, ESSER II and ARP ESSER III • Line 3.b10 Number of specific positions supported with ESSER Funds • Line 5.a Full Time Equivalent positions for ESSER I, ESSER II and ARP ESSER III • SEA obligations (including reimbursements) by allowable activity for CRRSA EANS • Other information for Non-public schools receiving services or assistance under CRRSA EANS While documenting controls over the Annual Report we noted one LEA with a subaward/allocation of $16,832,303.63 and re-allocation of $28,177.30 and SFY 22 current expenditures of $5,509,241.03 was not included on the ARP ESSER III Annual Report. While reviewing a sample of 62 of 1,275 LEA subaward allocations and total expenditures reported on the ESSER Annual Reports, we noted the following: • For 25 of 62 (40.32%) subawards tested, the SFY 22 allocations reported on the LEA’s Grant Management System (GMS) application was less than the amount reported on the ESSER II Annual Report, totaling $12,707.62. In addition, OSDE did not provide the supporting documentation for ESSER II re-allocations. Therefore, we were unable to verify whether the total allocation for these LEAs were reported correctly in the ESSER II Annual Report. • For three of 62 (4.84%) subawards tested, the SFY 22 current expenditures reported on the LEA’s GMS Closeout Report or Summary Expenditures reports were less than the amount reported on the ARP ESSER III Annual Report. OSDE was unable to provide support for the variances totaling $218,392.41. Cause: Due to staff turnover and inadequate record retention policies and procedures, OSDE was unable to locate and/or provide all the supporting documentation used by previous staff members to prepare the reports. Effect: The amount reported for the total ARP ESSER III subaward was understated by $16,860,480.93, and the amount reported for the total ARP ESSER III current year expenditures was understated by $5,290,848.62 Information being reported on the USDOE website is not accurate and/or complete. Data previously reported cannot be verified by current staff or other entities required to perform audits or reviews. Recommendation: We recommend OSDE develop and implement appropriate record retention policies and procedures to ensure records are maintained, especially during staff turnovers. We recommend OSDE develop and implement policies and procedures to ensure personnel have an adequate understanding of the requirements for the Annual Report and to ensure the amounts reported are correct. Views of Responsible Official(s) Contact Person: Tammy Smith, Senior Director of Federal Programs | Office of Title Services Anticipated Completion Date: March 2024 Corrective Action Planned: The Oklahoma State Department of Education agrees with the finding. See corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-059 (Partial Repeat 2022-049) STATE AGENCY: Oklahoma State Department of Education (OSDE) FEDERAL AGENCY: United States Department of Education (USDE) ALN: 84.425 – 84.425D, 84.425U; 84.425R FEDERAL PROGRAM NAME: Education Stabilization Fund (ESF) - Elementary and Secondary Schools Emergency Relief Fund (ESSER II); American Rescue Plan – Elementary and Secondary Schools Emergency Relief Fund (ARP ESSER III); Coronavirus Response and Relief Supplemental Appropriations Act, 2021 – Emergency Assistance To Non-Public Schools (CRRSA EANS) FEDERAL AWARD NUMBER: S425D210024; S425U210024 FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Reporting QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.303(a) – Internal Controls states in part, “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.” 2 CFR § 200.334 Record retention requirements states in part, “The recipient and subrecipient must retain all Federal award records for three years from the date of submission of their final financial report. For awards that are renewed quarterly or annually, the recipient and subrecipient must retain records for three years from the date of submission of their quarterly or annual financial report, respectively. Records to be retained include but are not limited to, financial records, supporting documentation, and statistical records. Federal agencies or pass-through entities may not impose any other record retention requirements except for the following: (a) The records must be retained until all litigation, claims, or audit findings involving the records have been resolved and final action taken if any litigation, claim, or audit is started before the expiration of the three-year period.” United States Department of Education website ESSER Annual Reporting states in part, “All grantees are required to report on ESSER funds received under the Coronavirus Aid, Relief, and Economic Security (CARES) Act; the Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act; and the American Rescue Plan (ARP) Act. Grantees must submit an annual report describing how the State and subrecipients used the awarded funds during the performance period. Similar to CARES Act Year 1 annual reporting, grantees will use the Annual Report Data Collection Tool to submit the State report.” Condition and Context: We were unable to verify compliance with several key line items on the ESSER I, ESSER II, ARP ESSER III, and CRRSA EANS SFY 22 Annual Reports submitted during the audit period due to a lack of supporting documentation (i.e., supporting data and questionnaires sent to LEAs/nonpublic schools to collect the FTE, Student Participation data, and expenditures by category and object code). These key line items include the following: • Line 3.b1 LEA expenditures by category, and object code for ESSER I, ESSER II and ARP ESSER III • Line 3.b10 Number of specific positions supported with ESSER Funds • Line 5.a Full Time Equivalent positions for ESSER I, ESSER II and ARP ESSER III • SEA obligations (including reimbursements) by allowable activity for CRRSA EANS • Other information for Non-public schools receiving services or assistance under CRRSA EANS While documenting controls over the Annual Report we noted one LEA with a subaward/allocation of $16,832,303.63 and re-allocation of $28,177.30 and SFY 22 current expenditures of $5,509,241.03 was not included on the ARP ESSER III Annual Report. While reviewing a sample of 62 of 1,275 LEA subaward allocations and total expenditures reported on the ESSER Annual Reports, we noted the following: • For 25 of 62 (40.32%) subawards tested, the SFY 22 allocations reported on the LEA’s Grant Management System (GMS) application was less than the amount reported on the ESSER II Annual Report, totaling $12,707.62. In addition, OSDE did not provide the supporting documentation for ESSER II re-allocations. Therefore, we were unable to verify whether the total allocation for these LEAs were reported correctly in the ESSER II Annual Report. • For three of 62 (4.84%) subawards tested, the SFY 22 current expenditures reported on the LEA’s GMS Closeout Report or Summary Expenditures reports were less than the amount reported on the ARP ESSER III Annual Report. OSDE was unable to provide support for the variances totaling $218,392.41. Cause: Due to staff turnover and inadequate record retention policies and procedures, OSDE was unable to locate and/or provide all the supporting documentation used by previous staff members to prepare the reports. Effect: The amount reported for the total ARP ESSER III subaward was understated by $16,860,480.93, and the amount reported for the total ARP ESSER III current year expenditures was understated by $5,290,848.62 Information being reported on the USDOE website is not accurate and/or complete. Data previously reported cannot be verified by current staff or other entities required to perform audits or reviews. Recommendation: We recommend OSDE develop and implement appropriate record retention policies and procedures to ensure records are maintained, especially during staff turnovers. We recommend OSDE develop and implement policies and procedures to ensure personnel have an adequate understanding of the requirements for the Annual Report and to ensure the amounts reported are correct. Views of Responsible Official(s) Contact Person: Tammy Smith, Senior Director of Federal Programs | Office of Title Services Anticipated Completion Date: March 2024 Corrective Action Planned: The Oklahoma State Department of Education agrees with the finding. See corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-059 (Partial Repeat 2022-049) STATE AGENCY: Oklahoma State Department of Education (OSDE) FEDERAL AGENCY: United States Department of Education (USDE) ALN: 84.425 – 84.425D, 84.425U; 84.425R FEDERAL PROGRAM NAME: Education Stabilization Fund (ESF) - Elementary and Secondary Schools Emergency Relief Fund (ESSER II); American Rescue Plan – Elementary and Secondary Schools Emergency Relief Fund (ARP ESSER III); Coronavirus Response and Relief Supplemental Appropriations Act, 2021 – Emergency Assistance To Non-Public Schools (CRRSA EANS) FEDERAL AWARD NUMBER: S425D210024; S425U210024 FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Reporting QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.303(a) – Internal Controls states in part, “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.” 2 CFR § 200.334 Record retention requirements states in part, “The recipient and subrecipient must retain all Federal award records for three years from the date of submission of their final financial report. For awards that are renewed quarterly or annually, the recipient and subrecipient must retain records for three years from the date of submission of their quarterly or annual financial report, respectively. Records to be retained include but are not limited to, financial records, supporting documentation, and statistical records. Federal agencies or pass-through entities may not impose any other record retention requirements except for the following: (a) The records must be retained until all litigation, claims, or audit findings involving the records have been resolved and final action taken if any litigation, claim, or audit is started before the expiration of the three-year period.” United States Department of Education website ESSER Annual Reporting states in part, “All grantees are required to report on ESSER funds received under the Coronavirus Aid, Relief, and Economic Security (CARES) Act; the Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act; and the American Rescue Plan (ARP) Act. Grantees must submit an annual report describing how the State and subrecipients used the awarded funds during the performance period. Similar to CARES Act Year 1 annual reporting, grantees will use the Annual Report Data Collection Tool to submit the State report.” Condition and Context: We were unable to verify compliance with several key line items on the ESSER I, ESSER II, ARP ESSER III, and CRRSA EANS SFY 22 Annual Reports submitted during the audit period due to a lack of supporting documentation (i.e., supporting data and questionnaires sent to LEAs/nonpublic schools to collect the FTE, Student Participation data, and expenditures by category and object code). These key line items include the following: • Line 3.b1 LEA expenditures by category, and object code for ESSER I, ESSER II and ARP ESSER III • Line 3.b10 Number of specific positions supported with ESSER Funds • Line 5.a Full Time Equivalent positions for ESSER I, ESSER II and ARP ESSER III • SEA obligations (including reimbursements) by allowable activity for CRRSA EANS • Other information for Non-public schools receiving services or assistance under CRRSA EANS While documenting controls over the Annual Report we noted one LEA with a subaward/allocation of $16,832,303.63 and re-allocation of $28,177.30 and SFY 22 current expenditures of $5,509,241.03 was not included on the ARP ESSER III Annual Report. While reviewing a sample of 62 of 1,275 LEA subaward allocations and total expenditures reported on the ESSER Annual Reports, we noted the following: • For 25 of 62 (40.32%) subawards tested, the SFY 22 allocations reported on the LEA’s Grant Management System (GMS) application was less than the amount reported on the ESSER II Annual Report, totaling $12,707.62. In addition, OSDE did not provide the supporting documentation for ESSER II re-allocations. Therefore, we were unable to verify whether the total allocation for these LEAs were reported correctly in the ESSER II Annual Report. • For three of 62 (4.84%) subawards tested, the SFY 22 current expenditures reported on the LEA’s GMS Closeout Report or Summary Expenditures reports were less than the amount reported on the ARP ESSER III Annual Report. OSDE was unable to provide support for the variances totaling $218,392.41. Cause: Due to staff turnover and inadequate record retention policies and procedures, OSDE was unable to locate and/or provide all the supporting documentation used by previous staff members to prepare the reports. Effect: The amount reported for the total ARP ESSER III subaward was understated by $16,860,480.93, and the amount reported for the total ARP ESSER III current year expenditures was understated by $5,290,848.62 Information being reported on the USDOE website is not accurate and/or complete. Data previously reported cannot be verified by current staff or other entities required to perform audits or reviews. Recommendation: We recommend OSDE develop and implement appropriate record retention policies and procedures to ensure records are maintained, especially during staff turnovers. We recommend OSDE develop and implement policies and procedures to ensure personnel have an adequate understanding of the requirements for the Annual Report and to ensure the amounts reported are correct. Views of Responsible Official(s) Contact Person: Tammy Smith, Senior Director of Federal Programs | Office of Title Services Anticipated Completion Date: March 2024 Corrective Action Planned: The Oklahoma State Department of Education agrees with the finding. See corrective action plan located in the corrective action plan section of this report.
FINDING NO: 2023-059 (Partial Repeat 2022-049) STATE AGENCY: Oklahoma State Department of Education (OSDE) FEDERAL AGENCY: United States Department of Education (USDE) ALN: 84.425 – 84.425D, 84.425U; 84.425R FEDERAL PROGRAM NAME: Education Stabilization Fund (ESF) - Elementary and Secondary Schools Emergency Relief Fund (ESSER II); American Rescue Plan – Elementary and Secondary Schools Emergency Relief Fund (ARP ESSER III); Coronavirus Response and Relief Supplemental Appropriations Act, 2021 – Emergency Assistance To Non-Public Schools (CRRSA EANS) FEDERAL AWARD NUMBER: S425D210024; S425U210024 FEDERAL AWARD YEAR: 2023 CONTROL CATEGORY: Reporting QUESTIONED COSTS: $0 Criteria: 2 CFR § 200.303(a) – Internal Controls states in part, “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.” 2 CFR § 200.334 Record retention requirements states in part, “The recipient and subrecipient must retain all Federal award records for three years from the date of submission of their final financial report. For awards that are renewed quarterly or annually, the recipient and subrecipient must retain records for three years from the date of submission of their quarterly or annual financial report, respectively. Records to be retained include but are not limited to, financial records, supporting documentation, and statistical records. Federal agencies or pass-through entities may not impose any other record retention requirements except for the following: (a) The records must be retained until all litigation, claims, or audit findings involving the records have been resolved and final action taken if any litigation, claim, or audit is started before the expiration of the three-year period.” United States Department of Education website ESSER Annual Reporting states in part, “All grantees are required to report on ESSER funds received under the Coronavirus Aid, Relief, and Economic Security (CARES) Act; the Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act; and the American Rescue Plan (ARP) Act. Grantees must submit an annual report describing how the State and subrecipients used the awarded funds during the performance period. Similar to CARES Act Year 1 annual reporting, grantees will use the Annual Report Data Collection Tool to submit the State report.” Condition and Context: We were unable to verify compliance with several key line items on the ESSER I, ESSER II, ARP ESSER III, and CRRSA EANS SFY 22 Annual Reports submitted during the audit period due to a lack of supporting documentation (i.e., supporting data and questionnaires sent to LEAs/nonpublic schools to collect the FTE, Student Participation data, and expenditures by category and object code). These key line items include the following: • Line 3.b1 LEA expenditures by category, and object code for ESSER I, ESSER II and ARP ESSER III • Line 3.b10 Number of specific positions supported with ESSER Funds • Line 5.a Full Time Equivalent positions for ESSER I, ESSER II and ARP ESSER III • SEA obligations (including reimbursements) by allowable activity for CRRSA EANS • Other information for Non-public schools receiving services or assistance under CRRSA EANS While documenting controls over the Annual Report we noted one LEA with a subaward/allocation of $16,832,303.63 and re-allocation of $28,177.30 and SFY 22 current expenditures of $5,509,241.03 was not included on the ARP ESSER III Annual Report. While reviewing a sample of 62 of 1,275 LEA subaward allocations and total expenditures reported on the ESSER Annual Reports, we noted the following: • For 25 of 62 (40.32%) subawards tested, the SFY 22 allocations reported on the LEA’s Grant Management System (GMS) application was less than the amount reported on the ESSER II Annual Report, totaling $12,707.62. In addition, OSDE did not provide the supporting documentation for ESSER II re-allocations. Therefore, we were unable to verify whether the total allocation for these LEAs were reported correctly in the ESSER II Annual Report. • For three of 62 (4.84%) subawards tested, the SFY 22 current expenditures reported on the LEA’s GMS Closeout Report or Summary Expenditures reports were less than the amount reported on the ARP ESSER III Annual Report. OSDE was unable to provide support for the variances totaling $218,392.41. Cause: Due to staff turnover and inadequate record retention policies and procedures, OSDE was unable to locate and/or provide all the supporting documentation used by previous staff members to prepare the reports. Effect: The amount reported for the total ARP ESSER III subaward was understated by $16,860,480.93, and the amount reported for the total ARP ESSER III current year expenditures was understated by $5,290,848.62 Information being reported on the USDOE website is not accurate and/or complete. Data previously reported cannot be verified by current staff or other entities required to perform audits or reviews. Recommendation: We recommend OSDE develop and implement appropriate record retention policies and procedures to ensure records are maintained, especially during staff turnovers. We recommend OSDE develop and implement policies and procedures to ensure personnel have an adequate understanding of the requirements for the Annual Report and to ensure the amounts reported are correct. Views of Responsible Official(s) Contact Person: Tammy Smith, Senior Director of Federal Programs | Office of Title Services Anticipated Completion Date: March 2024 Corrective Action Planned: The Oklahoma State Department of Education agrees with the finding. See corrective action plan located in the corrective action plan section of this report.
2023-007 – Internal Control over Reporting Requirements Identification of the Federal Program: Assistance Listing Number: 14.218 Assistance Listing Title: Community Development Block Grants-Entitlement Grants Cluster Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Entity: County of San Bernadino Community Development and Housing Federal Award Identification Number: ADEL-22-1-03K/0175, ADEL-21-1-05M/5262, ADEL-23-2-05Z/3679 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): In accordance with 2 CFR 200.415 Required Certifications, Subrecipients under the Federal award must certify to the pass-through entity whenever applying for funds, requesting payment, and submitting financial reports. A signature by the responsible official serves as evidence that the reimbursement request has been reviewed and approved in compliance with these requirements. As a subrecipient, the City receives funding on a reimbursement basis. The City prepares the reimbursement package, including all the required supporting documentation. Prior to the submission to the County, the package must be reviewed and approved by the responsible official as evidenced by the signature on the reimbursement request form. Further, pursuant to 2 CFR 200.334 Record retention requirements, the recipient and subrecipient must retain all Federal award records for three years from the date of submission of their final financial report. For awards that are renewed quarterly or annually, the recipient and subrecipient must retain records for three years from the date of submission of their quarterly or annual financial report, respectively. Records to be retained include but are not limited to, financial records, supporting documentation, and statistical records. Condition: During our audit, we noted that one of the reimbursement request forms was submitted to the County without proper signature and certification from the City’s responsible official. Cause: The City does not have adequate internal controls to ensure that reimbursement packages are reviewed and approved by the responsible official prior to submission. Effect or Potential Effect: The absence of certification resulted in noncompliance with the compliance requirement. Questioned Costs: None. Context: See condition above for the context of the finding. Identification as a Repeat Finding, If Applicable: Not applicable. Recommendation: We recommended the City establish internal control procedures to ensure that all reimbursement requests are reviewed and approved by an authorized official prior to submission. Views of Responsible Officials: Management concurs the finding.
2023-008 – Special Tests and Revisions – Internal Control and Compliance over Wage Rate Requirements Identification of the Federal Program: Assistance Listing Number: 14.218 Assistance Listing Title: Community Development Block Grants-Entitlement Grants Cluster Federal Agency: U.S. Department of Housing and Urban Development Pass-Through Entity: County of San Bernadino Community Development and Housing Federal Award Identification Number: ADEL-20-1-03K/0222, ADEL-21-1-03K/0235, and ADEL-22-1-03K/0175 Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation): Pursuant to 2 CFR 200.334 Record Retention Requirements, the recipient and subrecipient must retain all Federal award records for three years from the date of submission of their final financial report. Further, in accordance with the 2 CFR 200.303 Internal Controls, the recipient and subrecipient must also establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Programs subject to wage-rate rules (e.g., Davis-Bacon Act or program-specific requirements) must maintain weekly certified payrolls and supporting documentation for all working weeks to demonstrate compliance with prevailing wage requirements. Condition: For the fiscal year ended June 30, 2023, the City was unable to provide a complete listing of construction working weeks. The City provided only ten (10) documents supporting wage-rate compliance testing, representing ten (10) working weeks. However, during the audit, we noted that the reimbursement requests submitted by the City covered the period of July 1, 2022 through April 30, 2023, indicating that the documentation provided did not represent the full population of construction activity for the fiscal year. As a result, the auditor was unable to obtain sufficient documentation to determine whether wage-rate requirements were met for all applicable working weeks. Cause: The City did not have adequate internal controls to ensure that documentation for all construction working weeks was tracked, retained, and made available for audit. Effect or Potential Effect: Due to the insufficient documentation provided, the auditor could not determine whether the City complied with wage rate requirements for the fiscal year. Hence, resulted in non-compliance with wage rate documentation requirements, and internal control deficiency related to retention requirements and compliance monitoring. Questioned Costs: None. Context: See condition above for the context of the finding. Identification as a Repeat Finding, If Applicable: Not applicable. Recommendation: We recommend the City enhance its internal control by implementing policies and procedures to track wage rate requirements compliance, and ensure that all certified payrolls and supporting wage-rate documentation are retained. Views of Responsible Officials: Management concurs with the finding.
Finding 2023-007: Document Retention – Material Weakness Information on the federal program: Federal program is Crime Victim Assistance from the U.S. Department of Justice passed through the Criminal Justice Information Authority. Criteria: Under 2 CFR 200.334, non-federal entities must retain financial and programmatic records, supporting documentation, statistical records, and all other records pertinent to a federal award for the required retention period. Records must be maintained in a manner that allows them to be readily accessible for audit and monitoring purposes. Effective internal controls include maintaining complete, organized, and retrievable documentation to support financial reporting and compliance. Condition: The Organization does not have an effective document retention process or internal controls to ensure that key financial records are consistently preserved, organized, and readily retrievable. Supporting documentation such as invoices, contracts, reconciliations, journal entry support, and grant documentation was frequently incomplete, missing, or delayed in being provided. These gaps resulted in incomplete audit trails and limited management’s ability to demonstrate the completeness, accuracy, and validity of financial information. Cause: The Organization has not designed, implemented, or maintained adequate document retention procedures, nor assigned responsibility to ensure consistent storage, organization, and retrieval of supporting financial documentation. Effect: Without complete and accessible supporting documentation, the Organization cannot substantiate recorded amounts, validate the occurrence or completeness of transactions, or demonstrate the functioning of key internal controls. This increases the risk that material misstatements in the financial statements or noncompliance with federal requirements may not be prevented or detected in a timely manner. Questioned Costs: $29,414 Context: During the audit, we requested various supporting documents needed to verify financial transactions, account balances, and management representations for the period under audit. In multiple instances, the Organization was unable to locate or provide the requested documentation in a timely manner. These difficulties occurred across several financial areas, including invoices, reconciliations, journal entry support, grant-related documentation, and valuation records, indicating that document retention challenges were pervasive rather than isolated to one type of record. Identification as a Repeat Finding: This is not a repeat finding. Recommendation: We recommend that management implement a comprehensive document retention and recordkeeping policy that establishes standardized retention requirements for all key financial documentation, including invoices, contracts, reconciliations, journal entries, and grant support. Management should develop procedures for centralized and secure storage, either physical or electronic, to ensure records are properly preserved and readily accessible. Additionally, periodic monitoring should be performed to confirm compliance with retention procedures, and staff should receive training to reinforce expectations regarding documentation maintenance and timely retrieval. Views of responsible officials and planned corrective actions: Subsequent to this grant commencing, the Organization hired a new grant and partnership specialist. This specialist attaches all relevant support for expenditure to the internal monthly grant reporting and ensures that all expenditures are fully supported by appropriate detail. This detail is on a shared drive with finance and is reviewed by the vice president of finance.
FINDING 2023-004 Subject: Title I Grants to Local Educational Agencies - Allowable Costs/Cost Principles Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listings Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A200014, S010A210014, S010A220014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Cost Principles Audit Findings: Material Weakness, Other Matters Repeat Findings This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-003. Condition and Context Costs charged to grant funds must be adequately documented. To adequately document payroll expenses charged to the grant fund, contracts or other documentation supporting the employees' approved rates of pay are necessary. The School Corporation utilized a financial software system that has two different sides, an employee portal side and an administrator side. Employee contracts are approved by the employee, the Superintendent of Schools, and the President of the School Board within the system on the employee portal side. Once approved, the data in the employee portal side is fed into a process in the administrator side. The School Corporation could not provide contracts or approved payroll rates for 6 out of 24 employees tested. As such, we could not verify the employees were paid its correct rates for hours spent working on grant related activities. This resulted in known questioned costs of $149,870. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 24 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.334 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for the Federal awards that are renewed quarterly or annual, from the date of submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." 2 CFR 200.430(i) states in part: "Standards for documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities (for IHE, this per the IHE's definition of IBS); . . . (vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. . . ." INDIANA STATE BOARD OF ACCOUNTS 25 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause The School Corporation did not maintain or provide adequate documentation to support payroll expenses charged to the grant fund. While employee contracts are approved within the financial software system, the process lacked sufficient oversight and record retention practices to ensure that approved pay rates were accessible and verifiable. Effect Without access to approved contracts or documentation verifying payroll rates for 6 of the 24 employees tested, the School Corporation could not demonstrate that payroll costs charged to the grant were accurate and allowable. This lack of documentation resulted in known questioned costs totaling $149,870. Additionally, the absence of reliable records increases the risk of noncompliance with federal grant requirements and necessitates expanded audit procedures, which will likely lead to higher audit costs. Questioned Costs Questioned costs in the amount of $149,870 were identified as described in the Condition and Context. Recommendation The School Corporation should establish and enforce formal documentation procedures to verify payroll rates for all employees whose compensation is charged to federal grants. This includes maintaining approved contracts, salary schedules, and supporting records that clearly demonstrate the accuracy and allowability of payroll costs. A review and approval process by a second knowledgeable party should be implemented to ensure compliance prior to submission. Additionally, the School Corporation should provide necessary support and resources for staff involved in payroll and grant management to strengthen recordkeeping practices. These measures will reduce the risk of noncompliance, minimize questioned costs, and help control future audit expenses. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-006 Subject: Title I Grants to Local Educational Agencies - Reporting Federal Agency: Department of Education Federal Program: Title I Grants to Local Educational Agencies Assistance Listings Number: 84.010 Federal Award Numbers and Years (or Other Identifying Numbers): S010A200014, S010A210014, S010A220014 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-004. Condition and Context The School Corporation was required to submit reimbursement requests and final expenditure reports that included, among other data, both current and prior period expenditures. However, the required reports for federal awards did not capture all activity for the reporting period and were not supported by the School Corporation's records. Reimbursement Requests The School Corporation uses reimbursement requests to claim allowable expenses paid from Title I funds. These requests must be based on and supported by transactions recorded within the School Corporation's Title I accounts. Summary-level reports were generated from the School Corporation's financial system by the Director of Federal Grants for the reimbursement period and attached to the reimbursement request. While reimbursement requests were to be prepared by the Director of Federal Grants and reviewed by the Title I Director or Title I Budget Supervisor, no evidence of this review or oversight process was available. Of the four reimbursement requests selected for testing, three could not be verified against either the summary-level detail attached to the request or a detailed transaction listing. Because the amounts requested for reimbursement could not be traced to underlying records or to reports that accumulated or summarized the data, the accuracy and completeness of the reimbursement requests could not be verified. Final Expenditure Reports Final expenditure reports were expected to be prepared by the Director of Federal Grants using year-to-date expenditure data and reviewed by either the Director of Internal Audit or the Title I Budget Supervisor. However, no evidence was available to show that this review or oversight process took place. The lack of internal controls and noncompliance were systemic issues throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 29 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.334 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for the Federal awards that are renewed quarterly or annual, from the date of submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following: . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . . (3) Records that identify adequately the source and application of funds for federally funded activities. These records must contain information pertaining to Federal awards, authorizations, financial obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." Cause The School Corporation did not design or implement an effective internal control system to ensure the accuracy and compliance of reimbursement and final expenditure reporting processes. Specifically, the School Corporation did not have established procedures requiring the retention of detailed supporting documentation for reimbursement requests, and oversight responsibilities were not consistently carried out or evidenced over the reimbursement requests and final expenditure reports. Additionally, the employee responsible for preparing reimbursement requests during the audit period did not maintain the required documentation, and no secondary review process was in place to detect or correct these deficiencies. INDIANA STATE BOARD OF ACCOUNTS 30 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Effect Because the School Corporation did not retain detailed documentation to support reimbursement requests or provide evidence of the required review of final expenditure reports, the audit team could not verify the accuracy, allowability, or completeness of expenditures charged to the grant. These gaps in documentation increased the audit time and administrative burden, as additional testing and follow-up were necessary to address missing records. As a result, the risk of misreporting, misallocation of federal funds, and potential violations of grant requirements were significantly heightened. Questioned Costs There were no questioned costs identified. Recommendation The School Corporation should establish and implement a formal internal control system to ensure accurate financial reporting and compliance with federal grant requirements. This system should include documented review procedures, clear segregation of duties, and consistent oversight of reimbursement requests and expenditure reports. All financial submissions should be supported by verifiable documentation and reconciled with internal records prior to submission. Additionally, the School Corporation should provide necessary support and resources to staff responsible for ensuring grant compliance. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-009 Subject: COVID-19 - Education Stabilization Fund - Allowable Costs/Costs Principles Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U, 84.425C, 84.425W Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425D210013, S425U210013, S425C200018, S425W210015 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Allowable Costs/Costs Principles Audit Findings: Material Weakness, Other Matters Condition and Context The COVID-19 - Education Stabilization Fund established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, and further funded by the Coronavirus Response and Relief Supplemental Appropriations Act (CRSSA) and the American Rescue Plan (ARP) Act, was for the purpose of preventing, preparing for, or responding to the novel coronavirus. Based on information obtained during the audit, the scope of testing was expanded to include additional transactions in order to assess compliance with federal grant requirements. The expanded testing was necessary to obtain sufficient evidence regarding the allowability and documentation of grant expenditures. The following issues were noted during testing: Vendor Disbursements The School Corporation was unable to provide supporting documentation for three vendors tested: Mamas Against Violence, LTIA, and Kingdom Life. Although Memorandums of Understanding (MOUs) were initiated by the Treasurer, no evidence was provided to demonstrate that the MOUs were reviewed or approved by the School Board at the time of execution. Information provided was based on documentation generated by the School Corporation, including purchase orders, handwritten vendor claim forms, and copies of check payments. However, no itemized vendor invoices were submitted to substantiate the services provided or the payments made, nor to detail the nature of the services rendered. In addition, the School Corporation was unable to provide supporting documentation to verify student participation or substantiate any of the reported metrics associated with the MOU agreements. Payroll Records Out of ten additional payroll transactions tested, three employee pay rates could not be verified. One employee's pay rate did not agree with the salary ordinance, and the School Corporation was unable to provide documentation confirming School Board approval of the rate. The second employee's compensation could not be traced to specific work performed, as neither an hourly rate nor the number of hours worked was documented. The third employee's authorized salary was $30 per hour; however, the issued paycheck reflected $20 per hour. These issues combined resulted in known questioned costs of $38,400. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: INDIANA STATE BOARD OF ACCOUNTS 35 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.334 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for the Federal awards that are renewed quarterly or annual, from the date of submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." 2 CFR 200.403 states in part: "Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. . . . (g) Be adequately documented. . . ." 2 CFR 200.430(i) states in part: "Standards for documentation of Personnel Expenses (1) Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities (for IHE, this per the IHE's definition of IBS); . . . (vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. . . ." INDIANA STATE BOARD OF ACCOUNTS 36 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Cause The School Corporation demonstrated weaknesses in documentation and compliance practices. Vendor contracts and payments lacked adequate supporting records, including evidence of the School Board approval for MOUs and itemized invoices. The School Board approved pay rates, hours worked, and reconciliation of authorized salaries to amounts paid, limiting the ability to verify the accuracy and appropriateness of expenditures. Effect Without proper documentation, the allowability of grant expenditures cannot be substantiated, creating a risk that unallowable costs may be charged to the federal grant. In addition, incomplete payroll records prevent verification of compensation, heightening the risk of inaccurate payments, unsupported variances, and potential misuse of federal funds. Questioned Costs Questioned costs in the amount of $38,400 were identified as described in the Condition and Context. Recommendation To address these deficiencies, the School Corporation should strengthen documentation practices by ensuring all vendor contracts, MOUs, and invoices are properly reviewed, approved by the School Board, and retained. Payroll internal controls should be improved by reconciling authorized salary ordinances to actual pay rates, documenting hours worked, and retaining evidence of the School Board approval for all compensation. In addition, periodic monitoring and internal reviews should be implemented to verify adherence to federal grant requirements and School Corporation policies, thereby reducing the risk of noncompliance and enhancing accountability. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2023-010 Subject: COVID-19 - Education Stabilization Fund - Reporting Federal Agency: Department of Education Federal Program: COVID-19 - Education Stabilization Fund Assistance Listings Numbers: 84.425D, 84.425U, 84.425C, 84.425W Federal Award Numbers and Years (or Other Identifying Numbers): S425D200013, S425D210013, S425U210013, S425C200018, S425W210015 Pass-Through Entity: Indiana Department of Education Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2022-007. INDIANA STATE BOARD OF ACCOUNTS 37 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Condition and Context The School Corporation was required to submit an annual data report to the Indiana Department of Education (IDOE) 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 one ESSER I report, one ESSER II report, and one ESSER III report, for a total of three reports. An effective internal control system was not in place at the School Corporation to ensure these reports were accurate. As such, the annual data reports were prepared and submitted to the IDOE without an oversight or review process to prevent or detect and correct errors. All three reports submitted during the audit period were not supported by the School Corporation's records. The following errors were identified: The ESSER I, Year 3 report, which had an applicable reporting period of July 1, 2021 to June 30, 2022, reported $1,526,046 in expenditures. However, actual expenditures for the applicable reporting period totaled $1,601,347. The ESSER II, Year 2 report, which had an applicable reporting period of July 1, 2021 to June 30, 2022, reported $10,293,210 in expenditures. However, actual expenditures for the applicable reporting period totaled $9,750,555. The ESSER III, Year 2 report, which had an applicable reporting period of July 1, 2021 to June 30, 2022, reported $15,939,167 in expenditures. However, actual expenditures for the applicable reporting period totaled $17,220,521. During the audit period, the School Corporation also received eight total reimbursements related to the COVID-19 - Education Stabilization Fund grant. The School Corporation received two GEER reimbursements, two ESSER I reimbursements, two ESSER II reimbursements, two ESSER III reimbursements, and 2 ARP HCY reimbursements. All reimbursement request forms were tested against the School Corporations records for accuracy. Of the eight reimbursements requested, six forms tested were not supported by the School Corporation's records. The following errors were identified: GEER reimbursement requests forms were overstated by $3,580 compared to the School Corporation's records. ESSER I reimbursement request forms were $860,284 overstated compared to the School Corporation's records. ESSER II reimbursement request forms were overstated by $221,808 compared to the School Corporation's records. ESSER III reimbursement request forms were understated by $220,484 compared to the School Corporation's records. The lack of internal controls and noncompliance were systemic issues throughout the audit period. INDIANA STATE BOARD OF ACCOUNTS 38 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.334 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for the Federal awards that are renewed quarterly or annual, from the date of submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." 2 CFR 200.302(b) states in part: "The financial management system of each non-Federal entity must provide for the following. . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in §§ 200.328 and 200.329. . . ." 34 CFR 76.722 states: "A State may require a subgrantee to submit reports in a manner and format that assists the State in complying with the requirements under 34 CFR 76.720 and in carrying out other responsibilities under the program." Cause The School Corporation did not establish or implement a properly designed internal control system, including appropriate segregation of duties, to ensure the accuracy and reliability of financial data submitted to the IDOE. The absence of formal review procedures, oversight mechanisms, and reconciliation processes resulted in the submission of materially misstated annual data reports and reimbursement requests. Contributing factors included inadequate staff training on federal reporting requirements, the lack of documented financial reporting policies, and insufficient allocation of resources to monitor compliance with grant guidelines. Effect As a result, the annual data reports submitted to the IDOE via JotForm were materially misstated and lacked proper support from the School Corporation's financial records. Additionally, six out of eight reimbursement request forms tested during the audit period were either overstated or understated, reflecting inconsistent and inaccurate financial reporting tied to federal grant activity. These systemic errors represent significant noncompliance and undermine the reliability of reporting used for state and federal oversight. INDIANA STATE BOARD OF ACCOUNTS 39 SOUTH BEND COMMUNITY SCHOOL CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) Questioned Costs There were no questioned costs identified Recommendation The School Corporation should strengthen its financial reporting processes related to federal grant activity by implementing a formal internal control system that ensures accuracy, consistency, and proper documentation. This includes reconciling financial records with data submitted through JotForm, establishing review procedures for reimbursement requests, and assigning qualified personnel to verify all reports prior to submission. Staff responsible for grant management and financial reporting should receive necessary support and resources regarding federal documentation standards and reporting requirements. The School Corporation should adopt standardized documentation policies and procedures across all departments to ensure compliance and oversight. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-003 Subject: CDBG - Entitlement Grants Cluster - Reporting Federal Agency: Department of Housing and Urban Development Federal Program: Community Development Block Grants/Entitlement Grants Assistance Listings Number: 14.218 Federal Award Numbers and Years (or Other Identifying Numbers): B-20-MC-0010, B-21-MC-18-0010, B-22-MC-18-0010, M-20-MW-18-0010 Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2021-003. Condition and Context The City 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. Recipients are required to submit financial, performance, and special reports annually or quarterly depending on the specifics of their CDBG - Entitlement Grant. Financial reports are entered into the Integrated Disbursement and Information System (IDIS). Grantees may include reports generated by the IDIS as part of their annual performance and evaluation reports that must be submitted 90 days after the end of the grantee's program year. Information to be tested from the IDIS is in the following system-generated reports: PR-26 - CDBG Financial Summary Report, PR26 - CDBG-CV Financial Summary Report, PR-26 CDBG Activity Summary by Selected Grant, PR-29 CDBG Cash on Hand Quarterly Reporting, and the PR-29 CDBG-CV Cash on Hand Quarterly Report. In addition, under the Federal Funding Accountability and Transparency Act (FFATA) grantees are required to report first-tier subawards of $30,000 or more to the FFATA Subaward System. The City, based on the grants received, was required to submit the following reports during the audit period: the PR-29 CDBG Cash on Hand Quarterly Report, the PR-26 CDBG Financial Summary Report, and the FFATA reports. PR-29 CDBG CV Cash on Hand Reporting The City submitted the four required quarterly reports; however, a single employee prepared and submitted the reports without a review or oversight process in place to prevent, or detect and correct, errors. Federal Funding and Transparency Act (FFATA) Reporting The City submitted the two required FFATA reports for the two subaward recipients that received over $30,000. Although the reports were prepared by one individual and approved by another, the internal control was not effective and did not detect and allow correction of errors prior to submission. Due to the lack of effective internal controls the following key data elements were missing: Subawardee DUNS number, Subaward obligation/action date, and the date of report submission (report submitted timely). The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.334 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." 2 CFR 170, Appendix A(I)(a) states in part: "Reporting of first-tier subawards. Applicability. Unless you are exempt as provided in paragraph d. of this award term, you must report each action that equals or exceeds $30,000 in Federal funds for a subaward to a non- Federal entity or Federal agency . . . 2. Where and when to report. i. The non-Federal entity or Federal agency must report each obligating action described in paragraph a.1. of this award term to http://www.fsrs.gov. ii. For subaward information, report no later than the end of the month following the month in which the obligation was made. (For example, if the obligation was made on November 7, 2010, the obligation must be reported by no later than December 31, 2010.) 3. What to report. You must report the information about each obligating action that the submission instructions posted at http://www.fsrs.gov specify . . ." Cause A proper system of internal controls was not designed by management of the City, 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 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 design or implementation of the components of a system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, reports were not filed timely with all required key line items. 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 establish a proper system of internal controls, including strengthening their policies and procedures to ensure all required reports are filed and all required information is provided and supported by the City's records in a timely manner. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-003 Subject: Medicaid Cluster - Reporting Federal Agency: Department of Health and Human Services Federal Program: Medical Assistance Program Assistance Listings Number: 93.778 Federal Award Number and Year (or Other Identifying Number): FY2022 Pass-Through Entity: Indiana Family and Social Services Administration Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Condition and Context The Township 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, material noncompliance related to expenditures made from the Medicaid Cluster. The Medicaid Cluster consists of three federal programs. However, the Township received funding from only one program, the Medicaid Assistance Program. The Medicaid Assistance Program grant funding is provided by the Indiana Family and Social Services Administration (FSSA) to Freestanding Governmental Ambulance Providers, such as the Township, based on a Cost Report for funding. The Cost Report for funding utilizes all costs associated with the operation of the Township's ambulance program in conjunction with other metrics such as ambulance runs, total charges, and Medicaid charges to determine the federal ambulance payment adjustment, the amount received by the Township. The Township utilized its Fire Operations fund to account for both fire and ambulance services. Costs were allocated between fire and ambulance services as necessary. Expenditures related to ambulance services were included in the Township's Cost Report to determine the reimbursement due to the Township. The funding received during the audit period was based on expenditures and data from January 1, 2019 to December 31, 2019, and as such, internal controls for that period were reviewed. The Cost Report for the Medicaid Program was prepared by the Township's contracted CPA firm using information provided by the Township. The Township provided reports detailing run data, expenditures, and charges (both Medicaid and non-Medicaid) to the CPA firm. The CPA firm prepared the report and submitted it to the Indiana FSSA. The Township did not participate in the preparation or submission process, nor complete a review of the report prior to submission. As such, the Township could not ensure that the information provided was properly utilized or that the report was accurate. Additionally, for five of the seven key line items tested, the Township could not provide supporting documentation. The lack of supporting documentation for Ambulance Runs, Fire Runs, EMT Salaries, Fire Salaries, and Total Ambulance Cost on the 2019 Cost Report prevented the determination of the accuracy of these line items. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.334 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. Federal awarding agencies and pass-through entities must not impose any other record retention requirements upon non-Federal entities. . . ." Cause A proper system of internal controls over the Medicaid Cluster expenditures was not designed by management of the Township, which would include segregation of key functions to ensure the Medicaid Cluster funds were appropriately reported. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the Township'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, 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. 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 Township. In addition, not supporting key line items increases the likelihood that information is not accurate and properly reported to FSSA and the public. 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 that would provide segregation of duties for the preparation of the Cost Report for Reimbursement for the Medicaid Cluster awards. Additionally, policies and procedures should be implemented to ensure appropriate reviews, approvals, and oversight are taking place. 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) - 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.
2022-003 Filing system and document retention. CURRENT CONDITION: The Housing Authority of the City of Greeley was unable to efficiently locate documents for the audit. CFDA#: 14.850, 14.871 CRITERIA: 24 CFR section 200.334 requires the retention of supporting documentation. CAUSE: The Authority did not have procedures or controls in place to systematically file information. EFFECT: Documents could not be located in a timely fashion. RECOMMENDATION: The Authority should standardize procedures and employee responsibilities. VIEWS OF RESPONSIBLE OFFICIALS: We will comply with the Auditor?s recommendation. DISCUSSED WITH: Tom Teixeira, September 15, 2022
FINDING 2022-001 DOCUMENT RETENTION SIGNIFICANT DEFICIENCY Federal Program: Child Care Development Block Grant Assistance Listing Number: 93.575 Criteria Per 7 CFR 200.334, ?Financial records, supporting documents, statistical records, and all other non- Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.? Condition Salary expenses were included in the administrative costs applied to the program. Employees were to be applied to the program based on percentages set in the grant budget. IAN did not maintain documentation to support the amounts for each employee applied to the program during the year. Total payroll costs were provided for these employees. It was determined that total salary expenses applied to the grant were within the budget allotment, and no questioned costs were identified. Cause IAN did not maintain documentation to show amounts applied to the program by individual employees. Effect We were unable to see how much of each employee?s salary was specifically applied to the grant. Recommendation We recommend IAN develop internal controls requiring the maintenance of documentation to support employee allocations to federal programs. Views of Responsible Officials The School?s Corrective Action Plan is included on page 25.
#2022-011 - Major Federal Award Finding - Document Retention Nature of Finding: Compliance Finding - Uniform Guidance Administrative Requirements and Material Weakness in Internal Controls Over Compliance Criteria/Condition: Federal regulations 2 CFR 200.334 provides that a non-federal entity must retain all records pertinent to a federal award for a minimum period of three years from the date of submission of the annual financial report. We noted during testing that records were not consistently being maintained. Cause/Context: For 2 of the 40 expenditures selected for testing, the Organization was unable to provide appropriate invoice documentation supporting the amount charged to the grant. Effect: Federal expenditures could be charged to the grant at incorrect amounts or for unallowable costs. Recommendation: We recommend the Organization implement a document retention policy that is consistent with the federal document retention requirements. Views of Responsible Officials and Planned Corrective Actions: MARR will retain a CPA consultant to implement a document retention policy that is consistent with federal document retention requirements.
#2022-011 - Major Federal Award Finding - Document Retention Nature of Finding: Compliance Finding - Uniform Guidance Administrative Requirements and Material Weakness in Internal Controls Over Compliance Criteria/Condition: Federal regulations 2 CFR 200.334 provides that a non-federal entity must retain all records pertinent to a federal award for a minimum period of three years from the date of submission of the annual financial report. We noted during testing that records were not consistently being maintained. Cause/Context: For 2 of the 40 expenditures selected for testing, the Organization was unable to provide appropriate invoice documentation supporting the amount charged to the grant. Effect: Federal expenditures could be charged to the grant at incorrect amounts or for unallowable costs. Recommendation: We recommend the Organization implement a document retention policy that is consistent with the federal document retention requirements. Views of Responsible Officials and Planned Corrective Actions: MARR will retain a CPA consultant to implement a document retention policy that is consistent with federal document retention requirements.
FINDING 2022-003 Subject: CDBG - Entitlement Grants Cluster - Reporting Federal Agency: Department of Housing and Urban Development Federal Program: Community Development Block Grants/Entitlement Grants Assistance Listings Number: 14.218 Federal Award Numbers and Years (or Other Identifying Numbers): B-20-MC-0010, B-21-MC-18-0010, B-22-MC-18-0010, M-20-MW-18-0010 Compliance Requirement: Reporting Audit Findings: Material Weakness, Other Matters Repeat Finding This is a repeat finding from the immediately prior audit report. The prior audit finding number was 2021-003. Condition and Context The City 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. Recipients are required to submit financial, performance, and special reports annually or quarterly depending on the specifics of their CDBG - Entitlement Grant. Financial reports are entered into the Integrated Disbursement and Information System (IDIS). Grantees may include reports generated by the IDIS as part of their annual performance and evaluation reports that must be submitted 90 days after the end of the grantee's program year. Information to be tested from the IDIS is in the following system-generated reports: PR-26 - CDBG Financial Summary Report, PR26 - CDBG-CV Financial Summary Report, PR-26 CDBG Activity Summary by Selected Grant, PR-29 CDBG Cash on Hand Quarterly Reporting, and the PR-29 CDBG-CV Cash on Hand Quarterly Report. In addition, under the Federal Funding Accountability and Transparency Act (FFATA) grantees are required to report first-tier subawards of $30,000 or more to the FFATA Subaward System. The City, based on the grants received, was required to submit the following reports during the audit period: the PR-29 CDBG Cash on Hand Quarterly Report, the PR-26 CDBG Financial Summary Report, and the FFATA reports. PR-29 CDBG CV Cash on Hand Reporting The City submitted the four required quarterly reports; however, a single employee prepared and submitted the reports without a review or oversight process in place to prevent, or detect and correct, errors. Federal Funding and Transparency Act (FFATA) Reporting The City submitted the two required FFATA reports for the two subaward recipients that received over $30,000. Although the reports were prepared by one individual and approved by another, the internal control was not effective and did not detect and allow correction of errors prior to submission. Due to the lack of effective internal controls the following key data elements were missing: Subawardee DUNS number, Subaward obligation/action date, and the date of report submission (report submitted timely). The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.334 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. . . ." 2 CFR 170, Appendix A(I)(a) states in part: "Reporting of first-tier subawards. Applicability. Unless you are exempt as provided in paragraph d. of this award term, you must report each action that equals or exceeds $30,000 in Federal funds for a subaward to a non- Federal entity or Federal agency . . . 2. Where and when to report. i. The non-Federal entity or Federal agency must report each obligating action described in paragraph a.1. of this award term to http://www.fsrs.gov. ii. For subaward information, report no later than the end of the month following the month in which the obligation was made. (For example, if the obligation was made on November 7, 2010, the obligation must be reported by no later than December 31, 2010.) 3. What to report. You must report the information about each obligating action that the submission instructions posted at http://www.fsrs.gov specify . . ." Cause A proper system of internal controls was not designed by management of the City, 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 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 design or implementation of the components of a system of internal controls, including policies and procedures that provide segregation of duties and additional oversight as needed, the internal control system cannot be capable of effectively preventing, or detecting and correcting, material noncompliance. As a result, reports were not filed timely with all required key line items. 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 establish a proper system of internal controls, including strengthening their policies and procedures to ensure all required reports are filed and all required information is provided and supported by the City's records in a timely manner. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.
FINDING 2022-003 Subject: Medicaid Cluster - Reporting Federal Agency: Department of Health and Human Services Federal Program: Medical Assistance Program Assistance Listings Number: 93.778 Federal Award Number and Year (or Other Identifying Number): FY2022 Pass-Through Entity: Indiana Family and Social Services Administration Compliance Requirement: Reporting Audit Findings: Material Weakness, Modified Opinion Condition and Context The Township 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, material noncompliance related to expenditures made from the Medicaid Cluster. The Medicaid Cluster consists of three federal programs. However, the Township received funding from only one program, the Medicaid Assistance Program. The Medicaid Assistance Program grant funding is provided by the Indiana Family and Social Services Administration (FSSA) to Freestanding Governmental Ambulance Providers, such as the Township, based on a Cost Report for funding. The Cost Report for funding utilizes all costs associated with the operation of the Township's ambulance program in conjunction with other metrics such as ambulance runs, total charges, and Medicaid charges to determine the federal ambulance payment adjustment, the amount received by the Township. The Township utilized its Fire Operations fund to account for both fire and ambulance services. Costs were allocated between fire and ambulance services as necessary. Expenditures related to ambulance services were included in the Township's Cost Report to determine the reimbursement due to the Township. The funding received during the audit period was based on expenditures and data from January 1, 2019 to December 31, 2019, and as such, internal controls for that period were reviewed. The Cost Report for the Medicaid Program was prepared by the Township's contracted CPA firm using information provided by the Township. The Township provided reports detailing run data, expenditures, and charges (both Medicaid and non-Medicaid) to the CPA firm. The CPA firm prepared the report and submitted it to the Indiana FSSA. The Township did not participate in the preparation or submission process, nor complete a review of the report prior to submission. As such, the Township could not ensure that the information provided was properly utilized or that the report was accurate. Additionally, for five of the seven key line items tested, the Township could not provide supporting documentation. The lack of supporting documentation for Ambulance Runs, Fire Runs, EMT Salaries, Fire Salaries, and Total Ambulance Cost on the 2019 Cost Report prevented the determination of the accuracy of these line items. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.334 states in part: "Financial records, supporting documents, statistical records, and all other non-Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient. Federal awarding agencies and pass-through entities must not impose any other record retention requirements upon non-Federal entities. . . ." Cause A proper system of internal controls over the Medicaid Cluster expenditures was not designed by management of the Township, which would include segregation of key functions to ensure the Medicaid Cluster funds were appropriately reported. Embedded within a properly designed and implemented internal control system should be internal controls consisting of policies and procedures. Policies reflect the Township'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, 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. 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 Township. In addition, not supporting key line items increases the likelihood that information is not accurate and properly reported to FSSA and the public. 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 that would provide segregation of duties for the preparation of the Cost Report for Reimbursement for the Medicaid Cluster awards. Additionally, policies and procedures should be implemented to ensure appropriate reviews, approvals, and oversight are taking place. 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) - 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.
2022-003 Filing system and document retention. CURRENT CONDITION: The Housing Authority of the City of Greeley was unable to efficiently locate documents for the audit. CFDA#: 14.850, 14.871 CRITERIA: 24 CFR section 200.334 requires the retention of supporting documentation. CAUSE: The Authority did not have procedures or controls in place to systematically file information. EFFECT: Documents could not be located in a timely fashion. RECOMMENDATION: The Authority should standardize procedures and employee responsibilities. VIEWS OF RESPONSIBLE OFFICIALS: We will comply with the Auditor?s recommendation. DISCUSSED WITH: Tom Teixeira, September 15, 2022
FINDING 2022-001 DOCUMENT RETENTION SIGNIFICANT DEFICIENCY Federal Program: Child Care Development Block Grant Assistance Listing Number: 93.575 Criteria Per 7 CFR 200.334, ?Financial records, supporting documents, statistical records, and all other non- Federal entity records pertinent to a Federal award must be retained for a period of three years from the date of submission of the final expenditure report or, for Federal awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, respectively, as reported to the Federal awarding agency or pass-through entity in the case of a subrecipient.? Condition Salary expenses were included in the administrative costs applied to the program. Employees were to be applied to the program based on percentages set in the grant budget. IAN did not maintain documentation to support the amounts for each employee applied to the program during the year. Total payroll costs were provided for these employees. It was determined that total salary expenses applied to the grant were within the budget allotment, and no questioned costs were identified. Cause IAN did not maintain documentation to show amounts applied to the program by individual employees. Effect We were unable to see how much of each employee?s salary was specifically applied to the grant. Recommendation We recommend IAN develop internal controls requiring the maintenance of documentation to support employee allocations to federal programs. Views of Responsible Officials The School?s Corrective Action Plan is included on page 25.
#2022-011 - Major Federal Award Finding - Document Retention Nature of Finding: Compliance Finding - Uniform Guidance Administrative Requirements and Material Weakness in Internal Controls Over Compliance Criteria/Condition: Federal regulations 2 CFR 200.334 provides that a non-federal entity must retain all records pertinent to a federal award for a minimum period of three years from the date of submission of the annual financial report. We noted during testing that records were not consistently being maintained. Cause/Context: For 2 of the 40 expenditures selected for testing, the Organization was unable to provide appropriate invoice documentation supporting the amount charged to the grant. Effect: Federal expenditures could be charged to the grant at incorrect amounts or for unallowable costs. Recommendation: We recommend the Organization implement a document retention policy that is consistent with the federal document retention requirements. Views of Responsible Officials and Planned Corrective Actions: MARR will retain a CPA consultant to implement a document retention policy that is consistent with federal document retention requirements.
#2022-011 - Major Federal Award Finding - Document Retention Nature of Finding: Compliance Finding - Uniform Guidance Administrative Requirements and Material Weakness in Internal Controls Over Compliance Criteria/Condition: Federal regulations 2 CFR 200.334 provides that a non-federal entity must retain all records pertinent to a federal award for a minimum period of three years from the date of submission of the annual financial report. We noted during testing that records were not consistently being maintained. Cause/Context: For 2 of the 40 expenditures selected for testing, the Organization was unable to provide appropriate invoice documentation supporting the amount charged to the grant. Effect: Federal expenditures could be charged to the grant at incorrect amounts or for unallowable costs. Recommendation: We recommend the Organization implement a document retention policy that is consistent with the federal document retention requirements. Views of Responsible Officials and Planned Corrective Actions: MARR will retain a CPA consultant to implement a document retention policy that is consistent with federal document retention requirements.
Finding 2022-005: Insufficient Support for Costs Charged to Federal Award Programs Federal Agency: U.S. Department of the Treasury Assistance Listing Number: 21.027 Federal Program Name: Coronavirus State and Local Fiscal Recovery Funds Pass-through Entity: Snohomish County Human Services Pass-through Award Number: EL-22-AR-11-394 Criteria: Under 2 CFR 200.334, financial records and other supporting documents must be retained for a period of three years from the date of the submission of the annual financial report. Condition: Invoices, check copies, and other source documents could not be located to support the allowability of the costs charged to the major federal award program. Cause: The Organization had limited management and administrative staff and did not utilize a formal recordkeeping system during the year ended December 31, 2022. Further, as described in finding 2022-001, there were no written policies and procedures in place. Effect: Inadequate source documentation for costs charged to federal award programs may lead to findings in monitoring performed by oversight agencies and potential disallowed costs and/or decreases in future federal funding. Questioned Costs: Source documents could not be located for costs totaling $99,444, which represents 50% of our sample of transactions tested. Recommendation: We recommend that management implements and follows a formal record retention policy and retains receipts, invoices, and other source documents for costs charged to federal awards for a period of at least three years from the date the final financial report is submitted. Views of Responsible Officials: There is no disagreement with the finding.